The directors present their annual report, together with the financial statements and auditor’s report of London Process Centre Ltd (‘the Company’) for the year ended 31 March 2023.
The directors have not prepared a Strategic Report in accordance with the provisions applicable to companies entitled to the small companies’ exemption.
The Company made a profit after tax for the year of £192,579 (2022: loss £44,634). The directors are satisfied with the Company’s performance in the year. The directors consider the progress and future prospects of the Company to be satisfactory.
The results of the Company for the year are shown on page 8. During the year an interim dividend of £120,000 was paid (2022: £201,630).
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
The Company has sufficient financial resources in the form of cash and working capital facilities to meet its financial obligations. It has access to funding from Mitsui Group Companies and the parent Company where necessary. As a consequence the directors have a reasonable expectation that the Company has adequate resources to continue in operational existence for the foreseeable future. Accordingly, the Financial Statements have been prepared on a going concern basis.
Liquidity risk is the risk that an entity will encounter difficulty in meeting obligations associated with financial liabilities. The Company monitors its risk of shortage of funds, and aims to mitigate liquidity risk by managing cash generated by its operations and its cash collection.
The Company manages its cash in order to meet its day to day operating and business needs.
Credit risk is the risk that a counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The Company is exposed to credit risk from its operating activities (primarily of trade receivables). However, the directors believe that the Company’s exposure to credit risk is not significant as the majority of trade receivables are due from the parent company. It is, and has been throughout the period under review, the Company’s policy that no derivative financial instrument contracts shall be undertaken.
Significant changes in the present nature of the business are not expected in the near future.
Each of the directors of the Company holding office at the date of approval of this report confirms that:
the director has taken all steps that he/she ought to have taken as a director in order to make himself/herself aware of any relevant audit information and to establish that the Company’s auditor is aware of that information.
This confirmation is given and should be interpreted in accordance with provisions of s418 of the Companies Act 2006.
Rickard Luckin Ltd have been reappointed as auditor for financial year 2023/24, and a resolution to appoint them has been approved.
This report has been prepared in accordance with the provisions applicable to companies entitled to the small companies exemption.
We have audited the financial statements of London Process Centre Ltd (the 'company') for the year ended 31 March 2023 which comprise the statement of comprehensive income, the statement of financial position, 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 International Financial Reporting Standards (IFRSs) as adopted by the United Kingdom.
Basis for opinion
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.
Other information
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 directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
the directors' report has been prepared in accordance with applicable legal requirements.
In the light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identified material misstatements in the 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 directors' remuneration specified by law are not made; or
we have not received all the information and explanations we require for our audit; or
the directors were not entitled to prepare the financial statements in accordance with the small companies regime and take advantage of the small companies' exemption in preparing the directors' report and take advantage of the small companies exemption from the requirement to prepare a strategic report.
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.
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.
The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below.
We identified areas of laws and regulations that could reasonably be expected to have a material effect on the financial statements from our: general commercial and sector experience; through verbal and written communications with those charged with governance and other management; and via inspection of the company’s regulatory and legal correspondence.
We discussed with those charged with governance and other management the policies and procedures regarding compliance with laws and regulations.
We communicated identified laws and regulations to our team and remained alert to any indicators of non-compliance throughout the audit, we also specifically considered where and how fraud may occur within the company.
The potential effect of these laws and regulations on the financial statements varies considerably.
Firstly, the company is subject to laws and regulations that directly affect the financial statements, including: the company’s constitution, relevant financial reporting standards; company law; tax legislation and distributable profits legislation and we assess the extent of compliance with these laws and regulations as part of our procedures on the related financial statement items.
Secondly the company is subject to many other laws and regulations where the consequences of non-compliance could have a material effect on the amounts or disclosures in the financial statements, for instance through the imposition of fines and penalties, or through losses arising from litigations. We identified the following areas as those most likely to have such an affect: employment legislation; health and safety legislation; data protection legislation; anti-bribery and anti-corruption legislation.
ISAs (UK) limit the required procedures to identify non-compliance with these laws and regulations to the procedures, and no procedures over and above those already noted are required. These limited procedures did not identify any actual or suspected non-compliance which laws and regulations that could have a material impact on the financial statements.
In relation to fraud, we performed the following specific procedures in addition to those already noted:
Challenging assumptions made by management in its significant accounting estimates in particular: the valuation of a right of use asset and lease liability.
Identifying and testing journal entries, in particular any entries posted with unusual nominal ledger account combinations, journal entries crediting cash or any revenue account;
Performing analytical procedures to identify unexpected movements in account balances which may be indicative of fraud; and
Ensuring that testing undertaken on both the performance statement, and the Statement of Financial Position includes a number of items selected on a random basis.
These procedures did not identify any actual or suspected fraudulent irregularity that could have a material impact on the financial statements.
Owing to the inherent limitations of an audit, there is an unavoidable risk that we may not have detected some material misstatements in the financial statements, even though we have properly planned and performed our audit in accordance with ISAs (UK). For example, the further removed non-compliance with laws and regulations is from the events and transactions reflected in the financial statements, the less likely the procedures that we are required to undertake would identify it. In addition, as with any audit, there remains a high risk of non-detection of irregularities, as these might involve collusion, forgery, intentional omissions, misrepresentation, or the override of internal controls. We are not responsible for preventing non-compliance with laws and regulations or fraud, and cannot be expected to detect non-compliance with all laws and regulations or every incidence of fraud.
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.
Use of our 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.
London Process Centre Ltd (the “Company”) is a private limited company incorporated in the United Kingdom under the Companies Act. The address of the registered office is Oakland Court, 26 Market Square, South Woodham Ferrers, Essex, CM3 5XA. The nature of the Company’s operations and its principal activities are set out in the directors' report on page 1.
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 £.
An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on the de-recognition of the asset is included in profit or loss in the period of de-recognition.
Other financial liabilities, including borrowings, trade payables and other short-term monetary liabilities, are initially measured at fair value net of transaction costs directly attributable to the issuance of the financial liability. They are subsequently measured at amortised cost using the effective interest method. For the purposes of each financial liability, interest expense includes initial transaction costs and any premium payable on redemption, as well as any interest or coupon payable while the liability is outstanding.
Financial liabilities are derecognised when, and only when, the company’s obligations are discharged, cancelled, or they expire.
Equity instruments issued by the company are recorded at the proceeds received, net of direct issue costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the company.
At inception, the company assesses whether a contract is, or contains, a lease within the scope of IFRS 16. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. Where a tangible asset is acquired through a lease, the company recognises a right-of-use asset and a lease liability at the lease commencement date. Right-of-use assets are included within property, plant and equipment, apart from those that meet the definition of investment property.
The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date plus any initial direct costs and an estimate of the cost of obligations to dismantle, remove, refurbish or restore the underlying asset and the site on which it is located, less any lease incentives received.
The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term. The estimated useful lives of right-of-use assets are determined on the same basis as those of other property, plant and equipment. The right-of-use asset is periodically reduced by impairment losses, if any, and adjusted for certain remeasurements of the lease liability.
The lease liability is initially measured at the present value of the lease payments that are unpaid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the company's incremental borrowing rate. Lease payments included in the measurement of the lease liability comprise fixed payments, variable lease payments that depend on an index or a rate, amounts expected to be payable under a residual value guarantee, and the cost of any options that the company is reasonably certain to exercise, such as the exercise price under a purchase option, lease payments in an optional renewal period, or penalties for early termination of a lease.
The lease liability is measured at amortised cost using the effective interest method. It is remeasured when there is a change in: future lease payments arising from a change in an index or rate; the company's estimate of the amount expected to be payable under a residual value guarantee; or the company's assessment of whether it will exercise a purchase, extension or termination option. When the lease liability is remeasured in this way, a corresponding adjustment is made to the carrying amount of the right-of-use asset, or is recorded in profit or loss if the carrying amount of the right-of-use asset has been reduced to zero.
The company has elected not to recognise right-of-use assets and lease liabilities for short-term leases of machinery that have a lease term of 12 months or less, or for leases of low-value assets including IT equipment. The payments associated with these leases are recognised in profit or loss on a straight-line basis over the lease term.
Amounts payable under operating leases for intangible assets are charged to profit or loss on a straight line basis over the term of the lease.
Exceptional items
Exceptional items of expenditure are separately disclosed where they are material and relevant to an understanding of financial performance.
Dividends
An interim dividend is declared and paid by the directors subject to the member’s approval to ensure prompt return on investment in the form of receipt of dividends by the parent company. Each fiscal year, the retained earnings balance held is reviewed in respect of the budgeted cash flow position and the debt-to-equity position and a figure for the annual dividend payable by the company to Mitsui & Co. Europe Plc is determined
The preparation of financial statements requires management to make judgements, estimates and assumptions that affect the amounts reported for assets and liabilities as at the reporting date and the amounts reported for revenues and expenses during the year. However, the nature of estimation means that actual outcomes could differ from those estimates.
In the process of applying the Company's accounting policies, management has made the following judgements and estimations which have the most significant effect on the amounts recognised in the financial statements:
Revenue recognised in the Statement of Comprehensive Income is analysed as follows:
The Company's revenue is attributable to 87% (2022 - 85%) United Kingdom, and 13% (2022 - 15%) to other countries.
Management services are provided on an ongoing basis with service obligations meet as time is spent providing these services. Invoices are raised monthly with 30 days payment terms.
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During the 2022 year a goodwill impact assessment was performed and as a result of this a resolution was passed by the board to fully impair the remaining goodwill of £162,500. Following the resignation of the former Managing Director, the directors consider that the goodwill relating to the acquisition of Liberty Document Services Ltd is fully impaired.
Staff costs
None of the directors received remuneration from the Company during the year, however the Company pays a management fee to the parent in regards directors’ remuneration (refer to note 21 for details).
The average number of employees in the year were:
Their aggregate remuneration comprised:
See note 21 for further details.
The tax expense in the Statement of Comprehensive Income for the year is higher than the standard rate of corporation tax in the UK of 19% (2020: 19%). The differences are reconciled below:
All figures included above under the column 'Leasehold land and buildings' relate to right-of-use assets recognised as a result of applying the Standard IFRS 16 - Leases.
The following are the major deferred tax liabilities and assets recognised by the company and movements thereon during the current and prior reporting period.
Deferred tax assets and liabilities are offset in the financial statements only where the company has a legally enforceable right to do so.
Deferred tax assets relate to accelerated capital allowances (ACAs), and are expected to be received after more than one year.
Trade receivables are denominated in pounds sterling and due from the parent and other group companies (see note 21).
Trade receivables are non-interest bearing and are generally on 30 days’ terms. There is no provision for impairment as the parent and fellow group undertakings have not defaulted on its transaction obligations, and there is no expectation of a default.
Receivables to be recovered no more than twelve months after the reporting date total £1,089,901 (2022: £937,419) and more than twelve months after the reporting date £7,500 (2022: £7,500).
All trade and other payables are expected to be settled no more than twelve months after the reporting date.
Lease liabilities are classified based on the amounts that are expected to be settled within the next 12 months and after more than 12 months from the reporting date, as follows:
The fair value of the company's lease obligations is approximately equal to their carrying amount.
Practical Expendient
The company has made use of the practical expedient set out in IFRS 16.C10. allowing the application of a single discount rate to all leases, as they have substantially similar characteristics.
Weighted average lessee’s incremental borrowing rate applied
The borrowing rate applied to lease liabilities recognised in the statement of financial position at the date of initial application was 1.9144% , and the borrowing rate for extended lease liabilities at the date 31 March 2022 was 2.0087%, which is the interest rate set by Mitsui Europe, for internal borrowings within the group.
The Company’s financial instruments comprise cash, trade and other receivables, trade and other payables from the parent. The fair value of the Company’s financial assets and liabilities approximates to their book value.
The Company’s financial instruments arise directly from the Company's operations and to finance its activities.
The Company’s activities do not expose the Company to significant interest rate risk, foreign currency risk, or price risk. The Company is exposed to credit risk and liquidity risk. Refer to the Directors’ Report for further details.
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Company. The Company has adopted a policy of only dealing with creditworthy counterparties as a means of mitigating the risk of financial loss from defaults. The Company’s main counterparty is Mitsui & Co Europe PLC which is the parent company.
The Company’s maximum credit risk exposure is summarised as follows:
Assets 2023 2022
£'000 £'000
Trade and other receivables 1,014 883
Cash and cash equivalent 153 216
It is, and has been throughout the period under review, the Company’s policy that no derivative financial instrument contracts shall be undertaken.
The Company has one class of ordinary shares which carry one vote and one right to fixed income.
The primary objective of the Company’s capital management is to maintain healthy capital ratios in order to support its business and maximise shareholder value. The Company manages its capital structure, and makes adjustments to it, in light of changes in economic conditions.
The capital structure of the Company consists of equity attributable to the parent company comprising issued capital as disclosed in Note 17 and retained earnings.
A dividend of £120,000 (48 pence per ordinary share) was paid in January 2023 to Mitsui & Co.Europe Plc.
The Company is controlled by Mitsui & Co Europe PLC which owns all of the issued share capital. The revenue of the Company is derived from the parent company and other group companies for services rendered by the Company. Transactions entered into, and trading balances outstanding at 31 March 2023 with other related parties are as follows:
No transactions were carried out with the directors or other related parties.
Key management personnel
Key management personnel are the Directors and other senior employees of the Company, who are seconded from Mitsui & Co Europe PLC and paid by Mitsui & Co Europe PLC. Total compensation paid to key management personnel in respect of services to London Process Centre Ltd was £276,140 (2022: £302,569). None of the directors received remuneration from the Company during the current or previous year.
Most of the key management personnel of the Company also provide services to other entities within the group, for this year and the preceding year.
The company's immediate parent is Mitsui & Co Europe PLC, a company incorporated in the United Kingdom.
The company's ultimate parent and controlling party and parent of the largest and smallest group in which the company's results are consolidated is Mitsui & Co Ltd, a company incorporated in Japan. Copies of the group financial statements are available from:
Mitusi & Co Ltd
Nippon Life Marunouchi Garden Tower
1-3, Marunouchi 1-chrome
Chiyoda-ku
Tokyo 100-8631, Japan