Grafitec Limited
(Formally Grafitec Public Limited Company)
Annual report and financial statements
For the year ended 31 December 2023
Grafitec Limited
(formally Grafitec Public Limited Company)
Company information
Directors
Mr R G Hogg
Mr C J Barrett
Mr S J Wyles
Secretary
Mr C J Barrett
Company number
03797132
Registered office
Grafic House
Tom Dando Close
Normanton Industrial Estate
Wakefield
West Yorkshire
WF6 1TP
Auditor
DJH Audit Limited
The Glades
Festival Way
Festival Park
Stoke-on-Trent
Staffordshire
ST1 5SQ
Grafitec Limited
(formally Grafitec Public Limited Company)
Contents
Page
Strategic report
1 - 2
Directors' report
3 - 4
Independent auditor's report
5 - 8
Statement of income and retained earnings
9
Balance sheet
10
Notes to the financial statements
11 - 21
Grafitec Limited
(Formally Grafitec Public Limited Company)
Strategic report
For the year ended 31 December 2023
- 1 -
The directors present the strategic report for the year ended 31 December 2023.
Review of the business
We aim to provide a balanced and comprehensive review of the development and performance of our business during the year and its position at the year end. Our review is consistent with the size and non-complex nature of our business and is written in the context of the risks and uncertainties we face.
As a binding and finishing machinery supplier, the company continues to deal in the refurbishment and sale of used binding and finishing machines.
Turnover has increased by 35.93% this year compared with 2022 to £5,777,924 (2022: £4,250,733). The gross profit percentage has decreased compared with the prior year. This year it is 17.40% (2022: 17.87%). Due the to the increase in turnover, gross profit has increased by £245,882 to £1,005,505 (2022: £759,623). Administrative expenses have remained fairly consistent with the prior year £1,069,979 (2022: £987,439). The overall profit for the financial year was £64,446 (2022: £62,988).
The directors are satisfied to maintain consistent results this year and the financial position at the year end. An annual comprehensive review of costs, margins and expenses is carried out as part of the budget preparation. Changes implemented as a result of this annual review have helped increase the gross profitability of the company in recent years and it is hoped that this trend can be maintained.
The business environment in which we operate continues to be challenging. The company faces competition both nationally and globally. We are of course also subject to consumer spending patterns and purchasing policies.
Principal risks and uncertainties
There are a range of risks facing the company and the company seeks to manage its exposure to all forms of risk.
Financial instrument risk
The company is exposed to the risk that the financial instruments held by the company impact on its ability to operate effectively and profitably. The risks which are relevant to the company's operations are:
Foreign currency risk
The company's transactions are predominantly in Sterling, US Dollar and Euros. Bank accounts are held in these currencies and used to trade in and out in order to minimise exchange risk. Throughout the financial year, the influences of foreign exchange rates has impacted on the company's financial forecasting. Quarterly comparisons across the exchange market, provides confidence that the most beneficial rates are secured.
Cashflow risks
The company carefully manages its stock holding and debtor book to ensure that sufficient cash is available to meet operational needs. Credit is not extended to customers, machine sales being paid upon installation, usually with a significant deposit. Overseas transactions are payable in advance, by letter of credit, or upon copy bills of lading, minimising risk.
Liquidity risks
The company funds working capital needs through the generation and retention of profits.
Development and performance
The Group have liquidated buildings and land assets in order to become self funding, reducing bank borrowings while increasing buying power for Grafitec PLC to focus on its core business. With these risks and uncertainties in mind, we are aware that any plans for the future development of the business may be subject to unforeseen future events outside our control.
Grafitec Limited
(Formally Grafitec Public Limited Company)
Strategic report (continued)
For the year ended 31 December 2023
- 2 -
Key performance indicators
The company has several KPIs which are used to analyse current performance and assist with business development. Monthly KPIs are used to monitor financial and operational performance and are used to inform of progress and improvements.
We consider that our key performance indicators are those that communicate the financial performance and strength of the company as a whole, these being turnover, turnover growth, gross profit margin, operating profit margin and cash management (cash at bank and in hand).
2023 2022 2021
Turnover £5,777,924 £4,250,733 £5,283,000
(Decrease)/Increase in turnover 35.93% (19.54%) 9.42%
Gross profit margin 17.40% 17.87% 19.31%
Operating profit margin 1.67% 1.92% 2.01%
Cash at bank and in hand £97,785 £184,453 £259,474
Mr C J Barrett
Secretary
31 July 2024
Grafitec Limited
(Formally Grafitec Public Limited Company)
Directors' report
For the year ended 31 December 2023
- 3 -
The directors present their annual report and financial statements for the year ended 31 December 2023.
Principal activities
The principal activity of the company continued to be that of the supply of binding and folding machinery.
Results and dividends
The results for the year are set out on page 9.
No ordinary dividends were paid. The directors do not recommend payment of a final dividend.
Directors
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
Mr R G Hogg
Mr A C Barrett
(Deceased 14 November 2023)
Mr C J Barrett
Mr S J Wyles
Energy and carbon report
2023
2022
Energy consumption
kWh
kWh
Aggregate of energy consumption in the year
- Gas combustion
165,489
-
- Electricity purchased
60,361
74,649
225,850
74,649
2023
2022
Emissions of CO2 equivalent
metric tonnes
metric tonnes
Scope 1 - direct emissions
- Gas combustion
44.99
-
44.99
-
Scope 2 - indirect emissions
- Electricity purchased
12.16
15.28
Total gross emissions
57.15
15.28
Intensity ratio
Tonnes CO2e per average full-time employee
4.08
1.09
Quantification and reporting methodology
We have followed the 2019 HM Government Environmental Reporting Guidelines. We have also used the GHG Reporting Protocol – Corporate Standard and have used the 2023 UK Government’s Conversion Factors for Company Reporting.
Grafitec Limited
(Formally Grafitec Public Limited Company)
Directors' report (continued)
For the year ended 31 December 2023
- 4 -
Intensity measurement
The chosen intensity measurement ratio is total gross emissions in metric tonnes CO2e per turnover.
Measures taken to improve energy efficiency
The company is always looking for ways to reduce its carbon footprint.
Statement of directors' responsibilities
The directors are responsible for preparing the annual report and the financial statements in accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period. In preparing these financial statements, the directors are required to:
select suitable accounting policies and then apply them consistently;
make judgements and accounting estimates that are reasonable and prudent;
state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements;
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.
Strategic report
The company has chosen in accordance with Companies Act 2006, s. 414C(11) to set out in the company's strategic report information required by Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008, Sch. 7 to be contained in the directors' report.
Statement of disclosure to auditor
So far as the directors are aware, there is no relevant audit information of which the company's auditors are unaware. Additionally, the directors have taken all the necessary steps that they ought to have taken as directors in order to make themselves aware of all relevant audit information and to establish that the company's auditors are aware of that information.
By order of the board
Mr C J Barrett
Secretary
31 July 2024
Grafitec Limited
(Formally Grafitec Public Limited Company)
Independent auditor's report
To the members of Grafitec Limited
- 5 -
Opinion
We have audited the financial statements of Grafitec Limited (the 'company') for the year ended 31 December 2023 which comprise the statement of income and retained earnings, the balance sheet and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).
In our opinion the financial statements:
give a true and fair view of the state of the company's affairs as at 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; and
have been prepared in accordance with the requirements of the Companies Act 2006.
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.
The other information comprises the information included in the annual report other than the financial statements and our auditor's report thereon. The directors are responsible for the other information contained within the annual report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of our audit:
the information given in the 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.
Grafitec Limited
(Formally Grafitec Public Limited Company)
Independent auditor's report (continued)
To the members of Grafitec Limited
- 6 -
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 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.
The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below.
Grafitec Limited
(Formally Grafitec Public Limited Company)
Independent auditor's report (continued)
To the members of Grafitec Limited
- 7 -
The extent to which the audit was considered capable of detecting irregularities including fraud is detailed below.
Our approach to identifying and assessing the risks of material misstatement in respect of irregularities, including fraud and non-compliance with laws and regulations, was as follows:
the engagement partner ensured that the engagement team collectively had the appropriate competence, capabilities and skills to identify or recognise non-compliance with applicable laws and regulations;
we identified the laws and regulations applicable to the company through discussions with directors and other management, and from our commercial knowledge and experience of the company;
we assessed the extent of compliance with the laws and regulations identified above through making enquiries of management and inspecting legal correspondence; and
identified laws and regulations were communicated within the audit team regularly and the team remained alert to instances of non-compliance throughout the audit.
We assessed the susceptibility of the company’s financial statements to material misstatement, including obtaining an understanding of how fraud might occur, by:
making enquiries of management as to where they considered there was susceptibility to fraud, their knowledge of actual, suspected and alleged fraud; and
considering the internal controls in place to mitigate risks of fraud and non compliance with laws and regulations.
To address the risk of fraud through management bias and override of controls, we:
performed analytical procedures to identify any unusual or unexpected relationships;
tested journal entries to identify unusual transactions; and
assessed whether judgements and assumptions made in determining the accounting estimates were indicative of potential bias.
In response to the risk of irregularities and non-compliance with laws and regulations, we designed procedures which included, but were not limited to:
agreeing financial statement disclosures to underlying supporting documentation;
enquiring of management as to actual and potential litigation and claims; and
reviewing correspondence with HMRC, relevant regulators, and the company’s legal advisors.
There are inherent limitations in our audit procedures described above. The more removed that laws and regulations are from financial transactions, the less likely it is that we would become aware of non-compliance. Auditing standards also limit the audit procedures required to identify non-compliance with laws and regulations to enquiry of the directors and other management and the inspection of regulatory and legal correspondence, if any.
Material misstatements that arise due to fraud can be harder to detect than those that arise from error as they may involve deliberate concealment or collusion.
A further description of our responsibilities is available on the Financial Reporting Council’s website at: https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.
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.
Grafitec Limited
(Formally Grafitec Public Limited Company)
Independent auditor's report (continued)
To the members of Grafitec Limited
- 8 -
Stacey Parr FCCA
Senior Statutory Auditor
For and on behalf of DJH Audit Limited
7 August 2024
Accountants
Statutory Auditor
The Glades
Festival Way
Festival Park
Stoke-on-Trent
Staffordshire
ST1 5SQ
Grafitec Limited
(Formally Grafitec Public Limited Company)
Statement of income and retained earnings
For the year ended 31 December 2023
- 9 -
2023
2022
Notes
£
£
Turnover
2
5,777,924
4,250,733
Cost of sales
(4,772,419)
(3,491,110)
Gross profit
1,005,505
759,623
Administrative expenses
(1,069,979)
(987,439)
Other operating income
161,148
309,318
Operating profit
3
96,674
81,502
Interest receivable and similar income
7
47
Interest payable and similar expenses
8
(2,057)
(273)
Profit before taxation
94,664
81,229
Tax on profit
9
(30,218)
(18,241)
Profit for the financial year
64,446
62,988
Retained earnings brought forward
878,043
815,055
Retained earnings carried forward
942,489
878,043
The profit and loss account has been prepared on the basis that all operations are continuing operations.
Grafitec Limited
(Formally Grafitec Public Limited Company)
Balance sheet
As at 31 December 2023
31 December 2023
- 10 -
2023
2022
Notes
£
£
£
£
Fixed assets
Tangible assets
10
128,142
67,686
Current assets
Stocks
11
754,029
849,612
Debtors
12
557,858
558,248
Cash at bank and in hand
97,785
184,453
1,409,672
1,592,313
Creditors: amounts falling due within one year
13
(513,289)
(723,530)
Net current assets
896,383
868,783
Total assets less current liabilities
1,024,525
936,469
Provisions for liabilities
Deferred tax liability
14
32,036
8,426
(32,036)
(8,426)
Net assets
992,489
928,043
Capital and reserves
Called up share capital
16
50,000
50,000
Profit and loss reserves
17
942,489
878,043
Total equity
992,489
928,043
The financial statements were approved by the board of directors and authorised for issue on 31 July 2024 and are signed on its behalf by:
Mr C J Barrett
Director
Company Registration No. 03797132
Grafitec Limited
(Formally Grafitec Public Limited Company)
Notes to the financial statements
For the year ended 31 December 2023
- 11 -
1
Accounting policies
Company information
Grafitec Limited is a private company limited by shares incorporated in England and Wales. The registered office is Grafic House, Tom Dando Close, Normanton Industrial Estate, Wakefield, West Yorkshire, WF6 1TP.
1.1
Accounting convention
These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006.
The financial statements are prepared in sterling, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £.
The financial statements have been prepared under the historical cost convention. The principal accounting policies adopted are set out below.
This company is a qualifying entity for the purposes of FRS 102, being a member of a group where the parent of that group prepares publicly available consolidated financial statements, including this company, which are intended to give a true and fair view of the assets, liabilities, financial position and profit or loss of the group. The company has therefore taken advantage of exemptions from the following disclosure requirements:
The financial statements of the company are consolidated in the financial statements of Grafitec Holdings Limited. These consolidated financial statements are available from its registered office.
Grafitec Limited is a wholly owned subsidiary of Grafitec Holdings Limited and the results of Grafitec Limited are included in the consolidated financial statements of Grafitec Holdings Limited which are available from Companies House, Crown Way, Cardiff, CF14 3UZ.
1.2
Going concern
Atruet the time of approving the financial statements, the directors have a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future. Thus the directors continue to adopt the going concern basis of accounting in preparing the financial statements.
1.3
Turnover
Turnover is recognised at the fair value of the consideration received or receivable for goods and services provided in the normal course of business, and is shown net of VAT and other sales related taxes. The fair value of consideration takes into account trade discounts, settlement discounts and volume rebates.
When cash inflows are deferred and represent a financing arrangement, the fair value of the consideration is the present value of the future receipts. The difference between the fair value of the consideration and the nominal amount received is recognised as interest income.
Revenue from the sale of goods is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer (usually on despatch of the goods), the amount of revenue can be measured reliably, it is probable that the economic benefits associated with the transaction will flow to the entity and the costs incurred or to be incurred in respect of the transaction can be measured reliably.
Grafitec Limited
(Formally Grafitec Public Limited Company)
Notes to the financial statements (continued)
For the year ended 31 December 2023
1
Accounting policies
(Continued)
- 12 -
1.4
Tangible fixed assets
Tangible fixed assets are initially measured at cost and subsequently measured at cost or valuation, net of depreciation and any impairment losses.
Depreciation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:
Plant and machinery
15% per annum on cost
Fixtures, fittings and equipment
15% per annum on net book value
Motor vehicles
25% per annum on net book value & 10% on cost
The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is credited or charged to profit or loss.
1.5
Impairment of fixed assets
At each reporting period end date, the company reviews the carrying amounts of its tangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the company estimates the recoverable amount of the cash-generating unit to which the asset belongs.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.
Recognised impairment losses are reversed if, and only if, the reasons for the impairment loss have ceased to apply. Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.
1.6
Stocks
Stocks are stated at the lower of cost and estimated selling price less costs to complete and sell. Cost comprises direct materials and, where applicable, direct labour costs and those overheads that have been incurred in bringing the stocks to their present location and condition.
Stocks held for distribution at no or nominal consideration are measured at the lower of cost and replacement cost, adjusted where applicable for any loss of service potential.
At each reporting date, an assessment is made for impairment. Any excess of the carrying amount of stocks over its estimated selling price less costs to complete and sell is recognised as an impairment loss in profit or loss. Reversals of impairment losses are also recognised in profit or loss.
Grafitec Limited
(Formally Grafitec Public Limited Company)
Notes to the financial statements (continued)
For the year ended 31 December 2023
1
Accounting policies
(Continued)
- 13 -
1.7
Cash and cash equivalents
Cash and cash equivalents are basic financial assets and include cash in hand, deposits held at call with banks, other short-term liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities.
1.8
Financial instruments
The company has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.
Financial instruments are recognised in the company's balance sheet when the company becomes party to the contractual provisions of the instrument.
Financial assets and liabilities are offset, with the net amounts presented in the financial statements, when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.
Basic financial assets
Basic financial assets, which include debtors , amounts due from group companies and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised.
Other financial assets
Other financial assets, including investments in equity instruments which are not subsidiaries, associates or joint ventures, are initially measured at fair value, which is normally the transaction price. Such assets are subsequently carried at fair value and the changes in fair value are recognised in profit or loss, except that investments in equity instruments that are not publicly traded and whose fair values cannot be measured reliably are measured at cost less impairment.
Trade debtors, loans and other receivables that have fixed or determinable payments that are not quoted in an active market are classified as 'loans and receivables'. Loans and receivables are measured at amortised cost using the effective interest method, less any impairment.
Interest is recognised by applying the effective interest rate, except for short-term receivables when the recognition of interest would be immaterial. The effective interest method is a method of calculating the amortised cost of a debt instrument and of allocating the interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts through the expected life of the debt instrument to the net carrying amount on initial recognition.
Grafitec Limited
(Formally Grafitec Public Limited Company)
Notes to the financial statements (continued)
For the year ended 31 December 2023
1
Accounting policies
(Continued)
- 14 -
Impairment of financial assets
Financial assets, other than those held at fair value through profit and loss, are assessed for indicators of impairment at each reporting end date.
Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected. If an asset is impaired, the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset’s original effective interest rate. The impairment loss is recognised in profit or loss.
If there is a decrease in the impairment loss arising from an event occurring after the impairment was recognised, the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been, had the impairment not previously been recognised. The impairment reversal is recognised in profit or loss.
Derecognition of financial assets
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the company transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.
Classification of financial liabilities
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the company after deducting all of its liabilities.
Basic financial liabilities
Basic financial liabilities, including creditors and loans from fellow group companies, are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future payments discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.
Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.
Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Amounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.
Other financial liabilities
Debt instruments that do not meet the conditions in FRS 102 paragraph 11.9 are subsequently measured at fair value through profit or loss. Debt instruments may be designated as being measured at fair value through profit or loss to eliminate or reduce an accounting mismatch or if the instruments are measured and their performance evaluated on a fair value basis in accordance with a documented risk management or investment strategy.
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the company after deducting all of its liabilities.
Grafitec Limited
(Formally Grafitec Public Limited Company)
Notes to the financial statements (continued)
For the year ended 31 December 2023
1
Accounting policies
(Continued)
- 15 -
Derecognition of financial liabilities
Financial liabilities are derecognised when the company’s contractual obligations expire or are discharged or cancelled.
1.9
Equity instruments
Equity instruments issued by the company are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the company.
1.10
Taxation
The tax expense represents the sum of the tax currently payable and deferred tax.
Current tax
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the profit and loss account because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The company’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.
Deferred tax
Deferred tax liabilities are generally recognised for all timing differences and 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. Such assets and liabilities are not recognised if the timing difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.
Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the profit and loss account, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity.
1.11
Employee benefits
The costs of short-term employee benefits are recognised as a liability and an expense.
The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received.
Termination benefits are recognised immediately as an expense when the company is demonstrably committed to terminate the employment of an employee or to provide termination benefits.
1.12
Retirement benefits
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
1.13
Foreign exchange
Transactions in currencies other than pounds sterling are recorded at the rates of exchange prevailing at the dates of the transactions. At each reporting end date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the reporting end date. Gains and losses arising on translation in the period are included in profit or loss.
Grafitec Limited
(Formally Grafitec Public Limited Company)
Notes to the financial statements (continued)
For the year ended 31 December 2023
- 16 -
2
Turnover and other revenue
An analysis of the company's turnover is as follows:
2023
2022
£
£
Turnover analysed by class of business
Purchases for resale
5,777,924
4,250,733
2023
2022
£
£
Turnover analysed by geographical market
UK
2,736,066
1,765,995
EEC
525,861
346,138
Rest of the world
2,515,997
2,138,600
5,777,924
4,250,733
2023
2022
£
£
Other revenue
Interest income
47
-
3
Operating profit
2023
2022
Operating profit for the year is stated after charging/(crediting):
£
£
Exchange losses/(gains)
644
(2,534)
Fees payable to the company's auditor for the audit of the company's financial statements
14,000
8,900
Depreciation of owned tangible fixed assets
36,668
15,678
(Profit)/loss on disposal of tangible fixed assets
(2,435)
432
4
Auditor's remuneration
2023
2022
Fees payable to the company's auditor and associates:
£
£
For audit services
Audit of the financial statements of the company
14,000
8,900
Grafitec Limited
(Formally Grafitec Public Limited Company)
Notes to the financial statements (continued)
For the year ended 31 December 2023
- 17 -
5
Employees
The average monthly number of persons (including directors) employed by the company during the year was:
2023
2022
Number
Number
Office and management
9
9
Warehouse staff
5
5
Total
14
14
Their aggregate remuneration comprised:
2023
2022
£
£
Wages and salaries
466,447
440,831
Social security costs
39,338
37,581
Pension costs
77,248
76,225
583,033
554,637
6
Directors' remuneration
2023
2022
£
£
Remuneration for qualifying services
111,276
106,393
Company pension contributions to defined contribution schemes
54,770
54,537
166,046
160,930
The number of directors for whom retirement benefits are accruing under defined contribution schemes amounted to 3 (2022 - 3).
7
Interest receivable and similar income
2023
2022
£
£
Interest income
Interest on bank deposits
47
Grafitec Limited
(Formally Grafitec Public Limited Company)
Notes to the financial statements (continued)
For the year ended 31 December 2023
- 18 -
8
Interest payable and similar expenses
2023
2022
£
£
Interest on bank overdrafts and loans
300
273
Interest on finance leases and hire purchase contracts
1,757
-
2,057
273
9
Taxation
2023
2022
£
£
Current tax
UK corporation tax on profits for the current period
6,608
18,241
Deferred tax
Origination and reversal of timing differences
23,610
Total tax charge
30,218
18,241
The actual charge for the year can be reconciled to the expected charge for the year based on the profit or loss and the standard rate of tax as follows:
2023
2022
£
£
Profit before taxation
94,664
81,229
Expected tax charge based on the standard rate of corporation tax in the UK of 25.00% (2022: 19.00%)
23,666
15,434
Tax effect of expenses that are not deductible in determining taxable profit
82
Effect of change in corporation tax rate
(665)
Deferred tax adjustments in respect of prior years
8,496
Depreciation add back
(3,887)
Enhanced capital allowances
(1,279)
5,140
Unrecognised deferred tax adjustment
15,772
Unrecognised deferred tax adjustment in prior year
(15,048)
Changes in deferred tax rate
748
Taxation charge for the year
30,218
18,241
Grafitec Limited
(Formally Grafitec Public Limited Company)
Notes to the financial statements (continued)
For the year ended 31 December 2023
- 19 -
10
Tangible fixed assets
Plant and machinery
Fixtures, fittings and equipment
Motor vehicles
Total
£
£
£
£
Cost
At 1 January 2023
58,491
33,102
158,471
250,064
Additions
3,530
99,660
103,190
Disposals
(33,857)
(33,857)
At 31 December 2023
58,491
36,632
224,274
319,397
Depreciation and impairment
At 1 January 2023
58,246
18,414
105,718
182,378
Depreciation charged in the year
245
2,733
33,690
36,668
Eliminated in respect of disposals
(27,791)
(27,791)
At 31 December 2023
58,491
21,147
111,617
191,255
Carrying amount
At 31 December 2023
15,485
112,657
128,142
At 31 December 2022
245
14,688
52,753
67,686
11
Stocks
2023
2022
£
£
Finished goods and goods for resale
754,029
849,612
12
Debtors
2023
2022
Amounts falling due within one year:
£
£
Trade debtors
168,669
288,496
Amounts owed by group undertakings
232,789
83,708
Other debtors
20,922
144,570
Prepayments and accrued income
135,478
41,474
557,858
558,248
Grafitec Limited
(Formally Grafitec Public Limited Company)
Notes to the financial statements (continued)
For the year ended 31 December 2023
- 20 -
13
Creditors: amounts falling due within one year
2023
2022
£
£
Trade creditors
314,236
407,224
Amounts owed to group undertakings
60,000
227,232
Corporation tax
6,608
18,241
Other taxation and social security
9,767
9,566
Other creditors
57,653
1,934
Accruals and deferred income
65,025
59,333
513,289
723,530
14
Deferred taxation
The following are the major deferred tax liabilities recognised by the company and movements thereon:
Liabilities
Liabilities
2023
2022
Balances:
£
£
Accelerated Capital Allowances
32,036
8,426
2023
Movements in the year:
£
Liability at 1 January 2023
8,426
Effect of change in tax rate - profit or loss
23,610
Liability at 31 December 2023
32,036
15
Retirement benefit schemes
2023
2022
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
77,248
76,225
The company operates a defined contribution pension scheme for all qualifying employees. The assets of the scheme are held separately from those of the company in an independently administered fund.
Grafitec Limited
(Formally Grafitec Public Limited Company)
Notes to the financial statements (continued)
For the year ended 31 December 2023
- 21 -
16
Share capital
2023
2022
2023
2022
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Ordinary shares of £1 each
50,000
50,000
50,000
50,000
Each share carries full voting rights.
17
Profit and loss reserves
The retained earnings reserve holds the retained earnings of the company, after the deduction of any dividends paid in the period.
18
Financial commitments, guarantees and contingent liabilities
The company has a cross guarantee and debenture dated 21 October 2004, in favour of Barclays Bank plc, between Grafitec Plc and the following companies:-
Grafitec Web Limited
Grafitec Holdings Limited
19
Ultimate controlling party
The ultimate parent company is Grafitec Holdings Limited, a company registered in England and Wales.
The ultimate controlling party is considered to be Mr C J Barrett, by virtue of his majority shareholding in the parent company.
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