Company registration number 00878102 (England and Wales)
PRODUMAX LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 MARCH 2024
PRODUMAX LIMITED
COMPANY INFORMATION
Directors
Mrs M Ridyard
Mr J P Ridyard
Mr W R J Rawkins
(Appointed 29 September 2023)
Mr S C Weston
(Appointed 29 September 2023)
Mr J MacKenzie
(Appointed 1 September 2024)
Company number
00878102
Registered office
c/o A2e Industries Limited
No.1 Marsden Street
Manchester
United Kingdom
M2 1HW
Auditor
Azets Audit Services
Alpha House
4 Greek Street
Stockport
United Kingdom
SK3 8AB
PRODUMAX LIMITED
CONTENTS
Page
Strategic report
1 - 2
Directors' report
3 - 4
Independent auditor's report
5 - 7
Statement of comprehensive income
8
Balance sheet
9
Statement of changes in equity
10
Notes to the financial statements
11 - 24
PRODUMAX LIMITED
STRATEGIC REPORT
FOR THE PERIOD ENDED 31 MARCH 2024
- 1 -
The directors present the strategic report for the period ended 31 March 2024.
Review of the business
The principal activity of the company was that of precision production engineering; supplying parts and assemblies to the Global Aerospace industry. We are certified to AS9100 Rev D with the three main objectives of:
To Maintain a defect rate of less than 0.5%
To maintain a delivery performance of 95% or better
To ensure all customer complaints are dealt with within 28 days
We are certified to ISO 23001 for Business Continuity Planning and ISI 14001 for Environmental Management System. We hold Cyber essentials plus which is critical when dealing with important customer data.
Turnover for the 16 month period increased to £10.88m (2022: £6.49m), when pro-rated for a 12 month period this represents a 25.7% increase. A gross profit margin of 25.0% was achieved (2022: 32.4%). The company generated a loss before tax of £2.54m (2022: £0.46m).
The directors were satisfied with year on year revenue growth but less satisfied with the loss achieved on ordinary activities for the year. The company has successfully signed 5 year LTA’s with a number of primes and prestigious tier 1 customers. The development of the LTA’s has required substantial working capital investment which once transferred into production will drive the company to a forecasted turnover of £14.5m in FY25 and £16.2m in FY26 with improving gross margins.
The directors noted the continued recovery of the global Aircraft industry and the company has a balanced portfolio of customer platforms in narrow body, widebody and business jet markets. The company has an award winning apprenticeship program that ensures a continuous flow of quality engineers to support the strategic investment in CNC machinery. The average age of under 34 provides a solid base to support the strong growth in the company turnover.
Defence business has seen a steady increase due to new work of military aircraft and the steady increase of spares demand for ejector seats.
The balance sheet will continue to strengthen through FY25 and FY26 as the company returns to month on month profitability.
Given the nature of the business, the Company's directors are of the opinion that analysis using KPl's, other than those which emerge from the financial statements and discussed in the business review above, are not necessary for an understanding of the Company.
PRODUMAX LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE PERIOD ENDED 31 MARCH 2024
- 2 -
Principal risks and uncertainties
The Company uses financial instruments including cash, a bank overdraft and other items including trade debtors and trade creditors that arise directly from its operations. The existence of these financial instruments exposes the Company to a number of financial risks, which are described in further detail below.
Liquidity Risk
The Company seeks to manage financial risk by ensuring sufficient liquidity is available to meet foreseeable needs and to invest cash safely and profitably.
Interest Rate Risk
The Company does have 3rd party borrowings primarily in relation to the invoice finance facility provided by Close Brothers.
Credit Risk
The Company's principal financial assets are cash deposits, cash and trade debtors. The credit risk associated with cash is limited. The principal credit risk therefore lies with trade debtors. In order to manage the credit risk, the directors actively review payment history and debtor performance and in certain instances ensure that insured credit limits are put in place and actively managed.
Currency Risk
The Company is exposed to transaction foreign currency risk trading and holding in Sterling, Euros and US Dollars. In order to mitigate the risk, the Board of Directors naturally focus on managing receipts and payments in currencies to minimise any significant foreign exchange losses.
Supply Chain Risk
The Company’s products and services are delivered through the effective operation of its facilities and key capabilities, including its supply chain. While the Company’s strategy is to improve integration and simplify the internal and external elements of its supply chain by building long-term strategic links with fewer, stronger suppliers, it remains at risk of disruption. The Board of Directors have applied an increased focus to understanding and addressing sources of risk arising in the external supply chain, particularly those associated with financial instability.
Mr J P Ridyard
Director
21 November 2024
PRODUMAX LIMITED
DIRECTORS' REPORT
FOR THE PERIOD ENDED 31 MARCH 2024
- 3 -
The directors present their annual report and financial statements for the period ended 31 March 2024.
Principal activities
The principal activity of the company continued to be that of precision production engineering.
Results and dividends
The results for the period are set out on page 8.
Ordinary dividends were paid amounting to £3,933,171 of which Dividends included a distribution in specie of £3,121,234 in respect of the freehold property net of outstanding mortgage liabilities. (2022: £201,722). The directors do not recommend payment of a final dividend.
Directors
The directors who held office during the period and up to the date of signature of the financial statements were as follows:
Mrs M Ridyard
Mr J P Ridyard
Mr W R J Rawkins
(Appointed 29 September 2023)
Mr S C Weston
(Appointed 29 September 2023)
Mr J MacKenzie
(Appointed 1 September 2024)
Auditor
The auditor, Azets Audit Services, is deemed to be reappointed under section 487(2) of the Companies Act 2006.
Statement of directors' responsibilities
The directors are responsible for preparing the annual report and the financial statements in accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period. In preparing these financial statements, the directors are required to:
select suitable accounting policies and then apply them consistently;
make judgements and accounting estimates that are reasonable and prudent;
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company’s transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
Statement of disclosure to auditor
So far as each person who was a director at the date of approving this report is aware, there is no relevant audit information of which the company’s auditor is unaware. Additionally, the directors individually have taken all the necessary steps that they ought to have taken as directors in order to make themselves aware of all relevant audit information and to establish that the company’s auditor is aware of that information.
PRODUMAX LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE PERIOD ENDED 31 MARCH 2024
- 4 -
On behalf of the board
Mr J P Ridyard
Director
21 November 2024
PRODUMAX LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF PRODUMAX LIMITED
- 5 -
Opinion
We have audited the financial statements of Produmax Limited (the 'company') for the period ended 31 March 2024 which comprise the statement of comprehensive income, the balance sheet, the statement of changes in equity and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).
In our opinion the financial statements:
give a true and fair view of the state of the company's affairs as at 31 March 2024 and of its loss for the period then ended;
have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
have been prepared in accordance with the requirements of the Companies Act 2006.
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
The other information comprises the information included in the annual report other than the financial statements and our auditor's report thereon. The directors are responsible for the other information contained within the annual report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of our audit:
the information given in the strategic report and the directors' report for the financial period 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.
PRODUMAX LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF PRODUMAX LIMITED
- 6 -
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identified material misstatements in the strategic report or the directors' report.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:
adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or
the financial statements are not in agreement with the accounting records and returns; or
certain disclosures of remuneration specified by law are not made; or
we have not received all the information and explanations we require for our audit.
Responsibilities of directors
As explained more fully in the directors' responsibilities statement, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the directors are responsible for assessing the company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.
Auditor's responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
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.
PRODUMAX LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF PRODUMAX LIMITED
- 7 -
Extent to which the audit was considered capable of detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above and on the Financial Reporting Council’s website, to detect material misstatements in respect of irregularities, including fraud.
We obtain and update our understanding of the entity, its activities, its control environment, and likely future developments, including in relation to the legal and regulatory framework applicable and how the entity is complying with that framework. Based on this understanding, we identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. This includes consideration of the risk of acts by the entity that were contrary to applicable laws and regulations, including fraud.
In response to the risk of irregularities and non-compliance with laws and regulations, including fraud, we designed procedures which included:
Enquiry of management and those charged with governance around actual and potential litigation and claims as well as actual, suspected and alleged fraud;
Reviewing minutes of meetings of those charged with governance;
Assessing the extent of compliance with the laws and regulations considered to have a direct material effect on the financial statements or the operations of the company through enquiry and inspection;
Reviewing financial statement disclosures and testing to supporting documentation to assess compliance with applicable laws and regulations;
Performing audit work over the risk of management bias and override of controls, including testing of journal entries and other adjustments for appropriateness, evaluating the business rationale of significant transactions outside the normal course of business and reviewing accounting estimates for indicators of potential bias.
Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading to a material misstatement in the financial statements or non-compliance with regulation. This risk increases the more that compliance with a law or regulation is removed from the events and transactions reflected in the financial statements, as we will be less likely to become aware of instances of non-compliance. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
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.
Helen Davies
Senior Statutory Auditor
For and on behalf of Azets Audit Services
21 November 2024
Chartered Accountants
Statutory Auditor
Alpha House
4 Greek Street
Stockport
United Kingdom
SK3 8AB
PRODUMAX LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE PERIOD ENDED 31 MARCH 2024
- 8 -
Period
Year
ended
ended
31 March
30 November
2024
2022
Notes
£
£
Turnover
3
10,883,808
6,485,452
Cost of sales
(8,167,584)
(4,385,766)
Gross profit
2,716,224
2,099,686
Distribution costs
(773,896)
Administrative expenses
(4,350,410)
(2,007,635)
Other operating income
148,355
507,844
Exceptional item
4
(355,319)
Operating loss
5
(1,841,150)
(174,001)
Interest payable and similar expenses
8
(695,819)
(281,989)
Loss before taxation
(2,536,969)
(455,990)
Tax on loss
9
1,084,376
591,706
(Loss)/profit for the financial period
(1,452,593)
135,716
Other comprehensive income
Revaluation of tangible fixed assets
1,277,064
Total comprehensive income for the period
(1,452,593)
1,412,780
The profit and loss account has been prepared on the basis that all operations are continuing operations.
PRODUMAX LIMITED
BALANCE SHEET
AS AT
31 MARCH 2024
31 March 2024
- 9 -
31 March 2024
30 November 2022
Notes
£
£
£
£
Fixed assets
Tangible assets
11
4,514,921
9,239,825
Investments
12
10,000
10,000
4,524,921
9,249,825
Current assets
Stocks
13
2,795,013
2,040,673
Debtors
14
2,511,250
3,520,873
Cash at bank and in hand
247,019
396,452
5,553,282
5,957,998
Creditors: amounts falling due within one year
15
(9,151,728)
(4,944,473)
Net current (liabilities)/assets
(3,598,446)
1,013,525
Total assets less current liabilities
926,475
10,263,350
Creditors: amounts falling due after more than one year
16
(2,225,100)
(5,414,182)
Provisions for liabilities
Deferred tax liability
19
258,965
1,020,994
(258,965)
(1,020,994)
Net (liabilities)/assets
(1,557,590)
3,828,174
Capital and reserves
Called up share capital
22
1,500
1,500
Revaluation reserve
1,277,064
Profit and loss reserves
(1,559,090)
2,549,610
Total equity
(1,557,590)
3,828,174
The financial statements were approved by the board of directors and authorised for issue on 21 November 2024 and are signed on its behalf by:
Mr J P Ridyard
Director
Company Registration No. 00878102
PRODUMAX LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE PERIOD ENDED 31 MARCH 2024
- 10 -
Share capital
Revaluation reserve
Profit and loss reserves
Total
Notes
£
£
£
£
Balance at 1 December 2021
1,500
2,615,616
2,617,116
Year ended 30 November 2022:
Profit for the year
-
-
135,716
135,716
Other comprehensive income:
Revaluation of tangible fixed assets
-
1,277,064
-
1,277,064
Total comprehensive income for the year
-
1,277,064
135,716
1,412,780
Dividends
10
-
-
(201,722)
(201,722)
Balance at 30 November 2022
1,500
1,277,064
2,549,610
3,828,174
Period ended 31 March 2024:
Loss and total comprehensive income for the period
-
-
(1,452,593)
(1,452,593)
Dividends
10
-
-
(3,933,171)
(3,933,171)
Transfers
-
(1,277,064)
1,277,064
-
Balance at 31 March 2024
1,500
(1,559,090)
(1,557,590)
PRODUMAX LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 MARCH 2024
- 11 -
1
Accounting policies
Company information
Produmax Limited is a private company limited by shares incorporated in England and Wales. The registered office is c/o A2e Industries Limited, No.1 Marsden Street, Manchester, United Kingdom, M2 1HW.
1.1
Reporting period
The reporting period of the entity is for 16 months from 1 December 2022 to 31 March 2024. Therefore figures will not be wholly comparable with the prior period.
1.2
Accounting convention
These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006.
The financial statements are prepared in sterling, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £.
The financial statements have been prepared under the historical cost convention. The principal accounting policies adopted are set out below.
This company is a qualifying entity for the purposes of FRS 102, being a member of a group where the parent of that group prepares publicly available consolidated financial statements, including this company, which are intended to give a true and fair view of the assets, liabilities, financial position and profit or loss of the group. The company has therefore taken advantage of exemptions from the following disclosure requirements:
Section 7 ‘Statement of Cash Flows’: Presentation of a statement of cash flow and related notes and disclosures;
Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instrument Issues: Interest income/expense and net gains/losses for financial instruments not measured at fair value; basis of determining fair values; details of collateral, loan defaults or breaches, details of hedges, hedging fair value changes recognised in profit or loss and in other comprehensive income;
Section 33 ‘Related Party Disclosures’: Compensation for key management personnel.
Produmax Limited is a wholly owned subsidiary of Aero Services Global Group Limited and the results of Produmax Limited are included in the consolidated financial statements of Aero Services Global Group Limited which are available from its registered office, 1 Marsden Street, c/o A2e Industries Limited, Manchester, M2 1HW.
1.3
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.
1.4
Turnover
Turnover is recognised at the fair value of the consideration received or receivable for goods and services provided in the normal course of business, and is shown net of VAT and other sales related taxes. The fair value of consideration takes into account trade discounts, settlement discounts and volume rebates.
Revenue from the sale of goods is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer (usually on dispatch of the goods), the amount of revenue can be measured reliably, it is probable that the economic benefits associated with the transaction will flow to the entity and the costs incurred or to be incurred in respect of the transaction can be measured reliably.
PRODUMAX LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 31 MARCH 2024
1
Accounting policies
(Continued)
- 12 -
1.5
Tangible fixed assets
Tangible fixed assets are initially measured at cost and subsequently measured at cost or valuation, net of depreciation and any impairment losses.
Depreciation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:
Freehold property
2% Straight line
Plant and machinery
10% Reducing balance
Fixtures, fittings and equipment
20% Straight line
The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is credited or charged to profit or loss.
1.6
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.
1.7
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).
If the recoverable amount of an asset is estimated to be less than its carrying amount, the carrying amount of the asset is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.
Recognised impairment losses are reversed if, and only if, the reasons for the impairment loss have ceased to apply. Where an impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset in prior years. A reversal of an impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.
1.8
Stocks
Stocks are stated at the lower of cost and estimated selling price less costs to complete and sell. Cost comprises direct materials.
Stocks held for distribution at no or nominal consideration are measured at the lower of cost and replacement cost, adjusted where applicable for any loss of service potential.
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.
1.9
Cash and cash equivalents
Cash and cash equivalents are basic financial assets and include cash in hand, deposits held at call with banks and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities.
PRODUMAX LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 31 MARCH 2024
1
Accounting policies
(Continued)
- 13 -
1.10
Financial instruments
The company has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.
Financial instruments are recognised in the company's balance sheet when the company becomes party to the contractual provisions of the instrument.
Financial assets and liabilities are offset, with the net amounts presented in the financial statements, when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.
Basic financial assets
Basic financial assets, which include debtors and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised.
Impairment of financial assets
Financial assets, other than those held at fair value through profit and loss, are assessed for indicators of impairment at each reporting end date.
Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected. If an asset is impaired, the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset’s original effective interest rate. The impairment loss is recognised in profit or loss.
If there is a decrease in the impairment loss arising from an event occurring after the impairment was recognised, the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been, had the impairment not previously been recognised. The impairment reversal is recognised in profit or loss.
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.
PRODUMAX LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 31 MARCH 2024
1
Accounting policies
(Continued)
- 14 -
Basic financial liabilities
Basic financial liabilities, including creditors, bank loans and loans from fellow group companies are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future payments discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.
Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.
Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Amounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.
Derecognition of financial liabilities
Financial liabilities are derecognised when the company’s contractual obligations expire or are discharged or cancelled.
1.11
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.
1.12
Taxation
The tax expense represents the sum of the tax currently payable and deferred tax.
Current tax
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the profit and loss account because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The company’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.
Deferred tax
Deferred tax liabilities are generally recognised for all timing differences and deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Such assets and liabilities are not recognised if the timing difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.
The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the profit and loss account, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset when the company has a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.
PRODUMAX LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 31 MARCH 2024
1
Accounting policies
(Continued)
- 15 -
1.13
Employee benefits
The costs of short-term employee benefits are recognised as a liability and an expense, unless those costs are required to be recognised as part of the cost of stock or fixed assets.
The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received.
Termination benefits are recognised immediately as an expense when the company is demonstrably committed to terminate the employment of an employee or to provide termination benefits.
1.14
Retirement benefits
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
1.15
Leases
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessees. All other leases are classified as operating leases.
Assets held under finance leases are recognised as assets at the lower of the assets fair value at the date of inception and the present value of the minimum lease payments. The related liability is included in the balance sheet as a finance lease obligation. Lease payments are treated as consisting of capital and interest elements. The interest is charged to profit or loss so as to produce a constant periodic rate of interest on the remaining balance of the liability.
Rentals payable under operating leases, including any lease incentives received, are charged to profit or loss on a straight line basis over the term of the relevant lease except where another more systematic basis is more representative of the time pattern in which economic benefits from the leases asset are consumed.
1.16
Government grants
Government grants are recognised at the fair value of the asset received or receivable when there is reasonable assurance that the grant conditions will be met and the grants will be received.
A grant that specifies performance conditions is recognised in income when the performance conditions are met. Where a grant does not specify performance conditions it is recognised in income when the proceeds are received or receivable. A grant received before the recognition criteria are satisfied is recognised as a liability.
1.17
Foreign exchange
Transactions in currencies other than pounds sterling are recorded at the rates of exchange prevailing at the dates of the transactions. At each reporting end date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the reporting end date. Gains and losses arising on translation in the period are included in profit or loss.
1.18
Research expenditure is written off against profits in the year in which it is incurred. Identifiable development expenditure is capitalised to the extent that the technical, commercial and financial feasibility can be demonstrated.
1.19
Exceptional items are unusual or non-recurring in nature and are recognised as incurred.
1.20
During the period the directors reviewed the classification of expenditure. The classification of prior year comparative figures have not been adjusted and thus do not provide an exact comparative.
PRODUMAX LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 31 MARCH 2024
- 16 -
2
Judgements and key sources of estimation uncertainty
In the application of the company’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.
Stock provision
The company makes an estimate of the recoverable value of stocks. When assessing impairment of stocks, management considers factors including the current aging of the stocks held and the budgeted sales volumes in the next 12 months of certain products.
WIP valuation
WIP is calculated using a rate to absorb the amount of labour used.
Management experience of their product lines are essential to determine the amount labour absorbed and thus the value of the WIP. Management's experience of their product lines is essential to determine the amount of labour absorbed and thus the value of WIP.
PRODUMAX LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 31 MARCH 2024
- 17 -
3
Turnover and other revenue
2024
2022
£
£
Turnover analysed by geographical market
United Kingdom
5,447,132
4,541,802
Rest of the World
5,436,676
1,943,650
10,883,808
6,485,452
2024
2022
£
£
Other revenue
Grants received
148,355
408,500
4
Exceptional item
2024
2022
£
£
Expenditure
Professional fees
355,319
-
Exceptional expenditure is professional fees incurred as a result of the acquisition of Produmax Limited by Aero Services Global Group Limited.
5
Operating loss
2024
2022
Operating loss for the period is stated after charging/(crediting):
£
£
Exchange losses/(gains)
169,618
(184,307)
Government grants
(148,355)
(408,500)
Fees payable to the company's auditor for the audit of the company's financial statements
25,000
12,900
Depreciation of owned tangible fixed assets
312,725
257,606
Depreciation of tangible fixed assets held under finance leases
332,439
278,090
Loss on disposal of tangible fixed assets
9,698
-
Operating lease charges
198,683
-
PRODUMAX LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 31 MARCH 2024
- 18 -
6
Employees
The average monthly number of persons (including directors) employed by the company during the period was:
2024
2022
Number
Number
Directors
2
2
Administration and senior management
19
19
Production
64
55
Total
85
76
Their aggregate remuneration comprised:
2024
2022
£
£
Wages and salaries
4,211,471
2,730,293
Social security costs
424,050
295,820
Pension costs
90,612
56,915
4,726,133
3,083,028
7
Directors' remuneration
2024
2022
£
£
Remuneration for qualifying services
167,833
98,607
Company pension contributions to defined contribution schemes
1,862
-
169,695
98,607
The number of directors for whom retirement benefits are accruing under defined contribution schemes amounted to 2 (2022 - 2).
8
Interest payable and similar expenses
2024
2022
£
£
Interest on bank overdrafts and loans
277,858
195,379
Interest on invoice finance arrangements
62,072
Interest payable to group undertakings
193,108
Interest on finance leases and hire purchase contracts
162,781
86,610
695,819
281,989
PRODUMAX LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 31 MARCH 2024
- 19 -
9
Taxation
2024
2022
£
£
Current tax
UK corporation tax on profits for the current period
(332,808)
(414,700)
Adjustments in respect of prior periods
10,461
Total current tax
(322,347)
(414,700)
Deferred tax
Origination and reversal of timing differences
(762,029)
(177,006)
Total tax credit
(1,084,376)
(591,706)
The actual credit for the period can be reconciled to the expected credit for the period based on the profit or loss and the standard rate of tax as follows:
2024
2022
£
£
Loss before taxation
(2,536,969)
(455,990)
Expected tax credit based on the standard rate of corporation tax in the UK of 23.51% (2022: 19.00%)
(596,441)
(86,638)
Tax effect of expenses that are not deductible in determining taxable profit
85,531
Tax effect of income not taxable in determining taxable profit
(77,029)
Tax effect of utilisation of tax losses not previously recognised
(354,709)
Adjustments in respect of prior years
10,461
Effect of change in corporation tax rate
(35,256)
Research and development tax credit
(332,808)
(258,850)
Other non-reversing timing differences
177,704
Deferred tax adjustments in respect of prior years
(170,766)
Fixed asset differences
(45,097)
7,816
Taxation credit for the period
(1,084,376)
(591,706)
10
Dividends
2024
2022
£
£
Interim paid
3,933,171
201,722
At the point dividends were declared, the entity had sufficient distributable reserves. Subsequent losses were not forseeable.
Dividends include a distribution in specie of £3,121,234 in respect of the freehold property net of outstanding mortgage liabilities.
PRODUMAX LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 31 MARCH 2024
- 20 -
11
Tangible fixed assets
Freehold property
Plant and machinery
Fixtures, fittings and equipment
Total
£
£
£
£
Cost
At 1 December 2022
5,105,000
9,971,686
406,285
15,482,971
Additions
837,618
109,697
947,315
Disposals
(5,105,000)
(500,000)
(5,605,000)
At 31 March 2024
10,309,304
515,982
10,825,286
Depreciation and impairment
At 1 December 2022
45,109
6,052,729
145,308
6,243,146
Depreciation charged in the period
42,536
491,734
110,894
645,164
Eliminated in respect of disposals
(87,645)
(490,300)
(577,945)
At 31 March 2024
6,054,163
256,202
6,310,365
Carrying amount
At 31 March 2024
4,255,141
259,780
4,514,921
At 30 November 2022
5,059,891
3,918,957
260,977
9,239,825
The net carrying value of tangible fixed assets includes the following in respect of assets held under finance leases or hire purchase contracts.
2024
2022
£
£
Plant and machinery
2,677,524
2,433,832
12
Fixed asset investments
2024
2022
£
£
Unlisted investments
10,000
10,000
13
Stocks
2024
2022
£
£
Raw materials and consumables
823,020
1,144,176
Work in progress
1,374,842
708,176
Finished goods and goods for resale
597,151
188,321
2,795,013
2,040,673
PRODUMAX LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 31 MARCH 2024
- 21 -
14
Debtors
2024
2022
Amounts falling due within one year:
£
£
Trade debtors
2,156,802
2,328,927
Corporation tax recoverable
332,808
425,160
Amounts owed by group undertakings
642,220
Other debtors
5,261
3,691
Prepayments and accrued income
16,379
120,875
2,511,250
3,520,873
15
Creditors: amounts falling due within one year
2024
2022
Notes
£
£
Bank loans and overdrafts
17
1,579,965
Obligations under finance leases
18
781,305
636,183
Invoice discounting
1,911,700
Trade creditors
1,845,312
1,563,424
Amounts owed to group undertakings
2,987,310
Taxation and social security
1,045,874
169,912
Government grants
20
174,684
323,039
Other creditors
2,329
431,895
Accruals and deferred income
403,214
240,055
9,151,728
4,944,473
Obligations under finance leases are secured over the assets to which they relate to.
Invoice financing facility is secured by a fixed and floating charge over the company's assets.
Amounts owed to group undertakings are repayable on demand and non-interest bearing.
16
Creditors: amounts falling due after more than one year
2024
2022
Notes
£
£
Bank loans and overdrafts
17
3,475,244
Obligations under finance leases
18
2,225,100
1,938,938
2,225,100
5,414,182
Obligations under finance leases are secured over the assets to which they relate.
PRODUMAX LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 31 MARCH 2024
- 22 -
17
Loans and overdrafts
2024
2022
£
£
Bank loans
4,203,253
Bank overdrafts
851,956
5,055,209
Payable within one year
1,579,965
Payable after one year
3,475,244
18
Finance lease obligations
2024
2022
Future minimum lease payments due under finance leases:
£
£
Within one year
781,305
755,998
In two to five years
2,003,388
2,141,944
In over five years
221,712
3,006,405
2,897,942
Less: future finance charges
(322,821)
3,006,405
2,575,121
Finance lease payments represent rentals payable by the company for certain items of plant and machinery. Leases include purchase options at the end of the lease period, and no restrictions are placed on the use of the assets. The average lease term is 5 years. All leases are on a fixed repayment basis and no arrangements have been entered into for contingent rental payments.
PRODUMAX LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 31 MARCH 2024
- 23 -
19
Deferred taxation
The following are the major deferred tax liabilities and assets recognised by the company and movements thereon:
Liabilities
Liabilities
2024
2022
Balances:
£
£
Accelerated capital allowances
870,769
1,020,994
Losses and other deductions
(611,804)
-
258,965
1,020,994
2024
Movements in the period:
£
Liability at 1 December 2022
1,020,994
Credit to profit or loss
(762,029)
Liability at 31 March 2024
258,965
20
Government grants
2024
2022
£
£
Arising from government grants
174,684
323,039
21
Retirement benefit schemes
2024
2022
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
90,612
56,915
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.
22
Share capital
2024
2022
2024
2022
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Ordinary shares of £1 each
1,500
1,500
1,500
1,500
PRODUMAX LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 31 MARCH 2024
- 24 -
23
Financial commitments, guarantees and contingent liabilities
The company has provided an unlimited guarantee along with fellow group companies under common control regarding the investment made by Realta Investments Ireland DAC relating to Project Zephyr. This security given contains fixed and floating charges and a negative pledge. These charges were satisfied post-year end on 8 April 2024.
The company has in place a debenture with Close Brothers Limited, included as part of invoice discounting, by way of fixed and floating charges over all the property or undertaking of the company and contains a negative pledge.
24
Operating lease commitments
Lessee
At the reporting end date the company had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:
2024
2022
£
£
Within one year
369,000
Between two and five years
1,430,083
In over five years
1,575,479
3,374,562
25
Related party transactions
Transactions with related parties
During the period the company entered into the following transactions with related parties:
Rental of premises
Rental of premises
2024
2022
£
£
Other related parties
175,000
-
Other information
The company has taken advantage of the exemption permitted under Section 33 'Related Party Disclosures' paragraph 33.1A from disclosing transactions with the ultimate parent company, parent company and other 100% subsidiary companies.
26
Ultimate controlling party
The company's immediate parent company is JAMP Holdings Limited.
Copies of the consolidated financial statements of Aero Services Global Group Limited, which is both the smallest and largest group for which consolidated financial statements are prepared, may be obtained from No.1 Marsden Street, Manchester, England, M2 1HW.
The ultimate controlling party of Produmax Limited is Realta Investment Ireland DAC, which has the majority of the voting rights of Aero Services Global Group Limited.
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