ACCOUNTS - Final Accounts
ACCOUNTS - Final Accounts
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Registered Number:
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2022
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COMPANY INFORMATION
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CONTENTS
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STRATEGIC REPORT
FOR THE PERIOD ENDED 31 DECEMBER 2022
The directors present the Strategic Report for the 17 months to 31 December 2022.
2021 and 2022 have been challenging years for the Company which saw unprecedented price volatility due to supply chain issues and the war in Ukraine. Despite this the overall performance of the Company was pleasing with turnover for the period of £109.8m and profit before tax of £8.9m. A fall in prices in the second half of 2022 led to higher priced stock being sold at a lower margin which resulted in a decrease in the gross margin to 24.58% (2021: 25.55%). Despite this and after payment of dividends totalling £3.5m, the net assets of the business grew to £14.3m (2021: £10.5m), with a minimal debt requirement.
The key performance measures of the company are:
2022 2021 Sales £’000’s 109,816 59,250 Gross profit margin 24.58% 25.55% Net Current Assets £’000’s 13,086 9,887 Working capital management is closely monitored through stock ageing, debtor days and creditor days. Other key performance indicators The Company considers its non-financial key performance indicators to be the staff retention rate. During the year this was 80.28% (2021: 85%).
Credit risk
All customers trading on credit terms are subject to detailed credit verification procedures, with key debts being insured in the event of failure to pay. Price risk The price volatility over the last 2 years has been actively managed through forward planning of imports, use of forward exchange contracts and the maintenance of pre agreed payment terms.
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STRATEGIC REPORT (CONTINUED)
FOR THE PERIOD ENDED 31 DECEMBER 2022
The directors set out their section 172(1) statement in accordance with the Companies Act 2006 in relation to stakeholder engagement for the 17 month period ended 31 December 2022.
Stakeholder engagement The directors consider the shareholders, employees, customers and suppliers to be the company’s core stakeholders. We aim to develop strong, stable and profitable long term relationships with all our stakeholders through open and honest communications. This engagement with key stakeholders can be summarised as follows: Customers The Company maintains a broad range of customers with many of these relationships having been in place for many years. The objective of the company is to communicate openly with our customers and maintain high service levels. Suppliers A broad, strong and reliable supplier base is essential to the continued success of the business. Our practices and systems are being constantly monitored to ensure the suppliers are treated fairly. We aim to always pay our suppliers according to their terms. Employees The strength of the business relies on attracting, retaining and motivating our employees. Our employees are generously rewarded and are informed of all significant future developments. Community Environment Community involvement is an important aspect of the business and decisions are made which are sensitive to the impact on the community. Examples of the community support provided include the provision of a Blood Bike and support of the local football team. Environment The company continued to work towards becoming carbon neutral; as part of this process we commissioned a review of the company’s total carbon footprint with the purpose of offsetting the total organisation emissions. As an independent supplier of construction products in the UK it was identified that the main emissions occurred via third party inbound delivery of goods. Internally a number of initiatives have been introduced to assist in the further reduction of our emissions, examples include: 1. Continuing to increase the number of fully electric/hybrid vehicles; 2. Implementation of new ERP system to move towards paperless office; 3. Ongoing replacement old IT equipment; and 4. Installation of energy efficient LED’s.
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STRATEGIC REPORT (CONTINUED)
FOR THE PERIOD ENDED 31 DECEMBER 2022
This report was approved by the board on 9 June 2023 and signed on its behalf.
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DIRECTORS' REPORT
FOR THE PERIOD ENDED 31 DECEMBER 2022
The directors present their report and the financial statements for the period ended 31 December 2022.
The directors are responsible for preparing the Strategic Report, the Directors' Report and the financial statements in accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice), including Financial Reporting Standard 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland'. Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Company and of the profit or loss of the Company for that period.
In preparing these financial statements, the directors are required to:
∙select suitable accounting policies for the Company's financial statements and then apply them consistently;
∙make judgments and accounting estimates that are reasonable and prudent;
∙state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements;
∙prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Company and to enable them to ensure that the financial statements comply with the Companies Act 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.
The profit for the period, after taxation, amounted to £7,280,242 (2021 - £4,327,780).
Particulars of dividends can be found in note 11.
Since the year-end dividends of £178,750 have been proposed.
The directors who served during the period were:
The directors have professional indemnity insurance as part of a directors' and officers' professional indemnity insurance policy.
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PRECON PRODUCTS LTD
DIRECTORS' REPORT (CONTINUED)
FOR THE PERIOD ENDED 31 DECEMBER 2022
Charitable donations
During the year the Company made charitable donations of £81,778 (2021: £16,539).
The Company continues to invest to strengthen its position in the market place.
The financial risk management objectives of the Company and it's exposure to credit risk and liquidity risk have been disclosed in the Strategic Report.
Details of the Company's engagement with suppliers, customers and others have been disclosed in the Strategic Report.
The Company's greenhouse gas emissions and energy consumption (disclosed in kwh) for the period are:
Gas 484,702 Electricity 219,365 Transport fuel 467,318
Mandatory greenhouse gas emissions report by scope
Unit Total Scope 1 Energy consumption owned road vehicles tCO2e 110 Scope 2 Electricity and gas consumption tCO2e 171 Total Emissions tCO2e 281 Net operating income £’000 5,400 Intensity Ratio (emissions/net operating income) 0.05
Greenhouse gas emissions are calculated in alignment with records used for the production of these financial statements. We have used emission factors from BEIS’s “Greenhouse gas reporting: conversion factors 2020” to calculate our Scope 1 & 2 emissions. All emissions are required under the Companies Act 2006 are included where stated and include Scope 1 (direct emissions from road vehicles owned by the company) and Scope 2 (indirect emissions from purchased electricity).
The measures we have taken during the year to increase energy efficiency include acquiring further hybrid cars that have fewer emissions than previous fossil fuel cars.
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PRECON PRODUCTS LTD
DIRECTORS' REPORT (CONTINUED)
FOR THE PERIOD ENDED 31 DECEMBER 2022
- so far as the Director is aware, there is no relevant audit information of which the Company's auditor is unaware; and - the Director has taken all the steps that ought to have been taken as a Director in order to be aware of any relevant audit information and to establish that the Company's auditor is aware of that information.
There have been no significant events affecting the Company since the year end.
Our auditors Scrutton Bland LLP transferred their audit registration and therefore that part of their business to a
newly incorporated limited liability partnership, SB Audit LLP, on 1 April 2023. Accordingly Scrutton Bland LLP formally resigned as the Company's auditor with the directors duly appointing SB Audit LLP to fill the vacancy arising. The auditor, SB Audit LLP, will be proposed for reappointment in accordance with section 486 of the Companies Act 2006.
This report was approved by the board on
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INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF PRECON PRODUCTS LTD
We have audited the financial statements of Precon Products Ltd (the 'Company') for the period ended 31 December 2022, which comprise the Statement of Comprehensive Income, the Balance Sheet, the Statement of Cash Flows, the Statement of Changes in Equity and the related notes, including a summary of significant accounting 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).
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the Company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the United Kingdom, including the Financial Reporting Council's Ethical Standard and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
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.
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PRECON PRODUCTS LTD
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF PRECON PRODUCTS LTD (CONTINUED)
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.
In our opinion, based on the work undertaken in the course of the audit:
∙the information given in the Strategic Report and the Directors' Report for the financial 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 or the Directors' Report.
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PRECON PRODUCTS LTD
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF PRECON PRODUCTS LTD (CONTINUED)
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an Auditor's Report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:
We identified areas of laws and regulations that could reasonably be expected to have a material effect on the financial statements from our general commercial experience and through discussions and enquiries of directors and management. During the engagement team briefing, the outcomes of these discussions were shared with the team, as well as consideration as to where and how fraud may occur in the Company. The following laws and regulations were identified as being of significance to the Company: • Those laws and regulations considered to have a direct effect on the financial statements including UK financial reporting standards and UK Company Law. Audit procedures undertaken in response to the potential risks relating to irregularities (which include fraud and non-compliance with laws and regulations) comprised of: enquiries of management and those charged with governance as to whether the Company complies with such regulations; enquiries of management and those charged with governance concerning any actual or potential litigation or claims, inspection of relevant legal documentation, review of board minutes, testing of journal entries, performance of analytical review to identify any unexpected movements in account balances which may be indicative of fraud. There are inherent limitations in the audit procedures described above and the further removed non-compliance with laws and regulations is from the events and transactions reflected in the financial statements, the less likely we would become aware of it. Irregularities that result from fraud might be inherently more difficult to detect than irregularities that result from error. As explained above, there is an unavoidable risk that material misstatements may not be detected, even though the audit has been planned and performed in accordance with ISAs (UK).
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our Auditor's Report.
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PRECON PRODUCTS LTD
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF PRECON PRODUCTS LTD (CONTINUED)
This report is made solely to the Company's directors, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the Company's directors those matters we are required to state to them in an Auditor's Report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company's directors, as a body, for our audit work, for this report, or for the opinions we have formed.
for and on behalf of
Chartered Accountants
Statutory Auditor
Fitzroy House
Crown Street
Suffolk
IP1 3LG
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STATEMENT OF COMPREHENSIVE INCOME
FOR THE PERIOD ENDED 31 DECEMBER 2022
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BALANCE SHEET
AS AT 31 DECEMBER 2022
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BALANCE SHEET (CONTINUED)
AS AT 31 DECEMBER 2022
The financial statements were approved and authorised for issue by the board and were signed on its behalf on
The notes on pages 18 to 35 form part of these financial statements.
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STATEMENT OF CHANGES IN EQUITY
FOR THE PERIOD ENDED 31 DECEMBER 2022
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STATEMENT OF CASH FLOWS
FOR THE PERIOD ENDED 31 DECEMBER 2022
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STATEMENT OF CASH FLOWS (CONTINUED)
FOR THE PERIOD ENDED 31 DECEMBER 2022
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ANALYSIS OF NET DEBT
FOR THE PERIOD ENDED 31 DECEMBER 2022
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2022
Precon Products Ltd ("the Company") is a company limited by shares and incorporated and domiciled in England and Wales.
The address of the registered office is Fitzroy House, Crown Street, Ipswich, Suffolk, IP1 3LG however the trading activities are carried out at the Company's depots.
2.Accounting policies
The financial statements have been prepared under the historical cost convention unless otherwise specified within these accounting policies and in accordance with Financial Reporting Standard 102, the Financial Reporting Standard applicable in the UK and the Republic of Ireland and the Companies Act 2006.
The preparation of financial statements in compliance with FRS 102 requires the use of certain critical accounting estimates. It also requires management to exercise judgment in applying the Company's accounting policies (see note 3).
The following principal accounting policies have been applied:
Functional and presentation currency
Transactions and balances
Turnover from the sale of goods is recognised when they are dispatched.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2022
2.Accounting policies (continued)
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2022
2.Accounting policies (continued)
All intangible assets are considered to have a finite useful life. If a reliable estimate of the useful life cannot be made, the useful life shall not exceed ten years.
The estimated useful lives range as follows:
Tangible fixed assets under the cost model are stated at historical cost less accumulated depreciation and any accumulated impairment losses. Historical cost includes expenditure that is directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management.
Depreciation is charged so as to allocate the cost of assets less their residual value over their estimated useful lives, on either a straight line or reducing balance basis.
Depreciation is provided on the following basis:
The assets' residual values, useful lives and depreciation methods are reviewed, and adjusted prospectively if appropriate, or if there is an indication of a significant change since the last reporting date.
Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised in profit or loss.
At each balance sheet date, stocks are assessed for impairment. If stock is impaired, the carrying amount is reduced to its selling price less costs to complete and sell. The impairment loss is recognised immediately in profit or loss.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2022
2.Accounting policies (continued)
Provisions are charged as an expense to profit or loss in the year that the Company becomes aware of the obligation, and are measured at the best estimate at the balance sheet date of the expenditure required to settle the obligation, taking into account relevant risks and uncertainties. When payments are eventually made, they are charged to the provision carried in the Balance Sheet. The Company enters into basic financial instruments transactions that result in the recognition of financial assets and liabilities like trade and other accounts receivable and payable, loans from banks and other third parties.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2022
estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates. The items in the financial statements where estimates and underlying assumptions have been made include useful economic lives and impairment of fixed assets as well as recoverability of trade debtors, these are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.
Analysis of turnover by country of destination:
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2022
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2022
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2022
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2022
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2022
10.Taxation (continued)
The Finance Act 2021 announced an increase of the main rate of UK corporation tax rate from 19% to
25% from 1 April 2023. This was enacted in June 2021. Accordingly, deferred tax assets and liabilities are stated at 25%.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2022
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2022
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2022
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2022
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2022
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2022
21.Share capital (continued)
The holders of Ordinary A shares are not entitled to voting rights and have separate distribution rights to holders of Ordinary shares. The shares rank pari passu in the remaining rights.
The holders of Ordinary B to G shares are entitled to voting rights and have separate distribution rights to holders of Ordinary A shares. During the year, 4 Ordinary A shares were issued with a nominal value of £1 each. Consideration of £6,282 was received for each of the shares issued.
Share premium account
Capital redemption reserve
Profit and loss account
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2022
The Company operates a defined contributions pension scheme. The assets of the scheme are held separately from those of the Company in an independently administered fund. The pension cost charge represents contributions payable by the Company to the fund and amounted to £299,520 (2021 - £150,656). Contributions totalling £12,905 (2021 - £14,999) were payable to the fund at the balance sheet date.
At 31 December 2022 the Company had foreign currency forward contracts to buy 500k Euros and 200k USD at exchange rates against GB pounds of 1.15 Euros and 1.203 USD. The fair value of the forward contracts amounted to a liability of £8,473 and has not been recognised as immaterial.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2022
The Company was under the control of the directors throughout the year.
As at 31 December 2022, the Company owed a total of £1,176,168 (2021: £405,578) in respect of directors' and shareholder loan accounts. No interest was payable on the loan accounts. During the period the Company paid dividends to directors totalling £3,500,000 (2021: £1,395,933). Remuneration totalling £213,525 (2021: £135,640) was paid to close members of the directors' families during the period.
There is no individual ultimate controlling party of the Company.
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