Company Registration No. 05480765 (England and Wales)
PAXTON ACCESS GROUP LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2017
PAXTON ACCESS GROUP LIMITED
COMPANY INFORMATION
Directors
A Brotherton-Ratcliffe
A Stroud
Mr V Parekh
(Appointed 31 March 2017)
S Brotherton-Ratcliffe
(Appointed 1 June 2018)
Secretary
Mr V Parekh
Company number
05480765
Registered office
Paxton House
Home Farm Road
Brighton
East Sussex
BN1 9HU
Auditor
Humphrey & Co Audit Services Ltd
7 - 9 The Avenue
Eastbourne
East Sussex
BN21 3YA
Business address
Paxton House
Home Farm Road
Brighton
East Sussex
BN1 9HU
Bankers
HSBC Bank plc
153 North Street
Brighton
East Sussex
BN1 1SW
PAXTON ACCESS GROUP LIMITED
CONTENTS
Page
Strategic report
1 - 2
Directors' report
3 - 4
Directors' responsibilities statement
5
Independent auditor's report
6 - 7
Income statement
8
Statement of comprehensive income
9
Group statement of financial position
10
Company statement of financial position
11
Group statement of changes in equity
12
Company statement of changes in equity
13
Group statement of cash flows
14
Company statement of cash flows
15
Notes to the financial statements
16 - 36
PAXTON ACCESS GROUP LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2017
- 1 -
The directors present the strategic report for the year ended 31 December 2017.
Fair review of the business
2017 was another successful year for the group. The group has been able to increase its market share in all markets to which it has significant exposure.
In brief, the group grew substantially during the year, increasing turnover by 13.9% (2016: 10.3%) and gross profit by 16.6% (2016: 9.4%). At the same time administrative expenses increased by 12.9% (2016: 14.5%), so that net profit for the year before tax ended up at £1,536,820 (2016: £694,310). The group's net worth at the end of 2017 was £14,338,070 (2016: £11,541,880).
The group operates in a highly competitive market. In order to maintain and improve its position in this market, substantial investment has continued to be made by the group in research and development. This investment is made both for improving existing products and creating new innovative products for the market with a focus on providing returns over the longer term.
The group did not enter any new markets in the year, instead looking to cultivate the overseas markets already entered into, with particular focus on the US, where the team was restructured with the aim of evolving the business in that territory.
As part of its continued growth, the group made a significant investment in a new Technology Centre on the site next to our Head Office. Opened in September 2017, this state of the art building helps showcase the world class work carried out by our development team and gives us new areas where we can offer training to more installers than ever before, and most importantly gives us the capacity for future growth without the need to uproot the business.
Environmental matters
The group is committed to being environmentally responsible and has shown this in achieving the ISO 14001:2015 accreditation for its factory in Eastbourne in 2018. The group continuously reviews its policies and capital to see where environmental improvements can be made and has installed charge points for plug in hybrid cars to encourage the use of low emission vehicles. As well as this, the group has initiated a new cross company environmental group to track and report on environmental initiatives.
Social and Community Issues
The group takes social and community issues seriously and has arranged multiple charity days through the year to generate donation income for selected charities. Also, the group launched a scholarship programme offering funding, on the job training and research opportunities to three students from Brighton University, with the aim of expanding this over the following years, to take advantage of our location between two Universities.
PAXTON ACCESS GROUP LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2017
- 2 -
Principal risks and uncertainties
(i)The group's business is partly speculative, in that it is not known which new products will succeed, even though sales trends for existing products are known. The Directors cannot give any undertaking as to the success or otherwise of new products yielded by its research and development work. There is therefore a significant risk inherent with expenditure related to this.
(ii)The Directors are not privy to new products currently in development by the group's competitors; there is therefore a risk that sales of its own products may suffer in the future as a result of unknown improvements in competitors' products.
(iii)The group is typical of many companies of its type in that it is heavily reliant on its IT Systems. Whilst the Directors diligently review and improve measures for ensuring resilience of its systems and back up of its data, they cannot absolutely ensure that failures will not damage the group's business at some point. In order to mitigate this risk the group continues to invest heavily in its IT infrastructure.
(iv) Sales to the group's customers are made on a credit basis. Trade debtors amount to a substantial sum. Mindful of the current credit conditions affecting all companies, including our customers, there is an increased awareness regarding the importance of adherence to our credit terms. The board has satisfied itself that its customers are financially sound and will continue to be able to fund their debt for the foreseeable future. There is continued focus on strong credit management to ensure timely payment from customers and a healthy corporate liquidity position.
A Brotherton-Ratcliffe
Director
4 June 2018
PAXTON ACCESS GROUP LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 DECEMBER 2017
- 3 -
The directors present their annual report and financial statements for the year ended 31 December 2017.
Principal activities
Paxton Access Group Limited is a holding company whose principal activity, carried on through subsidiary undertakings, is the manufacture and distribution of electronic goods.
Directors
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
A Brotherton-Ratcliffe
A Stroud
Mr V Parekh
(Appointed 31 March 2017)
S Brotherton-Ratcliffe
(Appointed 1 June 2018)
Results and dividends
The results for the year are set out on page 8.
Ordinary dividends were paid amounting to £140,000. The directors do not recommend payment of a further dividend.
No preference dividends were paid. The directors do not recommend payment of a final dividend.
Financial instruments
Treasury operations and financial instruments
The group operates a treasury function which is responsible for managing the liquidity, interest and foreign currency risks associated with the company’s activities.
The group’s principal financial instruments are cash balances. In addition, the group has various other financial assets and liabilities such as trade debtors and trade creditors arising directly from its operations.
Liquidity risk
The group manages its cash and borrowing requirements in order to maximise interest income and minimise interest expense, whilst ensuring the group has sufficient liquid resources to meet the operating needs of the business.
Interest rate risk
Interest rate risk arises from cash balances, bank overdrafts and loans. The directors continually review the group's exposure to interest rates and take action to ensure that the risk is appropriate in relation to the financial results of the group.
Foreign currency risk
The group’s principal foreign currency exposures arise from trading with overseas companies. Dollar and Euro bank accounts are maintained in order to try and mitigate foreign currency risk.
Research and development
The group is heavily committed to research and development activities. During the year the group concentrated its research and development activities on both continuous improvement on its current product portfolio as well as diversification into other market sectors.
PAXTON ACCESS GROUP LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2017
- 4 -
Disabled persons
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 within the group continues and that the 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 to that of other employees.
Employee involvement
The group is conscious of the need to keep employees informed regarding the progress and future plans of the group and the mutual benefit that can be engendered by good internal communications. This is achieved through regular meetings with managers and staff and an open forum in which a two way flow of comment and ideas is encouraged. An example of this is the Paxton Exchange which offers senior management the opportunity to communicate the group goals and achievements to all members of staff. A significant amount of time and money is invested in employee training in the group and is available to all levels of staff. The Paxton Seagull, the staff newsletter, is a further commitment to the concept of improving communications within the group. The group is committed to providing a fantastic company culture for all its staff members, and entered, for the first time in 2017, the Sunday Times 100 Best Companies to Work For and achieved 49th position.
Future developments
The group is continuing to develop its overseas marketing and sales strategy and the directors expect that this will contribute to an increase in profitability.
Auditor
Humphrey & Co resigned as auditors after the the year end and Humphrey & Co Audit Services Ltd were appointed in their place. A resolution to re-appoint Humphrey & Co Audit Services Ltd as auditors will be put to the members at a general meeting.
Statement of disclosure to auditor
So far as each person who was a director at the date of approving this report is aware, there is no relevant audit information of which the 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.
On behalf of the board
A Brotherton-Ratcliffe
Director
4 June 2018
PAXTON ACCESS GROUP LIMITED
DIRECTORS' RESPONSIBILITIES STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2017
- 5 -
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 group and company, and of the profit or loss of the group 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;
-
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 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. They are 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.
PAXTON ACCESS GROUP LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF PAXTON ACCESS GROUP LIMITED
- 6 -
Opinion
We have audited the financial statements of Paxton Access Group Limited
(the 'parent company') and its subsidiaries (the 'group')
for the year ended 31 December 2017 which comprise the Group Income Statement, the Group Statement of Comprehensive Income, the Group Statement Of Financial Position, the Company Statement Of Financial Position, 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 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 FRS 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 December 2017 and of its 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.
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard
, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Conclusions relating to going concern
We have nothing to report in respect of the following matters in relation to which the ISAs (UK) require us to report to you where:
-
the directors' use of the going concern basis of accounting in the preparation of the financial statements is not appropriate; or
-
the directors have not disclosed in the financial statements any identified material uncertainties that may cast significant doubt about the
group's or the parent
company’s ability to continue to adopt the going concern basis of accounting for a period of at least twelve months from the date when the financial statements are authorised for issue
.
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. 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.
In connection with our audit of the financial statements, 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 audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the financial statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of our audit
:
-
the information given in the Strategic Report and the Directors' Report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
-
the Strategic Report and the Directors' Report have been prepared in accordance with applicable legal requirements.
PAXTON ACCESS GROUP LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF PAXTON ACCESS GROUP LIMITED
- 7 -
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the
group and the parent
company and its environment obtained in the course of the audit, we have not identifie
d
material misstatements in the Strategic Report and the Directors' Report
.
We have nothing to report in respect of the following matters where 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.
Responsibilities of directors
As explained more fully in the Directors' Responsibilities Statement, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the
group's and the parent
company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the
group or the parent
company or to cease operations, or have no realistic alternative but to do so.
Auditor's responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
A further description of our responsibilities for the audit of the financial statements is located on the
Financial Reporting Council’s website at: http://www.frc.org.uk/auditorsresponsibilities
.
This description forms part of our auditor’s 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.
Mr Michael Macefield (Senior Statutory Auditor)
for and on behalf of Humphrey & Co Audit Services Ltd
6 June 2018
Chartered Accountants
Statutory Auditor
7 - 9 The Avenue
Eastbourne
East Sussex
BN21 3YA
PAXTON ACCESS GROUP LIMITED
GROUP INCOME STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2017
- 8 -
2017
2016
Notes
£
£
Turnover
3
41,118,796
36,092,362
Cost of sales
(16,746,462)
(15,186,916)
Gross profit
24,372,334
20,905,446
Administrative expenses
(22,674,201)
(20,085,780)
Operating profit
4
1,698,133
819,666
Interest receivable and similar income
7
-
3
Interest payable and similar expenses
8
(161,313)
(125,359)
Profit before taxation
1,536,820
694,310
Tax on profit
9
369,111
405,179
Profit for the financial year
27
1,905,931
1,099,489
Profit for the financial year is all attributable to the owners of the parent company.
The Income Statement has been prepared on the basis that all operations are continuing operations.
PAXTON ACCESS GROUP LIMITED
GROUP STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2017
- 9 -
2017
2016
£
£
Profit for the year
1,905,931
1,099,489
Other comprehensive income
Currency translation differences
30,259
35,100
Total comprehensive income for the year
1,936,190
1,134,589
Total comprehensive income for the year is all attributable to the owners of the parent company.
PAXTON ACCESS GROUP LIMITED
GROUP STATEMENT OF FINANCIAL POSITION
AS AT
31 DECEMBER 2017
31 December 2017
- 10 -
2017
2016
Notes
£
£
£
£
Fixed assets
Intangible assets
11
225,894
241,103
Tangible assets
12
13,635,633
10,374,100
13,861,527
10,615,203
Current assets
Stocks
16
3,549,826
3,467,533
Debtors falling due after more than one year
17
1,360,264
1,053,240
Debtors falling due within one year
17
6,523,289
6,295,923
Cash at bank and in hand
4,472,928
3,896,682
15,906,307
14,713,378
Creditors: amounts falling due within one year
18
(10,417,073)
(10,046,708)
Net current assets
5,489,234
4,666,670
Total assets less current liabilities
19,350,761
15,281,873
Creditors: amounts falling due after more than one year
19
(4,769,691)
(3,496,993)
Provisions for liabilities
23
(243,000)
(243,000)
Net assets
14,338,070
11,541,880
Capital and reserves
Called up share capital
26
1,211,002
211,002
Other reserves
25
57,450
57,450
Profit and loss reserves
27
13,069,618
11,273,428
Total equity
14,338,070
11,541,880
The financial statements were approved by the board of directors and authorised for issue on 4 June 2018 and are signed on its behalf by:
04 June 2018
A Brotherton-Ratcliffe
Director
PAXTON ACCESS GROUP LIMITED
COMPANY STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2017
31 December 2017
- 11 -
2017
2016
Notes
£
£
£
£
Fixed assets
Tangible assets
12
10,818,482
7,578,187
Investments
13
234,073
250,249
11,052,555
7,828,436
Current assets
Debtors
17
23,771
347,260
Cash at bank and in hand
77,056
42,912
100,827
390,172
Creditors: amounts falling due within one year
18
(3,685,174)
(2,880,736)
Net current liabilities
(3,584,347)
(2,490,564)
Total assets less current liabilities
7,468,208
5,337,872
Creditors: amounts falling due after more than one year
19
(4,769,691)
(3,496,993)
Net assets
2,698,517
1,840,879
Capital and reserves
Called up share capital
26
1,211,002
211,002
Profit and loss reserves
27
1,487,515
1,629,877
Total equity
2,698,517
1,840,879
As permitted by s408 Companies Act 2006, the
c
ompany has not presented its own profit and loss account and related notes. The
c
ompany’s loss for the year was £2,362 (2016 - £1,460,691 profit).
The financial statements were approved by the board of directors and authorised for issue on 4 June 2018 and are signed on its behalf by:
04 June 2018
A Brotherton-Ratcliffe
Director
Company Registration No. 05480765
PAXTON ACCESS GROUP LIMITED
GROUP STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2017
- 12 -
Share capital
Other reserves
Profit and loss reserves
Total
Notes
£
£
£
£
Balance at 1 January 2016
211,002
57,450
10,278,839
10,547,291
Year ended 31 December 2016:
Profit for the year
-
-
1,099,489
1,099,489
Other comprehensive income:
Currency translation differences
-
-
35,100
35,100
Total comprehensive income for the year
-
-
1,134,589
1,134,589
Dividends
10
-
-
(140,000)
(140,000)
Balance at 31 December 2016
211,002
57,450
11,273,428
11,541,880
Year ended 31 December 2017:
Profit for the year
-
-
1,905,931
1,905,931
Other comprehensive income:
Currency translation differences on overseas subsidiaries
-
-
30,259
30,259
Total comprehensive income for the year
-
-
1,936,190
1,936,190
Issue of share capital
26
1,000,000
-
-
1,000,000
Dividends
10
-
-
(140,000)
(140,000)
Balance at 31 December 2017
1,211,002
57,450
13,069,618
14,338,070
PAXTON ACCESS GROUP LIMITED
COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2017
- 13 -
Share capital
Profit and loss reserves
Total
Notes
£
£
£
Balance at 1 January 2016
211,002
309,186
520,188
Year ended 31 December 2016:
Profit and total comprehensive income for the year
-
1,460,691
1,460,691
Dividends
10
-
(140,000)
(140,000)
Balance at 31 December 2016
211,002
1,629,877
1,840,879
Year ended 31 December 2017:
Loss and total comprehensive income for the year
-
(2,362)
(2,362)
Issue of share capital
26
1,000,000
-
1,000,000
Dividends
10
-
(140,000)
(140,000)
Balance at 31 December 2017
1,211,002
1,487,515
2,698,517
PAXTON ACCESS GROUP LIMITED
GROUP STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2017
- 14 -
2017
2016
Notes
£
£
£
£
Cash flows from operating activities
Cash generated from operations
31
3,690,105
4,750,557
Interest paid
(161,313)
(125,359)
Income taxes refunded
62,087
66,650
Net cash inflow from operating activities
3,590,879
4,691,848
Investing activities
Purchase of intangible assets
(77,688)
(167,552)
Purchase of tangible fixed assets
(4,344,469)
(4,236,356)
Proceeds on disposal of tangible fixed assets
-
10,081
Proceeds on disposal of subsidiaries
(16,176)
-
Interest received
-
3
Net cash used in investing activities
(4,438,333)
(4,393,824)
Financing activities
Proceeds from borrowings
-
512,096
Repayment of borrowings
(17,199)
(1,520,316)
Proceeds of new bank loans
1,959,579
2,800,000
Repayment of bank loans
(452,360)
(347,600)
Payment of finance leases obligations
16,044
-
Dividends paid to equity shareholders
(140,000)
(140,000)
Net cash generated from financing activities
1,366,064
1,304,180
Net increase in cash and cash equivalents
518,610
1,602,204
Cash and cash equivalents at beginning of year
3,896,682
2,294,478
Cash and cash equivalents at end of year
4,415,292
3,896,682
Relating to:
Cash at bank and in hand
4,472,928
3,896,682
Bank overdrafts included in creditors payable within one year
(57,636)
-
PAXTON ACCESS GROUP LIMITED
COMPANY STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2017
- 15 -
2017
2016
Notes
£
£
£
£
Cash flows from operating activities
Cash generated from/(absorbed by) operations
32
2,298,480
(1,087,093)
Interest paid
(154,098)
(115,973)
Net cash inflow/(outflow) from operating activities
2,144,382
(1,203,066)
Investing activities
Purchase of tangible fixed assets
(3,182,351)
(3,047,453)
Dividends received
-
1,500,000
Net cash used in investing activities
(3,182,351)
(1,547,453)
Financing activities
Proceeds from borrowings
-
512,096
Repayment of borrowings
(17,199)
-
Proceeds of new bank loans
1,959,579
2,800,000
Repayment of bank loans
(730,267)
(347,600)
Dividends paid to equity shareholders
(140,000)
(140,000)
Net cash generated from financing activities
1,072,113
2,824,496
Net increase in cash and cash equivalents
34,144
73,977
Cash and cash equivalents at beginning of year
42,912
(31,065)
Cash and cash equivalents at end of year
77,056
42,912
PAXTON ACCESS GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2017
- 16 -
1
Accounting policies
Company information
Paxton Access Group Limited
(“the Company”)
is a limited company domiciled and incorporated in England and Wales.
The registered office
is Paxton House, Home Farm Road, Brighton, East Sussex, BN1 9HU.
The Group consists of Paxton Access Group Limited and all of its subsidiaries.
1.1
Accounting convention
These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006.
The financial statements are prepared in
sterling
, which is the functional currency of the company.
Monetary a
mounts
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 financial statements incorporate those of Paxton Access Group Limited and all of its subsidiaries (ie entities that the
g
roup controls through its power to govern the financial and operating policies so as to obtain economic benefits). Subsidiaries acquired during the year are consolidated using the purchase method. Their results are incorporated from the date that control passes.
All financial statements are made up to 31 December 2017
.
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
g
roup.
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.
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. In the group financial statements, associates are accounted for
using the equity method.
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.
In the group financial statements, joint ventures are accounted for using the equity method.
1.2
Going concern
At the time of approving the financial statements, the directors have a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future. Thus the directors continue to adopt the going concern basis of accounting in preparing the financial statements.
1.3
Turnover
Turnover is recognised at the fair value of the consideration received or receivable for goods and services provided in the normal course of business, and is shown net of VAT and other sales related taxes. The fair value of consideration takes into account trade discounts, settlement discounts and volume rebates.
When cash inflows are deferred and represent a financing arrangement, the fair value of the consideration is the present value of the future receipts. The difference between the fair value of the consideration and the nominal amount received is recognised as interest income.
PAXTON ACCESS GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2017
1
Accounting policies
(Continued)
- 17 -
Revenue from the sale of goods is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer (usually on dispatch of the goods), the amount of revenue can be measured reliably, it is probable that the economic benefits associated with the transaction will flow to the entity and the costs incurred or to be incurred in respect of the transaction can be measured reliably.
1.4
Research and development expenditure
Research expenditure is written off against profits in the year in which it is incurred. Identifiable development expenditure is capitalised to the extent that the technical, commercial and financial feasibility can be demonstrated
.
1.5
Intangible fixed assets other than goodwill
Intangible assets acquired separately from a business are recognised at cost and are subsequently measured at cost less accumulated amortisation and accumulated impairment losses.
Intangible assets acquired on business combinations are recognised separately from goodwill at the acquisition date
where
it is probable that the expected future economic benefits that are attributable to the asset will flow to the entity and the cost or value of the asset can be measured reliably.
Amortisation 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:
Development Costs
33% reducing balance
1.6
Tangible fixed assets
Tangible fixed assets
are initially measured at cost and subsequently measured at cost or valuation, net of depreciation and any impairment losses.
Depreciation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:
Freehold properties
1% straight line
Leasehold properties
Straight line over the life of the lease
Plant and machinery
20% reducing balance and 33%/50% straight line
Fixtures, fittings & equipment
20%/25%/33% reducing balance and 20%/33% straight line
The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is recognised in the income statement.
1.7
Fixed asset investments
Equity in
vest
ments 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.
I
n 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.
PAXTON ACCESS GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2017
1
Accounting policies
(Continued)
- 18 -
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
g
roup’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 c
ompany financial statements, investments in associates are accounted for at cost less impairment.
Entities in which the
group
has a long term interest and shares control under a contractual arrangement are classified as jointly controlled entities
.
1.8
Impairment of fixed assets
At each reporting
period
end date, the
group
reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the
company
estimates the recoverable amount of the cash-generating unit to which the asset belongs.
The carrying amount of the investments accounted for using the equity method is tested for impairment as a single asset. Any goodwill included in the carrying amount of the investment is not tested separately for impairment.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.
Recognised impairment losses are reversed if, and only if, the reasons for the impairment loss have ceased to apply. Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit)
in
prior years. A reversal of an impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.
PAXTON ACCESS GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2017
1
Accounting policies
(Continued)
- 19 -
1.9
Stocks
Stocks are stated at the lower of cost and estimated selling price less costs to complete and sell. Cost comprises direct materials and, where applicable, direct labour costs and those overheads that have been incurred in bringing the stocks to their present location and condition.
Stocks held for distribution at no or nominal consideration are measured at
the
lower of replacement cost and cost, adjusted where applicable for any loss of service potential.
The cost of stock is based on an average cost basis, where the actual cost of stock purchased to obtain the quantity held is identified and an average cost calculated.
At each reporting date, an assessment is made for impairment. Any excess of the carrying amount of stocks over its estimated selling price less costs to complete and sell is recognised as an impairment loss in profit or loss. Reversals of impairment losses are also recognised in profit or loss.
1.10
Cash at bank and in hand
Cash at bank and in hand
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.
1.11
Financial instruments
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 statement of financial position 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.
Basic financial assets
Basic financial assets, which include debtors and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest
m
ethod 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.
Other financial assets
Other financial assets, including investments in equity instruments which are not subsidiaries, associates or joint ventures, are initially measured at fair value, which is normally the transaction price. Such assets are subsequently carried at fair value and the changes in fair value are recognised in profit or loss, except that investments in equity instruments that are not publicly traded and whose fair values cannot be measured reliably are measured at cost less impairment.
PAXTON ACCESS GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2017
1
Accounting policies
(Continued)
- 20 -
Impairment of financial assets
Financial assets, other than those
held
at
fair value through profit and loss
, are assessed for indicators of impairment at each reporting end date.
Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected.
If an asset is impaired, the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset’s original effective interest rate. The impairment loss is recognised in profit or loss.
If there is a decrease in the impairment loss arising from an event occurring after the impairment was recognised, the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been, had the impairment not previously been recognised. The impairment reversal is recognised in profit or loss.
Derecognition of financial assets
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the group transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.
Classification of financial liabilities
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the group after deducting all of its liabilities.
Basic financial liabilities, including creditors, bank loans, loans from fellow group companies and preference shares that are classified as debt, 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
paymen
ts discounted at a market rate of interest.
Financial liabilities classified as payable within one year are not amortised.
Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.
Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Amounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.
Derecognition of financial liabilities
Financial liabilities are derecognised when the
group's contractual obligations expire or are discharged or cancelled.
1.12
Equity instruments
Equity instruments issued by the group are recorded at the proceeds received, net of direct issue costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the group.
1.13
Taxation
The tax expense represents the sum of the tax currently payable and deferred tax.
PAXTON ACCESS GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2017
1
Accounting policies
(Continued)
- 21 -
Current tax
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the income statement 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
Deferred tax liabilities are generally recognised for all timing differences and deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Such assets and liabilities are not recognised if the timing difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.
The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the income statement, 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.
1.14
Provisions
Provisions are recognised when the
group
has a legal or constructive present obligation as a result of a past event, it is probable that the
group
will be required to settle that obligation and a reliable estimate can be made of the amount of the obligation.
The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the reporting end date, taking into account the risks and uncertainties surrounding the obligation.
Where the effect of the time value of money is material, the amount expected to be required to settle the obligation is recognised at present value. When a provision i
s
measured at present value
,
the unwinding of the discount is recognised as a finance cost in profit or loss in the period
in which
it arises.
1.15
Employee benefits
The costs of short-term employee benefits are recognised as a liability and an expense, unless those costs are required to be recognised as part of the cost of stock or fixed assets.
The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received.
Termination benefits are recognised immediately as an expense when the company is demonstrably committed to terminate the employment of an employee or to provide termination benefits.
1.16
Retirement benefits
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
PAXTON ACCESS GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2017
1
Accounting policies
(Continued)
- 22 -
1.17
Leases
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessees. All other leases are classified as operating leases.
Assets held under finance leases are recognised as assets at the lower of the assets fair
value at the date of inception and the present value of the minimum lease payments. The related liability is included in the statement of financial position as a finance lease obligation. Lease payments are treated as consisting of capital and interest elements. The interest is charged to the income statement so as to produce a constant periodic rate of interest on the remaining balance of the liability.
Rentals payable under operating leases,
including
any lease incentives received, are charged to income 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 lease asset are consumed.
1.18
Foreign exchange
Monetary assets and liabilities denominated in foreign currencies are translated into sterling at the rates of exchange ruling at the balance sheet date. Transactions in foreign currencies are recorded at a fixed rate that is used as an approximation for the actual rate. The fixed rates are reviewed periodically. All differences are taken to profit and loss account.
1.19
Provisions
Provision for the expected costs of warranty work are charged to the profit and loss account when revenue is recognised.
2
Judgements and key sources of estimation uncertainty
In the application of the group’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.
Critical judgements
The
critical
judgments
which
have the most significant
impact
on amounts recognised in the financial statements
are as follows:
Stock provisioning
Provision is made where necessary for obsolete, slow moving and defective stocks. The directors review the level of provision based on the level and condition of stock items and their knowledge of the business.
Warranty provisioning
The group provides a 5 year warranty on its products. A provision for expected warranty claims is calculated based on prior experience of levels of warranty claims incurred and future expectations.
Useful life of fixed assets
The directors estimate the expected useful lives of the company's fixed assets which in turn impacts on the amount of depreciation charged in the year.
PAXTON ACCESS GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2017
2
Judgements and key sources of estimation uncertainty
(Continued)
- 23 -
Key sources of estimation uncertainty
In the opinion of the directors there are no estimates or assumptions which have a significant risk of causing a material misstatement to the carrying amount of assets and liabilities within the next financial year.
3
Turnover and other revenue
An analysis of the group's turnover is as follows:
2017
2016
£
£
Turnover analysed by class of business
Electronic access control systems
41,118,796
36,092,362
2017
2016
£
£
Turnover analysed by geographical market
UK
26,412,321
23,020,867
Europe
6,566,575
6,548,116
Rest of World
8,139,900
6,523,379
41,118,796
36,092,362
4
Operating profit
2017
2016
£
£
Operating profit for the year is stated after charging/(crediting):
Exchange losses/(gains)
2,039
(87,839)
Research and development costs
905,846
316,247
Depreciation of owned tangible fixed assets
1,183,909
1,047,080
Depreciation of tangible fixed assets held under finance leases
2,311
-
Loss on disposal of tangible fixed assets
82,291
194,321
Amortisation of intangible assets
92,897
85,321
Cost of stocks recognised as an expense
14,646,638
13,199,568
Operating lease charges
389,861
393,165
Exchange differences recognised in profit or loss during the year, except for those arising on financial instruments measured at fair value through profit or loss, amounted to £2,039 (2016 - £87,839).
PAXTON ACCESS GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2017
- 24 -
5
Auditor's remuneration
2017
2016
Fees payable to the company's auditor and associates:
£
£
For audit services
Audit of the financial statements of the group and company
1,000
1,000
Audit of the financial statements of the company's subsidiaries
22,500
21,500
23,500
22,500
For other services
Other taxation services
4,000
2,500
All other non-audit services
5,000
5,000
9,000
7,500
6
Employees
The average monthly number of persons (including directors) employed by the group and company during the year was:
Group
Company
2017
2016
2017
2016
Number
Number
Number
Number
Administration
244
188
-
-
Production
60
95
-
-
Cleaning
2
2
-
-
306
285
-
-
Their aggregate remuneration comprised:
Group
Company
2017
2016
2017
2016
£
£
£
£
Wages and salaries
12,648,498
11,855,565
-
-
Social security costs
1,145,308
1,066,739
-
-
Pension costs
666,450
408,975
-
-
14,460,256
13,331,279
-
-
7
Interest receivable and similar income
2017
2016
£
£
Interest income
Interest on bank deposits
-
3
PAXTON ACCESS GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2017
7
Interest receivable and similar income
(Continued)
- 25 -
Investment income includes the following:
Interest on financial assets not measured at fair value through profit or loss
-
3
8
Interest payable and similar expenses
2017
2016
£
£
Interest on financial liabilities measured at amortised cost:
Interest on bank overdrafts and loans
143,739
115,973
Interest on finance leases and hire purchase contracts
10,359
-
Other interest on financial liabilities
7,215
9,386
161,313
125,359
9
Taxation
2017
2016
£
£
Current tax
UK corporation tax on profits for the current period
4,515
8,995
Adjustments in respect of prior periods
(67,961)
(79,438)
Total UK current tax
(63,446)
(70,443)
Foreign current tax on profits for the current period
1,359
2,504
Total current tax
(62,087)
(67,939)
Deferred tax
Origination and reversal of timing differences
(387,000)
(394,750)
Changes in tax rates
79,976
57,510
Total deferred tax
(307,024)
(337,240)
Total tax credit for the year
(369,111)
(405,179)
PAXTON ACCESS GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2017
9
Taxation
(Continued)
- 26 -
The actual charge for the year can be reconciled to the expected charge based on the profit or loss and the standard rate of tax as follows:
2017
2016
£
£
Profit before taxation
1,536,820
694,310
Expected tax charge based on the standard rate of corporation tax in the UK of 19.25% (2016: 20.00%)
295,838
138,862
Tax effect of expenses that are not deductible in determining taxable profit
26,221
42,111
Adjustments in respect of prior years
(67,961)
(79,438)
Effect of change in corporation tax rate
106,672
71,314
Depreciation on assets not qualifying for tax allowances
7,814
5,872
Research and development tax credit
(742,424)
(597,207)
Other non-reversing timing differences
4,729
13,307
Taxation credit for the year
(369,111)
(405,179)
10
Dividends
2017
2016
£
£
Final paid
140,000
140,000
11
Intangible fixed assets
Group
Development Costs
£
Cost
At 1 January 2017
370,690
Additions - internally developed
77,688
At 31 December 2017
448,378
Amortisation and impairment
At 1 January 2017
129,587
Amortisation charged for the year
92,897
At 31 December 2017
222,484
PAXTON ACCESS GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2017
11
Intangible fixed assets
(Continued)
- 27 -
Carrying amount
At 31 December 2017
225,894
At 31 December 2016
241,103
The company had no intangible fixed assets at 31 December 2017 or 31 December 2016.
12
Tangible fixed assets
Group
Freehold properties
Leasehold properties
Plant and machinery
Fixtures, fittings & equipment
Total
£
£
£
£
£
Cost
At 1 January 2017
2,375,400
6,242,115
2,572,009
1,364,936
12,554,460
Additions
-
3,144,074
934,305
469,777
4,548,156
Disposals
-
-
(256,011)
(18,213)
(274,224)
Exchange adjustments
-
13,754
-
(28,802)
(15,048)
Other changes
-
30,678
-
50,708
81,386
At 31 December 2017
2,375,400
9,430,621
3,250,303
1,838,406
16,894,730
Depreciation and impairment
At 1 January 2017
58,756
553,273
910,829
657,502
2,180,360
Depreciation charged in the year
17,091
236,906
598,289
333,934
1,186,220
Eliminated in respect of disposals
-
-
(173,720)
(17,810)
(191,530)
Exchange adjustments
-
(2,169)
-
(13,601)
(15,770)
Other changes
-
23,868
-
75,949
99,817
At 31 December 2017
75,847
811,878
1,335,398
1,035,974
3,259,097
Carrying amount
At 31 December 2017
2,299,553
8,618,743
1,914,905
802,432
13,635,633
At 31 December 2016
2,316,644
5,688,842
1,661,180
707,434
10,374,100
PAXTON ACCESS GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2017
12
Tangible fixed assets
(Continued)
- 28 -
Company
Freehold properties
Leasehold properties
Plant and machinery
Total
£
£
£
£
Cost
At 1 January 2017
2,370,400
5,540,152
-
7,910,552
Additions
-
3,051,410
334,628
3,386,038
At 31 December 2017
2,370,400
8,591,562
334,628
11,296,590
Depreciation and impairment
At 1 January 2017
58,756
273,609
-
332,365
Depreciation charged in the year
17,091
92,623
36,029
145,743
At 31 December 2017
75,847
366,232
36,029
478,108
Carrying amount
At 31 December 2017
2,294,553
8,225,330
298,599
10,818,482
At 31 December 2016
2,311,644
5,266,543
-
7,578,187
The net carrying value of tangible fixed assets includes the following in respect of assets held under finance leases or hire purchase contracts.
Group
Company
2017
2016
2017
2016
£
£
£
£
Plant and machinery
18,489
-
-
-
Depreciation charge for the year in respect of leased assets
2,311
-
-
-
13
Fixed asset investments
Group
Company
2017
2016
2017
2016
Notes
£
£
£
£
Investments in subsidiaries
14
-
-
234,073
250,249
PAXTON ACCESS GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2017
13
Fixed asset investments
(Continued)
- 29 -
Movements in fixed asset investments
Company
Shares in group undertakings
£
Cost or valuation
At 1 January 2017
250,249
Additions
2,181
Disposals
(18,357)
At 31 December 2017
234,073
Carrying amount
At 31 December 2017
234,073
At 31 December 2016
250,249
14
Subsidiaries
Details of the company's subsidiaries at 31 December 2017 are as follows:
Name of undertaking and country of
Nature of business
Class of
% Held
incorporation or residency
shareholding
Direct
Indirect
General Distribution Limited
England & Wales
Manufacture and distribution of electronic goods
Ordinary
100
Paxton Access FZE
UAE
Sale and distribution of electronic goods
Ordinary
100
Paxton Access GmbH
Germany
Sale and distribution of electronic goods
Ordinary
100
Paxton Access Inc
USA
Sale and distribution of electronic goods
Ordinary
100
Paxton Access Limited
England & Wales
Manufacture and distribution of electronic goods
Ordinary
100
The investments in subsidiaries are all stated at cost.
15
Financial instruments
Group
Company
2017
2016
2017
2016
£
£
£
£
Carrying amount of financial assets
Debt instruments measured at amortised cost
5,824,014
5,694,370
-
138,496
Carrying amount of financial liabilities
Measured at amortised cost
14,366,272
12,715,558
8,454,865
6,377,729
PAXTON ACCESS GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2017
- 30 -
16
Stocks
Group
Company
2017
2016
2017
2016
£
£
£
£
Raw materials and consumables
99,630
126,177
-
-
Finished goods and goods for resale
3,450,196
3,341,356
-
-
3,549,826
3,467,533
-
-
17
Debtors
Group
Company
2017
2016
2017
2016
Amounts falling due within one year:
£
£
£
£
Trade debtors
5,792,669
5,678,818
-
-
Corporation tax recoverable
1,289
1,289
-
-
Amounts owed by group undertakings
-
-
-
138,496
Other debtors
40,830
54,000
23,771
35,497
Prepayments and accrued income
688,501
561,816
-
173,267
6,523,289
6,295,923
23,771
347,260
Amounts falling due after more than one year:
Deferred tax asset (note 22)
1,360,264
1,053,240
-
-
Total debtors
7,883,553
7,349,163
23,771
347,260
18
Creditors: amounts falling due within one year
Group
Company
2017
2016
2017
2016
Notes
£
£
£
£
Bank loans and overdrafts
20
897,696
477,434
562,153
477,434
Obligations under finance leases
21
91,626
-
75,582
-
Other borrowings
20
494,897
512,096
494,897
512,096
Trade creditors
5,323,974
5,061,073
60,918
132,724
Amounts due to group undertakings
-
-
1,590,118
18,357
Other taxation and social security
820,492
828,143
-
-
Other creditors
1,962,670
2,785,276
898,506
1,736,975
Accruals and deferred income
825,718
382,686
3,000
3,150
10,417,073
10,046,708
3,685,174
2,880,736
PAXTON ACCESS GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2017
- 31 -
19
Creditors: amounts falling due after more than one year
Group
Company
2017
2016
2017
2016
Notes
£
£
£
£
Bank loans and overdrafts
20
4,641,586
3,496,993
4,641,586
3,496,993
Obligations under finance leases
21
128,105
-
128,105
-
4,769,691
3,496,993
4,769,691
3,496,993
Amounts included above which fall due after five years are as follows:
Payable by instalments
2,183,434
1,731,472
2,183,434
1,731,472
20
Loans and overdrafts
Group
Company
2017
2016
2017
2016
£
£
£
£
Bank loans
5,481,646
3,974,427
5,203,739
3,974,427
Bank overdrafts
57,636
-
-
-
Directors' loans
898,506
1,736,975
898,506
1,736,975
Loans from related parties
494,897
512,096
494,897
512,096
6,932,685
6,223,498
6,597,142
6,223,498
Payable within one year
2,291,099
2,726,505
1,955,556
2,726,505
Payable after one year
4,641,586
3,496,993
4,641,586
3,496,993
Amounts included above which fall due after five years:
Payable by instalments
2,183,434
1,731,472
2,183,434
1,731,472
PAXTON ACCESS GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2017
20
Loans and overdrafts
(Continued)
- 32 -
Bank loans are secured over the company's freehold and leasehold properties. There is also a debenture in favour of HSBC Bank comprising a fixed and floating charge over all the assets and undertakings of Paxton Access Limited and Paxton Inc.
There were three bank loans at the year end and they are repayable in monthly instalments and are due to be repaid fully between 2025 and 2027. Interest is charged at a rate of 2.35% per annum over the Bank of England base rate on two of the loans and at a fixed rate of 3.6% on the third loan.
Other loans are in respect of loans from close family members of a director and are repayable on demand. Interest is charged on the loans at a rate equal to the Bank of England's base rate.
Directors' loans are in respect of loans from a director and his wife and are also repayable on demand. Interest is charged at a rate equal to the Bank of England's base rate.
21
Finance lease obligations
Group
Company
2017
2016
2017
2016
£
£
£
£
Future minimum lease payments due under finance leases:
Within one year
91,624
-
75,580
-
In two to five years
128,107
-
128,107
-
219,731
-
203,687
-
Finance lease payments represent rentals payable by the company or group for certain items of plant and machinery. Leases include purchase options at the end of the lease period, and no restrictions are placed on the use of the assets. The average lease term is 3 years. All leases are on a fixed repayment basis and no arrangements have been entered into for contingent rental payments.
22
Deferred taxation
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:
Assets
Assets
2017
2016
Group
£
£
Accelerated capital allowances
16,038
(35,033)
Tax losses
1,344,226
1,088,273
1,360,264
1,053,240
The company has no deferred tax assets or liabilities.
PAXTON ACCESS GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2017
22
Deferred taxation
(Continued)
- 33 -
Group
Company
2017
2017
Movements in the year:
£
£
Liability at 1 January 2017
(1,053,240)
-
Charge to profit or loss
(387,000)
-
Effect of change in tax rate - profit or loss
79,976
-
Liability at 31 December 2017
(1,360,264)
-
23
Provisions for liabilities
Group
Company
2017
2016
2017
2016
£
£
£
£
243,000
243,000
-
-
Movements on provisions:
Group
£
At 1 January 2017
243,000
Additional provisions in the year
125,974
Utilisation of provision
(125,974)
At 31 December 2017
243,000
The provision for warranty claims is a provision for future product costs arising in the normal course of business from prior year sales. The group provides a 5 year warranty on its products.
24
Retirement benefit schemes
2017
2016
Defined contribution schemes
£
£
Charge to profit and loss in respect of defined contribution schemes
666,450
408,975
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.
PAXTON ACCESS GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2017
- 34 -
25
Other reserves
Merger reserve
Group
£
At 1 January 2016
57,450
At 31 December 2016
57,450
At 31 December 2017
57,450
Merger reserve
Company
£
At 1 January 2016
-
At 31 December 2016
-
At 31 December 2017
-
26
Share capital
Group and company
2017
2016
Ordinary share capital
£
£
Issued and fully paid
1,000 Ordinary shares of £211.002 each
211,002
211,002
Preference share capital
Issued and fully paid
1,000,000 Preference Shares of £1 each
1,000,000
-
27
Profit and loss reserves
Group
Company
2017
2016
2017
2016
£
£
£
£
At the beginning of the year
11,273,428
10,278,839
1,629,877
309,186
Profit/(loss) for the year
1,905,931
1,099,489
(2,362)
1,460,691
Dividends
(140,000)
(140,000)
(140,000)
(140,000)
Currency translation differences
30,259
35,100
-
-
At the end of the year
13,069,618
11,273,428
1,487,515
1,629,877
PAXTON ACCESS GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2017
- 35 -
28
Operating lease commitments
Lessee
Operating lease rentals consist of rentals payable by the group for motor vehicles. The motor vehicle leases are generally for a 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:
Group
Company
2017
2016
2017
2016
£
£
£
£
Within one year
272,839
284,642
-
-
Between two and five years
182,346
289,046
-
-
455,185
573,688
-
-
29
Capital commitments
Amounts contracted for but not provided in the financial statements:
Group
Company
2017
2016
2017
2016
£
£
£
£
Acquisition of tangible fixed assets
1,181,458
-
-
-
30
Controlling party
The ultimate controlling party is
A Brotherton-Ratcliffe
, a director of the company.
PAXTON ACCESS GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2017
- 36 -
31
Cash generated from group operations
2017
2016
£
£
Profit for the year after tax
1,905,931
1,099,489
Adjustments for:
Taxation credited
(369,111)
(405,179)
Finance costs
161,313
125,359
Investment income
-
(3)
Loss on disposal of tangible fixed assets
82,291
194,321
Amortisation and impairment of intangible assets
92,897
85,321
Depreciation and impairment of tangible fixed assets
1,186,220
1,047,080
Movements in working capital:
(Increase)/decrease in stocks
(82,293)
968,122
(Increase)/decrease in debtors
(230,317)
34,067
Increase in creditors
943,174
1,601,980
Cash generated from operations
3,690,105
4,750,557
31
Cash generated from operations - company
2017
2016
£
£
(Loss)/profit for the year after tax
(2,362)
1,460,691
Adjustments for:
Finance costs
154,098
115,973
Investment income
-
(1,500,000)
Depreciation and impairment of tangible fixed assets
145,743
96,402
Movements in working capital:
Decrease/(increase) in debtors
323,489
(98,001)
Increase/(decrease) in creditors
1,677,512
(1,162,158)
Cash generated from/(absorbed by) operations
2,298,480
(1,087,093)
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A Stroud
Mr V Parekh
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