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Registration number: SC618673

Pack34 Limited

Annual Report and Consolidated Financial Statements

for the Year Ended 31 December 2023

 

Pack34 Limited

Contents

Company Information

1

Strategic Report

2 to 4

Director's Report

5

Independent Auditor's Report

6 to 9

Consolidated Income Statement

10

Consolidated Statement of Comprehensive Income

11

Consolidated statement of Financial Position

12

Statement of Financial Position

13

Consolidated Statement of Changes in Equity

14

Consolidated Statement of Cash Flows

15

Notes to the Financial Statements

16 to 34

 

Pack34 Limited

Company Information

Director

Mr James Alexander Urquhart

Registered office

Kemback Street
Dundee
DD4 6ET

Solicitors

Thorntons Law LLP
Whitehall House
33 Yeaman Shore
DUNDEE
DD1 4BJ

Bankers

Royal Bank of Scotland plc
5 Church Street
Sheffield
S1 1HF

Auditors

Walker Dunnett & Co
Auditor
29 Commercial Street
Dundee
DD1 3DG

 

Pack34 Limited

Strategic Report for the Year Ended 31 December 2023

The Director presents his strategic report for the year ended 31 December 2023.

Principal activity

The principal activity of the Group is the manufacture of high-grade flexible packaging materials.

Fair review of the business

The following strategic report provides an overview of the financial performance, key trends, and strategic recommendations for Pack34 Limited . This report aims to assist the group's management in making informed decisions to enhance profitability and sustainability in a highly competitive market.

Financial Performance Analysis

We have continued to grow the business year on year for the last four years with turnover at £11,316,214 in 2020, £13,016,736 in 2021, £15,649,937 in 2022 and now £16,230,190 in 2023. This was inline with our original forecast for 2023. The main reasons for this continued improvement were the ongoing drive with sustainability with a number of customers opting to change to more expensive materials in their drive towards net zero. We also continue to bring on new customers which were in the main, a result of the desire to onshore their products from mainly, the far east . It is good to see that there is a strong desire to continue to look at the benefits of security of supply and buying British. We will continue to promote that benefit alongside our innovative track record to try to maintain the same upward trend through 2024. Our customer and product base is quite diverse which has helped us to stay on an upward trend where one market may slow down another surges ahead. We will continue to look at other new markets and product ranges. Having the ability to offer more than one printing process works really well for us and is a strong selling point.

Cost Control

The key costs within the business have always been energy and raw materials. Both of these have been difficult to manage and control but through cost savings, improvements in efficiencies we have managed to, in the main, offset those costs. We do our utmost to keep these in balance and remain competitive against our peers. We are once againworking on cost reduction projects to remain competitive in 2024.

Profitability

We are happy to report that for the fifth year in succession we have continued to make incrementally improved profits. It is testament to the team within the business that with focus and determination we have managed to gradually increase our profits. This has been no small feat considering the volatility of external forces the company and in general the industry, has faced over the last few years.
Operating profit over the last 4 years has gradually improved from £308,621 in 2020, £561,687 in 2021, £882,924 in 2022 to £1,218,863 in 2023.

Our patents have not yet produced any sales, we believe mainly due to the lingering effects of covid, however we now see a real appetite for innovation from both potential and existing customers. The patents and innovations have however helped us generate sales of more standard products as customers want to work with companies that offer areal point of difference. This is an area where the business excels. There has been recent work on another project that we hope to patent in 2024 which will deliver sales late in the year and ongoing thereafter.


 

 

Pack34 Limited

Strategic Report for the Year Ended 31 December 2023

Defined Benefit Pension liability (also see note 20)

The defined benefit pension liability has reduced to £4,380,000. We have used the recommended discount rate in this current year for the calculation of the pension liability.

The company has a recovery plan of over 20 years and all repayments have been made as they fall due. The liability is a figure taken at a certain point in time taking into account discount and inflation rates and it changes day to day. We have agreed a recovery plan which aims to eliminate this shortfall by 30 April 2046.

The Company's PPF levy has been set at one of the highest bands for many years. However, due to the improving company financial performance, the levy band is now about a quarter of the fee it has been in historic years.

The financial performance of this company is such that at current profit levels, the underfund will comfortably be paid with excess funds available for business growth. The company also expects, taking the above information into account that the pension liability will decrease in the 2024 year, even though there are various factors which can affect this.

 

Pack34 Limited

Strategic Report for the Year Ended 31 December 2023

Principal risks and uncertainties

We expect 2024 to be a more challenging year than 2023. We still see concerns and volatility within the supply chain, the latest of those relating to the issues in the Red Sea. We do see continued opportunities to bring business back to the UK and real opportunities within sustainable packaging going forward as that comes to the forefront with many customers. We expect to launch some ground breaking products in 2024 relating to that and will activelypromote it. We have several trials at varying stages in completely new markets for us, which help expand our portfolio even further. We are always keen to accept a challenge and diversify further..

We aim to outperform the 2023 result by doing the following;

Cost Saving Projects with deliverable targets will help us to remain competitive.

Improve operational efficiency: Streamline production processes further, reduce waste, and optimise resource allocation to enhance productivity and reduce costs.

Enhance our product portfolio: Identify opportunities to expand the product range, incorporating sustainable and eco-friendly packaging options to meet changing customer demands.

Strengthen customer relationships: Foster long-term partnerships with key customers, providing tailored solutions, excellent customer service, and responsiveness to gain a competitive edge.

Continue to Invest in research and development: Allocate resources to research and development efforts, focusing on innovative packaging solutions and staying ahead of emerging industry trends.

Expand market presence: Explore new markets and target industries that show potential for growth, while diversifying the customer base to reduce dependency on a single segment.

Embrace sustainability: Develop and implement sustainable products to help our customers aspirations.

Impact of Brexit related risks

Brexit still remains a factor, with increases in costs and supply chain disruptions our biggest risk at present.

Future developments

Projects to develop sustainable packaging solutions for our customers is still a high priority and will be reinstated as soon as coronavirus is under control.

We continue to develop new and exciting products which we hope to see launch at some point in 2024. We continue to protect these through intellectual property and patent applications. R&D is absolutely key to this business. We aim to be the go to company for new packaging ideas.

Approved and authorised by the director on 26 July 2024
 

.........................................
Mr James Alexander Urquhart
Director

 

Pack34 Limited

Director's Report for the Year Ended 31 December 2023

The Director presents his report and the for the year ended 31 December 2023.

Director of the Group

The Director who held office during the year was as follows:

Mr James Alexander Urquhart

Disclosure of information to the auditor

The Director has taken steps that he ought to have taken as a Director in order to make himself aware of any relevant audit information and to establish that the Company's auditor is aware of that information. The Director confirms that there is no relevant information that he knows of and of which he knows the auditor is unaware.

Approved and authorised by the director on 26 July 2024
 

.........................................
Mr James Alexander Urquhart
Director

 

Pack34 Limited

Independent Auditor's Report to the Members of Pack34 Limited

Opinion

We have audited the financial statements of Pack34 Limited (the 'parent Company') and its subsidiaries (the 'Group') for the year ended 31 December 2023, which comprise the Consolidated Income Statement, Consolidated Statement of Comprehensive Income, Consolidated statement of Financial Position, Statement of Financial Position, Consolidated Statement of Changes in Equity, Consolidated Statement of Cash Flows, and Notes to the Financial Statements, 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 Group's and the parent Company's affairs as at 31 December 2023 and of the Group's 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 auditor responsibilities for the audit of the financial statements section of our report. We are independent of the Group 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 Director's 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 Group's ability to continue as a going concern for a period of at least twelve months from when the original financial statements were authorised for issue.

Our responsibilities and the responsibilities of the Director with respect to going concern are described in the relevant sections of this report.

Other information

The Director is responsible for the other information. The other information comprises the information included in the annual report, other than the financial statements and our auditor’s report thereon. 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.

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 such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in 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 in this regard.

 

Pack34 Limited

Independent Auditor's Report to the Members of Pack34 Limited

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 Strategic Report and Director's Report for the financial year for which the financial statements are prepared is consistent with the financial statements; and

the Strategic Report and Director's Report have been prepared in accordance with applicable legal requirements.

Matters on which we are required to report by exception

In the light of our knowledge and understanding of the Company and its environment obtained in the course of the audit, we have not identified material misstatements in the Strategic Report and the Director's 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 by the parent Company, or returns adequate for our audit have not been received from branches not visited by us; or

the parent Company financial statements are not in agreement with the accounting records and returns; or

certain disclosures of Director's remuneration specified by law are not made; or

we have not received all the information and explanations we require for our audit.

Responsibilities of the Director

As explained more fully in the [set out on page ], the Director is 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 Director determines 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 Director is 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 Director either intends to liquidate the Company or to cease operations, or have no realistic alternative but to do so.

Auditor Responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:

 

Pack34 Limited

Independent Auditor's Report to the Members of Pack34 Limited

• Enquiry of management and those charged with governance around actual and potential litigation and claims.
• Enquiry of entity staff in compliance functions to identify any instances of non-compliance with laws and regulations.
• Reviewing financial statement disclosures and testing to supporting documentation to assess compliance with applicable laws and regulations.
• Auditing the risk of management override of controls, including through testing journal entries and other adjustments for appropriateness, and evaluating the business rationale of significant transactions outside the normal course of business.

The specific laws and regulations that have a specific impact on this company and the accounting preparation of the
company accounts will include:
• The Companies Act 2006
• FRS 102
• UK Corporate tax laws, which includes the plastic packaging tax, which is a specific tax for this industry.
• GDPR laws
• Health and Safety law
• Environmental laws and the disposal of waste material (as the manufacturing process use various chemicals)

We have assessed the information in the audit and have not found any significant issues with non-compliance with
laws and regulations.

The main specific risks relating to audit of the financial statements are income and expense recognition, harder to
audit sections such as work in progress and finished goods and accuracy and measurement of deferred tax asset and
the defined pension deficit. Specific procedures to help verify the accuracy of these sections have been used in each
case as was needed. These risks have been highlighted and have been cleared

This business has little risk of errors and fraud even though management have the potential of including incorrect
journal entries. As a result of the size of the business we can increase % of testing journal entries to reduce risk of
irregularities to very low especially those near the year-end. No irregularities have been found in the audit of this
company.

A further description of our responsibilities is available on the Financial Reporting Council’s website at:
www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.

A further description of our responsibilities is available on the Financial Reporting Council’s website at: 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.

 

Pack34 Limited

Independent Auditor's Report to the Members of Pack34 Limited

......................................
Danie van Niekerk (Senior Statutory Auditor)
For and on behalf of Walker Dunnett & Co , Statutory Auditor

29 Commercial Street
Dundee
DD1 3DG

26 July 2024

 

Pack34 Limited

Consolidated Income Statement for the Year Ended 31 December 2023

Note

2023
£

2022
£

Turnover

3

16,230,190

15,649,937

Cost of sales

 

(13,568,433)

(13,567,517)

Gross profit

 

2,661,757

2,082,420

Distribution costs

 

(283,256)

(361,675)

Administrative expenses

 

(1,163,818)

(852,916)

Other operating income

4

4,180

14,005

Operating profit

5

1,218,863

881,834

Costs relating to Net Benefit Pension Scheme

 

(318,000)

(232,000)

Interest payable and similar expenses

6

(60,560)

(62,292)

   

(378,560)

(294,292)

Profit before tax

 

840,303

587,542

Tax on profit

10

(107,360)

824,860

Profit for the financial year

 

732,943

1,412,402

Profit/(loss) attributable to:

 

Owners of the Company

 

732,943

1,412,402

 

Pack34 Limited

Consolidated Statement of Comprehensive Income for the Year Ended 31 December 2023

2023
£

2022
£

Profit for the year

732,943

1,412,402

Surplus on property, plant and equipment revaluation

32,862

151,420

Deficit on revaluation of other assets

(26,289)

(7,142)

Other actuarial pension adjustments

1,100,000

130,811

Remeasurement loss on defined benefit pension schemes

(239,000)

(321,000)

867,573

(45,911)

Total comprehensive income for the year

1,600,516

1,366,491

Total comprehensive income attributable to:

Owners of the Company

1,600,516

1,366,491

 

Pack34 Limited

(Registration number: SC618673)
Consolidated statement of Financial Position as at 31 December 2023

Note

2023
£

2022
£

Fixed assets

 

Intangible assets

11

218,182

274,107

Tangible assets

12

1,542,071

1,636,707

 

1,760,253

1,910,814

Current assets

 

Stocks

13

2,058,990

1,718,029

Debtors

14

6,417,433

6,964,246

Cash at bank and in hand

 

83,610

51,691

 

8,560,033

8,733,966

Creditors: Amounts falling due within one year

16

(3,931,455)

(4,802,858)

Net current assets

 

4,628,578

3,931,108

Total assets less current liabilities

 

6,388,831

5,841,922

Creditors: Amounts falling due after more than one year

16

(132,119)

(340,726)

Net assets excluding pension asset/(liability)

 

6,256,712

5,501,196

Annual adjustment relating to 20 year long term defined benefit
pension liability liability

17

(4,380,000)

(5,225,000)

Net assets

 

1,876,712

276,196

Capital and reserves

 

Called up share capital

18

1

1

Revaluation reserve

132,365

152,081

Profit and loss account

1,744,346

124,114

Equity attributable to owners of the company

 

1,876,712

276,196

Total equity

 

1,876,712

276,196

Approved and authorised by the director on 26 July 2024
 

.........................................
Mr James Alexander Urquhart
Director

 

Pack34 Limited

(Registration number: SC618673)
Statement of Financial Position as at 31 December 2023

Note

2023
£

2022
£

Current assets

 

Cash at bank and in hand

 

1

1

Creditors: Amounts falling due within one year

16

-

(950)

Net assets/(liabilities)

 

1

(949)

Capital and reserves

 

Called up share capital

18

1

1

Retained earnings

-

(950)

Shareholders' funds/(deficit)

 

1

(949)

Approved and authorised by the director on 26 July 2024
 

.........................................
Mr James Alexander Urquhart
Director

 

Pack34 Limited

Consolidated Statement of Changes in Equity for the Year Ended 31 December 2023
Equity attributable to the parent company

Share capital
£

Revaluation reserve
£

Retained earnings
£

Total
£

Total equity
£

At 1 January 2023

1

152,081

124,114

276,196

276,196

Profit for the year

-

-

732,943

732,943

732,943

Other comprehensive income

-

(19,716)

887,289

867,573

867,573

Total comprehensive income

-

(19,716)

1,620,232

1,600,516

1,600,516

At 31 December 2023

1

132,365

1,744,346

1,876,712

1,876,712

 

Pack34 Limited

Consolidated Statement of Cash Flows for the Year Ended 31 December 2023

Note

2023
£

2022
£

Cash flows from operating activities

Profit for the year

 

732,943

1,412,402

Adjustments to cash flows from non-cash items

 

Depreciation and amortisation

5

282,780

182,204

Finance costs

6

46,844

46,839

Income tax expense

10

107,360

(824,860)

 

1,169,927

816,585

Working capital adjustments

 

Increase in stocks

13

(340,961)

(164,706)

Decrease/(increase) in trade debtors

14

323,780

(50,960)

(Decrease)/increase in trade creditors

16

(545,795)

163,573

Decrease in retirement benefit obligation net of actuarial changes

17

(22,120)

(90,000)

Net cash flow from operating activities

 

584,831

674,492

Cash flows from investing activities

 

Acquisitions of tangible assets

(132,220)

(163,807)

Acquisition of intangible assets

11

-

(577)

Net cash flows from investing activities

 

(132,220)

(164,384)

Cash flows from financing activities

 

Interest paid

6

(46,844)

(46,839)

Payments to finance lease creditors

 

(171,425)

(171,429)

Net cash flows from financing activities

 

(218,269)

(218,268)

Net increase in cash and cash equivalents

 

234,342

291,840

Cash and cash equivalents at 1 January

 

(1,021,097)

(1,312,937)

Cash and cash equivalents at 31 December

 

(786,755)

(1,021,097)

 

Pack34 Limited

Notes to the Financial Statements for the Year Ended 31 December 2023

1

General information

The Company is a private company limited by share capital, incorporated in Scotland .

The address of its registered office is:
Kemback Street
Dundee
DD4 6ET

These financial statements were authorised for issue by the director on 26 July 2024.

2

Accounting policies

Summary of significant accounting policies and key accounting estimates

The principal accounting policies applied in the preparation of these financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated.

Statement of compliance

These financial statements were prepared in accordance with Financial Reporting Standard 102 'The Financial Reporting Standard applicable in the United Kingdom and Republic of Ireland and the Companies Act 2006'.

Basis of preparation

These financial statements have been prepared using the historical cost convention except that as disclosed in the accounting policies certain items are shown at fair value.

Basis of consolidation

The consolidated financial statements consolidate the financial statements of the Company and its subsidiary undertakings drawn up to 31 December 2023.

 

Pack34 Limited

Notes to the Financial Statements for the Year Ended 31 December 2023

A subsidiary is an entity controlled by the Company. Control is achieved where the Company has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities.

The results of subsidiaries acquired or disposed of during the year are included in the Income Statement from the effective date of acquisition or up to the effective date of disposal, as appropriate. Where necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with those used by the Group.

The purchase method of accounting is used to account for business combinations that result in the acquisition of subsidiaries by the Group. The cost of a business combination is measured as the fair value of the assets given, equity instruments issued and liabilities incurred or assumed at the date of exchange, plus costs directly attributable to the business combination. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. Any excess of the cost of the business combination over the acquirer’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities recognised is recorded as goodwill.

Inter-company transactions, balances and unrealised gains on transactions between the Company and its subsidiaries, which are related parties, are eliminated in full.

Intra-group losses are also eliminated but may indicate an impairment that requires recognition in the consolidated financial statements.

Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group. Non-controlling interests in the net assets of consolidated subsidiaries are identified separately from the Group’s equity therein. Non-controlling interests consist of the amount of those interests at the date of the original business combination and the non-controlling shareholder’s share of changes in equity since the date of the combination.

Going concern

The financial statements have been prepared on a going concern basis.

Revenue recognition

Turnover comprises the fair value of the consideration received or receivable for the sale of goods and provision of services in the ordinary course of the Group’s activities. Turnover is shown net of sales/value added tax, returns, rebates and discounts and after eliminating sales within the Group.

The Group recognises revenue when:
The amount of revenue can be reliably measured;
it is probable that future economic benefits will flow to the entity;
and specific criteria have been met for each of the Group's activities.

 

Pack34 Limited

Notes to the Financial Statements for the Year Ended 31 December 2023

Foreign currency transactions and balances

Transactions in foreign currencies are initially recorded at the functional currency rate prevailing at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated into the respective functional currency of the entity at the rates prevailing on the reporting period date. Non-monetary items carried at fair value that are denominated in foreign currencies are retranslated at the rate on the date when the fair value is re-measured.

Non-monetary items measured in terms of historical cost in a foreign currency are not retranslated.

Tax

The tax expense for the period comprises current and deferred tax. Tax is recognised in profit or loss, except that a change attributable to an item of income or expense recognised as other comprehensive income is also recognised directly in other comprehensive income.

The current income tax charge is calculated on the basis of tax rates and laws that have been enacted or substantively enacted by the reporting date in the countries where the Group operates and generates taxable income.

Deferred tax is recognised in respect of all timing differences between taxable profits and profits reported in the consolidated financial statements.

Unrelieved tax losses and other deferred tax assets are recognised when it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits.

Deferred tax is measured using the tax rates and laws that have been enacted or substantively enacted by the reporting date and that are expected to apply to the reversal of the timing difference.

Tangible assets

Tangible assets are stated in the statement of financial position at cost, less any subsequent accumulated depreciation and subsequent accumulated impairment losses.

The cost of tangible assets includes directly attributable incremental costs incurred in their acquisition and installation.

Depreciation

Depreciation is charged so as to write off the cost of assets, other than land and properties under construction over their estimated useful lives, as follows:

Asset class

Depreciation method and rate

Office Equipment

33% Straight line

Plant and Machinery

10% Straight line

Equipment

5% Straight line

Business combinations

Business combinations are accounted for using the purchase method. The consideration for each acquisition is measured at the aggregate of the fair values at acquisition date of assets given, liabilities incurred or assumed, and equity instruments issued by the Group in exchange for control of the acquired, plus any costs directly attributable to the business combination. When a business combination agreement provides for an adjustment to the cost of the combination contingent on future events, the Group includes the estimated amount of that adjustment in the cost of the combination at the acquisition date if the adjustment is probable and can be measured reliably.

 

Pack34 Limited

Notes to the Financial Statements for the Year Ended 31 December 2023

Goodwill

Goodwill arising on the acquisition of an entity represents the excess of the cost of acquisition over the Group’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities of the entity recognised at the date of acquisition. Goodwill is initially recognised as an asset at cost and is subsequently measured at cost less accumulated amortisation and accumulated impairment losses. Goodwill is held in the currency of the acquired entity and revalued to the closing rate at each reporting period date. Goodwill is amortised over its useful life, which shall not exceed ten years if a reliable estimate of the useful life cannot be made.

Intangible assets

Separately acquired trademarks and licences are shown at historical cost.

Trademarks, licences (including software) and customer-related intangible assets acquired in a business combination are recognised at fair value at the acquisition date.

Trademarks, licences and customer-related intangible assets have a finite useful life and are carried at cost less accumulated amortisation and any accumulated impairment losses.

Amortisation

Amortisation is provided on intangible assets so as to write off the cost, less any estimated residual value, over their useful life as follows:

Asset class

Amortisation method and rate

Patents

10% Straight line

Investments

Investments in equity shares which are publicly traded or where the fair value can be measured reliably are initially measured at fair value, with changes in fair value recognised in profit or loss. Investments in equity shares which are not publicly traded and where fair value cannot be measured reliably are measured at cost less impairment.


Interest income on debt securities, where applicable, is recognised in income using the effective interest method. Dividends on equity securities are recognised in income when receivable.

Cash and cash equivalents

Cash and cash equivalents comprise cash on hand and call deposits, and other short-term highly liquid investments that are readily convertible to a known amount of cash and are subject to an insignificant risk of change in value.

Trade debtors

Trade debtors are amounts due from customers for merchandise sold or services performed in the ordinary course of business.

Trade debtors are recognised initially at the transaction price. They are subsequently measured at amortised cost using the effective interest method, less provision for impairment. A provision for the impairment of trade debtors is established when there is objective evidence that the Group will not be able to collect all amounts due according to the original terms of the receivables.

 

Pack34 Limited

Notes to the Financial Statements for the Year Ended 31 December 2023

Stocks

Stocks are stated at the lower of cost and estimated selling price less costs to complete and sell. Cost is determined using the first-in, first-out (FIFO) method.

The cost of finished goods and work in progress comprises direct materials and, where applicable, direct labour costs and those overheads that have been incurred in bringing the inventories to their present location and condition. At each reporting date, stocks are assessed for impairment. If stocks are impaired, the carrying amount is reduced to its selling price less costs to complete and sell; the impairment loss is recognised immediately in profit or loss.

Trade creditors

Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Accounts payable are classified as current liabilities if the Group does not have an unconditional right, at the end of the reporting period, to defer settlement of the creditor for at least twelve months after the reporting date. If there is an unconditional right to defer settlement for at least twelve months after the reporting date, they are presented as non-current liabilities.

Trade creditors are recognised initially at the transaction price and subsequently measured at amortised cost using the effective interest method.

Borrowings

Interest-bearing borrowings are initially recorded at fair value, net of transaction costs. Interest-bearing borrowings are subsequently carried at amortised cost, with the difference between the proceeds, net of transaction costs, and the amount due on redemption being recognised as a charge to the income statement over the period of the relevant borrowing.

Interest expense is recognised on the basis of the effective interest method and is included in interest payable and similar charges.

Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least twelve months after the reporting date.

Leases

Leases in which substantially all the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases are charged to profit or loss on a straight-line basis over the period of the lease.

Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee.

Assets held under finance leases are recognised at the lower of their fair value at inception of the lease and the present value of the minimum lease payments. These assets are depreciated on a straight-line basis over the shorter of the useful life of the asset and the lease term. The corresponding liability to the lessor is included in the statement of financial position as a finance lease obligation.

Lease payments are apportioned between finance costs in the income statement and reduction of the lease obligation so as to achieve a constant periodic rate of interest on the remaining balance of the liability.

 

Pack34 Limited

Notes to the Financial Statements for the Year Ended 31 December 2023

Share capital

Ordinary shares are classified as equity. Equity instruments are measured at the fair value of the cash or other resources received or receivable, net of the direct costs of issuing the equity instruments. If payment is deferred and the time value of money is material, the initial measurement is on a present value basis.

Defined contribution pension obligation

A defined contribution plan is a pension plan under which fixed contributions are paid into a pension fund and the Group has no legal or constructive obligation to pay further contributions even if the fund does not hold sufficient assets to pay all employees the benefits relating to employee service in the current and prior periods.

Contributions to defined contribution plans are recognised as employee benefit expense when they are due. If contribution payments exceed the contribution due for service, the excess is recognised as a prepayment.

Financial instruments

Classification
Financial instruments are classified and accounted for, according to the substance of the contractual agreement, as either financial assets, financial liabilities or equity instruments. An equity instrument is any contract that evidences a residual interest in the assets of the company after deducting all of its liabilities.
 

3

Turnover

The analysis of the Group's Turnover for the year from continuing operations is as follows:

2023
£

2022
£

Sale of goods

16,230,190

15,649,937

4

Other operating income

The analysis of the Group's other operating income for the year is as follows:

2023
£

2022
£

Government grants

4,180

14,005

5

Operating profit

Arrived at after charging/(crediting)

2023
£

2022
£

Depreciation expense

226,856

176,139

Amortisation expense

55,924

6,065

Operating lease expense - plant and machinery

43,513

85,534

 

Pack34 Limited

Notes to the Financial Statements for the Year Ended 31 December 2023

6

Interest payable and similar expenses

2023
£

2022
£

Interest on obligations under finance leases and hire purchase contracts

46,844

46,839

Foreign exchange gains

13,716

15,453

60,560

62,292

 

Pack34 Limited

Notes to the Financial Statements for the Year Ended 31 December 2023

7

Staff costs

The aggregate payroll costs (including director's remuneration) were as follows:

2023
£

2022
£

Wages and salaries

2,325,628

2,163,967

Social security costs

197,309

193,369

Other short-term employee benefits

9,312

7,705

Pension costs, defined contribution scheme

87,431

82,339

Other employee expense

4,557

3,744

2,624,237

2,451,124

The average number of persons employed by the group (including the director) during the year, analysed by category was as follows:

2023
No.

2022
No.

Production

74

74

Administration and support

6

5

80

79

 

Pack34 Limited

Notes to the Financial Statements for the Year Ended 31 December 2023

8

Director's remuneration

The Director's remuneration for the year was as follows:

2023
£

2022
£

Remuneration

102,996

90,046

9

Auditors' remuneration

2023
£

2022
£

Audit of these financial statements

950

900

Audit of the financial statements of subsidiaries of the company pursuant to legislation

15,550

15,100

16,500

16,000


 

10

Taxation

Tax charged/(credited) in the consolidated income statement

2023
£

2022
£

Current taxation

UK corporation tax

(31,007)

(42,493)

Deferred taxation

Arising from origination and reversal of timing differences

138,367

201,428

Arising from changes in tax rates and laws

-

(983,795)

Total deferred taxation

138,367

(782,367)

Tax expense/(receipt) in the income statement

107,360

(824,860)

 

Pack34 Limited

Notes to the Financial Statements for the Year Ended 31 December 2023

11

Intangible assets

Group

Goodwill
 £

Trademarks, patents and licenses
 £

Total
£

Cost or valuation

At 1 January 2023

255,035

68,289

323,324

At 31 December 2023

255,035

68,289

323,324

Amortisation

At 1 January 2023

-

49,217

49,217

Amortisation charge

51,007

4,918

55,925

At 31 December 2023

51,007

54,135

105,142

Carrying amount

At 31 December 2023

204,028

14,154

218,182

At 31 December 2022

255,035

19,072

274,107

 

Pack34 Limited

Notes to the Financial Statements for the Year Ended 31 December 2023

12

Tangible assets

Group

Equipment
£

Plant and machinery
£

Office equipment
£

Total
£

Cost or valuation

At 1 January 2023

1,286,670

9,916,822

110,808

11,314,300

Additions

3,730

57,670

70,820

132,220

At 31 December 2023

1,290,400

9,974,492

181,628

11,446,520

Depreciation

At 1 January 2023

331,058

9,315,100

31,435

9,677,593

Charge for the year

63,169

115,093

48,594

226,856

At 31 December 2023

394,227

9,430,193

80,029

9,904,449

Carrying amount

At 31 December 2023

896,173

544,299

101,599

1,542,071

At 31 December 2022

955,612

601,722

79,373

1,636,707

13

Stocks

 

Group

Company

2023
£

2022
£

2023
£

2022
£

Raw materials and consumables

1,062,070

1,126,346

-

-

Work in progress

251,895

302,260

-

-

Finished goods and goods for resale

745,025

289,423

-

-

2,058,990

1,718,029

-

-

 

Pack34 Limited

Notes to the Financial Statements for the Year Ended 31 December 2023

14

Debtors

   

Group

Company

Current

Note

2023
£

2022
£

2023
£

2022
£

Trade debtors

 

2,249,457

2,650,621

-

-

Prepayments

 

169,618

101,979

-

-

Deferred tax assets

10

3,967,351

4,099,145

-

-

Income tax asset

10

31,007

112,501

-

-

   

6,417,433

6,964,246

-

-

15

Cash and cash equivalents

 

Group

Company

2023
£

2022
£

2023
£

2022
£

Cash on hand

270

111

-

-

Cash at bank

346,355

58,915

1

1

346,625

59,026

1

1

Bank overdrafts

(1,133,380)

(1,080,123)

-

-

Cash and cash equivalents in statement of cash flows

(786,755)

(1,021,097)

1

1

16

Creditors

   

Group

Company

Note

2023
£

2022
£

2023
£

2022
£

Due within one year

 

Loans and borrowings

19

1,024,867

1,288,661

-

-

Trade creditors

 

2,313,630

2,890,324

-

-

Social security and other taxes

 

342,263

348,442

-

-

Other payables

 

-

-

-

950

Accruals

 

161,608

175,697

-

-

Income tax liability

10

89,087

99,734

-

-

 

3,931,455

4,802,858

-

950

 

Pack34 Limited

Notes to the Financial Statements for the Year Ended 31 December 2023

   

Group

Company

Note

2023
£

2022
£

2023
£

2022
£

Due after one year

 

Loans and borrowings

19

-

154,498

-

-

Other non-current financial liabilities

 

132,119

186,228

-

-

 

132,119

340,726

-

-

 

Pack34 Limited

Notes to the Financial Statements for the Year Ended 31 December 2023

17

Pension and other schemes

Defined contribution pension scheme

The Group operates a defined contribution pension scheme. The pension cost charge for the year represents contributions payable by the Group to the scheme and amounted to £87,431 (2022 - £82,339).

Defined benefit pension schemes

Danapak Flexibles Retirement Benefits Scheme

As stated in the accounting policies, the company operates a retirement benefit scheme. The scheme is a defined
benefit occupational pension scheme with assets held in separate trustee administered funds and is contracted-out of
the state earnings related scheme. The scheme was closed to new entrants with effect from 1 January 2003. The
scheme ceased accruals of future service benefits with effect from 31 August 2009. Contributions to the retirement
benefit scheme are determined by a qualified actuary using the projected unit method.

 

Pack34 Limited

Notes to the Financial Statements for the Year Ended 31 December 2023

The date of the most recent comprehensive actuarial valuation was 31 March 2023. The date of the most recent comprehensive actuarial valuation was 31 March 2023. Assumptions used in the 2023
valuation are as follows:

Discount rate -
The discount rate will be calculated using the Nominal Gilt Yield curve plus 0.25% p.a at each term.

Return on existing assets and new contributions over the deficit recover period -
The return on assets over the deficity recover period will be calculated as 1.25% p.a. above the discount rate used to
value the technical provisions at each term. This is higher than the assumptions used to value the technical
provisions, in order to take same advance credit for the additional investment returns anticipated from the trustee's
investment strategy.

Rate of inflation (Retail Prices Index) -
The rate of inflation as measured by RPI growth will be calculated using the Gilt Inflation Curve less 0.1% p.a. at
each term to reflect the "inflation risk premium" for fixed interest gilts and the high demand/low supply of index
linked gilts relative to fixed interest gilts.

Rate of inflation (Customer Prices Index) -
The assumption for CPI growth will be calcuated as the assumption for RPI inflation less 0.70% p.a. at each term
until 2030 and as the assumption for RPI inflation thereafer.

Revalution of penions in deferment -
Statutory revaluation is calculated by splitting the accrued pension into the Guaranteed Minimum Pension ("GMP")
component and the excess. The GMP element will increase by a fixed rate. The remaining deferred pension will
increase during deferment by 5% per annum or the increase in inflation if lower (this is based on RPI until 2010 and
CPI thereafter).

Increases in pension payments -
Pre 6 April 1988 GMP: Nil
Post 5 April 1988 GMP: CPI subject to a maximum of 3% p.a.
Pre 1 July 1991 non GMP pension (members of the old Low & Bonar Group RBS): 3% p.a.
Pre 1 July 1991 non-GMP pension (all other member): Nil
Post 30 June 1991, pre 6 April 2006 non-GMP pension: RPI subject to a maximum of 5% p.a.
Post 5 April 2006 pension: RPI subject to a maximum of 2.5% p.a.
Pensions are increased on 1 April each year.

The total cost relating to defined benefit schemes for the year recognised in profit or loss as an expense was
£318,000 (2022 - £232,000).

The total cost relating to defined benefit schemes for the year included in the cost of an asset was £Nil (2022 - £-).

The total cost relating to defined benefit schemes for the year recognised in profit or loss as an expense was £318,000 (2022 - £232,000).

The total cost relating to defined benefit schemes for the year included in the cost of an asset was £Nil (2022 - £-).

 

Pack34 Limited

Notes to the Financial Statements for the Year Ended 31 December 2023

Research into the discount rate assumption has shown that most companies allowed for asset outperformance over
the discount rate assumption of more than 0.5%.

The company has a recovery plan of over 20 years and all repayments have been made as they fall due. The liability
is a figure taken at a certain point in time taking into account discount and inflation rates and it changes day to day.
We have agreed a recovery plan which aims to eliminate this shortfall by 30 April 2046.

The company’s PPF levy has been set at one of the highest bands for many years. However, due to the improving
company financial performance, the levy band is now about quarter of the fee it has been in historic years..
The financial performance of this company is such that at current profit levels, the underfund will comfortably be
paid with excess funds available for business growth. The company also expects, taking above information into
account that the pension liability will decrease in the 2024 year, even though there are various factors that can affect
this.

Reconciliation of scheme assets and liabilities to assets and liabilities recognised

The amounts recognised in the statement of financial position are as follows:

2023
£

2022
£

Fair value of scheme assets

17,076,000

16,147,000

Present value of defined benefit obligation

(21,456,000)

(21,372,000)

Defined benefit pension scheme deficit

(4,380,000)

(5,225,000)

Defined benefit obligation

Changes in the defined benefit obligation are as follows:

2023
£

Present value at start of year

21,372,000

Current service cost

36,000

Interest cost

1,137,000

Actuarial gains and losses

360,000

Benefits paid

(1,449,000)

Present value at end of year

21,456,000

Fair value of scheme assets

Changes in the fair value of scheme assets are as follows:

 

Pack34 Limited

Notes to the Financial Statements for the Year Ended 31 December 2023

2023
£

Fair value at start of year

16,147,000

Interest income

855,000

Return on plan assets, excluding amounts included in interest income/(expense)

121,000

Employer contributions

1,402,000

Benefits paid

(1,449,000)

Fair value at end of year

17,076,000

 

Pack34 Limited

Notes to the Financial Statements for the Year Ended 31 December 2023

Analysis of assets

The major categories of scheme assets are as follows:

2023
£

2022
£

Cash and cash equivalents

339,000

245,000

Equity instruments

2,536,000

2,333,000

Debt instruments

2,354,000

1,470,000

Other

11,847,000

12,099,000

17,076,000

16,147,000

Return on scheme assets

2023
£

2022
£

Return on scheme assets

976,000

(8,388,000)

The pension scheme has not invested in any of the Group's own financial instruments or in properties or other assets used by the Group.

Principal actuarial assumptions

The principal actuarial assumptions at the statement of financial position date are as follows:

2023
%

2022
%

Discount rate

4.80

5.50

Future pension increases

2.20

2.30

Inflation

2.90

3.00

 

Pack34 Limited

Notes to the Financial Statements for the Year Ended 31 December 2023

Post retirement mortality assumptions

2023
Years

2022
Years

Current UK pensioners at retirement age - male

20.00

21.00

Current UK pensioners at retirement age - female

23.00

23.00

Future UK pensioners at retirement age - male

22.00

22.00

Future UK pensioners at retirement age - female

24.00

24.00

18

Share capital

Allotted, called up and fully paid shares

2023

2022

No.

£

No.

£

Ordinary share of £1 each

1

1

1

1

       

19

Loans and borrowings

 

Group

Company

2023
£

2023
£

Current loans and borrowings

Bank overdrafts

1,133,380

-

HP and finance lease liabilities

128,576

-

Other borrowings

25,926

-

1,287,882

-

20

Parent and ultimate parent undertaking

This is the ultimate parent company of the group.