PCT GROUP SALES LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
Company registration number SC075642 (Scotland)
PCT GROUP SALES LIMITED
COMPANY INFORMATION
Directors
Mr Brian Lemond
Mr Paul Agnew
Mr William Wilson
Company number
SC075642
Registered office
Dalsetter House
37 Dalsetter Avenue
Glasgow
G15 8TE
Auditor
William Duncan + Co (Audit) Ltd
44 Bank Street
Kilmarnock
Ayrshire
KA1 1HA
Business address
Dalsetter House
37 Dalsetter Avenue
Glasgow
G15 8TE
Bankers
Virgin Money
Glasgow Business and Private Banking Centre
3rd Floor
30 St Vincent Place
Glasgow
G1 2HL
PCT GROUP SALES LIMITED
CONTENTS
Page
Strategic report
1 - 2
Directors' report
3
Directors' responsibilities statement
4
Independent auditor's report
5 - 7
Statement of comprehensive income
8
Balance sheet
10
Statement of changes in equity
11
Notes to the financial statements
12 - 24
PCT GROUP SALES LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2022
- 1 -
The directors present the strategic report for the year ended 31 December 2022.
Review of the business
The principal activity of the company is the manufacture, marketing, hire and development of equipment and consumables for the working and handling of metals and other materials.
Turnover increased 17.3% in the year, to £10,799,326, as the company benefited from the impact of a return of the market in oil and gas projects.
Gross profit at £4,756,424 declined 3% in the year to 44%, as the company worked through two projects in renewables which it had accepted, at lower margins, to help fill the void left by the temporary reduction experienced in oil and gas related orders
Normal administrative expenses, at £3,796,500 showed a reduction of 8% over the 2021 figure. A reduction in other income, as a result, principally of the absence of Government grants received the previous year during Covid, offset the overhead movement to an extent.
The combined effect of the foregoing led to the company generating an operating profit on normal trading, of £980,436 for the year, some 47% higher than the 2021 figure of £666,823.
Principal risks and uncertainties
Foreign currency risk
The company is exposed to foreign exchange risk. Transaction exposures, including those associated with forecast transactions are naturally hedged by the company transacting both income and expenditure in the major foreign currencies, thereby matching exchange risk as best as possible.
Credit risk
The company is exposed to credit related losses in the event of non performance by transaction counterparties, but mitigates such risks through its policy of only selecting counterparties with high credit ratings.
Liquidity risk
Operations are financed by a mixture of shareholders funds and bank borrowings. The objective is to ensure a mix of funding methods offering flexibility and cost effectiveness to match the needs of the company.
Cash flow risk
The company’s policy is to arrange bank overdrafts with a floating rate of interest plus an agreed
margin.
Development and performance
Turnover increased by 17.3% in the year to £10,799,326 (2021: £9,208,678). Gross profit percentage is 44% (2021: 47.5%). Profit before tax was £658,888 (2021: £421,849).
The directors consider turnover and GP% to be the key performance indicators.
PCT GROUP SALES LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
- 2 -
Mr Paul Agnew
Director
22 August 2024
PCT GROUP SALES LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 DECEMBER 2022
- 3 -
The directors present their annual report and financial statements for the year ended 31 December 2022.
Principal activities
The principal activity of the company continued to be that of manufacturing, marketing, hire and development of equipment and consumables for the working and handling of metals and other materials, with the provision of associated technical and advisory services. Most of the equipment and consumables can be categorised under three main headings; power tools, lifting and welding.
Branches
The company has four branches, one based in Scotland, two based in England, and the other in the United Arab Emirates.
Results and dividends
The results for the year are set out on 8.
Ordinary dividends were paid amounting to £593,749. 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:
Mr Brian Lemond
Mr Paul Agnew
Mr William Wilson
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
Mr Paul Agnew
Director
22 August 2024
PCT GROUP SALES LIMITED
DIRECTORS' RESPONSIBILITIES STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2022
- 4 -
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.
PCT GROUP SALES LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF PCT GROUP SALES LIMITED
- 5 -
We have audited the financial statements of PCT Group Sales Limited (the 'company') for the year ended 31 December 2022 which comprise the statement of comprehensive income, the balance sheet, the statement of changes in equity 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, except for the effects of the matter described in the basis for the qualified section of our report the financial statements, the financial statements:
give a true and fair view of the state of the company's affairs as at 31 December 2022 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.
Basis for qualified opinion
We were not appointed auditor of the company until after 31 December 2022 and thus did not observe the counting of physical inventories at the end of the year. During the course of the audit we tested the perpetual stock system that is in place and found this to be accurately recording stock quantities, however, since this was out with the accounting year we could not place reliance on this in relation to the balances at 31 December 2022. We were unable to satisfy ourselves by alternative means concerning inventory quantities held at 31 December 2022, which are included in the Balance Sheet at £5,727,291. Consequently, we were unable to determine whether any adjustment to these amounts were necessary.
During our audit work on other debtors, we were unable to satisfy ourselves as to the recoverability of amounts totalling £189,610. These amounts continue to be outstanding at the date of signing this audit report.
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 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 qualified 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.
PCT GROUP SALES LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF PCT GROUP SALES LIMITED
- 6 -
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.
As described in the basis for qualified opinion section of our report, we were unable to satisfy ourselves concerning the inventory quantities of £5,727,291 and other debtors balances of £189,610. We have concluded that where the other information refers to the inventory balance, other debtors or related balances such as cost of sales, it may be materially misstated for the same reason.
Opinions on other matters prescribed by the Companies Act 2006
Except for the possible effects of the matters described in the basis for qualified opinion section of our report In our opinion, based on the work undertaken in the course of the 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.
Matters on which we are required to report by exception
Except for the matters described in the basis for qualified opinion section of our report, 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 and the directors’ report.
Arising solely from the limitation on the scope of our work relating to inventory and other debtors, referred to above:
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:
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 directors’ remuneration specified by law are not made; or
the directors were not entitled to prepare the financial statements in accordance with the small companies’ regime and take advantage of the small companies’ exemptions in preparing the directors’ report and from the requirement to prepare a strategic report.
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.
PCT GROUP SALES LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF PCT GROUP SALES LIMITED
- 7 -
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.
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:
Enquiry of management, those charged with governance and the entity’s solicitors around actual and potential litigation and claims.
Enquiry of entity staff in compliance functions to identify any instances of non-compliance with Laws and Regulations.
Reviewing financial statement disclosures and testing to supporting documentation to assess compliance with applicable laws and regulations.
Auditing the risk of management override of controls, including through testing journal entries and other adjustments for appropriateness, and evaluating the business rationale of significant transactions outside the normal course of business.
Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading to a material misstatement in the financial statements or non-compliance with regulation. This risk increases the more that compliance with a law or regulation is removed from the events and transactions reflected in the financial statements, as we will be less likely to become aware of instances of non-compliance. The risk is also greater regarding irregularities occurring due to fraud rather than error, as fraud involves intentional concealment, forgery, collusion, omission or misrepresentation.
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.
Mr Graeme Bryson CTA, ACA
Senior Statutory Auditor
For and on behalf of William Duncan + Co (Audit) Ltd
22 August 2024
Accountants
Statutory Auditor
44 Bank Street
Kilmarnock
Ayrshire
KA1 1HA
PCT GROUP SALES LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2022
- 8 -
2022
2021
as restated
Notes
£
£
Turnover
3
10,799,326
9,208,678
Cost of sales
(6,042,902)
(4,825,348)
Gross profit
4,756,424
4,383,330
Administrative expenses
(3,796,500)
(4,135,030)
Other operating income
20,512
418,523
Operating profit
4
980,436
666,823
Interest payable and similar expenses
7
(321,548)
(244,974)
Profit before taxation
658,888
421,849
Tax on profit
8
(150,533)
(80,152)
Profit after taxation
508,355
341,697
Extraordinary profit or loss
(135,173)
(3,927,700)
Profit/(loss) for the financial year
373,182
(3,586,003)
The profit and loss account has been prepared on the basis that all operations are continuing operations.
PCT GROUP SALES LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2022
- 9 -
2022
2021
as restated
£
£
Profit/(loss) for the year
373,182
(3,586,003)
Other comprehensive income
Currency translation loss taken to retained earnings
(261,841)
Total comprehensive income for the year
111,341
(3,586,003)
PCT GROUP SALES LIMITED
BALANCE SHEET
AS AT
31 DECEMBER 2022
31 December 2022
- 10 -
2022
2021
as restated
Notes
£
£
£
£
Fixed assets
Tangible assets
11
1,025,481
1,069,770
Current assets
Stocks
12
7,920,090
7,259,367
Debtors
13
3,633,674
4,367,173
Cash at bank and in hand
4,448
4,555
11,558,212
11,631,095
Creditors: amounts falling due within one year
14
(6,299,053)
(5,339,410)
Net current assets
5,259,159
6,291,685
Total assets less current liabilities
6,284,640
7,361,455
Creditors: amounts falling due after more than one year
15
(721,193)
(1,347,349)
Provisions for liabilities
Deferred tax liability
18
126,420
94,671
(126,420)
(94,671)
Net assets
5,437,027
5,919,435
Capital and reserves
Called up share capital
20
1,041,666
1,041,666
Other reserves
124,567
124,567
Profit and loss reserves
4,270,794
4,753,202
Total equity
5,437,027
5,919,435
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 22 August 2024 and are signed on its behalf by:
Mr Paul Agnew
Director
Company registration number SC075642 (Scotland)
PCT GROUP SALES LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2022
- 11 -
Share capital
Other reserves
Profit and loss reserves
Total
Notes
£
£
£
£
As restated for the period ended 31 December 2021:
Balance at 1 January 2021
1,041,666
124,567
8,661,431
9,827,664
Prior year adjustment
-
-
(322,226)
(322,226)
As restated
1,041,666
124,567
8,339,205
9,505,438
Year ended 31 December 2021:
Loss and total comprehensive income
-
-
(3,586,003)
(3,586,003)
Balance at 31 December 2021
1,041,666
124,567
4,753,202
5,919,435
Year ended 31 December 2022:
Profit
-
-
373,182
373,182
Other comprehensive income:
Currency translation differences
-
-
(261,841)
(261,841)
Total comprehensive income
-
-
111,341
111,341
Dividends
9
-
-
(593,749)
(593,749)
Balance at 31 December 2022
1,041,666
124,567
4,270,794
5,437,027
PCT GROUP SALES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
- 12 -
1
Accounting policies
Company information
PCT Group Sales Limited is a private company limited by shares incorporated in Scotland. The registered office is Dalsetter House, 37 Dalsetter Avenue, Glasgow, G15 8TE.
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 £.
This company is a qualifying entity for the purposes of FRS 102, being a member of a group where the parent of that group prepares publicly available consolidated financial statements, including this company, which are intended to give a true and fair view of the assets, liabilities, financial position and profit or loss of the group. The company has therefore taken advantage of exemptions from the following disclosure requirements:
Section 7 ‘Statement of Cash Flows’: Presentation of a statement of cash flow and related notes and disclosures;
Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instrument Issues: Interest income/expense and net gains/losses for financial instruments not measured at fair value; basis of determining fair values; details of collateral, loan defaults or breaches, details of hedges, hedging fair value changes recognised in profit or loss and in other comprehensive income;
Section 26 ‘Share based Payment’: Share-based payment expense charged to profit or loss, reconciliation of opening and closing number and weighted average exercise price of share options, how the fair value of options granted was measured, measurement and carrying amount of liabilities for cash-settled share-based payments, explanation of modifications to arrangements;
Section 33 ‘Related Party Disclosures’: Compensation for key management personnel.
The financial statements of the company are consolidated in the financial statements of Oakenash Group Limited. These consolidated financial statements are available from its registered office, 37 Dalsetter Avenue, Glasgow, G15 8TE.
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
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.
In respect of long term contracts and contracts for ongoing services, turnover represents the value of work done in the year, including estimates of amounts not invoiced. Turnover in respect of long term contracts and contracts for ongoing services is recognised by reference to the stage of completion.
PCT GROUP SALES LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
1
Accounting policies
(Continued)
- 13 -
1.4
Intangible fixed assets other than goodwill
Intangible assets acquired separately from a business are recognised at cost and are subsequently measured at cost less accumulated amortisation and accumulated impairment losses.
Intangible assets acquired on business combinations are recognised separately from goodwill at the acquisition date where it is probable that the expected future economic benefits that are attributable to the asset will flow to the entity and the fair value of the asset can be measured reliably; the intangible asset arises from contractual or other legal rights; and the intangible asset is separable from the entity.
Development costs
25% Straight line
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.
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
5% on cost
Plant and equipment
5% - 10% on cost
Fixtures and fittings
5% - 10% on cost
Motor vehicles
20% reducing balance
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 and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the company estimates the recoverable amount of the cash-generating unit to which the asset belongs.
1.7
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.
Stocks held for distribution at no or nominal consideration are measured at the lower of cost and replacement cost, adjusted where applicable for any loss of service potential.
Work in Progress
Work in progress is valued on the basis of direct costs plus attributable overheads based on normal levels of activity. Provision is made for any foreseeable losses where appropriate. No element of profit is included in the valuation of work in progress.
Where there is a significant element of design and pre-tender costs associated with a project, work in progress included a percentage of contracted orders. These costs are expensed over the length of the applicable project.
PCT GROUP SALES LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
1
Accounting policies
(Continued)
- 14 -
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.
1.9
Financial instruments
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.
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
Taxation
The tax expense represents the sum of the tax currently payable and deferred tax.
PCT GROUP SALES LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
1
Accounting policies
(Continued)
- 15 -
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.
The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the profit and loss account, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset when the company has a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.
1.11
Employee benefits
The cost of short-term employee benefits are recognised as a liability and as an expense, unless those costs are required to be recognised as past of the 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.
1.12
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.
PCT GROUP SALES LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
1
Accounting policies
(Continued)
- 16 -
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.
1.15
Foreign exchange
Transactions in currencies other than pounds sterling are recorded at the rates of exchange prevailing at the dates of the transactions. At each reporting end date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the reporting end date. Gains and losses arising on translation in the period are included in profit or loss.
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.
Work in progress
The company estimates work in progress. This is based upon an estimate of time invested in the company order book and an estimate of accrued income based on costs incurred and stage of completion.
3
Turnover and other revenue
2022
2021
£
£
Turnover analysed by class of business
10,799,326
9,208,678
PCT GROUP SALES LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
3
Turnover and other revenue
(Continued)
- 17 -
2022
2021
£
£
Turnover analysed by geographical market
United Kingdom
2,681,033
3,167,500
Europe
501,396
243,589
Asia
863,837
2,098,623
Middle East
6,575,932
3,370,089
Rest of World
171,947
250,155
America
5,181
78,722
10,799,326
9,208,678
2022
2021
£
£
Other revenue
Grants received
-
173,980
4
Operating profit
2022
2021
Operating profit for the year is stated after charging/(crediting):
£
£
Exchange losses
33,680
98,848
Research and development costs
1,575
5,265
Government grants
-
(173,980)
Fees payable to the company's auditor for the audit of the company's financial statements
45,500
37,238
Depreciation of owned tangible fixed assets
22,257
102,284
Depreciation of tangible fixed assets held under finance leases
-
33,196
Profit on disposal of tangible fixed assets
(15,975)
(4,750)
Operating lease charges
442,823
443,383
5
Employees
The average monthly number of persons (including directors) employed by the company during the year was:
2022
2021
Number
Number
Production Staff
36
43
Distribution Staff
18
21
Administrative Staff
20
25
Total
74
89
PCT GROUP SALES LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
5
Employees
(Continued)
- 18 -
Their aggregate remuneration comprised:
2022
2021
£
£
Wages and salaries
2,599,468
3,064,451
Social security costs
194,243
227,027
Pension costs
86,550
55,860
2,880,261
3,347,338
6
Directors' remuneration
2022
2021
£
£
Remuneration for qualifying services
90,396
110,000
Company pension contributions to defined contribution schemes
36,838
12,500
127,234
122,500
7
Interest payable and similar expenses
2022
2021
£
£
Interest on bank overdrafts and loans
126,218
89,959
Other interest on financial liabilities
186,647
154,458
Interest on finance leases and hire purchase contracts
8,683
557
321,548
244,974
8
Taxation
2022
2021
£
£
Current tax
UK corporation tax on profits for the current period
118,784
122,296
Deferred tax
Origination and reversal of timing differences
31,749
(42,144)
Total tax charge
150,533
80,152
PCT GROUP SALES LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
8
Taxation
(Continued)
- 19 -
The actual charge for the year can be reconciled to the expected charge/(credit) for the year based on the profit or loss and the standard rate of tax as follows:
2022
2021
£
£
Profit/(loss) before taxation
523,715
(3,505,851)
Expected tax charge/(credit) based on the standard rate of corporation tax in the UK of 19.00% (2021: 19.00%)
99,506
(666,112)
Tax effect of expenses that are not deductible in determining taxable profit
1,092
141,787
Tax effect of income not taxable in determining taxable profit
(167,000)
Gains not taxable
(4,750)
Other non-reversing timing differences
24,252
29,963
Exceptional Item not deductible
25,683
746,264
Taxation charge for the year
150,533
80,152
9
Dividends
2022
2021
£
£
Final paid
593,749
10
Intangible fixed assets
Development costs
£
Cost
At 1 January 2022 and 31 December 2022
190,770
Amortisation and impairment
At 1 January 2022 and 31 December 2022
190,770
Carrying amount
At 31 December 2022
At 31 December 2021
PCT GROUP SALES LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
- 20 -
11
Tangible fixed assets
Leasehold land and buildings
Plant and equipment
Fixtures and fittings
Motor vehicles
Total
£
£
£
£
£
Cost
At 1 January 2022
287,471
4,149,979
411,419
718,871
5,567,740
Additions
4,436
6,654
94,539
105,629
Disposals
(11,182)
(280,342)
(291,524)
At 31 December 2022
287,471
4,154,415
406,891
533,068
5,381,845
Depreciation and impairment
At 1 January 2022
254,906
3,285,356
418,449
539,259
4,497,970
Depreciation charged in the year
8,499
19,669
(19,603)
13,692
22,257
Eliminated in respect of disposals
(11,182)
(152,681)
(163,863)
At 31 December 2022
263,405
3,305,025
387,664
400,270
4,356,364
Carrying amount
At 31 December 2022
24,066
849,390
19,227
132,798
1,025,481
At 31 December 2021
32,565
864,623
(7,030)
179,612
1,069,770
The net carrying value of tangible fixed assets includes the following in respect of assets held under finance leases or hire purchase contracts.
2022
2021
£
£
Plant and equipment
191,250
Motor vehicles
89,861
40,935
89,861
232,185
12
Stocks
2022
2021
£
£
Work in progress
2,192,799
2,398,684
Finished goods and goods for resale
5,727,291
4,860,683
7,920,090
7,259,367
PCT GROUP SALES LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
- 21 -
13
Debtors
2022
2021
Amounts falling due within one year:
£
£
Trade debtors
2,321,674
2,159,541
Corporation tax recoverable
67,646
Amounts owed by group undertakings
43,616
848,180
Other debtors
1,059,431
1,145,258
Prepayments and accrued income
141,307
214,194
3,633,674
4,367,173
14
Creditors: amounts falling due within one year
2022
2021
Notes
£
£
Bank loans and overdrafts
16
3,121,754
2,812,921
Obligations under finance leases
17
11,509
54,991
Trade creditors
911,728
1,394,362
Amounts owed to group undertakings
1,378
313,168
Corporation tax
552,390
404,132
Other taxation and social security
102,274
89,375
Other creditors
1,458,854
194,168
Accruals and deferred income
139,166
76,293
6,299,053
5,339,410
15
Creditors: amounts falling due after more than one year
2022
2021
Notes
£
£
Bank loans and overdrafts
16
661,111
1,318,710
Obligations under finance leases
17
60,082
28,639
721,193
1,347,349
PCT GROUP SALES LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
- 22 -
16
Loans and overdrafts
2022
2021
£
£
Bank loans
1,840,704
1,318,710
Bank overdrafts
1,942,161
2,812,921
3,782,865
4,131,631
Payable within one year
3,121,754
2,812,921
Payable after one year
661,111
1,318,710
Bank borrowings are secured by a floating charge over the assets and undertakings of the company and a cross guarantee with its parent undertaking and fellow subsidiary companies.
17
Finance lease obligations
2022
2021
Future minimum lease payments due under finance leases:
£
£
Within one year
11,509
54,991
In two to five years
60,082
28,639
71,591
83,630
18
Deferred taxation
The following are the major deferred tax liabilities and assets recognised by the company and movements thereon:
Liabilities
Liabilities
2022
2021
Balances:
£
£
Accelerated capital allowances
126,420
94,671
2022
Movements in the year:
£
Liability at 1 January 2022
94,671
Charge to profit or loss
31,749
Liability at 31 December 2022
126,420
PCT GROUP SALES LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
- 23 -
19
Retirement benefit schemes
2022
2021
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
86,550
55,860
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
2022
2021
2022
2021
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Ordinary Shares of £1 each
1,041,666
1,041,666
1,041,666
1,041,666
21
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:
2022
2021
£
£
Within one year
233,600
242,668
Between two and five years
878,064
897,141
In over five years
1,537,303
1,802,583
2,648,967
2,942,392
22
Related party transactions
Transactions with related parties
During the year the company entered into the following transactions with related parties:
At 31 December 2022, the company owed £231,692 (2021 - £896,904) to a company under common directorship and control. The balance at the year end is included within trade and other creditors due within one year. The company incurred rental charges of £232,356 (2021 - £232,356) and received income of £nil (2021 - £100,000) from that company.
At 31 December 2022, the company is owed £208,142 (2021 - £164,698) from the directors. These loans have no fixed repayment date. Interest is charged at 2% on these balances.
PCT GROUP SALES LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
- 24 -
23
Prior period adjustment
Reconciliation of changes in equity
1 January
31 December
2021
2021
£
£
Adjustments to prior year
Currency translation differences
-
(322,226)
Equity as previously reported
9,827,664
6,241,661
Equity as adjusted
9,827,664
5,919,435
Analysis of the effect upon equity
Profit and loss reserves
-
(322,226)
2021
£
Loss as previously reported
(3,586,003)
Notes to reconciliation
During the year an adjustment has been posted to record previously unrealised currency translation differences in respect of the year ended 31 December 2022. The impact of this adjustment has been a reduction in the profit and loss reserves carried forward as at 1 January 2022 of £322,226 and a reduction in other debtors.
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