Registered number:
FOR THE YEAR ENDED 31 DECEMBER 2022
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PATERSON SIMONS & CO (AFRICA) LIMITED
COMPANY INFORMATION
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PATERSON SIMONS & CO (AFRICA) LIMITED
CONTENTS
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PATERSON SIMONS & CO (AFRICA) LIMITED
GROUP STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2022
The Directors of the Company present their strategic report together with the audited consolidated financial statements for the year ended 31 December 2022.
The principal activity of the Company and its subsidiaries continued to be that of agents and general merchants. The Strategic Report is a statutory requirement under the Companies Act 2006.
The Directors consider that the main objectives of the business set in 2016 remain current, however as we have slowly taken on additional business in Cameroon and the Democratic Republic of Congo we have modified these to expand the territories in which we operate to include Central Africa.
Politically there were no main presidential elections in the region in 2022. The coup in Mali in 2021 resulting in sanctions was a cause of a tail off in mining activity which resumed in mid 2022 following African Union intervention and a lifting of sanctions. The coup in Burkina Faso in 2022 along with the poor security situation has resulted in the suspension of operations of some of our mining customers. Concerns over Al Qaida/Boko Haram disruption in the Sahel affecting Northern Nigeria, Northern Mali and North and Eastern Burkina Faso continue. The steps we took to look at contingency planning for travel activities during 2020 remain in place. The war in Ukraine also caused us to complete a due diligence exercise resulting in us ceasing supplies and work for one mining customer who was and remains subject to international sanctions. The ADB forecasts that the economies of Sub Saharan Africa will grow by around 3.1% in 2023 down from an estimated 3.8% in 2022 however these figures mask some real difficulties in one of the main territories in which we trade - Ghana has had the worst performing currency in the world in 2022 and return to 3% growth is not forecast until 2024. Port volumes during 2022 have reflected that background. Elsewhere, sluggish growth in 2022 coupled with a presidential election in Nigeria in April 2023 is also likely to contribute to slow growth. There are positive signs in the other areas: Mauritania, Mali and Liberia all have positive growth forecasts in part based on mining activities which we have benefited from. There are also positive signs for Togo and Benin as a result of planned diversification of their economies and this is evident in port development projects. In the two main territories we operate in Central Africa, growth performance and forecasts for Cameroon and DRC are positive. Our exposure in both is limited to the main ports but significant investments in both countries port infrastructure support these forecasts. Our strategy to continue to offer quality service, parts, retrofits/upgrades and aged replacements in the port sector is well established. PSAL continues to enjoy the trust of all the main terminal operators in the region who generate the majority of our income and in many areas relationships are deepening. The planned merger of Konecranes and Cargotec (Kalmar) announced in 2021 fell through which has significantly removed some uncertainty around the direction of our port service business. The renewed stability of relations with Konecranes has allowed us to review existing plans and agreements and to look document and secure those plans with firmer formal agreements going forwards.
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PATERSON SIMONS & CO (AFRICA) LIMITED
GROUP STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
Gold remains the main commodity of interest to us. The market price has traded at a range of USD1700 to USD 2000 per oz during 2022 and at that range the metal price remains strong enough to see continued investment, particularly for the large scale miners. Sales of telehandlers and mobile cranes have been strong with that background.
The oil price been hovering around the USD 70- 80/barrel mark for most of 2022. There are some small signs that the relative stability of the price may support fresh exploration activity in the relatively expensive waters of the Gulf of Guinea but onshore activity to support this remains low. Many other commodities have seen pricing rally. The opaque Bauxite and Manganese markets may be under some revival: Ghana Manganese stabilised its production during 2022. Guinea has seen continued investment in development of its bauxite reserves. Lithium has seen the development of one mine to production in Mali with various others in the region undergoing feasibility studies. This is commodity we will need to monitor closely in the coming years. Cocoa prices remain volatile, in part as a result of the Ghana/Ivory Coast “Abidjan Agreement” where large international cocoa buyers sought to circumvent purchasing from the Worlds’ two largest cocoa producers but also as a result of poor crop yields. Interest in mechanisation of bulk export remains alongside the trend to add value to the product by processing locally. The after-effects of the coronavirus pandemic coupled with the war in Ukraine and post Brexit labour challenges have impacted our operations significantly. Working patterns have settled down, service labour remains in demand and travel has returned to normal but supply chain difficulties caused by the pandemic remain and these have been exacerbated by the war in Ukraine which as a territory was a key supplier of special steel grades and electrical components to the lifting equipment industry. Both new equipment and spare parts deliveries been repeatedly extended and are unpredictable. This disruption has been accompanied by significant price inflation. PSAL Group continues to work closely with suppliers and to recruit, train, develop and invest in people and systems to mitigate the effects of this disruption which are a major cause of customer dissatisfaction. Some of the challenges thrown up by the current market have caused us to delay implementation of our Microsoft Dynamics based CRM which is now forecast to be delivered in late 2023. This timing will enable us to roll this out as part of a new dedicated approach to Key Account Management. During 2022 we appointed a dedicated HSE manager to update and accredit our HSE system. Steady progress has been made during the year and we expect to have an accredited ISO45001 system in the course of 2023. HSE fits into the wider area of sustainability which is a topic the Directors have long taken seriously and it is a key component to being a trusted partner for many of our customers. The Directors of the business are close to the day to day operations of the business which mitigates a lot of risk but work is ongoing to assess those and to introduce formal policies and document procedures to mitigate them.
The group turnover increased by 3.7% on the previous year (2021 - increase of 25.5%). The commissions element of the total turnover decreased by 51% on the previous year whilst that for the sale of goods increased by 7.8%. This had an effect on the Gross profit as commissions generate higher margins than the sale of goods. The Group achieved a Gross profit of 27.6% in 2022 (29.1% - 2021).
The Group has maintained its investment in staff with a small decrease in staff numbers from 235 in 2021 to 232 at the end of 2022, across the Group. The overall staffing costs for 2022 totalled £3.719 Million (2021 - £3.227 Million). Salaries were increased during the year 2022 to keep in line with local inflation rises and the increasing cost of living in the West African regions in which the Group operates. The interest rates across West Africa continued to increase year on year. Added to some significant increases in West African rates of inflation this has given rise to high increases in overheads and administration costs.
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PATERSON SIMONS & CO (AFRICA) LIMITED
GROUP STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
There are decreased amounts owed to the parent company by the subsidiaries, however these balances are still substantial and hence exposes the group to more risk of foreign exchange losses. 2022 has seen an increase to the Foreign Exchange Provision of £478,584 (2021 - £126,362 increase) arising due to the significant decline in the Cedi (Ghana) and Niara (Nigeria) from the start to the end of the current year. This figure has been adjusted in the Comprehensive Income account. The resultant loss before tax for the year was £447,753 (2021 - profit of £317,302). 2022 Exceptional Items The operating result for the group during the year to 31st December 2022 was significantly affected by a bad debt provision for €200,000 of debt due from one of the major customers. There was then a one off contract termination payment made in March 2022 of £250,000 to the management company whose services where no longer required.
The Group's financial instruments principally comprise of trade debtors, cash at bank, trade creditors and bank loan facilities, the main purpose of which is to finance the Group's operations. In addition, the Group has various other financial assets and liabilities such as other creditors arising directly from operations. It is, and has been throughout the period under review, the Group's policy that no trading in financial instruments shall be undertaken.
The main risks arising from the Group's financial instruments are liquidity, credit and foreign exchange risk. The Board reviews and agrees policies for managing each of these risks and they are summarised below. These policies have remained unchanged throughout the period. Liquidity risk The Group is susceptible to liquidity risk on large plant deals. Management prepare and review weekly cashflow forecasts to ensure sufficient funds are held for commitments. Short term shareholder loans are available to the group to inject cash when required. Credit risk All debtors are subject to credit verification procedures by the Board. Debtors are reviewed on a regular basis and provision is made for doubtful debts when necessary. Foreign exchange risk The Group is exposed to exchange rate fluctuations particularly where goods are invoiced in foreign currency. This is largely managed through a natural hedge generated from purchases denominated in the same currency.
This report was approved by the board on 29 September 2023 and signed on its behalf.
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PATERSON SIMONS & CO (AFRICA) LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 DECEMBER 2022
The directors present their report and the financial statements for the year ended 31 December 2022.
The directors are responsible for preparing the Group Strategic Report, the Directors' Report and the consolidated financial statements in accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice), including Financial Reporting Standard 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland'. Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Company and the Group and of the profit or loss of the Group for that period.
In preparing these financial statements, the directors are required to:
∙select suitable accounting policies for the Group's financial statements and then apply them consistently;
∙make judgments and accounting estimates that are reasonable and prudent;
∙prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group will continue in business.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Company and the Group and to enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
The loss for the year, after taxation and minority interests, amounted to £381,353 (2021 - profit £171,044).
The directors do not propose the payment of a dividend.
The directors have highlighted in the strategic report on pages 1-3, a review of the current year results, future outlook expectations, risks and key performance indicators for the Group.
The directors who served during the year were:
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PATERSON SIMONS & CO (AFRICA) LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
There have been no significant events affecting the Group since the year end.
The auditors, Simmons Gainsford LLP, will be proposed for reappointment in accordance with section 485 of the Companies Act 2006.
This report was approved by the board on
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PATERSON SIMONS & CO (AFRICA) LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF PATERSON SIMONS & CO (AFRICA) LIMITED
We have audited the financial statements of Paterson Simons & Co (Africa) Limited (the 'parent Company') and its subsidiaries (the 'Group') for the year ended 31 December 2022, which comprise the Group Statement of Comprehensive Income, the Group and Company Balance Sheets, the Group Statement of Cash Flows, the Group and Company Statement of Changes in Equity and the related notes, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland' (United Kingdom Generally Accepted Accounting Practice).
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditors' responsibilities for the audit of the financial statements section of our report. We are independent of the Group in accordance with the ethical requirements that are relevant to our audit of the financial statements in the United Kingdom, including the Financial Reporting Council's Ethical Standard and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
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 or the 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.
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PATERSON SIMONS & CO (AFRICA) LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF PATERSON SIMONS & CO (AFRICA) LIMITED (CONTINUED)
The other information comprises the information included in the Annual Report other than the financial statements and our Auditors' Report thereon. The directors are responsible for the other information contained within the Annual 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.
In our opinion, based on the work undertaken in the course of the audit:
∙the information given in the Group Strategic Report and the Directors' Report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
∙the Group Strategic Report and the Directors' Report have been prepared in accordance with applicable legal requirements.
In the light of the knowledge and understanding of the Group and the parent Company and its environment obtained in the course of the audit, we have not identified material misstatements in the Group Strategic Report or the Directors' Report.
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PATERSON SIMONS & CO (AFRICA) LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF PATERSON SIMONS & CO (AFRICA) LIMITED (CONTINUED)
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an Auditors' Report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these Group financial statements.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:
In order to identify and assess the risks of material misstatements, including fraud and non-compliance with laws and regulations that could be expected to have a material impact on the financial statements, we have considered: • the results of our enquiries of management and those charged with governance of their assessment of the risks of fraud and irregularities; • the nature of the Group, including its management structure and control systems (including the opportunity for management to override such controls); • management’s incentives and opportunities for fraudulent manipulation of the financial statements including the Company’s remuneration and bonus policies and performance targets; and • the industry and environment in which it operates. We also considered tax and pension legislation and laws and regulations relating to employment and the preparation and presentation of the financial statements such as the Companies Act 2006. Based on this understanding we identified the following matters as being of significance to the entity: • laws and regulations considered to have a direct effect on the financial statements including UK financial reporting standards, Company Law, tax and pension legislation and distributable profits legislation; • the timing of the recognition of commercial income; • compliance with legislation relating to health and safety and operating licenses; • management bias in selecting accounting policies and determining estimates; • inappropriate journal entries;and • recoverability of debtors. We communicated the outcomes of these discussions and enquiries, as well as consideration as to where and how fraud may occur in the entity, to all engagement team members including the auditors of significant components. Audit procedures undertaken by the Group engagement team and/or component auditors in response to the potential risks relating to irregularities (which include fraud and non-compliance with laws and regulations) comprised: • enquiries of management and those charged with governance as to whether the entity complies with such laws and regulations and discussion with the same regarding any known or suspected instances of non- compliance • enquiries with the same concerning any actual or potential litigation or claims; • inspection of relevant legal correspondence; • assessment of matters reported to management and the result of the subsequent investigation;
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PATERSON SIMONS & CO (AFRICA) LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF PATERSON SIMONS & CO (AFRICA) LIMITED (CONTINUED)
• obtaining an understanding of the relevant controls during the period and consideration of their implementation
• obtaining an understanding of the policies and controls over the recognition of income and testing their implementation during the year; • challenging assumptions made by management in their specific accounting policies and estimates, in particular in relation to depreciation of tangible fixed assets and impairment of investments; • identifying and testing journal entries, in particular any journal entries posted with unusual account combinations or crediting revenue or cash; • assessing the recovery of debtors in the period since the balance sheet date and challenging assumptions made by management regarding the recovery of balances which remain outstanding; • reviewing the financial statements for compliance with the relevant disclosure requirements; • performing analytical procedures to identify any unusual or unexpected relationships or unexpected movements in account balances which may be indicative of fraud; • reviewing correspondence with HMRC; • evaluating the underlying business reasons for any unusual transactions; and • review of component auditors' working papers. No instances of material non-compliance were identified. However, the likelihood of detecting irregularities, including fraud, is limited by the inherent difficulty in detecting irregularities, the effectiveness of the entity’s controls, and the nature, timing and extent of the audit procedures performed. Irregularities that result from fraud might be inherently more difficult to detect than irregularities that result from error. As explained above, there is an unavoidable risk that material misstatements may not be detected, even though the audit has been planned and performed in accordance with ISAs (UK).
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our Auditors' Report.
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 Auditors' 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.
for and on behalf of
Chartered Accountants
Statutory Auditors
14th Floor
33 Cavendish Square
W1G 0PW
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PATERSON SIMONS & CO (AFRICA) LIMITED
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2022
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PATERSON SIMONS & CO (AFRICA) LIMITED
REGISTERED NUMBER: 00453843
CONSOLIDATED BALANCE SHEET
AS AT 31 DECEMBER 2022
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PATERSON SIMONS & CO (AFRICA) LIMITED
REGISTERED NUMBER: 00453843
CONSOLIDATED BALANCE SHEET (CONTINUED)
AS AT 31 DECEMBER 2022
The financial statements were approved and authorised for issue by the board and were signed on its behalf on 29 September 2023.
The notes on pages 19 to 41 form part of these financial statements.
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PATERSON SIMONS & CO (AFRICA) LIMITED
REGISTERED NUMBER: 00453843
COMPANY BALANCE SHEET
AS AT 31 DECEMBER 2022
The financial statements were approved and authorised for issue by the board and were signed on its behalf on
The notes on pages 19 to 41 form part of these financial statements.
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CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2022
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CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2021
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PATERSON SIMONS & CO (AFRICA) LIMITED
COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2022
COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2021
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PATERSON SIMONS & CO (AFRICA) LIMITED
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2022
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PATERSON SIMONS & CO (AFRICA) LIMITED
CONSOLIDATED ANALYSIS OF NET DEBT
FOR THE YEAR ENDED 31 DECEMBER 2022
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PATERSON SIMONS & CO (AFRICA) LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
The Company is a private company limited by shares, and is incorporated in England & Wales. The address of its registered office is 4 The Offices, 10 Fleet Street, Brighton, East Sussex, BN1 4ZE, which is also the Company's principal trading address.
2.Accounting policies
The financial statements have been prepared under the historical cost convention unless otherwise specified within these accounting policies and in accordance with Financial Reporting Standard 102, the Financial Reporting Standard applicable in the UK and the Republic of Ireland and the Companies Act 2006.
The preparation of financial statements in compliance with FRS 102 requires the use of certain critical accounting estimates. It also requires Group management to exercise judgment in applying the Group's accounting policies (see note 3).
The Company has taken advantage of the exemption allowed under section 408 of the Companies Act 2006 and has not presented its own Statement of Comprehensive Income in these financial statements.
Parent Company disclosure exemptions
In preparing the separate financial statements of the parent Company, advantage has been taken of the following disclosure exemptions available in FRS 102: • No Statement of Cash Flows has been presented for the parent Company; • Disclosures in respect of the parent Company's financial instruments have not been presented as equivalent disclosures have been provided in respect of the Group as a whole; and • No disclosures have been given for the aggregate remuneration of the key management personnel of the parent Company as their remuneration is included in the totals for the Group as a whole.
The following principal accounting policies have been applied:
The consolidated financial statements present the results of the Company and its own subsidiaries ("the Group") as if they form a single entity. Intercompany transactions and balances between group companies are therefore eliminated in full.
The consolidated financial statements incorporate the results of business combinations using the purchase method. In the Balance Sheet, the acquiree's identifiable assets, liabilities and contingent liabilities are initially recognised at their fair values at the acquisition date. The results of acquired operations are included in the Consolidated Statement of Comprehensive Income from the date on which control is obtained. They are deconsolidated from the date control ceases.
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PATERSON SIMONS & CO (AFRICA) LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
2.Accounting policies (continued)
Turnover is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured. Turnover is measured as the fair value of the consideration received or receivable, excluding discounts, rebates, value added tax and other sales taxes. Turnover from the sale of goods is recognised when the goods are made available at the designated location and the customer has been notified. Turnover on maintenance contracts is recognised in proportion to the length of the contract with full provision made for all foreseeable costs.
All intangible assets are considered to have a finite useful life. If a reliable estimate of the useful life cannot be made, the useful life shall not exceed ten years.
Goodwill
Goodwill represents the difference between amounts paid on the cost of a business combination and the acquirer's interest in the fair value of the Group's share of its identifiable assets and liabilities of the acquiree at the date of acquisition. Acquired goodwill is written off to profit or loss in the year in which it is acquired. Computer software Software acquired by the company is stated at cost less accumulated amortisation and impairment losses. Subsequent expenditure on software assets is capitalised only when it increases future economic benefits embodied in the specific assets to which it relates. All other expenditure is expensed as incurred. Amortisation is recognised in the profit and loss on a straight line basis over the estimated useful life of the software from the date that it is available for use. The estimated useful life of the software is 3 years.
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PATERSON SIMONS & CO (AFRICA) LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
2.Accounting policies (continued)
Depreciation is charged so as to allocate the cost of assets less their residual value over their estimated useful lives, using the straight-line method.
Depreciation is provided on the following basis:
The assets' residual values, useful lives and depreciation methods are reviewed, and adjusted prospectively if appropriate, or if there is an indication of a significant change since the last reporting date.
Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised in profit or loss.
Fair values are determined from market based evidence normally undertaken by professionally qualified valuers.
Assets that are subject to depreciation or amortisation are assessed at each balance sheet date to determine whether there is any indication that the assets are impaired. Where there is any indication that an asset may be impaired, the carrying value of the asset (or cash-generating unit (CGU) to which the asset has been allocated) is tested for impairment. An impairment loss is recognised for the amount by which the asset's carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset's (or CGU's) fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (CGUs). Non-financial assets that have been previously impaired are reviewed at each balance sheet date to assess whether there is any indication that the impairment losses recognised in prior periods may no longer exist or may have decreased.
Page 21
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PATERSON SIMONS & CO (AFRICA) LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
2.Accounting policies (continued)
The Group has elected to apply the provisions of Section 11 “Basic Financial Instruments” of FRS 102 to all of its financial instruments.
Financial instruments are recognised in the Group's Balance Sheet when the Group becomes party to the contractual provisions of the instrument.
Financial assets and liabilities are offset, with the net amounts presented in the financial statements, when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.
Basic financial assets
Basic financial assets, which include trade and other receivables, cash and bank balances, are initially measured at their transaction price including transaction costs and are subsequently carried at their amortised cost using the effective interest method, less any provision for impairment, 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.
Discounting is omitted where the effect of discounting is immaterial. The Group's cash and cash equivalents, trade and most other receivables due with the operating cycle fall into this category of financial instruments.
Financial liabilities
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instruments any contract that evidences a residual interest in the assets of the Group after the deduction of all its liabilities.
Page 22
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PATERSON SIMONS & CO (AFRICA) LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
2.Accounting policies (continued)
Basic financial liabilities, which include trade and other payables, bank loans, other loans and loans due to fellow group companies are initially measured at their transaction price after transaction costs. When this constitutes a financing transaction, whereby the debt instrument is measured at the present value of the future receipts discounted at a market rate of interest. Discounting is omitted where the effect of discounting is immaterial.
Debt instruments are subsequently carried at their amortised cost using the effective interest rate method.
Trade payables are obligations to pay for goods and services that have been acquired in the ordinary course of business from suppliers. Trade payables are classified as current liabilities if the payment is due within one year. If not, they represent non-current liabilities. Trade payables are initially recognised at their transaction price and subsequently are measured at amortised cost using the effective interest method. Discounting is omitted where the effect of discounting is immaterial.
Derecognition of financial instruments
Derecognition of financial assets
Financial assets are derecognised when their contractual right to future cash flow expire, or are settled, or when the Group transfers the asset and substantially all the risks and rewards of ownership to another party. If significant risks and rewards of ownership are retained after the transfer to another party, then the Group will continue to recognise the value of the portion of the risks and rewards retained.
Derecognition of financial liabilities
Financial liabilities are derecognised when the Group's contractual obligations expire or are discharged or cancelled.
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PATERSON SIMONS & CO (AFRICA) LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
2.Accounting policies (continued)
Functional and presentation currency
Transactions and balances
Foreign exchange gains and losses that relate to borrowings and cash and cash equivalents are presented in the Consolidated Statement of Comprehensive Income within 'finance income or costs'. All other foreign exchange gains and losses are presented in the Consolidated Statement of Comprehensive Income within 'other operating income'. On consolidation, the results of overseas operations are translated into Sterling at rates approximating to those ruling when the transactions took place. All assets and liabilities of overseas operations are translated at the rate ruling at the reporting date. Exchange differences arising on translating the opening net assets at opening rate and the results of overseas operations at actual rate are recognised in other comprehensive income.
Page 24
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PATERSON SIMONS & CO (AFRICA) LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
2.Accounting policies (continued)
The contributions are recognised as an expense in the Consolidated Statement of Comprehensive Income when they fall due. Amounts not paid are shown in accruals as a liability in the Balance Sheet. The assets of the plan are held separately from the Group in independently administered funds.
Page 25
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PATERSON SIMONS & CO (AFRICA) LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
2.Accounting policies (continued)
The current income tax charge is calculated on the basis of tax rates and laws that have been enacted or substantively enacted by the balance sheet date in the countries where the Company and the Group operate and generate income. Deferred tax balances are recognised in respect of all timing differences that have originated but not reversed by the Balance Sheet date, except that: The recognition of deferred tax assets is limited to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits; Any deferred tax balances are reversed if and when all conditions for retaining associated tax allowances have been met; and Where they relate to timing differences in respect of interests in subsidiaries, associates, branches and joint ventures and the Group can control the reversal of the timing differences and such reversal is not considered probable in the foreseeable future. Deferred tax balances are not recognised in respect of permanent differences except in respect of business combinations, when deferred tax is recognised on the differences between the fair values of assets acquired and the future tax deductions available for them and the differences between the fair values of liabilities acquired and the amount that will be assessed for tax. Deferred tax is determined using tax rates and laws that have been enacted or substantively enacted by the balance sheet date. The company makes estimates and assumptions concerning the future. Actual results may differ from these estimates. 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.
Page 26
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PATERSON SIMONS & CO (AFRICA) LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
Page 27
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PATERSON SIMONS & CO (AFRICA) LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
Page 28
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PATERSON SIMONS & CO (AFRICA) LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
Page 29
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PATERSON SIMONS & CO (AFRICA) LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
There were no factors that may affect future tax charges.
The Company has taken advantage of the exemption allowed under section 408 of the Companies Act 2006 and has not presented its own Statement of Comprehensive Income in these financial statements. The loss after tax of the parent Company for the year was £
Page 30
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PATERSON SIMONS & CO (AFRICA) LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
Page 31
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PATERSON SIMONS & CO (AFRICA) LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
Page 32
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PATERSON SIMONS & CO (AFRICA) LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
Revalued Assets
The leasehold property in Ghana was revalued at the previous year end by the Directors, based on the sales price of the property after the year end; this was subsequently reclassified to Non-current assets held for sale. The leasehold property in the UK was revalued at the year end by a professional valuer.
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PATERSON SIMONS & CO (AFRICA) LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
Page 34
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PATERSON SIMONS & CO (AFRICA) LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
Page 35
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PATERSON SIMONS & CO (AFRICA) LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
Page 36
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PATERSON SIMONS & CO (AFRICA) LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
Page 37
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PATERSON SIMONS & CO (AFRICA) LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
Page 38
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PATERSON SIMONS & CO (AFRICA) LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
Revaluation reserve
The revaluation reserve comprises movements in the revaluations of leasehold properties net of the associated deferred tax. Company The revaluation reserve comprises movements in the revaluations of Investment in subsidiaries and the leasehold property.
Foreign exchange reserve
Profit and loss account
Page 39
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PATERSON SIMONS & CO (AFRICA) LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
During the year there was a change in accounting policy to carry the leasehold property under the revaluation model.
A prior year adjustment was made to ensure the comparatives reflect this change, as follows: The leasehold property value and revaluation reserve at 1 January 2021 has been increased by £218,351. In the opinion of the directors, the valuation of the property has not changed since the adjustment made as at 1 January 2021. During the prior year the directors identified that the foreign exchange movements on the leasehold property held in Ghana were incorrectly reflected in the accounts. This was corrected by a prior year adjustment. This resulted in the decrease of the revaluation reserves at 1 January 2020 of £949,552 and an increase in the charge to the Other comprehensive income of £174,706 resulting in a reduction in the reserves.
The Group operates a defined contributions pension scheme. The assets of the scheme are held separately from those of the group in an independently administered fund. The pension cost charge represents contributions payable by the Group to the fund and amounted to £197,807 (2021 - £160,285).
Page 40
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PATERSON SIMONS & CO (AFRICA) LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
Page 41
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