Company Registration No. 01534161 (England and Wales)
Powersystems UK Limited
Annual report and financial statements
for the year ended 31 December 2023
Powersystems UK Limited
Company information
Directors
Derek Earby
(Non executive director)
Stuart Wilsmore
(Non executive director)
Christopher Jenkins
Rachel Berry
Secretary
Rachel Berry
Company number
01534161
Registered office
Badminton Road Trading Estate
Badminton Road
Yate
Bristol
BS37 5GG
Independent auditor
Saffery LLP
St Catherine's Court
Berkeley Place
Clifton
Bristol
BS8 1BQ
Bankers
National Westminster Bank plc
PO Box 1369
16 The Plain
Thornbury
Bristol
BS35 2BF
Solicitors
Clarke Willmott
1 Georges Square
Bath Street
Bristol
BS1 6BA
Powersystems UK Limited
Contents
Page
Strategic report
1 - 2
Directors' report
3 - 5
Independent auditor's report
6 - 9
Statement of comprehensive income
10
Statement of financial position
11
Statement of changes in equity
12
Statement of cash flows
13
Notes to the financial statements
14 - 28
Powersystems UK Limited
Strategic report
For the year ended 31 December 2023
1

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

Review of the business

The company continues to operate successfully, designing and installing High Voltage electrical infrastructure and grid connections for renewable generation projects and industrial customers. Core market sectors include Renewable generation schemes (windfarms, solar, hydro and energy from waste), Grid scale support schemes (Generation and Battery), Electric vehicle charging and Industrial projects.

Powersystems continue to thrive in this sector by working in partnership with our customers and supply chain. The company works with robust and industry best practice procedures to mitigate risks to ensure services are delivered at our usual high standards, safely and efficiently.

Our repeated emphasis has been the efficient delivery of projects while adhering to high quality and safety standards. The results of this emphasis is that the company continues to build strong long-term relationships with clients leading to future repeat work opportunities across all sectors.

Staff health, safety and welfare remains a key priority given the sectors that we work in. A continued focus on this being “Priority No1” will ensure even safer delivery of our services across all sectors and protection of our work force.

Financial performance

The financial year ending 31st December 2023 saw a slight decrease in company turnover to £36,051,835 (2022: £38,991,623); Contribution to company profit before taxation also slightly decreased to £2,523,375 (2022: £2,715,824). Operating profit margin slightly decreased to 6.7% (2023: 7.04%) this being due to early recruitment of staff to be ready for increased workload in 2024. This can be seen in the increase in administrative expenses. The company remains on a very strong financial footing with no borrowings.

Principal risks and uncertainties

Our business is built upon supporting the thriving renewable energy generation sector that has been historically driven by government subsidies. We actively continue to service this sector as generation technologies mature and move towards subsidy free projects. We will closely monitor government policies to ensure that we remain flexible to align our business capability and objectives in line with any future changes in policy. We will also continue to diversify across all renewable sectors and grid stability projects to create a stable pipeline of projects.

We maintain the close monitoring of our supply chain to ensure that delivery and inflationary rises are mitigated to ensure that project delivery and financial aims are not compromised.

With increased company insolvencies due to supply chain inflationary pressures and higher interest rates we are careful to monitor the financial stability of our customers to ensure that any exposure to the risk of bad debts is minimised.

The increased volume of activity within our operating sectors means a shortage of contractors to meet the projects demand. While we see this as an opportunity, we are dependent upon retaining and recruiting Powersystems partners within the business to meet this growing demand. Our focus is to build on our employee-owned status and culture to continue to make Powersystems the employer of choice providing great career opportunities and skill development for all.

Powersystems UK Limited
Strategic report (continued)
For the year ended 31 December 2023
2
Future Outlook

The electricity infrastructure within the UK in the coming years is in the process of rapidly changing. This is due to meeting increased demand from Electric vehicle charging and the ambition of meeting Net Zero targets. This supported with increased distributed generation (mainly from subsidy free renewables supported by battery energy storage) should provide great opportunities for Powersystems to continue to succeed and thrive as the High Voltage specialist of choice for many well-established customers.

The company is in an incredibly positive position with sales orders secured for 2024 & 2025. We are also involved with numerous projects that would take our workload into 2026 and beyond.

The company remains a recognised leader in the onshore windfarm industry and is the High Voltage electrical contractor of choice for many developers. We look to expand on these relationships as we continue to move with our customers into complimentary markets of Battery, Solar, Grid Stabilisation and green Hydrogen projects.

The future is electric at Powersystems as we power the transition to a carbon free future as the High Voltage specialist of choice.

Section 172

The directors, in line with their duties under s172 of the Companies Act 2006, acted in a way they considered, in good faith, would be most likely to promote the success of the company for the benefit of its members as a whole through the decisions taken during the year ended 31 December 2023.

 

The directors met monthly to discuss operational, compliance and strategic matters, considering the interests of the company's main stake holders, being employees, suppliers, customers and the local community in their decisions contributing to the company’s ability to achieve long-term success.

On behalf of the board

Christopher Jenkins
Director
20 September 2024
Powersystems UK Limited
Directors' report
For the year ended 31 December 2023
3

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

Principal activities

The principle activity of the company remains the installation of power distribution systems for generation schemes and industrial clients.

Results and dividends

The results for the year are set out on page 10.

During the year the company paid dividends totalling £nil (2022: £nil).

 

The directors' report does not include a fair review of the business, details of the risks and uncertainties and future developments, as this information is documented within the Strategic Report as required under s414C(11).

Directors

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

Derek Earby
(Non executive director)
Stuart Wilsmore
(Non executive director)
Christopher Jenkins
Eirwyn Thomas
(Retired 6 April 2023)
Rachel Berry
Auditor

Saffery LLP have expressed their willingness to continue in office.

Energy and carbon report

The company is committed to making careful assessments of its levels of energy consumption, for example, through installation of energy saving devices and to reducing the impact of carbon dioxide emissions on the environment.

 

Energy usage covered in this disclosure covers all services provided for the year ended 31 December 2023, and is primarily through gas and electricity use.

 

Energy usage has been calculated based on gas and electricity meter readings.

 

The firm has followed the 2019 UK Government environmental reporting guidance and used the 2020 UK Government conversion factors.

2023
2022
Energy consumption
kWh
kWh
Aggregate of energy consumption in the year
192,890
188,319
Powersystems UK Limited
Directors' report (continued)
For the year ended 31 December 2023
4
2023
2022
Emissions of CO2 equivalent
metric tonnes
metric tonnes
Scope 1 - direct emissions
- Fuel consumed for owned transport
328.68
387.90
328.68
387.90
Scope 2 - indirect emissions
- Electricity purchased
33.40
86.11
- Gas combustion
5.69
6.65
Scope 3 - other indirect emissions
- Fuel consumed for transport not owned by the company
66.78
28.65
Total gross emissions
434.55
509.31
Intensity ratio
Tonnes CO2e per £100,000 turnover
1.2053
1.3062
Quantification and reporting methodology

We have followed the 2019 HM Government Environmental Reporting Guidelines. We have also used the GHG Reporting Protocol – Corporate Standard and have used the 2020 UK Government’s Conversion Factors for Company Reporting.

Intensity measurement

The chosen intensity measurement ratio is total gross emissions in metric tonnes CO2e per £100,000 turnover, the recommended ratio for the sector.

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:

 

 

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.

Powersystems UK Limited
Directors' report (continued)
For the year ended 31 December 2023
5
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.

On behalf of the board
Christopher Jenkins
Director
20 September 2024
Powersystems UK Limited
Independent auditor's report
To the members of Powersystems UK Limited
6
Opinion

We have audited the financial statements of Powersystems UK Limited (the 'company') for the year ended 31 December 2023 which comprise the statement of comprehensive income, the statement of financial position, 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:

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the 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.

Other information

The other information comprises the information included in the annual report other than the financial statements and our auditor's report thereon. The directors are responsible for the other information contained within the annual report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.

 

Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.

 

We have nothing to report in this regard.

Powersystems UK Limited
Independent auditor's report (continued)
To the members of Powersystems UK Limited
7

Opinions on other matters prescribed by the Companies Act 2006

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

 

Matters on which we are required to report by exception

In the light of the knowledge and understanding of the 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:

 

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.

Powersystems UK Limited
Independent auditor's report (continued)
To the members of Powersystems UK Limited
8

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 specific procedures for this engagement and the extent to which these are capable of detecting irregularities, including fraud are detailed below.

 

Identifying and assessing risks related to irregularities:

We assessed the susceptibility of the company’s financial statements to material misstatement and how fraud might occur, including through discussions with the directors, discussions within our audit team planning meeting, updating our record of internal controls and ensuring these controls operated as intended. We evaluated possible incentives and opportunities for fraudulent manipulation of the financial statements. We identified laws and regulations that are of significance in the context of the company by discussions with directors and by updating our understanding of the sector in which the company operates.

 

Laws and regulations of direct significance in the context of the company include The Companies Act 2006, Health and Safety regulations and UK Tax legislation.

 

Audit response to risks identified

We considered the extent of compliance with these laws and regulations as part of our audit procedures on the related financial statement items including a review of financial statement disclosures. We reviewed the company's records of breaches of laws and regulations, minutes of meetings and correspondence with relevant authorities to identify potential material misstatements arising. We discussed the company's policies and procedures for compliance with laws and regulations with members of management responsible for compliance.

During the planning meeting with the audit team, the engagement partner drew attention to the key areas which might involve non-compliance with laws and regulations or fraud. We enquired of management whether they were aware of any instances of non-compliance with laws and regulations or knowledge of any actual, suspected or alleged fraud. We addressed the risk of fraud through management override of controls by testing the appropriateness of journal entries and identifying any significant transactions that were unusual or outside the normal course of business. We assessed whether judgements made in making accounting estimates gave rise to a possible indication of management bias. At the completion stage of the audit, the engagement partner’s review included ensuring that the team had approached their work with appropriate professional scepticism and thus the capacity to identify non-compliance with laws and regulations and fraud.

There are inherent limitations in the audit procedures described above and the further removed non-compliance with laws and regulations is from the events and transactions reflected in the financial statements, the less likely we would become aware of it. Also, the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery or intentional misrepresentations, or through 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.

Powersystems UK Limited
Independent auditor's report (continued)
To the members of Powersystems UK Limited
9

Use of our report

This report is made solely to the company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's members as a body, for our audit work, for this report, or for the opinions we have formed.

Neil Davies
Senior Statutory Auditor
For and on behalf of Saffery LLP
23 September 2024
Statutory Auditors
St Catherine's Court
Berkeley Place
Clifton
Bristol
BS8 1BQ
Powersystems UK Limited
Statement of comprehensive income
For the year ended 31 December 2023
10
2023
2022
Notes
£
£
Turnover
3
36,051,835
38,991,623
Cost of sales
(25,708,964)
(29,340,651)
Gross profit
10,342,871
9,650,972
Administrative expenses
(7,913,277)
(6,907,653)
Operating profit
4
2,429,594
2,743,319
Interest receivable and similar income
8
142,487
13,325
Interest payable and similar expenses
9
(48,706)
(40,820)
Profit before taxation
2,523,375
2,715,824
Tax on profit
10
(345,718)
(544,355)
Profit for the financial year
2,177,657
2,171,469

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

Powersystems UK Limited
Statement of financial position
As at 31 December 2023
31 December 2023
11
2023
2022
Notes
£
£
£
£
Fixed assets
Tangible assets
11
3,126,009
3,155,318
Investments
12
2
1
3,126,011
3,155,319
Current assets
Stocks
13
5,781,749
3,940,830
Debtors
15
10,135,546
9,017,443
Cash at bank and in hand
11,807,362
7,886,805
27,724,657
20,845,078
Creditors: amounts falling due within one year
16
(20,806,286)
(12,568,818)
Net current assets
6,918,371
8,276,260
Total assets less current liabilities
10,044,382
11,431,579
Provisions for liabilities
Provisions
18
37,169
770,000
Deferred tax liability
20
419,470
371,624
(456,639)
(1,141,624)
Net assets
9,587,743
10,289,955
Capital and reserves
Called up share capital
21
5,641
5,000
Share premium account
22
544,209
-
0
Share option reserve
280,806
514,872
Profit and loss reserves
23
8,757,087
9,770,083
Total equity
9,587,743
10,289,955
The financial statements were approved by the board of directors and authorised for issue on 20 September 2024 and are signed on its behalf by:
Christopher Jenkins
Director
Company Registration No. 01534161
Powersystems UK Limited
Statement of changes in equity
For the year ended 31 December 2023
12
Share capital
Share premium account
Share option reserve
Profit and loss reserves
Total
Notes
£
£
£
£
£
Balance at 1 January 2022
5,000
-
0
514,872
9,712,329
10,232,201
Year ended 31 December 2022:
Profit and total comprehensive income for the year
-
-
-
2,171,469
2,171,469
Gift to Employee Ownership Trust
-
-
-
(2,113,715)
(2,113,715)
Balance at 31 December 2022
5,000
-
0
514,872
9,770,083
10,289,955
Year ended 31 December 2023:
Profit and total comprehensive income for the year
-
-
-
2,177,657
2,177,657
Issue of share capital
21
641
544,209
-
-
544,850
Gift to Employee Ownership Trust
-
-
-
(1,626,073)
(1,626,073)
Gift to Employee Benefit Trust
-
-
-
(1,798,646)
(1,798,646)
Transfers upon exercise of share options
-
-
0
(234,066)
234,066
-
Balance at 31 December 2023
5,641
544,209
280,806
8,757,087
9,587,743
Powersystems UK Limited
Statement of cash flows
For the year ended 31 December 2023
13
2023
2022
Notes
£
£
£
£
Cash flows from operating activities
Cash generated from operations
27
7,441,237
6,618,867
Interest paid
(48,706)
(40,820)
Income taxes paid
(385,000)
(1,275,564)
Net cash inflow from operating activities
7,007,531
5,302,483
Investing activities
Purchase of tangible fixed assets
(416,804)
(419,030)
Proceeds on disposal of tangible fixed assets
67,213
26,379
Purchase of subsidiaries
(1)
-
0
Interest received
142,487
13,325
Net cash used in investing activities
(207,105)
(379,326)
Financing activities
Proceeds from issue of shares
544,850
-
0
Gifts made to EOT and EBT entities
(3,424,719)
(2,113,715)
Net cash used in financing activities
(2,879,869)
(2,113,715)
Net increase in cash and cash equivalents
3,920,557
2,809,442
Cash and cash equivalents at beginning of year
7,886,805
5,077,363
Cash and cash equivalents at end of year
11,807,362
7,886,805
Powersystems UK Limited
Notes to the financial statements
For the year ended 31 December 2023
14
1
Accounting policies
Company information

Powersystems UK Limited is a private company limited by shares incorporated in England and Wales. The registered office is Badminton Road Trading Estate, Badminton Road, Yate, Bristol, BS37 5GG.

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 £1.

The financial statements have been prepared under the historical cost convention modified to include certain financial instruments at fair value. The principal accounting policies adopted are set out below.

The company has taken advantage of the exemption under section 405 of the Companies Act 2006 not to prepare consolidated accounts, on the basis that the subsidiary undertaking is not material to the group. The financial statements present information about the company as an individual entity and not about its group.

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

The turnover shown in the statement of comprehensive income represents the value of goods supplied and services rendered during the year, exclusive of value added tax.

 

Turnover and related costs on each long term contract are recorded in the profit and loss account as contract activity progresses. Turnover is calculated on the basis of the value of work done, and when a profitable outcome to the contract can be assessed with reasonable certainty, includes attributable profit.

 

Attributable profit is calculated on a prudent basis for each contract by reference to the contract's cumulative turnover, total contract value and total profit estimated for the completed contract. Contract completion is calculated against the percentage of costs incurred as at the reporting date or where applicable the number of labour hours completed against total expected labour hours. Full provision is made for losses on a contract immediately as they are identified.

1.4
Tangible fixed assets

Tangible fixed assets are initially measured at cost and subsequently measured at cost, 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:

Land and buildings Freehold
2% per annum straight line
Plant and machinery
25% per annum reducing balance or 33.3% per annum straight line
Fixtures, fittings & equipment
25% per annum reducing balance
Motor vehicles
25% per annum reducing balance
Powersystems UK Limited
Notes to the financial statements (continued)
For the year ended 31 December 2023
1
Accounting policies (continued)
15

 

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.

1.5
Fixed asset investments

Interests in subsidiaries, associates and jointly controlled entities are initially measured at cost and subsequently measured at cost less any accumulated impairment losses. The investments are assessed for impairment at each reporting date and any impairment losses or reversals of impairment losses are recognised immediately in profit or loss.

A subsidiary is an entity controlled by the company. Control is the power to govern the financial and operating policies of the entity so as to obtain benefits from its activities.

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.

1.7
Stocks

Stocks are valued on an average cost (AVCO) basis at the lower of cost and net realisable value after making due allowance for any obsolete or slow moving items.

 

The cost of work in progress is represented by the excess of costs incurred over costs of sale recognised to date.

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 and other short-term liquid investments with original maturities of three months or less.

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 statement of financial position 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.

Powersystems UK Limited
Notes to the financial statements (continued)
For the year ended 31 December 2023
1
Accounting policies (continued)
16
Basic financial assets

Basic financial assets, which include debtors, 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.

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.

Basic financial liabilities

Basic financial liabilities, including trade and other creditors, 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 receipts discounted at a market rate of interest.

Powersystems UK Limited
Notes to the financial statements (continued)
For the year ended 31 December 2023
1
Accounting policies (continued)
17
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

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

Current tax

The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the income statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The 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 is recognised in respect of all timing differences that have originated but not reversed at the balance sheet date where transactions or events have occurred at that date that will result in an obligation to pay more, or a right to pay less or to receive more tax.

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.

Powersystems UK Limited
Notes to the financial statements (continued)
For the year ended 31 December 2023
1
Accounting policies (continued)
18
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

The company operates a defined contribution scheme for employees. The assets of the scheme are held separately from those of the company. The annual contributions payable are charged to the income statement.

1.15
Share-based payments

Equity-settled share-based payments are measured at fair value at the date of grant by reference to the fair value of the equity instruments granted using the Black Scholes model. The fair value determined at the grant date is expensed on a straight-line basis over the vesting period, based on the estimate of shares that will eventually vest. A corresponding adjustment is made to equity.

2
Critical accounting 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.

Key sources of estimation uncertainty

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

Long term contracts

The nature of the primary revenue stream is such that the entity must estimate the performance and outcome of long term contracts in order to record related amounts in line with the applicable accounting standard. The directors employ the use of a detailed budget for each job as well as previous experience. The budget information is reviewed on a monthly basis and adjusted where objective evidence supports a change. Further detail regarding the accounting policy is included in note 1.3.

Provisions

Provisions are recognised on a project by project basis, where Powersytems UK Limited have an obligation for remedial work. Provisions are recognised based on average cost per unit and are revised annually in line with actual spend.

Powersystems UK Limited
Notes to the financial statements (continued)
For the year ended 31 December 2023
19
3
Turnover and other revenue

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

2023
2022
£
£
Turnover analysed by class of business
Installation turnover
36,051,835
38,991,623
2023
2022
£
£
Other revenue
Interest income
142,487
13,325
4
Operating profit
2023
2022
Operating profit for the year is stated after charging/(crediting):
£
£
Depreciation of owned tangible fixed assets
380,167
380,102
Profit on disposal of tangible fixed assets
(1,267)
(4,860)
Operating lease charges
3,981
-
5
Auditor's remuneration
2023
2022
Fees payable to the company's auditor and associates:
£
£
For audit services
Audit of the financial statements of the company
20,950
21,400
For other services
Taxation compliance services
4,250
4,000
6
Directors' remuneration
2023
2022
£
£
Remuneration for qualifying services
557,504
710,088
Company pension contributions to defined contribution schemes
65,447
78,083
622,951
788,171

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

Powersystems UK Limited
Notes to the financial statements (continued)
For the year ended 31 December 2023
6
Directors' remuneration (continued)
20
Remuneration disclosed above include the following amounts paid to the highest paid director:
2023
2022
£
£
Remuneration for qualifying services
376,556
394,630
Company pension contributions to defined contribution schemes
38,000
38,000
7
Employees

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

2023
2022
Number
Number
Production staff
36
38
Administrative staff
60
56
Directors
4
5
Total
100
99

Their aggregate remuneration comprised:

2023
2022
£
£
Wages and salaries
5,786,520
5,630,650
Social security costs
661,747
702,057
Pension costs
406,185
348,448
6,854,452
6,681,155
8
Interest receivable and similar income
2023
2022
£
£
Interest income
Interest on bank deposits
142,487
13,325
2023
2022
Investment income includes the following:
£
£
Interest on financial assets not measured at fair value through profit or loss
142,487
13,325
Powersystems UK Limited
Notes to the financial statements (continued)
For the year ended 31 December 2023
21
9
Interest payable and similar expenses
2023
2022
£
£
Interest on financial liabilities measured at amortised cost:
Other interest on financial liabilities
48,706
40,820
10
Taxation
2023
2022
£
£
Current tax
UK corporation tax on profits for the current period
297,701
489,808
Deferred tax
Origination and reversal of timing differences
47,846
54,547
Adjustment in respect of prior periods
171
-
0
Total deferred tax
48,017
54,547
Total tax charge
345,718
544,355

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
2,523,375
2,715,824
Expected tax charge based on the standard rate of corporation tax in the UK of 23.52% (2022: 19.00%)
593,498
516,007
Tax effect of expenses that are not deductible in determining taxable profit
9,778
1,178
Permanent capital allowances in excess of depreciation
34,552
14,080
Other permanent differences
-
0
13,090
Under/(over) provided in prior years
(54)
-
0
Deferred tax adjustments in respect of prior years
2,844
-
0
Share scheme deduction
(294,900)
-
0
Taxation charge for the year
345,718
544,355
Powersystems UK Limited
Notes to the financial statements (continued)
For the year ended 31 December 2023
22
11
Tangible fixed assets
Land and buildings Freehold
Plant and machinery
Fixtures, fittings & equipment
Motor vehicles
Total
£
£
£
£
£
Cost
At 1 January 2023
2,696,250
974,217
240,895
1,461,892
5,373,254
Additions
-
0
166,621
23,397
226,786
416,804
Disposals
-
0
(100,795)
-
0
(128,422)
(229,217)
At 31 December 2023
2,696,250
1,040,043
264,292
1,560,256
5,560,841
Depreciation and impairment
At 1 January 2023
585,629
712,894
201,735
717,678
2,217,936
Depreciation charged in the year
53,925
118,111
12,737
195,394
380,167
Eliminated in respect of disposals
-
0
(80,239)
-
0
(83,032)
(163,271)
At 31 December 2023
639,554
750,766
214,472
830,040
2,434,832
Carrying amount
At 31 December 2023
2,056,696
289,277
49,820
730,216
3,126,009
At 31 December 2022
2,110,621
261,323
39,160
744,214
3,155,318
12
Fixed asset investments
2023
2022
Notes
£
£
Investments in subsidiaries
14
2
1
Movements in fixed asset investments
Shares in subsidiaries
£
Cost or valuation
At 1 January 2023
1
Additions
1
At 31 December 2023
2
Carrying amount
At 31 December 2023
2
At 31 December 2022
1
Powersystems UK Limited
Notes to the financial statements (continued)
For the year ended 31 December 2023
23
13
Stocks
2023
2022
£
£
Raw materials and consumables
346,332
270,629
Work in progress
5,435,417
3,670,201
5,781,749
3,940,830
14
Subsidiaries

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

Name of undertaking
Registered office
Class of shares held
% Held
Direct
Indirect
Powersystems UK EOT Limited
England and Wales
Ordinary
100.00
-
PSEBT Limited
England and Wales
Ordinary
100.00
-
15
Debtors
2023
2022
Amounts falling due within one year:
£
£
Trade debtors
3,402,946
4,622,388
Gross amounts owed by contract customers
5,947,613
3,990,083
Corporation tax recoverable
286,070
198,942
Other debtors
209,707
-
0
Prepayments and accrued income
289,210
206,030
10,135,546
9,017,443
16
Creditors: amounts falling due within one year
2023
2022
£
£
Payments received on account
7,989,506
5,589,070
Trade creditors
7,757,930
3,428,156
Amounts due to group undertakings
2
1
Other taxation and social security
299,968
450,428
Other creditors
2,519,013
2,030,564
Accruals and deferred income
2,239,867
1,070,599
20,806,286
12,568,818
Powersystems UK Limited
Notes to the financial statements (continued)
For the year ended 31 December 2023
24
17
Retirement benefit schemes
2023
2022
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
406,185
348,448

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.

18
Provisions for liabilities
2023
2022
£
£
Provision against contracts
37,169
770,000
Movements on provisions:
Provision against contracts
£
At 1 January 2023
770,000
Provision utilised
(732,831)
At 31 December 2023
37,169

A provision has been recognised in the year in respect of ongoing revenue contracts. The total provided is £37,169 and is a best estimate of the amount required to settle the obligations in full.

19
Share-based payment transactions

The Directors of the Company participate in the share incentive schemes.

 

The fair value of the options is calculated based on the Black Scholes valuation model and assumptions as determined by management at the date of grant of the share options.

Powersystems UK Limited
Notes to the financial statements (continued)
For the year ended 31 December 2023
19
Share-based payment transactions (continued)
25
Number of share options
Weighted average exercise price
2023
2022
2023
2022
Number
Number
£
£
Outstanding at 1 January 2023
141,000
141,000
8.50
8.50
Exercised
(64,100)
-
0
8.50
-
0
Outstanding at 31 December 2023
76,900
141,000
8.50
8.50
Exercisable at 31 December 2023
76,900
141,000
8.50
8.50

In July 2023, 64,100 share options were exercised by directors and former directors at their exercise price of £8.50.

 

The options outstanding at 31 December 2023 had an exercise price of £8.50, and a remaining contractual life of 6.5 years.

 

The share options granted on 26 June 2020 are exercisable after a vesting period of 3 months. The options are then exercisable by the employee up to 26 June 2030.

20
Deferred taxation

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

Liabilities
Liabilities
2023
2022
Balances:
£
£
Accelerated Capital allowances
419,470
371,624

The deferred tax liability set out above is expected to reverse, but its reversal is uncertain of timing. The balance relates to accelerated capital allowances.

21
Share capital
2023
2022
£
£
Ordinary share capital
Issued and fully paid
500,000 Ordinary shares of £0.01 each (2020: 500,000 Ordinary shares of £0.01 each)
5,000
5,000
64,100 (2022: 0) Ordinary B shares of 1p each
641
-
5,641
5,000
Powersystems UK Limited
Notes to the financial statements (continued)
For the year ended 31 December 2023
21
Share capital (continued)
26

The company has two classes of shares which rank pari passu.

 

In July 2023, 64,100 share options were exercised by directors and former directors. 64,100 £0.01 Ordinary B shares were issued for a consideration of £544,850. A gift was made by the company to PSEBT Limited, a related party by way of common directors, to facilitate the purchase of these shares from the directors and former directors by PSEBT Limited.

22
Share premium account
2023
2022
£
£
At the beginning of the year
-
0
-
0
Issue of new shares
544,209
-
0
At the end of the year
544,209
-
0
23
Profit and loss reserves
2023
2022
£
£
At the beginning of the year
9,770,083
9,712,329
Profit for the year
2,177,657
2,171,469
Share based payment transactions
234,066
-
Gift to Employee Ownership Trust
(1,626,073)
(2,113,715)
Gift to Employee Benefit Trust
(1,798,646)
-
At the end of the year
8,757,087
9,770,083
24
Ultimate controlling party

There is not considered to be an ultimate controlling party.

Powersystems UK Limited
Notes to the financial statements (continued)
For the year ended 31 December 2023
27
25
Related party transactions
Remuneration of key management personnel

The remuneration of key management personnel is as follows.

2023
2022
£
£
Aggregate compensation
620,256
788,171

At the year end, the company owed the directors of the company £2,519,013 (2022: £2,030,563). Interest in the year relating to this loan amounted to £48,706 (2022: £40,820). Within the period advances from directors totalled £569,749 (2022: £82,904). The company repaid advances to the directors of £81,302 (2022: £67,818 ).

 

Directors received dividends totalling £nil (2022: £nil), in the year.

Transactions with related parties

During the year, the Company made a gift of £1,626,073 (2022: £2,113,715) to the Powersystems UK Employee Ownership Trust and a gift of £1,796,646 (2022: £nil) to PSEBT Limited.

 

26
Analysis of changes in net funds
1 January 2023
Cash flows
31 December 2023
£
£
£
Cash at bank and in hand
7,886,805
3,920,557
11,807,362
Powersystems UK Limited
Notes to the financial statements (continued)
For the year ended 31 December 2023
28
27
Cash generated from operations
2023
2022
£
£
Profit for the year after tax
2,177,657
2,171,469
Adjustments for:
Taxation charged
345,718
544,355
Finance costs
48,706
40,820
Investment income
(142,487)
(13,325)
Gain on disposal of tangible fixed assets
(1,267)
(4,860)
Depreciation and impairment of tangible fixed assets
380,167
380,102
Decrease in provisions
(732,831)
(321,910)
Movements in working capital:
(Increase)/decrease in stocks
(1,840,919)
2,160,358
(Increase)/decrease in debtors
(1,030,975)
5,561,263
Increase/(decrease) in creditors
8,237,468
(3,899,405)
Cash generated from operations
7,441,237
6,618,867
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