POD-TRAK_(HOLDINGS)_LIMIT - Accounts

The director presents the strategic report for the year ended 31 August 2022.

The group’s principal subsidiary, Pod-Trak is a well-established specialist contractor operating within the infrastructure sector. Since it was founded in 2007, Pod-Trak has grown in strength within the following disciplines:

• Railway Infrastructure (Rail Systems)

• Infrastructure Projects (Airports)

• Power & Communications

The group's head office is based at Perivale with further offices in Bristol, Doncaster and Manchester, enabling the company to service all regions throughout the UK.

In the year to 31 August 2022, the director is satisfied with Pod-Trak Group’s result for the year and the 8% increase in turnover, reflecting the efforts made by its Project Teams to deliver critical infrastructure works. The increase has partly been driven by the expansion of the trade of the Irish subsidiary including the ever growing Data centre Construction market in Ireland and Europe, as well as transport infrastructure work In Ireland, both of which align with Pod-Trak's strategy to diversify as a business creating a sustainable business model. Within all our infrastructure works the group's performance remains strong with an appetite from our clients and end users to continue to invest in infrastructure leading to an increased market share for Pod-Trak in all disciplines. The Board uses Key Performance Indicators (KPI’s) to monitor results to ensure the business remains efficient and competitive. These are achieved through a range of activities including timely management accounts, HSQES (Health & Safety Quality Environment Sustainability) monitoring, cash management, customer satisfaction and a number of other financial and non-financial measures.

Rail Infrastructure – This is the core business of Pod-Trak. Our success over the past number of years including 2021/22 is due to the desire by clients to invest progressively in Major and Minor Infrastructure Schemes throughout the UK. The business is well positioned, having invested in staff and business processes as we move towards the New Network Rail Control Period 7 frameworks. Pod-Trak will continue to work with Tier 1 contractors and asset owners/occupiers to both secure and ensure its market share. We have also continued to invest in Pre-Construction work helping to deliver added value for our clients, helping the business to secure future works, target strategic projects, and maintain and develop our strategic growth plan.

Infrastructure Projects – With a dramatic decrease in passenger numbers at all major UK Airports throughout 2021 & 2022, and with the recovery slower than expected, Pod-Trak saw a increased workload in this sector, however, still a slow recovery as a whole. We continue to work closely with our clients to deliver critical works necessary for the maintenance of the Airport premises. As normality returns, Pod-Trak expects growth in this area in the short and long term.

Power & Communication – Pod-Trak have worked within this sector for a number of years enabling us to multi-skill our teams and transfer resources across divisions. The sector was a key focus for 2021/22 and will be one of continuing growth for the business in the future, providing diversification and the opportunity to develop new skills across the business and its employees. The diversification strategy into new markets has been successful. We have been awarded multi-million pound contracts to deliver fibre optic cable in cities throughout the UK. We started deploying in June 2021 and this division has continued to grow and develop.

Through our continued growth, we have maintained a strong HSQES trend by continuing to invest in better ways of doing things, introducing data driven analysis. We have also continued to roll out our PALS- (Plan, Attitude, Lead & Share) behavioural based safety programme, which has been a great success and has helped us promote and develop our staff's ability to speak up and work better as a team. HSQES is one of the main drivers for the company as we strive daily to keep our workforce and associates safe.

One of the key concerns with the business is still Brexit and inflation within the UK. This will have an impact on resources, rising material costs and programme interruptions due to additional time required to ship materials and consumables to the UK. This is being monitored regularly by the group and the effects have not been felt to date but this has the potential to impede performance and supply to projects in the future. We will continue to closely monitor and manage these factors over the next 12 months.

The group will continue to monitor its liquidity and we are confident that we are in a good position to continue to deliver quality and value for money to our clients and partners. The group has demonstrated throughout the pandemic that it has systems in place to make it a very sustainable and scalable business. I am satisfied that this has been achieved and I am confident that we have successfully maintained our market share and commitments to our valued clients.

As a result of the above, the group fundamentals remain solid. The director believes that the company is well placed to deliver profits and are confident of its future. Previously delayed projects have been completed in financial year 2022. The group starts 2022/23 with a strong order book, delivered off the back of strong performance for its client base throughout 2022. Despite unprecedented risks in the country with Covid-19, the company has been resilient throughout, and is now positioned to continue to grow over the forthcoming period. The director confidently expects to deliver another year of profit in 2022/23 that is likely to exceed the turnover achieved in the year under review. The group continues to deliver larger projects successfully and safely for its clients within the sectors in which it operates.

Principal risks and uncertainties

There are a number of potential risks and uncertainties which could impact the Group’s performance, and these are considered by the Board on a regular basis. The Board of Directors and the relevant management teams consider the risks of all significant business decisions and changes in the external environment and in the group’s operations. The key risks affecting the business are as follows:

Operating Risk - the group manages this risk by providing added value services to its clients, having fast response times not only in supplying products and services but also in handling all client queries and by maintaining strong relationships with clients. The group's operating risk is reduced due to the market share of their clients as many of the group's clients are long standing market leaders in their field. The group has spread its operating risk by not only actively seeking to widen its client base but also through continued expansion of its activities in the South and North of England.

Market Risk - the group operates in a specialised market and seeks to maintain a competitive advantage by offering an appropriate and relevant service range and providing a high level of customer service from professional and dedicated staff. The group keeps abreast of developments in the market through maintaining strong relationships with its clients and monitoring the wider economic environment.

Personnel Risk – the Group is a privately-owned business and places great emphasis on recruiting, training, rewarding and retaining high quality people. The Directors consider staff resourcing and on a regular basis. We promote from within whenever we can to maintain the group culture. We also embrace new people from elsewhere as they bring fresh ideas and the benefits of their experience. The Board have tried to ensure that the knowledge base of the operational management team is shared as much as possible throughout the group.

Taxation risk -the group is exposed to financial risks from increases in tax rates and changes to the basis of taxation including corporation tax and VAT. Principal controls to mitigate this risk include regular monitoring of legislative proposals and the engagement of experienced executives and the use of experienced sector-specific professional advisers to mitigate the impact of any changes and ensure compliance.

Financial Risk- the group is principally funded from retained profits. Financial monitoring, forecasting, and planning are ever present processes with the care taken to achieve a reasonable profit margin and investment in resources whilst maintaining delivery of a high-quality service to its clients - see also Financial instruments.

Information Technology – the group relies heavily on systems to operate its business, ordering goods, paying suppliers, ensuring health and safety records are accurate, accounting and payroll. The risk of Cyber-attacks is ever present and an increasing risk to every business. Ensuring we have robust and up to date Cyber security measures and vigilant users is critical to the successful running of these systems, as well as employing appropriately skilled and experienced staff and external specialist support as required.

Economic risk - the director has identified and evaluated risks and uncertainties and have controls in place to mitigate these. Responsibility for management of each key risk is identified and delegated. The group is exposed to the economic risks that could lower the group's revenues and operating results in the future. However, actions continue to be taken to maximise the group's performance in all aspects of the business.

The balance sheets on pages 14 and 15 of the financial statements show that the group's and company's financial position at the year end is, in terms of both net assets and liquidity, an improvement over the previous year.

The key financial and non financial performance indicators used to determine the progress and performance of the group are set out below:

     2022              2021

Turnover                             £54,928,977            £50,862,697

Gross profit                          £10,121,996             £6,830,687

Gross margin                          18.4%             13.4%

Operating profit                          £6,488,278         £3,652,013

Operating profit as a % of sales                 11.8%              7.2%

Earnings before interest, tax, depreciation, amortisation

and pension provision (EBITDA)                 £6,557,412             £3,508,158

EBITDA as a % of sales                     11.9%              6.9%

Market Share

The principal subsidiary is a medium-sized privately owned construction company based in England. Although difficult to quantify the company is estimated to have a strong market share.

Gross Profit Margin

The director views that an acceptable gross profit as a % of sales should ideally be in the 14% to 16% range. The business has continued to reinvest for growth, including through the period of Covid, continuing to support its clients and its staff through this period, taking a long-term view of the market and its future. This investment through a period of pressure on operational delivery has meant that the target range has been exceeded this year, and the director expects this to continue in the short to medium term.

Operating profit and EBITDA % of sales

The directors view operating profit as a % of sales as a key performance indicator for the business and this is reviewed regularly. The director views that an acceptable operating profit as a % of sales should ideally be in the 7% to 9% range, and this year the target range has been exceeded and the director expects this to continue in the short to medium term. It is the intention of the group to continue to strengthen its financial performance in the industry by concentrating on client retention and expansion in the market share, whilst at the same time closely monitoring both direct and indirect costs.

Health and Safety performance - the director also views safety performance as a KPI and strives to ensure that all incidents and accidents are reduced as much as possible. RIDDOR accidents, minor accidents, Toolbox talks, near misses, Service Strikes and rolling Accident Frequency statistics are regularly monitored at management meetings and the group uses Close Call reporting and trend analysis to monitor performance.

Staff turnover – employees who leave and the reasons thereto.

Tenders - enquiry success rate for tenders and price estimates.

Safety, health and environmental policies

The Pod-Trak Group has a fully integrated Health and Safety policy. The group continues to strive to improve its safety, health and environmental standards and performance. These are monitored regularly throughout the year and reviewed in response to performance and changes in legislation.

Health and safety

The group recognises the significance of health and safety in the workplace to ensure its work force is free from risk, through investment in continuing improvement in the occupational health and safety field.

In recognising the significance of health and safety, the group has made significant investment in, occupational health, a behavioural culture programme, ongoing external monitoring, evaluation of environmental impact, risk reduction methods, the employment of professionally qualified personnel and full-time safety officers.

Pod-Trak also has a commitment to the CSCS scheme. All new operatives receive full CSCS training and that their accreditation is appropriate to the work that they do. At Pod-Trak the belief is that all accidents are preventable with proper planning, information, training and adherence to Method Statements and Works Package Plans. Regular Toolbox Talks and Task Briefs also ensure continual development and sharing of information relevant to the works carried out, offering a forum for the workforce to get involved and provide feedback important to a healthy working environment.

In addition, the monitoring of the employees' health and welfare through regular site visits on each of its projects and the continuation of an extensive training programme, ensuring competency in the workplace, continue to play a major part in protecting the group's workforce, and the group's reputation.

Environment

The group recognises the importance of its environmental responsibilities, monitors its impact on the environment and designs and implements policies to reduce any damage that might be caused by the group's activities. Initiatives designed to minimise the group's impact on the environment include safe disposal of any product waste, recycling and reducing energy consumption.

Accreditations and memberships

The principal subsidiary has been assessed and has achieved the following accreditations and awards and is a member of the following :

- Quality Management System (ISO 9001: 2015);

- Environmental Management System (ISO 14001: 2015);

- Health & Safety Management System (BS OHSAS 45001: 2018 SSIP);

- Constructionline - Gold Member;

- Network Rail Ontrack Plant Operations Scheme Approval;

- Membership of CIRAS;

- FORS Silver accredited (Perivale and Manchester);

- Member of the Rail Industry Contractors Association (RICA);

- Member of the Construction Plant-Hire Association (CPA);

- Member of the Rail Plant Association (RPA);

- Member of the Freight Transport Association (FTA);

- Verified supplier - Railway Industry Supplier Qualification Scheme (RISQS);

- Registered as an upper tier waste carrier with the Environment Agency;

- Member of the Royal Society for the Prevention of Accidents (ROSPA);

- Approved Contractor Scheme - NICEIC;

- Network Rail - Principal Contractor Licence Management Systems Accepted;

- Cyber Essentials Scheme compliant.

The director is of the opinion that these memberships, certifications and accreditations will ensure the continued efficiency of its internal and external processes, and aid the group's commitment to working towards health, safety and environmental best practice across the business.

Employee involvement and policy

The group continues to make significant investment in its human resources both in terms of necessary increases and strengthening of its management teams, supervisory personnel and work force.

Details of the number of employees and related costs can be found in note 6 to the financial statements.

The Group's employment policies respect the individual and offer career opportunities regardless of gender, race or religion. The group engages, promotes and trains staff on the basis of their capabilities, qualifications and experience without discrimination, giving all employees an equal opportunity to progress within the group.

Applications for employment by disabled persons are always fully considered, bearing in mind the aptitudes of the applicant concerned. In the event of members of staff becoming disabled, every effort is made to ensure that their employment with the group continues and that appropriate training is arranged. It is the policy of the group that the training, career development and promotion of disabled persons should, as far as possible, be identical with that of other employees.

On behalf of the board

The director presents his annual report and financial statements for the year ended 31 August 2022.

The principal activity of the company and group continued to be that of specialist rail contractors and electrical installations.

The results for the year are set out on page 13.

Ordinary dividends were paid amounting to £4,182. The director does not recommend payment of a further dividend.

No preference dividends were paid. The director does not recommend payment of a final dividend.

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

Objectives and policies

The group's principal financial instruments comprise bank balances, trade creditors, trade debtors, hire purchase creditors, loans to and from related companies and loans to/from the director. The main purpose of these instruments is to raise funds to finance the group's operations. The group's approach to managing other risks applicable to the financial instruments concerned is shown below.

Cash flow and liquidity risk

In respect of bank balances the liquidity risk is managed by maintaining a balance between continuity of funding and flexibility through and agreed payment policy. Strict payment terms are negotiated with the group's customers which enables it to ensure that it is paid promptly once an application has been issued. This policy ensures that sufficient funds are available to meet amounts due to trade creditors. Trade debtors are managed in respect of credit and cash flow risk by policies concerning the credit offered to customers and the regular monitoring of amounts outstanding.

In respect of loans to and from related companies, these are unsecured, interest-free with no fixed date for repayment. The loans from the director are interest-free and repayable on demand. The director is aware of the company's required financing and has determined that these will only be repaid, in whole or in part, when finance is available. Loans to the director are unsecured and repayable on demand.

The group sees R&D activity as a vital part of sustaining competitive advantage and when presented with technical challenges, will seek to develop the optimal solution.

During the year the group undertook several Research and Development (‘R&D’) projects that sought to achieve advancements in technology in carrying out various railway systems and infrastructure projects.

The group has demonstrated its resilience during the Covid pandemic and is now better placed having obtained Principal Contractor Status. It will allow the group to focus on strengthening its financial performance in the industry by concentrating on current customer base retention, looking out for new clients by developing long term relationships, while at the same time keeping a firm grip of both direct and indirect cost in line with turnover.

The group will continue to focus on securing profitable work and while doing this we will continue to develop the new markets that we have secured work within, (in particular the Utilities and Aviation sectors), which will help us to diversify the business to help us become more sustainable in the overall Infrastructure sector within which we operate. This will allow us to continue to increase our market share by expanding our customer base not only in the South, North and Southwest of England, but also in Ireland and Europe. We will continue to seek to diversify the work it undertakes within our core sectors.

Subsequent to the year end, the group has seen a growth in its order book which should see it deliver turnover in the UK and ireland in the region of £80m in 2022/23.

The director anticipates that in 2022/23 and going forward into 2023/24, the group will continue to be focused on further developing its market share within the infrastructure sectors and mainly focusing on expanding within the infrastructure markets in which we operate, and continue to develop our market share going forward.

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

The director is responsible for preparing the Annual Report and the financial statements in accordance with applicable law and regulations.

Company law requires the director to prepare financial statements for each financial year. Under that law the director has 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 director must not approve the financial statements unless he is satisfied that they give a true and fair view of the state of affairs of the group and company, and of the profit or loss of the group for that period. In preparing these financial statements, the director is required to:

•     select suitable accounting policies and then apply them consistently;

•     make judgements and accounting estimates that are reasonable and prudent;

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

•     prepare the on the going concern basis unless it is inappropriate to presume that the group and company will continue in business.

The director is responsible for keeping adequate accounting records that are sufficient to show and explain the group’s and company’s transactions and disclose with reasonable accuracy at any time the financial position of the group and company and enable them to ensure that the financial statements comply with the Companies Act 2006. He is also responsible for safeguarding the assets of the group and company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

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 auditor of the company 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 auditor of the company is aware of that information.

We have audited the financial statements of Pod-Trak (Holdings) Limited (the 'parent company') and its subsidiaries (the 'group') for the year ended 31 August 2022 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, the company 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 group's and the parent company's affairs as at 31 August 2022 and of the group's profit for the year then ended;

•     have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and

•     have been prepared in accordance with the requirements of the Companies Act 2006.

Basis for opinion

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

• the strategic report and the director's 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 director's 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 director's responsibilities statement, the director is 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 director determines 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 director is 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 director either intends to liquidate the parent company or to cease operations, or has 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.

The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below.

Our approach to identifying and assessing the risks of material misstatement in respect of irregularities, including fraud and non-compliance with laws and regulations, was as follows;

• the engagement partner ensured the engagement team had the appropriate competence, capabilities and skills to identify or recognise possible non-compliance with applicable laws and regulations.

• we identified significant laws and regulations applicable to the company through discussions with directors, along with our commercial knowledge and experience of the construction sector in which our client operates.

• we focused on specific laws and regulations which we consider may have a material effect on the financial statements or operations of the company, including the Companies Act 2006, taxation legislation, data protection, health and safety, and employment law.

• We assessed the extent of compliance with the laws and regulations identified above through making enquiries of management and inspecting legal correspondence; and

• Identified laws and regulations were communicated within the audit team regularly and the team remained alert to instances of non-compliance throughout the audit.

We assessed the susceptibility of the company’s financial statements to material misstatement, including obtaining an understanding of how fraud might occur, by:

• Making enquiries of management as to where they considered there was susceptibility to fraud, their knowledge of actual, suspected and alleged fraud;

• Considered the internal controls in place to mitigate risks of fraud and non-compliance with laws and regulations.

To address the risk of fraud through management bias and override of controls, we:

• have performed analytical procedures to identify any unusual variances

• reviewed and tested journal entries and other adjustments to identify any unusual transactions

• assessed judgements and assumptions used in determining the accounting estimates which could indicated any potential bias

• investigated the rational behind significant or unusual transactions.

In response to the risk of irregularities and non-compliance with laws and regulations, we designed procedures which included, but were not limited to:

• reviewing disclosures in the financial statements and testing to supporting documentation.

• reviewing meeting minutes where available

• discussions with management regarding actual or potential litigations and / or claims.

• reviewing correspondence with HMRC and other relevant regulators

There are inherent limitations in our audit procedures described above. The more removed that laws and regulations are from the financial transactions, the less likely it is that we would become aware or any possible non-compliance. Auditing standards also limit the audit procedures required to identify non-compliance with laws and regulations to enquiry of directors and other management and the inspection of regulatory and legal correspondence, if any.

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.

As permitted by s408 Companies Act 2006, the company has not presented its own profit and loss account and related notes. The company's profit for the year was £3,066,698 (2021 - £2,059,712 profit).

Pod-Trak (Holdings) Limited (“the company”) is a private limited company domiciled and incorporated in England and Wales. The registered office is Crove House, 14 Aintree Road, Perivale, UB6 7LA.

The group consists of Pod-Trak (Holdings) 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. The principal accounting policies adopted are set out below.

The consolidated group financial statements consist of the financial statements of the parent company Pod-Trak (Holdings) Limited together with all entities controlled by the parent company (its subsidiaries) and the group’s share of its interests in joint ventures and associates.

All financial statements are made up to 31 August 2022. Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with those used by other members of the group.

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.

An associate is an entity, being neither a subsidiary nor a joint venture, in which the company holds a long-term interest and where the company has significant influence. The group considers that it has significant influence where it has the power to participate in the financial and operating decisions of the associate.

Investments in associates are initially recognised at the transaction price (including transaction costs) and are subsequently adjusted to reflect the group’s share of the profit or loss, other comprehensive income and equity of the associate using the equity method. Any difference between the cost of acquisition and the share of the fair value of the net identifiable assets of the associate on acquisition is recognised as goodwill. Any unamortised balance of goodwill is included in the carrying value of the investment in associates.

Losses in excess of the carrying amount of an investment in an associate are recorded as a provision only when the company has incurred legal or constructive obligations or has made payments on behalf of the associate.

In the parent company financial statements, investments in associates are accounted for at cost less impairment.

At the time of approving the financial statements, the director has a reasonable expectation that the group has adequate resources to continue in operational existence for the foreseeable future. Thus the director continues to adopt the going concern basis of accounting in preparing the financial statements.

Turnover represents amounts receivable for goods and services net of VAT and trade discounts. Income is recognised on the basis of work measured, valued and certified at the year end.

Construction contracts

Where the outcome of a construction contract can be estimated reliably, revenue and costs are 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 construction 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 “percentage of completion method” is used to determine the appropriate amount to recognise in a given period. The stage of completion is measured by the proportion of contract costs incurred for work performed to date compared to the estimated total contract costs. Costs incurred in the year in connection with future activity on a contract are excluded from contract costs in determining the stage of completion. These costs are presented as stocks, prepayments or other assets depending on their nature, and provided it is probable they will be recovered.

The group sees R&D activity as a vital part of sustaining competitive advantage and when presented with technical challenges, will seek to develop the optimal solution.

During the year the group undertook several Research and Development (‘R&D’) projects that sought to achieve advancements in technology. These advancements extended the overall knowledge or capability in a field of railway systems and infrastructure projects. Given the complexity of the built environment in which Pod-Trak operates, significant R&D resources are directed to overcoming system uncertainty.

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.

Negative goodwill represents the excess of the fair value of net assets of a business acquired over the cost of acquisition. It is initially recognised as a liability at cost and is subsequently measured at cost less accumulated amortisation and accumulated impairment losses. Negative goodwill is considered to have a finite useful life and the directors have carried out an impairment review and taken the decision to amortise the remaining unamortised balance in full in the year, rather than carry on amortising over 5 years.

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:

Short leasehold property was in the course of construction at the year end and has not been depreciated.

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, associates and jointly controlled entities 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.

Entities in which the group holds an interest and which are jointly controlled by the group and one or more other venturers under a contractual arrangement are treated as joint ventures. Entities other than subsidiary undertakings or joint ventures, in which the group has a participating interest and over whose operating and financial policies the group exercises a significant influence, are treated as associates.

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.

Stock and work in progress are valued at the lower of cost and net realisable value. Cost includes all direct costs and an appropriate proportion of fixed and variable overheads. Work in progress is reflected in the accounts on a contract by contract basis and represents the unbilled direct and indirect costs incurred as at the year end. These typically arise where mid month valuations have occurred and a time apportioned estimate of the cost of measured work has been calculated. Net realisable value represents the certified value of the measured work carried out in a particular period, invoiced subsequent to the year end.

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 the profit and loss account. Reversals of impairment losses are also recognised in the profit and loss account.

Cash and cash equivalents are basic financial assets and include cash in hand, deposits held at call with banks, other short-term liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities.

The group 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 group's balance sheet when the group becomes party to the contractual provisions of the instrument.

Financial assets and liabilities are offset and 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.

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.

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.

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.

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.

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 director is 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.

The following judgements (apart from those involving estimates) have had the most significant effect on amounts recognised in the financial statements.

The calculation of contract turnover, gross amounts due from customers and work in progress is contingent on the accurate measurement of work done and internal valuations by key management personnel. The amounts due from contract customers requires the company to make a judgement in relation to the stage of completion of the contracts ongoing at the year end. Management are provided with internal valuations by experienced personnel based on the costs incurred to date and the terms and conditions of the contract.

The directors have ensured that generally accepted industry practices and methodologies are followed by all relevant personnel and that accounting and quality management systems are regularly evaluated and certified.

Management regularly review intercompany balances for recoverability

The valuation of the company’s and group's investment in its subsidiary and associate companies. In the company accounts, the investments are held in the accounts at historic cost and have not been revalued. In the group accounts the investment in associates is calculated under the equity method of accounting. The carrying value of all investments are reviewed annually by the management for any impairment based on the trading results of the respective companies for the year with reference to the original cost and carrying value under the equity method of accounting.

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

During the year, the group received £25,033 (2021: £126,364) by way of Government grants under the Coronavirus Job Retention Scheme, and a further grant amounting to £11,912 (2021: £14,457) under the Kickstart Scheme.

Of the £69,134 (2021: £45,613) depreciation of owned tangible fixed assets, £7,548 (2021: £10,068) is included within cost of sales. The balance is included in administration expenses.

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

Their aggregate remuneration comprised:

The actual charge for the year can be reconciled to the expected charge for the year based on the profit or loss and the standard rate of tax as follows:

The directors have opted to account for the company's investment in its subsidiary and associate companies at cost less impairment as set out in the above accounting policies and in accordance with the FRS 102. The reason for choosing this method is that both the subsidiary and associate have always been privately owned and its shares have never been publicly traded.

Details of the company's subsidiaries at 31 August 2022 are as follows:

1. The Registered office address is Crove House, 14 Aintree Road, Perivale, Greenford, Middlesex, UB6 7LA.

2. The Registered office address is Harcourt Centre, Block 4, Harcourt Road, Dublin 2, Dublin D02 HW77, Ireland .

Details of associates at 31 August 2022 are as follows:

3. The registered office address of the associate is 17 Pennine Parade, Pennine Drive, London, NW2 1NT.

The amounts owed by undertakings in which the company has a participating interest are unsecured, interest-free and repayable on demand with no fixed repayment terms.

Included in other debtors are net amounts due from related parties that are unsecured, interest-free and with no fixed repayment dates

The director considers that the carrying amount of trade payables approximates to their fair value.

The amounts owed to group undertakings are unsecured, interest-free and repayable on demand with no fixed repayment terms.

Included in other creditors are amounts due to related parties that are unsecured, interest-free and with no fixed repayment dates.

There is a Debenture dated 4 July 2013 in favour of the subsidiary company's bankers, Barclays Bank plc, to secure banking facilities. This comprises fixed and floating charges over the undertaking and all property and all fixed and current assets present and future, The Debenture contains a negative pledge.

There is a Legal Charge dated 7 September 2017, in favour of Metro Bank Plc, to secure leasehold property subject to a lease between the subsidiary company and a related company. This comprises fixed and floating charges in connection with the leasehold property present and future, The Legal Charge contains a negative pledge

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

The deferred tax liability set out above is expected to reverse within 12 months and relates to accelerated capital allowances that are expected to mature within the same period.

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.

The company has two classes of shares in issue:

- Ordinary shares which carry no right to fixed income, but which carry full voting rights; and

- Preference shares which carry neither any right to fixed income nor full voting rights.

The group has provided guarantees in respect of unpaid hire purchase liabilities of a related company. At 31 August 2022, the outstanding hire purchase liabilities in that related company, which are not included in the group's balance sheet, amounted to £831,752 (2021: £341,114) - see also Note 25 ' Related party transactions'.

Operating lease payments represent rentals payable by the group for office equipment, vehicles and business premises. Leases are negotiated for an average term of 3 years.

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:

Key personnel, comprising the three directors of the subsidiary company, received remuneration totalling £119,346 (2021: £114,346) in the UK subsidiary company.

During the year the group entered into the following transactions with related parties:

Sales of goods to related parties were made at the company's usual list price. Purchases were made at market price discounted to reflect the quantity of services purchased and the relationships between the parties.

The following amounts were outstanding at the reporting end date:

The amounts owed to related parties are unsecured, interest-free, have no fixed dates of repayment and are repayable on demand.

The following amounts were outstanding at the reporting end date:

The amounts owed by related parties are unsecured, interest-free, have no fixed dates of repayment and are repayable on demand.

The amounts outstanding are unsecured and will be settled in cash.

As mentioned in Note 23, at 31st August 2022, the group has guaranteed the unpaid finance lease commitments of a related company to a maximum of £831,752 (2021: £341,114).

Dividends totalling £2,173 (2021 - £2,173) were paid in the year in respect of shares held by the company's sole director.

Loans have been granted by the group to its directors as follows:

The maximum outstanding during the year was £1,065,283. The loan is unsecured and repayable on demand. Interest of £24,970 was charged at a rate of 2.5%.

The ultimate controlling party is P O'Donnell, by virtue of his majority shareholding in the called up share capital of the company.

The largest and smallest group financial statements that consolidate this company is Pod-Trak (Holdings) Limited. These group accounts are available to the public from the company's registered office address at Crove House 14 Aintree Road Perivale, UB6 7LA.

The ultimate controlling party is P O'Donnell, by virtue of his majority shareholding in the called up share capital of the company.