Company registration number 00584296 (England and Wales)
PRECISION COMPONENTS & EQUIPMENT LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
PRECISION COMPONENTS & EQUIPMENT LIMITED
COMPANY INFORMATION
Directors
N A Bradley
D A Bradley
H E Bradley
Secretary
D A Bradley and H E Bradley
Company number
00584296
Registered office
Junction 21 Business Park
Gorse Street
Chadderton
Oldham
Lancashire
OL9 9QH
Auditor
Pierce C A Limited
Mentor House
Ainsworth Street
Blackburn
Lancashire
BB1 6AY
Business address
Junction 21 Business Park
Gorse Street
Chadderton
Oldham
Lancashire
OL9 9QH
PRECISION COMPONENTS & EQUIPMENT LIMITED
CONTENTS
Page
Strategic report
1
Directors' report
2
Directors' responsibilities statement
3
Independent auditor's report
4 - 6
Profit and loss account
7
Statement of comprehensive income
8
Balance sheet
9
Statement of changes in equity
10
Statement of cash flows
11
Notes to the financial statements
12 - 21
PRECISION COMPONENTS & EQUIPMENT LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 30 JUNE 2023
- 1 -
The directors present the strategic report for the year ended 30 June 2023.
Review of the business
The directors are pleased with the company’s results for the financial year, with an increase in profit before tax of £431,553 (168.2%). The company’s turnover decreased in the financial year by £1.79m (17.6%), but this is partly due to raw material price volatility, which has now begun to stabilise post year end.
The company continues to deal with inflationary and pricing pressures as a result of the Covid-19 pandemic, and has managed to navigate through a process of increasing working capital requirements.
We now predict the company will experience growth in the coming years, given significant investment in plant and machinery and sales staff in the previous two years. The company has the capacity levels to be able to now recognize significant organic growth as a result of the investments made.
Principal risks and uncertainties
Operating in a highly competitive market continues to be the company’s principal risk. Albeit, to mitigate these risks the company has invested significantly in plant and machinery, and we believe this will allow the company to stay ahead of our competition.
In addition, the company faces risk and uncertainty in respect of rising interest rates, rising utility costs and inflation. We constantly monitor this risk diligently to ensure it has a minimal impact on the activities of the business.
We continue to acknowledge the wide uncertainty in respect of the global economy.
Financial risk management
Moving forward the directors are looking to consolidate and grow the company's current position in the market on the back of the investment made in plant and machinery. We are expecting the company to exhibit strong balance sheet growth moving forward and to use the company's net profits to facilitate repayment of its existing borrowings.
Key performance indicators
The directors believe identifying key performance indicators is important and use several indicators to monitor and improve the development, performance and position of the business.
The directors have identified the following metrics as key financial indicators of performance:
Turnover – £8,370,524 (2022 - £10,162,831)
Gross profit margin – 30% (2022 – 21%)
Profit before tax – £688,064 (2022 - £256,511)
Other performance indicators
Non-financial indicators are also monitored on a day-to-day basis with regards to quality, efficiency and various other manufacturing parameters.
The company supports equal opportunities in employment and strongly opposes discrimination of any form. The company also employs a policy, where possible, to show sympathy for those disabled seeking employment and to protect the interests of those employees who are disabled.
N A Bradley
Director
16 November 2023
PRECISION COMPONENTS & EQUIPMENT LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 30 JUNE 2023
- 2 -
The directors present their annual report and financial statements for the year ended 30 June 2023.
Principal activities
The principal activity of the company continued to be that of the manufacture and distribution of specialist engineering components for a range of industries.
Results and dividends
The results for the year are set out on page 7.
During the year dividends were paid amounting to £300,000 (2022: £682,000). The directors do not recommend payment of a further dividend.
Directors
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
N A Bradley
D A Bradley
H E Bradley
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 company’s auditor 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 company’s auditor 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 medium-sized companies exemption.
On behalf of the board
N A Bradley
Director
16 November 2023
PRECISION COMPONENTS & EQUIPMENT LIMITED
DIRECTORS' RESPONSIBILITIES STATEMENT
FOR THE YEAR ENDED 30 JUNE 2023
- 3 -
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 company and of the profit or loss of the company for that period. In preparing these financial statements, the directors are required to:
select suitable accounting policies and then apply them consistently;
make judgements and accounting estimates that are reasonable and prudent;
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company’s transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
PRECISION COMPONENTS & EQUIPMENT LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF PRECISION COMPONENTS & EQUIPMENT LIMITED
- 4 -
Opinion
We have audited the financial statements of Precision Components & Equipment Limited (the 'company') for the year ended 30 June 2023 which comprise the profit and loss account, the statement of comprehensive income, the balance sheet, the statement of changes in equity, the 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:
give a true and fair view of the state of the company's affairs as at 30 June 2023 and of its profit for the year then ended;
have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
have been prepared in accordance with the requirements of the Companies Act 2006.
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 company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
The other information comprises the information included in the annual report other than the financial statements and our auditor's report thereon. The directors are responsible for the other information contained within the annual report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of our audit:
the information given in the strategic report and the directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
the strategic report and the directors' report have been prepared in accordance with applicable legal requirements.
PRECISION COMPONENTS & EQUIPMENT LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF PRECISION COMPONENTS & EQUIPMENT LIMITED
- 5 -
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identified material misstatements in the strategic report or the directors' report.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:
adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or
the financial statements are not in agreement with the accounting records and returns; or
certain disclosures of remuneration specified by law are not made; or
we have not received all the information and explanations we require for our audit.
Responsibilities of directors
As explained more fully in the directors' responsibilities statement, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the directors are responsible for assessing the company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.
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.
In identifying and assessing risks of material misstatements in respect of irregularities (including fraud) we considered the following:
The nature of the industry, the company's control environment, the significant laws and regulations relevant to the company, and the company's policies on detection of fraud;
Results of our enquiries of management and of those charged with governance;
Our review of disclosures included in the financial statements, and
Engagement team discussions in respect of any potential indicators of non-compliance or fraud.
We have also performed specific procedures to consider the risk of management override and of fraud arising in significant transactions outside the normal course of business.
We did not identify a material risk of non-compliance with laws and regulations or of fraud.
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.
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.
PRECISION COMPONENTS & EQUIPMENT LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF PRECISION COMPONENTS & EQUIPMENT LIMITED
- 6 -
Paul Moulding (Senior Statutory Auditor)
For and on behalf of Pierce C A Limited
Statutory Auditor
Mentor House
Ainsworth Street
Blackburn
Lancashire
BB1 6AY
PRECISION COMPONENTS & EQUIPMENT LIMITED
PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 30 JUNE 2023
- 7 -
2023
2022
Notes
£
£
Turnover
3
8,370,524
10,162,831
Cost of sales
(5,863,089)
(8,038,663)
Gross profit
2,507,435
2,124,168
Distribution costs
(424,777)
(516,903)
Administrative expenses
(1,207,764)
(1,279,151)
Other operating income
19,380
22,028
Operating profit
4
894,274
350,142
Interest receivable and similar income
6,038
Interest payable and similar expenses
8
(212,248)
(93,631)
Profit before taxation
688,064
256,511
Tax on profit
9
539,589
40,643
Profit for the financial year
1,227,653
297,154
The profit and loss account has been prepared on the basis that all operations are continuing operations.
PRECISION COMPONENTS & EQUIPMENT LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2023
- 8 -
2023
2022
£
£
Profit for the year
1,227,653
297,154
Other comprehensive income
-
-
Total comprehensive income for the year
1,227,653
297,154
PRECISION COMPONENTS & EQUIPMENT LIMITED
BALANCE SHEET
- 9 -
2023
2022
Notes
£
£
£
£
Fixed assets
Tangible assets
11
3,972,122
3,178,190
Current assets
Stocks
12
794,845
958,840
Debtors
13
1,484,033
1,667,356
Cash at bank and in hand
47,508
50,199
2,326,386
2,676,395
Creditors: amounts falling due within one year
14
(3,273,939)
(3,624,272)
Net current liabilities
(947,553)
(947,877)
Total assets less current liabilities
3,024,569
2,230,313
Creditors: amounts falling due after more than one year
15
(1,926,531)
(1,611,081)
Provisions for liabilities
Deferred tax liability
16
448,847
-
(448,847)
Net assets
1,098,038
170,385
Capital and reserves
Called up share capital
17
1,000
1,000
Profit and loss reserves
1,097,038
169,385
Total equity
1,098,038
170,385
These financial statements have been prepared in accordance with the provisions relating to medium-sized companies.true
The financial statements were approved by the board of directors and authorised for issue on 16 November 2023 and are signed on its behalf by:
N A Bradley
Director
Company registration number 00584296 (England and Wales)
PRECISION COMPONENTS & EQUIPMENT LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2023
- 10 -
Share capital
Profit and loss reserves
Total
Notes
£
£
£
Balance at 1 July 2021
1,000
554,231
555,231
Year ended 30 June 2022:
Profit and total comprehensive income
-
297,154
297,154
Dividends
10
-
(682,000)
(682,000)
Balance at 30 June 2022
1,000
169,385
170,385
Year ended 30 June 2023:
Profit and total comprehensive income
-
1,227,653
1,227,653
Dividends
10
-
(300,000)
(300,000)
Balance at 30 June 2023
1,000
1,097,038
1,098,038
PRECISION COMPONENTS & EQUIPMENT LIMITED
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2023
- 11 -
2023
2022
Notes
£
£
£
£
Cash flows from operating activities
Cash generated from operations
22
1,136,242
1,283,507
Interest paid
(105,661)
(24,296)
Income taxes refunded/(paid)
10,026
(62,008)
Net cash inflow from operating activities
1,040,607
1,197,203
Investing activities
Purchase of tangible fixed assets
(357,762)
(1,815,196)
Proceeds from disposal of tangible fixed assets
184,000
500,019
Repayment of borrowings
(719,536)
(252,488)
Net cash used in investing activities
(893,298)
(1,567,665)
Financing activities
Proceeds from loans
150,000
1,021,162
Dividends paid
(300,000)
(682,000)
Net cash (used in)/generated from financing activities
(150,000)
339,162
Net decrease in cash and cash equivalents
(2,691)
(31,300)
Cash and cash equivalents at beginning of year
50,199
81,499
Cash and cash equivalents at end of year
47,508
50,199
PRECISION COMPONENTS & EQUIPMENT LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
- 12 -
1
Accounting policies
Company information
Precision Components & Equipment Limited is a private company limited by shares incorporated in England and Wales. The registered office is Junction 21 Business Park, Gorse Street, Chadderton, Oldham, Lancashire, OL9 9QH.
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. The principal accounting policies adopted are set out below.
1.2
Going concern
The company is reliant on the ongoing support of its lenders and invoice factoring facility to meet its liabilities as they fall due. The directors are not aware of any reasons why these borrowings will not be maintained at their current levels.true
As a result the directors have continued to adopt the going concern basis in preparing the financial statements.
1.3
Turnover
Turnover is recognised at the fair value of the consideration received or receivable for goods provided in the normal course of business, and is shown net of VAT and other sales related taxes. Turnover has been wholly derived from the group's principal activities.
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.
1.4
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.
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:
Leasehold land and buildings
Straight line over the life of the lease
Plant and equipment
15% Reducing balance / Straight line over 10 to 15 years
Fixtures and fittings
15% Reducing balance
Computers
25% - 33.33% Straight line
Motor vehicles
25% Straight line
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 profit or loss.
PRECISION COMPONENTS & EQUIPMENT LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
1
Accounting policies
(Continued)
- 13 -
1.5
Impairment of fixed assets
At each reporting period end date, the company reviews the carrying amounts of its tangible 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.
1.6
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 profit or loss. Reversals of impairment losses are also recognised in profit or loss.
1.7
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.
1.8
Financial instruments
The company 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 company's balance sheet when the company 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 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.
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 profit or loss.
If there is a decrease in the impairment loss arising from an event occurring after the impairment was recognised, the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been, had the impairment not previously been recognised. The impairment reversal is recognised in profit or loss.
PRECISION COMPONENTS & EQUIPMENT LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
1
Accounting policies
(Continued)
- 14 -
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 company 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.
Derecognition of financial liabilities
Financial liabilities are derecognised when the company’s contractual obligations expire or are discharged or cancelled.
1.9
Equity instruments
Equity instruments issued by the company 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 company.
1.10
Taxation
The tax expense represents the sum of the tax currently payable and deferred tax.
Current tax
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the profit and loss account because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The company’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.
1.11
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.
PRECISION COMPONENTS & EQUIPMENT LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
1
Accounting policies
(Continued)
- 15 -
1.12
Retirement benefits
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
1.13
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 balance sheet 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 leases asset are consumed.
1.14
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.
2
Judgements and key sources of estimation uncertainty
In the application of the company’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.
3
Turnover
2023
2022
£
£
Turnover analysed by class of business
Principal activity
8,370,524
10,162,831
2023
2022
£
£
Turnover analysed by geographical market
United Kingdom
8,205,717
9,983,245
Europe
164,807
179,586
8,370,524
10,162,831
PRECISION COMPONENTS & EQUIPMENT LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
- 16 -
4
Operating profit
2023
2022
Operating profit for the year is stated after charging/(crediting):
£
£
Depreciation of owned tangible fixed assets
483,066
526,198
(Profit)/loss on disposal of tangible fixed assets
(20,459)
121,816
Operating lease charges
343,177
184,140
5
Auditor's remuneration
2023
2022
Fees payable to the company's auditor and associates:
£
£
For audit services
Audit of the financial statements of the company
12,000
20,000
6
Employees
The average monthly number of persons (including directors) employed by the company during the year was:
2023
2022
Number
Number
Production staff
90
94
Administrative staff
14
14
Total
104
108
Their aggregate remuneration comprised:
2023
2022
£
£
Wages and salaries
2,621,052
2,690,912
Social security costs
247,484
219,078
Pension costs
71,648
68,596
2,940,184
2,978,586
7
Directors' remuneration
The directors received no remuneration from the company during the year.
PRECISION COMPONENTS & EQUIPMENT LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
- 17 -
8
Interest payable and similar expenses
2023
2022
£
£
Interest on financial liabilities measured at amortised cost:
Interest on bank overdrafts and loans
16,686
13,159
Other finance costs:
Interest on finance leases and hire purchase contracts
88,183
6,261
Other interest
107,379
74,211
212,248
93,631
9
Taxation
2023
2022
£
£
Current tax
Adjustments in respect of prior periods
(90,742)
(127,361)
Deferred tax
Origination and reversal of timing differences
(448,847)
86,718
Total tax credit
(539,589)
(40,643)
The actual 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
688,064
256,511
Expected tax charge based on the standard rate of corporation tax in the UK of 19.00% (2022: 19.00%)
130,732
48,737
Tax effect of expenses that are not deductible in determining taxable profit
379
41,542
Adjustments in respect of prior years
(90,742)
(127,361)
Permanent capital allowances in excess of depreciation
(3,561)
Deferred tax adjustments in respect of prior years
(448,847)
Losses carried forward
(131,111)
Taxation credit for the year
(539,589)
(40,643)
10
Dividends
2023
2022
£
£
Final paid
300,000
682,000
PRECISION COMPONENTS & EQUIPMENT LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
- 18 -
11
Tangible fixed assets
Leasehold land and buildings
Plant and equipment
Fixtures and fittings
Computers
Motor vehicles
Total
£
£
£
£
£
£
Cost
At 1 July 2022
81,104
4,664,092
60,257
87,231
158,172
5,050,856
Additions
1,351,722
2,800
125,017
1,479,539
Disposals
(405,000)
(62,701)
(467,701)
At 30 June 2023
81,104
5,610,814
60,257
90,031
220,488
6,062,694
Depreciation and impairment
At 1 July 2022
46,530
1,601,910
34,614
75,632
113,980
1,872,666
Depreciation charged in the year
8,110
434,235
4,104
7,505
29,112
483,066
Eliminated in respect of disposals
(222,765)
(42,395)
(265,160)
At 30 June 2023
54,640
1,813,380
38,718
83,137
100,697
2,090,572
Carrying amount
At 30 June 2023
26,464
3,797,434
21,539
6,894
119,791
3,972,122
At 30 June 2022
34,574
3,062,182
25,643
11,599
44,192
3,178,190
The net carrying value of tangible fixed assets includes the following in respect of assets held under finance leases or hire purchase contracts.
2023
2022
£
£
Plant and equipment
2,991,198
2,095,136
Motor vehicles
124,439
23,100
3,115,637
2,118,236
12
Stocks
2023
2022
£
£
Raw materials and consumables
637,851
750,408
Work in progress
95,141
142,215
Finished goods and goods for resale
61,853
66,217
794,845
958,840
PRECISION COMPONENTS & EQUIPMENT LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
- 19 -
13
Debtors
2023
2022
Amounts falling due within one year:
£
£
Trade debtors
1,170,962
1,499,554
Corporation tax recoverable
127,361
Other debtors
223,661
Prepayments and accrued income
89,410
40,441
1,484,033
1,667,356
Other debtors represents an amount of £223,661 (2022: £Nil) due from one of the company's directors.
Interest charged by the company, on this amount, totalled £5,909 (2022: £Nil).
14
Creditors: amounts falling due within one year
2023
2022
£
£
Obligations under finance leases
691,290
470,733
Other borrowings
125,951
102,951
Trade creditors
758,283
1,246,708
Corporation tax
80,635
Other taxation and social security
485,240
266,454
Government grants
2,067
Other creditors
1,066,531
1,353,810
Accruals and deferred income
146,644
100,914
3,273,939
3,624,272
Amounts owed in respect of finance leases are secured on the assets to which they relate.
Included within Other borrowings is an amount of £67,004 (2022 - £44,004) advanced from the John Bradley Pension Fund. The liability is secured over the company's plant and machinery and is subject to interest at 1% and 3% above the relevant interest rate under the Registered Pension Schemes Regulation 2005.
Also included within Other borrowings is an amount of £58,947 (2022 - £58,947) advanced from Close Brothers, the liability is unsecured and is subject to an interest rate of 4.5% above base rate.
Other creditors includes an amount of £721,093 (2022 - £955,165) which represent advances received in respect of factored debts. The liability is secured by a fixed and floating charge over the company and all property and assets present and future.
Other creditors also includes an amount of £202,951 (2022 - £225,908) in respect of a loan advanced from a connected company under common control. The loan is unsecured, interest free and repayable on demand.
PRECISION COMPONENTS & EQUIPMENT LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
- 20 -
15
Creditors: amounts falling due after more than one year
2023
2022
£
£
Obligations under finance leases
1,714,306
1,451,673
Other borrowings
212,225
159,408
1,926,531
1,611,081
Amounts owed in respect of finance leases are secured on the assets to which they relate.
Included within Other borrowings is an amount of £163,102 (2022 - £51,338) advanced from the John Bradley Pension Fund. The liability is secured over the company's plant and machinery and is subject to interest at 1% and 3% above the relevant interest rate under the Registered Pension Schemes Regulation 2005.
Other borrowings also includes an amount of £49,123 (2022 - £108,070) advanced from Close Brothers, the liability is unsecured and is subject to an interest rate of 4.5% above base rate.
16
Deferred taxation
The following are the major deferred tax liabilities and assets recognised by the company and movements thereon:
Liabilities
Liabilities
2023
2022
Balances:
£
£
Accelerated capital allowances
-
448,847
2023
Movements in the year:
£
Liability at 1 July 2022
448,847
Credit to profit or loss
(448,847)
Liability at 30 June 2023
-
17
Share capital
2023
2022
2023
2022
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Ordinary "A" shares of £1 each
525
525
525
525
Ordinary "B" shares of £1 each
425
425
425
425
Ordinary "C" shares of £1 each
50
50
50
50
1,000
1,000
1,000
1,000
PRECISION COMPONENTS & EQUIPMENT LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
- 21 -
18
Contingent liabilities
The company has given a guarantee and indemnity on behalf of John Bradley & Son (Springs) Limited in respect of obligations under its debt financing facility. The liability outstanding at 30 June 2023 was £198,410 (2022 - £233,992).
19
Operating lease commitments
Lessee
At the reporting end date the company had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:
2023
2022
£
£
Within one year
193,083
176,000
Between two and five years
372,476
528,000
565,559
704,000
20
Related party transactions
Transactions with related parties
During the year the company entered into the following transactions with related parties:
During the year the company incurred expenses of £322,400 (2022 - £243,041) from a pension scheme of which director N A Bradley is both a trustee and a beneficiary.
21
Ultimate controlling party
The company is controlled by Mr N A Bradley by virtue of his majority shareholding in the company.
22
Cash generated from operations
2023
2022
£
£
Profit for the year after tax
1,227,653
297,154
Adjustments for:
Taxation credited
(539,589)
(40,643)
Finance costs
103,594
46,513
(Gain)/loss on disposal of tangible fixed assets
(20,459)
121,816
Depreciation of tangible fixed assets
483,066
526,198
Movements in working capital:
Decrease in stocks
163,995
87,942
Decrease in debtors
49,182
345,572
(Decrease) in creditors
(331,200)
(101,045)
Cash generated from operations
1,136,242
1,283,507
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