Company registration number 00707502 (England and Wales)
P & B METAL COMPONENTS LIMITED AND SUBSIDIARY UNDERTAKINGS
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MAY 2023
Tavistock House South
Tavistock Square
Rayner Essex LLP
London
Chartered Accountants
WC1H 9LG
P & B METAL COMPONENTS LIMITED AND SUBSIDIARY UNDERTAKINGS
COMPANY INFORMATION
Directors
J Bushell
J Howard
B J Kendrick
G Bartlett
S Mills
P Hemming
(Appointed 30 August 2022)
Company number
00707502
Registered office
Acres Hill Lane
Sheffield
South Yorkshire
S9 4LR
Auditor
Rayner Essex LLP
Tavistock House South
Tavistock Square
London
WC1H 9LG
Business address
Acres Hill Lane
Sheffield
South Yorkshire
S9 4LR
Bankers
HSBC Bank Plc
Global House
High Street
Crawley
West Sussex
RH10 1DL
P & B METAL COMPONENTS LIMITED AND SUBSIDIARY UNDERTAKINGS
CONTENTS
Page
Strategic report
1 - 2
Directors' report
3 - 4
Independent auditor's report
5 - 7
Income statement
8
Group statement of comprehensive income
9
Group statement of financial position
10
Company statement of financial position
11 - 12
Group statement of changes in equity
13 - 14
Company statement of changes in equity
15
Group statement of cash flows
16
Notes to the financial statements
17 - 46
P & B METAL COMPONENTS LIMITED AND SUBSIDIARY UNDERTAKINGS
STRATEGIC REPORT
FOR THE YEAR ENDED 31 MAY 2023
- 1 -

The directors present the strategic report for the year ended 31 May 2023.

Fair review of the business
The Group continues to enjoy a good reputation for the high-quality components it manufactures. The Group has strong working relationships with its existing customers and is looking to strengthen relationships with those customers combined with selective new business opportunities.
Group revenues declined by 5% to £21,517,112 (2022: £22,749,559) and Profit before Tax increased to £1,160,248 (2022: £663,205) in the year to 31 May 2023. The first half of FY23 saw strong output but towards the second half of the financial year the Group witnessed a reduction in demand from some customers. A number of reasons were cited including post Covid overstocking, the increase of energy prices of European suppliers due to the conflict in Ukraine, increased interest rates and some customers dual sourcing to reduce risk in the supply chain.
The subsidiary company P & B Metal Components (Asia) Shd. Bhd. continued to develop in line with expectations by building its customer base locally and in the overall Asian market. Turnover increased in the year and the company achieved a profit before tax in the year to 31 May 2023. The Board are pleased to also note a reduction of £313,441 in the year of the amount due from the subsidiary and projections for future years indicate a gradual repayment of the debt. No further impairment provision has been made in the current year against the carrying value of the investment.
During the final quarter of FY23 the Group undertook a rightsizing exercise to react and deal with the operational challenges due to market demand. The Group is now appropriately staffed to deliver the FY24 budget. The Group strategy is to remain cash generative and profitable.
In February 2023, the Group instructed an independent RICS valuer to undertake a professional valuation of the freehold property at Acres Hill Lane in Sheffield. The freehold property was valued at £3,750,000 which resulted in an increase in valuation of £768,114 which has been reflected in Other Comprehensive Income.
During the year, the company continued to work closely with the administrator and trustees of its defined benefit pension scheme.
At the year end date results of a review undertaken by Isio (formerly Deloitte) in respect of the Deloitte Master Plan defined benefit pension scheme indicated a deficit of £6,302,330 in accordance with the provisions of FRS 102. The FRS 102 valuation requires the discount rate to be set using corporate bonds which differs to a triennial review where the discount rate is based in the expected returns of the scheme assets which have historically been higher. The FRS 102 deficit at the year end date of £6,302,330 will be measured against the results of the next triennial review which falls due on 31 March 2024. Annual contributions of £200,000 were paid to the scheme in the year in respect of the funding shortfall and £300,000 in respect of administration expenses and levies as agreed under the Recovery Plan dated 1 June 2022.
The directors draw attention to recent appointments to the Board as noted in the Directors' Report on page 3.
Principal risks and uncertainties

The directors continue to monitor KPIs to mitigate risk and identify new opportunities as they arise. The Group has established a risk and financial management framework whose primary objectives are to protect the Group from events that hinder the achievement of the Group's performance objectives.

 

Competitive risks

The objectives aim to limit undue counterparty exposure, ensure sufficient working capital exists and monitor the management of risk at a business unit level.

 

Foreign currency risk

The Group is exposed to foreign exchange risk from commercial transactions in foreign currencies, recognised assets and liabilities, and loans between Group undertakings with different functional currencies. We manage foreign currency risk by constantly reviewing our exposure to limit the adverse effects of such risks on the financial performance of the Group and we use forward foreign exchange contracts to hedge certain future commercial transactions denoted in US dollars.

P & B METAL COMPONENTS LIMITED AND SUBSIDIARY UNDERTAKINGS
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2023
- 2 -

Exposure to credit, liquidity and cash flow risk

Credit risk is the risk that one party to a financial instrument will cause a financial loss for that other party by failing to discharge an obligation. Our policies are aimed at minimising such losses.

 

Liquidity risk is the risk that the group will encounter difficulty in meeting obligations associated with financial liabilities. We aim to mitigate liquidity risk by managing net cash generation within our operations.

 

Cash flow risk is the risk that inflows and outflows of cash and cash equivalents will not be sufficient to finance the day-to-day operations. We manage cash flow risk by careful management of terms with customers and suppliers and by active updates of trading performance with trade insurers.

Development and performance

Coronavirus and the COVID-19 pandemic

The business continues to monitor the situation through its supply chain and is ready to introduce restrictions if needed.

 

Conflict in Ukraine

Increased energy prices in Europe due to the conflict have led to raw material price increase which have been partially mitigated through the development of new suppliers for critical raw materials.

Key performance indicators
The directors use a number of measures, both financial and non-financial to monitor and benchmark the performance of the Group. They regard the following as the key financial indicators of performance:-
Operating profit (before depreciation, amortisation and exceptional items) - measuring the profits generated by the group.
Net cash flows from operating activities - measuring the performance in translating operating profit into cash flow through management of working capital.
Operating profit/(loss) before
Net cash inflow/(outflow)
Year Ended
depreciation, amortisation & exceptional items
from operating activities
£
£
31 May 2023
1,746,505
2,946,588
31 May 2022 (as restated)
1,520,772
1,683,461
Throughout the year the directors continued to examine more deeply the business' cost base, its capacity, capability and customer profitability to deliver a turnaround strategy for the Group. This included targeted price increases, exiting of loss-making business in declining markets and disciplined debt management.
Other performance indicators

The key non-financial indicators are associated with the group’s ability to maintain its existing customer base and to attract new customers.

On behalf of the board

B J Kendrick
Director
4 October 2023
P & B METAL COMPONENTS LIMITED AND SUBSIDIARY UNDERTAKINGS
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 MAY 2023
- 3 -

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

Principal activities

The principal activity of the group continued to be that of the manufacture of precious and base metal components.

Results and dividends

The results for the year are set out on page 8.

No ordinary dividends were paid. The directors do not recommend payment of a final dividend.

Directors

The directors who held office during the year and up to the date of signature of the financial statements were as follows:

J Bushell
J Howard
B J Kendrick
G Bartlett
S Mills
A Hall
(Appointed 1 August 2022 and resigned 29 September 2023)
P Hemming
(Appointed 30 August 2022)
Auditor

In accordance with the company's articles, a resolution proposing that Rayner Essex LLP be reappointed as auditor of the group will be put at a General Meeting.

Statement of directors' responsibilities

The directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable law and regulations.

 

Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the group and company, and of the profit or loss of the group for that period. In preparing these financial statements, the directors are required to:

 

 

The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the group’s and company’s transactions and disclose with reasonable accuracy at any time the financial position of the group and 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 group and company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

P & B METAL COMPONENTS LIMITED AND SUBSIDIARY UNDERTAKINGS
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2023
- 4 -
Statement of disclosure to auditor

So far as each person who was a director at the date of approving this report is aware, there is no relevant audit information of which the auditor of the company is unaware. Additionally, the directors individually have taken all the necessary steps that they ought to have taken as directors in order to make themselves aware of all relevant audit information and to establish that the auditor of the company is aware of that information.

Medium-sized companies exemption

This report has been prepared in accordance with the provisions applicable to companies entitled to the small companies exemption.

On behalf of the board
B J Kendrick
Director
4 October 2023
P & B METAL COMPONENTS LIMITED AND SUBSIDIARY UNDERTAKINGS
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF P & B METAL COMPONENTS LIMITED AND SUBSIDIARY UNDERTAKINGS
- 5 -
Opinion

We have audited the financial statements of P & B Metal Components Limited (the 'parent company') and its subsidiaries (the 'group') for the year ended 31 May 2023 which comprise the group income statement, the group statement of comprehensive income, the group statement of financial position, the company statement of financial position, 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).

In our opinion the financial statements:

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.

P & B METAL COMPONENTS LIMITED AND SUBSIDIARY UNDERTAKINGS
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF P & B METAL COMPONENTS LIMITED AND SUBSIDIARY UNDERTAKINGS
- 6 -

Opinions on other matters prescribed by the Companies Act 2006

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

Matters on which we are required to report by exception

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:

Responsibilities of directors

As explained more fully in the directors' responsibilities statement, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the directors are responsible for assessing the 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.

Auditor's responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below.

The extent to which the audit was considered capable of detecting irregularities including fraud

Our approach to identifying and assessing the risks of material misstatement in respect of irregularities, including fraud and non-compliance with laws and regulations, was as follows:

 

P & B METAL COMPONENTS LIMITED AND SUBSIDIARY UNDERTAKINGS
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF P & B METAL COMPONENTS LIMITED AND SUBSIDIARY UNDERTAKINGS
- 7 -

We assessed the susceptibility of the company’s financial statements to material misstatement, including obtaining an understanding of how fraud might occur, by:

 

To address the risk of fraud through management bias and override of controls, we:

 

In response to the risk of irregularities and non-compliance with laws and regulations, we designed procedures which included, but were not limited to:

 

 

There are inherent limitations in our audit procedures described above. The more removed that laws and regulations are from financial transactions, the less likely it is that we would become aware of non-compliance. Auditing standards also limit the audit procedures required to identify non-compliance with laws and regulations to enquiry of the directors and other management and the inspection of regulatory and legal correspondence, if any.

 

Material misstatements that arise due to fraud can be harder to detect than those that arise from error as they may involve deliberate concealment or collusion.

A further description of our responsibilities is available on the Financial Reporting Council’s website at: https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.

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.

Simon Essex FCA (Senior Statutory Auditor)
For and on behalf of Rayner Essex LLP
5 October 2023
Chartered Accountants
Statutory Auditor
Tavistock House South
Tavistock Square
London
WC1H 9LG
P & B METAL COMPONENTS LIMITED AND SUBSIDIARY UNDERTAKINGS
GROUP INCOME STATEMENT
FOR THE YEAR ENDED 31 MAY 2023
- 8 -
2023
2022
as restated
Notes
£
£
Turnover
3
21,517,112
22,749,559
Cost of sales
(15,401,555)
(16,541,968)
Gross profit
6,115,557
6,207,591
Distribution costs
(589,499)
(728,302)
Administrative expenses
(4,132,965)
(4,272,582)
Other operating income
-
0
4,284
Provision for onerous contracts
4
-
0
(221,285)
Operating profit
5
1,393,093
989,706
Interest receivable and similar income
9
680,216
397,382
Interest payable and similar expenses
10
(913,061)
(723,883)
Profit before taxation
1,160,248
663,205
Tax on profit
11
(1,138)
491,983
Profit for the financial year
1,159,110
1,155,188
Profit for the financial year is all attributable to the owners of the parent company.

The income statement has been prepared on the basis that all operations are continuing operations.

P & B METAL COMPONENTS LIMITED AND SUBSIDIARY UNDERTAKINGS
GROUP STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 MAY 2023
- 9 -
2023
2022
as restated
£
£
Profit for the year
1,159,110
1,155,188
Other comprehensive income
Revaluation of tangible fixed assets
768,114
653,263
Actuarial (loss)/gain on defined benefit pension schemes
(251,000)
2,751,000
Currency translation gain/(loss) taken to retained earnings
62,854
(138,892)
Tax relating to other comprehensive income
54,000
(418,250)
Other comprehensive income for the year
633,968
2,847,121
Total comprehensive income for the year
1,793,078
4,002,309
Total comprehensive income for the year is all attributable to the owners of the parent company.
P & B METAL COMPONENTS LIMITED AND SUBSIDIARY UNDERTAKINGS
GROUP STATEMENT OF FINANCIAL POSITION
AS AT 31 MAY 2023
31 May 2023
- 10 -
2023
2022
as restated
Notes
£
£
£
£
Fixed assets
Intangible assets
13
4,276
501
Tangible assets
14
6,120,139
5,535,477
6,124,415
5,535,978
Current assets
Stocks
17
2,995,510
4,233,658
Debtors - deferred tax
24
1,575,500
1,521,500
Debtors - other
18
4,222,737
5,751,729
Cash at bank and in hand
1,909,974
1,303,656
10,703,721
12,810,543
Creditors: amounts falling due within one year
19
(4,964,483)
(7,768,620)
Net current assets
5,739,238
5,041,923
Total assets less current liabilities
11,863,653
10,577,901
Creditors: amounts falling due after more than one year
20
(114,655)
(591,026)
Provisions for liabilities
23
-
0
(247,285)
Net assets excluding pension liability
11,748,998
9,739,590
Defined benefit pension liability
25
(6,302,330)
(6,086,000)
Net assets
5,446,668
3,653,590
Capital and reserves
Called up share capital
26
736,359
736,359
Share premium account
619,759
619,759
Revaluation reserve
27
1,342,411
653,263
Other reserves
71,735
71,735
Profit and loss reserves
2,676,404
1,572,474
Total equity
5,446,668
3,653,590
The financial statements were approved by the board of directors and authorised for issue on 4 October 2023 and are signed on its behalf by:
04 October 2023
B J Kendrick
S Mills
Director
Director
P & B METAL COMPONENTS LIMITED AND SUBSIDIARY UNDERTAKINGS
COMPANY STATEMENT OF FINANCIAL POSITION
AS AT 31 MAY 2023
31 May 2023
- 11 -
2023
2022
as restated
Notes
£
£
£
£
Fixed assets
Intangible assets
13
4,276
501
Tangible assets
14
6,023,065
5,424,783
Investments
15
198,174
198,174
6,225,515
5,623,458
Current assets
Stocks
17
2,483,811
3,443,408
Debtors - deferred tax
24
1,575,500
1,521,500
Debtors - other
18
6,873,830
8,511,480
Cash at bank and in hand
1,118,744
1,124,054
12,051,885
14,600,442
Creditors: amounts falling due within one year
19
(4,915,181)
(7,571,149)
Net current assets
7,136,704
7,029,293
Total assets less current liabilities
13,362,219
12,652,751
Creditors: amounts falling due after more than one year
20
(102,954)
(574,108)
Provisions for liabilities
Provisions
23
-
0
247,285
-
(247,285)
Net assets excluding pension liability
13,259,265
11,831,358
Defined benefit pension liability
25
(6,302,330)
(6,086,000)
Net assets
6,956,935
5,745,358
Capital and reserves
Called up share capital
26
736,359
736,359
Share premium account
619,759
619,759
Revaluation reserve
27
1,342,411
653,263
Profit and loss reserves
4,258,406
3,735,977
Total equity
6,956,935
5,745,358

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 £640,463 (2022: £524,010) before other comprehensive income of £571,114 (2022: £2,986,013) in the year.

P & B METAL COMPONENTS LIMITED AND SUBSIDIARY UNDERTAKINGS
COMPANY STATEMENT OF FINANCIAL POSITION (CONTINUED)
AS AT 31 MAY 2023
31 May 2023
- 12 -
The financial statements were approved by the board of directors and authorised for issue on 4 October 2023 and are signed on its behalf by:
04 October 2023
B J Kendrick
S Mills
Director
Director
Company registration number 00707502 (England and Wales)
P & B METAL COMPONENTS LIMITED AND SUBSIDIARY UNDERTAKINGS
GROUP STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 MAY 2023
- 13 -
Share capital
Share premium account
Revaluation reserve
Other reserves
Profit and loss reserves
Total
£
£
£
£
£
£
As restated for the period ended 31 May 2022:
Balance at 1 June 2021
736,359
619,759
-
0
71,735
(1,776,572)
(348,719)
Year ended 31 May 2022:
Profit for the year
-
-
-
-
1,155,188
1,155,188
Other comprehensive income:
Revaluation of tangible fixed assets
-
-
653,263
-
-
653,263
Actuarial gains on defined benefit plans
-
-
-
-
2,751,000
2,751,000
Currency translation differences
-
-
-
-
(138,892)
(138,892)
Tax relating to other comprehensive income
-
-
-
0
-
(418,250)
(418,250)
Total comprehensive income for the year
-
-
653,263
-
3,349,046
4,002,309
Balance at 31 May 2022
736,359
619,759
653,263
71,735
1,572,474
3,653,590
P & B METAL COMPONENTS LIMITED AND SUBSIDIARY UNDERTAKINGS
GROUP STATEMENT OF CHANGES IN EQUITY (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2023
Share capital
Share premium account
Revaluation reserve
Other reserves
Profit and loss reserves
Total
£
£
£
£
£
£
- 14 -
Year ended 31 May 2023:
Profit for the year
-
-
-
-
1,159,110
1,159,110
Other comprehensive income:
Revaluation of tangible fixed assets
-
-
768,114
-
-
768,114
Actuarial gains on defined benefit plans
-
-
-
-
(251,000)
(251,000)
Currency translation differences
-
-
-
-
62,854
62,854
Tax relating to other comprehensive income
-
-
-
0
-
54,000
54,000
Total comprehensive income for the year
-
-
768,114
-
1,024,964
1,793,078
Transfers
-
-
(78,966)
-
78,966
-
Balance at 31 May 2023
736,359
619,759
1,342,411
71,735
2,676,404
5,446,668
P & B METAL COMPONENTS LIMITED AND SUBSIDIARY UNDERTAKINGS
COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 MAY 2023
- 15 -
Share capital
Share premium account
Revaluation reserve
Profit and loss reserves
Total
£
£
£
£
£
As restated for the period ended 31 May 2022:
Balance at 1 June 2021
736,359
619,759
-
0
879,217
2,235,335
Year ended 31 May 2022:
Profit for the year
-
-
-
524,010
524,010
Other comprehensive income:
Revaluation of tangible fixed assets
-
-
653,263
-
653,263
Actuarial gains on defined benefit plans
-
-
-
2,751,000
2,751,000
Tax relating to other comprehensive income
-
-
-
0
(418,250)
(418,250)
Total comprehensive income for the year
-
-
653,263
2,856,760
3,510,023
Balance at 31 May 2022
736,359
619,759
653,263
3,735,977
5,745,358
Year ended 31 May 2023:
Profit for the year
-
-
-
640,463
640,463
Other comprehensive income:
Revaluation of tangible fixed assets
-
-
768,114
-
768,114
Actuarial gains on defined benefit plans
-
-
-
(251,000)
(251,000)
Tax relating to other comprehensive income
-
-
-
0
54,000
54,000
Total comprehensive income for the year
-
-
768,114
443,463
1,211,577
Transfers
-
-
(78,966)
78,966
-
Balance at 31 May 2023
736,359
619,759
1,342,411
4,258,406
6,956,935
P & B METAL COMPONENTS LIMITED AND SUBSIDIARY UNDERTAKINGS
GROUP STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 MAY 2023
- 16 -
2023
2022
as restated
Notes
£
£
£
£
Cash flows from operating activities
Cash generated from operations
31
3,031,322
1,816,675
Interest paid
(84,061)
(132,883)
Income taxes paid
(673)
(331)
Net cash inflow from operating activities
2,946,588
1,683,461
Investing activities
Purchase of intangible assets
(4,500)
-
Purchase of tangible fixed assets
(203,864)
(69,503)
Proceeds from disposal of tangible fixed assets
31,426
45,292
Contributions to defined benefit pension scheme
(578,670)
(275,000)
Interest received
10,216
382
Net cash used in investing activities
(745,392)
(298,829)
Financing activities
Repayment of bank loans
(366,667)
(366,666)
Payment of finance leases obligations
(134,523)
(150,181)
Invoice discounting
(1,093,688)
(725,222)
Net cash used in financing activities
(1,594,878)
(1,242,069)
Net increase in cash and cash equivalents
606,318
142,563
Cash and cash equivalents at beginning of year
1,303,656
1,161,093
Cash and cash equivalents at end of year
1,909,974
1,303,656
P & B METAL COMPONENTS LIMITED AND SUBSIDIARY UNDERTAKINGS
NOTES TO THE GROUP FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MAY 2023
- 17 -
1
Accounting policies
Company information

P & B Metal Components Limited (“the company”) is a private limited company domiciled and incorporated in England and Wales. The registered office is Acres Hill Lane, Sheffield, South Yorkshire, S9 4LR. The principal place of business is Acres Hill Lane, Sheffield, South Yorkshire, S9 4LR.

 

The group consists of P & B Metal Components Limited and all of its subsidiaries.

1.1
Accounting convention

These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006.

The financial statements are prepared in sterling, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £.

The financial statements have been prepared under the historical cost convention, modified to include certain financial instruments at fair value. 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:

 

 

1.2
Business combinations

In the parent company financial statements, the cost of a business combination is the fair value at the acquisition date of the assets given, equity instruments issued and liabilities incurred or assumed, plus costs directly attributable to the business combination. The excess of the cost of a business combination over the fair value of the identifiable assets, liabilities and contingent liabilities acquired is recognised as goodwill. The cost of the combination includes the estimated amount of contingent consideration that is probable and can be measured reliably, and is adjusted for changes in contingent consideration after the acquisition date. Provisional fair values recognised for business combinations in previous periods are adjusted retrospectively for final fair values determined in the 12 months following the acquisition date. Investments in subsidiaries, joint ventures and associates are accounted for at cost less impairment.

 

Deferred tax is recognised on differences between the value of assets (other than goodwill) and liabilities recognised in a business combination accounted for using the purchase method and the amounts that can be deducted or assessed for tax, considering the manner in which the carrying amount of the asset or liability is expected to be recovered or settled. The deferred tax recognised is adjusted against goodwill or negative goodwill.

P & B METAL COMPONENTS LIMITED AND SUBSIDIARY UNDERTAKINGS
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2023
1
Accounting policies
(Continued)
- 18 -
1.3
Basis of consolidation

The consolidated group financial statements consist of the financial statements of the parent company P & B Metal Components 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 31 May 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.

 

The financial statements of the subsidiaries are drawn up using the currency of the primary economic environment in which they operate (“functional currency”). The consolidated financial statements are presented in sterling, the functional currency of the parent company and hence the currency of presentation of the consolidated financial statements of the group.

The procedures for translation of the financial statements expressed in foreign currency other than sterling are the following:

 

1.4
Going concern

These financial statements are prepared on a going concern basis. As at 31 May 2023, the Group generated a net profit of £1,159,110 before other comprehensive income of £633,968 resulting in a positive movement in reserves of £1,793,078 in the year. The Directors have updated the three-year plan and have a reasonable expectation that the Group will continue in operational existence for the foreseeable future.

 

During the year, the Directors prepared forecasts and projections supporting the company’s ability to continue trading. They considered key risks and sensitivities to the FY24 budget and assessed their possible impact on cash flows.

 

The forecasts and projections that have been prepared include a base forecast as well as sensitised downside scenarios for the business. These demonstrate the ability of the company to continue trading within the bank facilities together with an agreed extended payment plan with regard to the settlement of the pension deficit, shown in note 25 to the accounts.

 

As at 31 May 2023, the Group’s assets exceeded the total liabilities by £5,446,668 after taking into account the defined benefit pension liability amounting to £6,302,330.

 

After considering the factors described above the Directors are confident that with the ongoing support of its existing banking facilities the Group will continue to have access to adequate resources in order to continue in operational existence for the foreseeable future.

 

The financial statements do not include any adjustment that would result from the withdrawal of the continued support described above.

 

P & B METAL COMPONENTS LIMITED AND SUBSIDIARY UNDERTAKINGS
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2023
1
Accounting policies
(Continued)
- 19 -
1.5
Turnover

Turnover is recognised at the fair value of the consideration received or receivable for goods and services provided in the normal course of business, and is shown net of VAT and other sales related taxes. The fair value of consideration takes into account trade discounts, settlement discounts and volume rebates.

 

Revenue from the sale of goods is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer (usually on dispatch of the goods), the amount of revenue can be measured reliably, it is probable that the economic benefits associated with the transaction will flow to the entity and the costs incurred or to be incurred in respect of the transaction can be measured reliably.

1.6
Intangible fixed assets other than goodwill

Intangible assets acquired separately from a business are recognised at cost and are subsequently measured at cost less accumulated amortisation and accumulated impairment losses.

 

Intangible assets acquired on business combinations are recognised separately from goodwill at the acquisition date where it is probable that the expected future economic benefits that are attributable to the asset will flow to the entity and the fair value of the asset can be measured reliably; the intangible asset arises from contractual or other legal rights; and the intangible asset is separable from the entity.

Amortisation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:

Goodwill
20% straight line
1.7
Tangible fixed assets

Tangible fixed assets are initially measured at cost and subsequently measured at cost or valuation, net of depreciation and any impairment losses.

 

The revaluation model is applied to all items of property, plant and equipment in the same class of asset i.e. having similar nature, function or use in the business.

Depreciation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:

Land and buildings Freehold
Nil
Plant and machinery
10 - 20% reducing balance
Fixtures, fittings & equipment
15 - 33% reducing balance
Motor vehicles
25% reducing balance

Freehold property is stated in the statement of financial position at revalued amounts, being the fair value on the date of revaluation less any subsequent depreciation and impairment losses. Revaluations are performed with sufficient regularity such that the carrying amount does not differ materially from that with could be determined using fair values at the reporting end date.

 

No depreciation is charged on freehold property because the directors consider that the economic life and residual value of the property is such that the depreciation charge and accumulated depreciation would be immaterial. The company has a policy and practice of regular maintenance and repair of freehold property and the residual value of the property is regularly reviewed in order to identify any impairment which would be charged to the profit and loss account. No impairment was identified during the review conducted as at 31 May 2023.

P & B METAL COMPONENTS LIMITED AND SUBSIDIARY UNDERTAKINGS
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2023
1
Accounting policies
(Continued)
- 20 -

If an asset’s carrying amount is increased as a result of a revaluation, the increase shall be recognised in other comprehensive income and accumulated in equity. However, the increase shall be recognised in profit and loss to the extent that it reverses a revaluation decrease of the same asset previously recognised in profit or loss. The decrease of an asset’s carrying amount as a result of revaluation shall be recognised in other comprehensive income to the extent of any previously recognised revaluation increase accumulated in equity, in respect of that asset. If a revaluation decrease exceeds the accumulated revaluation gains accumulated in equity in respect of that asset, the excess shall be recognised in profit or loss. Any excess depreciation on revalued assets shall be transferred from other comprehensive income to profit or loss.

The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is credited or charged to the income statement.

1.8
Fixed asset investments

In the parent company financial statements, investments in subsidiaries are initially measured at cost and subsequently measured at cost less any accumulated impairment losses.The investments are assessed for impairment at each reporting date and any impairment losses or reversals of impairment losses are recognised immediately in the income statement in the separate financial statements of the company.

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.

1.9
Impairment of fixed assets

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 the income statement, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.

Recognised impairment losses are reversed if, and only if, the reasons for the impairment loss have ceased to apply. Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.

P & B METAL COMPONENTS LIMITED AND SUBSIDIARY UNDERTAKINGS
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2023
1
Accounting policies
(Continued)
- 21 -
1.10
Stocks

Stocks are stated at the lower of cost and estimated selling price less costs to complete and sell. Cost comprises direct materials and, where applicable, direct labour costs and those overheads that have been incurred in bringing the stocks to their present location and condition.

At each reporting date, an assessment is made for impairment. Any excess of the carrying amount of stocks over its estimated selling price less costs to complete and sell is recognised as an impairment loss in the income statement. Reversals of impairment losses are also recognised in the income statement.

1.11
Cash and cash equivalents

Cash and cash equivalents are basic financial assets and include cash in hand, deposits held at call with banks, other short-term liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities.

1.12
Financial instruments

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 statement of financial position 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

Basic financial assets, which include debtors and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised.

Other financial assets

Other financial assets, including investments in equity instruments which are not subsidiaries, associates or joint ventures, are initially measured at fair value, which is normally the transaction price. Such assets are subsequently carried at fair value and the changes in fair value are recognised in profit or loss, except that investments in equity instruments that are not publicly traded and whose fair values cannot be measured reliably are measured at cost less impairment.

Impairment of financial assets

Financial assets, other than those held at fair value through profit and loss, are assessed for indicators of impairment at each reporting end date.

 

Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected. If an asset is impaired, the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset’s original effective interest rate. The impairment loss is recognised in the income statement.

 

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 the income statement.

P & B METAL COMPONENTS LIMITED AND SUBSIDIARY UNDERTAKINGS
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2023
1
Accounting policies
(Continued)
- 22 -
Derecognition of financial assets

Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the 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.

Classification of financial liabilities

Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the group after deducting all of its liabilities.

Basic financial liabilities

Basic financial liabilities, including creditors, bank loans, loans from fellow group companies and preference shares that are classified as debt, are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future payments discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.

 

Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.

 

Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Amounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.

Other financial liabilities

Derivatives, including interest rate swaps and forward foreign exchange contracts, are not basic financial instruments. Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured at their fair value. Changes in the fair value of derivatives are recognised in profit or loss in finance costs or finance income as appropriate, unless hedge accounting is applied and the hedge is a cash flow hedge.

 

Debt instruments that do not meet the conditions in FRS 102 paragraph 11.9 are subsequently measured at fair value through profit or loss. Debt instruments may be designated as being measured at fair value through profit or loss to eliminate or reduce an accounting mismatch or if the instruments are measured and their performance evaluated on a fair value basis in accordance with a documented risk management or investment strategy.

Derecognition of financial liabilities

Financial liabilities are derecognised when the group's contractual obligations expire or are discharged or cancelled.

1.13
Equity instruments

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.

1.14
Taxation

The tax expense represents the sum of the tax currently payable and deferred tax.

P & B METAL COMPONENTS LIMITED AND SUBSIDIARY UNDERTAKINGS
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2023
1
Accounting policies
(Continued)
- 23 -
Current tax

The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the income statement 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

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 measured on an undiscounted basis, and at the tax rates that have been enacted or substantively enacted as at the reporting date that are expected to apply in the periods in which the asset or liability is settled. Deferred tax is charged or credited in the income statement, 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.

1.15
Provisions

Provisions are recognised when the group has a legal or constructive present obligation as a result of a past event, it is probable that the group will be required to settle that obligation and a reliable estimate can be made of the amount of the obligation.

 

The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the reporting end date, taking into account the risks and uncertainties surrounding the obligation. Where the effect of the time value of money is material, the amount expected to be required to settle the obligation is recognised at present value. When a provision is measured at present value, the unwinding of the discount is recognised as a finance cost in profit or loss in the period in which it arises.

1.16
Employee benefits

The costs of short-term employee benefits are recognised as a liability and an expense, unless those costs are required to be recognised as part of the cost of stock or fixed assets.

 

The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received.

 

Termination benefits are recognised immediately as an expense when the company is demonstrably committed to terminate the employment of an employee or to provide termination benefits.

P & B METAL COMPONENTS LIMITED AND SUBSIDIARY UNDERTAKINGS
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2023
1
Accounting policies
(Continued)
- 24 -
1.17
Retirement benefits
The company operates a defined contribution scheme for the benefit of its employees. Contributions payable are charged to the profit and loss account in the year they are payable.

The company also operates a defined benefit scheme for the benefit of its employees. Until 31 March 2006 the company operated this scheme with one other related company which required contributions to be made to a separately administered fund. During January 2006 a related company ceased to be part of the scheme when it was acquired by a third party. At that date the proportion of the Scheme deficit applicable to that company was quantified . This scheme was frozen to new members on 31 March 2006 and the scheme has been suspended from further pension accrual with all contribution members becoming 'Deferred Pensioners'. The latest information available regarding the scheme is provided in note 25 to the accounts.

The net interest element is determined by multiplying the net defined benefit liability by the discount rate, taking into account any changes in the net defined benefit liability during the period as a result of contribution and benefit payments. The net interest is recognised in the income statement as other finance revenue or cost.

 

Remeasurement changes comprise actuarial gains and losses, the effect of the asset ceiling and the return on the net defined benefit liability excluding amounts included in net interest. These are recognised immediately in other comprehensive income in the period in which they occur and are not reclassified to the income statement in subsequent periods.

The net defined benefit pension asset or liability in the balance sheet comprises the total for each plan of the present value of the defined benefit obligation (using a discount rate based on high quality corporate bonds), less the fair value of plan assets out of which the obligations are to be settled directly. Fair value is based on market price information, and in the case of quoted securities is the published bid price. The value of a net pension benefit asset is limited to the amount that may be recovered either through reduced contributions or agreed refunds from the scheme.

1.18
Leases

Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessees. All other leases are classified as operating leases.

 

Assets held under finance leases are recognised as assets at the lower of the assets fair value at the date of inception and the present value of the minimum lease payments. The related liability is included in the statement of financial position as a finance lease obligation. Lease payments are treated as consisting of capital and interest elements. The interest is charged to profit or loss so as to produce a constant periodic rate of interest on the remaining balance of the liability.

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.

1.19
Government grants

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.

P & B METAL COMPONENTS LIMITED AND SUBSIDIARY UNDERTAKINGS
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2023
1
Accounting policies
(Continued)
- 25 -
1.20
Foreign exchange

Monetary assets and liabilities denominated in foreign currencies are translated into sterling at the rates of exchange ruling at the balance sheet date. Transactions in foreign currencies are recorded at the rate ruling at the date of the transaction. Where exchange gains/losses result from the sale of foreign currency, they are taken to the profit and loss account. All other exchange differences are treated as unrealised gains/losses.

 

Exchange differences arising on monetary items that form part of the net investment in a foreign subsidiary are recognised in other comprehensive income and are not reclassified to the income statement.

1.21

Research and development

Research expenditure is written off to the income statement in the year in which it is incurred. Development expenditure is written off in the same way unless the directors are satisfied as to the technical, commercial and financial viability of individual projects. In this situation, the expenditure is deferred and amortised over the period during which the company is expected to benefit.

2
Judgements and key sources of estimation uncertainty

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.

Critical judgements

The following judgements (apart from those involving estimates) have had the most significant effect on amounts recognised in the financial statements.

Valuation of plant and machinery

The directors exercise a significant amount of judgement when valuing plant and machinery annually and use their extensive knowledge based on internal technical evaluation and experience with similar assets.

 

The valuation is also based on used price lists obtained from the company's main suppliers of plant and machinery for assets in a similar condition however a significant amount of judgement is required by the directors to assess the valuation of assets based on the used price lists obtained.

P & B METAL COMPONENTS LIMITED AND SUBSIDIARY UNDERTAKINGS
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2023
2
Judgements and key sources of estimation uncertainty
(Continued)
- 26 -
Key sources of estimation uncertainty

The estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are as follows.

Pension and other post-employment benefits

The cost of defined benefit pension plans and other post-employment medical benefits are determined using actuarial valuations. The actuarial valuation involves making assumptions about discount rates, future salary increases, mortality rates, future pension increases and the requirement to equalise members’ benefits for the effects of Guaranteed Minimum Pension (GMP). Due to the complexity of the valuation, the underlying assumptions and the long term nature of these plans, such estimates are subject to significant uncertainty.

 

In determining the appropriate discount rate, management considers the interest rates of corporate bonds in the respective currency with at least AA rating, with extrapolated maturities corresponding to the expected duration of the defined benefit obligation. The underlying bonds are further reviewed for quality, and those having excessive credit spreads are removed from the population bonds on which the discount rate is based, on the basis that they do not represent high quality bonds. The mortality rate is based on publicly available mortality tables. Future salary increases and pension increases are based on expected future inflation rates.

Impairment assessment on investments in subsidiaries

The group assesses the impairment of investments in subsidiaries whenever triggering events or changes in circumstances indicate that an investment may be impaired and carrying value may not be recoverable. The group measures the impairment based on a projected future cash flow of the subsidiary undertaking, including the underlying assumptions of sales growth rate and profitability estimated by the entities' internal management team. The group also takes into account market conditions and the relevant industry trends to ensure the reasonableness of such assumptions.

Deferred tax assets

Deferred tax assets are recognised for all unabsorbed tax losses and unutilised capital allowances to the extent that it is probable that taxable profit will be available against which the losses and capital allowances can be utilised. Significant judgement is required to determine the amount of deferred tax assets that can be recognised, based upon the likely timing and level of future taxable profits together with future tax planning strategies.

Provisions

Provisions are recognised at the statement of financial position date at management’s best estimate of the expenditure required to settle the present obligation. The carrying amounts of provisions are regularly reviewed and adjusted for new facts or changes in law, technology or financial markets.

 

Restructuring provision

A restructuring provision is measured at the best estimate of the expenditure required to settle the present obligation, taking into account the risks and uncertainties of the obligation and when the time value of money is material, discounting to present value. A restructuring provision includes only the direct expenditures arising from the restructuring, which are those that are necessarily entailed by the restructuring and not associated with the ongoing activities of the entity. The costs often incurred as part of a restructuring include employee termination benefits under a one-time termination plan, contract termination costs and costs to consolidate or close a site.

P & B METAL COMPONENTS LIMITED AND SUBSIDIARY UNDERTAKINGS
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2023
2
Judgements and key sources of estimation uncertainty
(Continued)
- 27 -

Onerous contract provision

An onerous contract provision is recognised when the unavoidable cost of meeting the obligations under the contract exceed the economic benefits expected to be received under it. The unavoidable cost under a contract is the lower of the cost of fulfilling the contract and any compensation or penalties arising from failure to fulfil it. The cost of fulfilling a contract comprises the costs that relate directly to the contract. Significant assumptions are used in making these calculations and changes in assumptions and future events could cause the value of these provisions to change.

 

Stock provision

At each reporting date, a review on slow moving and obsolete stock is made by the directors. Any excess of the carrying amount of the stock overs its estimated selling price is recognised as an impairment loss in the group income statement. The assessment of stock for impairment requires judgement and estimates. Possible changes to the estimates could result in revisions to the valuation of stock at the year end date.

3
Turnover and other revenue

An analysis of the group's turnover is as follows:

2023
2022
£
£
Turnover analysed by class of business
Sale of precious and base metal components
21,517,112
22,749,559
2023
2022
£
£
Turnover analysed by geographical market
United Kingdom
2,152,340
3,030,760
Europe
6,998,532
8,996,654
Asia Pacific
1,854,211
1,595,461
North America
5,840,975
5,405,855
India, Middle East and Africa
4,671,054
3,720,829
21,517,112
22,749,559
2023
2022
£
£
Other revenue
Interest income
680,216
397,382
Grants received
-
4,284
4
Exceptional item
2023
2022
£
£
Expenditure
Provision for onerous contracts
-
221,285
P & B METAL COMPONENTS LIMITED AND SUBSIDIARY UNDERTAKINGS
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2023
4
Exceptional item
(Continued)
- 28 -

Provision for onerous contracts

An onerous contract provision of £nil (2022: £221,285) has been recognised at 31 May 2023 representing the unavoidable cost of meeting obligations under certain sales contracts entered into with customers on or before the 31 May 2023 that exceed the economic benefits expected to be received from them in the future. The provision at 31 May 2023 is £nil and is shown in note 23 to the accounts.

5
Operating profit
2023
2022
£
£
Operating profit for the year is stated after charging/(crediting):
Exchange gains
(414,334)
(256,672)
Government grants
-
(4,284)
Depreciation of owned tangible fixed assets
308,432
240,597
Depreciation of tangible fixed assets held under finance leases
44,255
65,684
(Profit)/loss on disposal of tangible fixed assets
(754)
15,092
Amortisation of intangible assets
725
3,500
Cost of stocks recognised as an expense
9,765,645
9,350,002
Stocks impairment losses recognised or reversed
132,872
142,959
Operating lease charges
47,458
53,368

Exchange (gains)/losses above include unrealised foreign exchange losses of £66,811 (2022: gain of £153,160) on retranslation of group intercompany balances at the year end date.

6
Auditor's remuneration
2023
2022
Fees payable to the company's auditor and associates:
£
£
For audit services
Audit of the financial statements of the group and company
48,000
36,000
Audit of the financial statements of the company's subsidiaries
6,142
4,841
54,142
40,841
For other services
All other non-audit services
45,854
61,924
P & B METAL COMPONENTS LIMITED AND SUBSIDIARY UNDERTAKINGS
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2023
- 29 -
7
Employees

The average monthly number of persons (including directors) employed by the group and company during the year was:

Group
Company
2023
2022
2023
2022
Number
Number
Number
Number
Management and administration
35
39
22
22
Manufacturing
128
135
89
92
Total
163
174
111
114

Their aggregate remuneration comprised:

Group
Company
2023
2022
2023
2022
£
£
£
£
Wages and salaries
4,385,193
4,471,545
3,643,190
3,813,496
Social security costs
403,811
360,083
382,682
347,275
Pension costs
610,111
909,789
553,404
857,816
5,399,115
5,741,417
4,579,276
5,018,587
8
Directors' remuneration
2023
2022
£
£
Remuneration for qualifying services
548,962
610,326
Company pension contributions to defined contribution schemes
57,194
28,168
606,156
638,494

The number of directors for whom retirement benefits are accruing under defined contribution schemes amounted to 5 (2022 - 3).

The number of directors for whom retirement benefits are accruing under defined benefit schemes amounted to 1 (2022 - 1).

Remuneration disclosed above includes the following amounts paid to the highest paid director:
2023
2022
£
£
Remuneration for qualifying services
110,342
170,917
Company pension contributions to defined contribution schemes
40,672
8,333
P & B METAL COMPONENTS LIMITED AND SUBSIDIARY UNDERTAKINGS
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2023
- 30 -
9
Interest receivable and similar income
2023
2022
£
£
Interest income
Interest on bank deposits
10,216
382
Interest on the net defined benefit asset
670,000
397,000
Total income
680,216
397,382
10
Interest payable and similar expenses
2023
2022
£
£
Interest on bank overdrafts and loans
57,145
109,787
Interest on finance leases and hire purchase contracts
26,916
23,096
Net interest on the net defined benefit liability
829,000
591,000
Total finance costs
913,061
723,883
11
Taxation
2023
2022
£
£
Current tax
UK corporation tax on profits for the current period
1,138
331
Deferred tax
Origination and reversal of timing differences
-
0
(492,314)
Total tax charge/(credit)
1,138
(491,983)
P & B METAL COMPONENTS LIMITED AND SUBSIDIARY UNDERTAKINGS
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2023
11
Taxation
(Continued)
- 31 -

The actual charge/(credit) for the year can be reconciled to the expected charge for the year based on the profit or loss and the standard rate of tax as follows:

2023
2022
£
£
Profit before taxation
1,160,248
663,205
Expected tax charge based on the standard rate of corporation tax in the UK of 25.00% (2022: 19.00%)
290,062
126,009
Tax effect of expenses that are not deductible in determining taxable profit
14,288
9,150
Tax effect of income not taxable in determining taxable profit
(1,195)
(98,030)
Tax effect of utilisation of tax losses not previously recognised
(183,053)
-
0
Unutilised tax losses carried forward
-
0
65,537
Permanent capital allowances in excess of depreciation
(39,614)
(13,608)
Depreciation on assets not qualifying for tax allowances
72,626
46,319
Deferred tax
-
0
(492,314)
FRS102 adjustments - net interest
39,750
36,860
FRS102 adjustments - contributions paid
(144,668)
(52,250)
Foreign tax adjustments
(124,899)
(119,754)
FRS102 adjustments - expenses not deductible
81,750
-
Provision for unrealised profit in stock
(3,909)
98
Taxation charge/(credit)
1,138
(491,983)

The group has estimated tax losses of £5,630,000 (2022 - £6,700,000) available for carry forward against future trading profits.

 

In addition to the amount charged to the income statement, the following amounts relating to tax have been recognised directly in other comprehensive income:

2023
2022
£
£
Deferred tax arising on:
Actuarial differences recognised as other comprehensive income
(54,000)
418,250
P & B METAL COMPONENTS LIMITED AND SUBSIDIARY UNDERTAKINGS
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2023
- 32 -
12
Impairments

Impairment tests have been carried out where appropriate and the following impairment losses have been recognised in the group income statement:

2023
2022
Notes
£
£
In respect of:
Stocks
17
132,872
142,959
Recognised in:
Cost of sales
132,872
142,959
13
Intangible fixed assets
Group
Goodwill
£
Cost
At 1 June 2022
10,003
Additions
4,500
At 31 May 2023
14,503
Amortisation and impairment
At 1 June 2022
9,502
Amortisation charged for the year
725
At 31 May 2023
10,227
Carrying amount
At 31 May 2023
4,276
At 31 May 2022
501
Company
Goodwill
£
Cost
At 1 June 2022
10,003
Additions
4,500
At 31 May 2023
14,503
Amortisation and impairment
At 1 June 2022
9,502
Amortisation charged for the year
725
At 31 May 2023
10,227
P & B METAL COMPONENTS LIMITED AND SUBSIDIARY UNDERTAKINGS
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2023
13
Intangible fixed assets
(Continued)
- 33 -
Carrying amount
At 31 May 2023
4,276
At 31 May 2022
501
14
Tangible fixed assets
Group
Land and buildings Freehold
Plant and machinery
Fixtures, fittings & equipment
Motor vehicles
Total
£
£
£
£
£
Cost or valuation
At 1 June 2022
2,981,886
15,404,371
527,570
84,967
18,998,794
Additions
-
0
150,281
53,583
-
0
203,864
Disposals
-
0
(3,956)
(1,523)
(39,896)
(45,375)
Revaluation
768,114
-
0
-
0
-
0
768,114
Exchange adjustments
-
0
(25,332)
(5,957)
(1,061)
(32,350)
At 31 May 2023
3,750,000
15,525,364
573,673
44,010
19,893,047
Depreciation and impairment
At 1 June 2022
-
0
13,032,134
408,555
22,628
13,463,317
Depreciation charged in the year
-
0
311,577
31,642
9,468
352,687
Eliminated in respect of disposals
-
0
(489)
(1,201)
(13,013)
(14,703)
Exchange adjustments
-
0
(22,906)
(4,983)
(504)
(28,393)
At 31 May 2023
-
0
13,320,316
434,013
18,579
13,772,908
Carrying amount
At 31 May 2023
3,750,000
2,205,048
139,660
25,431
6,120,139
At 31 May 2022
2,981,886
2,372,237
119,015
62,339
5,535,477
P & B METAL COMPONENTS LIMITED AND SUBSIDIARY UNDERTAKINGS
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2023
14
Tangible fixed assets
(Continued)
- 34 -
Company
Land and buildings Freehold
Plant and machinery
Fixtures, fittings & equipment
Motor vehicles
Total
£
£
£
£
£
Cost or valuation
At 1 June 2022
2,981,886
14,567,205
343,580
52,196
17,944,867
Additions
-
0
100,197
46,634
-
0
146,831
Disposals
-
0
-
0
-
0
(39,896)
(39,896)
Revaluation
768,114
-
0
-
0
-
0
768,114
At 31 May 2023
3,750,000
14,667,402
390,214
12,300
18,819,916
Depreciation and impairment
At 1 June 2022
-
0
12,223,588
277,145
19,351
12,520,084
Depreciation charged in the year
-
0
267,742
19,310
2,728
289,780
Eliminated in respect of disposals
-
0
-
0
-
0
(13,013)
(13,013)
At 31 May 2023
-
0
12,491,330
296,455
9,066
12,796,851
Carrying amount
At 31 May 2023
3,750,000
2,176,072
93,759
3,234
6,023,065
At 31 May 2022
2,981,886
2,343,617
66,435
32,845
5,424,783

The net carrying value of tangible fixed assets includes the following in respect of assets held under finance leases or hire purchase contracts.

Group
Company
2023
2022
2023
2022
£
£
£
£
Plant and machinery
364,708
484,921
364,708
484,921
Fixtures, fittings & equipment
3,190
4,782
3,190
4,782
Motor vehicles
22,197
29,494
-
0
-
0
Computer equipment
-
0
28,675
-
0
28,675
390,095
547,872
367,898
518,378

The freehold property from which the company trades and with a carrying amount of £2,981,886 was revalued at 1 March 2023 by Knight Frank LLP, independent RICS registered valuer not connected with the company on the basis of market value. The valuation conforms to International Valuation Standards and was based on recent market transactions on arm's length terms for similar properties. The freehold property was valued at £3,750,000 on this date.

The following assets are carried at valuation. If the assets were measured using the cost model, the carrying amounts would be as follows:

P & B METAL COMPONENTS LIMITED AND SUBSIDIARY UNDERTAKINGS
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2023
14
Tangible fixed assets
(Continued)
- 35 -
Plant and machinery
Land and Buildings
2023
2022
2023
2022
£
£
£
£
Group
Cost
11,562,703
12,299,674
2,981,886
2,981,886
Accumulated depreciation
(9,944,301)
(10,580,700)
-
-
Carrying value
1,618,402
1,718,974
2,981,886
2,981,886
Company
Cost
11,562,703
11,462,508
2,981,886
2,981,886
Accumulated depreciation
(9,944,301)
(9,772,154)
-
-
Carrying value
1,618,402
1,690,354
2,981,886
2,981,886
15
Fixed asset investments
Group
Company
2023
2022
2023
2022
Notes
£
£
£
£
Investments in subsidiaries
16
-
0
-
0
198,174
198,174
Movements in fixed asset investments
Company
Shares in subsidiaries
£
Cost or valuation
At 1 June 2022 and 31 May 2023
924,612
Impairment
At 1 June 2022 and 31 May 2023
726,438
Carrying amount
At 31 May 2023
198,174
At 31 May 2022
198,174

The carrying value of the investment in the Malaysian subsidiary was reviewed at the year end date and the impairment provision reflected above remains appropriate.

P & B METAL COMPONENTS LIMITED AND SUBSIDIARY UNDERTAKINGS
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2023
- 36 -
16
Subsidiaries

Details of the company's subsidiaries at 31 May 2023 are as follows:

Name of undertaking
Address
Class of
% Held
shares held
Direct
Allenvale Tools & Production Ltd
England
Ordinary
100.00
P & B Metal Components (Asia) Sdn. Bhd.
Malaysia
Ordinary
100.00
Turnomatic Limited
England
Ordinary
100.00

The above listed subsidiaries are included in the consolidated financial statements of the group.

17
Stocks
Group
Company
2023
2022
2023
2022
£
£
£
£
Raw materials and consumables
1,442,585
2,544,948
1,129,969
2,119,511
Work in progress
1,552,925
1,688,710
1,353,842
1,323,897
2,995,510
4,233,658
2,483,811
3,443,408

An impairment review was undertaken during the year and stock values written down accordingly to take into account of slow moving and obsolete stock as disclosed in Impairments, note 12 above.

18
Debtors
Group
Company
2023
2022
2023
2022
Amounts falling due within one year:
£
£
£
£
Trade debtors
3,639,790
5,431,447
2,949,722
4,552,199
Amounts owed by group undertakings
-
-
3,377,767
3,691,208
Other debtors
359,831
138,817
348,335
119,876
Prepayments and accrued income
223,116
181,465
198,006
148,197
4,222,737
5,751,729
6,873,830
8,511,480
Amounts falling due after more than one year:
Deferred tax asset (note 24)
1,575,500
1,521,500
1,575,500
1,521,500
Total debtors
5,798,237
7,273,229
8,449,330
10,032,980
P & B METAL COMPONENTS LIMITED AND SUBSIDIARY UNDERTAKINGS
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2023
- 37 -
19
Creditors: amounts falling due within one year
Group
Company
2023
2022
2023
2022
Notes
£
£
£
£
Bank loans
21
366,667
366,667
366,667
366,667
Obligations under finance leases
22
114,354
139,173
110,012
134,892
Trade creditors
1,364,046
2,025,945
1,273,931
1,944,621
Amounts owed to group undertakings
-
0
-
0
190,757
190,757
Corporation tax payable
465
-
0
-
0
-
0
Other taxation and social security
95,708
94,648
95,708
94,648
Other creditors
2,612,337
4,207,913
2,599,034
4,037,501
Accruals and deferred income
410,906
934,274
279,072
802,063
4,964,483
7,768,620
4,915,181
7,571,149

Included in other creditors is an amount of £2,136,804 (2022: £3,230,492) representing amounts advanced against the parent company's trade debtors. The advance is secured by a fixed and floating charge over all the assets of the company.

20
Creditors: amounts falling due after more than one year
Group
Company
2023
2022
2023
2022
Notes
£
£
£
£
Bank loans and overdrafts
21
-
0
366,667
-
0
366,667
Obligations under finance leases
22
114,655
224,359
102,954
207,441
114,655
591,026
102,954
574,108
21
Loans and overdrafts
Group
Company
2023
2022
2023
2022
£
£
£
£
Bank loans
366,667
733,334
366,667
733,334
Payable within one year
366,667
366,667
366,667
366,667
Payable after one year
-
0
366,667
-
0
366,667
366,667
733,334
366,667
733,334

The bank loans are secured by legal charges over the parent company's freehold property and by a fixed and floating charge over all the assets of the parent company.

P & B METAL COMPONENTS LIMITED AND SUBSIDIARY UNDERTAKINGS
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2023
- 38 -
22
Finance lease obligations
Group
Company
2023
2022
2023
2022
£
£
£
£
Future minimum lease payments due under finance leases:
Within one year
114,354
139,173
110,012
134,892
In two to five years
114,655
224,359
102,954
207,441
229,009
363,532
212,966
342,333

Finance lease payments represent rentals payable by the group and company for certain items of plant and machinery. All leases are on a fixed repayment basis and no arrangements have been entered into for contingent rental payments.

23
Provisions for liabilities
Group
Company
2023
2022
2023
2022
Notes
£
£
£
£
Onerous contracts
-
247,285
-
247,285
Deferred tax liabilities
24
-
-
0
-
0
-
0
-
247,285
-
0
247,285
Movements on provisions apart from deferred tax liabilities:
Onerous contracts
Group & Company
£
At 1 June 2022
247,285
Utilisation of provision
(247,285)
At 31 May 2023
-

The onerous contract provision of £nil (2022: £247,285) as at 31 May 2023 represents the unavoidable cost of meeting obligations under certain sales contracts entered into with customers on or before 31 May 2023 that exceed the economic benefits expected to be received from them. The unavoidable cost under a contract is the lower of the cost of fulfilling the contract and any compensation or penalties arising from failure to fulfil it. The cost of fulfilling a contract comprises the costs that relate directly to the contract.

P & B METAL COMPONENTS LIMITED AND SUBSIDIARY UNDERTAKINGS
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2023
- 39 -
24
Deferred taxation

Deferred tax assets and liabilities are offset where the group or company has a legally enforceable right to do so. The following is the analysis of the deferred tax balances (after offset) for financial reporting purposes:

Assets
Assets
2023
2022
Group
£
£
Retirement benefit obligations
1,575,500
1,521,500
1,575,500
1,521,500
Assets
Assets
2023
2022
Company
£
£
Retirement benefit obligations
1,575,500
1,521,500
1,575,500
1,521,500
Group
Company
2023
2023
Movements in the year:
£
£
Asset at 1 June 2022
(1,521,500)
(1,521,500)
Credit to other comprehensive income
(54,000)
(54,000)
Asset at 31 May 2023
(1,575,500)
(1,575,500)
P & B METAL COMPONENTS LIMITED AND SUBSIDIARY UNDERTAKINGS
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2023
24
Deferred taxation
(Continued)
- 40 -

Group

The deferred tax liability set out above relates to accelerated capital allowances on tangible fixed assets and is expected to reverse within the assets useful economic life.

 

The deferred tax assets set out above are provided in relation to the following:

 

A deferred tax asset of £586,274 (2022: £624,109) has been recognised on available trading tax losses carried forward at 31 May 2023 to the extent of deferred tax liabilities on temporary timing differences in the same tax jurisdiction. The utilisation of these losses is dependent on the existence of future taxable profits, which are expected to arise in future years. The availability of suitable taxable profit is considered probable as the company has taxable temporary differences (i.e. deferred tax liabilities) relating to the same taxation authority that are expected to reverse in the same period as the deductible temporary difference or unused tax losses or credit (or in a period into which the tax losses can be carried back or forward).

 

A deferred tax asset of £1,575,500 (2022: £1,521,500) has been provided in relation to the retirement benefit obligations as set out in note 25 of the financial statements.

 

A deferred tax asset has not been recognised in respect of group tax losses of approximately £3.3m (2022: £4.1m) as it is not probable that they will be recovered against the reversal of deferred tax liabilities or future taxable profits due to the uncertainty as to when they will be utilised.

 

With effect from year of assessment 2019, the unutilised tax losses relating to the group’s overseas subsidiary are available for utilisation in the next ten consecutive years of assessment, for which, any excess at the end of the tenth year, will be disregarded.

Company

The deferred tax liability set out above relates to accelerated capital allowances on tangible fixed assets and is expected to reverse within the assets useful economic life.

 

The deferred tax assets set out above are provided in relation to the following:

 

A deferred tax asset of £563,574 (2022: £602,095) has been recognised on available trading tax losses carried forward at 31 May 2023 to the extent of deferred tax liabilities on temporary timing differences in the same tax jurisdiction. The utilisation of these losses is dependent on the existence of future taxable profits, which are expected to arise in future years. The availability of suitable taxable profit is considered probable as the company has taxable temporary differences (i.e. deferred tax liabilities) relating to the same taxation authority that are expected to reverse in the same period as the deductible temporary difference or unused tax losses or credit (or in a period into which the tax losses can be carried back or forward).

 

A deferred tax asset of £1,575,500 (2022: £1,521,500) has been provided in relation to the retirement benefit obligations as set out in note 25 of the financial statements.

 

Deferred tax has not been recognised in respect of tax losses of approximately £1.27m (2022: £1.85m) as it is not probable that they will be recovered against the reversal of deferred tax liabilities or future taxable profits due to the uncertainty as to when they will be utilised.

25
Retirement benefit scheme
2023
2022
Defined contribution schemes
£
£
Charge to income statement in respect of defined contribution schemes
320,444
171,407
P & B METAL COMPONENTS LIMITED AND SUBSIDIARY UNDERTAKINGS
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2023
25
Retirement benefit scheme
(Continued)
- 41 -

The group operates a defined contribution retirement benefit scheme for all qualifying employees. The assets of the scheme are held separately from those of the company. The company contributes a specified percentage of payroll costs to the retirement benefit scheme to fund the benefits. The only obligation of the group with respect to the scheme is to make the specified contributions.

Defined benefit scheme - group and company

The company also operates a defined benefit scheme providing benefits based on final pensionable pay. The assets of the scheme are held separately from those of the company. This scheme was frozen and closed to new members on 31 March 2006 and the scheme has been suspended from further pension accrual with all contribution members becoming 'Deferred Pensioners'.

 

In a Transfer Deed dated 25 June 2021 the Principal Employer and the Trustees agreed to transfer all the assets and liabilities of the Scheme to the P&B Metal Components Limited Section of the Deloitte Pensions Master Plan. The Master Plan Trustee and the Trustees of the P&B Metal Components Limited Section of the Deloitte Pensions Master Plan accepted the transfer of assets and liabilities from the Scheme on 22 July 2021.

Valuation

An actuarial valuation as at 31 May 2023 was also prepared for the purpose of applying FRS102 Section 28 Employee Benefits as applied to defined benefit plans. The actuarial valuation showed that the market value of the scheme's assets was £12,831,670 and that the actuarial value of those assets represented 67.06% of the benefits that had accrued to members, after allowing for expected future increases in earnings.

2023
2022
Key assumptions
%
%
Discount rate
5.3
3.5
Expected rate of increase of pensions in payment
2.7
2.9
Retail price inflation (RPI)
3.3
3.5
Consumer Price inflation (CPI)
2.8
3.0
Mortality assumptions
2023
2022

Assumed life expectations on retirement at age 65:

Years
Years
Retiring today
- Males
21.2
21.7
- Females
23.6
24.1
Retiring in 20 years
- Males
21.5
22.1
- Females
24.2
24.7
P & B METAL COMPONENTS LIMITED AND SUBSIDIARY UNDERTAKINGS
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2023
25
Retirement benefit scheme
(Continued)
- 42 -

The amounts included in the statement of financial position arising from the company's obligations in respect of defined benefit plans are as follows:

Group and company
2023
2022
£
£
Present value of defined benefit obligations
19,134,000
24,206,000
Fair value of plan assets
(12,831,670)
(18,120,000)
Deficit in scheme
6,302,330
6,086,000
Total liability recognised
6,302,330
6,086,000
Group and company
2023
2022

Amounts recognised in the income statement

£
£
Net interest on net defined benefit liability/(asset)
159,000
194,000
The effect of any curtailment or settlement
-
(129,000)
Other costs and income
58,000
1,478,000
Total costs
217,000
1,543,000
Group and company
2023
2022

Amounts taken to other comprehensive income

£
£
Actual return on scheme assets
4,410,000
2,562,000
Less: calculated interest element
670,000
397,000
Return on scheme assets excluding interest income
5,080,000
2,959,000
Actuarial changes related to obligations
(4,829,000)
(4,097,000)
Total costs/(income)
251,000
(1,138,000)
Group and company
2023

Movements in the present value of defined benefit obligations

£
Liabilities at 1 June 2022
24,206,000
Benefits paid
(1,072,000)
Actuarial gains and losses
(4,829,000)
Interest cost
829,000
At 31 May 2023
19,134,000

The defined benefit obligations arise from plans which are wholly or partly funded.

P & B METAL COMPONENTS LIMITED AND SUBSIDIARY UNDERTAKINGS
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2023
25
Retirement benefit scheme
(Continued)
- 43 -
Group and company
2023

Movements in the fair value of plan assets

£
Fair value of assets at 1 June 2022
18,120,000
Interest income
670,000
Return on plan assets (excluding amounts included in net interest)
(5,080,000)
Benefits paid
(1,072,000)
Contributions by the employer
578,670
Other
(385,000)
At 31 May 2023
12,831,670

The actual return on plan assets was £670,000 (2022 - £397,000).

Group and company
2023
2022

Fair value of plan assets at the reporting period end

£
£
Invested assets
12,653,000
16,692,000
Insured pensions
798,000
974,000
Net current (liabilities)/assets
(619,330)
454,000
12,831,670
18,120,000
26
Share capital
Group and company
2023
2022
2023
2022
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Ordinary shares of £1 each
736,359
736,359
736,359
736,359
27
Reserves
Share premium account
This reserve records the amounts above the nominal value received for shares issued, less transaction costs.
Revaluation reserve
This reserve is used to record increases in the fair value of tangible assets and decreases to the extent that such decrease relates to an increase on the same asset and is a non-distributable reserve.
Profit and loss reserves
This reserve includes all current and prior period retained profits and losses.
28
Financial commitments, guarantees and contingent liabilities

The company has indemnified its bank for a guarantee given by the bank in respect of HM Customs & Excise duty on imports only. The maximum amount under guarantee is £50,000 (2022: £50,000).

P & B METAL COMPONENTS LIMITED AND SUBSIDIARY UNDERTAKINGS
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2023
- 44 -
29
Operating lease commitments
Lessee

Operating lease payments represent rentals payable by the company for motor vehicles, computer equipment and plant and machinery and for the group include rentals payable for factory and office premises.

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:

Group
Company
2023
2022
2023
2022
£
£
£
£
Within one year
59,280
51,705
20,618
12,569
Between two and five years
113,500
120,482
49,754
44,526
In over five years
-
3,711
-
3,711
172,780
175,898
70,372
60,806
30
Related party transactions
Remuneration of key management personnel

The key management personnel are the directors of the company. The remuneration of the directors is included in Directors' remuneration, note 8.

Transactions with group undertakings

The company has taken advantage of the exemption available in FRS 102 "Related party disclosures" whereby it has not disclosed transactions with any wholly owned subsidiary undertakings.

 

31
Cash generated from group operations
2023
2022
£
£
Profit for the year after tax
1,159,110
1,155,188
Adjustments for:
Taxation charged/(credited)
1,138
(491,983)
Finance costs
913,061
723,883
Investment income
(680,216)
(397,382)
Net effect of foreign exchange differences
66,811
(151,306)
(Gain)/loss on disposal of tangible fixed assets
(754)
15,092
Amortisation and impairment of intangible assets
725
3,500
Depreciation and impairment of tangible fixed assets
352,687
306,281
Pension scheme non-cash movement
385,000
1,159,000
(Decrease)/increase in provisions
(247,285)
96,739
Movements in working capital:
Decrease/(increase) in stocks
1,238,148
(265,708)
Decrease in debtors
1,528,992
1,182,001
Decrease in creditors
(1,686,095)
(1,518,630)
Cash generated from operations
3,031,322
1,816,675
P & B METAL COMPONENTS LIMITED AND SUBSIDIARY UNDERTAKINGS
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2023
- 45 -
32
Analysis of changes in net funds - group
1 June 2022
Cash flows
31 May 2023
£
£
£
Cash at bank and in hand
1,303,656
606,318
1,909,974
Borrowings excluding overdrafts
(733,334)
366,667
(366,667)
Obligations under finance leases
(363,532)
134,523
(229,009)
206,790
1,107,508
1,314,298
33
Events after the reporting date

Group

 

Sales return

During the months of June to August 2023, goods were returned from a new customer of the group’s overseas subsidiary. Those goods were sold to the customer in March and April 2023 and returned to the subsidiary company due to an issue related to production specifications. Four credit notes totalling £337,419 have been issued by the subsidiary company in the months of June to August 2023 to account for the sales return subsequent to the year end date. The issue in product specification did not impact any other sales in the year to 31 May 2023.

34
Prior period adjustment
Changes to the statement of financial position - group
As previously reported
Adjustment
As restated at 31 May 2022
£
£
£
Current assets
Debtors due within one year
5,763,796
(12,067)
5,751,729
Creditors due within one year
Other creditors
(7,237,181)
69,049
(7,168,132)
Net assets
3,596,608
56,982
3,653,590
Capital and reserves
Profit and loss reserves
1,515,492
56,982
1,572,474
Changes to the income statement - group
As previously reported
Adjustment
As restated
Period ended 31 May 2022
£
£
£
Administrative expenses
(4,329,564)
56,982
(4,272,582)
P & B METAL COMPONENTS LIMITED AND SUBSIDIARY UNDERTAKINGS
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2023
34
Prior period adjustment
(Continued)
- 46 -
Reconciliation of changes in equity - group
1 June
31 May
2021
2022
£
£
Adjustments to prior year
Trade Debtors
-
18,021
Other Debtors
-
(30,088)
Trade Creditors
-
69,049
Total adjustments
-
56,982
Equity as previously reported
(348,719)
3,596,608
Equity as adjusted
(348,719)
3,653,590
Analysis of the effect upon equity
Profit and loss reserves
-
56,982
Reconciliation of changes in profit for the previous financial period
2022
£
Adjustments to prior year
Unrealised gain on foreign exchange
56,982
Profit as previously reported
1,098,206
Profit as adjusted
1,155,188
Reconciliation of changes in equity - company
The prior period adjustments do not give rise to any effect upon equity.
Reconciliation of changes in profit for the previous financial period
2022
£
Adjustments to prior year
Total adjustments
-
Profit as previously reported
524,010
Profit as adjusted
524,010
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