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COMPANY REGISTRATION NUMBER: 2078560
Energizer Trading Limited
Annual Report
30 September 2022
Energizer Trading Limited
Financial Statements
Year ended 30 September 2022
Contents
Page
Strategic report
1
Directors' report
9
Independent auditors' report to the members of Energizer Trading Limited
12
Statement of comprehensive income
16
Statement of financial position
17
Statement of changes in equity
18
Notes to the financial statements
19
Energizer Trading Limited
Strategic Report
Year ended 30 September 2022
Business review
The company acts in two capacities - as a Warehouse and Distribution services provider for its subsidiary Energizer Group Limited (EGL) and EGL's affiliates. In this role the company sources batteries, lights and autocare products and then sells them to intercompany affiliates and third-party customers. The company receives an arm's length rate of return for providing these services. - as a manufacturer of private label and branded micropower batteries on behalf of EGL and EGL's affiliates. The company receives an arm's length rate of return for providing these services. The company has an agreement with EGL whereby EGL provides it with commercial and administrative advisory services in exchange for an entrepreneurial rate of return. The company paid a management fee of €47m (2021: €42m) to EGL under this agreement. On 1 October 2021 the company purchased the autocare product distribution assets and liabilities from fellow group companies Custom Accessories Europe Limited and CAE Direct Imports Limited, whose principal activities were the design, development and distribution of automotive accessories and related products, for a consideration of €8.9m and added them to its existing Warehouse and Distribution services provider role (see note 28 for further details). The main KPIs that are used to assess the performance and position of the company are turnover, gross margin percentage (GM%), operating profit percentage (OP%) and days in inventory (DII). The following comparisons are versus the prior year. Turnover has increased by €18m (6%) from €295m to €313m. €11m was attributable to the acquired autocare business and the remaining €7m was due to organic growth. The GM% has increased by 1.7 percentage points from 18.9% to 20.6%, comprising of a reduction of 4.5 percentage points as a result of higher product costs offset by a 2.6 percentage point increase due to a reduction in intercompany royalty charges in the year (EGL paid the majority of equivalent royalties in the current year) and a 3.6 percentage points increase due to favourable foreign exchange gains on product purchases in foreign currencies of €7.3m in the current year compared to unfavourable losses of €3.9m in the prior year. The OP% (excluding foreign exchange gains and losses) has decreased by 2.7 percentage points from 4.0% to 1.3% as a result of the decline in GM% due to higher product costs and an increase in administrative expenses. Favourable exchange gains of €7.9m increased the OP% by 2.5 percentage points from 1.3% to 3.8%, compared to the prior year where unfavourable foreign exchange losses of €4.4m had reduced the OP% by 1.5 percentage points from 4.0% to 2.5%. DII has increased by 36 days from 117 days to 153 days. This is mainly a result of increased inventory holding at the year end to compensate for global supply chain constraints. The company has temporarily increased inventory levels to ensure that service levels to customers can be maintained. The company performed an impairment review of its investments in subsidiaries at the year end and wrote off its investment in Energizer Group Limited as that subsidiary has net liabilities and is forecasted to make future losses. The company has reported an operating profit and profit before taxation in both the current and prior years, however as it had net current liabilities of €12.3m at the year-end (2021: net current liabilities €25.1m) the directors have obtained a legally binding letter of support from the ultimate parent Energizer Holdings Inc. ensuring it can meet its working capital needs.
Financial risk management
The credit, liquidity and cash flow risks are deemed low due to the ability to obtain financing from group undertakings. The company has implemented policies that require appropriate credit checks on potential customers before sales are made. Treasury and financial risk management are conducted at a corporate level and further details can be found in section 1A of Energizer Holdings Inc.'s 2022 annual report, which does not form part of this report.
Principal risks and uncertainties
The company is exposed to a variety of risks, some of which are inherent in our industry and others of which are more specific to our own businesses. The discussion below addresses the material factors, of which we are currently aware, that could affect, and in certain cases have affected, our businesses, results of operations and financial condition. Other factors not discussed below or elsewhere in this Annual Report could also adversely affect our businesses, results of operations and financial condition. Therefore, the risk factors below should not be considered a complete list of potential risks that we may face. Global economic conditions, including the conditions resulting from the COVID-19 pandemic, and actions taken by our customers, suppliers, other business partners and governments in markets in which we compete might materially and negatively impact us. The COVID-19 pandemic has caused considerable volatility to global economic conditions and the economies in regions in which we conduct business. While we experienced reduced demand for certain of our consumer products as a result of the pandemic, demand increased for other products. In the future, our business might be adversely affected in a material way by lower consumer demand as a result of recessionary economic conditions, including after the direct impact of the COVID-19 pandemic has subsided. In response to unfavourable economic conditions, there could be a reduction in discretionary spending, which may lead to reduced net sales or cause a shift in our product mix from higher-margin to lower-margin product offerings or a shift of purchasing patterns to lower cost options such as "private label" brands sold by retail chains or price brands. This shift could drive the market towards lower margin products or force us to reduce prices for our products in order to compete. Similarly, our retailer customers could reduce their inventories, shift to different products or require us to lower our prices to retain the shelf placement of our products. Conversely, rapid increases in demand as a result of improving economic conditions could lead to supply chain challenges. Uncertain economic and financial market conditions may also adversely affect the financial condition of our customers, suppliers and other business partners. Any significant decrease in customers' purchases of our products or our inability to collect accounts receivable resulting from an adverse impact of the global markets on customers' financial condition could have a material adverse effect on our business, financial condition and results of operations. Competition in our product categories might hinder our ability to execute our business strategy, achieve profitability, or maintain relationships with existing customers. Most of our products compete with other widely advertised, promoted and merchandised brands within each product category. The categories in which we operate are mature and highly competitive, with a limited number of large manufacturers competing for consumer acceptance, limited retail shelf space and e-commerce opportunities. Because of the highly competitive environment in which we operate, our customers, including online retailers, frequently seek to obtain pricing concessions or better trade terms, resulting in either a reduction of our margins or the loss of distribution to lower-cost competitors. Competition in our product categories is based upon brand perceptions, innovation, product performance, customer service and price. Our ability to compete effectively is, and in the future could be, affected by a number of factors, including: - Certain of our competitors have substantially greater financial, marketing, research and development, and other resources and greater market share in certain segments than we do, which could provide them with greater scale and negotiating leverage with retailers and suppliers. These competitors may be able to spend more aggressively on advertising and promotional activities, introduce competing products more quickly and respond more effectively to changing business and economic conditions than we can. - Our competitors may have lower production, sales and distribution costs, and higher profit margins. - Our competitors have obtained, and may in the future be able to obtain, exclusivity or sole source at particular retailers or favourable in-store placement. - We may lose market share to private label brands that are typically sold at lower prices and compete with our products in certain categories. Changes in the retail environment and consumer preferences could adversely affect our business Our sales have historically been largely concentrated in the traditional retail grocery and mass retail outlets. We cannot, however, predict how the retail environment will evolve Alternative retail channels, including hard discounters, e-commerce retailers and subscription services, have become more prevalent, and retailers are increasingly selling consumer products through such channels. In addition, a growing number of alternative sales channels and business models, such as niche brands, native online brands, private label and store brands, direct-to-consumer brands and channels and discounter channels, continue to evolve. In particular, the growing presence of, and increasing sales through, e-commerce retailers have affected, and may continue to affect, consumer preferences (as consumers increasingly shop online) and market dynamics, including any pricing pressures for consumer goods as retailers face added costs to build their e-commerce capacity. These trends have been magnified due to the COVID-19 pandemic. Although we are engaged in e-commerce with respect to many of our products, if we are not successful in responding to these competitive factors, changing consumer preferences and market dynamics or expanding sales through evolving sales channels, especially e-commerce retailers, hard discounters and other alternative retail channels, our business, financial condition and results of operations may be negatively impacted. We must successfully manage the demand, supply, and operational challenges brought about by the COVID-19 pandemic and any other disease outbreak, including epidemics, pandemics, or similar widespread public health concerns. Our operations are impacted by consumer spending levels, impulse purchases, the availability of our products to retail and our ability to manufacture, store and distribute products to our customers and consumers in an effective and efficient manner. The fear of exposure to or actual effects of a disease outbreak or similar widespread public health concern, such as COVID-19, negatively impacted portions of our business in fiscal 2021 and could continue to negatively impact our overall business, financial position and financial results. These impacts may include, but are not limited to: - Significant reductions, shifts or fluctuations in demand for one or more of our products, which may be caused by, among other things: - a decrease in consumer traffic in brick-and-mortar stores across all our major markets; - the temporary inability of our consumers to purchase our products due to illness, quarantine, other travel restrictions, or financial hardship; - shifts in demand away from one or more of our premium products to lower priced value or private label products and lower demand in our discretionary product categories; - stockpiling activity by consumers, which if prolonged, further increase the complexity of our operations planning and financial forecasting and adversely impact our results of operations; - significant reductions in the availability of one or more of our products as a result of retailers, common carriers or other shippers modifying restocking, fulfillment and shipping practices; or - shifts, fluctuations, or cancellation of orders due to the impact on customers' operations, including the possibility of temporary or permanent closure. - Inability to meet our customers' needs due to disruptions in our manufacturing and supply chain arrangements caused by the loss or disruption of essential manufacturing and supply chain elements, such as raw materials or other finished product components, transportation, workforce, or other manufacturing and distribution capability. In addition, we may incur higher costs for transportation, workforce and distribution capability in order to maintain the surety of supplying product to our customers; - Failure of third parties upon which we rely, including our suppliers, contract manufacturers, distributors, contractors and commercial banks, to meet their obligations to us to meet those obligations in a timely manner, which may be caused by their own financial or operational difficulties and may adversely impact our operations, liquidity and financial results; and - Significant changes in the political and regulatory landscape in the markets in which we sell or distribute our products, which may include, but are not limited to, restrictions on international trade, governmental or regulatory actions, closures or other restrictions that limit or suspend our or our third-party partners' or customers' operating and/or manufacturing capabilities, including operations necessary for the production, distribution, sale, and support of our products, which could adversely impact our results. Loss of reputation of our leading brands or failure of our marketing plans could have an adverse effect on our business. We depend on the continuing reputation and success of our brands. Maintaining a strong reputation with consumers, customers and trade and other third-party partners is critical to the success of our business. Negative publicity about us or our brands, including product safety, quality, efficacy, environmental impacts (including packaging, energy and water use, matters related to climate and waste management) and other sustainability or similar issues, whether real or perceived, could occur and could be be widely and rapidly disseminated, including through the use of social media or network sites. Our operating results could be adversely affected if any of our brands suffers damage to its reputation due to real or perceived quality issues. Any damage to our brands could impair our ability to charge premium prices for our products, resulting in the reduction of our margins or losses of distribution to lower price competitors, and adversely affect our business. The success of our brands can suffer if our marketing plans or new product offerings do not improve, or have a negative impact on, our brands' image or ability to attract and retain consumers. Additionally, if claims made in our marketing campaigns subject us to claims and litigation alleging false advertising, which is common in our industry, such claims and litigation could damage our brand or cause us to alter our marketing plans in ways that may materially and adversely affect sales, or result in the imposition of significant damages against us. In addition, our products could face quality or safety issues, which could result in our withdrawing or recalling the product from the marketplace and may lead to decreased demand for, and sales of, such products and harm the reputation of the related brands. We also license certain of our brands to third parties, and such licenses and partnerships may create additional exposure for those brands to product safety, quality, sustainability and other concerns. Loss of any of our principal customers could significantly decrease our sales and profitability. A large percentage of our sales are attributable to a relatively small number of retail customers, and we may continue to derive a significant portion of our future revenues from a small number of customers. Additionally, with the growing trend towards retailer consolidation, the rapid growth of e-commerce and the integration of traditional and digital operations at key retailers, we are increasingly dependent on certain retailers. As a result, changes in the strategies of our largest customers, including a reduction in the number of brands they carry, a shift of shelf space to private label or competitors' products or a decision to lower pricing of consumer products, including branded products, may harm our net sales or margins, and reduce our ability to offer new, innovative products to consumers. Furthermore, these large, consolidated companies could also exert additional competitive pressure on our other customers, which could in turn lead to similar demands on us. If we cease doing business with a significant customer or if we experience a significant reduction in net sales to a key customer, it could have a material adverse effect on our business, financial condition and results of operations. Customers could reduce their purchasing levels or cease buying products from us at any time and for any reason. If we do not effectively respond to the demands of our customers, they could decrease their purchases from us, causing our net sales and net earnings to decline. A failure of a key information technology system could adversely impact our ability to conduct business. We rely extensively on information technology systems, including some that are managed by third-party service providers, in order to conduct business. These systems include, but are not limited to, programs and processes relating to internal and external communications, ordering and managing materials from suppliers, converting materials to finished products, shipping products to customers, processing transactions, summarising and reporting results of operations, and complying with regulatory, legal or or tax requirements. These information technology systems could be damaged or cease to function properly due to the poor performance or failure of third-party service providers, catastrophic events, power outages, security breaches, network outages, failed upgrades or other similar events. If our business continuity plans do not effectively resolve such issues on a timely basis, we may suffer interruptions in conducting our business, which may adversely impact our operating results. We rely significantly on information technology and any inadequacy, interruption, theft or loss of data, malicious attack, integration failure, failure to maintain the security, confidentiality or privacy of sensitive data residing on our systems or other security failure of that technology could harm our ability to effectively operate our business and damage the reputation of our brands. Our systems and networks, as well as those of our retailer customers, suppliers, service providers, and banks, have and may in the future become the target of cyberattacks or information security breaches, which in turn could result in the unauthorised release and misuse of confidential or proprietary information about our company, employees, customers or consumers, as well as disrupt their and our operations or damage their and our facilities or those of third parties. We have seen an increase in the number of such attacks since a large number of our employees began working remotely. Furthermore, such attacks may originate from nation states or attempts by outside parties, hackers, criminal organisations, or other threat actors. Any significant breaches or breakdowns of such databases or systems could result in significant costs, including costs to investigate or remediate. While we have taken steps to maintain and enhance cyber security and address these risks and uncertainties by implementing security technologies, internal controls, network and data centre resiliency, redundancy and recovery processes, upgrading our remote work environment and by obtaining insurance coverage, these measures may be inadequate. In addition, such incidents could result in unauthorised disclosure and misuse of material confidential information. Cyber threats are becoming more sophisticated, are constantly evolving and are being made by groups and individuals with a wide range of expertise and motives, and this increases the difficulty of detecting and successfully defending against them. Data breaches or theft of personal information we and our third-party service providers collect, as well as company information and assets, have occurred in the past and may occur in the future and the failure to remediate such intrusions may adversely affect our reputation and financial condition. Energizer's business is subject to regulation. The manufacture, packaging, labelling, storage, distribution, advertising and sale of our products are subject to extensive regulation. New or more restrictive regulations or more restrictive interpretations of existing regulations could have an adverse impact on our business. Legislative and regulatory changes by taxing authorities have an impact on our effective tax rate, and we may be subject to additional costs arising from new or changed regulations, including those relating to health care and energy. Additionally, a finding that we are in violation of, or not in compliance with, applicable laws or regulations could subject us to material civil remedies, including fines, damages, injunctions or product recalls, or criminal sanctions. Even if a claim is unsuccessful, is not merited or is not fully pursued, the negative publicity surrounding such assertions could jeopardise our reputation and brand image and have a material adverse effect on our businesses, as well as require resources to to rebuild our reputation. We must comply with various environmental laws and regulations including those relating to the handling and disposal of solid and hazardous wastes, recycling of batteries, and the remediation of contamination associated with the use and disposal of hazardous substances. A release of such substances due to accident or an intentional act could result in substantial liability to governmental authorities or to third parties. We have incurred, and will continue to incur, capital and operating expenses and other costs in complying with environmental laws and regulations, including remediation costs relating to our current and former properties and third-party waste disposal sites. We could become subject to additional environmental liabilities in the future that could cause a material adverse effect on our results of operations or financial condition. Changes in production costs, including raw material prices, have adversely affected, and in the future could erode, our profit margins and negatively impact operating results. Pricing and availability of raw materials, energy, shipping and other services needed for our business can be volatile due to general economic conditions, labour costs, production levels, import duties and tariffs and other factors beyond our control, including inflation. There is no certainty that we will be able to offset future cost increases. This volatility can significantly affect our production cost and may, therefore, have a material adverse effect on our business, results of operations and financial condition. Volatility, availability and increases in the cost of raw materials and transportation have negatively impacted, and are likely to continue to negatively impact, the Company's results of operations. We believe commodity price and other cost increases and volatility, especially due to the COVID-19 pandemic, could continue in the future. If such increases occur or exceed our estimates and we are not able to increase the prices of our products or achieve cost savings to offset such cost increases, our results of operation would be harmed. In addition, even if we increase the prices of our products in response to increases in the cost of commodities or other cost increases, we may not be able to sustain our price increases. Sustained price increases may lead to declines in volume as competitors may not adjust their prices or customers may decide not to pay the higher prices, which could lead to sales declines and loss of market share. Our projections may not accurately predict the volume impact of of price increases, which could adversely affect our business, financial condition and results of operations. Energizer's manufacturing facilities or supply channels may be subject to disruption from events beyond our control. Operations of the ultimate parent company's manufacturing and packaging facilities worldwide may be subject to disruption for a variety of reasons, including work stoppages, cyber-attacks and other disruptions in information technology systems, demonstrations, disease outbreaks or pandemics acts of war or conflicts (including the ongoing conflict in Ukraine), terrorism, fire, earthquakes, flooding or other natural disasters, disruptions in in logistics, loss or impairment of key manufacturing sites, supplier capacity constraints, raw material and product quality or safety issues, industrial accidents or other occupational health and safety issues, availability of raw materials, and other regulatory issues, trade disputes between countries in which we have operations, such as the U.S. and China. There is also a possibility that third-party manufacturers, which produce a significant portion of certain of our products, could discontinue production with little or no advance notice, or experience financial problems or problems with product quality or timeliness of product delivery, resulting in manufacturing delays or disruptions, regulatory sanctions, product liability claims or consumer complaints. If a major disruption were to occur, it could result in delays in shipments of products to customers or suspension of operations. We maintain business interruption insurance to potentially mitigate the impact of business interruption, but such coverage may not be sufficient to offset the financial or reputational impact of an interruption. We may not be able to attract, retain and develop key personnel. Our future performance depends in significant part upon the continued service of our executive officers and other key personnel. The loss of the services of one or more of our executive officers or other key employees could have a material adverse effect on our business, prospects, financial condition and results of operations. Our success also depends on our continuing ability to attract, retain and develop highly qualified personnel. Competition for such personnel is intense, and there can be no no assurance that we can retain and motivate our key employees or attract and retain other highly qualified personnel in the future.
Future activities
The directors do not anticipate any significant changes to the activities of the company in the near future.
S172 statement
Sustainability at Energizer Energizer Trading Limited is part of the global Energizer Household and Autocare products Group and is a 100% owned subsidiary of Energizer Holdings Inc. (EHI), the ultimate parent company. The strategies of the company are aligned with the strategies of EHI. During 2021 EHI introduced a new purpose statement, 'We responsibly create products to make lives easier and more enjoyable', and also created a formal sustainability program covering environmental, social and governance (ESG) issues; appointed a global head of sustainability; created a cross-functional sustainability team; and developed a long-term sustainability strategy that runs through 2030 and beyond. The sustainability team conducted an extensive materiality assessment to better understand the sustainability impacts, risks and opportunities for Energizer Holdings across the organisation. Based on the results of this assessment three key focus areas were identified: Sustainable Packaging, Product Sustainability & Safety, Climate & Energy. The team developed multistep plans with goals and timelines to ensure meaningful progress is made toward these goals. As part of the Sustainable Packaging focus the company is investing in new packaging lines to support plastic free packaging in Europe, as can be seen by the increase in plant and machinery costs at the year end (see note 16). The new packaging lines have gone into use during fiscal year 2022. Product sustainability and Environmental responsibility are two of the five pillars of our ESG commitment alongside the remaining three pillars of Social responsibility, Community impact and Corporate governance. A full sustainability report can be found on Energizer Holdings Inc.'s website. Identifying our stakeholders Engaging with a wide range of stakeholders is essential to understanding, anticipating and taking action on risks and opportunities related to sustainability. Our stakeholders include our customers, consumers, colleagues, investors, governments and regulators, trade associations, non-governmental organisations (NGOs) and communities. For our customers, our ambition is to be a valued supplier across the markets we operate in. We work with them to help them meet consumer needs and support them in achieving their own sustainability goals. Energizer reaches consumers through many channels, including through our products, in-store, e-commerce and through our brand marketing communications. We are committed to providing products that can help consumers lead more sustainable lives, with the transparency they expect. We regularly engage with consumers through market research to understand their priorities. Our colleagues are a core stakeholder group for Energizer. Without them, we wouldn't have a business. We aim to retain and attract top talent in the industry, support them through learning and development opportunities, and provide a work environment where everyone is treated with respect, receives fair compensation and benefits, has work-life flexibility and has a manager who helps them to grow and thrive. Our two-way feedback process allows us to keep an open dialogue with our team members and ensure they have a positive, safe and fulfilling experience of working at Energizer. We regularly engage with existing and potential shareholders and investors to gauge their sustainability priorities. This helps build mutual understanding and provides a foundation for progress, so that we are focusing on the issues that they care about. Governments and regulators are a core stakeholder group for Energizer as they set the compliance framework for our business. Our company guidelines on engaging with governments are included in our Code of Conduct. We work with our suppliers and strive to ensure that the components and materials that go into our products are sourced responsibly. Our requirements from our suppliers are clearly stated in our Supplier Code of Conduct and we actively seek relationships with suppliers that share these values and that promote high standards within their own supply chains. Our business contributes to the economic livelihoods of many people and communities across our value chain. We create direct and indirect employment opportunities, and we make direct contributions through regional and community activities. We are members of many industry, business and trade associations whose activities are related to Energizer's brands and operations. These associations provide a forum to have a voice within the broader industry, while providing a platform for joint research, issue monitoring and sharing of best practices. For a list of trade associations where Energizer has made contributions see the Corporate Governance pillar section in our ESG commitment summary. We engage with NGOs and not-for-profits to help us better understand key issues, stay on top of best practices and achieve certification in some of the sustainability areas that are key priorities for us.
This report was approved by the board of directors on 26 October 2023 and signed on behalf of the board by:
Mrs S Hampton
Director
Registered office:
Sword House
Totteridge Road
High Wycombe
England
HP13 6DG
Energizer Trading Limited
Directors' Report
Year ended 30 September 2022
The directors present their report and the financial statements of the company for the year ended 30 September 2022 .
Directors
The directors who served the company during the year and up to the date of signing the financial statements were as follows:
Mrs K Dugan
(Appointed 24 January 2022)
Mrs K Gabrielson
(Appointed 24 January 2022)
Mrs S Hampton
(Appointed 24 January 2022)
Mr B Angelette
(Resigned 24 January 2022)
Mr J Drabik
(Resigned 24 January 2022)
Dividends paid and payable
The directors do not recommend the payment of a dividend.
Streamlined energy and carbon reporting
Unit
2022
2021
Emissions resulting from activities for which the company is responsible
tCO2e
50
154
Emissions resulting from the purchase of electricity by the company for its own use
tCO2e
858
905
----
-------
Total emissions
tCO2e
908
1,059
Total energy consumption
kWh
4,285,911
5,113,326
Intensity metric - tCO2e / employee
3.83
4.34
------------
------------
Methodologies for energy and emissions calculations
The company's ultimate parent uses a global ESG data management software to assist in traceability, record keeping and analysis of data. This software uses the Greenhouse Gas Protocol Methodology by the World Resources Institute.
Principal measures taken to increase energy efficiency
No specific actions have been taken by the company during the year to reduce emissions.
Qualifying third party indemnity provisions
During the year qualifying third party indemnity provisions for the directors were provided by Energizer Holdings Inc., the ultimate parent company. Such qualifying third party indemnity provisions remain in force as at the date of approval of the financial statements.
Going concern
The company meets its day-to-day working capital requirements through its bank facilities. The company was in a net current liability position at the year end and the directors have obtained a legally binding letter of support from the ultimate parent company to ensure it can service its debts and continue to operate as a going concern. This letter states that:
The Parent will provide financial support to the Company such that the Company is able to operate as a going concern and to settle its liabilities as they fall due. This financial support will include:
- Not seeking the repayment of amounts advanced to the Company by the Parent and/or other members of the Parent group unless adequate alternative financing has been secured by the Company; and
- Advancing further amounts to the Company as required by the Company.
The company continues to adopt the going concern basis in preparing its financial statements.
Disclosure of information in the strategic report
Disclosure of the future activities of the company, the directors' assessment of the company's principal risks and uncertainties and financial risk management as well as the S172 Statement are set out in the Strategic Report.
Directors' responsibilities statement
The directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable law and regulation. Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have prepared the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards, comprising FRS 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland", and applicable law). Under company law, 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 the financial statements, the directors are required to: - select suitable accounting policies and then apply them consistently; - state whether applicable United Kingdom Accounting Standards, comprising FRS 102 have been followed, subject to any material departures disclosed and explained in the financial statements; - make judgements and accounting estimates that are reasonable and prudent; and - 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 safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. The directors are also 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.
Directors' confirmations In the case of each director in office at the date the Directors' Report is approved: - so far as the director is aware, there is no relevant audit information of which the company's auditors are unaware; and - they have taken all the steps that they ought to have taken as a director in order to make themselves aware of any relevant audit information and to establish that the company's auditors are aware of that information.
Independent auditors
The auditors PricewaterhouseCoopers LLP have indicated their willingness to continue in office and a resolution concerning their reappointment will be proposed at the next board meeting.
This report was approved by the board of directors on 26 October 2023 and signed on behalf of the board by:
Mrs S Hampton
Director
Registered office:
Sword House
Totteridge Road
High Wycombe
England
HP13 6DG
Energizer Trading Limited
Independent Auditors' Report to the Members of Energizer Trading Limited
Year ended 30 September 2022
Report on the audit of the financial statements
Opinion In our opinion, Energizer Trading Limited's financial statements: - give a true and fair view of the state of the company's affairs as at 30 September 2022 and of its loss for the year then ended; - have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards, including FRS 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland", and applicable law); and - have been prepared in accordance with the requirements of the Companies Act 2006. We have audited the financial statements, included within the Annual Report, which comprise: the Statement of Financial Position as at 30 September 2022; the Statement of Comprehensive Income and the Statement of Changes in Equity for the year then ended; and the notes to the financial statements, which include a description of the significant accounting policies.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) ("ISAs (UK)") and applicable law. Our responsibilities under ISAs (UK) are further described in the Auditors' responsibilities for the audit of the financial statements section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Independence We remained independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, which includes the FRC's Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements.
Conclusions relating to going concern
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.
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.
However, because not all future events or conditions can be predicted, this conclusion is not a guarantee as to the company's ability to continue as a going concern.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
Reporting on other information
The other information comprises all of the information in the Annual Report other than the financial statements and our auditors' report thereon. The directors are responsible for the other information. Our opinion on the financial statements does not cover the other information and, accordingly, we do not express an audit opinion or, except to the extent otherwise explicitly stated in this report, any form of assurance thereon. In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If we identify an apparent material inconsistency or material misstatement, we are required to perform procedures to conclude whether there is a material misstatement of the financial statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report based on these responsibilities. With respect to the Strategic report and Directors' Report, we also considered whether the disclosures required by the UK Companies Act 2006 have been included. Based on our work undertaken in the course of the audit, the Companies Act 2006 requires us also to report certain opinions and matters as described below.
Strategic report and directors' report
In our opinion, based on the work undertaken in the course of the audit, the information given in the Strategic report and Directors' Report for the year ended 30 September 2022 is consistent with the financial statements and has been prepared in accordance with applicable legal requirements.
In light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we did not identify any material misstatements in the Strategic report and Directors' Report.
Responsibilities for the financial statements and the audit
Responsibilities of the directors for the financial statements As explained more fully in the Directors' Responsibilities Statement, the directors are responsible for the preparation of the financial statements in accordance with the applicable framework and for being satisfied that they give a true and fair view. The directors are also responsible for such internal control as they 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.
Auditors' 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 auditors' 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. Based on our understanding of the company and industry, we identified that the principal risks of non-compliance with laws and regulations related to compliance with the Companies Act 2006 and the tax legislation as applicable in the UK, and we considered the extent to which non-compliance might have a material effect on the financial statements. We evaluated management's incentives and opportunities for fraudulent manipulation of the financial statements (including the risk of override of controls), and determined that the principal risks were related to posting inappropriate journal entries and management bias in accounting estimates. Audit procedures performed by the engagement team included: - Testing of journal entries for appropriateness,testing of the accounting estimates (because of the risk of management bias), and evaluating the business rationale of significant transactions outside the normal course of business; and - Inquiry and discussions with management, including consideration of known or suspected instances of non-compliance with laws and regulations and fraud - Challenging assumptions made by management in its significant accounting estimates and judgements; There are inherent limitations in the audit procedures described above. We are less likely to become aware of instances of non-compliance with laws and regulations that are not closely related to events and transactions reflected in the financial statements. Also, the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery or intentional misrepresentations, or through collusion. A further description of our responsibilities for the audit of the financial statements is located on the FRC's website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditors' report. Use of this report
This report, including the opinions, has been prepared for and only for the company's members as a body in accordance with Chapter 3 of Part 16 of the Companies Act 2006 and for no other purpose. We do not, in giving these opinions, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing.
Other required reporting
Companies Act 2006 exception reporting Under the Companies Act 2006 we are required to report to you if, in our opinion: - we have not obtained all the information and explanations we require for our audit; or - adequate accounting records have not been kept by the company, or returns adequate for our audit have not been received from branches not visited by us; or - certain disclosures of directors' remuneration specified by law are not made; or - the financial statements are not in agreement with the accounting records and returns. We have no exceptions to report arising from this responsibility.
Gregory Briggs
(Senior Statutory Auditor)
For and on behalf of
PricewaterhouseCoopers LLP
Chartered Accountants & Statutory Auditors
Watford
26 October 2023
Energizer Trading Limited
Statement of Comprehensive Income
Year ended 30 September 2022
2022
2021
Note
€000
€000
Turnover
5
313,166
294,858
Cost of sales
( 247,544)
( 231,382)
Intercompany Royalties
( 324)
( 7,830)
---------
---------
Gross profit
65,298
55,646
Distribution costs
( 6,654)
( 8,145)
Administrative expenses
( 50,795)
( 44,374)
Other operating income
6
4,090
4,206
--------
--------
Operating profit
7
11,939
7,333
Income from shares in group undertakings
11
5,780
19,846
Interest receivable and similar income
12
46
10
Amounts written off investments
( 61,646)
Interest payable and similar expenses
13
( 1,776)
( 15,478)
--------
--------
(Loss)/profit before taxation
( 45,657)
11,711
Tax on (loss)/profit
14
( 2,335)
( 284)
--------
--------
(Loss)/profit for the financial year and total comprehensive income
( 47,992)
11,427
--------
--------
All the activities of the company are from continuing operations.
Energizer Trading Limited
Statement of Financial Position
30 September 2022
2022
2021
Note
€000
€000
€000
Fixed assets
Intangible assets
15
14,818
15,000
Tangible assets
16
24,324
24,765
Investments
17
137,717
199,363
---------
---------
176,859
239,128
Current assets
Inventories
18
122,732
88,690
Debtors: amounts falling due within one year
19
43,467
42,916
Debtors: amounts falling due after more than one year
19
215
Cash at bank and in hand
17,678
22,127
---------
---------
183,877
153,948
Creditors: amounts falling due within one year
20
( 196,150)
( 179,067)
---------
---------
Net current liabilities
( 12,273)
( 25,119)
---------
---------
Total assets less current liabilities
164,586
214,009
Creditors: amounts falling due after more than one year
21
( 1,394)
( 1,587)
Provisions for liabilities
Taxation including deferred tax
23
( 1,180)
( 2,418)
Other provisions
23
( 271)
( 271)
-------
-------
(1,451)
(2,689)
---------
---------
Net assets
161,741
209,733
---------
---------
Capital and reserves
Share premium account
27
197,809
197,809
Profit and loss account
( 36,068)
11,924
---------
---------
Total shareholders' funds
161,741
209,733
---------
---------
These financial statements were approved by the board of directors and authorised for issue on 26 October 2023 , and are signed on behalf of the board by:
Mrs S Hampton
Director
Company registration number: 2078560
Energizer Trading Limited
Statement of Changes in Equity
Year ended 30 September 2022
Share premium account
Profit and loss account
Total
€000
€000
€000
At 1 October 2020
497
497
Profit for the year
11,427
11,427
----
--------
--------
Total comprehensive income for the year
11,427
11,427
Issue of shares
197,809
197,809
---------
--------
---------
Total investments by and distributions to owners
197,809
197,809
At 30 September 2021
197,809
11,924
209,733
Loss for the year
( 47,992)
( 47,992)
---------
--------
---------
Total comprehensive income for the year
( 47,992)
( 47,992)
---------
--------
---------
At 30 September 2022
197,809
( 36,068)
161,741
---------
--------
---------
Energizer Trading Limited
Notes to the Financial Statements
Year ended 30 September 2022
1. General information
The company is a private company limited by shares, incorporated and registered in England and Wales. The address of the registered office is Sword House, Totteridge Road, High Wycombe, Bucks, HP13 6DG, England.
2. Statement of compliance
These financial statements have been prepared in accordance with applicable United Kingdom accounting standards, including Financial Reporting Standard 102 'The Financial Reporting Standard applicable in the United Kingdom and Republic of Ireland' ('FRS 102'), and with the Companies Act 2006.
3. Accounting policies
The following accounting policies have been applied consistently throughout the period in dealing with items which are considered material in relation to the company's financial statements.
Basis of preparation
The financial statements have been prepared on a going concern basis under the historical cost convention. The financial statements are prepared in euro, which is the functional currency of the entity. The preparation of financial statements in conformity with FRS 102 requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the company's accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements are disclosed in this note under the heading judgements and key sources of estimation uncertainty. Going concern The company meets its day-to-day working capital requirements through its bank facilities. The company was in a net current liability position at the year end the directors have obtained a legally binding letter of support from the ultimate parent company to ensure it can service its debts and continue to operate as a going concern. The company's forecasts and projections, taking account of reasonably possible changes in trading performance, show that the company should be able to operate within the level of its current facilities. The company therefore continues to adopt the going concern basis in preparing its financial statements. Disclosure exemptions The entity satisfies the criteria of being a qualifying entity as defined in FRS 102. Its financial statements are consolidated into the financial statements of Energizer Holdings Inc ., which can be obtained from Investor relations, Energizer Holdings Inc., 533 Maryville University Drive, St Louis, MO 63141, USA. As such, advantage has been taken of the following disclosure exemptions: - from the requirement to prepare a statement of cash flows as required by paragraph 3.17(d) of FRS 102; - from the requirement to disclose the key management personnel compensation in total as required by paragraph 33.7 of FRS 102; - from the requirement to present a reconciliation of the number of shares outstanding at the beginning and end of the period as required by paragraph 4.12(a)(iv) of FRS 102;and - from the requirement to present certain financial instrument disclosures, as required by sections 11 and 12 of FRS 102. Consolidation The company is a wholly owned subsidiary of Energizer UK Limited and of its ultimate parent, Energizer Holdings Inc., a company incorporated in the USA. It is included in the consolidated financial statements of Energizer Holdings Inc. which are publicly available and can be obtained from Investor Relations, Energizer Holdings Inc., 533 Maryville University Drive, St Louis, MO 63141, USA. Therefore the company is exempt by virtue of section 401 of the Companies Act 2006 from the requirement to prepare consolidated financial statements. Related party transactions The company has made use of the exemption contained in paragraph 33.1A of FRS 102, not to disclose related party transactions with other group companies, as it is a wholly owned subsidiary of a company, Energizer Holdings Inc., which prepares consolidated financial statements incorporating those transactions. Turnover Turnover represents invoiced amounts (stated net of value added tax) presented net of trade discounts and rebates, and is recognised when the goods are delivered to the customer which is when title to the product passes to the customer. The company offers rebate programs, primarily to its retail customers, designed to promote the sales of its products. Such programs require periodic payments and allowances based on estimated results and are recorded as a reduction to revenue. Other operating income Other operating income represents the income from recharges of regional costs to Energizer Group Limited, the European Principal, during the year. Other operating Income is recognised in the accounting period in which the services are rendered. Taxation The current income tax charge is calculated on the basis of tax rates and laws that have been enacted or substantively enacted by the balance sheet date in the countries where the company operates and generates income. Deferred tax is recognised in respect of all timing differences that have originated, but not reversed by the balance sheet date and which would give rise to an obligation to pay more or less taxation in the future. Deferred tax assets are recognised to the extent they are regarded as recoverable. They are regarded as recoverable to the extent that, on the basis of all available evidence, it is regarded more likely than not that there will be suitable taxable profits from which the future reversal of the underlying timing differences can be deducted. Deferred tax is measured on a non-discounted basis at the average tax rates that are expected to apply in the periods in which timing differences reverse, based on tax rates and laws substantively enacted at the balance sheet date. Software Computer software is stated at cost less accumulated amortisation and accumulated impairment losses. Software is amortised over its estimated useful life of seven years on a straight line basis. Goodwill Goodwill represents the excess of the fair value of the consideration given over the fair value of the identifiable net assets acquired. Amortisation is calculated so as to write off the cost of an asset, less its estimated residual value, over the useful economic life of that asset as follows: Goodwill - 10 - 15 years straight line
Vendor relationships
Vendor relationships are initially recorded at cost and are subsequently stated at cost less any accumulated amortisation and impairment losses. Vendor relationships are amortised over their estimated useful life of three years on a straight line basis.
Tangible assets
Tangible fixed assets are stated at historic purchase cost less accumulated depreciation. Cost includes the original purchase price of the asset and the costs attributable to bringing the asset to its working condition for its intended use. Depreciation is calculated so as to write off the cost of an asset, less its estimated residual value, over the useful economic life of that asset as follows: Land, Buildings & Leasehold improvements - 15 years straight line Plant & Machinery - 3 to 15 years straight line Fixtures & Fittings - 5 to 10 years straight line
Investments
Investments in subsidiaries are initially recorded at cost, and subsequently stated at cost less any accumulated impairment losses.
Cash and cash equivalents
Cash and cash equivalents includes cash in hand, deposits held at call with banks and bank overdrafts. Bank overdrafts, when applicable, are shown within borrowings in current liabilities.
Impairment of non-financial assets
At each balance sheet date non-financial assets not carried at fair value are assessed to determine whether there is an indication that the asset (or asset's cash generating unit) may be impaired. If there is such an indication the recoverable amount of the asset (or asset's cash generating unit) is compared to the carrying amount of the asset (or asset's cash generating unit). The recoverable amount of the asset (or asset's cash generating unit) is the higher of the fair value less costs to sell and value in use. Value in use is defined as the present value of the future cash flows before interest and tax obtainable as a result of the asset's (or asset's cash generating unit) continued use. These cash flows are discounted using a pre-tax discount rate that represents the current market risk-free rate and the risks inherent in the asset. If the recoverable amount of the asset (or asset's cash generating unit) is estimated to be lower than the carrying amount, the carrying amount is reduced to its recoverable amount. An impairment loss is recognised in the profit and loss account, unless the asset has been revalued when the amount is recognised in other comprehensive income to the extent of any previously recognised revaluation. Thereafter any excess is recognised in profit or loss.
Inventory - finished goods
Inventories are stated at the lower of cost and estimated selling prices less any further costs expected to be incurred to completion and sale. Inventories are recognised as an expense in the period in which the related revenue is recognised. Where necessary, provision is made for obsolete, slow moving and defective inventory.
Inventory - work in progress
Work in progress represents battery cells that are waiting to be packaged for resale and is valued on the basis of direct costs plus attributable overheads based on normal level of activity. Provision is made for any foreseeable losses where appropriate. No element of profit is included in the valuation of work in progress.
Finance leases and hire purchase contracts
Assets held under finance leases and hire purchase contracts are recognised in the statement of financial position as assets and liabilities at the lower of the fair value of the assets and the present value of the minimum lease payments, which is determined at the inception of the lease term. Any initial direct costs of the lease are added to the amount recognised as an asset. Lease payments are apportioned between the finance charges and reduction of the outstanding lease liability using the effective interest method. Finance charges are allocated to each period so as to produce a constant rate of interest on the remaining balance of the liability.
Provisions
Provisions are recognised where there is a present obligation that can be reliably estimated as a result of a past event and it is probable that an outflow of economic benefits will be required to settle the obligation.
Financial instruments
A financial asset or a financial liability is recognised only when the entity becomes a party to the contractual provisions of the instrument. Basic financial instruments are initially recognised at the transaction price, unless the arrangement constitutes a financing transaction, where it is recognised at the present value of the future payments discounted at a market rate of interest for a similar debt instrument.
Debt instruments are subsequently measured at amortised cost. Where investments in non-convertible preference shares and non-puttable ordinary shares or preference shares are publicly traded or their fair value can otherwise be measured reliably, the investment is subsequently measured at fair value with changes in fair value recognised in profit or loss. All other such investments are subsequently measured at cost less impairment.
Other financial instruments, including derivatives, are initially recognised at fair value, unless payment for an asset is deferred beyond normal business terms or financed at a rate of interest that is not a market rate, in which case the asset is measured at the present value of the future payments discounted at a market rate of interest for a similar debt instrument.
Other financial instruments are subsequently measured at fair value, with any changes recognised in profit or loss, with the exception of hedging instruments in a designated hedging relationship (see hedge accounting policy).
Financial assets that are measured at cost or amortised cost are reviewed for objective evidence of impairment at the end of each reporting date. If there is objective evidence of impairment, an impairment loss is recognised in profit or loss immediately.
For all equity instruments regardless of significance, and other financial assets that are individually significant, these are assessed individually for impairment. Other financial assets are either assessed individually or grouped on the basis of similar credit risk characteristics.
Any reversals of impairment are recognised in profit or loss immediately, to the extent that the reversal does not result in a carrying amount of the financial asset that exceeds what the carrying amount would have been had the impairment not previously been recognised.
Defined contribution plans
Contributions payable in the period in respect of services rendered are recognised as an expense. Differences between contributions payable in the period and contributions actually paid are shown as either accruals or prepayments in the balance sheet.
Share capital
Equity instruments issued by the company are recorded at the proceeds received, net of direct issue costs.
Business combinations
Business combinations relating to acquiring control of trade and assets to form one or more businesses are accounted for using the purchase method. The cost of a business combination is measured as the aggregate of the fair values, at the acquisition date, of assets given, liabilities incurred or assumed, and equity instruments issued plus any costs directly attributable to the business combination. Where control is achieved in stages, the cost of the business combination is the aggregate of the fair values of the assets given, liabilities incurred or assumed, and equity instruments issued at the date of each transaction in the series. Where the business combination requires an adjustment to the cost contingent on future events, the estimated amount of that adjustment is included in the cost of the combination at the acquisition date providing it is probable and can be measured reliably. Where it is not recognised at the acquisition date but subsequently becomes probable and can be measured reliably, the additional consideration is treated as an adjustment to the cost of the combination. If such expected future events do not occur, or the estimate needs to be revised, the cost of the business combination is adjusted accordingly. The unwinding of any discounting is recognised as a finance cost in profit or loss in the period it arises.
Dividends
Equity dividends are recognised when they become legally payable. Interim equity dividends are recognised when paid. Final equity dividends are recognised when approved by the shareholders at an annual general meeting.
4. Judgements and key sources of estimation uncertainty
The company makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are addressed below.
Impairment of debtors
The company makes an estimate of the recoverable value of trade and other debtors. When assessing impairment of trade and other debtors, management considers factors including the current credit rating of the debtor, the ageing profile of debtors and historical experience.
Rebates
The company offers a variety of programs, primarily to retail customers, designed to promote sales of our products. Such programs require periodic payments and allowances based on estimated results of specific programs and are recorded as a reduction to net sales. The company accrues, at the time of sale, the estimated total payments and allowances associated with each transaction. At the balance sheet date, the company reviews the level of actual activity for each promotion and updates the accrual as as required.
Recoverable amount of investments
The company makes estimates of the recoverable amounts of its investments in subsidiary undertakings based on the net assets of the subsidiaries or the discounted net present value of their future operating cash flows. The latter involves significant estimates and assumptions related to revenue growth rates and discount rates.
Intangible assets
The company considers whether its intangible assets are impaired. Where an indication of impairment is identified the company estimates the recoverable value of the assets. This requires estimation of the future cash flows that will be generated by these assets and also selection of appropriate discount rates in order to calculate the net present value of those cash flows.
Useful economic lives of intangible assets
The annual depreciation charge for intangible assets is sensitive to changes in the estimated useful economic lives and residual values of the assets. The useful economic lives and residual values are re-assessed annually. They are amended when necessary to reflect current estimates, based on technological advancement, future investments, economic utilisation and the physical condition of the assets.
5. Turnover
Turnover arises from:
2022
2021
€000
€000
Sale of goods - 3rd party customers
115,617
109,706
Sale of goods - intercompany
197,549
185,152
---------
---------
313,166
294,858
---------
---------
The turnover is attributable to the one principal activity of the company. An analysis of turnover by the geographical markets that substantially differ from each other is given below:
2022
2021
€000
€000
United Kingdom
64,355
63,075
Overseas - Modern Trade
176,829
159,978
Overseas - Distributors
63,413
59,153
Overseas - Developing Markets
8,569
12,652
---------
---------
313,166
294,858
---------
---------
6. Other operating income
2022
2021
€000
€000
Other operating income
4,090
4,206
-------
-------
Other operating income represents the income from recharges of regional costs to Energizer Group Limited, the European Principal, during the year.
7. Operating profit
Operating profit or loss is stated after charging/crediting:
2022
2021
€000
€000
Amortisation of intangible assets
3,662
1,224
Depreciation of tangible assets
3,527
4,828
Loss on disposal of tangible assets
25
Impairment of trade debtors
465
3
Foreign exchange differences (included within administrative expenses)
( 598)
461
Impairment of inventory (included within cost of sales)
5,546
2,451
Foreign exchange differences (included within cost of sales)
( 7,296)
3,945
-------
-------
8. Auditors' remuneration
The auditors remuneration in the current and prior years was borne by Energizer Group Limited. The remuneration in respect of the audit of the company was €247,000 (2021: €231,000), however no recharge was made to the company
9. Staff costs
The monthly average number of persons employed by the company during the year, including the directors, amounted to:
2022
2021
No.
No.
Production staff
237
244
----
----
The aggregate payroll costs incurred during the year, relating to the above, were:
2022
2021
€000
€000
Wages and salaries
10,189
9,812
Social security costs
1,016
909
Other pension costs
395
361
--------
--------
11,600
11,082
--------
--------
Energizer Group Limited, a fellow subsidiary undertaking, employs management, sales and administration staff who provide a service to the company, for which there is a recharge.
10. Directors' remuneration
The directors are all based in the US and are paid by the ultimate parent Energizer Holdings Inc.(EHI). EHI does not charge any UK entity for the services of these directors as they are paid predominantly for their services to EHI and not for their services as directors of the UK subsidiaries.
11. Income from shares in group undertakings
2022
2021
€000
€000
Dividends from group undertakings
5,780
244,605
Amounts written off investments
(224,759)
-------
---------
5,780
19,846
-------
---------
On 30 September 2022 the company received a €5,780,000 (£5,000,000) dividend from its subsidiary EEL.
12. Interest receivable and similar income
2022
2021
€000
€000
Interest on cash and cash equivalents
10
Interest from group undertakings
46
----
----
46
10
----
----
13. Interest payable and similar expenses
2022
2021
€000
€000
Interest due to group undertakings
1,606
15,246
Other interest payable and similar charges
170
232
-------
--------
1,776
15,478
-------
--------
14. Tax on (loss)/profit
Major components of tax expense
2022
2021
€000
€000
Current tax:
UK current tax expense
3,573
Deferred tax:
Origination and reversal of timing differences
( 1,238)
958
Impact of change in tax rate
( 674)
-------
----
Total deferred tax
( 1,238)
284
-------
----
Tax on (loss)/profit
2,335
284
-------
----
Reconciliation of tax expense
The tax assessed on the loss on ordinary activities for the year is higher than (2021: lower than) the standard rate of corporation tax in the UK of 19 % (2021: 19 %).
2022
2021
€000
€000
(Loss)/profit on ordinary activities before taxation
( 45,657)
11,711
--------
--------
(Loss)/profit on ordinary activities by rate of tax
( 8,675)
2,225
Effect of expenses not deductible for tax purposes
10,849
( 3,770)
Effect of capital allowances and depreciation
570
1,144
Other timing differences
( 409)
( 56)
Group relief surrendered not paid for
741
--------
--------
Tax on (loss)/profit
2,335
284
--------
--------
Factors that may affect future tax expense
The tax rate for the current year is the same as the prior year.
In the Spring Budget 2021, the UK Government announced that from 1 April 2023 the corporation tax rate would increase to 25% (rather than remaining at 19%, as previously enacted). This new law was substantively enacted on 24 May 2021. Deferred taxes at the balance sheet date have been measured using these enacted tax rates.
In the Autumn Statement in November 2022, the government confirmed the increase in corporation tax rate to 25% from April 2023.
15. Intangible assets
Goodwill
Software
Vendor relationships
Total
€000
€000
€000
€000
Cost
At 1 October 2021
20,134
282
20,416
Additions
Acquisitions through business combinations
664
2,821
3,485
Transfers
( 6)
( 6)
--------
----
-------
--------
At 30 September 2022
20,798
276
2,821
23,895
--------
----
-------
--------
Amortisation
At 1 October 2021
5,311
105
5,416
Charge for the year
1,234
30
2,398
3,662
Transfers
( 1)
( 1)
--------
----
-------
--------
At 30 September 2022
6,545
134
2,398
9,077
--------
----
-------
--------
Carrying amount
At 30 September 2022
14,253
142
423
14,818
--------
----
-------
--------
At 30 September 2021
14,823
177
15,000
--------
----
-------
--------
16. Tangible assets
Land, buildings and leasehold improvements
Plant and machinery
Fixtures and fittings
Assets Under Construction
Total
€000
€000
€000
€000
€000
Cost
At 1 October 2021
2,172
21,088
6,863
30,123
Additions
410
2,671
3,081
Transfers
( 28)
8,728
24
( 8,718)
6
-------
--------
----
-------
--------
At 30 September 2022
2,144
30,226
24
816
33,210
-------
--------
----
-------
--------
Depreciation
At 1 October 2021
310
5,048
5,358
Charge for the year
158
3,370
( 1)
3,527
Transfers
( 27)
22
6
1
-------
--------
----
-------
--------
At 30 September 2022
441
8,440
5
8,886
-------
--------
----
-------
--------
Carrying amount
At 30 September 2022
1,703
21,786
19
816
24,324
-------
--------
----
-------
--------
At 30 September 2021
1,862
16,040
6,863
24,765
-------
--------
----
-------
--------
Finance leases and hire purchase contracts
Included within the carrying value of tangible assets are the following amounts relating to assets held under finance leases or hire purchase agreements:
Short leasehold property
€000
At 30 September 2022
1,604
-------
At 30 September 2021
1,737
-------
17. Investments
Shares in group undertakings
€000
Cost
At 1 October 2021 and 30 September 2022
265,025
---------
Impairment
At 1 October 2021
65,662
Impairment losses
61,646
---------
At 30 September 2022
127,308
---------
Carrying amount
At 30 September 2022
137,717
---------
At 30 September 2021
199,363
---------
Subsidiaries, associates and other investments
Registered office
Class of share
Percentage of shares held
Subsidiary undertakings
Energizer Group Limited*
Sword House,
Ordinary
100
Totteridge Road,
High Wycombe,
Bucks, HP13 6DG.
Energizer Europe Limited*
Unit 2a,
Ordinary
100
Stephenson Industrial Estate,
Washington,
Tyne & Wear, NE37 3HW.
Energizer Group Sweden AB*
Drottningholmsvägen 22,
Ordinary
100
112 42, Stockholm.
Energizer Auto UK Limited*
Sword House,
Ordinary
100
Totteridge Road,
High Wycombe,
Bucks, HP13 6DG.
Energizer Auto UK Parent Limited**
Sword House,
Ordinary
100
Totteridge Road,
High Wycombe,
Bucks, HP13 6DG.
Energizer Brands II LLC**
1209 Orange Street,
Ordinary
100
Wilmington, New Castle ,
Delaware 19801
Energizer Brands UK Limited**
Sword House,
Ordinary
100
Totteridge Road,
High Wycombe,
Bucks, HP13 6DG.
*Direct investment
**Indirect investment
Energizer Auto UK Parent Limited is an investment holding company.
Energizer Europe Limited, Energizer Brands UK Limited and Energizer Brands II LLC are non trading entities.
The company performed an impairment review of its investments in subsidiaries at the year end and wrote off its investment in Energizer Group Limited as that subsidiary has net liabilities and is forecasted to make future losses.
18. Inventories
2022
2021
€000
€000
Raw materials
3,227
2,952
Work in progress
37,082
26,203
Finished goods
81,066
58,383
Maintenance, Repairs & Operating supplies
1,357
1,152
---------
--------
122,732
88,690
---------
--------
Inventory is stated net of a provision of €5,482,000 (2021: €2,506,000) for obsolete and slow moving products. The replacement cost of the inventory at 30 September 2022 is expected to be 16% to 20% higher than the balance sheet value as a result of the inflationary pressures on input costs such as freight and raw material commodities due to global supply chain disruption from the Covid 19 pandemic and the conflict in Ukraine.
19. Debtors
Debtors falling due within one year are as follows:
2022
2021
€000
€000
Trade debtors
29,516
22,005
Amounts owed by group undertakings
6,770
10,265
Prepayments and accrued income
4,175
7,187
Corporation tax repayable
774
Other debtors - VAT recoverable
2,005
2,522
Other debtors
1,001
163
--------
--------
43,467
42,916
--------
--------
Debtors falling due after one year are as follows:
2022
2021
€000
€000
Other debtors - VAT recoverable
215
----
----
All amounts owed by group undertakings are unsecured and are repayable on demand. Included within this amount are: Trading accounts with a number of affiliates, totalling €6,770,000 (2021: €10,265,000) that are settled on normal trading terms and are therefore interest free. Debtors falling due after one year in the prior year is VAT receivable from Switzerland.
20. Creditors: amounts falling due within one year
2022
2021
€000
€000
Trade creditors
29,135
28,197
Amounts owed to group undertakings
133,465
123,740
Accruals and deferred income
16,225
11,797
Corporation tax
2,816
Social security and other taxes
601
428
Obligations under finance leases and hire purchase contracts
154
149
Accrued Rebates
13,754
14,756
---------
---------
196,150
179,067
---------
---------
All amounts owed to group undertakings are unsecured and are repayable on demand. Included within this amount are: Trading accounts with a number of affiliates, totalling €82,904,000 (2021: €81,030,000) that are not settled on normal trading terms and therefore incur interest at commercial rates ranging between 1.50% and 1.73% during the year. Trading accounts with a number of affiliates, totalling €50,561,000 (2021: €42,710,000) that are settled on normal trading terms and are therefore interest free.
21. Creditors: amounts falling due after more than one year
2022
2021
€000
€000
Obligations under finance leases and hire purchase contracts
1,394
1,587
-------
-------
22. Finance leases and hire purchase contracts
The total future minimum lease payments under finance leases and hire purchase contracts are as follows:
2022
2021
€000
€000
Not later than 1 year
154
149
Later than 1 year and not later than 5 years
698
678
Later than 5 years
696
909
-------
-------
1,548
1,736
-------
-------
23. Provisions for liabilities
Deferred tax (note 24)
Bad debt provisions
Total
€000
€000
€000
At 1 October 2021
2,418
271
2,689
Additions
( 1,238)
( 1,238)
-------
----
-------
At 30 September 2022
1,180
271
1,451
-------
----
-------
In accordance with its previous commissionaire agreements Energizer Trading Limited bore the bad debt risk associated with the sales made to third party customers by its former commissionaire agents. Therefore a provision for bad debts is maintained by the company. This provision has not been offset against trade debtors as it relates to assets that are on the balance sheets of the former commissionaire agents and not the company's own balance sheet.
24. Deferred tax
The deferred tax included in the statement of financial position is as follows:
2022
2021
€000
€000
Included in provisions for liabilities (note 23)
1,180
2,418
-------
-------
The deferred tax account consists of the tax effect of timing differences in respect of:
2022
2021
€000
€000
Accelerated capital allowances
2,824
2,650
Accruals
( 179)
( 232)
Provisions
(1,449)
Pension plan obligations
( 16)
-------
-------
1,180
2,418
-------
-------
25. Employee benefits
Defined contribution plans
The amount recognised in profit or loss as an expense in relation to defined contribution plans was € 376,000 (2021: € 361,000 ).
26. Called up share capital
Issued, called up and fully paid
2022
2021
No.
No.
Ordinary shares of € 0.000022 each
50,000
1
50,000
1
Ordinary Class 2 shares of € 0.000024 each
2
2
Ordinary Class 3 shares of € 0.000023 each
504,998
12
504,998
12
---------
----
---------
----
555,000
13
555,000
13
---------
----
---------
----
The company's allotted share capital is 555,000 ordinary shares of £0.0000199984 each. The shares are denominated in sterling, however as the company adopted euros as its presentational and functional currency on 30 June 2011, the 50,000 shares issued at the time were translated into euros at the rate applicable on that date (1.1052). 2 new shares were issued during 2012 and were translated into euros at the rate applicable on the date of issue (1.2000). 499,998 new shares were issued on 29 September 2021 and were translated into euros at the rate applicable on the date of issue (1.17127). 5,000 new shares were issued on 30 September 2021 and were translated into euros at the rate applicable on the date of issue (1.17127).
27. Reserves
The Share Premium account represents the premium received in excess of the nominal value of the following issued shares :
2022 2021
€000 €000
At 1 October 197,809 -
1 ordinary €0.000023 share issued to Energizer UK Limited - 24,183
499,997 ordinary €0.000023 shares issued to Energizer UK Limited - 165,031
5,000 ordinary €0.000023 shares issued to Energizer UK Limited - 8,595
At 30 September 197,809 197,809
28. Business combinations
Acquisition of CAE Direct Imports Limited distribution business
The fair value of consideration paid in relation to the acquisition of CAE Direct Imports Limited distribution business is as follows:
€000
Intercompany loan notes ($10,040,000)
8,830
-------
The fair value of amounts recognised at the acquisition date in relation to CAE Direct Imports Limited distribution business are as follows:
Fair value
€000
Intangible assets acquired
2,821
Trade debtors acquired
3,858
Other debtors acquired
126
Cash and cash equivalents acquired
( 821)
Amounts due from group undertakings
4,985
Trade creditors assumed
( 2,182)
Other creditors assumed
( 522)
-------
8,265
Goodwill on acquisition
565
-------
8,830
-------
Acquisition of Custom Accessories Europe Limited distribution business
The fair value of consideration paid in relation to the acquisition of Custom Accessories Europe Limited distribution business is as follows:
€000
Intercompany loan notes ($115,000)
99
----
The fair value of amounts recognised at the acquisition date in relation to Custom Accessories Europe Limited distribution business are as follows:
Fair value
€000
Goodwill on acquisition
99
----
29. Controlling party
The company's immediate parent is Energizer UK Limited , a company registered in England and Wales. The company's ultimate parent company and controlling party is Energizer Holdings Inc ., a US company incorporated in the state of Missouri. The parent undertaking of the smallest and largest group for which financial statements are drawn up and of which the company is a member is Energizer Holdings Inc., incorporated in the USA. Copies of Energizer Holdings Inc. 's annual report can be obtained from Investor Relations, Energizer Holdings Inc., 533 Maryville University Drive, St Louis, MO 63141, USA.