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Registered number: 10899695










MERPAS (UK) LIMITED










ANNUAL REPORT AND FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2022

 
MERPAS (UK) LIMITED
 
 
COMPANY INFORMATION


Directors
Fadi Freiha 
Edgard Frem 




Registered number
10899695



Registered office
Building 4
Foundation Park

Roxborough Way

Maidenhead

SL6 3UD




Independent auditor
MHA

Building 4

Foundation Park

Roxborough Way

Maidenhead

SL6 3UD





 
MERPAS (UK) LIMITED
 

CONTENTS



Page
Group Strategic Report
1 - 2
Directors' Report
3 - 4
Independent Auditor's Report
5 - 9
Consolidated Statement of Comprehensive Income
10
Consolidated Statement of Financial Position
11 - 12
Company Statement of Financial Position
13
Consolidated Statement of Changes in Equity
14
Company Statement of Changes in Equity
15
Consolidated Statement of Cash Flows
16 - 17
Consolidated Analysis of Net Debt
18
Notes to the Financial Statements
19 - 46


 
MERPAS (UK) LIMITED
 
 
GROUP STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2022

Introduction
 
The directors present their strategic report together with the financial statements for the year ended 31 December 2022.

Business review
 
Merpas (UK) Limited and Subsidiaries (the "Group") is a leading supplier of heavy duty sacks, FFS film, sealant file, stretch hood film and shrink building film. Our experienced management, operations, and sales teams introduce innovations to optimize customer packaging platforms drive sustainability initiatives, and reinforce the group’s leadership position in the industry.

Principal risks and uncertainties
 
The slow down of the economy in the US and the impact that this would have on the valuation of the US entities.
With expanding into Europe, the risks associated with this; including, but not limited to, the continued risk as a result of the Brexit decision. Despite these risks, the directors are happy that the Group is financially secure.

Future developments of the business
 
We continue to support the growth of the US operations Indevco North America ("INA") through the expansion of the current manufacturing capabilities as well as the acquisition of new entities.
In Europe, we plan to invest in new manufacturing ventures, initially in the UK, and later throughout continental Europe, in the field of plastic films (and their derivatives) as well as paper and corrugated packaging.

Directors' statement of compliance with duty to promote the success of the Group
 
The Board of Directors always consider, both individually and together, that they have acted in the way they consider, in good faith, would be most likely to promote the success of the Company for the benefit of its employees and shareholders as a whole, having regard to the stakeholders and matters set out in s172(1) (a) - (f) of the Companies Act 2006, in the decisions taken during the year ended 31 December 2022. 
We have a one-year strategic business plan, designed to counter the impact of the current Coronavirus pandemic, which is designed to ensure there is a longer term beneficial impact on the group and to contribute to its success in delivering a high quality of service across all of our business divisions.
We put people at the centre of everything we do and we embrace innovation and technology to be sustainable leaders in our chosen fields. 
Engagement with suppliers and customers is also key to our success. 
As the Board of Directors, our intention is to behave in a responsible manner, operating within the high standards of business conduct and good governance expected for a business such as ours and in doing so, will contribute to the delivery of our plan. The intention is to nurture our reputation, through both construction and delivery of our plan, that reflects our values, beliefs and culture.
As the Board of Directors, our intention is to behave responsibly towards all our enlightened shareholders and treat them fairly and equally, so they too may benefit from the successful delivery of our plan.

Page 1

 
MERPAS (UK) LIMITED
 

GROUP STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022


This report was approved by the board and signed on its behalf.



Fadi Freiha
Director

Date: 16 August 2024

Page 2

 
MERPAS (UK) LIMITED
 
 
 
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 DECEMBER 2022

The directors present their report and the financial statements for the year ended 31 December 2022.

Directors' responsibilities statement

The directors are responsible for preparing the Group Strategic Report, the Directors' Report and the consolidated 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 applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice), including Financial Reporting Standard 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland'. Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Company and the Group and of the profit or loss of the Group for that period.

 In preparing these financial statements, the directors are required to:


select suitable accounting policies for the Group's financial statements 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 Group 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 the Group and to enable them to ensure that the financial statements comply with the Companies Act 2006They are also responsible for safeguarding the assets of the Company and the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

Results and dividends

The loss for the year, after taxation, amounted to $8,404,000 (2021 - loss $3,903,000).

No dividends were declared during the period (2021: $109,277,000).

Directors

The directors who served during the year were:

Fadi Freiha 
Edgard Frem 

Future developments

We continue to support the growth of the US operations INA through the expansion of the current manufacturing capabilities as well as the acquisition of new entities.
In Europe, we plan to invest in new manufacturing ventures, initially in the UK, and later throughout continental Europe, in the field of plastic films (and their derivatives) as well as paper and corrugated packaging.

Page 3

 
MERPAS (UK) LIMITED
 
 
 
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022

Greenhouse gas emissions, energy consumption and energy efficiency action

The Group has not disclosed information in respect of greenhouse gas emissions, energy consumption and energy efficiency action as Merpas (UK) Limited's energy consumption in the United Kingdom for the year is 40,000kWh or lower, by virtue of it's trade. No further Group entity is required to be included in the report due to the exemptions applicable to overseas entities and those subsidiaries which would not be obliged to report individually themselves.

Disclosure of information to auditor

Each of the persons who are directors at the time when this Directors' Report is approved has confirmed that:
 
so far as the director is aware, there is no relevant audit information of which the Company and the Group's auditor is unaware, and

the director has taken all the steps that ought to have been taken as a director in order to be aware of any relevant audit information and to establish that the Company and the Group's auditor is aware of that information.

Auditor

Under section 487(2) of the Companies Act 2006MHA will be deemed to have been reappointed as auditor 28 days after these financial statements were sent to members or 28 days after the latest date prescribed for filing the accounts with the registrar, whichever is earlier.

This report was approved by the board and signed on its behalf.
 





Fadi Freiha
Director

Date: 16 August 2024

Page 4

 
MERPAS (UK) LIMITED
 
 
 
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF MERPAS (UK) LIMITED
 

Qualified opinion


We have audited the financial statements of Merpas (UK) Limited (the 'parent Company') and its subsidiaries (the 'Group') for the year ended 31 December 2022, which comprise the Consolidated Statement of Comprehensive Income, the Consolidated Statement of Financial Position, the Company Statement of Financial Position, the Consolidated Statement of Cash Flows, the Consolidated Statement of Changes in Equity, the Company Statement of Changes in Equity and the related notes, including a summary of significant accounting policiesThe 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, except for the possible effects of the matter described in the basis for qualified opinion section of our report, the financial statements:


give a true and fair view of the state of the Group's and of the parent Company's affairs as at 31 December 2022 and of the Group's loss for the year then ended;
have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
have been prepared in accordance with the requirements of the Companies Act 2006.


Basis for qualified opinion


In the prior year, we were unable to obtain sufficient appropriate audit evidence in respect of the financial statements of significant components of the Group, ePac Holdings LLC, ePac Austin LLC, ePac Richmond LLC and ePac Philadelphia LLC, companies registered and domiciled in the United States of America. As we were unable to obtain documentation we considered necessary for inspection and were unable to satisfy ourselves, by alternative means concerning the reported results and financial position of these significant components of the Group, the audit report was disclaimed. Consequently, it was not possible to determine whether any adjustments might have been necessary to the consolidated financial statements of the Group which include these significant components.
In the current year to 31 December 2022, we have obtained sufficient appropriate audit evidence in respect of the closing position of the significant components of the Group noted above. However, as a result of the disclaimer of opinion in the prior year, we have been unable to determine whether there was any consequential effect on the Consolidated statement of comprehensive income for the year ended 31 December 2021, or the Consolidated statement of financial position for the year ended 31 December 2021. As such, the two periods may not be entirely comparable.


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 Group in accordance with the ethical requirements that are relevant to our audit of the financial statements in the United Kingdom, including the Financial Reporting Council's Ethical Standard and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.


Page 5

 
MERPAS (UK) LIMITED
 
 
 
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF MERPAS (UK) LIMITED (CONTINUED)


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 Group's or the parent Company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.


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


Other information


The other information comprises the information included in the Annual Report other than the financial statements and our Auditor's Report thereon. The directors are responsible for the other information contained within the Annual ReportOur 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.


Opinion on other matters prescribed by the Companies Act 2006
 

In our opinion, based on the work undertaken in the course of the audit:


the information given in the Group 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 Group Strategic Report and the Directors' Report have been prepared in accordance with applicable legal requirements.


Page 6

 
MERPAS (UK) LIMITED
 
 
 
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF MERPAS (UK) LIMITED (CONTINUED)


Matters on which we are required to report by exception
 

Arising solely from the matter described in the basis for qualified opinion section of our report, in the light of the knowledge and understanding of the Group and the parent Company and its environment obtained in the course of the audit, we have not identified material misstatements in the Group Strategic Report or the Directors' Report.
Arising solely from the limitation on the scope of our work relating to the prior period disclaimer of opinion and its possible effects on the Consolidated statement of comprehensive income for the year ended 31 December 2021, and the Consolidated statement of financial position for the year ended 31 December 2021, referred to above:
 
we have not obtained all the information and explanations that we considered necessary for the purpose of our audit; and
we were unable to determine whether adequate accounting records have been kept.


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 by the parent Company, or returns adequate for our audit have not been received from branches not visited by us; or
the parent Company financial statements are not in agreement with the accounting records and returns; or
certain disclosures of directors' remuneration specified by law are not made; or
we have not received all the information and explanations we require for our audit.


Responsibilities of directors
 

As explained more fully in the Directors' Responsibilities Statement set out on page 3, 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 Group's and the parent 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 Group or the parent Company or to cease operations, or have no realistic alternative but to do so.


Page 7

 
MERPAS (UK) LIMITED
 
 
 
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF MERPAS (UK) LIMITED (CONTINUED)


Auditor responsibilities for the audit of the financial statements
 

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

Enquiry of management and those charged with governance around actual and potential litigation and claims;
 
Performing audit work over the risk of management override of controls, including testing journal entries and other adjustments for appropriateness, evaluating the business rationale of significant transactions outside  the normal course of business and reviewing accounting estimates for bias, and;
 
Reviewing financial statement disclosures and testing supporting documentation to assess compliance with applicable laws and regulations.

Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading to a material misstatement in the financial statements or non-compliance with regulation. This risk increases the more that compliance with a law or regulation is removed from the events and transactions reflected in the financial statements, as we will be less likely to become aware of instances of non-compliance. The risk is also greater regarding irregularities occurring due to fraud rather than error, as fraud involves intentional concealment, forgery, collusion, omission or misrepresentation.


A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our Auditor's Report.


Page 8

 
MERPAS (UK) LIMITED
 
 
 
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF MERPAS (UK) LIMITED (CONTINUED)


Use of our report
 

This report is made solely to the Company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006Our 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.





Katharine Arnott BSc FCA (Senior Statutory Auditor)
for and on behalf of
MHA
Statutory Auditor
Maidenhead, United Kingdom

16 August 2024

MHA is the trading name of MacIntyre Hudson LLP, a limited liability partnership in England and Wales (registered number OC312313)
Page 9

 
MERPAS (UK) LIMITED
 
 
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2022

As restated
2022
2021
Note
$000
$000

  

Turnover
 3 
162,138
138,758

Cost of sales
  
(149,254)
(139,265)

Gross profit/(loss)
  
12,884
(507)

Administrative expenses
  
(29,380)
(12,226)

Other operating income
 4 
(125)
5,089

Other operating charges
  
(261)
-

Operating loss
 5 
(16,882)
(7,644)

Income / (loss) from fixed assets investments
  
1,499
(1,110)

Interest receivable and similar income
 9 
813
61

Interest payable and similar expenses
 10 
(8,591)
(1,123)

Loss before taxation
  
(23,161)
(9,816)

Tax on loss
 11 
(960)
(576)

Loss for the financial year
  
(24,121)
(10,392)

  

Total comprehensive income for the year
  
(24,121)
(10,392)

(Loss) for the year attributable to:
  

Non-controlling interests
  
-
157

Owners of the parent Company
  
(24,121)
(10,549)

  
(24,121)
(10,392)

Total comprehensive income for the year attributable to:
  

Non-controlling interest
  
-
157

Owners of the parent Company
  
(24,121)
(10,549)

  
(24,121)
(10,392)

The notes on pages 19 to 46 form part of these financial statements.

Page 10

 
MERPAS (UK) LIMITED
REGISTERED NUMBER: 10899695

CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2022

As restated
2022
2021
Note
$000
$000

Fixed assets
  

Intangible assets
 13 
3,868
5,424

Tangible assets
 14 
65,832
60,077

Investments
 15 
333,389
337,501

  
403,089
403,002

Current assets
  

Stocks
 16 
18,002
17,320

Debtors: amounts falling due within one year
 17 
31,103
40,962

Cash at bank and in hand
 18 
18,133
43,579

  
67,238
101,861

Creditors: amounts falling due within one year
 19 
(28,394)
(59,415)

Net current assets
  
 
 
38,844
 
 
42,446

Total assets less current liabilities
  
441,933
445,448

Creditors: amounts falling due after more than one year
 20 
(49,689)
(29,779)

Provisions for liabilities
  

Deferred taxation
  
(696)
-

  
 
 
(696)
 
 
-

Net assets
  
391,548
415,669


Capital and reserves
  

Called up share capital 
 23 
38,323
38,323

Revaluation reserve
 24 
8
8

Capital redemption reserve
 24 
7,433
7,433

Merger reserve
 24 
(9,606)
(9,606)

Profit and loss account
 24 
212,694
236,815

Equity attributable to owners of the parent Company
  
248,852
272,973

Non-controlling interests
  
142,696
142,696

  
391,548
415,669


Page 11

 
MERPAS (UK) LIMITED
REGISTERED NUMBER: 10899695
    
CONSOLIDATED STATEMENT OF FINANCIAL POSITION (CONTINUED)
AS AT 31 DECEMBER 2022

The financial statements were approved and authorised for issue by the board and were signed on its behalf by: 


Fadi Freiha
Director

Date: 16 August 2024

The notes on pages 19 to 46 form part of these financial statements.

Page 12

 
MERPAS (UK) LIMITED
REGISTERED NUMBER: 10899695

COMPANY STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2022

2022
2021
Note
$000
$000

Fixed assets
  

Investments
 15 
260,329
251,012

  
260,329
251,012

Current assets
  

Debtors: amounts falling due within one year
 17 
31,719
17,212

Cash at bank and in hand
 18 
386
24,696

  
32,105
41,908

Creditors: amounts falling due within one year
 19 
(7,984)
(7,432)

Net current assets
  
 
 
24,121
 
 
34,476

Total assets less current liabilities
  
284,450
285,488

  

  

Net assets
  
284,450
285,488


Capital and reserves
  

Called up share capital 
 23 
38,323
38,323

Revaluation reserve
 24 
5
5

Capital redemption reserve
 24 
7,433
7,433

Profit and loss account brought forward
  
239,727
302,312

Loss/(profit) for the year
  
(1,038)
46,692

Other changes in the profit and loss account

  

-
(109,277)

Profit and loss account carried forward
  
238,689
239,727

  
284,450
285,488


The financial statements were approved and authorised for issue by the board and were signed on its behalf by: 


Fadi Freiha
Director

Date: 16 August 2024

The notes on pages 19 to 46 form part of these financial statements.

Page 13

 

 
MERPAS (UK) LIMITED


 

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2022



Called up share capital
Capital redemption reserve
Revaluation reserve
Merger reserve
Profit and loss account
Equity attributable to owners of parent Company
Non-controlling interests
Total equity


$000
$000
$000
$000
$000
$000
$000
$000



At 1 January 2021 (as previously stated)
38,323
7,433
8
(9,606)
379,350
415,508
141,845
557,353


Prior year adjustment - correction of error
-
-
-
-
(22,709)
(22,709)
-
(22,709)



At 1 January 2021 (as restated)
38,323
7,433
8
(9,606)
356,641
392,799
141,845
534,644



Comprehensive income for the year


Loss for the year
-
-
-
-
(10,549)
(10,549)
851
(9,698)


Dividends: Equity capital
-
-
-
-
(109,277)
(109,277)
-
(109,277)





At 1 January 2022 (as previously stated)
38,323
7,433
8
(9,606)
232,756
268,914
142,696
411,610


Prior year adjustment - correction of error
-
-
-
-
4,059
4,059
-
4,059



At 1 January 2022 (as restated)
38,323
7,433
8
(9,606)
236,815
272,973
142,696
415,669



Comprehensive income for the year


Loss for the year
-
-
-
-
(24,121)
(24,121)
-
(24,121)



At 31 December 2022
38,323
7,433
8
(9,606)
212,694
248,852
142,696
391,548



The notes on pages 19 to 46 form part of these financial statements.

Page 14

 
MERPAS (UK) LIMITED
 

COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2022


Called up share capital
Capital redemption reserve
Revaluation reserve
Profit and loss account
Total equity

$000
$000
$000
$000
$000


At 1 January 2021
38,323
7,433
5
302,312
348,073


Comprehensive income for the year

Profit for the year
-
-
-
46,692
46,692

Dividends paid
-
-
-
(109,277)
(109,277)



At 1 January 2022
38,323
7,433
5
239,727
285,488


Comprehensive income for the year

Loss for the year
-
-
-
(1,038)
(1,038)


At 31 December 2022
38,323
7,433
5
238,689
284,450


The notes on pages 19 to 46 form part of these financial statements.

Page 15

 
MERPAS (UK) LIMITED
 

CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2022

As restated
2022
2021
$000
$000

Cash flows from operating activities

Loss for the financial year
(24,121)
(10,392)

Adjustments for:

Amortisation of intangible assets
1,555
1,967

Depreciation of tangible assets
1,926
1,995

Loss share from investment in associates
2,424
-

Interest paid
8,591
1,123

Interest received
(813)
(61)

Taxation charge
960
576

(Increase) in stocks
(683)
(683)

Decrease in debtors
41,605
22,937

(Decrease)/increase in creditors
(31,021)
23,031

Corporation tax received
610
576

Net cash generated from operating activities

1,033
41,069


Cash flows from investing activities

Purchase of tangible fixed assets
(10,105)
(12,091)

Proceeds on sale of investments
53,735
147,396

Purchase of unlisted and other investments
(53,054)
(35,889)

Interest received
813
61

Net cash from investing activities

(8,611)
99,477
Page 16

 
MERPAS (UK) LIMITED
 

CONSOLIDATED STATEMENT OF CASH FLOWS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022

As restated

2022
2021

$000
$000



Cash flows from financing activities

Repayment of loans
(1,385)
(8,413)

Dividends paid
-
(109,277)

Interest paid
(8,591)
(1,123)

Net cash used in financing activities
(9,976)
(118,813)

Net (decrease)/increase in cash and cash equivalents
(17,554)
21,733

Cash and cash equivalents at beginning of year
35,449
13,716

Cash and cash equivalents at the end of year
17,895
35,449


Cash and cash equivalents at the end of year comprise:

Cash at bank and in hand
18,133
43,579

Bank overdrafts
(238)
(8,130)

17,895
35,449


The notes on pages 19 to 46 form part of these financial statements.

Page 17

 
MERPAS (UK) LIMITED
 

CONSOLIDATED ANALYSIS OF NET DEBT
FOR THE YEAR ENDED 31 DECEMBER 2022





At 1 January 2022
Cash flows
Other non-cash changes
At 31 December 2022
$000

$000

$000

$000

Cash at bank and in hand

43,579

(46,292)

20,846

18,133

Bank overdrafts

(8,130)

7,896

(5)

(239)

Debt due after 1 year

(27,892)

7,603

(12,744)

(33,033)

Debt due within 1 year

(405)

119

-

(286)

Finance leases

(6,987)

(196)

(5,564)

(12,747)



165
(30,870)
2,533
(28,172)

The notes on pages 19 to 46 form part of these financial statements.

Page 18

 
MERPAS (UK) LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022

1.


General information

Merpas (UK) Limited is a private company limited by shares incorporated in England and Wales, registration number 10899695. 
The principal activities of the Group during the year was that of investment and a supplier of heavy duty sacks, FFS film, sealant film, stretch hood film & shrink bundling film.

2.Accounting policies

 
2.1

Basis of preparation of financial statements

The financial statements have been prepared under the historical cost convention unless otherwise specified within these accounting policies and in accordance with Financial Reporting Standard 102, the Financial Reporting Standard applicable in the UK and the Republic of Ireland and the Companies Act 2006.

The preparation of financial statements in compliance with FRS 102 requires the use of certain critical accounting estimates. It also requires Group management to exercise judgement in applying the Group's accounting policies.

The Company has taken advantage of the exemption allowed under section 408 of the Companies Act 2006 and has not presented its own Statement of Comprehensive Income in these financial statements.

 
2.2

Basis of consolidation

The consolidated financial statements present the results of the Company and its own subsidiaries ("the Group") as if they form a single entity. Intercompany transactions and balances between group companies are therefore eliminated in full.
The consolidated financial statements incorporate the results of business combinations using the purchase method. In the Statement of Financial Position, the acquiree's identifiable assets, liabilities and contingent liabilities are initially recognised at their fair values at the acquisition date. The results of acquired operations are included in the Consolidated Statement of Comprehensive Income from the date on which control is obtained. They are deconsolidated from the date control ceases.

Page 19

 
MERPAS (UK) LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022

2.Accounting policies (continued)

 
2.3

Associates and joint ventures

An entity is treated as a joint venture where the Group is a party to a contractual agreement with one or more parties from outside the Group to undertake an economic activity that is subject to joint control.

An entity is treated as an associated undertaking where the Group exercises significant influence in that it has the power to participate in the operating and financial policy decisions.
In the consolidated accounts, interests in associated undertakings are accounted for using the equity method of accounting. Under this method an equity investment is initially recognised at the transaction price (including transaction costs) and is subsequently adjusted to reflect the investors share of the profit or loss, other comprehensive income and equity of the associate. The Consolidated Statement of Comprehensive Income includes the Group's share of the operating results, interest, pre-tax results and attributable taxation of such undertakings applying accounting policies consistent with those of the Group. In the Consolidated Statement of Financial Position, the interests in associated undertakings are shown as the Group's share of the identifiable net assets, including any unamortised premium paid on acquisition.
Any premium on acquisition is dealt with in accordance with the goodwill policy.

 
2.4

Going concern

The Directors consider it applicable to prepare the Financial Statements on a going concern basis. In reaching this conclusion, the Directors have considered the financial projections of the company and group for the forseeable future, which covers a period of at least 12 months from the date of signing the Financial Statements. The Coronavirus crisis is likely to have an impact on the group's and company's operations over the next 12 months, therefore the Directors have reviewed forecasts which model a worst-case scenario. This model demonstrates the group will be able to continue to be able to repay its liabilities as they fall due for the forseeable future.

Page 20

 
MERPAS (UK) LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022

2.Accounting policies (continued)

 
2.5

Foreign currency translation

Functional and presentation currency

The Company's functional and presentational currency is US Dollars.

Transactions and balances

Foreign currency transactions are translated into the functional currency using the spot exchange rates at the dates of the transactions.

At each period end foreign currency monetary items are translated using the closing rate. Non-monetary items measured at historical cost are translated using the exchange rate at the date of the transaction and non-monetary items measured at fair value are measured using the exchange rate when fair value was determined.

Foreign exchange gains and losses resulting from the settlement of transactions and from the translation at period-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in profit or loss except when deferred in other comprehensive income as qualifying cash flow hedges.

On consolidation, the results of overseas operations are translated into US Dollars at rates approximating to those ruling when the transactions took place. All assets and liabilities of overseas operations are translated at the rate ruling at the reporting date. Exchange differences arising on translating the opening net assets at opening rate and the results of overseas operations at actual rate are recognised in other comprehensive income.

Page 21

 
MERPAS (UK) LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022

2.Accounting policies (continued)

 
2.6

Revenue

Turnover is recognised to the extent that it is probable that the economic benefits will flow to the Group and the turnover can be reliably measured. Turnover is measured as the fair value of the consideration received or receivable, excluding discounts, rebates, value added tax and other sales taxes. The following criteria must also be met before turnover is recognised:

Sale of goods

Turnover from the sale of goods is recognised when all of the following conditions are satisfied:
the Group has transferred the significant risks and rewards of ownership to the buyer;
the Group retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold;
the amount of turnover can be measured reliably;
it is probable that the Group will receive the consideration due under the transaction; and
the costs incurred or to be incurred in respect of the transaction can be measured reliably.

Rendering of services

Turnover from a contract to provide services is recognised in the period in which the services are provided in accordance with the stage of completion of the contract when all of the following conditions are satisfied:
the amount of turnover can be measured reliably;
it is probable that the Group will receive the consideration due under the contract;
the stage of completion of the contract at the end of the reporting period can be measured reliably; and
the costs incurred and the costs to complete the contract can be measured reliably.

 
2.7

Operating leases: the Group as lessee

Rentals paid under operating leases are charged to profit or loss on a straight-line basis over the lease term.

Benefits received and receivable as an incentive to sign an operating lease are recognised on a straight-line basis over the lease term, unless another systematic basis is representative of the time pattern of the lessee's benefit from the use of the leased asset.

 
2.8

Finance costs

Finance costs are charged to profit or loss over the term of the debt using the effective interest method so that the amount charged is at a constant rate on the carrying amount. Issue costs are initially recognised as a reduction in the proceeds of the associated capital instrument.

Page 22

 
MERPAS (UK) LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022

2.Accounting policies (continued)

 
2.9

Pensions

Defined contribution pension plan

The Group operates a defined contribution plan for its employees. A defined contribution plan is a pension plan under which the Group pays fixed contributions into a separate entity. Once the contributions have been paid the Group has no further payment obligations.

The contributions are recognised as an expense in profit or loss when they fall due. Amounts not paid are shown in accruals as a liability in the Statement of Financial Position. The assets of the plan are held separately from the Group in independently administered funds.

Defined benefit pension plan

The Group operates a defined benefit plan for certain employees. A defined benefit plan defines the pension benefit that the employee will receive on retirement, usually dependent upon several factors including but not limited to age, length of service and remuneration. A defined benefit plan is a pension plan that is not a defined contribution plan.

The liability recognised in the Statement of Financial Position in respect of the defined benefit plan is the present value of the defined benefit obligation at the end of the reporting date less the fair value of plan assets at the reporting date (if any) out of which the obligations are to be settled.

The defined benefit obligation is calculated using the projected unit credit method. Annually the company engages independent actuaries to calculate the obligation. The present value is determined by discounting the estimated future payments using market yields on high quality corporate bonds that are denominated in dollars and that have terms approximating to the estimated period of the future payments ('discount rate').

The fair value of plan assets is measured in accordance with the FRS102 fair value hierarchy and in accordance with the Group's policy for similarly held assets. This includes the use of appropriate valuation techniques.

Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are charged or credited to other comprehensive income. These amounts together with the return on plan assets, less amounts included in net interest, are disclosed as 'Remeasurement of net defined benefit liability'.

The cost of the defined benefit plan, recognised in profit or loss as employee costs, except where included in the cost of an asset, comprises:

a) the increase in net pension benefit liability arising from employee service during the period; and

b) the cost of plan introductions, benefit changes, curtailments and settlements.

The net interest cost is calculated by applying the discount rate to the net balance of the defined benefit obligation and the fair value of plan assets. This cost is recognised in profit or loss as a 'finance expense'.

 
2.10

Interest income

Interest income is recognised in profit or loss using the effective interest method.

Page 23

 
MERPAS (UK) LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022

2.Accounting policies (continued)

 
2.11

Borrowing costs

All borrowing costs are recognised in profit or loss in the year in which they are incurred.

 
2.12

Current and deferred taxation

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

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

Deferred tax balances are recognised in respect of all timing differences that have originated but not reversed by the reporting date, except that:
The recognition of deferred tax assets is limited to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits;
Any deferred tax balances are reversed if and when all conditions for retaining associated tax allowances have been met; and
Where they relate to timing differences in respect of interests in subsidiaries, associates, branches and joint ventures and the Group can control the reversal of the timing differences and such reversal is not considered probable in the foreseeable future.

Deferred tax balances are not recognised in respect of permanent differences except in respect of business combinations, when deferred tax is recognised on the differences between the fair values of assets acquired and the future tax deductions available for them and the differences between the fair values of liabilities acquired and the amount that will be assessed for tax. Deferred tax is determined using tax rates and laws that have been enacted or substantively enacted by the reporting date.

Page 24

 
MERPAS (UK) LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022

2.Accounting policies (continued)

 
2.13

Intangible assets

Goodwill

Goodwill represents the difference between amounts paid on the cost of a business combination and the acquirer’s interest in the fair value of the identifiable assets and liabilities of the acquiree at the date of acquisition. Subsequent to initial recognition, goodwill is measured at cost less accumulated amortisation and accumulated impairment losses. Goodwill is amortised on a straight-line basis to the Consolidated Statement of Comprehensive Income over its useful economic life.

Other intangible assets

Intangible assets are initially recognised at cost. After recognition, under the cost model, intangible assets are measured at cost less any accumulated amortisation and any accumulated impairment losses.

All intangible assets are considered to have a finite useful life. If a reliable estimate of the useful life cannot be made, the useful life shall not exceed ten years.

 The estimated useful lives range as follows:

Goodwill
-
10
years

 
2.14

Tangible fixed assets

Tangible fixed assets under the cost model are stated at historical cost less accumulated depreciation and any accumulated impairment losses. Historical cost includes expenditure that is directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management.

Depreciation is charged so as to allocate the cost of assets less their residual value over their estimated useful lives, using the straight-line method.

The estimated useful lives range as follows:

Long-term leasehold property
-
25 years
Plant and machinery
-
5-10 years
Motor vehicles
-
5-10 years
Office equipment
-
5-10 years
Computer equipment
-
5-10 years

The assets' residual values, useful lives and depreciation methods are reviewed, and adjusted prospectively if appropriate, or if there is an indication of a significant change since the last reporting date.

Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised in profit or loss.

Assets in transit and under construction are added to the list of fixed assets but are not depreciated until they have been brought into use. They are included within the category of assets for which the item would otherwise belong.

Page 25

 
MERPAS (UK) LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022

2.Accounting policies (continued)

 
2.15

Valuation of investments

Investments in subsidiaries are measured at cost less accumulated impairment.

Investments in unlisted Company shares, whose market value can be reliably determined, are remeasured to market value at each reporting date. Gains and losses on remeasurement are recognised in the Consolidated Statement of Comprehensive Income for the period. Where market value cannot be reliably determined, such investments are stated at historic cost less impairment.

Investments in listed company shares are remeasured to market value at each reporting date. Gains and losses on remeasurement are recognised in profit or loss for the period.

 
2.16

Stocks

Stocks are stated at the lower of cost and net realisable value, being the estimated selling price less costs to complete and sell. Cost is based on the cost of purchase on a weighted average basis. Work in progress and finished goods include labour and attributable overheads.

At each reporting date, stocks are assessed for impairment. If stock is impaired, the carrying amount is reduced to its selling price less costs to complete and sell. The impairment loss is recognised immediately in profit or loss.

 
2.17

Debtors

Short-term debtors are measured at transaction price, less any impairment. Loans receivable are measured initially at fair value, net of transaction costs, and are measured subsequently at amortised cost using the effective interest method, less any impairment.

 
2.18

Cash and cash equivalents

Cash is represented by cash in hand and deposits with financial institutions repayable without penalty on notice of not more than 24 hours. Cash equivalents are highly liquid investments that mature in no more than three months from the date of acquisition and that are readily convertible to known amounts of cash with insignificant risk of change in value.

In the Consolidated Statement of Cash Flows, cash and cash equivalents are shown net of bank overdrafts that are repayable on demand and form an integral part of the Group's cash management.

 
2.19

Creditors

Short-term creditors are measured at the transaction price. Other financial liabilities, including bank loans, are measured initially at fair value, net of transaction costs, and are measured subsequently at amortised cost using the effective interest method.

 
2.20

Financial instruments

The Group has elected to apply the provisions of Section 11 “Basic Financial Instruments” of FRS 102 to all of its financial instruments.

Financial instruments are recognised in the Group's Statement of Financial Position when the Group becomes party to the contractual provisions of the instrument.

Page 26

 
MERPAS (UK) LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022

2.Accounting policies (continued)


2.20
Financial instruments (continued)

Basic financial assets

Basic financial assets, which include trade and other receivables, cash and bank balances, are initially measured at their transaction price including transaction costs and are subsequently carried at their amortised cost using the effective interest method, less any provision for impairment, 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.

Discounting is omitted where the effect of discounting is immaterial. The Group's cash and cash equivalents, trade and most other receivables due with the operating cycle fall into this category of financial instruments.

Financial liabilities

Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instruments any contract that evidences a residual interest in the assets of the Group after the deduction of all its liabilities.

Basic financial liabilities, which include trade and other payables, bank loans, other loans and loans due to fellow group companies are initially measured at their transaction price after transaction costs. When this constitutes a financing transaction, whereby the debt instrument is measured at the present value of the future receipts discounted at a market rate of interest. Discounting is omitted where the effect of discounting is immaterial.

Debt instruments are subsequently carried at their amortised cost using the effective interest rate method.

Trade payables are obligations to pay for goods and services that have been acquired in the ordinary course of business from suppliers. Trade payables are classified as current liabilities if the payment is due within one year. If not, they represent non-current liabilities. Trade payables are initially recognised at their transaction price and subsequently are measured at amortised cost using the effective interest method. Discounting is omitted where the effect of discounting is immaterial.

 
2.21

Provisions for liabilities

Provisions are recognised when an event has taken place that gives rise to a legal or constructive obligation, a transfer of economic benefits is probable and a reliable estimate can be made.
Provisions are measured as the best estimate of the amount required to settle the obligation, taking into account the related risks and uncertainties.
 
Increases in provisions are generally charged as an expense to profit or loss.

 
2.22

Dividends

Equity dividends are recognised when they become legally payable. Interim equity dividends are recognised when paid. Final equity dividends are recognised when approved by the shareholders at an annual general meeting.

Page 27

 
MERPAS (UK) LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022

3.


Turnover

An analysis of turnover by class of business is as follows:


2022
2021
$000
$000

Paper coating division
112,725
109,770

Plastics division
49,413
28,988

162,138
138,758


Analysis of turnover by country of destination:

2022
2021
$000
$000

United Kingdom
9,864
13,855

Rest of the world
152,274
124,903

162,138
138,758



4.


Other operating income

2022
2021
$000
$000

Other operating income
(125)
5,187

Profit on disposal of tangible assets
-
8

Foreign exchange difference - gain
-
(106)

(125)
5,089



5.


Operating loss

The operating loss is stated after charging:

2022
2021
$000
$000

Exchange differences
4,595
(106)

Page 28

 
MERPAS (UK) LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022

6.


Auditor's remuneration

During the year, the Group obtained the following services from the Company's auditor and its associates:


2022
2021
$000
$000

Fees payable to the Group's auditor and its associates for the audit of the Group's annual financial statements
84
38

Fees payable to the Group's auditor and its associates in respect of:

Audit-related assurance services
15
18


7.


Employees

Staff costs were as follows:


Group
Group
Company
Company
2022
2021
2022
2021
$000
$000
$000
$000


Wages and salaries
17,963
17,163
-
-

Social security costs
572
547
-
-

Cost of defined contribution scheme
195
186
-
-

18,730
17,896
-
-


The average monthly number of employees, including the directors, during the year was as follows:



Group
Group
Company
Company
        2022
        2021
        2022
        2021
            No.
            No.
            No.
            No.









Directors
2
2
2
2



Employees
264
236
-
-

266
238
2
2

The Directors did not receive any remuneration during the period (2021 -$NIL)


8.


Income from investments

2022
2021
$000
$000

Income from fixed asset investments
(1,499)
1,110






Page 29

 
MERPAS (UK) LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022

9.


Interest receivable

2022
2021
$000
$000


Other interest receivable
813
61


10.


Interest payable and similar expenses

2022
2021
$000
$000


Bank interest payable
10
7

Other loan interest payable
1,002
184

Loans from group undertakings
7,579
932

8,591
1,123


11.


Taxation


2022
2021
$000
$000

Corporation tax


Current tax on profits for the year
282
635

Adjustments in respect of previous periods
(18)
(59)


Total current tax
264
576

Deferred tax


Origination and reversal of timing differences
696
-


Tax on loss
960
576
Page 30

 
MERPAS (UK) LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
 
11.Taxation (continued)


Factors affecting tax charge for the year

The tax assessed for the year is higher than (2021 - higher than) the standard rate of corporation tax in the UK of 19% (2021 - 19%). The differences are explained below:

2022
2021
$000
$000


Loss on ordinary activities before tax
(23,161)
(9,817)


Loss on ordinary activities multiplied by standard rate of corporation tax in the UK of 19% (2021 - 19%)
(4,401)
(1,865)

Effects of:


Expenses not deductible for tax purposes
29
63

Adjustments in respect of prior periods
(18)
(64)

State taxation
122
80

Non-taxable income
174
(601)

Impact of overseas tax rates
(512)
343

Impact of disposal of shares
1,054
251

Amounts not recognised
4,512
2,369

Total tax charge for the year
960
576


Factors that may affect future tax charges

The UK Government has confirmed that the increase in the UK corporation tax rate from 19% to 25% (effective 1 April 2023) and substantively enacted on 24 May 2021 will come into force as planned. Deferred taxes at the balance sheet date have been measured using these enacted tax rates and reflected in these financial statements.


12.


Dividends

2022
2021
$000
$000


Dividends on ordinary shares
-
109,277

Page 31

 
MERPAS (UK) LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022

13.


Intangible assets

Group





Trademarks
Goodwill
Total

$000
$000
$000



Cost


At 1 January 2022 (as previously stated)
410
15,148
15,558


Prior Year Adjustment
(410)
-
(410)


At 1 January 2022 (as restated)
-
15,148
15,148



At 31 December 2022

-
15,148
15,148



Amortisation


At 1 January 2022
-
9,725
9,725


Charge for the year on owned assets
-
1,555
1,555



At 31 December 2022

-
11,280
11,280



Net book value



At 31 December 2022
-
3,868
3,868



At 31 December 2021 (as restated)
-
5,424
5,424



Page 32

 
MERPAS (UK) LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022

14.


Tangible fixed assets

Group






Long-term leasehold property
Plant and machinery
Motor vehicles
Office equipment
Computer equipment

$000
$000
$000
$000
$000



Cost


At 1 January 2022 (as previously stated)
16,977
150,469
270
2,019
2,110


Prior Year Adjustment
-
(81,343)
-
-
-


At 1 January 2022 (as restated)
16,977
69,126
270
2,019
2,110


Additions
6,010
4,059
19
4
13


Disposals
(1,232)
(823)
-
(642)
(1,507)



At 31 December 2022

21,755
72,362
289
1,381
616



Depreciation


At 1 January 2022 (as previously stated)
6,072
212
147
1,098
822


Prior Year Adjustment
-
22,073
-
-
-


At 1 January 2022 (as restated)
6,072
22,285
147
1,098
822


Charge for the year on owned assets
79
1,728
48
41
30


Disposals
(1,319)
-
-
-
(460)



At 31 December 2022

4,832
24,013
195
1,139
392



Net book value



At 31 December 2022
16,923
48,349
94
242
224



At 31 December 2021 (as restated)
10,904
46,841
123
921
1,288
Page 33

 
MERPAS (UK) LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022

           14.Tangible fixed assets (continued)


Total

$000



Cost


At 1 January 2022 (as previously stated)
171,845


Prior Year Adjustment
(81,343)


At 1 January 2022 (as restated)
90,502


Additions
10,105


Disposals
(4,204)



At 31 December 2022

96,403



Depreciation


At 1 January 2022 (as previously stated)
8,351


Prior Year Adjustment
22,073


At 1 January 2022 (as restated)
30,424


Charge for the year on owned assets
1,926


Disposals
(1,779)



At 31 December 2022

30,571



Net book value



At 31 December 2022
65,832



At 31 December 2021 (as restated)
60,077

Page 34

 
MERPAS (UK) LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022

           14.Tangible fixed assets (continued)


Included within additions are transfers of £161k from Plant & machinery to Motor vehicles.
Included within the cost of disposals are £585k of Long-term leasehold property, £9,982k of Plant and machinery, £50k of Office equipment and £99k of Computer equipment relating to the deconsolidation of subsidiaries. 
Their related accumulated depreciation on disposal is £26k, £417k, £2k and £4k respectively.
Included within Plant and machinery are assets under construction. Assets under construction are added to tangible fixed assets but are not depreciated until such a time as they are brought in to use.

The net book value of assets held under finance leases or hire purchase contracts, included above, are as follows:


2022
2021
$000
$000



Plant and machinery
12,066
4,434

Page 35

 
MERPAS (UK) LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022

15.


Fixed asset investments

Group





Investments in associates
Listed investments
Unlisted investments
Total

$000
$000
$000
$000



Cost


At 1 January 2022 (as previously stated)
-
326,602
3,045
329,647


Prior Year Adjustment

7,854
-
-
7,854


At 1 January 2022 (as restated)
7,854
326,602
3,045
337,501


Additions
-
36,866
16,188
53,054


Disposals
-
(46,605)
(7,130)
(53,735)


Share of profit/(loss)
2,773
-
-
2,773



At 31 December 2022

10,627
316,863
12,103
339,593



Impairment


Charge for the period
-
-
6,204
6,204



At 31 December 2022

-
-
6,204
6,204



Net book value



At 31 December 2022
10,627
316,863
5,899
333,389



At 31 December 2021 (as restated)
7,854
326,602
3,045
337,501

Page 36

 
MERPAS (UK) LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
Company





Investments in subsidiary companies

$000



Cost or valuation


At 1 January 2022
251,012


Additions
9,317



At 31 December 2022
260,329






Net book value



At 31 December 2022
260,329



At 31 December 2021
251,012


Direct subsidiary undertakings


The following were direct subsidiary undertakings of the Company:

Name

Registered office

Principal activity

Class of shares

Holding

Merpas Hungary Kft
Hungary
1062 Budapest, Vaci ut 1-3., "A" torony, 6.em.
Ordinary
50%
Indevco North America, Inc
USA
800 Jordan Valley Road, Longview, Texas, 75604
Ordinary
100%
Merpas Co. S.a.r.l.
Luxembourg
6 Rue Jean Monnet, 2180 Luxembourg
Ordinary
100%
Indevco Alternative Energy, Inc
USA
10351 Verdon Rd, Doswell, VA 23047, United States
Ordinary
100%
Alesia Hungary Limited Liability Company
Hungary
1062 Budapest, Vaci ut 1-3., "A" torony, 6.em.
Ordinary
100%
ePac Holdings Europe Limited*
UK
Creative Industry Centre, University of Wolverhampton Science Park, Wolverhampton WV10 9TG
Ordinary
91%

* Merpas (UK) Limited directly holds 85% of the Ordinary share capital of ePac Holdings Europe Limited, and a further 6% indirectly.

Page 37

 
MERPAS (UK) LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022

Indirect subsidiary undertakings


The following were indirect subsidiary undertakings of the Company:

Name

Registered office

Principal activity

Class of shares

Holding

Indevco Plastics Longview, LLC
USA
800 Jordan Valley Road, Longview, Texas, 75604
Ordinary
100%
Specialty Coating & Laminating, LLC
USA
10351 Verdon Rd, Doswell, VA 23047, United States
Ordinary
100%
ePac Austin, LLC
USA
4509 Freidrich Ln Suite 102, Austin, Texas 78744, United States
Ordinary
76%
ePac Lyon SAS
France
5 Avenue de Chantereine, 38300 Bourgoin-Jalieu, France
Ordinary
91%
ePac UK Silverstone Limited
UK
Arrow Park, Unit 4, Northampton Rd, Brackley NN13 5SZ
Ordinary
64%
ePac Richmond LLC
USA
1540 E Parham Road, Henrico, VA 23228, United States
76%
ePac Philadelphia LLC
USA
915 N Lenola Rd, Suite 1, Moorestown, NJ 08057, United States
Ordinary
76%


16.


Stocks

Group
Group
2022
2021
$000
$000

Raw materials and consumables
10,182
10,981

Work in progress (goods to be sold)
2,720
2,443

Finished goods and goods for resale
5,100
3,896

18,002
17,320


The difference between purchase price or production cost of stocks and their replacement cost is not material.

The carrying value of stocks are stated net of impairment losses totalling $15,191,120 (2021 - $15,756,748). Impairment losses totalling  $1,200,000 (2021 - $450,000) were recognised in profit and loss.

Page 38

 
MERPAS (UK) LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022

17.


Debtors



Group
Group
Company
Company
2022
2021
2022
2021
$000
$000
$000
$000

Due within one year

Trade debtors
22,558
25,751
-
-

Amounts owed by group undertakings
-
-
26,927
8,809

Other debtors
1,895
5,373
-
290

Prepayments and accrued income
1,905
1,725
47
-

Tax recoverable
1,271
1,648
1,271
1,648

Financial instruments
3,474
6,465
3,474
6,465

31,103
40,962
31,719
17,212



18.


Cash and cash equivalents

Group
Group
Company
Company
2022
2021
2022
2021
$000
$000
$000
$000

Cash at bank and in hand
18,133
43,579
386
24,696

Less: bank overdrafts
(239)
(8,130)
-
-

17,894
35,449
386
24,696


Page 39

 
MERPAS (UK) LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022

19.


Creditors: Amounts falling due within one year

Group
Group
Company
Company
2022
2021
2022
2021
$000
$000
$000
$000

Bank overdrafts
239
8,130
-
-

Other loans
286
405
-
-

Trade creditors
11,428
23,186
440
440

Amounts owed to non-consolidated group undertakings
-
11,636
78
78

Corporation tax
250
377
-
377

Other taxation and social security
338
754
-
-

Obligations under finance lease and hire purchase contracts
2,224
2,621
-
-

Other creditors
20
221
-
1

Accruals and deferred income
6,241
5,620
98
71

Financial instruments
7,368
6,465
7,368
6,465

28,394
59,415
7,984
7,432



20.


Creditors: Amounts falling due after more than one year

Group
Group
2022
2021
$000
$000

Bank loans
12,745
-

Amounts owed to non-consolidated group undertakings
20,289
12,686

Net obligations under finance leases and hire purchase contracts
10,523
15,474

Other creditors
6,132
1,619

49,689
29,779



Page 40

 
MERPAS (UK) LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022

21.


Loans


Analysis of the maturity of loans is given below:


Group
Group
2022
2021
$000
$000

Amounts falling due within one year

Other loans
286
405

Amounts falling due 1-2 years

Bank loans
12,745
-

Amounts falling due after more than 5 years

Amounts owed to non-consolidated group undertakings
20,289
12,686

33,320
13,091


On July 20, 2018, the Group entered into a revolving credit agreement with a financial institution, which provided for borrowings up to $15,000,000. Interest is payable monthly at LIBOR rate plus applicable margin based on the fixed charge coverage ratio (4.28 percent at December 31, 2018). The revolving credit facility matures on July 20, 2023. The debt is collateralized by tangible assets and is subject to fixed charge covenant ratios.
On July 20, 2018, the Group received a $10,000,000 term loan bearing interest at LIBOR rate plus applicable margin based on the fixed charge coverage ratio (4.40 percent at December 31, 2018) maturing on July 20, 2023. The Group also entered into a revolving equipment term loan which allows draws up to $4,600,000 until September 2019. Interest only payments are due until September 2019 at LIBOR plus applicable margin (4.74 percent at December 31, 2018). The equipment term loan matures in September 2026. The debt is collateralized by tangible assets and is subject to fixed charge covenant ratios.
In conjunction with Merpas contribution of Specialty Coating & Laminating, LLC (SC&L), the Group entered into a term note payable (the "term note") with SC&L in the amount of $242,604 on September 25, 2015 (the "issuance date"). Interest is payable quarterly and accrues at an annual rate stated as the prime rate as published within the Wall Street Journal, plus 1 percent.
The term note is payable in four equal installments of $60,651 commencing on the first anniversary of the issuance date and each of the succeeding three anniversary dates thereafter. As set forth within the term note, the Group’s obligation is to the holder of the term note in the event of subsequent assignment by SC&L. On December 10, 2015, SC&L assigned the term note to an employee of SC&L.

Page 41

 
MERPAS (UK) LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022

22.


Hire purchase and finance leases


Minimum lease payments under hire purchase fall due as follows:

Group
Group
2022
2021
$000
$000

Between 1-5 years
3,379
1,925

Over 5 years
6,769
5,068

10,148
6,993

During the year, the Group deconsolidated a number of entities which previously held hire purchase and finance lease liabilities as lessees. 


23.


Share capital

2022
2021
$000
$000
Allotted, called up and fully paid



38,322,844 (2021 - 38,322,844) Ordinary shares of $1 each
38,323
38,323

During 2020, the Company repurchased 7,433,257 Ordinary shares of $1.00 USD each for a total consideration of £90,385,063 GBP. 



24.


Reserves

Capital redemption reserve

The capital redemption reserve represents cumulative non-distributable reserves as a result of buy back of the company's own shares

Merger Reserve

The merger reserve arises as a result of the group reconstruction which was enacted during a previous period.

Profit and loss account

The profit and loss account includes all current and prior period retained profits and losses.

Page 42

 
MERPAS (UK) LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022

25.


Prior year adjustment

Management have noted the incorrect accounting treatment of some of the ePac investments. We note, despite the 50.01% holding, that the company does not have the super majority per the LLC agreement and therefore have no control over these entities. The affect of removing these subsidiaries, now recorded using the equity method instead, follow:

Group
Group
Company
2022
Adjustment
2022
$000
$000
$000

Consolidated statement of comprehensive income

Turnover
292,066
(153,308)
138,758

Cost of sales
(240,228)
100,963
(139,265)

Administrative expenses
(77,020)
64,794
(12,226)

Operating income
5,089
-
5,089

Other operating expenses
-
-
-

Income from fixed assets investments
18,668
(19,778)
(1,110)

Interest received and similar income
61
-
61

Interest payable and similar expenses
(1,792)
669
(1,123)

Tax on loss
(590)
14
(576)

Net affect on profit/loss
(3,746)
(6,646)
(10,392)

Group
Group
Company
2022
Adjustment
2022
$000
$000
$000

Consolidated statement of Financial position

Intangible assets
6,244
(820)
5,424

Tangible assets
125,505
(65,428)
60,077

Investments
329,647
7,854
337,501

Stocks
25,295
(7,975)
17,320

Debtors
69,816
(28,854)
40,962

Cash at bank and in hand
51,659
(8,080)
43,579

Creditors: amounts falling due within one year
(91,912)
32,497
(59,415)

Creditors: amounts falling after one year
(122,056)
92,277
(29,779)

Net affect on the group's net asset position
394,198
21,471
415,669

Page 43

 
MERPAS (UK) LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022

25.


Prior year adjustment (continued)

Group
Group
Company
2022
Adjustment
2022
$000
$000
$000

Consolidated statement of changes in equity

Called up share capital
38,323
-
38,323

Revaluation reserve
8
-
8

Capital redemption reserve
7,433
-
7,433

Merger reserve
(9,606)
-
(9,606)

Profit and loss account
215,344
21,471
236,815

Non-controlling interest
142,696
-
142,696

Net affect on equity
394,198
21,471
415,669

Group
Group
Company
2022
Adjustment
2022
$000
$000
$000

Consolidated statement of cash flows

Loss for the financial year
(3,746)
(6,646)
(10,392)

Amortisation of intangible assets
1,557
410
1,967

Depreciation of tangible assets
36,082
(34,087)
1,995

Interest paid
1,793
(670)
1,123

Interest received
(61)
-
(61)

Taxation charge
590
(14)
576

Decrease/(increase) in stocks
(8,658)
7,975
(683)

Decrease in debtors
2,938
19,999
22,937

Decrease in amounts owed by groups
42,057
(42,057)
-

(Decrease)/increase in creditors
6,904
16,127
23,031

Corporation tax received/(paid)
(213)
789
576

Purchase of intangible fixed assets
(410)
410
-

Purchase of tangible fixed assets
(111,604)
99,513
(12,091)

Sale of listed investments
155,249
(7,853)
147,396

Purchase of unlisted and other investments
(35,889)
-
(35,889)

Interest received
61
-
61

New secured loans
54,228
(62,641)
(8,413)

Dividends paid
(109,277)
-
(109,277)

Interest paid
(1,793)
670
(1,123)

Net affect on cashflow
29,808
(8,075)
21,733

Page 44

 
MERPAS (UK) LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022

26.


Contingent liabilities

The Group is the defendant in legal proceedings relating to a matter arising in the ordinary course of business. The resolution of this claim is not expected to have a material impact on the Group's financial position.
UBS hold a guarantee for payments of $3,800,000 on contingent investments from export business transactions.


27.


Capital commitments




At 31 December 2022 the Group and Company had capital commitments as follows:


Group
Group
2022
2021
$000
$000

Contracted for but not provided in these financial statements
(6,428)
(5,397)


28.


Pension commitments

The Group operates a defined contributions pension scheme. The assets of the scheme are held separately from those of the Group  in an independently administered fund. The pension cost charge represents contributions payable by the Group  to the fund and amounted to $219,000 (2021: $1,567,000). Contributions totalling $735,781 (2021: $605,265) were payable to the fund at the reporting date and are included in creditors.
The Group also operates a defined benefits pension scheme. The assets of the scheme are held separately from those of the Group  in an independently administered fund. The pension cost charge represents contributions payable by the Group  to the fund and amounted to $13,053,000 (2021: $Nil). Contributions totalling $Nil (2021: $Nil) were payable to the fund at the reporting date and are included in creditors.


29.


Commitments under operating leases

At 31 December 2022 the Group and the Company had future minimum lease payments due under non-cancellable operating leases for each of the following periods:


Group
Group
2022
2021
$000
$000

Not later than 1 year
1,001
421

Later than 1 year and not later than 5 years
3,758
1,535

Later than 5 years
5,840
819

10,599
2,775
Page 45

 
MERPAS (UK) LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022

30.


Related party transactions

The Group enters into trade sale transactions with affiliates commonly owned by foreign affiliates of INDEVCO Group, headquartered in Lebanon. The transactions are a vendor relationship between one of the Group  subsidiaries and INDEVCO affiliates. As of December 31, 2022 the Group owed $919,333 (2021: $1,825,808) to INDEVCO foreign affiliates. 
Purchases from INDEVCO affiliates were $Nil (2021: $Nil) for the year ended December 31, 2022.
The Group had other various management-related transactions with INDEVCO Group affiliates with amounts due to the Group of $1,279,219 (2021: $1,269,829).
The Group has a $15,000,000 convertible line of credit with the ePac Holdings LLC under which interest accrued at a rate of 7 percent per annum until October 18 2020 and 10 percent per annum from October 19 2020.
The revenues of ePac Austin, LLC were produced and fulfilled by other operating plants of ePac Holdings, LLC. The associated cost of sales were charges from the other operating plants to ePac Austin, LLC for the product produced.
The Group has taken advantage of the exemption in paragraph 1AC. 35 of FRS102 not to disclose transactions with wholly owned Group entities.


31.


Controlling party

In the opinion of the directors there is no ultimate controlling party.

Page 46