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COMPANY REGISTRATION NUMBER: 02033296
VERPLAS LIMITED
FINANCIAL STATEMENTS
31 December 2023
VERPLAS LIMITED
FINANCIAL STATEMENTS
YEAR ENDED 31 DECEMBER 2023
Contents
Page
Strategic report
1
Directors' report
5
Independent auditor's report to the members
7
Statement of income and retained earnings
11
Statement of financial position
12
Statement of cash flows
13
Notes to the financial statements
14
VERPLAS LIMITED
STRATEGIC REPORT
YEAR ENDED 31 DECEMBER 2023
The directors present their strategic report for the year ended 31 December 2023. Fair review of the business Over the past year, our company has remained steadfast in its core activities as specialists in the design and manufacturing of domestic ventilation equipment. Despite the challenges presented by the ongoing economic climate, the directors are pleased to report that the company achieved satisfactory results and maintained a favourable financial position at the year-end. Looking ahead, we anticipate the market to remain flat year-on-year due to the slowdown in the housing market. However, we are confident in our ability to maintain profitability through enhanced productivity and energy efficiency. Our commitment to sustainability will continue, with a focus on using 100% recycled materials and 100% renewable electricity, despite the associated cost increases. The government-mandated Living Wage increases of approximately 10% over the past two years have been challenging to absorb and pass on. Our sales are successfully conducted through a well-established network of fan manufacturers, wholesalers, and distributors in both the UK and overseas markets. As a manufacturer of ventilation, ducting, and accessories, we have continued to expand our product range, introducing innovative solutions that comply with Building Regulations, adapt to market changes, and meet customer demands. To assess the financial performance and strength of the company, we rely on key performance indicators, specifically turnover, gross margin, and operating profit. A summary of these indicators is included in the Strategic Report below. Sales decreased by 1.7% compared to the previous year, although Verplas outperformed the market average by increasing its market share. Despite the industry's challenges, our customer mix remained stable, and we express our gratitude to our customers, whom we truly consider partners, ensuring mutual benefits from our ongoing relationships. The new build housing market has significantly slowed, with most estimates indicating a 25% - 35% decline compared to 2022. This is primarily due to higher interest rates, inflation, and political uncertainty within the UK. We expect a modest recovery in the second half of 2024, with 2025 being a better year and achieving pre-COVID levels by the end of 2026. In conclusion, this review provides a comprehensive and accurate account of our business's performance throughout the year and its standing at the year-end. We are optimistic about the future and remain committed to delivering high-quality products that meet the evolving needs of our customers and the industry as a whole.
Principal risks and uncertainties The company's main financial tools are bank balances, trade debtors, and trade creditors. We manage risks with effective cash flow management and participation in the Indutrade UK cash pool since June 2015. To mitigate risks with trade debtors, we have customer credit policies and monitor outstanding amounts and credit limits. For trade creditors, we ensure sufficient funds and negotiate credit terms with key suppliers. We follow ISO9001:2015 quality systems to control our processes and support customer service. Our reliance on the construction industry makes us vulnerable to market, economic, and political changes. We monitor the market, use external data, track demand changes, and participate in industry groups to stay informed. Brexit has limited impact on our UK business and exports, but the Indutrade Group's diversified structure and strong financial position provide stability, therefore the overall future impact remains uncertain for the wider group.
Key performance indicators The directors conduct an annual long term strategy plan review where each key area of the business is monitored and measured against financial, sales and production performance indicators to provide them with a better understanding of the development, performance and position of the business in relation to the strategy plan.
2023 2022 2021 2020 2019
Turnover (£000's) 13,212 13,439 11,629 10,347 12,140
Turnover % growth/(decline) 2 16 12 15 2
Gross margin % 34 34 32 27 33
Profits before tax £000's) 1,229 1,488 815 190 1,259
The directors monitor financial information and key performance indicators monthly. Dividends In April 2023 dividends of £800,000 were paid to the parent company, Indutrade UK Limited (2022 - £700,000). Employees Thanks to our dedicated and loyal employees, Verplas Ltd has achieved great success. We are on a journey of positive culture change to become the preferred choice for both Employees and Customers. Guided by respectful and ethical behaviours, we continue to improve and value every individual's contribution. Future developments The company's directors have outlined their objectives for the upcoming year, aiming to maintain the current total turnover while also allocating resources to nurture existing customer relationships and forge new ones. Our broad and loyal customer base already benefits from our innovative product range and strong market standing. As we move forward, we are determined to explore new market avenues, establish strategic partnerships, and expand into untapped geographic regions. Acknowledging the growing importance of Indoor Air Quality (IAQ), as emphasised by medical research, professionals, government entities, consumers, and our customers, we are committed to aligning our strategic product development with this critical aspect. Continuous efforts are underway to develop new products, improve IT systems, and enhance operational efficiency. In our pursuit of sustainability, we place significant emphasis on employing more recycled materials, on-site waste recycling, and reducing our carbon footprint. Currently, we have successfully integrated recycled window frames and fridges for injection moulding, while also sourcing 100% renewable electricity. The company will continue investing in energy-efficient machinery to bolster both profitability and environmental responsibility. Position of the company at the yearend The results for the year and the financial position at the yearend were considered satisfactory by the directors who expect continued growth in the foreseeable future
This report was approved by the board of directors on 30 July 2024 and signed on behalf of the board by:
B B Wicks
D G Gittins
Director
Director
Registered office:
Unit 7 Verwood Industrial Estate
Blackhill
Verwood
Dorset
BH31 6HA
VERPLAS LIMITED
DIRECTORS' REPORT
YEAR ENDED 31 DECEMBER 2023
The directors present their report and the financial statements of the company for the year ended 31 December 2023 .
Principal activities
The principal activities of the company during the year were those of specialists in the design and manufacture of domestic ventilation equipment.
Directors
The directors who served the company during the year were as follows:
B B Wicks
D G Gittins
A N Dickinson
P I Rowlands
Dividends
Particulars of recommended dividends are detailed in note 13 to the financial statements.
Directors' responsibilities statement
The directors are responsible for preparing the strategic report, directors' report and the financial statements in accordance with applicable law and regulations. Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and 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 judgments and accounting estimates that are reasonable and prudent; - 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. Auditor
Each of the persons who is a director at the date of approval of this report confirms that:
- so far as they are aware, there is no relevant audit information of which the company's auditor is unaware; and - they have taken all steps that they ought to have taken as a director to make themselves aware of any relevant audit information and to establish that the company's auditor is aware of that information.
This report was approved by the board of directors on 30 July 2024 and signed on behalf of the board by:
B B Wicks
D G Gittins
Director
Director
Registered office:
Unit 7 Verwood Industrial Estate
Blackhill
Verwood
Dorset
BH31 6HA
VERPLAS LIMITED
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF VERPLAS LIMITED
YEAR ENDED 31 DECEMBER 2023
Opinion
We have audited the financial statements of Verplas Limited (the 'company') for the year ended 31 December 2023 which comprise the statement of income and retained earnings, statement of financial position, statement of cash flows 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 FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice). In our opinion the financial statements: - give a true and fair view of the state of the company's affairs as at 31 December 2023 and of its profit for the year then ended; - have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; - 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's responsibilities for the audit of the financial statements section of our report. We are independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
Other information
The other information comprises the information included in the annual report, other than the financial statements and our auditor’s report thereon. The directors are responsible for the other information. 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.
Opinions 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 the directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
- the strategic report and the directors' report have been prepared in accordance with applicable legal requirements.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identified material misstatements in the strategic report or 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, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the directors are responsible for assessing the company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.
Auditor's responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below: Based on our understanding of the company and the industry in which is operates, we identified that the principal risks of non-compliance with laws and regulations related to the acts by the company which were contrary to applicable laws and regulations including fraud and we considered the extent to which noncompliance might have a material effect on the financial statements. We also considered those laws and regulations that have a direct impact on the preparation of the financial statements such as as the Companies Act 2006. We evaluated management's incentives and opportunities for fraudulent manipulation of the financial statements (including the risk of override of controls), and determine that the principal risks were related to inflated revenue and profit. Audit procedures performed included: review of the financial statement disclosures to underlying supporting documentation, review of correspondence with and reports to the regulators, review of correspondence with legal advisors, enquiries of management and in so far as they related to the financial statements, and testing of journals and evaluating whether there was evidence of bias by the directors that represented a risk of material misstatement due to fraud. There are inherent limitations in the audit procedures described above and the further removed noncompliance with laws and regulations is from the events and transactions reflected in the financial statements, the less likely we would become aware of it. Also, the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery or intentional misrepresentations, or through collusion. As part of an audit in accordance with ISAs (UK), we exercise professional judgment and maintain professional scepticism throughout the audit. We also: - Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. - Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the internal control. - Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors. - Conclude on the appropriateness of the directors' use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the company's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the company to cease to continue as a going concern. - Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation. We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. 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.
Charles Homan
(Senior Statutory Auditor)
For and on behalf of
UHY Hacker Young (S.E.) Limited
Chartered accountants & statutory auditor
168 Church Road
Hove
East Sussex
BN3 2DL
30 July 2024
VERPLAS LIMITED
STATEMENT OF INCOME AND RETAINED EARNINGS
YEAR ENDED 31 DECEMBER 2023
2023
2022
Note
£
£
Turnover
4
13,212,026
13,439,288
Cost of sales
8,686,668
8,867,885
---------------
---------------
Gross profit
4,525,358
4,571,403
Administrative expenses
3,192,311
3,034,943
Other operating income
5
12,275
-------------
-------------
Operating profit
6
1,333,047
1,548,735
Other interest receivable and similar income
10
2,766
117
Interest payable and similar expenses
11
107,158
60,553
-------------
-------------
Profit before taxation
1,228,655
1,488,299
Tax on profit
12
330,251
352,148
-------------
-------------
Profit for the financial year and total comprehensive income
898,404
1,136,151
-------------
-------------
Dividends paid and payable
13
( 800,000)
( 700,000)
Retained earnings at the start of the year
3,380,474
2,944,323
-------------
-------------
Retained earnings at the end of the year
3,478,878
3,380,474
-------------
-------------
All the activities of the company are from continuing operations.
VERPLAS LIMITED
STATEMENT OF FINANCIAL POSITION
31 December 2023
2023
2022
Note
£
£
£
Fixed assets
Intangible assets
14
39,677
59,756
Tangible assets
15
1,929,874
1,883,205
-------------
-------------
1,969,551
1,942,961
Current assets
Stocks
16
1,987,322
2,251,432
Debtors
17
2,770,920
2,658,492
Cash at bank and in hand
67,323
25,226
-------------
-------------
4,825,565
4,935,150
Creditors: amounts falling due within one year
19
3,030,898
3,260,719
-------------
-------------
Net current assets
1,794,667
1,674,431
-------------
-------------
Total assets less current liabilities
3,764,218
3,617,392
Provisions
20
285,188
236,766
-------------
-------------
Net assets
3,479,030
3,380,626
-------------
-------------
Capital and reserves
Called up share capital
23
99
99
Capital redemption reserve
24
53
53
Profit and loss account
24
3,478,878
3,380,474
-------------
-------------
Shareholders funds
3,479,030
3,380,626
-------------
-------------
These financial statements have been prepared in accordance with the provisions applicable to companies subject to the medium companies regime.
These financial statements were approved by the board of directors and authorised for issue on 30 July 2024 , and are signed on behalf of the board by:
B B Wicks
D G Gittins
Director
Director
Company registration number: 02033296
VERPLAS LIMITED
STATEMENT OF CASH FLOWS
YEAR ENDED 31 DECEMBER 2023
2023
2022
Note
£
£
Cash flows from operating activities
Profit for the financial year
898,404
1,136,151
Adjustments for:
Depreciation of tangible assets
411,512
421,042
Amortisation of intangible assets
20,079
19,243
Other interest receivable and similar income
( 2,766)
( 117)
Interest payable and similar expenses
107,158
60,553
Loss on disposal of tangible assets
2,533
3,499
Tax on profit
330,251
352,148
Accrued expenses/(income)
79,829
( 145,585)
Changes in:
Stocks
264,110
( 759,190)
Trade and other debtors
( 112,428)
26,688
Trade and other creditors
63,151
( 149,994)
-------------
-------------
Cash generated from operations
2,061,833
964,438
Interest paid
( 107,158)
( 60,553)
Interest received
2,766
117
Tax paid
( 285,355)
( 211,606)
-------------
----------
Net cash from operating activities
1,672,086
692,396
-------------
----------
Cash flows from investing activities
Purchase of tangible assets
( 472,649)
( 673,512)
Proceeds from sale of tangible assets
11,935
874
-------------
----------
Net cash used in investing activities
( 460,714)
( 672,638)
-------------
----------
Cash flows from financing activities
Proceeds from loans from group undertakings
( 187,630)
6,476
Dividends paid
( 800,000)
( 700,000)
-------------
----------
Net cash used in financing activities
( 987,630)
( 693,524)
-------------
----------
Net increase/(decrease) in cash and cash equivalents
223,742
( 673,766)
Cash and cash equivalents at beginning of year
(1,352,364)
(678,598)
-------------
-------------
Cash and cash equivalents at end of year
18
( 1,128,622)
( 1,352,364)
-------------
-------------
VERPLAS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
YEAR ENDED 31 DECEMBER 2023
1. General information
The company is a private company limited by shares, registered in England and Wales. The address of the registered office is Unit 7 Verwood Industrial Estate, Blackhill, Verwood, Dorset, BH31 6HA.
2. Statement of compliance
These financial statements have been prepared in compliance with FRS 102, 'The Financial Reporting Standard applicable in the UK and the Republic of Ireland'.
3. Accounting policies
Basis of preparation
The financial statements have been prepared on the historical cost basis, as modified by the revaluation of certain financial assets and liabilities and investment properties measured at fair value through profit or loss.
The financial statements are prepared in sterling, which is the functional currency of the entity.
Judgements and key sources of estimation uncertainty
The following are areas of particular significance to the Company's financial statements and include the use of estimates and the application of judgement, which is fundamental to the compilation of a set of financial statements. Goodwill and other intangibles The Directors use their judgement to determine the extent to which goodwill and other capitalised intangible assets have a value that will benefit the performance of the Company over future periods. To assist in making this judgement, the Directors undertake an assessment, at least annually, of the carrying value of the Company's capitalised goodwill and other intangible assets. The projection period is, in the opinion of the Directors, an appropriate period over which to view the future results of the Group's businesses for this purpose. Changes to the assumptions used in making these forecasts could significantly alter the Directors' assessment of the carrying value of goodwill and other intangible assets. Other estimates, assumptions and judgements are applied by the Company. These include, but are not limited to, depreciation and amortisation on tangible and intangible assets respectively, and provisions. These estimates, assumptions and judgements are also evaluated on a continual basis but are not deemed significant.
Revenue recognition
Turnover is measured at the fair value of the consideration received or receivable for goods supplied and services rendered, net of discounts and Value Added Tax. Revenue from the sale of goods is recognised when the significant risks and rewards of ownership have transferred to the buyer (usually on despatch of the goods); the amount of revenue can be measured reliably; it is probable that the associated economic benefits will flow to the entity; and the costs incurred or to be incurred in respect of the transactions can be measured reliably.
Income tax
The taxation expense represents the aggregate amount of current and deferred tax recognised in the reporting period. Tax is recognised in profit or loss, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case, tax is recognised in other comprehensive income or directly in equity, respectively. Current tax is recognised on taxable profit for the current and past periods. Current tax is measured at the amounts of tax expected to pay or recover using the tax rates and laws that have been enacted or substantively enacted at the reporting date.
Deferred tax is recognised in respect of all timing differences at the reporting date. Unrelieved tax losses and other deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Deferred tax is measured using the tax rates and laws that have been enacted or substantively enacted by the reporting date that are expected to apply to the reversal of the timing difference.
Foreign currencies
Foreign currency transactions are initially recorded in the functional currency, by applying the spot exchange rate as at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are translated at the exchange rate ruling at the reporting date, with any gains or losses being taken to the profit and loss account.
Operating leases
Lease payments are recognised as an expense over the lease term on a straight-line basis. The aggregate benefit of lease incentives is recognised as a reduction to expense over the lease term, on a straight-line basis.
Goodwill
Goodwill arises on business acquisitions and represents the excess of the cost of the acquisition over the company's interest in the net amount of the identifiable assets, liabilities and contingent liabilities of the acquired business. Goodwill is measured at cost less accumulated amortisation and accumulated impairment losses. It is amortised on a straight-line basis over its useful life. Where a reliable estimate of the useful life of goodwill or intangible assets cannot be made, the life is presumed not to exceed ten years.
Intangible assets
Intangible assets are initially recorded at cost, and are subsequently stated at cost less any accumulated amortisation and impairment losses. Any intangible assets carried at revalued amounts, are recorded at the fair value at the date of revaluation, as determined by reference to an active market, less any subsequent accumulated amortisation and subsequent accumulated impairment losses. Intangible assets acquired as part of a business combination are only recognised separately from goodwill when they arise from contractual or other legal rights, are separable, the expected future economic benefits are probable and the cost or value can be measured reliably.
Amortisation
Amortisation is calculated so as to write off the cost of an asset, less its estimated residual value, over the useful life of that asset as follows:
Goodwill
-
Over the useful economic life
Patents, trademarks and licences
-
10% straight line
If there is an indication that there has been a significant change in amortisation rate, useful life or residual value of an intangible asset, the amortisation is revised prospectively to reflect the new estimates.
The goodwill of the extrusion business of VPE Limited was acquired in 2006 and the accounting policy is to write off the goodwill over a period of 20 years, subject to an annual review by the directors of the business division's trading results. It is deemed appropriate to amortise the goodwill over 20 years as the turnover generated by the VPE part of the business (non-ventilation products) provides a consistent income to the company and the directors have no reason to believe this will decline in the foreseeable future.
Tangible assets
Tangible assets are initially recorded at cost, and subsequently stated at cost less any accumulated depreciation and impairment losses. Any tangible assets carried at revalued amounts are recorded at the fair value at the date of revaluation less any subsequent accumulated depreciation and subsequent accumulated impairment losses. An increase in the carrying amount of an asset as a result of a revaluation, is recognised in other comprehensive income and accumulated in equity, except to the extent it reverses a revaluation decrease of the same asset previously recognised in profit or loss. A decrease in the carrying amount of an asset as a result of revaluation, is recognised in other comprehensive income to the extent of any previously recognised revaluation increase accumulated in equity in respect of that asset. Where a a revaluation decrease exceeds the accumulated revaluation gains accumulated in equity in respect of that asset, the excess shall be recognised in profit or loss. Assets under construction are transferred to the relevant class on completion. No depreciation is charged until the asset is transferred and brought into service. Assets under construction are also excluded for capital allowance and deferred tax purposes.
Depreciation
Depreciation is calculated so as to write off the cost or valuation of an asset, less its residual value, over the useful economic life of that asset as follows:
Short leasehold property
-
Over the life of the lease
Plant and machinery
-
10% to 25% straight line or 15% reducing balance
Fixtures and fittings
-
10% to 33% straight line or 10% to 25% reducing balance
Motor vehicles
-
25% reducing balance
Impairment of fixed assets
A review for indicators of impairment is carried out at each reporting date, with the recoverable amount being estimated where such indicators exist. Where the carrying value exceeds the recoverable amount, the asset is impaired accordingly. Prior impairments are also reviewed for possible reversal at each reporting date. For the purposes of impairment testing, when it is not possible to estimate the recoverable amount of an individual asset, an estimate is made of the recoverable amount of the cash-generating unit to which the asset belongs. The cash-generating unit is the smallest identifiable group of assets that includes the asset and generates cash inflows that largely independent of the cash inflows from other assets or groups of assets. For impairment testing of goodwill, the goodwill acquired in a business combination is, from the acquisition date, allocated to each of the cash-generating units that are expected to benefit from the synergies of the combination, irrespective of whether other assets or liabilities of the company are assigned to those units.
Stocks
Stocks are measured at the lower of cost and estimated selling price less costs to complete and sell. Cost includes all costs of purchase, costs of conversion and other costs incurred in bringing the stock to its present location and condition.
Provisions
Provisions are recognised when the entity has an obligation at the reporting date as a result of a past event, it is probable that the entity will be required to transfer economic benefits in settlement and the amount of the obligation can be estimated reliably. Provisions are recognised as a liability in the statement of financial position and the amount of the provision as an expense. Provisions are initially measured at the best estimate of the amount required to settle the obligation at the reporting date and subsequently reviewed at each reporting date and adjusted to reflect the current best estimate of the amount that would be required to settle the obligation. Any adjustments to the amounts previously recognised are recognised in profit or loss unless the provision was originally recognised as part of the cost of an asset. When a provision is measured at the present value of the amount expected to be required to settle the obligation, the unwinding of the discount is recognised as a finance cost in profit or loss in the period it arises.
Financial instruments
A financial asset or a financial liability is recognised only when the company becomes a party to the contractual provisions of the instrument. Basic financial instruments are initially recognised at the transaction price, unless the arrangement constitutes a financing transaction, where it is recognised at the present value of the future payments discounted at a market rate of interest for a similar debt instrument. Debt instruments are subsequently measured at amortised cost. Where investments in non-convertible preference shares and non-puttable ordinary shares or preference shares are publicly traded or their fair value can otherwise be measured reliably, the investment is subsequently measured at fair value with changes in fair value recognised in profit or loss. All other such investments are subsequently measured at cost less impairment. Other financial instruments, including derivatives, are initially recognised at fair value, unless payment for an asset is deferred beyond normal business terms or financed at a rate of interest that is not a market rate, in which case the asset is measured at the present value of the future payments discounted at a market rate of interest for a similar debt instrument. Other financial instruments are subsequently measured at fair value, with any changes recognised in profit or loss, with the exception of hedging instruments in a designated hedging relationship.
Financial assets that are measured at cost or amortised cost are reviewed for objective evidence of impairment at the end of each reporting date. If there is objective evidence of impairment, an impairment loss is recognised in profit or loss immediately. For all equity instruments regardless of significance, and other financial assets that are individually significant, these are assessed individually for impairment. Other financial assets are either assessed individually or grouped on the basis of similar credit risk characteristics. Any reversals of impairment are recognised in profit or loss immediately, to the extent that the reversal does not result in a carrying amount of the financial asset that exceeds what the carrying amount would have been had the impairment not previously been recognised.
Defined contribution plans
Contributions to defined contribution plans are recognised as an expense in the period in which the related service is provided. Prepaid contributions are recognised as an asset to the extent that the prepayment will lead to a reduction in future payments or a cash refund. When contributions are not expected to be settled wholly within 12 months of the end of the reporting date in which the employees render the related service, the liability is measured on a discounted present value basis. The unwinding of the discount is recognised as a finance cost in profit or loss in the period in which it arises.
4. Turnover
Turnover arises from:
2023
2022
£
£
Sale of goods
13,212,026
13,439,288
---------------
---------------
The turnover is attributable to the one principal activity of the company. An analysis of turnover by the geographical markets that substantially differ from each other is given below:
2023
2022
£
£
United Kingdom
12,009,959
12,179,399
Overseas
1,202,067
1,259,889
---------------
---------------
13,212,026
13,439,288
---------------
---------------
5. Other operating income
2023
2022
£
£
Other operating income
12,275
----
---------
6. Operating profit
Operating profit or loss is stated after charging:
2023
2022
£
£
Amortisation of intangible assets
20,079
19,243
Depreciation of tangible assets
411,512
421,042
Loss on disposal of tangible assets
2,533
3,499
Impairment of trade debtors
9,283
8,404
Foreign exchange differences
7,111
7,551
----------
----------
7. Auditor's remuneration
2023
2022
£
£
Fees payable for the audit of the financial statements
20,444
19,570
---------
---------
Fees payable to the company's auditor and its associates for other services:
Other non-audit services
6,825
6,500
---------
---------
8. Staff costs
The average number of persons employed by the company during the year, including the directors, amounted to:
2023
2022
No.
No.
Production staff
61
60
Administrative staff
8
9
Sales staff
7
6
Directors
2
2
----
----
78
77
----
----
The aggregate payroll costs incurred during the year, relating to the above, were:
2023
2022
£
£
Wages and salaries
2,555,906
2,277,201
Social security costs
220,889
239,628
Other pension costs
72,864
69,106
-------------
-------------
2,849,659
2,585,935
-------------
-------------
9. Directors' remuneration
The directors' aggregate remuneration in respect of qualifying services was:
2023
2022
£
£
Remuneration
234,253
213,858
Company contributions to defined contribution pension plans
9,406
10,838
----------
----------
243,659
224,696
----------
----------
The number of directors who accrued benefits under company pension plans was as follows:
2023
2022
No.
No.
Defined contribution plans
2
2
----
----
Remuneration of the highest paid director in respect of qualifying services:
2023
2022
£
£
Aggregate remuneration
157,142
143,977
Company contributions to defined contribution pension plans
8,813
8,778
----------
----------
165,955
152,755
----------
----------
10. Other interest receivable and similar income
2023
2022
£
£
Interest on cash and cash equivalents
2,766
117
-------
----
11. Interest payable and similar expenses
2023
2022
£
£
Interest on banks loans and overdrafts
107,158
60,553
----------
---------
12. Tax on profit
Major components of tax expense
2023
2022
£
£
Current tax:
UK current tax expense
281,829
215,132
Deferred tax:
Origination and reversal of timing differences
48,422
137,016
----------
----------
Tax on profit
330,251
352,148
----------
----------
Reconciliation of tax expense
The tax assessed on the profit on ordinary activities for the year is higher than (2022: higher than) the standard rate of corporation tax in the UK of 23.50 % (2022: 19 %).
2023
2022
£
£
Profit on ordinary activities before taxation
1,228,655
1,488,299
-------------
-------------
Profit on ordinary activities by rate of tax
288,734
281,662
Effect of expenses not deductible for tax purposes
3,613
8,458
Effect of capital allowances and depreciation
( 10,518)
( 74,988)
Deferred tax
48,422
137,016
-------------
-------------
Tax on profit
330,251
352,148
-------------
-------------
13. Dividends
Dividends paid during the year (excluding those for which a liability existed at the end of the prior year):
2023
2022
£
£
Ordinary A shares of £1 each - Interim
800,000
700,000
----------
----------
14. Intangible assets
Goodwill
Patents, trademarks and licences
Total
£
£
£
Cost
At 1 January 2023 and 31 December 2023
392,722
3,629
396,351
----------
-------
----------
Amortisation
At 1 January 2023
333,207
3,388
336,595
Charge for the year
19,838
241
20,079
----------
-------
----------
At 31 December 2023
353,045
3,629
356,674
----------
-------
----------
Carrying amount
At 31 December 2023
39,677
39,677
----------
-------
----------
At 31 December 2022
59,515
241
59,756
----------
-------
----------
As part of a rationalisation of the Verplas Group in the period ended 31 December 2006, the trade and assets of VPE Limited were transferred to Verplas Limited. This resulted in an apparent overvaluation of investments in the Verplas Limited company's books, although there was no overall loss to the Verplas Group. Chapter 4 to the Companies Act 2006 requires that, where such an overvaluation is expected to be permanent, the investment should be written down accordingly. The directors considered that as as the substance of the transaction was merely to reorganise the Verplas Group's operations, such a treatment would fail to give a true and fair view and the diminution in value of investments was instead reallocated to goodwill.
15. Tangible assets
Short leasehold property
Plant and machinery
Fixtures and fittings
Motor vehicles
Assets under construction
Total
£
£
£
£
£
£
Cost
At 1 Jan 2023
693,856
4,742,147
806,946
68,696
86,542
6,398,187
Additions
61,219
164,083
83,331
33,615
130,401
472,649
Disposals
( 70,001)
( 28,630)
( 98,631)
----------
-------------
----------
---------
----------
-------------
At 31 Dec 2023
755,075
4,836,229
890,277
73,681
216,943
6,772,205
----------
-------------
----------
---------
----------
-------------
Depreciation
At 1 Jan 2023
288,375
3,619,596
550,561
56,450
4,514,982
Charge for the year
114,079
220,697
73,478
3,258
411,512
Disposals
( 63,653)
( 20,510)
( 84,163)
----------
-------------
----------
---------
----------
-------------
At 31 Dec 2023
402,454
3,776,640
624,039
39,198
4,842,331
----------
-------------
----------
---------
----------
-------------
Carrying amount
At 31 Dec 2023
352,621
1,059,589
266,238
34,483
216,943
1,929,874
----------
-------------
----------
---------
----------
-------------
At 31 Dec 2022
405,481
1,122,551
256,385
12,246
86,542
1,883,205
----------
-------------
----------
---------
----------
-------------
16. Stocks
2023
2022
£
£
Raw materials and consumables
649,766
813,312
Finished goods and goods for resale
1,337,556
1,438,120
-------------
-------------
1,987,322
2,251,432
-------------
-------------
17. Debtors
2023
2022
£
£
Trade debtors
2,425,374
2,391,888
Prepayments and accrued income
327,402
266,604
Corporation tax repayable
18,144
-------------
-------------
2,770,920
2,658,492
-------------
-------------
18. Cash and cash equivalents
Cash and cash equivalents comprise the following:
2023
2022
£
£
Cash at bank and in hand
67,323
25,226
Bank overdrafts
( 1,195,945)
( 1,377,590)
-------------
-------------
( 1,128,622)
( 1,352,364)
-------------
-------------
19. Creditors: amounts falling due within one year
2023
2022
£
£
Bank loans and overdrafts
1,195,945
1,377,590
Trade creditors
1,085,435
984,386
Amounts owed to group undertakings
187,630
Accruals and deferred income
457,407
377,578
Corporation tax
3,526
Social security and other taxes
278,378
316,239
Other creditors
13,733
13,770
-------------
-------------
3,030,898
3,260,719
-------------
-------------
20. Provisions
Deferred tax (note 21)
£
At 1 January 2023
236,766
Additions
48,422
----------
At 31 December 2023
285,188
----------
21. Deferred tax
The deferred tax included in the statement of financial position is as follows:
2023
2022
£
£
Included in provisions (note 20)
285,188
236,766
----------
----------
The deferred tax account consists of the tax effect of timing differences in respect of:
2023
2022
£
£
Accelerated capital allowances
292,016
243,009
Pension plan obligations
( 6,828)
( 6,243)
----------
----------
285,188
236,766
----------
----------
22. Employee benefits
Defined contribution plans
The amount recognised in profit or loss as an expense in relation to defined contribution plans was £ 72,864 (2022: £ 69,106 ).
23. Called up share capital
Issued, called up and fully paid
2023
2022
No.
£
No.
£
Ordinary A shares of £ 1 each
95
95
95
95
Ordinary B, C, D & E shares of £ 1 each
4
4
4
4
----
----
----
----
99
99
99
99
----
----
----
----
All share classes have the specific right attached that one share equals one vote. There are no restrictions on the distribution of dividends and the repayment of capital.
24. Reserves
Retained earnings includes all current and prior period retained profits and losses. Capital redemption reserve includes all amounts transferred following the redemption or purchase of a company's own shares.
25. Analysis of changes in net debt
At 1 Jan 2023
Cash flows
At 31 Dec 2023
£
£
£
Cash at bank and in hand
25,226
42,097
67,323
Bank overdrafts
(1,377,590)
181,645
(1,195,945)
Debt due within one year
(187,630)
187,630
-------------
----------
-------------
( 1,539,994)
411,372
( 1,128,622)
-------------
----------
-------------
26. Operating leases
The total future minimum lease payments under non-cancellable operating leases are as follows:
2023
2022
£
£
Not later than 1 year
470,956
435,799
Later than 1 year and not later than 5 years
1,624,878
1,609,045
Later than 5 years
540,834
900,712
-------------
-------------
2,636,668
2,945,556
-------------
-------------
VERPLAS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (continued)
YEAR ENDED 31 DECEMBER 2023
27. Controlling party
Indutrade UK Limited owns 100% of the issued share capital in Verplas Limited. Indutrade AB, a company incorporated in Sweden, owns 100% of the share capital of the parent company, Indutrade UK Limited, and the company is therefore a wholly owned subsidary of the Indutrade Group. The consolidated financial statements of Indutrade AB are avaliable and may be obtained from Raseborgsgaten 9, Box 6044, SE-164 06 Kista, Sweden.