Cabot Carbon Limited
Annual report and financial statements
for the year ended 30 September 2023
Registered Number 00462857
Cabot Carbon Limited
Contents
Page
Directors and advisors
1
Strategic report
2
Directors' report
4
Directors' responsibilities statement
6
Independent auditor's report
7
Profit and loss account
11
Balance sheet
12
Statement of changes in equity
13
Notes to the financial statements
14
Cabot Carbon Limited
Directors and advisors
Directors
S Knight
A Tucker
Secretary and registered office
A Tucker
Sully Moors Road
Sully
Penarth
CF64 5RP
United Kingdom
Auditor
Menzies LLP
5 The Crescent
Ashcombe House
Leatherhead
KT22 8DY
United Kingdom
Solicitors
Eversheds LLP
Senator House
85 Queen Victoria Street
London
EC4V 4JL
United Kingdom
Bankers
JP Morgan Chase Bank, N.A.
Chaseside
Bournemouth
BH7 7DB
United Kingdom
1
Cabot Carbon Limited
Strategic report
for the year ended 30 September 2023
The directors present their strategic report on the affairs of the company, together with the audited financial statements, for the year ended 30 September 2023.
Cabot Carbon Limited is a tolling manufacturer of hydrophilic and treated fumed silica.
Business review
There have not been any significant changes in the principal activity of the company in the financial year ended 30 September 2023.
As shown in the profit and loss account on page 11 of the financial statements, Cabot Carbon Limited's turnover for the financial year ended 30 September 2023 has decreased by 21% compared to 2022 (2022: 29.7% increase) due to cost reductions made in the year across the wider group.  The company is exclusively a tolling manufacturer on behalf of a European sister company.  Sales are for manufacturing services only and do not include any element of materials.  The profit for the year after taxation amounted to £1,685,000 (2022: £4,765,000).
Balance Sheet movement relates to a reduction in creditors due to the repayments of the Wells Fargo loan of £65,100,000 which is offset in lower debtors through the ICO payment revolving loan.
Key performance indicators
Given the straightforward nature of the business, the company's directors' opinion is that use of limited KPIs is useful for an understanding of the development, performance, and position of the business of Cabot Carbon Limited, as follows:
2023
2022
£'000 / %
£'000 / %
Turnover
18,123
22,941
Gross profit margin
14.8%
15.9%
EBITDA (Operating profit plus depreciation)
5,475
6,465
Health & safety – continued succession of days without a reportable incident
572
207
Environmental impact – days without a reportable incident
4,684
4,319
Turnover, Gross margin and EBITDA has been affected by the cost saving activites in the year across the wider group and utilities rates stabilisation. No Health & Safety or environmental incidents have occurred within the year.
The directors are satisfied with the performance for the year. The directors expect that the present level of activity will be sustained for the foreseeable future and are optimistic about the long-term prospects for growth.
Principal risks and uncertainties
The directors have considered the principal risks and uncertainties of the company and they consider these to be those detailed in the financial risk management disclosures below.
2
Cabot Carbon Limited
Strategic report (continued)
for the year ended 30 September 2023
Financial risk management
The company's operations expose it to a variety of financial risks that include the effects of changes on price risk, credit risk, liquidity risk and interest rate risk.  The company has in place a risk management programme that seeks to limit the adverse effects on the financial performance of the company by monitoring levels of debt finance and the related finance costs.
The policies set by the board of directors are implemented by the company's finance department.  The department has a policy and procedures manual that sets out specific guidelines to manage interest rate risk, credit risk and circumstances where it would be appropriate to use financial instruments to manage these. Currently there are no such instruments in place.
Credit risk
The company's sales are made almost exclusively to other Group companies which are not considered high risk.
Price risk
The company is exposed to commodity price risk as a result of its operations. However, given the size of the company's operations, the costs of managing exposure to commodity risk exceed any potential benefits.
Liquidity risk
The company actively maintains a mixture of long-term and short-term debt finance with other Group companies that is designed to ensure the company has sufficient available funds for operations and planned expansions.
Interest rate cash flow risk
The company has both interest-bearing assets and interest-bearing liabilities.  These relate entirely to inter-group borrowings which are largely dictated by the Group's interest rate management policies.
Economic Impacts
Cabot has maintained production throughout the year. The entity has accounted for higher costs, due to the impact of  inflation, through the budgeting process and flow through of actuals and looking at supplier efficiencies where possible.  Labour rates have been increased to reflect the cost of living impacts and travel has returned to normal following covid restrictions.
Future developments
The directors expect that the present level of activity will be sustained for the foreseeable future and are optimistic about the long-term prospects for growth. There are no significant future developments expected.
Approved by the Board of Directors on the …… 27 Mar 2024 ……….and signed on behalf of the Board by:
S E Knight
Director
3
Cabot Carbon Limited
Directors' report
for the year ended 30 September 2023
The directors present their annual report on the affairs of Cabot Carbon Limited (“the Company”), together with the financial statements and auditor's report, for the year ended 30 September 2023.
Dividends and transfers to reserves
No dividends were paid this year (2022: £6,580,000). The profit for the year of £1,685,000 (2022: £4,765,000) has been taken to reserves.
The directors consider the year-end financial position to be satisfactory. The balance sheet position of the company is acceptable and in line with the directors' expectations. Net assets at 30 September 2023 were £34,964,000 (2022: £33,279,000 (restated)).
Charitable contributions
Contributions made by the company during the year for charitable purposes amounted to £9,804 (2022: £4,997).
Directors
The directors who held office during the year and up to the date of signing this report were S Knight,
I Jovanovic (resigned 31st January 2023) and A Tucker. The Company has made qualifying third-party indemnity provisions for the benefit of its directors which were made during the year and remain in force at the date of this report.
Future developments
Details of future developments can be found in the Strategic Report on page 3 and form part of this report by cross-reference.
Financial risk
Details of financial risk can be found in the Strategic Report on page 3 and form part of this report by cross-reference.
Going concern
At 30 September 2023 the Company had net assets of £34,964,000 (2022: £33,279,000 (restated)). The directors have carried out a review of the company's financial position for a period of 12 months from the date of signing these financial statements and received a letter of support from its parent company, Cabot Corporation Inc.
Given the uncertainties surrounding the current economic environment, the company is reliant on Cabot Corporation Inc's ability to support them in the coming months. The letter of support has provided an acknowledgement whereby any amounts due to Cabot Corporation Inc. or its subsidiaries within the group will not be recalled for repayment until a time when sufficient funds are available.
Cabot Corporation Inc. monitors the company's financial situation on an ongoing basis and may take actions to refinance or other actions to financially support this wholly owned subsidiary if required in the future.
Accordingly, the going concern basis adopted for the preparation of the financial statements is considered appropriate.
4
Cabot Carbon Limited
Directors' report (continued)
for the year ended 30 September 2023
Auditor
Each of the persons who is a director of the company at the date when this report is approved confirms that:
so far as the director is aware, there is no relevant audit information of which the company's auditor is unaware; and
the director has taken all the 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 the provisions of s418 of the Companies Act 2006.
Under section 487(2) of the Companies Act 2006, Menzies LLP will be deemed to have been reappointed as auditors 28 days after these financial statements were sent to members or 28 days after the latest date prescribed for filing the accounts with the registrar, whichever is earlier.
Approved by the Board of Directors on the …………
27 Mar 2024
27 March 2024
……………. and signed on behalf of the Board by:
S E Knight
Director
5
Cabot Carbon Limited
Directors' responsibilities statement
for the year ended 30 September 2023
The directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year.  Under that law the directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law), including FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland”.  Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period. In preparing these financial statements, the directors are required to:
select suitable accounting policies and then apply them consistently;
make judgements and accounting estimates that are reasonable and prudent; 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 keeping adequate accounting records that are sufficient to show and explain the company's transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the Companies Act 2006.  They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
6
Cabot Carbon Limited
Independent auditor's report to the members of Cabot Carbon Limited
Opinion
We have audited the financial statements of Cabot Carbon Limited (the ‘company') for the year ended 30 September 2023 which comprise the Profit and Loss account, the Balance Sheet, the Statement of Changes in Equity and the related notes, including a summary of significant accounting policies.  The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland' (United Kingdom Generally Accepted Accounting Practice).
In our opinion the financial statements:
*
give a true and fair view of the state of the Company's affairs as at
30 September 2023
30 September 2023
and of its profit for the year then ended;
*
have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
*
have been prepared in accordance with the requirements of the Companies Act 2006.
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 Auditors' 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 United Kingdom, including the Financial Reporting Council'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 Auditors' 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
7
Cabot Carbon Limited
Independent auditor's report to the members of Cabot Carbon Limited (continued)
misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Opinion on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of the 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.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the Company and its environment obtained in the course of the audit, we have not identified material misstatements in the Directors' Report.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:
*
adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or
*
the financial statements are not in agreement with the accounting records and returns; or
*
certain disclosures of directors' remuneration specified by law are not made; or
*
we have not received all the information and explanations we require for our audit.
Responsibilities of directors
As explained more fully in the Directors' Responsibilities Statement set out on page 6, 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.
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 noncompliance 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:
8
Cabot Carbon Limited
Independent auditor's report to the members of Cabot Carbon Limited (continued)
*
The Company is subject to laws and regulations that directly affect the financial statements including financial reporting legislation. We determined that the following laws and regulations were most
significant;
*
The Companies Act 2006;
*
Financial Reporting Standard 102;
*
UK employment legislation;
*
UK tax legislation;
*
UK health and safety legislation; and
*
General Data Protection Regulations.
*
We assessed the extent of compliance with these laws and regulations as part of our procedures on the related financial statement items.
*
We understood how the company is complying with those legal and regulatory frameworks by, making
inquiries to management, those responsible for legal and compliance procedures and the company secretary. We corroborated our inquiries through our review of board minutes.
*
The engagement partner assessed whether the engagement team collectively had the appropriate competence and capabilities to identify or recognise noncompliance with laws and regulations. The assessment did not identify any issues in this area.
*
We assessed the susceptibility of the company's and financial statements to material misstatement, including how fraud might occur. Audit procedures performed by the engagement team included:
*
Identifying and assessing the design effectiveness of controls management has in place to prevent and detect fraud;
*
Understanding how those charged with governance considered and addressed the potential for override of controls or other inappropriate influence over the financial reporting process.
*
Challenging assumptions and judgements made by management in its significant accounting estimates; and identifying and testing journal entries, in particular any journal entries posted with unusual account combinations.
As a result of the above procedures, we considered the opportunities and incentives that may exist within the
organisation for fraud and identified the greatest potential for fraud in the following areas;
*
The application of inappropriate judgements or estimation to manipulate the Company's financial position
*
Posting of unusual journals and complex transactions; and
*
The use of management override of controls to manipulate results, or to cause the Company to enter into transactions not in its best interests.
Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading to a material misstatement in the financial statements or noncompliance with regulation. This risk increases the more that compliance with a law or regulation is removed from the events and transactions reflected in the financial statements, as we will be less likely to become aware of instances of noncompliance.  The risk is also greater regarding irregularities occurring due to fraud rather than error, as fraud involves intentional concealment, forgery, collusion, omission or misrepresentation.
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our Auditors' Report.
9
Cabot Carbon Limited
Independent auditor's report to the members of Cabot Carbon Limited (continued)
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 Auditors' 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.
Caroline Milton FCA (Senior Statutory Auditor)
for and on behalf of
Menzies LLP
Chartered Accountants
Statutory Auditor
Ashcombe House
5 The Crescent
Leatherhead
Surrey
KT22 8DY
Date: 28 Mar 2024
10
Cabot Carbon Limited
Profit and loss account
for the year ended 30 September 2023
Note
2023
2022
£'000
£'000
Turnover
3
18,123
22,941
Cost of sales
(15,445)
(19,292)
Gross profit
2,678
3,649
Administrative expenses
(309)
(114)
Other operating income/ (charges)
269
(905)
Operating profit/loss
5
2,638
2,630
Finance costs (net)
4
(856)
(494)
Profit before taxation
1,782
2,136
Tax credit/(charge) on profit
8
(97)
2,629
Profit for the financial year
1,685
4,765
  The notes on pages 14 to 27 form part of these financial statements.
All items included in the profit and loss account for 2023 and 2022 relate to continuing operations.
There has been no comprehensive income or expense in either reporting year other than that recorded in the profit and loss account. Accordingly a separate statement of comprehensive income is not presented.
11
Cabot Carbon Limited
Balance sheet
As at 30 September 2023
Restated
Note
2023
2022
£'000
£'000
Fixed assets
Tangible assets
9
14,843
14,242
14,843
14,242
Current assets
Stocks
10
1,818
1,307
Debtors: due within one year
11
21,238
87,201
Cash at bank and in hand
-
0
4
23,056
88,512
Creditors: amounts falling due within one year
12
(2,851)
(4,295)
Net current assets
20,205
84,217
Total assets less current liabilities
35,048
98,459
Creditors: amounts falling due after more than one year
13
(67)
(65,100)
Provision for Liabilities
14
(17)
(80)
Net assets
34,964
33,279
Capital and reserves
Called up share capital
16
350
350
Profit and loss account
16
34,614
32,929
Shareholder's funds
34,964
33,279
The notes on pages 14 to 27 form part of these financial statements.
The financial statements of Cabot Carbon Limited, registered number 00462857, were approved by the Board of Directors and authorised for issue on ……………
27 Mar 2024
27 March 2024
…………………. They were signed on its behalf by:
S E Knight
Director
12
Cabot Carbon Limited
Statement of changes in equity,
for year ended 30 September 2023
Called up share capital
Profit and loss account
Total
£'000
£'000
£'000
At 01 October 2021 (as previously stated)
350
35,836
36,186
Prior Year adjustment
(1,092)
(1,092)
At 01 October 2021 (as restated)
350
34,744
35,094
Profit for the financial year
-
4,765
4,765
Dividend Paid
(6,580)
(6,580)
-
(1,815)
(1,815)
Total comprehensive income
At 30 September 2022
350
32,929
33,279
1,685
Profit for the financial year
-
1,685
-
1,685
1,685
Total comprehensive income
At 30 September 2023
350
34,614
34,964
The notes on pages 14 to 27 form part of these financial statements.
13
Cabot Carbon Limited
Notes to the financial statements
for the year ended 30 September 2023
1
Accounting policies
The principal accounting policies are summarised below.  They have all been applied consistently throughout the current and preceding financial year.
General information and basis of accounting
Cabot Carbon Limited (“the Company”) is a private company limited by shares incorporated in the United Kingdom under the Companies Act 2006 and is registered in England and Wales.  The address of the registered office is previously given on page 1.  The nature of the company's operations and its principal activities are set out in the strategic report on pages 2 and 3.
The financial statements have been prepared under the historical cost convention and in accordance with Financial Reporting Standard 102 (FRS 102) issued by the Financial Reporting Council.
The functional currency of the company is considered to be pounds sterling because that is the currency of the primary economic environment in which the company operates. Monetary amounts in these financial statements are rounded to the nearest £.
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 its ultimate parent company, Cabot Corporation Inc., which may be obtained at Two Seaport Lane, Suite 1400, Boston MA 02210-2019, USA.
As such, advantage of the following disclosure exemptions available under paragraph 1.18 of FRS 102 were taken:
a) the requirements of section 7 Statement of cash flows;
b) the requirement of section 3 Financial Statement of Presentation paragraph 3.17 (d);
c) the requirements of section 33 Related party disclosures paragraph 33.7.
Fixed assets and depreciation
Tangible fixed assets are stated at cost, net of depreciation and any provision for impairment.  Depreciation is provided on all tangible fixed assets, other than freehold land, at rates calculated to write off the cost, less estimated residual value, of each asset on a straight-line basis over its expected useful life, as follows:
Freehold buildings
25 years
Plant and machinery
3-10 years
Assets in the course of construction are not depreciated.
Residual value represents the estimated amount which would currently be obtained from disposal of an asset, after deducting estimated costs of disposal, if the asset were already of the age and in the condition expected at the end of its useful life.
14
Cabot Carbon Limited
Notes to the financial statements
for the year ended 30 September 2023 (continued)
1
Accounting policies (continued)
Stocks
Stocks are stated at the lower of cost and estimated selling price less costs to sell, which is equivalent to the net realisable value. Provision is made for obsolete, slow-moving or defective items where appropriate. Stock is  costed based on using average cost.
Leased assets
Assets held under finance leases, hire purchase contracts and other similar arrangements where title remains with the lessor but which confer rights and obligations similar to those attached to owned assets, are capitalised as tangible fixed assets at the fair value of the leased asset (or, if lower, the present value of the minimum lease payments as determined at the inception of the lease) and are depreciated over the shorter of the lease terms and their useful lives.  The capital elements of future lease obligations are recorded as liabilities, while the interest elements are charged to the profit and loss account over the period of the leases to produce a constant periodic rate of interest on the remaining balance of the liability.
Rentals under operating leases are charged on a straight-line basis over the lease term, even if the payments are not made on such a basis.  Benefits received and receivable as an incentive to sign an operating lease are similarly spread on a straight-line basis over the lease term.
Borrowing costs
Borrowing costs which are directly attributable to the construction of tangible fixed assets are capitalised as part of the cost of those assets.  Capitalisation begins when both finance costs and expenditures for the asset are being incurred and activities that are necessary to get the asset ready for use are in progress.  Capitalisation ceases when substantially all the activities that are necessary to get the asset ready for use are complete.
Interest Income
Interest income is recognised when it is probable that the economic benefits will flow to the company and the amount of revenue can be measured reliably. Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that asset's net carrying amount on initial recognition
15
Cabot Carbon Limited
Notes to the financial statements
for the year ended 30 September 2023 (continued)
1
Accounting policies (continued)
Taxation
Current tax, including UK corporation tax and foreign tax, is provided at amounts expected to be paid (or recovered) using the tax rates and laws that have been enacted or substantively enacted by the balance sheet date.
Deferred tax is recognised in respect of all timing differences that have originated but not reversed at the balance sheet date where transactions or events that result in an obligation to pay more tax in the future or a right to pay less tax in the future have occurred at the balance sheet date.  Timing differences are differences between the company's taxable profits and its results as stated in the financial statements that arise from inclusion of gains and losses in tax assessments in periods different from those in which they are recognised in the financial statements.
Unrelieved tax losses and other deferred tax assets are recognised only to the extent that, on the basis of all available evidence, it can be regarded as more likely than not that there will be suitable taxable profits from which the future reversal of the underlying timing differences can be deducted.
When the amount that can be deducted for tax for an asset that is recognised in a business combination is less (more) than the value at which it is recognised, a deferred tax liability (asset) is recognised for the additional tax that will be paid (avoided) in respect of that difference.  Similarly, a deferred tax asset (liability) is recognised for the additional tax that will be avoided (paid) because of a difference between the value at which a liability is recognised and the amount that will be assessed for tax.
Deferred tax liabilities are recognised for timing differences arising from investments in subsidiaries and associates, except where the company is able to control the reversal of the timing difference and it is probable that it will not reverse in the foreseeable future.
Deferred tax is measured using the tax rates and laws that have been enacted or substantively enacted by the balance sheet date that are expected to apply to the reversal of the timing difference.  Deferred tax relating to property, plant and equipment measured using the revaluation model and investment property is measured using the tax rates and allowances that apply to sale of the asset.
Where items recognised in other comprehensive income or equity are chargeable to or deductible for tax purposes, the resulting current or deferred tax expense or income is presented in the same component of comprehensive income or equity as the transaction or other event that resulted in the tax expense or income.
Current tax assets and liabilities are offset only when there is a legally enforceable right to set off the amounts and the company intends either to settle on a net basis or to realise the asset and settle the liability simultaneously.
16
Cabot Carbon Limited
Notes to the financial statements
for the year ended 30 September 2023 (continued)
1
Accounting policies (continued)
Taxation (continued)
Deferred tax assets and liabilities are offset only if: a) the company has a legally enforceable right to set off current tax assets against current tax liabilities; and b) the deferred tax assets and deferred tax liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities which intend either to settle current tax liabilities and assets on a net basis, or to realise the assets and settle the liabilities simultaneously, in each future period in which significant amounts of deferred tax liabilities or assets are expected to be settled or recovered.
Foreign currencies
Transactions in foreign currencies are recorded at the rate of exchange at the date of the transaction.  Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are reported at the rates of exchange prevailing at that date.
Turnover
Turnover is stated net of VAT and trade discounts and is recognised when the significant risks and rewards are considered to have been transferred to the buyer.  Turnover from the supply of services within the tolling agreement for the group companies and represents the value of services provided under contracts to the extent that there is a right to consideration and is recorded at the fair value of the consideration received or receivable.
Employee benefits
The company operates a defined contribution scheme.  The amounts charged to the profit and loss account in respect of pension costs and other retirement benefits are the contributions payable in the year.  Differences between contributions payable in the year and contributions actually paid are shown as either accruals or prepayments in the balance sheet.
Interest Rates
The Company is exposed to SONIA interest rates in its group undertakings relating to intercompany debtors and creditors.
Financial instruments
(i) Financial assets and liabilities
All financial assets and liabilities are initially measured at transaction price (including transaction costs), except for those financial assets classified as at fair value through profit or loss.
Debt instruments which comply with all of the condition of FRS102 are classified as 'basic'. Instruments classified as 'basic' financial instruments are subsequently measured at amortised cost using the effective interest method.
17
Cabot Carbon Limited
Notes to the financial statements
for the year ended 30 September 2023 (continued)
1
Accounting policies (continued)
Financial instruments (continued)
(i) Financial assets and liabilities (continued)
Financial assets are derecognised when and only when the contractual rights to the cash flows from the financial asset expire or are settled, the Company transfers to another party substantially all of the risks and rewards of ownership of the financial asset, or the Company, despite having retained some, but not all, significant risks and rewards of ownership, has transferred control of the asset to another party. Financial liabilities are derecognised only when the obligation specified in the contract is discharged, cancelled or expires.
(ii) Equity Instruments
Equity instruments issued by the Company are recorded at the fair value of cash or other resources received or receivable, net of transaction costs.
Dividend Income
Dividend income from investments is recognised when the shareholders' rights to receive payment have been established (provided that it is probable that the economic benefits will flow to the Company and the amount of revenue can be measured reliably).
2    Critical accounting judgements and key sources of estimation uncertainty
In the application of the company's accounting policies, which are described in note 1, the directors are required to make judgements, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources.  The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant.  Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.
Due to the nature of the company, there are minimal sources of estimation uncertainty. The company measures estimates in high value items such as utilities and stock by using Accenture to provide  utilities estimates and stock is reviewed and provisioned against dependant on ageing of the items.
18
Cabot Carbon Limited
Notes to the financial statements
for the year ended 30 September 2023 (continued)
3
Turnover and revenue
All revenue in both the current and prior year originated in the United Kingdom on sales to a sister company in Western Europe. All revenue related to manufacturing services provided under a tolling agreement with the sister company involved.
4      Finance costs (net)
2023
2022
£'000
£'000
Interest receivable and similar income
996
1,339
Interest payable and similar charges
(1,852)
(1,833)
Total
(856)
(494)
Interest receivable and similar income
2023
2022
£'000
£'000
Interest receivable from other group companies
996
1,339
996
1,339
Total
Interest payable and similar charges
2023
2022
£'000
£'000
Interest payable to other group companies
-
666
Interest payable on finance leases
7
8
Interest payable on group credit facility
1,845
1,159
Total
1,852
1,833
19
Cabot Carbon Limited
Notes to the financial statements
for the year ended 30 September 2023 (continued)
5   Operating Profit
Operating Profit is stated after charging / (crediting):
2023
2022
£'000
£'000
Depreciation of tangible fixed assets
2,691
3,780
Loss on disposal of fixed assets
146
55
Foreign exchange gain/(loss)
280
839
Operating lease rentals
16
18
Audit fees payable
14
13
   There were no fees payable to Menzies LLP for non-audit services (2022: nil).
6
Staff numbers and costs
The average monthly number of employees (including executive directors) was:
2023
2022
Number
Number
Production
58
55
Administration
32
32
90
87
Restated
Their aggregate remuneration comprised:
2023
2022
£'000
£'000
Wages and salaries
4,764
4,936
Social security costs
490
504
Other pension costs (note 16)
314
323
5,568
5,763
20
Cabot Carbon Limited
Notes to the financial statements
for the year ended 30 September 2023 (continued)
7    Directors' remuneration and transactions
One director received remuneration for their services (2022: one).
The number of directors who:
2023
2022
Number
Number
Are members of a defined contribution pension scheme
1
1
8
Tax on profit
The tax charge comprises:
2023
2022
£'000
£'000
Current tax on profit
UK corporation tax
-
-
Adjustment in respect of prior year
-
(2,480)
Total current tax
-
(2,480)
Deferred taxation
Current year charge
97
(126)
Adjustment in respect of prior year
-
17
Effect of tax rate change on opening balance
-
(40)
Total deferred tax (see note 15)
97
(149)
Total tax charge/(credit) on profit
97
(2,629)
21
Cabot Carbon Limited
Notes to the financial statements
for the year ended 30 September 2023 (continued)
8
Tax on profit (continued)
The difference between the total tax charge shown above and the amount calculated by applying the standard rate of UK corporation tax of 22.01% ( the corporation tax rate of 25% came into force on the 1st April 23, the rate currently being used is time apportioned) (2022: 19%) to the profit before tax is as follows:
2023
2022
£'000
£'000
Profit before tax
1,782
2,136
Tax on profit at the rate of UK corporation tax of 22.01% (2022: 19%)
392
406
Effects of:
12
(40)
Change in rates
(307)
2,263
Adjustment to tax charge in respect of previous years
Total tax charge/(credit) for the year
97
(2,629)
9  Tangible fixed assets
Freehold land and buildings
Plant and machinery
Assets in the course of construction
                     Total
£'000
£'000
£'000
        £'000
Cost
At 1 October 2022
5,193
63,626
3,385
72,204
Additions
-
-
3,437
3,437
Disposals
(142)
(8,456)
-
(8,598)
Transfers from assets under construction
-
3,001
(3,001)
-
At 30 September 2023
5,051
58,171
3,821
67,043
Depreciation
At 1 October 2022
4,650
53,311
-
57,961
Charge for the year
56
2,635
-
2,691
Disposals
(142)
(8,310)
-
(8,452)
At 30 September 2023
4,564
47,636
-
52,200
Net book value
At 30 September 2023
487
10,535
3,821
14,843
At 30 September 2022
543
10,315
3,384
14,242
22
Cabot Carbon Limited
Notes to the financial statements
for the year ended 30 September 2023 (continued)
9  Tangible fixed assets (continued)
Finance leased asset net book values included above:
At 30 September 2023
-
83
-
83
At 30 September 2022
-
116
-
116
10  Stocks
2023
2022
£'000
£'000
Consumables
1,818
1,307
There is no material difference between the balance sheet value of stocks and their replacement cost.  The value includes a provision against slow moving stock of £1,695,000 (2022: £1,573,000).
11  Debtors
Restated
2023
2022
£'000
£'000
Amounts falling due within one year
Amounts owed by Cabot group undertakings
21,110
87,037
Prepayments and accrued income
128
164
Total
21,238
87,201
Amounts due from group undertakings are interest-bearing and based on 3 month SONIA rates for short term debts or SWAP rates using a mid market quote for long term debts. The effective interest rates used for the current year are 1.55 % to 5.37%. Amounts are repayable on demand.
23
Cabot Carbon Limited
Notes to the financial statements
for the year ended 30 September 2023 (continued)
12  Creditors – amounts falling due within one year
Restated
2023
2022
£'000
£'000
Trade creditors
897
1,725
Amounts due to associates
744
1,544
Obligations under finance leases
33
33
Accruals and deferred income
1,177
993
Total
2,851
4,295
Amounts owed to group undertakings are not interest bearing.
13   Creditors - amounts falling due after more than one year
2023
2022
£'000
£'000
Obligations under finance leases
67
100
Amounts owed to group undertaking
-
0
65,000
Total
67
65,100
Amounts owed to group undertakings are interest-bearing and based on 3 month SONIA rates. The effective interest rates used for the current year is 4.42%. Amounts owed to group undertakings have been settled within the year.
24
Cabot Carbon Limited
Notes to the financial statements
for the year ended 30 September 2023 (continued)
13   Creditors - amounts falling due after more than one year (continued)
Finance leases are repayable as follows:
2023
2022
£'000
£'000
Minimum lease payments
Within one year
37
39
In the second to fifth years inclusive
51
77
After five years
28
32
116
148
Less: future finance charges
(16)
(15)
Present value of lease obligations
100
133
Present value of minimum lease payments
Within one year (note 12)
33
33
In the second to fifth years inclusive (note 13)
37
60
After five years (note 13)
30
40
Present value of lease obligations
100
133
14   Deferred tax asset/liability
Deferred tax is provided as follows:
2023
2022
£'000
£'000
Deferred tax (asset)/ liability at 1 October
(80)
69
(Credit)/Charge to profit and loss account
97
(149)
              (80)
Deferred liability/ (asset) at 30 September
17
Deferred tax assets and liabilities are offset only where the company has a legally enforceable right to do so and where the assets and liabilities relate to income taxes levied by the same taxation authority on the same taxable entity.
25
Cabot Carbon Limited
Notes to the financial statements
for the year ended 30 September 2023 (continued)
14   Deferred tax asset/liability (continued)
The deferred tax liability comprises the following:
2023
2022
£'000
£'000
Differences between accumulated depreciation and capital allowances
17
(80)
15   Employee benefits
The company operates a defined contribution pension scheme for all qualifying employees. The total expense charged to the profit or loss account in the year ended 30 September 2023 was £314,000 (2022: £323,000). There were no amounts accrued or prepaid at the year-end (2022: nil).
16   Called up share capital and reserves
2023
2022
Ordinary shares of £1 each
£'000
£'000
Allotted, called up and fully paid 350,000 ordinary shares of £1 each
350
350
The company has one class of ordinary shares which carry no right to fixed income.
Reserves
The profit and loss reserve of £34,614,000 (2022: £32,929,000) represents cumulative profits or losses.
17    Prior Period Adjustment
There has been a prior period adjustment of £1,092,000 in 2022 to remove deferred tax on unutilised tax losses. This has reduced debtors and the profit and loss reserve brought forward by £1,092,000. This adjustment has no impact on tax.
Staff costs note has been restated for 2022 to reflect bonus payments that were not included in this note previously, this has no impact on the profit and loss or tax.
26
Cabot Carbon Limited
Notes to the financial statements
for the year ended 30 September 2023 (continued)
18   Financial commitments
Capital commitments at 30 September 2023 and 2022, all relating to plant and machinery, are as follows:
2023
2022
£'000
£'000
Contracted for but not provided for
50
80
At 30 September 2023 and 2022, the company had obligations under non-cancellable operating leases payable as follows:
        2023
        2022
  £'000
  £'000
  Within one year
15
14
Within two to five years
28
48
  Over five years
0
0
Total
      43
62
19  Ultimate and immediate holding company
The ultimate parent undertaking and controlling party is Cabot Corporation Inc., a company incorporated in the United States of America, which is the parent undertaking of the smallest and largest group to consolidate these financial statements.  Copies of the group financial statements can be obtained Cabot Corporation Inc., Two Seaport Lane, Suite 1400, Boston MA 02210-2019, USA which is also the entity's registered address.
The directors regard Cabot G.B. Limited, which is registered in England and Wales, as its immediate holding company.  Copies of the financial statements of Cabot G.B. Limited may be obtained from The Secretary, Cabot G.B. Limited, Sully Moors Road, Sully, Penarth CF64 5RP.
27
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