ACCOUNTS - Final Accounts preparation


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Company registration number: 02285953







ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED
31 MAY 2023


ESPRIT ELECTRONICS LIMITED






































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ESPRIT ELECTRONICS LIMITED
 


 
COMPANY INFORMATION


Directors
P Handley 
L Holloway 
I McInnes 
J McInnes 
R Otter 
G Page 
L Sigournay 
Z M Vine (appointed 18 October 2022)
R F O'Mara (appointed 1 August 2023)




Company secretary
Mr A Ward



Registered number
02285953



Registered office
Unit 33 Mitchell Point
Ensign Way

Hamble

Southampton

SO31 4RF




Independent auditors
Menzies LLP
Chartered Accountants & Statutory Auditor

3000a Parkway

Whiteley

Hampshire

PO15 7FX




Bankers
National Westminster Bank PLC
69-73 High Street

Cosham

Portsmouth

Hampshire

PO6 3DA





 


ESPRIT ELECTRONICS LIMITED
 



CONTENTS



Page
Strategic report
1 - 2
Directors' report
3 - 4
Independent auditors' report
5 - 8
Statement of income and retained earnings
9
Statement of financial position
10 - 11
Notes to the financial statements
12 - 29


 


ESPRIT ELECTRONICS LIMITED
 


 
STRATEGIC REPORT
FOR THE YEAR ENDED 31 MAY 2023

Business review
 
The principal activity of the Company continued to be that of manufacturing electronic components and assemblies.
The Company reported a net profit before tax for the year of £1,107,689 (2022 - £502,846). In common with many in the industry, there has been extreme pressure on component supply and pricing following supply disruption post Covid and the impact of US$ exchange rates. The disruption is expected to continue for some time, but customer and supplier relationships have ensured continued business development so that the directors are confident of continued benefits from the marketing and investment activities over recent years with both new customers and a wider spread of manufactured electronic components & assemblies for established customers. This has led to a sales growth of 23.0% (2022 - 34.1%).
The risk of any individual customer dependence by the Company has become more contained. Component availability and stability of pricing, which includes $ exchange rates, and the lead time for that supply is considered to be the biggest risk to the Company as that impacts on the service to its customers on which the company has built its reputation. Improved productivity will be required to finance continued increases in direct wage costs and the Company, therefore, continually reviews its capital expenditure program. The conclusion of the last major review of equipment led to the purchase of almost £460,000 (2022 - £400,000). This expenditure being primarily funded by asset finance to maintain working capital.
Increased product ranges and current supply issues have expanded stock holding needs but the Company believes its method of working capital finance and good customer relations accommodate most of the pressure that may create. The directors believe the Company is well placed to continue to take advantage of new business.
At the year end, the directors consider the Company remains in a strong financial position with shareholders' funds totaling £5,081,103 (2022 - £4,245,063) and maintaining a good working capital position.

Principal risks and uncertainties
 
The principal threats to the Company, in addition to material availability and the lead time for that supply, is as with most other companies, will always be the loss of major customers and the cost of supply impacted by wages, sourcing of components and stability of material prices which are affected by world supply and the values of the GBP.
The Company’s management with the support of its valued, and loyal customers has so far managed to mitigate the extremes of the global shortage of electronic components and has continued to deliver to its customers meeting deadlines, the Company is confident that there are sufficient available resources to ensure a strong future.

Page 1

 


ESPRIT ELECTRONICS LIMITED
 



STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2023

Financial key performance indicators
 
The directors consider the Company's key financial performance indicators to be its operating profit and margins together with stock turn which then has an impact on working capital.  These key performance indicators of the business have all been adequate and at a level to ensure customer development, and retention and the long term success of the Company. The reduction in stock turn was consistent with increased stock needs for new products.
The main key financial performance indicators are as follows:

2023
2022
         
Operating profit

1,187,759

539,404

Gross profit margin

27.25%

26.77%

Stock turn

3.87

4.03

Current ratio

1.84

1.64



This report was approved by the board and signed on its behalf.



................................................
Mr A Ward
Company Secretary

Date: 2 February 2024

Page 2

 


ESPRIT ELECTRONICS LIMITED
 


 
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 MAY 2023

The directors present their report and the financial statements for the year ended 31 May 2023.

Directors' responsibilities statement

The directors are responsible for preparing the Strategic report, the Directors' 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 applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice), including Financial Reporting Standard 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland'. 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 for the Company's financial statements and then apply them consistently;

make judgments 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 to enable them to ensure that the financial statements comply with the Companies Act 2006They 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.

Results and dividends

The profit for the year, after taxation, amounted to £911,040 (2022 - £421,678).

The directors have recommended the payment of a dividend of £75,000 (2022 - £75,000).

Directors

The directors who served during the year were:

P Handley 
L Holloway 
I McInnes 
J McInnes 
R Otter 
G Page 
L Sigournay 
Z M Vine (appointed 18 October 2022)

Future developments

The Company will continue to focus its efforts on core customers and service lines in order to maintain profit levels, whilst actively seeking to develop relationships with new customers to increase profit levels.

Financial instruments

The Company uses basic financial instruments such as cash and fixed term deposits. 

Page 3

 


ESPRIT ELECTRONICS LIMITED
 


 
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2023

Matters covered in the Strategic report

The Company has chosen in accordance with section 414C(11) of the Companies Act 2006 (Strategic Report and Directors' Report) Regulations 2013 to set out in the Company's strategic report information required by schedule 7 of the Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008 it must be stated in the Directors' Report that it has done so. This includes information that would have been included in the business review and the principal risks and uncertainties.

Disclosure of information to auditors

Each of the persons who are directors at the time when this Directors' report is approved has confirmed that:
 
so far as the director is aware, there is no relevant audit information of which the Company's auditors are unaware, and

the director has taken all the steps that ought to have been taken as a director in order to be aware of any relevant audit information and to establish that the Company's auditors are aware of that information.

Each of the persons who are directors at the time when this Directors' Report is approved has confirmed that:

Post balance sheet events

There have been no significant events affecting the Company since the year end.

Going concern

The directors have a reasonable expectation that the Company has adequate resources to continue operational existence for a period of at least 12 months from the date that the accounts are autrhorised for issue. For this reason the directors continue to adopt the going concern basis of accounting in preparing the annual financial statements. 

Auditors

Under section 487(2) of the Companies Act 2006Menzies LLP will be deemed to have been reappointed as auditors 28 days after these financial statements were sent to members or 28 days after the latest date prescribed for filing the accounts with the registrar, whichever is earlier.

This report was approved by the board and signed on its behalf.
 





................................................
Mr A Ward
Secretary

Date: 2 February 2024

Page 4

 


ESPRIT ELECTRONICS LIMITED
 

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INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF ESPRIT ELECTRONICS LIMITED

Opinion


We have audited the financial statements of Esprit Electronics Limited (the 'Company') for the year ended 31 May 2023, which comprise the Statement of income and retained earnings, the Statement of financial position and the related notes, including a summary of significant accounting policiesThe 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 May 2023 and of its profit for the year then ended;
have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
have been prepared in accordance with the requirements of the Companies Act 2006.


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 United Kingdom, including the Financial Reporting Council'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 other information comprises the information included in the Annual Report other than the financial statements and our Auditors' report thereon. The directors are responsible for the other information contained within the Annual ReportOur 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.


Page 5

 


ESPRIT ELECTRONICS LIMITED


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INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF ESPRIT ELECTRONICS LIMITED (CONTINUED)

Opinion 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 Directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
the Strategic report and the Directors' report have been prepared in accordance with applicable legal requirements.


Matters on which we are required to report by exception
 

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


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


adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or
the financial statements are not in agreement with the accounting records and returns; or
certain disclosures of 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 Directors' responsibilities statement set out on page 3, 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.


Page 6

 


ESPRIT ELECTRONICS LIMITED


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INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF ESPRIT ELECTRONICS LIMITED (CONTINUED)

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 an Auditors' 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:

The Company is subject to laws and regulations that directly affect the financial statements including The Companies Act 2006, UK taxation legislation, financial reporting legislation and general regulations such as occupational health and safety and General Data Protection. There are no industry specific laws and regulations which would be deemed to have a significant impact on the financial statements. We assessed the extent of compliance with the appropriate laws and regulations as part of our procedures on the related financial statement items.

We understood how the Company is complying with those legal and regulatory frameworks by, making inquiries to management, those responsible for legal and compliance procedures and the company secretary. We corroborated our inquiries through our review of documentation.

The engagement partner assessed whether the engagement team collectively had the appropriate competence and capabilities to identify or recognise non-compliance with laws and regulations. The assessment did not identify any issues in this area.

We assessed the susceptibility of the Company's financial statements to material misstatement, including how fraud might occur. Audit procedures performed by the engagement team included:

°Identifying and assessing the design effectiveness of controls management has in place to prevent and detect fraud;
°Understanding how those charged with governance considered and addressed the potential for override of controls orother inappropriate influence over the financial reporting process;
°Challenging assumptions and judgments made by management in its significant accounting estimates;
°Identifying and testing journal entries, in particular any journal entries posted with unusual account combinations; and
°Review of legal and professional expenditure and supporting documentation.

As a result of the above procedures, we considered the opportunities and incentives that may exist within the organisation for fraud and identified the greatest potential for fraud in the following areas:

°Posting of unusual journals and complex transactions;
°Misappropriation of funds through fraudulent supplier ledger activity; and
°Manipulation of amounts subject to significant judgement or estimate.


Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading to a material misstatement in the financial statements or non-compliance with regulation. This risk increases the more that compliance with a law or regulation is removed from the events and transactions reflected in the financial statements, as we will be less likely to become aware of instances of non-compliance. The risk is also greater regarding irregularities occurring due to fraud rather than error, as fraud involves intentional concealment, forgery, collusion, omission or misrepresentation.


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 Auditors' report.


Page 7

 


ESPRIT ELECTRONICS LIMITED