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Registered Number:06116510













PRECON PRODUCTS LTD






ANNUAL REPORT AND FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2023











 
PRECON PRODUCTS LTD
 

 
COMPANY INFORMATION


Directors
Mr A T Hawes 
Mr J M Green 
Mr M D Philpot 
Mr L K O'Sullivan 
Mrs F J Whitehead 




Company secretary
Mr A T Hawes



Registered number
06116510



Registered office
Fitzroy House
Crown Street

Ipswich

Suffolk

IP1 3LG




Independent auditor
Sumer Auditco Limited
Statutory Auditor

Fitzroy House

Crown Street

Ipswich

Suffolk

IP1 3LG






 
PRECON PRODUCTS LTD
 


CONTENTS



Pages
Strategic Report
1 - 3
Directors' Report
4 - 6
Independent Auditor's Report
7 - 10
Statement of Comprehensive Income
11
Balance Sheet
12 - 13
Statement of Changes in Equity
14
Statement of Cash Flows
15
Analysis of Net Debt
16
Notes to the Financial Statements
17 - 35



 
PRECON PRODUCTS LTD
 

 
STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2023

Business review
 
The directors present the Strategic Report for the year to 31 December 2023. 
2023 has been a challenging year for the company ongoing inflationary pressures, supply chain issues and the ongoing war in Ukraine. This is reflected in the continued growth in turnover and a decline in the gross profit percentage. 
After paying dividends totalling £1.5m the net assets of the business grew to £15.1m (2022 - £14.3m), with a minimal debt requirement.

Principal risks and uncertainties
 
The key risks to the Company include, but are not limited to, compliance with legislative and regulatory requirements including environmental and litigation failures, business continuity and actions of customers, suppliers and competitors. 
Financial risk management objectives and policies
The directors regularly review and manage the financial risk management objectives and policies associated with the Company's activities. The Company's principal financial instruments include instruments to manage credit risk and price risk.
Credit risk
All customers trading on credit terms are subject to detailed credit verification procedures, with key debts being insured in the event of failure to pay.
Price risk
The price volatility over the last 2 years has been actively managed through forward planning of imports, use of forward exchange contracts and the maintenance of pre agreed payment terms.

Financial key performance indicators
 
The key performance measures of the company are:
     
Year ended  17 months ended     
     
31 December  31 December
     
2023   2022
Sales £’000’s   77,887  109,816
Gross profit margin  23.83%  24.58%
Net Current Assets £’000’s 13,496  13,086
Working capital management is closely monitored through stock ageing, debtor days and creditor days. 

Other key performance indicators
 
The Company considers its non-financial key performance indicators to be the staff retention rate. During the year this was 84.71% (2022 - 80.28%).


- 1 -



 
PRECON PRODUCTS LTD
 


STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023

Directors' statement of compliance with duty to promote the success of the Company
 
The directors set out their section 172(1) statement in accordance with the Companies Act 2006 in relation to stakeholder engagement for the year ended 31 December 2023.
Stakeholder engagement
The directors consider the shareholders, employees, customers and suppliers to be the company’s core stakeholders. We aim to develop strong, stable and profitable long term relationships with all our stakeholders through open and honest communications. 
This engagement with key stakeholders can be summarised as follows:
Customers
The Company maintains a broad range of customers with many of these relationships having been in place for many years. The objective of the company is to communicate openly with our customers and maintain high service levels. 
Suppliers
A broad, strong and reliable supplier base is essential to the continued success of the business. Our practices and systems are being constantly monitored to ensure the suppliers are treated fairly. We aim to always pay our suppliers according to their terms. 
Employees
The strength of the business relies on attracting, retaining and motivating our employees. Our employees are generously rewarded and are informed of all significant future developments.
 
Community Environment
Community involvement is an important aspect of the business and decisions are made which are sensitive to the impact on the community. Examples of the community support provided include the provision of a Blood Bike and support of the local football team. 
Environment
The company continued to work towards becoming carbon neutral; as part of this process we commissioned a review of the company’s total carbon footprint with the purpose of offsetting the total organisation emissions.  As an independent supplier of construction products in the UK it was identified that the main emissions occurred via third party inbound delivery of goods.
Internally a number of initiatives have been introduced to assist in the further reduction of our emissions, examples include:
1. Continuing to increase the number of fully electric/hybrid vehicles;
2. Implementation of new ERP system to move towards paperless office;
3. Ongoing replacement old IT equipment; and
4. Installation of energy efficient LED’s.


- 2 -



 
PRECON PRODUCTS LTD
 


STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023


This report was approved by the board on 28 June 2024 and signed on its behalf.



Mr M D Philpot
Director


- 3 -



 
PRECON PRODUCTS LTD
 

 
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 DECEMBER 2023

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

Directors' responsibilities statement

The directors are responsible for preparing the Strategic Report, the Directors' 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 applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice), including Financial Reporting Standard 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland'. Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Company and 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 for the Company's financial statements and then apply them consistently;

make judgments and accounting estimates that are reasonable and prudent;

state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements;

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 to enable them to ensure that the financial statements comply with the Companies Act 2006They 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.

Results and dividends

The profit for the year, after taxation, amounted to £2,189,377 (2022 - £7,280,242).

Particulars of dividends can be found in note 11.
Since the year-end dividends of £983,333 have been paid or proposed.

Directors

The directors who served during the year were:

Mr A T Hawes 
Mr J M Green 
Mr M D Philpot 
Mr L K O'Sullivan 
Mrs F J Whitehead 

The directors have professional indemnity insurance as part of a directors' and officers' professional indemnity insurance policy.
 

- 4 -



 
PRECON PRODUCTS LTD
 

 
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023

Charitable donations
During the year the Company made charitable donations of £30,508 (2022 - £81,778).

Future developments

The Company continues to invest to strengthen its position in the market place.
Financial instruments
The financial risk management objectives and policies of the Company and it's exposure to credit risk and price risk have been disclosed in the Strategic Report.

Financial instruments

The financial risk management objectives of the Company and it's exposure to credit risk and liquidity risk have been disclosed in the Strategic Report.

Engagement with suppliers, customers and others

Details of the Company's engagement with suppliers, customers and others have been disclosed in the Strategic Report.

Greenhouse gas emissions, energy consumption and energy efficiency action

The Company's greenhouse gas emissions and energy consumption (disclosed in kwh) for the year are:
Electricity   234,863
Transport fuel  218,163

Mandatory greenhouse gas emissions report by scope
         Unit   Total
Scope 1
Energy consumption owned road vehicles   tCO2e  218
Scope 2
Electricity and gas consumption      tCO2e 51
Total Emissions       tCO2e  269
Net operating income       £’000  2,889
Intensity Ratio (emissions/net operating income)     0.09

Greenhouse gas emissions are calculated in alignment with records used for the production of these financial statements. We have used emission factors from BEIS’s “Greenhouse gas reporting: conversion factors 2020” to calculate our Scope 1 & 2 emissions. All emissions are required under the Companies Act 2006 are included where stated and include Scope 1 (direct emissions from road vehicles owned by the company) and Scope 2 (indirect emissions from purchased electricity).
The measures we have taken during the year to increase energy efficiency include acquiring further hybrid cars that have fewer emissions than previous fossil fuel cars.


- 5 -



 
PRECON PRODUCTS LTD
 

 
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023

Disclosure of information to auditor

Each of the persons who are directors at the time when this Directors' Report is approved has confirmed that:
 
so far as the director is aware, there is no relevant audit information of which the Company's auditor is unaware, and

the director has taken all the steps that ought to have been taken as a director in order to be aware of any relevant audit information and to establish that the Company's auditor is aware of that information.

Post balance sheet events

There have been no significant events affecting the Company since the year end.

Auditor

On 28 March 2024 our auditor, SB Audit LLP, merged with Sumer Auditco Limited.
Accordingly SB Audit LLP formally resigned as the Company's auditor with the directors duly appointing Sumer Auditco Limited to fill the vacancy arising.  The auditor, Sumer Auditco Limitedwill be proposed for reappointment in accordance with section 485 of the Companies Act 2006.

This report was approved by the board on 28 June 2024 and signed on its behalf.
 





Mr M D Philpot
Director


- 6 -



 
PRECON PRODUCTS LTD
 

 
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF PRECON PRODUCTS LTD

Opinion


We have audited the financial statements of Precon Products Ltd (the 'Company') for the year ended 31 December 2023, which comprise the Statement of Comprehensive Income, the Balance Sheet, the Statement of Cash Flows, the Statement of Changes in Equity and the related notes, including a summary of significant accounting policiesThe financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland' (United Kingdom Generally Accepted Accounting Practice).


In our opinion the financial statements:


give a true and fair view of the state of the Company's affairs as at 31 December 2023 and of its profit for the year then ended;
have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
have been prepared in accordance with the requirements of the Companies Act 2006.


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 United Kingdom, including the Financial Reporting Council's Ethical Standard and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.


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.



- 7 -



 
PRECON PRODUCTS LTD
 

 
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF PRECON PRODUCTS LTD (CONTINUED)

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 ReportOur 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.


Opinion on other matters prescribed by the Companies Act 2006
 

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
 

In the light of the knowledge and understanding of the Company and its environment obtained in the course of the audit, we have not identified material misstatements in the Strategic Report or the Directors' Report.


We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:


adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or
the financial statements are not in agreement with the accounting records and returns; or
certain disclosures of directors' remuneration specified by law are not made; or
we have not received all the information and explanations we require for our audit.


Responsibilities of directors
 

As explained more fully in the Directors' Responsibilities Statement set out on page 4, 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.



- 8 -



 
PRECON PRODUCTS LTD
 

 
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF PRECON PRODUCTS LTD (CONTINUED)

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:

We identified areas of laws and regulations that could reasonably be expected to have a material effect on the financial statements from our general commercial experience and through discussions and enquiries of directors and management. During the engagement team briefing, the outcomes of these discussions were shared with the team, as well as consideration as to where and how fraud may occur in the Company.
The following laws and regulations were identified as being of significance to the Company:
• Those laws and regulations considered to have a direct effect on the financial statements including UK financial reporting standards and UK Company Law.
Audit procedures undertaken in response to the potential risks relating to irregularities (which include fraud and non-compliance with laws and regulations) comprised of: enquiries of management and those charged with governance as to whether the Company complies with such regulations; enquiries of management and those charged with governance concerning any actual or potential litigation or claims, inspection of relevant legal documentation, review of board minutes, testing of journal entries, performance of analytical review to identify any unexpected movements in account balances which may be indicative of 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. Irregularities that result from fraud might be inherently more difficult to detect than irregularities that result from error. As explained above, there is an unavoidable risk that material misstatements may not be detected, even though the audit has been planned and performed in accordance with ISAs (UK).


A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our Auditor's Report.



- 9 -



 
PRECON PRODUCTS LTD
 

 
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF PRECON PRODUCTS LTD (CONTINUED)

Use of our report
 

This report is made solely to the Company's directors, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006Our audit work has been undertaken so that we might state to the Company's directors 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 directors, as a body, for our audit work, for this report, or for the opinions we have formed.





Steven Burgess (Senior Statutory Auditor)
for and on behalf of
Sumer Auditco Limited
Statutory Auditor
Fitzroy House
Crown Street
Ipswich
Suffolk
IP1 3LG

1 July 2024

- 10 -



 
PRECON PRODUCTS LTD
 

 
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2023

Year ended
31 December
17 month period ended
31 December
2023
2022
Notes
£
£

  

Turnover
 4 
77,887,499
109,815,613

Cost of sales
  
(59,326,071)
(82,821,001)

Gross profit
  
18,561,428
26,994,612

Distribution costs
  
(6,682,946)
(7,398,673)

Administrative expenses
  
(9,087,737)
(10,632,134)

Other operating income
 5 
99,867
26,169

Operating profit
 6 
2,890,612
8,989,974

Tax on profit
 10 
(701,235)
(1,709,732)

Profit for the financial year
  
2,189,377
7,280,242

There was no other comprehensive income for 2023 (2022:£NIL).

The notes on pages 17 to 35 form part of these financial statements.


- 11 -



 
PRECON PRODUCTS LTD
REGISTERED NUMBER:06116510


BALANCE SHEET
AS AT 31 DECEMBER 2023

2023
2022
Note
£
£

Fixed assets
  

Intangible assets
 12 
71,480
80,785

Tangible assets
 13 
1,942,383
1,536,664

  
2,013,863
1,617,449

Current assets
  

Stocks
 14 
7,382,224
9,164,231

Debtors: amounts falling due within one year
 15 
13,804,616
15,367,634

Cash at bank and in hand
 16 
5,563,075
6,523,619

  
26,749,915
31,055,484

Creditors: amounts falling due within one year
 17 
(13,252,299)
(17,969,685)

Net current assets
  
 
 
13,497,616
 
 
13,085,799

Total assets less current liabilities
  
15,511,479
14,703,248

Creditors: amounts falling due after more than one year
 18 
(170,339)
(116,392)

Provisions for liabilities
  

Deferred tax
 20 
(266,751)
(242,790)

  
 
 
(266,751)
 
 
(242,790)

Net assets
  
15,074,389
14,344,066


Capital and reserves
  

Called up share capital 
 21 
100
100

Share premium account
 22 
62,810
62,810

Capital redemption reserve
 22 
10
10

Profit and loss account
 22 
15,011,469
14,281,146

  
15,074,389
14,344,066


The financial statements were approved and authorised for issue by the board and were signed on its behalf on 28 June 2024.




Mr M D Philpot
Director

The notes on pages 17 to 35 form part of these financial statements.

- 12 -



 
PRECON PRODUCTS LTD
REGISTERED NUMBER:06116510

    
BALANCE SHEET (CONTINUED)
AS AT 31 DECEMBER 2023



- 13 -



 
PRECON PRODUCTS LTD
 


STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2023


Called up share capital
Share premium account
Capital redemption reserve
Profit and loss account
Total equity

£
£
£
£
£


At 1 August 2021
96
37,686
10
10,500,904
10,538,696



Profit for the period
-
-
-
7,280,242
7,280,242

Dividends: Equity capital
-
-
-
(3,500,000)
(3,500,000)

Shares issued during the period
4
25,124
-
-
25,128



At 1 January 2023
100
62,810
10
14,281,146
14,344,066



Profit for the year
-
-
-
2,189,377
2,189,377

Dividends: Equity capital
-
-
-
(1,459,054)
(1,459,054)


At 31 December 2023
100
62,810
10
15,011,469
15,074,389


The notes on pages 17 to 35 form part of these financial statements.


- 14 -



 
PRECON PRODUCTS LTD
 


STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2023

2023
2022
£
£

Cash flows from operating activities

Profit for the financial year
2,189,377
7,280,242

Adjustments for:

Amortisation of intangible assets
23,112
5,386

Depreciation of tangible assets
408,747
395,141

Loss on disposal of tangible assets
12,483
52,923

Taxation charge
701,235
1,709,732

Decrease/(increase) in stocks
1,782,007
(2,861,137)

Decrease/(increase) in debtors
1,563,018
(673,982)

(Decrease)/increase in creditors
(4,178,746)
1,385,777

Corporation tax (paid)
(558,617)
(2,049,867)

Net cash generated from operating activities

1,942,616
5,244,215


Cash flows from investing activities

Purchase of intangible fixed assets
(13,807)
(86,171)

Purchase of tangible fixed assets
(864,311)
(1,116,312)

Sale of tangible fixed assets
37,362
53,490

Net cash from investing activities

(840,756)
(1,148,993)

Cash flows from financing activities

Issue of ordinary shares
-
25,128

Repayment of/new finance leases
211,451
49,753

Loans due from/(repaid to) directors
(814,801)
770,590

Dividends paid
(1,459,054)
(3,500,000)

Net cash used in financing activities
(2,062,404)
(2,654,529)

Net (decrease)/increase in cash and cash equivalents
(960,544)
1,440,693

Cash and cash equivalents at beginning of year
6,523,619
5,082,926

Cash and cash equivalents at the end of year
5,563,075
6,523,619


Cash and cash equivalents at the end of year comprise:

Cash at bank and in hand
5,563,075
6,523,619

5,563,075
6,523,619


The notes on pages 17 to 35 form part of these financial statements.


- 15 -



 
PRECON PRODUCTS LTD
 


ANALYSIS OF NET DEBT
FOR THE YEAR ENDED 31 DECEMBER 2023




At 1 January 2023
Cash flows
At 31 December 2023
£

£

£

Cash at bank and in hand

6,523,619

(960,544)

5,563,075

Debt due within 1 year

(1,176,168)

875,639

(300,529)

Finance leases

(194,687)

(211,451)

(406,138)


5,152,764
(296,356)
4,856,408

The notes on pages 17 to 35 form part of these financial statements.


- 16 -



 
PRECON PRODUCTS LTD
 

 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

1.


General information

Precon Products Ltd ("the Company") is a company limited by shares and incorporated and domiciled in England and Wales. 
The address of the registered office is Fitzroy House, Crown Street, Ipswich, Suffolk, IP1 3LG however the trading activities are carried out at the Company's depots.

2.Accounting policies

 
2.1

Basis of preparation of financial statements

The financial statements have been prepared under the historical cost convention unless otherwise specified within these accounting policies and in accordance with Financial Reporting Standard 102, the Financial Reporting Standard applicable in the UK and the Republic of Ireland and the Companies Act 2006.

The preparation of financial statements in compliance with FRS 102 requires the use of certain critical accounting estimates. It also requires management to exercise judgment in applying the Company's accounting policies (see note 3).

The following principal accounting policies have been applied:

 
2.2

Foreign currency translation

Functional and presentation currency

The Company's functional and presentational currency is GBP.

Transactions and balances

Foreign currency transactions are translated into the functional currency using the spot exchange rates at the dates of the transactions.

At each period end foreign currency monetary items are translated using the closing rate. Non-monetary items measured at historical cost are translated using the exchange rate at the date of the transaction and non-monetary items measured at fair value are measured using the exchange rate when fair value was determined.

Foreign exchange gains and losses resulting from the settlement of transactions and from the translation at period-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the Profit and Loss Account.

 
2.3

Revenue

Turnover is recognised to the extent that it is probable that the economic benefits will flow to the Company and the turnover can be reliably measured. Turnover is measured as the fair value of the consideration received or receivable, excluding discounts, rebates, value added tax and other sales taxes. 
Turnover from the sale of goods is recognised when they are dispatched.


- 17 -



 
PRECON PRODUCTS LTD
 

 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

2.Accounting policies (continued)

 
2.4

Operating leases: the Company as lessee

Rentals paid under operating leases are charged to profit or loss on a straight-line basis over the lease term.

 
2.5

Pensions

Defined contribution pension plan

The Company operates a defined contribution plan for its employees. A defined contribution plan is a pension plan under which the Company pays fixed contributions into a separate entity. Once the contributions have been paid the Company has no further payment obligations.

The contributions are recognised as an expense in profit or loss when they fall due. Amounts not paid are shown in accruals as a liability in the Balance Sheet. The assets of the plan are held separately from the Company in independently administered funds.

 
2.6

Current and deferred taxation

The tax expense for the year comprises current and deferred tax. Tax is recognised in profit or loss except that a charge attributable to an item of income and expense recognised as other comprehensive income or to an item recognised directly in equity is also recognised in other comprehensive income or directly in equity respectively.

The current income tax charge is calculated on the basis of tax rates and laws that have been enacted or substantively enacted by the balance sheet date in the countries where the Company operates and generates income.

Deferred tax balances are recognised in respect of all timing differences that have originated but not reversed by the balance sheet date, except that:
The recognition of deferred tax assets is limited to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits; and
Any deferred tax balances are reversed if and when all conditions for retaining associated tax allowances have been met.

Deferred tax balances are not recognised in respect of permanent differences except in respect of business combinations, when deferred tax is recognised on the differences between the fair values of assets acquired and the future tax deductions available for them and the differences between the fair values of liabilities acquired and the amount that will be assessed for tax. Deferred tax is determined using tax rates and laws that have been enacted or substantively enacted by the balance sheet date.


- 18 -



 
PRECON PRODUCTS LTD
 

 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

2.Accounting policies (continued)

 
2.7

Intangible assets

Intangible assets are initially recognised at cost. After recognition, under the cost model, intangible assets are measured at cost less any accumulated amortisation and any accumulated impairment losses.

All intangible assets are considered to have a finite useful life. If a reliable estimate of the useful life cannot be made, the useful life shall not exceed ten years.

 The estimated useful lives range as follows:

Software
-
4
years

 
2.8

Tangible fixed assets

Tangible fixed assets under the cost model are stated at historical cost less accumulated depreciation and any accumulated impairment losses. Historical cost includes expenditure that is directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management.

Depreciation is charged so as to allocate the cost of assets less their residual value over their estimated useful lives, on either a straight line or reducing balance basis.

Depreciation is provided on the following basis:

Short-term leasehold property
-
Over the period of the lease
Plant and machinery
-
25%
Reducing balance
Motor vehicles
-
25%
Reducing balance
Office equipment
-
25%
Reducing balance
Computer equipment
-
33%
Straight line

The assets' residual values, useful lives and depreciation methods are reviewed, and adjusted prospectively if appropriate, or if there is an indication of a significant change since the last reporting date.

Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised in profit or loss.

 
2.9

Stocks

Stocks are stated at the lower of cost and net realisable value, being the estimated selling price less costs to complete and sell. Cost is based on the cost of purchase on an average basis. 
At each balance sheet date, stocks are assessed for impairment. If stock is impaired, the carrying amount is reduced to its selling price less costs to complete and sell. The impairment loss is recognised immediately in profit or loss.

 
2.10

Debtors

Short term debtors are measured at transaction price, less any impairment. 


- 19 -



 
PRECON PRODUCTS LTD
 

 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

2.Accounting policies (continued)

 
2.11

Cash and cash equivalents

Cash is represented by cash in hand and deposits with financial institutions repayable without penalty on notice of not more than 24 hours. Cash equivalents are highly liquid investments that mature in no more than three months from the date of acquisition and that are readily convertible to known amounts of cash with insignificant risk of change in value.

 
2.12

Creditors

Short-term creditors are measured at the transaction price. Other financial liabilities, including bank loans, are measured initially at fair value, net of transaction costs, and are measured subsequently at amortised cost using the effective interest method.

 
2.13

Provisions for liabilities

Provisions are recognised when an event has taken place that gives rise to a legal or constructive obligation, a transfer of economic benefits is probable and a reliable estimate can be made.
Provisions are measured as the best estimate of the amount required to settle the obligation, taking into account the related risks and uncertainties.
 
Increases in provisions are generally charged as an expense to profit or loss.

 
2.14

Financial instruments

The Company has elected to apply the provisions of Section 11 “Basic Financial Instruments” of FRS 102 to all of its financial instruments.

Financial instruments are recognised in the Company's Balance Sheet when the Company becomes party to the contractual provisions of the instrument.

Financial assets and liabilities are offset, with the net amounts presented in the financial statements, when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.

Basic financial assets

Basic financial assets, which include trade and other receivables, cash and bank balances, are initially measured at their transaction price including transaction costs and are subsequently carried at their amortised cost using the effective interest method, less any provision for impairment, unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest.

Discounting is omitted where the effect of discounting is immaterial. The Company's cash and cash equivalents, trade and most other receivables due with the operating cycle fall into this category of financial instruments.

Impairment of financial assets

Financial assets are assessed for indicators of impairment at each reporting date. 


- 20 -



 
PRECON PRODUCTS LTD
 

 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

2.Accounting policies (continued)


2.14
Financial instruments (continued)

Financial assets are impaired when events, subsequent to their initial recognition, indicate the estimated future cash flows derived from the financial asset(s) have been adversely impacted. The impairment loss will be the difference between the current carrying amount and the present value of the future cash flows at the asset(s) original effective interest rate.

If there is a favourable change in relation to the events surrounding the impairment loss then the impairment can be reviewed for possible reversal. The reversal will not cause the current carrying amount to exceed the original carrying amount had the impairment not been recognised. The impairment reversal is recognised in the profit or loss.

Financial liabilities

Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instruments any contract that evidences a residual interest in the assets of the Company after the deduction of all its liabilities.

Basic financial liabilities, which include trade and other payables, bank loans and other loans are initially measured at their transaction price after transaction costs. When this constitutes a financing transaction, whereby the debt instrument is measured at the present value of the future receipts discounted at a market rate of interest. Discounting is omitted where the effect of discounting is immaterial.

Debt instruments are subsequently carried at their amortised cost using the effective interest rate method.

Trade payables are obligations to pay for goods and services that have been acquired in the ordinary course of business from suppliers. Trade payables are classified as current liabilities if the payment is due within one year. If not, they represent non-current liabilities. Trade payables are initially recognised at their transaction price and subsequently are measured at amortised cost using the effective interest method. Discounting is omitted where the effect of discounting is immaterial.

Derecognition of financial instruments

Derecognition of financial assets

Financial assets are derecognised when their contractual right to future cash flow expire, or are settled, or when the Company transfers the asset and substantially all the risks and rewards of ownership to another party. If significant risks and rewards of ownership are retained after the transfer to another party, then the Company will continue to recognise the value of the portion of the risks and rewards retained.

Derecognition of financial liabilities

Financial liabilities are derecognised when the Company's contractual obligations expire or are discharged or cancelled.


- 21 -



 
PRECON PRODUCTS LTD
 

 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

2.Accounting policies (continued)

 
2.15

Dividends

Equity dividends are recognised when they become legally payable. Interim equity dividends are recognised when paid. Final equity dividends are recognised when approved by the shareholders at an annual general meeting. 


3.


Judgments in applying accounting policies 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 items in the financial statements where estimates and underlying assumptions have been made include useful economic lives and impairment of fixed assets as well as recoverability of trade debtors, these 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. 


- 22 -



 
PRECON PRODUCTS LTD
 

 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

4.


Turnover

An analysis of turnover by class of business is as follows:


Year ended
31 December
17 month period ended
31 December
2023
2022
£
£

Sales from goods
77,887,499
109,815,613

77,887,499
109,815,613


Analysis of turnover by country of destination:

Year ended
31 December
17 month period ended
31 December
2023
2022
£
£

United Kingdom
77,160,910
108,789,307

Rest of Europe
726,589
1,026,306

77,887,499
109,815,613



5.


Other operating income

Year ended
31 December
17 month period ended
31 December
2023
2022
£
£

Other operating income
99,867
26,169

99,867
26,169



- 23 -



 
PRECON PRODUCTS LTD
 

 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

6.


Operating profit

The operating profit is stated after charging:

Year ended
31 December
17 month period ended
31 December
2023
2022
£
£

Depreciation and amortisation
408,709
400,527

Exchange differences
(4,126)
(257)

Other operating lease rentals
861,413
959,643

Loss on disposal of tangible assets
12,483
52,923


7.


Auditor's remuneration

During the year, the Company obtained the following services from the Company's auditor and its associates:


Year ended
31 December
17 month period ended
31 December
2023
2022
£
£

Fees payable to the Company's auditor and its associates for the audit of the Company's financial statements
16,600
15,100

Fees payable to the Company's auditor and its associates in respect of:

Other services relating to taxation
1,450
9,540

Other services relating to payroll
6,340
6,053

- 24 -



 
PRECON PRODUCTS LTD
 

 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

8.


Employees

Staff costs, including directors' remuneration, were as follows:


Year ended
31 December
17 month period ended
31 December
2023
2022
£
£

Wages and salaries
3,865,368
4,808,127

Social security costs
514,166
514,166

Cost of defined contribution scheme
279,617
299,520

4,659,151
5,621,813


The average monthly number of employees, including the directors, during the year was as follows:


      Year ended
     31 December
17 month period ended
      31 December
        2023
        2022
            No.
            No.







Management and Office Staff
62
47



Sales and distribution
40
30

102
77


- 25 -



 
PRECON PRODUCTS LTD
 

 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

9.


Directors' remuneration

Year ended
31 December
17 month period ended
31 December
2023
2022
£
£

Directors' emoluments
680,219
1,168,924

Company contributions to defined contribution pension schemes
113,933
93,891

794,152
1,262,815


During the year retirement benefits were accruing to 5 directors (2022 - 5) in respect of defined contribution pension schemes.

The highest paid director received remuneration of £189,489 (2022 - £369,016).

The value of the Company's contributions paid to a defined contribution pension scheme in respect of the highest paid director amounted to £4,000 (2022 - £4,000).
All key management personnel are directors.


10.


Taxation


Year ended
31 December
17 month period ended
31 December
2023
2022
£
£

Corporation tax


Current tax on profits for the year
677,274
1,642,560


677,274
1,642,560


Total current tax
677,274
1,642,560

Deferred tax


Origination and reversal of timing differences
23,961
67,172

Total deferred tax
23,961
67,172


Tax on profit
701,235
1,709,732

- 26 -



 
PRECON PRODUCTS LTD
 

 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
 
10.Taxation (continued)


Factors affecting tax charge for the year/period

The tax assessed for the year/period is higher than (2022 - higher than) the standard rate of corporation tax in the UK of 23.52% (2022 - 19%). The differences are explained below:

Year ended
31 December
17 month period ended
31 December
2023
2022
£
£


Profit on ordinary activities before tax
2,890,612
8,989,974


Profit on ordinary activities multiplied by standard rate of corporation tax in the UK of 23.52% (2022 - 19%)
679,872
1,708,095

Effects of:


Expenses not deductible for tax purposes, other than goodwill amortisation and impairment
18,599
36,568

Other assets not qualifying for capital allowance purposes
2,540
3,287

Income not chargeable for tax purposes
-
(21,839)

Change in tax rate
224
(16,379)

Total tax charge for the year/period
701,235
1,709,732


Factors that may affect future tax charges

The main rate of UK Corporation tax increased from 19% to 25% on 1 April 2023. The was substantively enacted in May 2021. Accordingly deferred tax assets and liabilities are stated at 25% (2022 - 25%).


11.


Dividends

2023
2022
£
£


Dividends paid on equity capital
1,459,054
3,500,000

1,459,054
3,500,000


- 27 -



 
PRECON PRODUCTS LTD
 

 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

12.


Intangible assets




Computer software

£



Cost


At 1 January 2023
86,171


Additions
13,807



At 31 December 2023

99,978



Amortisation


At 1 January 2023
5,386


Charge for the year on owned assets
23,112



At 31 December 2023

28,498



Net book value



At 31 December 2023
71,480



At 31 December 2022
80,785




- 28 -



 
PRECON PRODUCTS LTD
 

 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

13.


Tangible fixed assets





Short-term leasehold property
Plant and machinery
Motor vehicles
Office equipment
Computer equipment
Total

£
£
£
£
£
£



Cost or valuation


At 1 January 2023
343,355
1,023,370
890,332
36,015
89,083
2,382,155


Additions
304,470
310,806
219,033
1,969
28,033
864,311


Disposals
-
-
(112,545)
-
-
(112,545)



At 31 December 2023

647,825
1,334,176
996,820
37,984
117,116
3,133,921



Depreciation


At 1 January 2023
78,629
445,619
260,594
19,682
40,967
845,491


Charge for the year on owned assets
60,810
164,480
156,381
3,783
23,293
408,747


Disposals
-
-
(62,700)
-
-
(62,700)



At 31 December 2023

139,439
610,099
354,275
23,465
64,260
1,191,538



Net book value



At 31 December 2023
508,386
724,077
642,545
14,519
52,856
1,942,383



At 31 December 2022
264,726
577,751
629,738
16,333
48,116
1,536,664

The net book value of assets held under finance leases or hire purchase contracts, included above, are as follows:


2023
2022
£
£



Plant and machinery
168,948
40,292

Motor vehicles
342,693
173,351

511,641
213,643


- 29 -



 
PRECON PRODUCTS LTD
 

 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

14.


Stocks

2023
2022
£
£

Finished goods and goods for resale
7,382,224
9,164,231

7,382,224
9,164,231



15.


Debtors

2023
2022
£
£


Trade debtors
11,744,259
13,477,884

Other debtors
205,788
8,532

Prepayments and accrued income
1,854,569
1,881,218

13,804,616
15,367,634



16.


Cash and cash equivalents

2023
2022
£
£

Cash at bank and in hand
5,563,075
6,523,619

5,563,075
6,523,619



17.


Creditors: Amounts falling due within one year

2023
2022
£
£

Trade creditors
11,227,953
15,167,832

Corporation tax
332,734
214,077

Other taxation and social security
130,639
229,396

Obligations under finance lease and hire purchase contracts
235,799
78,295

Other creditors
361,367
1,176,168

Accruals and deferred income
963,807
1,103,917

13,252,299
17,969,685



- 30 -



 
PRECON PRODUCTS LTD
 

 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

18.


Creditors: Amounts falling due after more than one year

2023
2022
£
£

Net obligations under finance leases and hire purchase contracts
170,339
116,392

170,339
116,392



19.


Hire purchase and finance leases


Minimum lease payments under hire purchase fall due as follows:

2023
2022
£
£


Within one year
248,255
86,884

Between 1-5 years
186,263
122,079

434,518
208,963

Liabilities for hire purchase contracts are secured against the assets to which they relate.


20.


Deferred taxation




2023
2022


£

£






At beginning of year
(242,790)
(175,618)


Charged to profit or loss
(23,961)
(67,172)



At end of year
(266,751)
(242,790)

The provision for deferred taxation is made up as follows:

2023
2022
£
£


Accelerated capital allowances
(270,799)
(246,016)

Other short-term temporary differences
4,048
3,226

(266,751)
(242,790)


- 31 -



 
PRECON PRODUCTS LTD
 

 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

21.


Share capital

2023
2022
£
£
Allotted, called up and fully paid



10 (2022 - 10) Ordinary A shares of £1.00 each
10
10
25 (2022 - 25) Ordinary B shares of £1.00 each
25
25
25 (2022 - 25) Ordinary C shares of £1.00 each
25
25
25 (2022 - 25) Ordinary D shares of £1.00 each
25
25
5 (2022 - 5) Ordinary E shares of £1.00 each
5
5
5 (2022 - 5) Ordinary F shares of £1.00 each
5
5
5 (2022 - 5) Ordinary G shares of £1.00 each
5
5

100

100

The holders of Ordinary shares are not entitled to voting rights and have separate distribution rights to holders of Ordinary shares. The shares rank pari passu in the remaining rights.
The holders of Ordinary B to G shares are entitled to voting rights and have separate distribution rights to holders of Ordinary A shares.



22.


Reserves

Share premium account

The share premium account represents the premium paid on the Ordinary A shares issued.

Capital redemption reserve

The capital redemption reserve represents shares repurchased less bonus issues of shares.

Profit and loss account

The profit and loss account represents the Company's accumulated profits less dividends paid which are available for distribution to shareholders.


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PRECON PRODUCTS LTD
 

 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

23.


Share based payments

On 20 April 2016 the Company set up an Enterprise Management Incentive Scheme. Under this scheme
two employees were granted the option to purchase 5 Ordinary A £1 shares each at £6,282 per share.
In order to satisfy the criteria of the options, a vesting condition of one years service from the grant date
was required. The options must be exercised within 10 years from the grant date otherwise they will be
forfeited. The share based payment will be equity settled.
At the date of grant, the directors assessed the fair value of the share options using an option pricing
model. The resulting share based payment charge was considered to be immaterial and accordingly no
share based payment charge was recorded.
At 31 December 2023, no share options were outstanding.







24.


Pension commitments

The company operates a defined contributions pension scheme. The assets of the scheme are held separately from those of the Company in an independently administrated fund. The pension cost charge represents contributions payable by the Company to the fund and amounted to £279,617 (2022-£299,520). Contributions totalling £16,193 (2022- £12,905) were payable to the fund at the balance sheet date.


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PRECON PRODUCTS LTD
 

 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

25.


Commitments under operating leases

At 31 December 2023 the Company had future minimum lease payments due under non-cancellable operating leases for each of the following periods:

2023
2022
£
£

Land and Buildings


Not later than 1 year
683,000
544,500

Later than 1 year and not later than 5 years
2,611,375
2,178,000

Later than 5 years
2,032,667
702,208

5,327,042
3,424,708

2023
2022

£
£

Other assets


Not later than 1 year
478,791
208,009

Later than 1 year and not later than 5 years
708,751
211,131

Later than 5 years
6,064
-

1,193,606
419,140


26.Other financial commitments

At 31 December 2023 the Company had foreign currency forward contracts to buy 1m Euros at exchange rates against GB pounds of 1.16 Euros. The fair value of the forward contracts amounted to a liability of £1,799 and has not been recognised as immaterial.
At 31 December 2023 the Company had foreign currency forward contracts to buy 250k Dollars at exchange rates against GB pounds of 1.27 Dollars. The fair value of the forward contracts amounted to a asset of £1,340 and has not been recognised as immaterial.


27.


Related party transactions

The Company was under the control of the directors throughout the year.
As at 31 December 2023, the Company owed a total of £300,529 (2022 - £1,176,168) in respect of directors' and shareholder loan accounts. No interest was payable on the loan accounts.
During the year the Company paid dividends to directors totalling £1,459,054 (2022 - £3,500,000).
Remuneration totalling £160,679 (2022 - £213,525) was paid to close members of the directors' families during the period.


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PRECON PRODUCTS LTD
 

 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

28.


Controlling party

There is no individual ultimate controlling party of the Company.

 

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