PTJ_&_R_LIMITED - Accounts

The directors present the strategic report for the period ended 31 May 2022.

The period saw the company maintain its rental yield derived from the two owned commercial properties, although predominantly through occupation by its trading subsidiary. Additional professional costs were incurred as a consequence of the difficulties experienced by the subsidiary company during the period. This resulted in a group wide refinance exercise and the increased interest rate expense in the period.

Two significant items are recognised in the profit and loss account. Firstly the company received a dividend totalling £1,677,863 (2020: £Nil) from Direct Garden Supplies Limited, representing a final distribution from this dormant subsidiary. Next the directors reviewed the carrying value of the company's fixed asset investment in its trading subsidiary, and opted to recognise an impairment charge totalling £2,529,100 (2020: £Nil). The net impact of these two entries produces the majority of the reported loss before taxation of £866,201 (2020: £37,901 profit).

The net asset position of £358,282 (2020: £1,320,344) whilst clearly substantially diminished is primarily a function of the deteriorating fortunes of the trading subsidiary. More information is provided in the final section of this report.

As the company is principally engaged in leasing its two commercial properties to other businesses, it is susceptible to occupancy decisions around lease break dates or end dates. The general economic backdrop can also create financial pressure upon tenants causing credit risk, albeit this is mitigated by provisions included within lease agreements. The company has implemented policies that require appropriate credit checks on potential tenants before leases are negotiated.

The company's interest rate risk was mitigated by the reduced debt levels, compared to prior years and is now negated through the change in its debt profile as described in the section below. The directors have considered liquidity risk in the context of the current economic environment and are satisfied that no further action is required.

Given the size of the company's operations, the directors have not delegated the responsibility of monitoring financial risk management to a sub-committee of the board and implement their own policies. The company does not use derivative financial instruments and as such no hedge accounting is applied.

The directors are satisfied with the financial performance of the company during the period and its financial position at the balance sheet date.

This contrasts with the circumstances of its trading subsidiary, Nutriculture UK Limited. Whilst it performed well during 2020 in spite of the Covid-19 pandemic, financial performance deteriorated during 2021 as inflationary cost pressures, particularly on stock and shipping, combined with reduced demand and disjointed stock availability. The directors availed themselves of external, specialist financial advice and the group secured a refinance prior to the balance sheet date, in April 2022.

Trading conditions remained tough throughout 2022 and the subsidiary's cash flow deteriorated as profitability suffered and liquidity became an increasing problem. In Autumn 2022 specialist external advisors were engaged to advise on restructuring options but creditor pressure forced the subsidiary's directors to place it into administration on 1 December 2022. It appears there is little prospect of the subsidiary emerging from this process and the directors believe it will be liquidated with negligible prospects of any distribution to the company, as its sole shareholder.

In May 2023 the company was able to fully redeem all bank debt, through funds loaned by a company under the control of the Molyneux family, which has pledged its financial support for a period of at least twelve months from the date of approving the financial statements. At the time of approving the financial statements, the company has tenants in place for each property and growing levels of equity within each property.

By order of the board

The directors present their annual report and financial statements for the period ended 31 May 2022.

During the period, the principal activity of the company continued to be that of a holding company.

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

The auditor, MHA Moore and Smalley, is deemed to be reappointed under section 487(2) of the Companies Act 2006.

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.

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.

We have audited the financial statements of PTJ & R Limited (the 'company') for the period ended 31 May 2022 which comprise the profit and loss account, the balance sheet, the statement of changes in equity, the statement of cash flows and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).

In our opinion the financial statements:

•     give a true and fair view of the state of the company's affairs as at 31 May 2022 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.

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Other Matter

The company was a parent of a medium sized group at the balance sheet date and therefore s399 of the Companies Act 2006 states the directors must prepare group financial statements for the 18 month period ended 31 May 2022.

However the company's trading subsidiary entered administration after the balance sheet date, as explained in the Strategic Report within these financial statements. As a consequence all employees of the subsidiary were made redundant. Given the current stage of the administration process, the directors are not able to access financial information or explanations from former members of the subsidiary's finance department to an appropriate level. Therefore it has not been possible for the directors to prepare group financial statements for the period ended 31 May 2022.

Consequently group financial statements are not available and the directors are not able to comply with s399 of the Companies Act 2006.

Conclusions relating to going concern

In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.

Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.

Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.

Other information

The other information comprises the information included in the annual report other than the financial statements and our auditor's report thereon. The directors are responsible for the other information contained within the annual report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.

We have nothing to report in this regard.

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.

In the light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identified material misstatements in the strategic report and the directors' report. 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; or

•     the directors were not entitled to prepare the financial statements in accordance with the small companies regime and take advantage of the small companies' exemption in preparing the directors' report.

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.

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

• Enquiries with management about any known or suspected instances of non-compliance with laws and regulations and fraud;

• Challenging assumptions and judgements made by management in their significant accounting estimates, in particular in relation to provisions

• Auditing the risk of management override of controls, including through testing journal entries and other adjustments for appropriateness; and

• Reviewed the systems for recording rental income and tested a rentals throughout the period (and around the period end), to ensure they have been invoiced and recognised within the correct period.

Because of the field in which the client operates, we identified the following area as most likely to have a material impact on the financial statements: compliance with the UK Companies Act.

Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading to a material misstatement in the financial statements or non-compliance with regulation. This risk increases the more that compliance with a law or regulation is removed from the events and transactions reflected in the financial statements, as we will be less likely to become aware of instances of non-compliance. The risk is also greater regarding irregularities occurring due to fraud rather than error, as fraud involves intentional concealment, forgery, collusion, omission or misrepresentation.

A further description of our responsibilities is available on the Financial Reporting Council’s website at: https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.

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.

The profit and loss account has been prepared on the basis that all operations are continuing operations.

PTJ & R Limited is a private company limited by shares incorporated in England and Wales. The registered office is Paddock Road Business Centre, 2 Paddock Road, West Pimbo, Skelmersdale, WN8 9PL.

The current financial period covers a long period from 1 December 2020 to 31 May 2022 however the prior financial period covered a full year from 1 December 2019 to 30 November 2020 therefore they are not comparable.

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 as applicable to companies subject to the small companies regime. The disclosure requirements of section 1A of FRS 102 have been applied other than where additional disclosure is required to show a true and fair view.

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.

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.

At the present time both properties have new or existing tenants in place, under multi year leases, providing comfort over future income streams. The company was recently able to fully redeem all external debt through an interest free loan from a company under common control. This related company has confirmed its financial support for a period of at least 12 months from the date of approving the financial statements. After making enquiries with the Administrators of the subsidiary company, the directors are not aware of any material liabilities connected to the company.

Based on this information the company appears to have sufficient financial resources to discharge liabilities as they fall due for payment over the upcoming twelve months. Thus the directors continue to adopt the going concern basis of accounting in preparing the financial statements.

Tangible fixed assets are initially measured at cost and subsequently measured at cost, net of depreciation and any impairment losses.

Depreciation is recognised so as to write off the cost of assets less their residual values over their useful lives on the following bases:

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.

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

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

At each reporting period end date, the company reviews the carrying amounts of its tangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the company estimates the recoverable amount of the cash-generating unit to which the asset belongs.

Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.

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.

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, 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.

The company does not have any financial assets which are not classified as basic financial instruments.

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.

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.

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

Basic financial liabilities, 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 receipts 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.

The company does not have any financial liabilities which are not classified as basic financial instruments.

Financial liabilities are derecognised when the company’s contractual obligations expire or are discharged or cancelled.

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.

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 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 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.

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.

Rentals applicable to operating leases where substantially all of the benefits and risks of ownership remain with the lessor are charged against profits on a straight line basis over the period of the lease.

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 entity after deducting all of its financial liabilities.

Where the contractual obligations of financial instruments (including share capital) are equivalent to a similar debt instrument, those financial instruments are classed as financial liabilities. Financial liabilities are presented as such in the balance sheet. Finance costs and gains or losses relating to financial liabilities are included in the profit and loss account. Finance costs are calculated so as to produce a constant rate of return on the outstanding liability.

Where the contractual terms of share capital do not have any terms meeting the definition of a financial liability then this is classed as an equity instrument. Dividends and distributions relating to equity instruments are debited direct to equity.

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

Impairment tests have been carried out where appropriate and the following impairment losses have been recognised in profit or loss:

The impairment losses in respect of financial assets are recognised in other gains and losses in the profit and loss account. Please refer to note 7 to the financial statements for further information.

At the balance sheet date, the trading position of the company's subsidiary had deteriorated. At that time the subsidiary was trading fully and the board were pursuing a number of options to remedy the position. The directors felt it prudent to recognise an impairment to the carrying value of the company's investment in its subsidiary at that date, recognising the diminution in the value of that entity given the known information and circumstances at 31 May 2022.

Bank loan balances totalling £38,911 (2020: £104,991) secured by way of a first legal charge over the land and buildings situated at 2 Paddock Road, West Pimbo, Skelmersdale, WN8 9PL and 4 Paddock Road, West Pimbo, Skelmersdale, WN8 9PL, alongside a debenture covering all current and future assets of the company the loan is in.

Bank loans totalling £1,061,089 (2020: £623,901) secured by way of a first legal charge over the land and buildings situated at 2 Paddock Road, West Pimbo, Skelmersdale, WN8 9PL and 4 Paddock Road, West Pimbo, Skelmersdale, WN8 9PL, alongside a debenture covering all current and future assets of the company the loan is in.

Each class of shares has equal voting rights and ranks pari passu in all respects except for restrictions on the transferability of certain classes.

As noted within the Strategic Report the company's trading subsidiary, Nutriculture UK Limited, entered into administration on 1 December 2022.