Company registration number 02047278 (England and Wales)
BITUCHEM BUILDING PRODUCTS LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
BITUCHEM BUILDING PRODUCTS LIMITED
COMPANY INFORMATION
Directors
P Paschali Snr
P Paschali Jnr
R K Lord
M Paschali
D G Howie
T Ellsmore
M R Stott
Secretary
M Paschali
Company number
02047278
Registered office
Laymore Road
Forest Vale Industrial Estate
Cinderford
Gloucestershire
United Kingdom
GL14 2PH
Auditor
Azets Audit Services
Epsilon House
The Square
Gloucester Business Park
Gloucester
United Kingdom
GL3 4AD
Bankers
Barclays Bank Plc
6 Market Place
Bexleyheath
Kent
United Kingdom
DA6 7DY
BITUCHEM BUILDING PRODUCTS LIMITED
CONTENTS
Page
Strategic report
1
Directors' report
2 - 3
Independent auditor's report
4 - 6
Statement of income and retained earnings
7
Balance sheet
8
Notes to the financial statements
9 - 23
BITUCHEM BUILDING PRODUCTS LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2022
- 1 -
The directors present the strategic report for the year ended 31 December 2022.
Fair review of the business
Turnover for the year has increased by 16% to £14.9 million compared to £12.9 million in the previous year. The gross margin for the year has been impacted by global events occurring in the early part of the year. These global events have impacted on the supply of raw materials and the directors have worked throughout the year to limit the effect of these events on the margin achieved.
The company continue to maintain long term relationships with key customers and suppliers and have sought to build relationships with new customers.
The development of new products remains a key part of the company’s strategy to create new opportunities to further grow the company into the future.
Principal risks and uncertainties
Due to the nature of the company’s trade, the directors believe that changes in the economy and the effect that these have on the construction sectors to be the principal risk of the group. The risks that the group face within the construction sector are mitigated, as far as possible, by fulfilling contracts for a diverse range of sectors.
The directors recognise that the current market conditions are likely to provide continuing challenges within the supply chain and construction sector in the forthcoming year. The group remains in a strong position within the sector with a significant order book for the year ended 31 December 2023.
Key performance indicators
The directors consider the key financial performance indicators (KPI’s) when assessing the performance of the company. The key KPI’s used by the directors in the current market conditions are the measurement sales volumes and the control of costs and overheads to maintain margins.
D G Howie
Director
21 September 2023
BITUCHEM BUILDING PRODUCTS LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 DECEMBER 2022
- 2 -
The directors present their annual report and financial statements for the year ended 31 December 2022.
Principal activities
The principal activity of the company continued to be that of marketing bituminous products for use in road construction and civil engineering.
Directors
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
P Paschali Snr
P Paschali Jnr
R K Lord
M Paschali
D G Howie
T Ellsmore
M R Stott
Results and dividends
The results for the year are set out on page 7.
Ordinary dividends were paid amounting to £139,000. The directors do not recommend payment of a final dividend.
Auditor
In accordance with the company's articles, a resolution proposing that Azets Audit Services be reappointed as auditor of the company will be put at a General Meeting.
Statement of directors' responsibilities
The directors are responsible for preparing the annual report and the financial statements in accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period. In preparing these financial statements, the directors are required to:
select suitable accounting policies and then apply them consistently;
make judgements and accounting estimates that are reasonable and prudent;
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company’s transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
BITUCHEM BUILDING PRODUCTS LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
- 3 -
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 company’s auditor is unaware. Additionally, the directors individually have taken all the necessary steps that they ought to have taken as directors in order to make themselves aware of all relevant audit information and to establish that the company’s auditor is aware of that information.
On behalf of the board
D G Howie
Director
21 September 2023
BITUCHEM BUILDING PRODUCTS LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF BITUCHEM BUILDING PRODUCTS LIMITED
- 4 -
Opinion
We have audited the financial statements of Bituchem Building Products Limited (the 'company') for the year ended 31 December 2022 which comprise the statement of income and retained earnings, the balance sheet and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).
In our opinion the financial statements:
give a true and fair view of the state of the company's affairs as at 31 December 2022 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
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.
The other information comprises the information included in the annual report other than the financial statements and our auditor's report thereon. The directors are responsible for the other information contained within the annual report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of our audit:
the information given in the strategic report and the directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
the strategic report and the directors' report have been prepared in accordance with applicable legal requirements.
BITUCHEM BUILDING PRODUCTS LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF BITUCHEM BUILDING PRODUCTS LIMITED
- 5 -
Matters on which we are required to report by exception
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. We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:
adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or
the financial statements are not in agreement with the accounting records and returns; or
certain disclosures of remuneration specified by law are not made; or
we have not received all the information and explanations we require for our audit.
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 company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.
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 is available on the Financial Reporting Council’s website at: https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.
BITUCHEM BUILDING PRODUCTS LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF BITUCHEM BUILDING PRODUCTS LIMITED
- 6 -
Extent to which the audit was considered capable of detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above and on the Financial Reporting Council’s website, to detect material misstatements in respect of irregularities, including fraud.
We obtain and update our understanding of the entity, its activities, its control environment, and likely future developments, including in relation to the legal and regulatory framework applicable and how the entity is complying with that framework. Based on this understanding, we identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. This includes consideration of the risk of acts by the entity that were contrary to applicable laws and regulations, including fraud.
In response to the risk of irregularities and non-compliance with laws and regulations, including fraud, we designed procedures which included:
Enquiry of management and those charged with governance around actual and potential litigation and claims as well as actual, suspected and alleged fraud;
Reviewing minutes of meetings of those charged with governance;
Assessing the extent of compliance with the laws and regulations considered to have a direct material effect on the financial statements or the operations of the company through enquiry and inspection;
Reviewing financial statement disclosures and testing to supporting documentation to assess compliance with applicable laws and regulations;
Performing audit work over the risk of management bias and override of controls, including testing of journal entries and other adjustments for appropriateness, evaluating the business rationale of significant transactions outside the normal course of business and reviewing accounting estimates for indicators of potential bias.
Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading to a material misstatement in the financial statements or non-compliance with regulation. This risk increases the more that compliance with a law or regulation is removed from the events and transactions reflected in the financial statements, as we will be less likely to become aware of instances of non-compliance. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
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.
Rebecca Hudson (Senior Statutory Auditor)
For and on behalf of Azets Audit Services
21 September 2023
Chartered Accountants
Statutory Auditor
Epsilon House
The Square
Gloucester Business Park
Gloucester
United Kingdom
GL3 4AD
BITUCHEM BUILDING PRODUCTS LIMITED
STATEMENT OF INCOME AND RETAINED EARNINGS
FOR THE YEAR ENDED 31 DECEMBER 2022
- 7 -
2022
2021
£
£
Turnover
3
14,949,259
12,884,584
Cost of sales
(9,688,236)
(7,838,807)
Gross profit
5,261,023
5,045,777
Distribution costs
(538,990)
(598,675)
Administrative expenses
(4,089,374)
(3,923,619)
Other operating income
40,364
Operating profit
4
632,659
563,847
Interest payable and similar expenses
7
(47,325)
(19,642)
Profit before taxation
585,334
544,205
Tax on profit
8
(106,421)
(66,503)
Profit for the financial year
478,913
477,702
Retained earnings brought forward
5,270,639
4,941,937
Dividends
9
(139,000)
(149,000)
Retained earnings carried forward
5,610,552
5,270,639
The profit and loss account has been prepared on the basis that all operations are continuing operations.
BITUCHEM BUILDING PRODUCTS LIMITED
BALANCE SHEET
AS AT 31 DECEMBER 2022
31 December 2022
- 8 -
2022
2021
Notes
£
£
£
£
Fixed assets
Intangible assets
10
80,528
Tangible assets
11
1,329,962
1,378,116
1,410,490
1,378,116
Current assets
Stocks
12
967,801
1,101,577
Debtors
13
1,528,327
1,225,758
Cash at bank and in hand
2,830,904
3,192,265
5,327,032
5,519,600
Creditors: amounts falling due within one year
14
(784,526)
(1,350,598)
Net current assets
4,542,506
4,169,002
Total assets less current liabilities
5,952,996
5,547,118
Creditors: amounts falling due after more than one year
15
(54,556)
(19,695)
Provisions for liabilities
Deferred tax liability
18
287,788
256,684
(287,788)
(256,684)
Net assets
5,610,652
5,270,739
Capital and reserves
Called up share capital
20
100
100
Profit and loss reserves
5,610,552
5,270,639
Total equity
5,610,652
5,270,739
The financial statements were approved by the board of directors and authorised for issue on 21 September 2023 and are signed on its behalf by:
D G Howie
Director
Company Registration No. 02047278
BITUCHEM BUILDING PRODUCTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
- 9 -
1
Accounting policies
Company information
Bituchem Building Products Limited is a private company limited by shares incorporated in England and Wales. The registered office is Laymore Road, Forest Vale Industrial Estate, Cinderford, Gloucestershire, United Kingdom, GL14 2PH.
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 amounts in these financial statements are rounded to the nearest £.
The financial statements have been prepared under the historical cost convention. The principal accounting policies adopted are set out below.
This company is a qualifying entity for the purposes of FRS 102, being a member of a group where the parent of that group prepares publicly available consolidated financial statements, including this company, which are intended to give a true and fair view of the assets, liabilities, financial position and profit or loss of the group. The company has therefore taken advantage of exemptions from the following disclosure requirements:
Section 7 ‘Statement of Cash Flows’: Presentation of a statement of cash flow and related notes and disclosures;
Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instrument Issues: Interest income/expense and net gains/losses for financial instruments not measured at fair value; basis of determining fair values; details of collateral, loan defaults or breaches, details of hedges, hedging fair value changes recognised in profit or loss and in other comprehensive income;
Section 26 ‘Share based Payment’: Share-based payment expense charged to profit or loss, reconciliation of opening and closing number and weighted average exercise price of share options, how the fair value of options granted was measured, measurement and carrying amount of liabilities for cash-settled share-based payments, explanation of modifications to arrangements;
Section 33 ‘Related Party Disclosures’: Compensation for key management personnel.
The financial statements of the company are consolidated in the financial statements of Bituchem Holdings Limited. These consolidated financial statements are available from its registered office, Laymore Road, Forest Vale Industrial Estate, Cinderford, Gloucestershire, GL14 2PH.
1.2
Going concern
Atruet the time of approving the financial statements, the directors have a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future. 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.
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.
BITUCHEM BUILDING PRODUCTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
1
Accounting policies
(Continued)
- 10 -
1.4
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 fair value of the asset can be measured reliably; the intangible asset arises from contractual or other legal rights; and the intangible asset is separable from the entity.
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:
Software
20% - Straight Line
1.5
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:
Plant and equipment
5%-20% - Straight Line
Fixtures and fittings
10%-25% - Straight Line
Motor vehicles
25% and 50% - Reducing Balance
The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is credited or charged to profit or loss.
1.6
Impairment of fixed assets
At each reporting period end date, the company 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.
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.
BITUCHEM BUILDING PRODUCTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
1
Accounting policies
(Continued)
- 11 -
1.7
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 cost and replacement cost, adjusted where applicable for any loss of service potential.
Cost is calculated using the first in first out (FIFO) methodology.
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.
1.8
Cash and cash equivalents
Cash and cash equivalents are basic financial assets and include cash in hand, deposits held at call with banks, other short-term liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities.
1.9
Financial instruments
Financial instruments are recognised in the company's balance sheet when the company becomes party to the contractual provisions of the instrument.
Financial assets and liabilities are offset, with the net amounts presented in the financial statements, when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.
Basic financial assets
Basic financial assets, which include debtors and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised.
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.
BITUCHEM BUILDING PRODUCTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
1
Accounting policies
(Continued)
- 12 -
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 company transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.
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 company after deducting all of its liabilities.
Basic financial 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 payments 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.
Other financial liabilities
Derivatives, including interest rate swaps and forward foreign exchange contracts, are not basic financial instruments. Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured at their fair value. Changes in the fair value of derivatives are recognised in profit or loss in finance costs or finance income as appropriate, unless hedge accounting is applied and the hedge is a cash flow hedge.
Debt instruments that do not meet the conditions in FRS 102 paragraph 11.9 are subsequently measured at fair value through profit or loss. Debt instruments may be designated as being measured at fair value through profit or loss to eliminate or reduce an accounting mismatch or if the instruments are measured and their performance evaluated on a fair value basis in accordance with a documented risk management or investment strategy.
BITUCHEM BUILDING PRODUCTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
1
Accounting policies
(Continued)
- 13 -
Derecognition of financial liabilities
Financial liabilities are derecognised when the company’s contractual obligations expire or are discharged or cancelled.
1.10
Equity instruments
Equity instruments issued by the company are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the company.
1.11
Taxation
The tax expense represents the sum of the tax currently payable and deferred tax.
Current tax
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the profit and loss account because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The company’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.
Deferred tax
Deferred tax liabilities are generally recognised for all timing differences and deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Such assets and liabilities are not recognised if the timing difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.
The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the profit and loss account, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset when the company has a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.
1.12
Provisions
Provisions are recognised when the company has a legal or constructive present obligation as a result of a past event, it is probable that the company 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 is 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.
BITUCHEM BUILDING PRODUCTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
1
Accounting policies
(Continued)
- 14 -
1.13
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.
1.14
Retirement benefits
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
1.15
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 balance sheet as a finance lease obligation. Lease payments are treated as consisting of capital and interest elements. The interest is charged to profit or loss 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 profit or loss on a straight line basis over the term of the relevant lease except where another more systematic basis is more representative of the time pattern in which economic benefits from the leases asset are consumed.
1.16
Government grants
Government grants are recognised at the fair value of the asset received or receivable when there is reasonable assurance that the grant conditions will be met and the grants will be received.
Government grants relating to turnover are recognised as income over the periods when the related costs are incurred. Grants relating to an asset are recognised in income systematically over the asset's expected useful life. If part of such a grant is deferred it is recognised as deferred income rather than being deducted from the asset's carrying amount.
1.17
Foreign exchange
Transactions in currencies other than pounds sterling are recorded at the rates of exchange prevailing at the dates of the transactions. At each reporting end date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the reporting end date. Gains and losses arising on translation in the period are included in profit or loss.
2
Judgements and key sources of estimation uncertainty
In the application of the company’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.
BITUCHEM BUILDING PRODUCTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
- 15 -
3
Turnover and other revenue
An analysis of the company's turnover is as follows:
2022
2021
£
£
Turnover analysed by class of business
Sale of goods
14,410,689
12,374,996
Recharged income
538,570
509,588
14,949,259
12,884,584
2022
2021
£
£
Other revenue
Grants received
40,364
All of the companies sales are in the UK.
The government grant income in 2021 relate to monies received under the coronavirus job retention scheme.
4
Operating profit
2022
2021
Operating profit for the year is stated after charging/(crediting):
£
£
Exchange losses
2,476
Government grants
(40,364)
Fees payable to the company's auditor for the audit of the company's financial statements
8,635
7,850
Depreciation of owned tangible fixed assets
484,776
413,937
Depreciation of tangible fixed assets held under finance leases
35,243
27,330
Amortisation of intangible assets
13,647
Operating lease charges
356,080
302,176
5
Employees
The average monthly number of persons (including directors) employed by the company during the year was:
2022
2021
Number
Number
Employees
27
26
Directors
7
7
Total
34
33
BITUCHEM BUILDING PRODUCTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
5
Employees
(Continued)
- 16 -
Their aggregate remuneration comprised:
2022
2021
£
£
Wages and salaries
1,426,497
1,120,678
Social security costs
137,558
176,910
Pension costs
208,426
126,814
1,772,481
1,424,402
6
Directors' remuneration
2022
2021
£
£
Remuneration for qualifying services
532,883
398,904
Company pension contributions to defined contribution schemes
141,466
86,799
674,349
485,703
Remuneration disclosed above include the following amounts paid to the highest paid director:
2022
2021
£
£
Remuneration for qualifying services
223,685
230,046
Company pension contributions to defined contribution schemes
29,239
29,239
7
Interest payable and similar expenses
2022
2021
£
£
Interest on invoice finance arrangements
42,936
16,833
Interest on finance leases and hire purchase contracts
4,389
2,809
47,325
19,642
8
Taxation
2022
2021
£
£
Current tax
UK corporation tax on profits for the current period
75,317
9,169
Adjustments in respect of prior periods
(4,418)
Total current tax
75,317
4,751
BITUCHEM BUILDING PRODUCTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
8
Taxation
2022
2021
£
£
(Continued)
- 17 -
Deferred tax
Origination and reversal of timing differences
31,104
61,752
Total tax charge
106,421
66,503
The actual charge for the year can be reconciled to the expected charge for the year based on the profit or loss and the standard rate of tax as follows:
2022
2021
£
£
Profit before taxation
585,334
544,205
Expected tax charge based on the standard rate of corporation tax in the UK of 19.00% (2021: 19.00%)
111,213
103,399
Tax effect of expenses that are not deductible in determining taxable profit
1,051
2,930
Adjustments in respect of prior years
(4,418)
Effect of change in corporation tax rate
6,815
61,604
Depreciation on assets not qualifying for tax allowances
5,714
4,440
Research and development tax credit
(98,523)
Under/(over) provided in prior years
2,708
Super deduction claimed
(21,080)
(2,929)
Taxation charge for the year
106,421
66,503
9
Dividends
2022
2021
£
£
Interim paid
139,000
149,000
BITUCHEM BUILDING PRODUCTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
- 18 -
10
Intangible fixed assets
Software
£
Cost
At 1 January 2022
Additions
65,000
Transfers
29,175
At 31 December 2022
94,175
Amortisation and impairment
At 1 January 2022
Amortisation charged for the year
13,647
At 31 December 2022
13,647
Carrying amount
At 31 December 2022
80,528
At 31 December 2021
All intangible fixed assets are pledged as security for the bank borrowings under a fixed and floating charge.
11
Tangible fixed assets
Plant and equipment
Fixtures and fittings
Motor vehicles
Total
£
£
£
£
Cost
At 1 January 2022
4,812,438
189,597
123,816
5,125,851
Additions
468,504
5,978
26,557
501,039
Disposals
(1,992,182)
(135,165)
(2,127,347)
Transfers
(29,175)
(29,175)
At 31 December 2022
3,259,585
60,410
150,373
3,470,368
Depreciation and impairment
At 1 January 2022
3,490,323
154,876
102,536
3,747,735
Depreciation charged in the year
489,665
21,714
8,640
520,019
Eliminated in respect of disposals
(1,992,183)
(135,165)
(2,127,348)
At 31 December 2022
1,987,805
41,425
111,176
2,140,406
Carrying amount
At 31 December 2022
1,271,780
18,985
39,197
1,329,962
At 31 December 2021
1,322,115
34,721
21,280
1,378,116
BITUCHEM BUILDING PRODUCTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
11
Tangible fixed assets
(Continued)
- 19 -
The net carrying value of tangible fixed assets includes the following in respect of assets held under finance leases or hire purchase contracts.
2022
2021
£
£
Plant and equipment
74,379
46,268
Motor vehicles
33,004
13,021
107,383
59,289
All tangible fixed assets are pledged as security for the bank borrowings under a fixed and floating charge.
12
Stocks
2022
2021
£
£
Raw materials and consumables
967,801
1,101,577
All stock is pledged as secruity for the bank borrowings under a fixed and floating charge.
13
Debtors
2022
2021
Amounts falling due within one year:
£
£
Trade debtors
721,692
608,068
Corporation tax recoverable
10,764
54,331
Amounts owed by group undertakings
448,367
340,812
Other debtors
202,711
Prepayments and accrued income
144,793
222,547
1,528,327
1,225,758
Trade debtors disclosed above are measured at amortised cost.
The company factors its trade debtors with Barclays Bank Plc Sales Financing, under a confidential invoice discounting facility, who have a first fixed charge over the book debts. Debtors are stated gross and the liability to the factoring company is included in the creditors due within one year.
All debtors are pledged as security for the bank borrowings under a fixed and floating charge.
BITUCHEM BUILDING PRODUCTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
- 20 -
14
Creditors: amounts falling due within one year
2022
2021
Notes
£
£
Bank loans and overdrafts
16
18,174
Obligations under finance leases
17
38,169
18,180
Trade creditors
332,403
395,885
Amounts owed to group undertakings
134,993
94,692
Taxation and social security
82,705
21,168
Other creditors
554,334
Accruals and deferred income
196,256
248,165
784,526
1,350,598
15
Creditors: amounts falling due after more than one year
2022
2021
Notes
£
£
Obligations under finance leases
17
54,556
19,695
16
Loans and overdrafts
2022
2021
£
£
Bank overdrafts
18,174
Payable within one year
18,174
17
Finance lease obligations
2022
2021
Future minimum lease payments due under finance leases:
£
£
Within one year
44,205
20,905
In two to five years
64,050
22,647
108,255
43,552
Less: future finance charges
(15,530)
(5,677)
92,725
37,875
Finance lease payments represent rentals payable by the company 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.
The finance lease obligations are secured against the assets to which they relate.
BITUCHEM BUILDING PRODUCTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
- 21 -
18
Deferred taxation
Deferred tax assets and liabilities are offset where the 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:
Liabilities
Liabilities
2022
2021
Balances:
£
£
Accelerated capital allowances
289,577
257,535
Other timing differences
(1,789)
(851)
287,788
256,684
2022
Movements in the year:
£
Liability at 1 January 2022
256,684
Charge to profit or loss
31,104
Liability at 31 December 2022
287,788
Deferred tax has been calculated at the substantively enacted tax rate of 25%.
19
Retirement benefit schemes
2022
2021
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
208,426
126,814
The company operates a defined contribution pension scheme for all qualifying employees. The assets of the scheme are held separately from those of the company in an independently administered fund.
20
Share capital
2022
2021
2022
2021
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Ordinary of £1 each
100
100
100
100
21
Financial commitments, guarantees and contingent liabilities
The company has given a guarantee to the bank in respect of loans and overdrafts of fellow subsidiaries and its parent undertaking. At the balance sheet date the maximum potential liability was £195,861 (2021: £226,566).
BITUCHEM BUILDING PRODUCTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
- 22 -
22
Operating lease commitments
Lessee
At the reporting end date the company had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:
2022
2021
£
£
Within one year
94,135
157,281
Between two and five years
536,097
538,935
In over five years
10,950
46,981
641,182
743,197
23
Capital commitments
Amounts contracted for but not provided in the financial statements:
2022
2021
£
£
Acquisition of tangible fixed assets
71,076
326,792
BITUCHEM BUILDING PRODUCTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
- 23 -
24
Related party transactions
Transactions with related parties
The company has taken the available exemption under section 33.1A of FRS 102 to not disclose balances or transactions made with other group members.
25
Ultimate controlling party
The company is a 99% owned subsidiary of Bituchem Holdings Limited, a company incorporated in England & Wales. Bituchem Holdings Limited is the smallest and largest group in which the results of the company are consolidated. Copies of the group financial statements are available from their registered office Laymore Road, Forest Vale Industrial Estate, Cinderford, Gloucestershire, GL14 2PH.
At 31 December 2022 the company's ultimate parent company was Inter-Euro Investments Limited, a company incorporated in Cyprus, by virtue of its 100% interest in the share capital of Bituchem Holdings Limited.
The ultimate controlling party is The Inter-Euro Trust by virtue of its controlling interest in Inter-Euro Investments Limited.
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