The directors present the strategic report for the year ended 30 June 2023.
The Group's main trading subsidiary British Cables Company’s (BCC) turnover was slightly below prior year, which was due to end of a large export copper cable contract and also due to a moratorium being placed by BCCs large customer for a period of 3 months with the effect spread over 6 months. War in Ukraine continues to have pressure on raw material prices as well as energy prices, which has made competing with foreign imports a lot difficult. Our industry is also LME (London Metal Exchange) driven and turnover year on year (YoY) is therefore not directly comparable. Average LME (copper) in 21/22 was £7,140 and in 22/23 LME had increased to £6.878. Overall turnover decreased by £1.9m, of which the copper impact was £0.4m positive and volume was £2.3m reduction. Openreach continue to rollout fibre to new build properties, which influences the copper cables we manufacture. Sales in to the Rail sector increased by 44% YoY but Copper Telco cable saw the largest reduction compared to prior year. Due to themoratorium fibre sales reduced by just over £1m YoY.
Common across the whole of the cable manufacturing industry has been and continues to be the indirect impact of the war in Ukraine namely increased raw material costs / material shortages and long lead times.
One major account imposed a moratorium on spend affecting all of their suppliers, which although originally thought to last 3 months ended lasting a full half of year with the obvious negative effect on revenues. Order levels have since started to return to pre challenge levels.
We continue to resolutely adhere to the key strategic objective of reducing the dependency on the copper telecommunications market by entering new markets, securing new customers and supplying newly introduced products through our NPI program. New rail products targeting the rail infrastructure sectors both in the UK and Europe gain significant traction which bode well for the ensuing years.
The increase in trading accounts continues to be key in our development and our risk spreading strategy. Active accounts continue to remain on a steady and upward trajectory.
Embracing digitalisation and utilisation of several new platforms drives and continues to build the BCC brand. Engagement with the British Government / Department of International trade combined with the “Buy British overtones” have allowed us to enter / tender for more infrastructure projects Internationally. The Middle East markets in particular call for UK manufactured products.
BCC’s manufacturing efficiency remains a key focus along with scrap management / scrap reduction programs
The transfer of the manufacturing facility from our sister Company in Ireland has been completed, thus increasing both manufacturing capability and capacity. This will allow BCC to produce products for existing, new and emerging markets.
Tight labour markets required extra focus on resource planning, upskilling, multiskilling, succession programs and retention.
Entering and focussing on developing business in these new and buoyant markets, securing medium and long-term contracts will provide significant growth over the ensuing years.
The group makes little use of financial instruments other than an operational bank account and confidential invoice finance facility, so its exposure to credit risk, liquidity risk and cash flow risk is not material for the assessment of the assets, liabilities, financial position and profit and loss of the group.
Price risk
The group is exposed to commodity price risk as a result of its operations. The directors believe that the group has adequate controls established to ensure that prices charged to customers reflect the cost of copper for each order received.
Foreign exchange risk
The group operates internationally and is exposed to foreign exchange risk arising from various currency exposures, primarily with respect to Euros. Foreign risk arises from future commercial transaction and recognised assets and liabilities.
Since the movement of machinery from sister company IDH, BCC are now fully operational and approved for all the cable range previously being manufactured by IDH. A small delay in getting the equipment setup was due to lead time of new equipment added to existing piece of kit, which will make the manufacturing more efficient and price more competitive in a highly competitive market.
IDH Limited will be supported by BCC in UK to manufacture goods for Irish and export market, but will continue to be a Hans Wilms Beteiligungs GmbH company. It was also decided that some manufacturing will remain in IDH, so they can serve the Irish markets.
The business has successfully secured new long-term contracts to supply optical fibre cables and also new contract for supply of copper telecommunication cable. Both these commenced from Autumn 2021.
The key tenet of the business continues to be health, safety, quality and the environment. The health and safety of all employees remains paramount.
Our policy aims to provide and support a culture where health, safety, quality and the environment is at the top of everyone's agenda. This has been achieved by ensuring that all our staff, operatives and sub-contractors receive adequate training, have the correct personal protective equipment and feel empowered to raise any concerns that they may have.
The Group retains its enviable record of exceeding H&S standards having achieved the RoSpa Presidents award for three consecutive years following being awarded Gold awards each year for over a decade.
Accreditations
BS EN ISO 9001 : 2015 Quality Management System
BS EN ISO 14001 : 2015 Environmental Management System
BS EN 45001 : 2018 Health & Safety Management System
Certificate of Product Approval to cover cables to BS EN 50525-3-41:2011
H07Z-R Class 2 1 core 1.5mm2 to 25mm2
H05Z-K Class 5 1 core 0.5mm2 to 1mm2
H07Z-K Class 5 1 core 1.5mm2 to 10mm2
Certificate of Product Approval to cover cables to BS 8436:2011
Screened Class 2 2 core, 3 core and 4 core 1.0mm² to 4.0mm²
Certificate of Product Approval to cover cables to BS 7211:2012
6241B- 6243B – Class 1 & Class 2, 1.5mm2 – 16mm2
Certificate of Product Approval to cover cables to BS 6004:2012
6181Y Class 1 1 core 1.0mm² to 2.5mm² and Class 2 1 core 4.0mm² to 25mm²
Certificate of Product Approval to cover cables to BS 7629-1:2015FG200 Fire Resistant Screened Class 1 & 2 2 core, 3 core and 4 core 1.5mm² to 4.0mm²
LPCB Certificate of Product Approval to cover single core fire resistant cables to BS 6387:2103
FG100 Single Core Fire Resistant cables 1.0mm2 – 16.0mm2
BCC also have a range of certificates / approvals covering the fire performance CPR requirements.
Key Performance Indicators
2023 2022
£'000 £'000
Turnover 35,249 37,418
Gross profit 8.1% 8.6%
EBITDA 487 1,000
EBITDA % 1.4% 2.7%
Debtor Days 65 71
Creditor Days 58 60
Gross profit % dropped to 8.1% which is mainly to do with the energy price increases and packaging price increases. EBITDA % dropped 1.3% due to these large hikes.
Debtor days have gone down from 71 days to 65 days. This is due to improvements in cash collections and challenging some increased payment terms requested. Creditor days have reduced year on year from 60 days to 58 days. This seems to be the longest terms currently being offered by suppliers. As there is shortage of supplies, trying to negotiate extended terms doesn’t seem to be of interest. Moving to new suppliers is becoming difficult, as suppliers are only willing to serve its existing customers base.
his statement by the board describes how the responsibilities under s172 (1) (a) to (f) of the Companies Act 2006 have been approached. The directors consider that they have acted in good faith to promote the success of the group on behalf of the stakeholders, in relation to matters set out in s172 of the Act. The stakeholders of the business include the employees, clients and suppliers of the business.
The directors monitor and review strategic objectives against growth plans and regular reviews at departmental and board level are held across the business in the key areas. These areas being H & S, Financial performance, Operations, Human Resources and Risks and Opportunities.
The directors consider H&S fundamental to the management of the business. Safe working practices that minimise environmental impact are key to the success of the business and vitally important for our stakeholders, the communities and the environments we work in.
The fundamental principle in the governance of British Cables Company is the clear, fair and trusting approach to all interactions with employees, clients and suppliers; this is reflected in the length of service of employees and management teams and the longevity of the relationships with our clients and suppliers.
The group’s employees, clients and suppliers are critical to the success of the business and so it is recognised that engagement is an important aspect in those relationships.
The directors recognise and understand that it is important to keep employees informed of all matters concerning them and does this in a number of ways including site notices, meetings, verbal and written communications. The views and interests of employees are considered in consultation with them through working groups or forums, which evolve over time to meet the needs of all parties. The policy of the group is to consult and discuss with employees any issues that arise in accordance with relevant procedures or legislation.
The group has an equal opportunities policy and is committed to the principles within the policy in respect of all stakeholders. The group has built, and continues to grow, the business on a reputation for delivering excellent customer service. The group, through the senior management team and employees, strives continuously to improve in every aspect of the products and services it provides, for the mutual benefit of all stakeholders.
The group enjoys good relationships with suppliers in relation to credit arrangements and takes a firm approach to debtor management. Payment terms reduce the risk to the business whilst the process for debt collection minimises the risk of non-payments. The directors have overall responsibility for delivering the group’s strategy and values and for ensuring high standards of governance. The primary aim of the directors is to promote the long-term sustainable success of the group to generate benefit for the stakeholders
Strong customer relationships and a reputation for delivering great customer service will provide a springboard for continued growth with existing and new customers. Our increased capability and capacity positions us well for securing sustainable growth over the ensuing years.
The experienced team, along with the supportive shareholders will continue to drive the business through 2020 and beyond. A strong balance sheet and cash position means the business is in the perfect position to build on the success of past years.
Business investment and improvement plans will continue to further enhance health and safety culture, improve the client experience, and develop our people and systems to provide greater efficiencies for the benefit of all stakeholders.
The directors are very confident for the future of the business.
On behalf of the board
The directors present their annual report and financial statements for the year ended 30 June 2023.
The results for the year are set out on page 13.
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
We have followed the 2019 HM Government Environmental Reporting Guidelines. We have also used the GHG Reporting Protocol – Corporate Standard and have used the 2022/23 UK Government’s Conversion Factors for Company Reporting.
Utilities
Invoices from electricity and natural gas suppliers were provided, with energy consumption expressed in kilowatt hours. Emissions were calculated using the average UK mix.
Transport
Fuel consumption by company owned vehicles is recorded by fuel cards, expressed in litres.
Energy consumption and emissions were calculated using the average forecourt mineral blend of fuels.
For rental vehicles the engine size and mileage was recorded. Vehicles were grouped by engine size and fuel type according reporting guidance in order to estimate emissions, which in turn was converted to energy consumption in kilowatt hours. For combustion engines the average forecourt mineral blend was used and for electric vehicles the average UK generation mix was used.
Fugitive Emissions
Where air conditioning repairs included replacement of escaped refrigerant gasses, invoices from maintenance contractors were provided, expressing the type of refrigerant used and quantity in kilograms. All emissions have been converted and expressed as its carbon dioxide equivalent.
The chosen intensity measurement ratio is total gross emissions in metric tonnes CO2e per full-time employee, a recommended ratio for the sector.
Future strategy surrounds the continuous look out for efficiencies to be made within the production processes.
These include:
- Greater power savings by the shutting down of key production processes when they are in standby mode and the conversion of Core lines to more efficient drive systems. For example, DC to AC power on Lines 1512 and 1513 is planned to be rolled out across all Core production lines over time.
- Core vessel management has been reviewed and shorter times (electrical savings) are to be used without degradation in product quality.
- Greater control on the usage of gas heating across the site where older gas lines have been removed and more efficient electrical systems installed for personnel welfare.
- Finally following the Management Review 2023, an ambitious 1.5 % Carbon reduction has been agreed to continue to aim of a minimum certification level of C by 2030.
After performing their assessment and making appropriate enquiries, the directors have a reasonable expectation that the group will remain a going concern for the foreseeable future and accordingly, the financial statements have been prepared on a going concern basis. The results and conclusions of the going concern assessment are described in more detail in note 1 of the financial statements.
We have audited the financial statements of Standard Cableteam UK Limited (the 'parent company') and its subsidiaries (the 'group') for the year ended 30 June 2023 which comprise the group profit and loss account, the group statement of comprehensive income, the group balance sheet, the company balance sheet, the group statement of changes in equity, the company statement of changes in equity, the group statement of cash flows 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).
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the group and parent 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 group's and parent 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 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.
In the light of the knowledge and understanding of the group and the parent company and their 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 by the parent company, or returns adequate for our audit have not been received from branches not visited by us; or
the parent company 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.
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 parent 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 parent company or to cease operations, or have no realistic alternative but to do so.
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 specific procedures for this engagement and the extent to which these are capable of detecting irregularities, including fraud, are detailed below:
Enquiries with management about any known or suspected instances of non-compliance with laws and regulations;
Enquires with management about any known or suspected instances of fraud;
Examination of journal entries and other adjustments to test for appropriateness and identify any instances of management override of controls;
Auditing the risk of fraud and management override of revenue by incorporating data analytics into our sampling of source entries and testing specific transactions to determine the completeness of revenue, and
Review of legal and professional expenditure to identify any evidence of ongoing litigation or enquiries.
Because of the field in which the client operates we identified that employment law, health and safety legislation and compliance with the UK Companies Act are the areas most likely to have a material impact on the financial statements.
Owing to the inherent limitations of an audit, there is an unavoidable risk that some material misstatements in the financial statements may not be detected, even though the audit is properly planned and performed in accordance with the ISAs (UK). For instance, the further removed non-compliance is from the events and transactions reflected in the financial statements, the less likely the auditor is to become aware of it or to recognise the non-compliance.
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.
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.
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 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.
As permitted by s408 Companies Act 2006, the company has not presented its own profit and loss account and related notes. The company’s profit for the year was £1,241 (2022 - £9,703 loss).
Standard Cableteam UK Limited (“the company”) is a private limited company domiciled and incorporated in England and Wales. The registered office is .
The group consists of Standard Cableteam UK Limited and all of its subsidiaries.
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.
The 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 for parent company information presented within the consolidated financial statements:
Section 7 ‘Statement of Cash Flows’: Presentation of a statement of cash flow and related notes and disclosures;
Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instrument Issues: Interest income/expense and net gains/losses for financial instruments not measured at fair value; basis of determining fair values; details of collateral, loan defaults or breaches, details of hedges, hedging fair value changes recognised in profit or loss and in other comprehensive income;
Section 33 ‘Related Party Disclosures’: Compensation for key management personnel.
The consolidated group financial statements consist of the financial statements of the parent company Standard Cableteam UK Limited together with all entities controlled by the parent company (its subsidiaries) and the group’s share of its interests in joint ventures and associates.
All financial statements are made up to 30 June 2023. Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with those used by other members of the group.
All intra-group transactions, balances and unrealised gains on transactions between group companies are eliminated on consolidation. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.
Subsidiaries are consolidated in the group’s financial statements from the date that control commences until the date that control ceases.
As with most businesses, at the date of approval of the financial statements, the group has been recovering from the effects of the Covid-19 pandemic. Currently 3 things that we are assessing on a regular basis is are:
War in Ukraine – this is having a bigger impact than Covid-19 has done. Shortages in supplies of certain raw materials is driving higher prices. Also, sanctions placed by the UK government with Russia is making it difficult for our suppliers to source materials. We have been comforted by our suppliers that they have alternative supplies in place, albeit at a slightly higher costs, but supply will continue.
Energy Costs – as the country is feeling the pressure from wholesalers increasing energy costs, and seeing large numbers of ‘smaller’ energy companies not being able to survive. We have been working closely with our brokers to ensure this does not have big impact on our costs, and manage our energy costs for us.
Inflation – this has increased 3 folds from 12 months ago. We are seeing that prices of not only raw materials, but transport, fuel, energy and commodity increasing. In order to minimize impact of inflation we are making some improvements on our production by driving efficiencies, and negotiating hard with our raw material suppliers to keep the prices down. Ultimately we are also negotiating with our customers, with whom we have long term contracts, to pass some of the increase over.
The directors have prepared detailed cashflow forecasts including assumptions on key contracts which have now come to fruition, these demonstrate that the company has sufficient cash resources to be able to withstand the future trading conditions arising due to the factors listed above, whilst being able to continue to meet its liabilities as they fall due and meet the financial covenant requirements for the 12 month period following approval of the accounts. The Hans Wilms Beteiligungs-GmbH group has also confirmed that it will provide financial support for the company for the 12 month period following the approval of the accounts.
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.
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 recognised in the profit and loss account.
Assets in the course of construction are not depreciated as they have no been brought into use.
Equity investments are measured at fair value through profit or loss, except for those equity investments that are not publicly traded and whose fair value cannot otherwise be measured reliably, which are recognised at cost less impairment until a reliable measure of fair value becomes available.
In the parent company financial statements, investments in subsidiaries, associates and jointly controlled entities are initially measured at cost and subsequently measured at cost less any accumulated impairment losses.
A subsidiary is an entity controlled by the group. Control is the power to govern the financial and operating policies of the entity so as to obtain benefits from its activities.
At each reporting period end date, the group reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the company estimates the recoverable amount of the cash-generating unit to which the asset belongs.
The carrying amount of the investments accounted for using the equity method is tested for impairment as a single asset. Any goodwill included in the carrying amount of the investment is not tested separately for impairment.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.
The group 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 group's balance sheet when the group becomes party to the contractual provisions of the instrument.
Financial assets and liabilities are offset and the net amounts presented in the financial statements when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.
Basic financial assets, 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, 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.
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.
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the group 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.
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 group after deducting all of its 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.
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.
Financial liabilities are derecognised when the group's contractual obligations expire or are discharged or cancelled.
Equity instruments issued by the group 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 group.
The tax expense represents the sum of the tax currently payable and deferred 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 group’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.
Deferred tax liabilities are generally recognised for all timing differences and deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Such assets and liabilities are not recognised if the timing difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.
The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the profit and loss account, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset if, and only if, there is a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.
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.
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
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 leased asset are consumed.
Government grants are recognised at the fair value of the asset received or receivable when there is reasonable assurance that the grant conditions will be met and the grants will be received.
A grant that specifies performance conditions is recognised in income when the performance conditions are met. Where a grant does not specify performance conditions it is recognised in income when the proceeds are received or receivable. A grant received before the recognition criteria are satisfied is recognised as a liability.
In the application of the group’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.
The following judgements (apart from those involving estimates) have had the most significant effect on amounts recognised in the financial statements.
The group manufactures and buys copper and fibre cable. It is necessary to consider the recoverability of the cost of inventory and the associated provisioning required. When calculating the inventory provision, management considers stock not sold within the last 12 months, stock over 12 months old, short lengths and stock for which the company has more than 12 months of cover.
Stock is stated at the lower of cost and estimated selling price less cost to complete and sell. Cost is determined on a standard cost basis and is reviewed periodically. The carrying value of stock at the year end is as disclosed in note 15.
The group shipped plant and machinery from overseas in the previous period from a fellow group undertaking. The exceptional costs incurred in that period relate to the costs to transport the plant and machinery to the group's premises.
The average monthly number of persons (including directors) employed by the group and company during the year was:
Their aggregate remuneration comprised:
The number of directors for whom retirement benefits are accruing under defined benefit schemes amounted to 1 (2022: 1).
The actual charge for the year can be reconciled to the expected (credit)/charge for the year based on the profit or loss and the standard rate of tax as follows:
In March 2021 the Chancellor confirmed, in the budget, an increase in the corporation tax rate from 19% to 25%. The Finance Bill 2021 had its third reading on 24 May 2021 and is now considered substantively enacted. The timing differences expected to reverse on or after 1 April 2023 have been accounted for at 25%.
Details of the company's subsidiaries at 30 June 2023 are as follows:
The bank loans are secured by a debenture over all of the company's assets and undertaking as well as fixed and floating charges over the property at Ashenhurst Works, Blackley, which is owned by HW Real Estate UK Ltd.
The following are the major deferred tax liabilities and assets recognised by the group and company, and movements thereon:
A defined contribution pension scheme is operated for all qualifying employees. The assets of the scheme are held separately from those of the group in an independently administered fund.
There are unlimited cross company guarantees on bank borrowing facilities and loans between British Cables Company Limited, HW Real Estate UK Ltd and Standard Cableteam UK Limited.
The potential liability at 30 June 2023 for the group under this guarantee is £2,050,000.
Included within other creditors are amounts advances under invoice financing arrangements of £3,373,372 (2022: £4,177,350). The facility within other creditors is secured by a charge over the company's book debts.
At the reporting end date the group had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:
Amounts contracted for but not provided in the financial statements:
During the year the group entered into the following transactions with related parties:
The following amounts were outstanding at the reporting end date:
The company has taken advantage of the disclosure exemption relating to section 33.1A of the standard with regards to the requirement of disclosing transactions with fellow group entities.
The company is a wholly owned subsidiary of Standard Cableteam Spain S.L. The directors consider that the ultimate parent undertaking of this company is Hans Wilms Beteiligungs GmbH.