Trolex Limited - Limited company accounts 23.1

REGISTERED NUMBER: 00644260 (England and Wales)

STRATEGIC REPORT, REPORT OF THE DIRECTORS AND

FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2022

FOR

TROLEX LIMITED

Page

Company Information

1

Strategic Report

2

Report of the Directors

4

Report of the Independent Auditors

6

Income Statement

10

Other Comprehensive Income

11

Balance Sheet

12

Statement of Changes in Equity

13

Notes to the Financial Statements

14

DIRECTORS:

J Pierce-Jones

G Pierce-Jones

L Pierce-Jones

P Brian

REGISTERED OFFICE:

Newby Road

Hazel Grove

Stockport

Cheshire

SK7 5DY

REGISTERED NUMBER:

00644260 (England and Wales)

AUDITORS:

Moss & Williamson Limited

Chartered Accountants

Statutory Auditor

Booth Street Chambers

Ashton-under-Lyne

Lancashire

OL6 7LQ

The directors present their strategic report for the year ended 31 December 2022.

REVIEW OF THE BUSINESS

The Company delivers best in class safety technology to ensure workers in challenging environments are never put at risk. It is a leading designer and manufacturer of innovative products for gas and dust detection, connector solutions and strata monitoring systems in the hazardous industrial, mining and tunnelling markets.

Throughout 2022 the Company continued to face challenges from the fallout of the Covid-19 pandemic, including supply chain delays and significant cost increases. These issues softened during the year but are expected to remain to some degree, specifically in terms of cost increases and minimum order requirements being enforced.

A number of key projects continued during 2022 with the development of patented, world first technologies as well as improvement in existing technologies that will allow the Company to diversify and grow its marketplace in years to come.

These development and improvement projects continue to place Trolex in a much stronger position for visibility and diversity in future years.

For the year ended 31 December 2022 the company reported a turnover of £7,798,631 (2021:£6,449,653 and operating profit of £230,142 (2021: profit of £43,536).

The directors believe that it is imperative to adapt to economic and environmental changes through continuous improvement in business processes in order to reduce costs and create efficiencies without jeopardising the quality, performance and delivery of the goods manufactured.

KEY PERFORMANCE INDICATORS

The directors believe that the KPIs outlined below provide an overview as to how the Company is performing against principal key objectives to enable it to achieve the directors' long-term strategic vision. The KPIs encompass business performance as well as financial indicators taking consideration of the interests of all stakeholders:

- Turnover £7,798,631 (2021: £6,449,653)

- Gross margin £4,951,048 (2021: £4,211,154)

- Operating profit £230,142 (2021: £43,536)

- Cash balances £137,736 (2021: £176,169)

- Shareholder funds £3,161,026 (2021: £3,073,134)

The directors believe that the non-financial KPIs shown below are also significant to the understanding of the Company's performance:

- Headcount 68 (2021: 69)

PRINCIPAL RISKS AND UNCERTAINTIES

The company is forecast to continue to improve its financial performance in 2023. The directors are aware of the risks that the continued impacts of Covid-19 and the war in Ukraine as well as the current worldwide economic and trading environment bring to the Company. The directors meet on a regular basis with other members of senior management where the risks and uncertainties facing the business are discussed and appropriate actions taken to mitigate any impact on the Company's performance.

Foreign currency risk

The Company operates from the UK but its customers are located not only in the UK but also in other jurisdictions such as Europe, Asia and Australia. This fact requires the company to operate in Sterling, Dollars and Euros. Transactions in foreign currencies are recorded at the rate ruling at the date of the transaction and the balances are regularly revalued at the prevailing rates of exchange. The company does not undertake any hedging in relation to foreign currency.

Legislative and regulatory risk

The company supplies products in an industry that is subject to significant health and safety and environmental regulation. Failure to comply with laws and regulations could lead to a loss of reputation, revenues or the ability to sell products in some jurisdictions. To mitigate this risk, the directors continuously invest in the development of the company's product range, invest in the training of staff, monitor for changes in laws and regulations and identify and action improvements in processes and controls.

ON BEHALF OF THE BOARD:

G Pierce-Jones - Director

27 June 2023

The directors present their report with the financial statements of the company for the year ended 31 December 2022.

DIVIDENDS

An interim dividend of 13.73 pence per share on the Ordinary £0.05 shares was paid on 22 November 2022. The directors recommend that no final dividend be paid on these shares.

The total distribution of dividends for the year ended 31 December 2022 will be £ 170,000 .

RESEARCH AND DEVELOPMENT

The company continuously undertakes research and development activities to improve and development its products.

FUTURE DEVELOPMENTS

The directors will continue to pursue a strategy of developing the Company's product offerings as well as seeking new opportunities to increases revenues and margins. Detailed future developments, strategy and Key Performance Indicators are discussed in the Strategic Report.

DIRECTORS

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

J Pierce-Jones

G Pierce-Jones

L Pierce-Jones

P Brian

FINANCIAL INSTRUMENTS

The Company's financial instruments comprise cash, trade debtors and creditors, bank loans and certain other debtors and accruals all of which arise from its operations.

The main risks associated with these financial assets and liabilities are credit risk and liquidity and cash flow risk. The directors review and agree policies for managing each of these risks and they are outlined below. The policies are consistent with those from the prior year.

The company does not use derivative financial instruments.

Credit risk

The Company's credit risk is primarily associated with its trade debtors. The amounts presented in the balance sheet are net of allowances for doubtful debts where applicable. An allowance for impairment is made where there is an identified loss event which, based on previous experience, is evidence of a reduction in the recoverability of the cash flows. The directors monitor credit risk but consider that the company has minimal exposure.

Liquidity and cash flow risk

Liquidity and cash flow risk is the risk that an entity will encounter difficulty in meeting obligations associated with financial liabilities. The directors aim to mitigate liquidity risk and cash flow risk by managing working capital and, as a result, they continue to closely monitor the Company's working capital requirements. Should the directors identify that the Company requires additional working capital they would look to secure and utilise short-term or long-term finance facilities from external sources.

REVIEW OF THE BUSINESS

A description of the Company's principal activity, a review of the business and its principal risks and uncertainties is set out in the Strategic Report on pages 2 - 3 of these financial statements.

The profit for the year, after taxation, amounted to £287,892 (2021: £137,409).

Total comprehensive income for the year amounted to £257,892 (2021: £107,409).

GOING CONCERN

The directors have made enquiries and assessed the impact and risks of the geo-political situation in Ukraine, the current economic climate and the continued impacts of Covid-19. The directors believe that the Company will be able to manage any risks that might present themselves and consider that the accounts should be prepared on a going concern basis. This conclusion has been reached based upon the Company having access to sufficient funds to be able to meet its liabilities and obligations as they fall due for a period of at least twelve months from approving these financial statements.

STATEMENT OF DIRECTORS' RESPONSIBILITIES

The directors are responsible for preparing the Strategic Report, the Report of the Directors and the financial statements in accordance with applicable law and regulations.

Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). 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.

STATEMENT AS TO DISCLOSURE OF INFORMATION TO AUDITORS

So far as the directors are aware, there is no relevant audit information (as defined by Section 418 of the Companies Act 2006) of which the company's auditors are unaware, and each director has taken all the steps that he ought to have taken as a director in order to make himself aware of any relevant audit information and to establish that the company's auditors are aware of that information.

AUDITORS

The auditors, Moss & Williamson Limited, will be proposed for re-appointment at the forthcoming Annual General Meeting.

ON BEHALF OF THE BOARD:

G Pierce-Jones - Director

27 June 2023

Opinion

We have audited the financial statements of Trolex Limited (the 'company') for the year ended 31 December 2022 which comprise the Income Statement, Other Comprehensive Income, Balance Sheet, Statement of Changes in Equity and Notes to the Financial Statements, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 'The Financial Reporting Standard applicable in the UK and Republic of Ireland' (United Kingdom Generally Accepted Accounting Practice).

In our opinion the financial statements:

-	give a true and fair view of the state of the company's affairs as at 31 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.

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditors' responsibilities for the audit of the financial statements section of our report. We are independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC's Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Conclusions relating to going concern

In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.

Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.

Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.

Other information

The directors are responsible for the other information. The other information comprises the information in the Strategic Report and the Report of the Directors, but does not include the financial statements and our Report of the Auditors thereon.

Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

Opinions on other matters prescribed by the Companies Act 2006

In our opinion, based on the work undertaken in the course of the audit:

-	the information given in the Strategic Report and the Report of the Directors for the financial year for which the financial statements are prepared is consistent with the financial statements; and

-	the Strategic Report and the Report of the Directors have been prepared in accordance with applicable legal requirements.

Matters on which we are required to report by exception

In the light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identified material misstatements in the Strategic Report or the Report of the Directors.

We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion:

-	adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or

-	the financial statements are not in agreement with the accounting records and returns; or

-	certain disclosures of directors' remuneration specified by law are not made; or

-	we have not received all the information and explanations we require for our audit.

Responsibilities of directors

As explained more fully in the Statement of Directors' Responsibilities set out on page five, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the directors are responsible for assessing the company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.

Auditors' responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue a Report of the Auditors that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect 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 the audit was considered capable of detecting irregularities including fraud is detailed below:

As a part of our audit in accordance with United Kingdom Generally Accepted Accounting Practice; and requirements of the Companies Act 2006 we exercise professional judgement and maintain professional scepticism throughout the audit. Based on our understanding and accumulated knowledge of the Company and the sector in which it operates we considered the risk of acts by the Company which were contrary to applicable laws and regulations, including fraud and whether such actions or non-compliance might have a material impact on the financial statements. These included but were not limited to those that relate to the form and content of the financial statements, such as the accounting policies, United Kingdom Generally Accepted Accounting Practice, the UK Companies Act 2006, compliance with health and safety regulations and those that relate to the payment of employees. All team members were briefed to ensure they were aware of any relevant regulations in relation to their work.

We evaluated management's incentives and opportunities for fraudulent manipulation of the financial statements (including the risk of override of controls) and determined that the principal risks were related to posting inappropriate journal entries, management bias in accounting estimates and improper revenue recognition. Our audit procedures included, but were not limited to:

- Agreement of the financial statement disclosures to underlying supporting documentation;

- Challenging assumptions and judgements made by management in their significant accounting estimates, in particular in relation to revenue recognition, useful life of fixed assets, fair value of property assets and completeness of accruals and provisions;

- Revenue year end cut-off procedures;

- Identifying and testing journal entries, in particular any journal entries posted with specific unusual narrative, manual journals to revenue and cash, and review of journals posted to least used accounts;

- Discussions with management; including consideration of known or suspected instances of non-compliance with laws and regulation and fraud;

- Obtaining an understanding of how the Company is complying with its legal and regulatory frameworks by making enquiries with management and those responsible for legal and compliance procedures. We corroborated our enquiries through our review of board minutes, legal correspondence received, legal expenses incurred and interactions with regulators such as the HMRC.

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

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

A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website at www.frc.org.uk/auditorsresponsibilities. This description forms part of our Report of the Auditors.

Use of our report

This report is made solely to the company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in a Report of the Auditors and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's members as a body, for our audit work, for this report, or for the opinions we have formed.

D Evans FCA (Senior Statutory Auditor)

for and on behalf of Moss & Williamson Limited

Chartered Accountants

Statutory Auditor

Booth Street Chambers

Ashton-under-Lyne

Lancashire

OL6 7LQ

27 June 2023

TURNOVER

3

7,798,631

6,449,653

Cost of sales

2,847,583

2,238,499

GROSS PROFIT

4,951,048

4,211,154

Administrative expenses

4,760,906

4,167,618

190,142

43,536

Other operating income

4

40,000

-

OPERATING PROFIT

6

230,142

43,536

Interest payable and similar expenses

7

53,267

61,110

PROFIT/(LOSS) BEFORE TAXATION

176,875

(17,574

)

Tax on profit/(loss)

8

(111,017

)

(154,983

)

PROFIT FOR THE FINANCIAL YEAR

287,892

137,409

PROFIT FOR THE YEAR

287,892

137,409

OTHER COMPREHENSIVE INCOME

Scheme asset return less interest income

(1,062,000

)

103,000

Experience gains/(losses)

(90,000

)

34,000

Changes in actuarial assumptions

784,000

189,000

Change in irrecoverable surplus

338,000

(356,000

)

Income tax relating to components of other comprehensive income

-

-

OTHER COMPREHENSIVE INCOME FOR THE YEAR, NET OF INCOME TAX

(30,000

)

(30,000

)

TOTAL COMPREHENSIVE INCOME FOR THE YEAR

257,892

107,409

FIXED ASSETS

Intangible assets

10

301,509

379,608

Tangible assets

11

2,523,174

2,719,263

Investments

12

-

24,947

2,824,683

3,123,818

CURRENT ASSETS

Stocks

13

1,688,865

1,420,937

Debtors

14

823,874

1,451,615

Cash at bank and in hand

137,736

176,169

2,650,475

3,048,721

CREDITORS

Amounts falling due within one year

15

1,311,625

1,977,549

NET CURRENT ASSETS

1,338,850

1,071,172

TOTAL ASSETS LESS CURRENT LIABILITIES

4,163,533

4,194,990

CREDITORS

Amounts falling due after more than one year

16

(1,002,507

)

(1,098,911

)

PROVISIONS FOR LIABILITIES

19

-

(22,945

)

NET ASSETS

3,161,026

3,073,134

CAPITAL AND RESERVES

Called up share capital

20

61,739

61,739

Share premium

21

29,779

29,779

Revaluation reserve

21

577,619

577,619

Capital redemption reserve

21

98,606

98,606

Retained earnings

21

2,393,283

2,305,391

SHAREHOLDERS' FUNDS

3,161,026

3,073,134

The financial statements were approved by the Board of Directors and authorised for issue on 27 June 2023 and were signed on its behalf by:

G Pierce-Jones - Director

Called up

share

Retained

Share

capital

earnings

premium

£

£

£

Balance at 1 January 2021

61,739

2,197,982

29,779

Changes in equity

Total comprehensive income

-

107,409

-

Balance at 31 December 2021

61,739

2,305,391

29,779

Changes in equity

Dividends

-

(170,000

)

-

Total comprehensive income

-

257,892

-

Balance at 31 December 2022

61,739

2,393,283

29,779

Capital

Revaluation

redemption

Total

reserve

reserve

equity

£

£

£

Balance at 1 January 2021

577,619

98,606

2,965,725

Changes in equity

Total comprehensive income

-

-

107,409

Balance at 31 December 2021

577,619

98,606

3,073,134

Changes in equity

Dividends

-

-

(170,000

)

Total comprehensive income

-

-

257,892

Balance at 31 December 2022

577,619

98,606

3,161,026

1.	STATUTORY INFORMATION

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

2.	ACCOUNTING POLICIES

Basis of preparing the financial statements

These financial statements have been prepared in accordance with Financial Reporting Standard 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland" and the Companies Act 2006. The financial statements have been prepared under the historical cost convention as modified by the revaluation of certain assets.

The functional currency of Trolex Limited is considered to be pounds sterling as this is the currency of the primary economic environment in which the company operates.

Financial Reporting Standard 102 - reduced disclosure exemptions

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

•

the requirements of Section 7 Statement of Cash Flows;

•

the requirement of paragraph 3.17(d);

•

the requirements of paragraphs 11.42, 11.44, 11.45, 11.47, 11.48(a)(iii), 11.48(a)(iv), 11.48(b) and 11.48(c);

•

the requirements of paragraphs 12.26, 12.27, 12.29(a), 12.29(b) and 12.29A;

•

the requirement of paragraph 33.7.

Preparation of consolidated financial statements

The financial statements contain information about Trolex Limited as an individual company and do not contain consolidated financial information as the parent of a group. The company is exempt under Section 400 of the Companies Act 2006 from the requirements to prepare consolidated financial statements as it and its subsidiary undertaking are included by full consolidation in the consolidated financial statements of its parent, Trolex Group Limited, 10a Newby Road Industrial Estate, Newby Road, Hazel Grove, Stockport,Cheshire, SK7 5DY.

Significant judgements and estimates

The Company's directors make estimates and assumptions about the future. These estimates and assumptions impact recognised assets and liabilities, as well as revenue and expenses and other disclosures. These estimates are based on historical experience and on various assumptions considered reasonable under the prevailing conditions. The actual outcome may diverge from these estimates if other assumptions are made, or other conditions arise. The estimates and assumptions that may have a significant effect on the carrying amounts of assets and liabilities within the next financial year include:

Tangible assets and intangible assets are recognised at cost, less accumulated depreciation, amortisation and any impairments. Amortisation and depreciation take place over the estimated useful life of each asset, until the assessed residual value of the asset is reached. The estimate of the fair value of the Company's property assets is undertaken by a qualified valuer at regular intervals.

The directors make an estimate of the recoverable value of trade and other debtors. When assessing for impairment of trade and other debtors, management considers factors including the ageing profile of debtors and historical experience.

The directors make an estimate of the provision required for slow moving and obsolete stock at each financial year end. When assessing the required provision, management considers factors including the ageing of the stock, the number of units sold or consumed in the previous 12 months and the release of new or updated products which make existing products obsolete.

The present value of the defined benefit pension surplus or liability depends on a number of factors that are determined on an actuarial basis using a variety of assumptions. The assumptions used in determining the net cost or income for pensions include the discount rate. Any changes in these assumptions, which are disclosed in note 21, can considerably impact the carrying value of the pension surplus or liability. Furthermore a roll forward approach which projects results from the latest full actuarial valuation performed at 31 December 2021 has been used by the actuary in valuing the pensions liability at 31 December 2022. Any differences between the figures derived from the roll forward approach and a full actuarial valuation would impact on the carrying amount of the pension surplus or liability.

Turnover

Turnover comprises the fair value of the consideration received for the sale of gas and dust detection products, connector solutions and strata monitoring products, net of VAT and trade discounts. Turnover is recognised when the product is despatched to the customer.

Goodwill

Goodwill, being the amount paid in connection with the acquisition of a business in 2015, is being amortised evenly over its estimated useful life of ten years.

Goodwill is subject to an annual impairment reviews by the directors.

Patents and licences

Patents and licences are amortised at rates calculated to write off the assets on a straight line basis over their estimated useful economic lives. Impairment of intangible assets is reviewed where circumstances indicate that the carrying value of an asset may not be fully recoverable.

Tangible fixed assets

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

Freehold property

-

2% on valuation

Plant and machinery

-

at varying rates on cost

Motor vehicles

-

25% on cost

Tangible fixed assets are initially recorded at cost and then subsequently at cost less accumulated depreciation and impairment charges. Cost includes all incremental costs associated with the asset's acquisition and installation. Freehold land is not depreciated.

Investments in subsidiaries

Investments in subsidiary undertakings are recognised at cost.

Stock and work in progress

Stock is valued at the lower of cost and net realisable value, after making due allowance for obsolete and slow moving items.

Work in progress is valued on the basis of direct costs plus attributable overheads based on normal level of activity. Provision is made for any foreseeable losses where appropriate. No element of profit is included in the valuation of work in progress.

Taxation

Taxation for the year comprises current and deferred tax. Tax is recognised in the Income Statement, except to the extent that it relates to items recognised in other comprehensive income or directly in equity.

Current or deferred taxation assets and liabilities are not discounted.

Current tax is recognised at the amount of tax payable using the tax rates and laws that have been enacted or substantively enacted by the balance sheet date.

Deferred tax

Deferred tax is recognised in respect of all timing differences that have originated but not reversed at the balance sheet date.

Timing differences arise from the inclusion of income and expenses in tax assessments in periods different from those in which they are recognised in financial statements. Deferred tax is measured using tax rates and laws that have been enacted or substantively enacted by the year end and that are expected to apply to the reversal of the timing difference.

Unrelieved tax losses and other deferred tax assets are recognised only to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits.

Research and development

Expenditure on research and development is written off in the year in which it is incurred.

Foreign currencies

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

Pension costs and other post-retirement benefits

The company operates two funded pension schemes, these schemes fall within the following categories:

Defined Contribution Scheme

The company operates a defined contribution pension scheme for the benefit of qualifying employees. The assets of the scheme are held separately from those of the group in an independently administered fund. The pension cost charge for the year represents contributions payable by the company to the fund.

Defined Benefit Scheme

The company also operates a defined benefit scheme for certain employees, providing benefits based on final pensionable pay. The assets of the scheme are held separately from those of the company and invested at the discretion of the trustees under the terms of the definitive trust deed.

The regular pension cost is charged to profit and loss account and is based on the expected pension costs over the service lives of the employees. Contributions to the pension plan are paid according to the advice of actuaries.

A pension surplus or deficit is recorded as the difference between the present value of the scheme liabilities and the fair value of the scheme assets. The Company's share of pension surplus is recognised to the extent that the company is able to recover a surplus through reduced contributions in the future or through refunds from the scheme.

Operating lease agreements

Rentals applicable to operating leases where substantially all of the benefits and risks of ownership remain with the lessor are charged against profits on a straight line basis over the period of the lease.

3.

TURNOVER

The turnover and profit (2021 - loss) before taxation are attributable to the one principal activity of the company.

An analysis of turnover by geographical market is given below:

2022

2021

£

£

Europe

4,006,720

3,427,857

America/Canada

990,844

639,961

Africa

83,043

58,703

Asia/Middle East

1,065,197

508,365

Australia/New Zealand

1,652,827

1,814,767

7,798,631

6,449,653

4.	OTHER OPERATING INCOME

2022

2021

£

£

Insurance receipt

40,000

-

5.	EMPLOYEES AND DIRECTORS

2022

2021

£

£

Wages and salaries

2,972,465

2,705,791

Social security costs

310,057

275,871

Other pension costs

185,442

169,743

3,467,964

3,151,405

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

2022

2021

Office and Management

26

29

Technical/Engineers

30

27

Operatives

12

13

68

69

2022

2021

£

£

Directors' remuneration

417,586

404,910

Information regarding the highest paid director is as follows:

2022

2021

£

£

Emoluments etc

177,398

172,060

6.	OPERATING PROFIT

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

2022

2021

£

£

Depreciation - owned assets

223,763

196,998

Loss/(profit) on disposal of fixed assets

81,302

(307

)

Goodwill amortisation

89,319

89,319

Intangible assets amortisation

1,126

-

Auditors' remuneration

15,000

15,000

7.

INTEREST PAYABLE AND SIMILAR EXPENSES

2022

2021

£

£

Bank interest

41,999

61,110

Other Interest

11,268

-

53,267

61,110

8.

TAXATION

Analysis of the tax credit

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

2022

2021

£

£

Current tax:

UK corporation tax

(88,072

)

(160,259

)

Deferred tax-Timing difference

(22,945

)

5,276

Tax on profit/(loss)

(111,017

)

(154,983

)

UK corporation tax has been charged at 19% (2021 - 19%).

Reconciliation of total tax credit included in profit and loss

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

2022

2021

£

£

Profit/(loss) before tax

176,875

(17,574

)

Profit/(loss) multiplied by the standard rate of corporation tax in the UK of 19% (2021 - 19%)

33,606

(3,339

)

Effects of:

Expenses not deductible for tax purposes

7,142

4,605

Depreciation in excess of capital allowances

2,556

10,815

Utilisation of tax losses

-

(1,106

)

Enhanced capital allowances

(148,621

)

(160,258

)

Pension provision

(5,700

)

(5,700

)

Total tax credit

(111,017

)

(154,983

)

Tax effects relating to effects of other comprehensive income

2022

Gross

Tax

Net

£

£

£

Scheme asset return less interest income

(1,062,000

)

-

(1,062,000

)

Experience gains/(losses)

(90,000

)

-

(90,000

)

Changes in actuarial assumptions

784,000

-

784,000

Change in irrecoverable surplus

338,000

-

338,000

(30,000

)

-

(30,000

)