The directors present their strategic report of the company and the group for the year ended 31 December 2023.
The group has chosen, in accordance with section 414C of the Companies Act 2006, to set out in the Strategic Report information which would otherwise be required to appear in the Directors' Report.
The business continues to benefit from the expanding global presence of Perkins and Will, Inc. and its associated companies enabling continued further expansion into new geographical markets and clients.
London (Perkins&Will UK, Limited)
Performance in the year ended 2023 remained affected by operational changes such as the move to new offices in February 2023 coupled with the longer lasting impact of Covid-19 on some areas of the business. However, 2023 also saw signs of recovery with a substantial reduction in losses compared to prior year and efforts from the management team to build strong foundations to sustain long-term growth. While Corporate Interiors was still the largest income stream in 2023, the business also experienced the recovery of other income streams and started capitalising on its expansion into Architecture through the acquisition of Penoyre & Prasad in 2019.
Dublin (Perkins&Will Ireland, Limited)
Set up in June 2020, the Group’s Irish arm focuses on Corporate Interiors in Ireland and geographical representation of Perkins and Will. After a strong performance in 2022, the Irish entity suffered a small loss due to the nature of the projects undertaken. The Irish entity has the full financial support of the UK parent.
Portland Design Associates Limited
Longer lasting impacts of Covid-19 have been experienced by the business in 2023, resulting in difficulties in growing areas of the business and resourcing larger projects post-Covid. A lower operating profit was recorded in 2023 while the business is in consolidation phase to build strong foundations for long-term financial stability. The company is a design company providing branding and commercial wayfinding and signage, particularly in the retail sector.
Dubai (Pringle Brandon Middle East Design LLC)
As reported in previous Strategic Reports, the decision was made to wind down Pringle Brandon Middle East Design LLC and the business was formally closed in Q4 2022.
DISABILITY POLICY
The group is an Equal Opportunity Employer. We conduct all employment-related activities without regards to sex, race, colour, religion, national origin, ancestry, age, medical condition, disability, sexual orientation, familial status, marital status or veteran status. The group welcomes diversity in the workplace and the group makes reasonable accommodation in the application process for applicants with disability. The group takes all reasonable steps to ensure that individuals are treated equally and fairly and that decisions on recruitment, selection, training, promotion and career development are based solely on objective and job-related criteria. The group will support any employees who become disabled during the course of employment and make reasonable adjustments including providing alternative working arrangements and ensuring that employees are not disadvantaged by their disability.
EMPLOYEE INVOLVEMENT
The group actively encourages employee involvement with regular staff meetings held in all locations to enable office leadership to provide office and business updates, to discuss both past performance and future plans, and also encourage staff feedback by means of answering questions and providing suggestions for business improvement. The group operates a discretionary bonus scheme which encourages employee involvement in the group's financial performance.
The group's parent company, Perkins and Will, Inc. has the following :
Risk Management Committee comprising Chief Executive Officer, General Counsel, Chief Operating Officer and Chief Financial Officer.
Risk Management Policy which covers the group and the purpose of the policy is to minimise legal, operational, financial and reputational risk. The policy applies to the global business of Perkins and Will including Perkins +Will UK, Limited.
To manage these risks, we monitor our clients and their individual projects on a monthly basis and remain agile to responding to their requirements. Key risks which are reviewed and monitored monthly include:
-Work In Progress and Accounts Receivable
-Backlog, and staffing levels against backlog
-Resourcing requirements
-Cash flow forecasting
-Margins and Profitability
-Marketing Pipeline
Appropriate mitigating action is taken, if in the opinion of the directors, it is required in order to maintain both a profitable business and to maintain the business as a going concern.
The London office is ISO 9001 (Quality Management) accredited and we are committed to delivering services by continual improvement, which we apply to systems, processes and products.
PARENT COMPANY GUARANTEE AND SHARE CAPITAL
The directors have received confirmation from the directors of Perkins and Will, Inc., Perkins + Will UK, Limited's parent company that Perkins and Will, Inc. will provide adequate financial support for the foreseeable future. On 3 December 2013 (March 2024), Perkins and Will, Inc. provided a parent company guarantee which assures the proper performance of all contractual and legal obligations, duties, undertakings and covenants assumed by the company in the course and scope of its business operations to any third party, government body, bank or creditor.
The London business has been founded on commercial interiors work, where we are a leading company. The acquisition of the assets and liabilities of Penoyre & Prasad LLP in 2019 has expanded our services in Architecture and the directors anticipate significant growth in turnover in Architecture.
As reported in previous Strategic Reports, the decision was made to wind down Pringle Brandon Middle East Design LLC and the business was formally closed in 2022. Although Pringle Brandon Middle East Design LLC has closed, the business will continue to service both clients and projects based in the Middle East from London, a geographical area in which we continue to see substantial growth.
Looking ahead, the directors welcome with cautious optimism the substantial reduction in losses from 2022 to 2023, which signals the start of financial recovery. Under Jo Wright’s leadership who joined the business in January 2023 bringing over 30 years of experience of leading design and delivery of projects across a wide range of sectors, the directors have the confidence that the business will see a full recovery and a return to profitability in 2024.
Year ended 31st December | 2023 | 2022 |
Turnover | £24.0m | £23.9m |
Gross Profit | £10.7m | £10.9m |
Gross Profit /(loss)% | 44.6% | 45.6% |
Net profit/(loss) before tax | (£2.5m) | (£4.2m) |
Employee satisfaction and retention is monitored by means of diversity and inclusion focus employee groups, annual reviews, monitoring employee retention and turnover and by means of exit interviews.
FINANCIAL INSTRUMENTS
Due to the nature of the industry it can take several months to collect trade debtor balances which has a significant impact on the group's working capital position. The group manages this by utilising the finance available from its parent company, Perkins and Will, Inc.
On behalf of the board
The directors present their annual report and financial statements for the year ended 31 December 2023.
The results for the year are set out on page 9.
No ordinary dividends were paid. The directors do not recommend payment of a dividend.
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
We have audited the financial statements of Perkins+Will UK, Limited (the 'parent company') and its subsidiaries (the 'group') for the year ended 31 December 2023 which comprise the group statement of comprehensive income, the group balance sheet, the company balance sheet, the group statement of changes in equity, the company statement of changes in equity, the group statement of cash flows and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).
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 group and parent 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 group's and parent company’s ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
Other information
The other information comprises the information included in the annual report other than the financial statements and our auditor's report thereon. The directors are responsible for the other information contained within the annual report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of our audit:
the information given in the strategic report and the directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
the strategic report and the directors' report have been prepared in accordance with applicable legal requirements.
In the light of the knowledge and understanding of the group and the parent company and their 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 by the parent company, or returns adequate for our audit have not been received from branches not visited by us; or
the parent company 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.
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 parent 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 parent company or to cease operations, or have no realistic alternative but to do so.
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.
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;
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 entity 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.
Use of our report
This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company’s members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company’s members as a body, for our audit work, for this report, or for the opinions we have formed.
As permitted by s408 Companies Act 2006, the company has not presented its own profit and loss account and related notes. The company’s loss for the year was £2,074,726 (2022 - £4,352,043 restated loss).
Perkins+Will UK, Limited (“the company”) is a private limited company domiciled and incorporated in England and Wales. The registered office is 150 Holborn, London, United Kingdom, EC1N 2NS.
The group consists of Perkins+Will UK, Limited and all of its subsidiaries.
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, modified to include certain financial instruments at fair value. The principal accounting policies adopted are set out below.
The 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 for parent company information presented within the consolidated financial statements:
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’: Carrying amounts, interest income/expense and net gains/losses for each category of financial instrument; 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.
The consolidated group financial statements consist of the financial statements of the parent company Perkins+Will UK, Limited together with all entities controlled by the parent company (its subsidiaries).
All financial statements are made up to 31 December 2023.
All intra-group transactions, balances and unrealised gains on transactions between group companies are eliminated on consolidation. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.
Subsidiaries are consolidated in the group’s financial statements from the date that control commences until the date that control ceases.
The directors have prepared and reviewed forecasts and projections for the group and, taking into account the economic conditions and possible changes in trading performance, alongside the facts noted above, they have a reasonable expectation that the group has adequate resources to continue in operational existence for the 12 months from the approval of these financial statements. The group therefore continues to adopt the going concern basis in preparing its financial statements.
The directors have received confirmation from the directors of Perkins + Will Inc ('PWI'), Perkins + Will UK, Limited's parent company, that PWI will provide adequate financial support to the group for the foreseeable future. On 3 December 2013 (updated March 2024), PWI provided a parent company guarantee which assures the proper performance of all contractual and legal obligations, duties, undertakings and covenants assumed by the group in the course and scope of its business operations to any third party, governmental body, bank or creditor.
Turnover is recognised at the fair value of the consideration received or receivable for services provided in the normal course of business, and is shown net of VAT and other sales related taxes.
Where the outcome of a contract can be estimated reliably, revenue is recognised by reference to the stage of completion of the contract activity at the reporting end date. Variations in contract work, claims and incentive payments are included to the extent that the amount can be measured reliably and its receipt is considered probable.
When it is probable that total contract costs will exceed total contract turnover, the expected loss is recognised as an expense immediately.
Where the outcome of a contract cannot be estimated reliably, contract revenue is recognised to the extent of contract costs incurred where it is probable that they will be recoverable. Contract costs are recognised as expenses in the period in which they are incurred. When costs incurred in securing a contract are recognised as an expense in the period in which they are incurred, they are not included in contract costs if the contract is obtained in a subsequent period.
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 recognised in the profit and loss account.
Equity investments are measured at fair value through profit or loss, except for those equity investments that are not publicly traded and whose fair value cannot otherwise be measured reliably, which are recognised at cost less impairment until a reliable measure of fair value becomes available.
In the parent company financial statements, investments in subsidiaries are initially measured at cost and subsequently measured at cost less any accumulated impairment losses.
A subsidiary is an entity controlled by the group. Control is the power to govern the financial and operating policies of the entity so as to obtain benefits from its activities.
At each reporting period end date, the group reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the company estimates the recoverable amount of the cash-generating unit to which the asset belongs.
The carrying amount of the investments accounted for using the equity method is tested for impairment as a single asset. Any goodwill included in the carrying amount of the investment is not tested separately for impairment.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.
Recognised impairment losses are reversed if, and only if, the reasons for the impairment loss have ceased to apply. Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.
Trade and other debtors are measured at transaction price less any impairment unless the arrangement constitutes a financing transaction in which case the transaction is measured at the present value of the future receipts discounted at the prevailing market rate of interest . Loans are initially measured at fair value and are subsequently measured at amortised cost using the effective interest method less any impairment.
Trade and other creditors are measured at their transaction price unless the arrangement constitutes a financing transaction in which case the transaction is measured at present value of future payments discounted at prevailing market rate of interest. Other financial liabilities are initially measured at fair value net of their transaction costs. They are subsequently measured at amortised cost using the effective interest method.
The tax expense represents the sum of the tax currently payable and deferred 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 group’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.
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 if, and only if, there is 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.
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.
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
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 leased asset are consumed.
Rental income from operating leases is recognised on a straight line basis over the term of the relevant lease. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised on a straight line basis over the lease term.
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.
In the application of the group’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.
Amount recoverable on contracts is a significant estimate. Management use a bespoke software package which assists in calculating the balances based on a percentage completion method.
With the exception of the estimate described above, the directors consider that there are no other significant judgements or estimates in the preparation of these financial statements
All turnover is attributable to the one principal activity of the group.
The average monthly number of persons (including directors) employed by the group and company during the year was:
Their aggregate remuneration comprised:
The corporation tax rate increased to 25% from 1 April 2023, affecting companies with profits of £250,000 and over.
The actual charge for the year can be reconciled to the expected credit for the year based on the profit or loss and the standard rate of tax as follows:
Pringle Brandon Middle East Design LLC was dissolved during the year and the investment was fully written down in previous years.
Details of the company's subsidiaries at 31 December 2023 are as follows:
These loans are unsecured with no fixed repayment date. The interest charged to the company is based on the floating rate paid on the parent's own line of credit with its banks. The weighted average interest rate charged is 3.4% (2022: 3.4%).
During the year, the company and group have recognised a provision for contractual lease costs that are considered onerous as no ecomonic benefit is derrived from the lease.
The provision covers the remaining life of the lease which at the latest will end in the year ending 31st December 2025.
The following are the major deferred tax liabilities and assets recognised by the group and company, and movements thereon:
Deferred tax is not recognised in respect of tax losses of £13,720,472 (Company £13,463,314) as it is not probable that they will be recovered against future taxable profits in the forseeable future.
A defined contribution pension scheme is operated for all qualifying employees. The assets of the scheme are held separately from those of the group in an independently administered fund.
At the year end, contributions to the scheme of £67,529 (2022: £49,539) were payable to the scheme.
At the reporting end date the group had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:
Post year end, leases that were recognised as an onerous lease at the year end 31 December 2023 were partially offset by income from subletting.
The company has taken advantage of exemption, under the term of Financial Reporting Standard 102 'The Financial Reporting Standard applicable in the UK and Republic of Ireland', not to disclose related party transactions with wholly owned subsidiaries within the ultimate group.
The directors are considered to be the only key management personnel. Directors' remuneration is disclosed in note 9.
During the preparation of the 2023 accounts, the group discovered significant transactions that were incorrectly reported in prior periods. The details of the impact on the financial statements are as follows:
The amount of the correction for each line item of the consolidated statement of comprehensive income affected was:
In the prior period a presentational adjustment of £237,485 has been processed to reclassify the company's foreign exchange from other comprehensive income to the administrative expense. There is no net impact on closing equity or reserves.
During the year it was identified that subsidiary transactions with a net loss of £42,783 in year ended 31 December 2022 and a net loss of £324,949 relating to years prior to this had been incorrectly included withinin the company's financial statements. This adjustment restates the company's profit and loss by removing all of the subsidiaries transactions.