Company Registration No. 06039291 (England and Wales)
POLYTHENE (UK) LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
POLYTHENE (UK) LIMITED
COMPANY INFORMATION
Directors
Mr J E Woollard
Mrs K Woollard
Mr J D Mungall
Secretary
Mrs K Woollard
Company number
06039291
Registered office
31c Avenue One
Station Lane
Witney
Oxon
OX28 4XZ
Auditor
Shaw Gibbs (Audit) Limited
264 Banbury Road
Oxford
Oxfordshire
OX2 7DY
POLYTHENE (UK) LIMITED
CONTENTS
Page
Strategic report
1
Directors' report
2 - 3
Independent auditor's report
4 - 6
Statement of comprehensive income
7
Balance sheet
8
Statement of changes in equity
9
Statement of cash flows
10
Notes to the financial statements
11 - 23
POLYTHENE (UK) LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2022
- 1 -
The directors present the strategic report and financial statements for the year ended 31 December 2022.
The principal activity of the company during the year was that of packaging wholesale.
Review of the business, key performance indicators and future developments
The directors are satisfied with the performance of the company during the year. The key performance indicators of the business continued to be turnover, gross profit margin, operating profit, net assets and the number of new customers.
2022 2021
Turnover 13,102,271 13,483,144
Gross profit margin 24% 21%
Operating profit 1,164,312 1,109,370
Turnover decreased by 3% from 2021. The decrease in turnover is a result of a global reduction of raw material prices which need to be passed on to the customer.
Gross profit margin has increased from the prior year due to better cost controls. Operating profit, which is another key performance indicator for the business has increased as the company benefitted from continued cost savings such as travel and entertainment as a result of the lockdowns caused by COVID-19. The company continues to invest in people and advertising as well as superior products.
There has also been a £156k growth in net assets which is a result of the continued performance of the company.
The directors believe that the continued commitment, including investment in research and development, to enhance the product base and provide more environmentally friendly alternatives will enhance customer satisfaction and facilitate growth. The company is well positioned with a strong supplier base to be responsive in an innovative market place.
During the year the company also continued to invest in renovation works to one of its investment properties. The renovation works are expected to be completed in the 2024 financial year.
Principal risk and uncertainties
The principal risks the company faces are indicated below:
As mentioned above the company continues to invest in environmentally friendly alternatives and has formed key links with innovative suppliers.
The directors regularly monitor the above risks in board meetings and relevant actions are discussed and undertaken to mitigate the risks.
Mrs K Woollard
Director
15 September 2023
POLYTHENE (UK) 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.
Directors
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
Mr J E Woollard
Mrs K Woollard
Mr J D Mungall
Results and dividends
During the year an interim dividend of £717,500 (2021: £526,000) was paid. The directors do not recommend payment of a final dividend.
Auditor
In accordance with the company's articles, a resolution proposing that Shaw Gibbs (Audit) Limited 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;
state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements;
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company’s transactions and disclose with reasonable accuracy at any time the financial position of the company and 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.
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.
POLYTHENE (UK) LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
- 3 -
Going concern
In drawing their conclusion on the appropriateness of the going concern assumption, the directors has been mindful of the company having net current liabilities of £85,918 (2021: £571,857).
The directors have prepared forecasts which show continued growth and funds to ensure that it can meet its liabilities when the fall due.
Therefore, 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.
On behalf of the board
Mrs K Woollard
Director
15 September 2023
POLYTHENE (UK) LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF POLYTHENE (UK) LIMITED
- 4 -
Opinion
We have audited the financial statements of Polythene (UK) Limited (the 'company') for the year ended 31 December 2022 which comprise the statement of comprehensive income, the balance sheet, the statement of changes in equity, the statement of cash flows and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).
In our opinion the financial statements:
give a true and fair view of the state of the company's affairs as at 31 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.
POLYTHENE (UK) LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF POLYTHENE (UK) 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 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, 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.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below.
At the planning stage of the audit we gain an understanding of the laws and regulations which apply to the company and how the management seek to comply with those laws regulations. This helps us to plan appropriate risk assessments.
During the audit we focus on relevant risk areas and review the compliance with the laws and regulations by making relevant enquiries and undertaking corroboration, for example by reviewing Board Minutes and other documentation.
We assess the risk of material misstatement in the financial statements including as a result of fraud and undertake procedures including:
Reviewing the controls set in place by management;
Making enquiries of management as to whether they consider fraud or other irregularity may have taken place, or where such opportunity might exist;
Challenging management assumptions with regard to accounting estimates; and
Identifying and testing journal entries, particularly those which appear to be unusual by size or nature.
Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading to a material misstatement in the financial statements or non-compliance with regulation. This risk increases the more that compliance with a law or regulation is removed from the events and transactions reflected in the financial statements, as we will be less likely to become aware of instances of non-compliance. The risk is also greater regarding irregularities occurring due to fraud rather than error, as fraud involves intentional concealment, forgery, collusion, omission or misrepresentation.
POLYTHENE (UK) LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF POLYTHENE (UK) LIMITED
- 6 -
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.
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.
Malik Nayyer Salim (Senior Statutory Auditor)
For and on behalf of Shaw Gibbs (Audit) Limited
22 September 2023
Chartered Certified Accountants
Statutory Auditor
264 Banbury Road
Oxford
Oxfordshire
OX2 7DY
POLYTHENE (UK) LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2022
- 7 -
2022
2021
Notes
£
£
Turnover
3
13,102,271
13,483,144
Cost of sales
(10,031,080)
(10,680,022)
Gross profit
3,071,191
2,803,122
Administrative expenses
(1,940,172)
(1,726,643)
Other operating income
33,293
32,891
Operating profit
4
1,164,312
1,109,370
Interest receivable and similar income
7
14,422
12,510
Interest payable and similar expenses
8
(102,045)
(63,347)
Increase in fair value of investment property
80,000
Profit before taxation
1,076,689
1,138,533
Tax on profit
9
(203,037)
(209,480)
Profit for the financial year
873,652
929,053
Other comprehensive income
Revaluation of tangible fixed assets
39,000
Total comprehensive income for the year
873,652
968,053
The statement of total comprehensive income has been prepared on the basis that all operations are continuing operations.
There are no recognised gains or losses other than those passing through the statement of total comprehensive income.
POLYTHENE (UK) LIMITED
BALANCE SHEET
AS AT
31 DECEMBER 2022
31 December 2022
- 8 -
2022
2021
Notes
£
£
£
£
Fixed assets
Intangible assets
11
1,787
1,964
Tangible assets
12
933,774
969,889
Investment properties
13
1,727,020
1,677,463
2,662,581
2,649,316
Current assets
Stocks
15
541,593
811,326
Debtors
16
2,916,239
3,261,746
Cash at bank and in hand
41,608
400,318
3,499,440
4,473,390
Creditors: amounts falling due within one year
17
(3,585,358)
(5,045,247)
Net current liabilities
(85,918)
(571,857)
Total assets less current liabilities
2,576,663
2,077,459
Creditors: amounts falling due after more than one year
18
(917,591)
(567,328)
Provisions for liabilities
19
(97,206)
(104,417)
Net assets
1,561,866
1,405,714
Capital and reserves
Called up share capital
21
100
100
Share premium account
9,900
9,900
Revaluation reserve
22
355,174
355,174
Profit and loss reserves
1,196,692
1,040,540
Total equity
1,561,866
1,405,714
The financial statements were approved by the board of directors and authorised for issue on 15 September 2023 and are signed on its behalf by:
Mrs K Woollard
Director
Company Registration No. 06039291
POLYTHENE (UK) LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2022
- 9 -
Share capital
Share premium account
Revaluation reserve
Profit and loss reserves
Total
Notes
£
£
£
£
£
Balance at 1 January 2021
100
9,900
236,174
717,487
963,661
Year ended 31 December 2021:
Profit for the year
-
-
-
929,053
929,053
Other comprehensive income:
Revaluation of tangible fixed assets
-
-
39,000
-
39,000
Total comprehensive income for the year
39,000
929,053
968,053
Dividends
10
-
-
-
(526,000)
(526,000)
Transfer of revaluation of investment properties
-
-
80,000
(80,000)
-
Balance at 31 December 2021
100
9,900
355,174
1,040,540
1,405,714
Year ended 31 December 2022:
Profit and total comprehensive income for the year
-
-
-
873,652
873,652
Dividends
10
-
-
-
(717,500)
(717,500)
Balance at 31 December 2022
100
9,900
355,174
1,196,692
1,561,866
POLYTHENE (UK) LIMITED
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2022
- 10 -
2022
2021
Notes
£
£
£
£
Cash flows from operating activities
Cash generated from operations
25
1,010,714
1,489,823
Interest paid
(102,045)
(63,347)
Income taxes paid
(325,017)
(175,972)
Net cash inflow from operating activities
583,652
1,250,504
Investing activities
Purchase of intangible assets
(1,457)
(505)
Purchase of tangible fixed assets
(79,494)
(113,674)
Proceeds on disposal of tangible fixed assets
3,702
Investment property improvements
(38,096)
(122,335)
Decrease/(increase) in directors loan account
(35,092)
(203,013)
Net cash used in investing activities
(150,437)
(439,527)
Financing activities
Repayment of bank loans
(74,425)
(91,005)
Dividends paid
(717,500)
(526,000)
Net cash used in financing activities
(791,925)
(617,005)
Net (decrease)/increase in cash and cash equivalents
(358,710)
193,972
Cash and cash equivalents at beginning of year
400,318
206,346
Cash and cash equivalents at end of year
41,608
400,318
POLYTHENE (UK) LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
- 11 -
1
Accounting policies
Company information
Polythene (UK) Limited is a private company limited by shares incorporated in England and Wales. The registered office is 31c Avenue One, Station Lane, Witney, Oxon, OX28 4XZ.
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, modified to include the revaluation of freehold properties and investment properties at fair value. The principal accounting policies adopted are set out below.
1.2
Going concern
In drawing their conclusion on the appropriateness of the going concern assumption, the directors has been mindful of the company having net current liabilities of £true85,918 (2021: £571,857).
The directors have prepared forecasts which show continued growth and funds to ensure that it can meet its liabilities when the fall due.
Therefore, 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
The turnover shown in the profit an loss account represents amounts invoiced during the year, exclusive of Value Added Tax.
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 point of delivery), 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
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:
Patents
- 3 years straight line
POLYTHENE (UK) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
1
Accounting policies
(Continued)
- 12 -
1.5
Tangible fixed assets
Tangible fixed assets (excluding freehold properties) are initially measured at cost and subsequently measured at cost or deemed cost, net of depreciation and any impairment losses.
Freehold properties are initially measured at cost and subsequently revalued at each year end date to market value, which is not considered to be materially different from fair value, by the directors. This is based on underlying market conditions and evidence of transaction prices for similar properties in the area. The fair value is then depreciated in line with the rates below.
Freehold property and refurbishment
50 & 15 years straight line respectively
Plant and machinery
3 years straight line
Computer equipment
3 years straight line
Motor vehicles
3 years 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 credited or charged to profit or loss.
1.6
Investment properties
Investment properties, which are properties held to earn rentals and/or for capital appreciation, are initially recognised at cost, which includes the purchase cost and any directly attributable expenditure. Subsequently they are measured at fair value at the reporting end date. Changes in fair value are recognised in profit or loss.
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.
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
Financial instruments
The company has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.
Financial instruments are recognised in the company's balance sheet when the company becomes party to the contractual provisions of the instrument.
Financial assets and liabilities are offset, with the net amounts presented in the financial statements, when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.
Basic financial assets
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.
POLYTHENE (UK) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
1
Accounting policies
(Continued)
- 13 -
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.
Derecognition of financial liabilities
Financial liabilities are derecognised when the company’s contractual obligations expire or are discharged or cancelled.
1.9
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.
1.10
Taxation
The tax expense represents the sum of the tax currently payable and deferred tax.
POLYTHENE (UK) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
1
Accounting policies
(Continued)
- 14 -
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.
1.11
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.
1.12
Retirement benefits
The company operates a defined contribution scheme for the benefit of its employees. Contributions payable are charged to the profit and loss account in the year they are payable.
1.13
Foreign exchange
Assets and liabilities in foreign currencies are translated into sterling at the rates of exchange ruling at the balance sheet date. Transactions in foreign currencies are translated into sterling at the rate of exchange ruling at the date of the transaction. Exchange differences are taken into account in arriving at the operating profit.
POLYTHENE (UK) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
- 15 -
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.
Key sources of estimation uncertainty
The estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are as follows.
Stock valuation and obsolescence
Stocks are valued at the lower of cost and estimated selling price less costs to complete and sell, after making due allowances for obsolete stock and slow moving items. Provisions are made for any foreseeable losses, where appropriate. No element of profit is included in the valuation.
The calculation of the above provisions requires estimates to be made, which include a number of variables, such as, the forecast customer demand, the economic environment, the ageing of the stock and the discontinuation of certain product lines. These variables are monitored by the directors and a provision is in place to mitigate the relevant risks.
Freehold and investment property valuation
Freehold and investment properties are measured at market value, which is not considered to be materially different from the fair value, at the year end date. The directors estimate the market value of the properties at each year end taking into consideration the underlying market conditions and evidence of transaction prices for similar properties in the area.
Useful economic life of tangible assets
The useful economic lives of non-current assets have been derived from the estimate of the directors, using their best estimate of the write-down period.
3
Turnover and other revenue
An analysis of the company's turnover is as follows:
2022
2021
£
£
Turnover analysed by class of business
Packaging wholesale
13,102,271
13,483,144
2022
2021
£
£
Other significant revenue
Interest received on overdrawn directors loan account
14,422
12,510
Rental income arising from investment properties
33,293
32,891
POLYTHENE (UK) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
3
Turnover and other revenue
(Continued)
- 16 -
2022
2021
£
£
Turnover analysed by geographical market
United Kingdom
12,487,775
13,019,322
Europe
614,496
462,473
Canada
-
1,349
13,102,271
13,483,144
4
Operating profit
2022
2021
Operating profit for the year is stated after charging:
£
£
Fees payable to the company's auditor for the audit of the company's financial statements
12,500
11,000
Exchange losses / (gains)
8,929
(6,560)
Depreciation
100,077
84,635
Amortisation
1,634
2,036
5
Employees
The average monthly number of persons (including directors) employed by the company during the year was:
2022
2021
Number
Number
Administrative
12
12
Sales
5
5
Production
3
3
Directors
3
3
Average employee numbers
23
23
Their aggregate remuneration comprised:
2022
2021
£
£
Wages and salaries
1,117,663
1,011,905
Social security costs
132,238
111,972
Pension costs
95,266
60,990
1,345,167
1,184,867
POLYTHENE (UK) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
- 17 -
6
Directors' remuneration
2022
2021
£
£
Remuneration paid to directors
263,992
239,486
Company pension contributions to defined contribution schemes
72,038
42,700
Remuneration disclosed above include the following amounts paid to the highest paid director:
2022
2021
£
£
Remuneration for qualifying services
104,184
88,099
Company pension contributions to defined contribution schemes
34,500
20,000
7
Interest receivable and similar income
2022
2021
£
£
Interest receivable and similar income includes the following:
Bank interest received
115
Interest receivable on directors loan account
14,307
12,510
8
Interest payable and similar expenses
2022
2021
£
£
Interest payable and similar expenses includes the following:
Interest on invoice finance arrangements
60,317
38,916
Interest on bank overdrafts and loans
45,024
24,431
105,341
63,347
9
Taxation
2022
2021
£
£
Current tax
UK corporation tax on profits for the current period
210,248
161,838
Deferred tax
Origination and reversal of timing differences
(7,211)
47,642
Total tax charge
203,037
209,480
POLYTHENE (UK) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
9
Taxation
(Continued)
- 18 -
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
1,076,689
1,138,533
Expected tax charge based on the standard rate of corporation tax in the UK of 19.00% (2021: 19.00%)
204,571
216,321
Tax effect of expenses that are not deductible in determining taxable profit
4,353
2,980
(Capital allowances in excess of depreciation) / depreciation in excess of capital allowances
(5,887)
8,499
Effect of revaluations on properties
15,701
Under/(over) provided in prior years
(34,021)
Taxation charge for the year
203,037
209,480
10
Dividends
2022
2021
£
£
Interim paid
717,500
526,000
11
Intangible fixed assets
Goodwill
Patents
Total
£
£
£
Cost
At 1 January 2022
112,500
21,819
134,319
Additions
-
1,457
1,457
At 31 December 2022
112,500
23,276
135,776
Amortisation and impairment
At 1 January 2022
112,500
19,855
132,355
Amortisation charged for the year
1,634
1,634
At 31 December 2022
112,500
21,489
133,989
Carrying amount
At 31 December 2022
1,787
1,787
At 31 December 2021
1,964
1,964
POLYTHENE (UK) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
- 19 -
12
Tangible fixed assets
Freehold property and refurbishment
Plant and machinery
Computer equipment
Motor vehicles
Total
£
£
£
£
£
Cost
At 1 January 2022
939,586
72,461
311,633
56,545
1,380,225
Additions
12,266
66,278
950
79,494
Disposals
(27,040)
(56,528)
(370)
(83,938)
Transfers
(11,461)
(11,461)
At 31 December 2022
939,586
57,687
309,922
57,125
1,364,320
Depreciation and impairment
At 1 January 2022
127,653
37,217
210,311
35,155
410,336
Depreciation charged in the year
14,571
20,039
53,341
12,126
100,077
Eliminated in respect of disposals
(27,039)
(52,828)
(79,867)
At 31 December 2022
142,224
30,217
210,824
47,281
430,546
Carrying amount
At 31 December 2022
797,362
27,470
99,098
9,844
933,774
At 31 December 2021
811,933
35,244
101,322
21,390
969,889
13
Investment properties
2022
£
Fair value
At 1 January 2022
1,677,463
Transfers from tangible fixed assets
11,461
Improvement costs
38,096
At 31 December 2022
1,727,020
The fair value of the investment properties has been arrived at on the basis of valuations carried out on 31 December 2022 by the directors. The valuations were made on an open market value basis by reference to market evidence of transaction prices, both capital and rental, for similar properties. The fair value of the properties is not considered to be materially different to their market value at the year end date.
POLYTHENE (UK) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
- 20 -
14
Financial instruments
2022
2021
£
£
Carrying amount of financial assets
Debt instruments measured at amortised cost
2,867,473
3,532,001
Carrying amount of financial liabilities
Measured at amortised cost
3,185,644
4,148,265
15
Stocks
2022
2021
£
£
Finished goods
541,593
811,326
16
Debtors
2022
2021
Amounts falling due within one year:
£
£
Trade debtors
2,071,585
2,411,796
Other debtors
754,280
719,887
Prepayments and accrued income
90,374
130,063
2,916,239
3,261,746
17
Creditors: amounts falling due within one year
2022
2021
£
£
Bank loans
9,611
434,299
Trade creditors
1,780,844
2,277,731
Corporation tax
176,661
291,428
Other taxation and social security
213,441
171,255
Other creditors
1,367,716
1,808,907
Accruals and deferred income
37,085
61,627
3,585,358
5,045,247
Bank borrowings with National Westminster Bank PLC are secured by fixed charges on the freehold and investment properties and floating charges over the other assets held by the company.
In addition to the above, RBS Invoice Finance Limited holds a fixed and floating charge over all the property and undertakings of the company.
POLYTHENE (UK) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
- 21 -
18
Creditors: amounts falling due after more than one year
2022
2021
Notes
£
£
Bank loans
917,591
567,328
Bank borrowings with National Westminster Bank PLC are secured by fixed charges on the freehold and investment properties and floating charges over the other assets held by the company.
In addition to the above, RBS Invoice Finance Limited holds a fixed and floating charge over all the property or undertaking of the company.
Amounts included above which fall due after five years are as follows:
Payable by instalments
555,278
358,616
19
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
38,081
45,292
Revaluations
59,125
59,125
97,206
104,417
2022
Movements in the year:
£
Liability at 1 January 2022
104,417
Credit to profit or loss
(7,211)
Liability at 31 December 2022
97,206
20
Retirement benefit schemes
2022
2021
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
95,266
60,990
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. As at the year end £12,911 (2021: £12,523) was due to the pension scheme.
POLYTHENE (UK) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
- 22 -
21
Called up share capital
2022
2021
£
£
Ordinary share capital
Issued and fully paid
90 Ordinary A share of £1 each
90
90
10 Ordinary B share of £1 each
10
10
100
100
22
Revaluation reserve
2022
2021
£
£
At beginning of year
355,174
236,174
Revaluation of tangible fixed assets
39,000
Revaluation of investment properties
80,000
At the end of the year
355,174
355,174
23
Related party transactions
The director Mr J Woollard has personally guaranteed £50,000 as security for the bank overdraft.
Transactions with directors:
As at the year end, the directors had an overdrawn loan account of £747,079 (2021: £711,987). Interest of £14,307 (2021: £12,510) was charged on the loan during the year.
During the year a Director paid rent of £19,200 (2021: £18,000) to the company. The transactions were made at arms length and are in accordance with the relevant market rates.
24
Ultimate controlling party
The ultimate controlling party is Mr J Woollard by virtue of his majority shareholding.
POLYTHENE (UK) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
- 23 -
25
Cash generated from operations
2022
2021
£
£
Profit for the year after tax
873,652
929,053
Adjustments for:
Taxation charged
203,037
209,480
Finance costs
102,045
63,347
Loss on disposal of tangible fixed assets
370
Amortisation and impairment of intangible assets
1,634
2,036
Depreciation and impairment of tangible fixed assets
100,077
84,635
Investment properties revaluation
-
(80,000)
Movements in working capital:
Decrease/(increase) in stocks
269,733
(161,481)
Decrease/(increase) in debtors
380,599
(329,446)
(Decrease)/increase in creditors
(920,434)
772,199
Cash generated from operations
1,010,713
1,489,823
26
Analysis of changes in net debt
1 January 2022
Cash flows
31 December 2022
£
£
£
Cash at bank and in hand
400,318
(358,710)
41,608
Borrowings excluding overdrafts
(1,001,627)
74,425
(927,202)
(601,309)
(284,285)
(885,594)
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