Company registration number 01271151 (England and Wales)
P.J. PIPE & VALVE CO. LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
P.J. PIPE & VALVE CO. LIMITED
COMPANY INFORMATION
Directors
Mr D R Munro
Mr S R Charles
Mr P H Goodmaker
Mr K J Kmiec
Mr J D Moir
Company number
01271151
Registered office
4 Post Office Walk
Hertford
Hertfordshire
SG14 1DL
Auditor
Gravita Audit II Limited
Aldgate Tower
2 Leman Street
London
E1 8FA
P.J. PIPE & VALVE CO. LIMITED
CONTENTS
Page
Strategic report
1
Directors' report
2 - 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 - 25
P.J. PIPE & VALVE CO. LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2023
- 1 -
The directors present the strategic report for the year ended 31 December 2023.
Fair review of the business
Turnover for the year of £16.250m represents a record year for valve sales, as anticipated in the 2023 audited accounts.
Principal risks and uncertainties
The directors believe we will continue to grow in this current buoyant marketplace. Key customer relationships, established in recent years, will underpin our expectations. Due to high inflation globally in 2022-23, margins have been pressured, but this has been offset, where possible, by improved control of overheads with updated technologies and efficiencies. We are also expecting to start seeing the benefits of our investment in 2023 of moving into new markets. The directors anticipate this growth to continue into 2025 and beyond.
Mr D R Munro
Director
15 August 2024
P.J. PIPE & VALVE CO. LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 DECEMBER 2023
- 2 -
The directors present their annual report and financial statements for the year ended 31 December 2023.
Principal activities
The principal activity of the company continued to be that of supplying of valves to energy and other projects.
Results and dividends
The results for the year are set out on page 7.
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:
Mr D R Munro
Ms S Munro
(Resigned 9 June 2023)
Mr S R Charles
Mr P H Goodmaker
Mr K J Kmiec
Mr J D Moir
Auditor
Gravita Audit II Limited were appointed as auditor to the company and in accordance with section 485 of the Companies Act 2006, a resolution proposing that they be re-appointed 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 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.
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.
P.J. PIPE & VALVE CO. LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 3 -
On behalf of the board
Mr D R Munro
Director
15 August 2024
P.J. PIPE & VALVE CO. LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF P.J. PIPE & VALVE CO. LIMITED
- 4 -
Opinion
We have audited the financial statements of P.J. Pipe & Valve Co. Limited (the 'company') for the year ended 31 December 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 31 December 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.
P.J. PIPE & VALVE CO. LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF P.J. PIPE & VALVE CO. 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.
We ensured that the engagement team collectively had the appropriate competence, capabilities and skills to identify or recognise non-compliance with applicable laws and regulations. The laws and regulations applicable to the company were identified through discussions with directors and other management, and from our commercial knowledge and experience of the global energy projects suppliers industry. Of these laws and regulations, we focused on those that we considered may have a direct material effect on the financial statements or the operations of the company, including Companies Act 2006, taxation legislation, data protection, anti-bribery, anti-money-laundering, employment, environmental and health and safety legislation. The extent of compliance with these laws and regulations identified above was assessed through making enquiries of management and inspecting legal correspondence. The identified laws and regulations were communicated within the audit team regularly and the team remained alert to instances of non-compliance throughout the audit.
We assessed the susceptibility of the company’s financial statements to material misstatement, including obtaining an understanding of how fraud might occur, by:
making enquiries of management as to where they considered there was susceptibility to fraud, their knowledge of actual, suspected and alleged fraud;
considering the internal controls in place to mitigate risks of fraud and non-compliance with laws and regulations; and
understanding the design of the company’s remuneration policies.
To address the risk of fraud through management bias and override of controls, we:
performed analytical procedures to identify any unusual or unexpected relationships;
tested journal entries to identify unusual transactions;
assessed whether judgements and assumptions made in determining the accounting estimates set out in note 2 were indicative of potential bias; and
investigated the rationale behind significant or unusual transactions.
P.J. PIPE & VALVE CO. LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF P.J. PIPE & VALVE CO. LIMITED
- 6 -
In response to the risk of irregularities and non-compliance with laws and regulations, we designed procedures which included, but were not limited to:
agreeing financial statement disclosures to underlying supporting documentation;
reading the minutes of meetings of those charged with governance;
enquiring of management as to actual and potential litigation and claims; and
reviewing correspondence with HMRC, relevant regulators including the company’s legal advisors.
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.
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.
Paul Woosey FCA, FCCA
Senior Statutory Auditor
For and on behalf of Gravita Audit II Limited
16 August 2024
Chartered Accountants
Statutory Auditor
Aldgate Tower
2 Leman Street
London
E1 8FA
P.J. PIPE & VALVE CO. LIMITED
PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 31 DECEMBER 2023
- 7 -
2023
2022
Notes
£
£
Turnover
3
16,250,110
14,044,704
Change in stocks of finished goods and in work in progress
483,581
(145,793)
Other operating income
530,865
Other external expenses
(12,499,019)
(11,289,046)
Staff costs
5
(1,345,082)
(1,034,375)
Depreciation
4
(45,534)
(13,398)
Other operating expenses
(1,700,680)
(971,221)
Operating profit
4
1,674,241
590,871
Interest receivable and similar income
7
2,670
42
Interest payable and similar expenses
8
(125,760)
(83,508)
Profit before taxation
1,551,151
507,405
Tax on profit
9
(195,802)
(44,844)
Profit for the financial year
1,355,349
462,561
The profit and loss account has been prepared on the basis that all operations are continuing operations.
P.J. PIPE & VALVE CO. LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2023
- 8 -
2023
2022
£
£
Profit for the year
1,355,349
462,561
Other comprehensive income
-
-
Total comprehensive income for the year
1,355,349
462,561
P.J. PIPE & VALVE CO. LIMITED
BALANCE SHEET
AS AT
31 DECEMBER 2023
31 December 2023
- 9 -
2023
2022
Notes
£
£
£
£
Fixed assets
Tangible assets
10
44,907
111,101
Current assets
Stocks
11
637,818
154,237
Debtors
12
11,855,963
9,278,827
Cash at bank and in hand
911,678
774,388
13,405,459
10,207,452
Creditors: amounts falling due within one year
13
(8,494,848)
(7,118,145)
Net current assets
4,910,611
3,089,307
Total assets less current liabilities
4,955,518
3,200,408
Creditors: amounts falling due after more than one year
14
(746,710)
(1,008,096)
Provisions for liabilities
Provisions
17
797,480
114,233
Deferred tax liability
18
22,100
(797,480)
(136,333)
Net assets
3,411,328
2,055,979
Capital and reserves
Called up share capital
20
3,850
3,850
Other reserves
1,150
1,150
Profit and loss reserves
3,406,328
2,050,979
Total equity
3,411,328
2,055,979
These financial statements have been prepared in accordance with the provisions relating to medium-sized companies.
The financial statements were approved by the board of directors and authorised for issue on 15 August 2024 and are signed on its behalf by:
Mr D R Munro
Director
Company registration number 01271151 (England and Wales)
P.J. PIPE & VALVE CO. LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2023
- 10 -
Share capital
Other reserves
Profit and loss reserves
Total
£
£
£
£
Balance at 1 January 2022
3,850
1,150
1,588,418
1,593,418
Year ended 31 December 2022:
Profit and total comprehensive income for the year
-
-
462,561
462,561
Balance at 31 December 2022
3,850
1,150
2,050,979
2,055,979
Year ended 31 December 2023:
Profit and total comprehensive income for the year
-
-
1,355,349
1,355,349
Balance at 31 December 2023
3,850
1,150
3,406,328
3,411,328
P.J. PIPE & VALVE CO. LIMITED
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2023
- 11 -
2023
2022
Notes
£
£
£
£
Cash flows from operating activities
Cash generated from operations
24
570,880
31,395
Interest paid
(125,760)
(83,508)
Income taxes refunded
2,672
14,446
Net cash inflow/(outflow) from operating activities
447,792
(37,667)
Investing activities
Proceeds from disposal of intangibles
7,825
1,538
Purchase of tangible fixed assets
(5,510)
(84,618)
Proceeds from disposal of tangible fixed assets
18,345
Repayment of loans
42,664
(42,664)
Interest received
2,670
42
Net cash generated from/(used in) investing activities
65,994
(125,702)
Financing activities
Repayment of bank loans
(340,529)
(243,016)
Payment of finance leases obligations
(35,967)
54,774
Net cash used in financing activities
(376,496)
(188,242)
Net increase/(decrease) in cash and cash equivalents
137,290
(351,611)
Cash and cash equivalents at beginning of year
774,388
1,126,000
Cash and cash equivalents at end of year
911,678
774,388
P.J. PIPE & VALVE CO. LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
- 12 -
1
Accounting policies
Company information
P.J. Pipe & Valve Co. Limited is a private company limited by shares incorporated in England and Wales. The registered office is 4 Post Office Walk, Hertford, Hertfordshire, SG14 1DL.
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
Atruet the time of approving the financial statements, the directors have a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future. Thus the directors continue to adopt the going concern basis of accounting in preparing the financial statements.
1.3
Turnover
Turnover is measured at the fair value of the consideration received or receivable, excluding discounts, rebates, value added tax and other sales taxes.
Revenue from the sale of goods is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer in accordance with the contract terms (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.
Purchase costs incurred in relation to sales contracts where the revenue recognition criteria has not been met are included in stock.
Purchase deposits paid in relation to contract purchases are included in prepayments.
Payments received on account from contract customers in line with contractual stage payment milestones where the revenue recognition criteria has not been met are included in creditors as payments received on account.
Amounts due from contract customers included in debtors relate to accrued income in relation to final contract milestones which have not yet been invoiced where the revenue recognition criteria has been met on the contract during the year.
1.4
Research and development expenditure
Research expenditure is written off against profits in the year in which it is incurred. Identifiable development expenditure is capitalised to the extent that the technical, commercial and financial feasibility can be demonstrated.
1.5
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.
P.J. PIPE & VALVE CO. LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 13 -
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:
Fixtures and fittings
25% on cost
Computers
33.33% on cost
Motor vehicles
20% on cost
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.
1.6
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.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.
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.
1.7
Stocks
Stocks are valued at the lower of cost and net realisable value, after making due allowance for obsolete and slow moving items.
Contract work in progress is costs incurred, after deducting any expected contract losses.
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.
1.8
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.
P.J. PIPE & VALVE CO. LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 14 -
1.9
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.
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 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.
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 company 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 company after deducting all of its liabilities.
P.J. PIPE & VALVE CO. LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 15 -
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 company’s contractual obligations expire or are discharged or cancelled.
1.10
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.
1.11
Taxation
Taxation for the year comprises current and deferred tax. Tax is recognised in the Income Statement, except to the extent that it relates to items recognised in other comprehensive income or directly in equity.
Current or deferred taxation assets and liabilities are not discounted.
Current tax
Current tax is recognised at the amount of tax payable using the tax rates and laws that have been enacted or substantively enacted by the balance sheet date.
Current tax is recognised at the amount of tax payable using the tax rates and laws that have been enacted or substantively enacted by the balance sheet date.
P.J. PIPE & VALVE CO. LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 16 -
Deferred tax
Deferred tax is recognised in respect of all timing differences that have originated but not reversed at the balance sheet date.
Timing differences arise from the inclusion of income and expense in tax assessments in periods different from those in which they are recognised in financial statements. Deferred tax is measured using tax rates and laws that have been enacted or substantively enacted by the year end and that are expected to apply to the reversal of the timing difference.
Unrelieved tax losses and other deferred tax assets are recognised only to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits.
1.12
Provisions
Provisions are recognised when the company has a legal or constructive present obligation as a result of a past event, it is probable that the company 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.
The company provides a warranty provision for costs to replace or repair where an issue has been identified with products supplied to customers.
1.13
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.
1.14
Retirement benefits
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
1.15
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.
P.J. PIPE & VALVE CO. LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 17 -
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.
Critical judgements
The following judgements (apart from those involving estimates) have had the most significant effect on amounts recognised in the financial statements.
Recoverability of intercompany debtors
The recoverability of intercompany debtors is a significant judgement, the directors have prepared an assessment of the recoverability of the balances based on the future profits that supports the recoverability of these balances.
3
Turnover and other revenue
2023
2022
£
£
Turnover analysed by class of business
Revenue from contracts
16,250,110
14,044,704
2023
2022
£
£
Turnover analysed by geographical market
Americas
766,000
71,704
APAC
12,810,110
9,051,000
EMEA
2,674,000
4,922,000
16,250,110
14,044,704
2023
2022
£
£
Other revenue
Interest income
2,670
42
P.J. PIPE & VALVE CO. LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 18 -
4
Operating profit
2023
2022
Operating profit for the year is stated after charging/(crediting):
£
£
Exchange (gains)/losses
(209,176)
268,269
Research and development costs
90,441
103,018
Fees payable to the company's auditor for the audit of the company's financial statements
65,850
33,310
Depreciation of owned tangible fixed assets
12,256
14,517
Depreciation of tangible fixed assets held under finance leases
41,100
-
Profit on disposal of intangible assets
(7,822)
(1,120)
Operating lease charges
51,965
81,990
5
Employees
The average monthly number of persons (including directors) employed by the company during the year was:
2023
2022
Number
Number
10
11
Their aggregate remuneration comprised:
2023
2022
£
£
Wages and salaries
1,177,824
931,213
Social security costs
132,668
74,917
Pension costs
34,590
28,245
1,345,082
1,034,375
6
Directors' remuneration
2023
2022
£
£
Remuneration for qualifying services
923,563
749,581
Remuneration disclosed above include the following amounts paid to the highest paid director:
2023
2022
£
£
Remuneration for qualifying services
169
114
P.J. PIPE & VALVE CO. LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 19 -
7
Interest receivable and similar income
2023
2022
£
£
Interest income
Interest on bank deposits
2,670
42
8
Interest payable and similar expenses
2023
2022
£
£
Interest on financial liabilities measured at amortised cost:
Interest on bank overdrafts and loans
125,760
83,508
9
Taxation
2023
2022
£
£
Current tax
UK corporation tax on profits for the current period
69,093
(14,709)
Deferred tax
Origination and reversal of timing differences
126,709
59,553
Total tax charge
195,802
44,844
The actual charge 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
1,551,151
507,405
Expected tax charge based on the standard rate of corporation tax in the UK of 23.52% (2022: 19.00%)
364,831
96,407
Tax effect of expenses that are not deductible in determining taxable profit
1,832
1,017
Tax effect of income not taxable in determining taxable profit
(1,840)
Tax effect of utilisation of tax losses not previously recognised
(176,761)
(80,932)
Group relief
(5,327)
Permanent capital allowances in excess of depreciation
(1,332)
(19,250)
Depreciation on assets not qualifying for tax allowances
12,549
2,758
Under/(over) provided in prior years
(14,709)
Deferred tax adjustments in respect of prior years
126,709
59,553
Release of intercompany loan
(124,859)
Taxation charge for the year
195,802
44,844
P.J. PIPE & VALVE CO. LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 20 -
10
Tangible fixed assets
Fixtures and fittings
Computers
Motor vehicles
Total
£
£
£
£
Cost
At 1 January 2023
6,000
26,095
138,523
170,618
Additions
5,510
5,510
Disposals
(61,654)
(61,654)
At 31 December 2023
6,000
31,605
76,869
114,474
Depreciation and impairment
At 1 January 2023
6,000
16,156
37,361
59,517
Depreciation charged in the year
12,256
41,100
53,356
Eliminated in respect of disposals
(43,306)
(43,306)
At 31 December 2023
6,000
28,412
35,155
69,567
Carrying amount
At 31 December 2023
3,193
41,714
44,907
At 31 December 2022
9,939
101,162
111,101
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
£
£
Motor vehicles
41,714
24,513
11
Stocks
2023
2022
£
£
Finished goods and goods for resale
637,818
154,237
12
Debtors
2023
2022
Amounts falling due within one year:
£
£
Trade debtors
5,570,366
4,693,026
Gross amounts owed by contract customers
205,750
217,592
Amounts owed by group undertakings
5,745,553
3,525,752
Other debtors
257,001
107,306
Prepayments and accrued income
77,293
586,341
11,855,963
9,130,017
P.J. PIPE & VALVE CO. LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
12
Debtors
(Continued)
- 21 -
2023
2022
Amounts falling due after more than one year:
£
£
Deferred tax asset (note 18)
148,810
Total debtors
11,855,963
9,278,827
13
Creditors: amounts falling due within one year
2023
2022
Notes
£
£
Bank loans
15
236,364
340,530
Obligations under finance leases
16
14,188
25,132
Payments received on account
1,959,032
2,726,630
Trade creditors
4,126,436
1,425,910
Amounts owed to group undertakings
506,802
815,372
Corporation tax
71,764
Other taxation and social security
24,077
42,922
Other creditors
141,658
688,082
Accruals and deferred income
1,414,527
1,053,567
8,494,848
7,118,145
14
Creditors: amounts falling due after more than one year
2023
2022
Notes
£
£
Bank loans and overdrafts
15
709,091
945,454
Obligations under finance leases
16
37,619
62,642
746,710
1,008,096
15
Loans and overdrafts
2023
2022
£
£
Bank loans
945,455
1,285,984
Payable within one year
236,364
340,530
Payable after one year
709,091
945,454
Loans are secured by fixed charges over all present freehold and leasehold property.
P.J. PIPE & VALVE CO. LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
15
Loans and overdrafts
(Continued)
- 22 -
Coronavirus Business Interruption loan
The loan was repaid during the year, The interest was charged at 3.49% per annum over the Bank of England Base Rate.
Recovery Loan Scheme
Interest is charged at 3.99% per annum over the Bank of England Base Rate.
16
Finance lease obligations
2023
2022
Future minimum lease payments due under finance leases:
£
£
Within one year
14,188
25,132
In two to five years
37,619
62,642
51,807
87,774
Finance lease payments represent rentals payable by the company for certain items of plant and machinery. Leases include purchase options at the end of the lease period, and no restrictions are placed on the use of the assets. The average lease term is 3 years. All leases are on a fixed repayment basis and no arrangements have been entered into for contingent rental payments.
17
Provisions for liabilities
2023
2022
£
£
Warranty provision
797,480
114,233
Movements on provisions:
Warranty provision
£
At 1 January 2023
114,233
Additional provisions in the year
683,247
At 31 December 2023
797,480
P.J. PIPE & VALVE CO. LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 23 -
18
Deferred taxation
The following are the major deferred tax liabilities and assets recognised by the company and movements thereon:
Liabilities
Liabilities
Assets
Assets
2023
2022
2023
2022
Balances:
£
£
£
£
Accelerated capital allowances
-
22,100
-
-
Tax losses
-
-
-
148,810
-
22,100
-
148,810
2023
Movements in the year:
£
Asset at 1 January 2023
(126,710)
Charge to profit or loss
126,710
Liability at 31 December 2023
-
19
Retirement benefit schemes
2023
2022
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
34,590
28,245
The company operates a defined contribution pension scheme for all qualifying employees. The assets of the scheme are held separately from those of the company in an independently administered fund.
20
Share capital
2023
2022
2023
2022
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Ordinary shares of £1 each
3,850
3,850
3,850
3,850
21
Financial commitments, guarantees and contingent liabilities
The company has given guarantees in connection with its own trading business to certain customers and HM Revenue & Customs for a total maximum amount of £2,278k (2022: £1,337k). None of these guarantees had crystallised as at the date of approval of these accounts.
P.J. PIPE & VALVE CO. LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 24 -
22
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
185
10
23
Ultimate controlling party
The Company's ultimate parent undertaking is P J Valves Group Limited, registered office 4 Post Office Walk, Hertford, England, SG14 1DL and is a Company incorporated in England and Wales. Copies of consolidated financial statements can be obtained from Companies House.
The ultimate parent undertaking changed from P.J Valves Holding Limited to P J Valves Group Limited on the 7th June 2023 when the company was acquired by the P J Valves Group Limited.
The ultimate controlling party is Daniel Munro.
24
Cash generated from operations
2023
2022
£
£
Profit for the year after tax
1,355,349
462,561
Adjustments for:
Taxation charged
195,802
44,844
Finance costs
125,760
83,508
Investment income
(2,670)
(42)
Gain on disposal of intangible assets
(7,822)
(1,120)
Depreciation and impairment of tangible fixed assets
53,356
14,517
Increase/(decrease) in provisions
683,247
(81,767)
Movements in working capital:
(Increase)/decrease in stocks
(483,581)
327,763
Increase in debtors
(2,768,610)
(2,589,353)
Increase in creditors
1,420,049
1,770,483
Cash generated from operations
570,880
31,394
P.J. PIPE & VALVE CO. LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 25 -
25
Analysis of changes in net debt
1 January 2023
Cash flows
31 December 2023
£
£
£
Cash at bank and in hand
774,388
137,290
911,678
Borrowings excluding overdrafts
(1,285,984)
340,529
(945,455)
Obligations under finance leases
(87,774)
35,967
(51,807)
(599,370)
513,786
(85,584)
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