The directors present the strategic report for the year ended 31 December 2023 in respect of U-POL Products Limited ("the company").
The principal activity of the company in the year under review was that of an intermediate holding company with no active trade. These financial statements contain information about U-POL Products Limited as a standalone entity and do not contain consolidated financial information as a parent company.
There have been no transactions in the current or prior years and consequently no profit and loss account is presented. The company's net liabilities at 31 December 2023 were £2.2m (2022: £2.2m).
Key performance indicators
The key financial performance indicators for the company, considered by the board are net liabilities. As the business is a holding company and simplistic in nature, the directors do not utilise non-financial key performance indicators to govern the company.
The directors are of the opinion that the company has adopted a thorough risk management process that involves the formal review off all the risks identified below. The board monitors and reviews on a regular basis, in order to mitigate each risk area.
Recoverability of subsidiary investments
The company’s future revenue stream is dependent upon dividends being declared from its subsidiary investments, which are subject to economic and market risks affecting their financial performance and return to the company. This includes potential changes to the carrying value of subsidiary investments impacting the company’s net asset value (i.e. through impairment). In order to mitigate these risks, the directors seek to ensure that the subsidiary investments trade profitably, with a focus on returning value to the shareholder. They do this through oversight and providing support to subsidiary management as required.
The company is part of the U-POL Holdings Limited group (a subgroup within the international group of Axalta Coating Systems Ltd) and the directors are currently embarking on a corporate simplification exercise for this subgroup, incorporating this entity. As part of this corporate simplification exercise, the company's net intercompany position will be settled and capital reduced, with its subsidiary investment interests being transferred to the most senior holding company within the subgroup being U-POL Bidco Limited. On completion of this corporate simplification exercise, the directors intend to strike the company off, which is anticipated to happen within the next financial year. As such, the directors do not consider it appropriate to adopt the going concern basis of accounting in preparing these financial statements and accordingly they have prepared on a basis other than going concern.
Adopting a basis other than going concern has meant the assets have been written down to their net realisable values, which is reflected in the company's balance sheet at 31 December 2023, with no other impact on the recognition or measurement of the company's assets or liabilities. The financial statements do not include any provision for future costs of terminating the business.
The directors are aware of their duty under s.172 of the Companies Act 2006 to act in the way which they consider, in good faith, would be most likely to promote the success of the company and its subsidiaries (collectively known as "the group") for the benefit of its members as a whole and, in doing so, to have regard (amongst other matters) to:
The likely consequences of any decision in the long term;
The interests of the group’s employees;
The need to foster the group’s relationships with suppliers, customers and others;
The impact of the group’s operations on the community and the environment; and
The desirability of the group maintaining a reputation for high standards of business conduct.
The directors work to promote the success of the group, by considering the impact that their decisions may have on the group, along with the group’s stakeholders. The issues and factors which have guided the directors’ decisions are outlined in the ‘review of business’ and the ‘principal risks and uncertainties’ sections within this report.
Reputation is of key importance to the group and the directors who always consider reputational impact in taking decisions and encourages high standards of business conduct.
The group’s key stakeholders include, but are not limited to:
Employees;
Customers;
Suppliers; and
Local communities and environment in which the group is based
The directors of the group promote good governance, which is key to drive the success of the group. The directors also aim to achieve the overall strategic objectives of the U-POL group, as well as continuing good relationships with all key stakeholders who are critical to the long-term success of the group. Opportunities for further professional and career development are on offer for employees through relevant training courses and qualifications.
Having regard to employees’ interests
The board attaches great importance to the skills and experience of the management and employees of the group. Its aim is to retain the best talent and believes that they will benefit from the opportunities within the group.
The board is committed to consulting, as appropriate, with relevant employees and employee representatives on a regular basis and has worked hard to ensure effective communication with all employees during the year.
The group has a number of initiatives including a commitment to create a working environment where everyone has the opportunity to learn, develop and contribute to the success of the group, whilst working within a common set of values. Regular updates on business performance KPIs through various channels are provided and an element of employee reward is linked to the financial success of the group, amongst other appraisal criteria. Appropriate whistleblowing procedure are available that employees are comfortable using.
Fostering business relationships
The group aims to be to the first choice for customers’ needs, enabling them to enjoy the full value of their relationship with the business. The group builds long term customer relationships by providing unrivalled levels of service and an offering which is unmatched in its flexibility. We maintain strong relationships across our supply chain through regular contact and meetings with our suppliers. We encourage our customers and suppliers to raise any issues or concerns they have over their relationship with the group, incorporating all aspects (legal, commercial, operational etc.) and offering dedicated points of contact within our team to promote the building of long-term business relationships.
These relationships contribute to the group’s competitive advantage. They not only enable us to execute our strategy efficiently, but also help customers and suppliers plan their business, managing cash flow and production. The group also engages actively with suppliers to make sure they fully comply with our code of conduct for suppliers and partners, which includes provisions on human rights and environmental standards.
Impact on community and environment
The group values the communities in which it operates, and its aim is for its business activities to have a positive impact on them.
The group will continue to promote green technology and initiatives to protect our environment, as well as being a contributor to the economies it operates in. We continue to seek to reduce the environmental impact of our business. The business is committed to delivering a corporate social responsibility strategy that sets the overall aim to be environmentally responsible, a good neighbour and a great place to work.
Maintaining high standards of business conduct
The directors are committed to operating the group in a responsible manner, operating with high standards of business conduct and good governance.
Future Developments
The company will continue as an intermediate holding company until the point of being wound up.
On behalf of the board
The directors present their annual report and financial statements for the year ended 31 December 2023.
The principal activity of the company in the year under review was that of an intermediate holding company. There have been no transactions in the current or prior years and consequently no profit and loss account is presented.
No ordinary dividends were paid (2022: £Nil). The directors do not recommend payment of a final dividend (2022: £Nil).
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
The auditor, Johnston Carmichael LLP, is deemed to be reappointed under section 487(2) of the Companies Act 2006.
The company is an investment holding company for a number of subsidiaries (collectively known as “the group”) with no active trade or employees. The group qualifies as large and as such is required to disclose SECR; the company’s energy use was less than 40,000 kWh in the year and as such is exempt from disclosing SECR in its own right. Within the group, the only subsidiary that is required to disclose SECR in its own right is U-POL Limited and the relevant information is disclosed within the strategic report in U-POL Limited’s financial statements for the year ended 31 December 2023.
Employment involvement and engagement
The company has no employees other than the directors and therefore has nothing to report in respect of employee engagement activity during the year.
Financial risk management objectives and policies
As a holding company, the company is not exposed to any significant financial risk and does not use derivatives to manage this.
Future developments
Future developments have been provided within the strategic report and form part of this report through cross-reference.
Basis for opinion
Emphasis of matter - financial statements prepared on a basis other than going concern
We draw attention to note 1.2 of the financial statements, which explains that on the completion of a corporate simplification exercise incorporating the company, the directors intend to strike the company off which is anticipated to happen within the next financial year and as such the directors do not consider it appropriate to adopt the going concern basis of accounting in preparing these financial statements. Accordingly, the financial statements have been prepared on a basis other than going concern as described in note 1.2. Our opinion is not modified in respect of this matter.
Our responsibilities and the responsibilities of the Directors with respect to going concern are described in the relevant sections of this report.
Other information
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.
As explained more fully in the statement of directors' responsibilities, 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.
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.
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council’s website at: http://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.
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.
We assessed whether the engagement team collectively had the appropriate competence and capabilities to identify or recognise non-compliance with laws and regulations by considering their experience, past performance and support available.
All engagement team members were briefed on relevant identified laws and regulations and potential fraud risks at the planning stage of the audit. Engagement team members were reminded to remain alert to any indications of fraud or non-compliance with laws and regulations throughout the audit.
Extent to which the audit is considered capable of detecting irregularities, including fraud (continued)
We obtained an understanding of the legal and regulatory frameworks that are applicable to company and the sector in which it operates, focusing on those provisions that had a direct effect on the determination of material amounts and disclosures in the financial statements. The most relevant frameworks we identified include:
Companies Act 2006;
UK Tax legislation; and
UK Generally Accepted Accounting Practice
We gained an understanding of how the company is complying with these laws and regulations by making enquiries of management and those charged with governance. We corroborated these enquiries through our review of relevant correspondence with regulatory bodies.
We assessed the susceptibility of the financial statements to material misstatement, including how fraud might occur, by meeting with management and those charged with governance to understand where it was considered there was susceptibility to fraud. This evaluation also considered how management and those charged with governance were remunerated and whether this provided an incentive for fraudulent activity. We considered the overall control environment and how management and those charged with governance oversee the implementation and operation of controls. In areas of the financial statements where the risks were considered to be higher, we performed procedures to address each identified risk.
In addition to the above, the following procedures were performed to provide reasonable assurance that financial statements were free of material fraud or error:
Making enquiries of those charged with governance for reference to: breaches of laws and regulation or for any indication of any potential litigation and claims; and events or conditions that could indicate an incentive or pressure to commit fraud or provide an opportunity to commit fraud;
Completion of appropriate checklists and use of our experience to assess the company's compliance with the Companies Act 2006; and
Agreement of the financial statement disclosures to supporting documentation.
Our audit procedures were designed to respond to the risk of material misstatements in the financial statements, recognising that the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve intentional concealment, forgery, collusion, omission or misrepresentation. There are inherent limitations in the audit procedures performed and the further removed non-compliance with laws and regulations is from the events and transactions reflected in the financial statements, the less likely we are to become aware of it.
Use of our report
This report is made solely to the company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's members, as a body, for our audit work, for this report, or for the opinions we have formed.
U-POL Products Limited ("the company") is a private company limited by shares incorporated in England and Wales. The registered office is U-Pol Tech Centre Denington Road, Denington Industrial Estate, Wellingborough, Northamptonshire, United Kingdom, NN8 2QH. The principal activity of the company and the nature of its operations are set out in the strategic report on page 1.
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 £'000 unless where stated otherwise
As a qualifying entity, the company has taken advantage of the following disclosure exemptions in preparing these financial statements, as permitted by FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland”:
The requirements of Section 7 Statement of Cash Flows and paragraph 3.17(d) in respect of presenting a statement of cash flows; and
The requirements of paragraphs 11.42, 11.44. 11.45, 11.47. 11.48(a)(iii). 11.48(a)(iv), 11.48(b) and 11.48(c) in respect of certain basic financial instrument requirements.
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, including amounts owed to 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.
Financial liabilities are derecognised when the company’s contractual obligations expire or are discharged or cancelled.
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.
In the application of the company’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.
The following judgements have had the most significant effect on amounts recognised in the financial statements.
The directors have considered the carrying value of the investments and considered factors such as the performance of the underlying trading group and the market value of certain assets held by the group undertakings to assess if any impairment charge is required. No impairment indicators have been noted by the directors impacting the current or prior years.
There are no other key judgements or sources of estimation uncertainty in these financial statements.
Directors' emoluments in relation to the directors with respect of their services to the company were borne by other group companies. The notional allocation of their cost to the company was negligible for both current and prior years.
Details of the company's subsidiaries at 31 December 2023 are as follows:
Registered office addresses:
Amounts owed to group undertakings are unsecured, interest free and repayable on demand.
The share classes rank pari passu.
Share premium
The share premium reserve represents the excess above nominal value paid by the shareholder on the issue of the company’s shares.
Profit and loss reserves
The profit and loss reserves represent retained profits and losses less cumulative dividends.
The company has taken advantage of the exemption under paragraph 33.1A from the provisions of section 33 of FRS 102 ‘Related party disclosures’ on the grounds that it is a wholly owned subsidiary of a group headed by Axalta Coating Systems Limited incorporated.