REGISTERED NUMBER: |
STRATEGIC REPORT, REPORT OF THE DIRECTORS AND |
AUDITED FINANCIAL STATEMENTS |
FOR THE YEAR ENDED 30 NOVEMBER 2023 |
FOR |
COVENTRY CHEMICALS LIMITED |
REGISTERED NUMBER: |
STRATEGIC REPORT, REPORT OF THE DIRECTORS AND |
AUDITED FINANCIAL STATEMENTS |
FOR THE YEAR ENDED 30 NOVEMBER 2023 |
FOR |
COVENTRY CHEMICALS LIMITED |
COVENTRY CHEMICALS LIMITED (REGISTERED NUMBER: 01205963) |
CONTENTS OF THE FINANCIAL STATEMENTS |
for the year ended 30 November 2023 |
Page |
Company Information | 1 |
Strategic Report | 2 |
Report of the Directors | 6 |
Report of the Independent Auditors | 8 |
Statement of Comprehensive Income | 10 |
Balance Sheet | 11 |
Statement of Changes in Equity | 12 |
Notes to the Financial Statements | 13 |
COVENTRY CHEMICALS LIMITED |
COMPANY INFORMATION |
for the year ended 30 November 2023 |
DIRECTORS: |
SECRETARY: |
REGISTERED OFFICE: |
REGISTERED NUMBER: |
AUDITORS: |
Chartered Accountants |
Statutory Auditor |
Magma House, 16 Davy Court |
Castle Mound Way |
Rugby |
CV23 0UZ |
COVENTRY CHEMICALS LIMITED (REGISTERED NUMBER: 01205963) |
STRATEGIC REPORT |
for the year ended 30 November 2023 |
The directors present their strategic report for the year ended 30 November 2023. |
REVIEW OF BUSINESS |
The principal activity of the company is the manufacture and distribution of hygiene products. |
The Company made a profit before tax of £906k for the year, a significant turnaround from the loss before tax of £3,780k incurred in the previous year. The net assets of the business improved to £1,273k from £696k and the net current liability position improved to £1,977k (FY22: net liabilities of £2,533k - a departure from the net current assets positions of earlier years caused by the effects of the trading environment of 2021 and 2022 on the results of the Company in those years). |
FY22 has been the toughest trading year the business has ever faced. Challenges with logistics availability, freight costs, supply chain disruption, surging energy prices, increase in labour costs and the residual Covid-19 impact have fuelled an unprecedented, rapid and unpredictable input cost inflation. When coupled with negotiation lags over urgent customer pricing discussions, this has significantly impacted margins. |
The same inflationary environment and consequent "cost of living crisis" has seen a change in consumer buying behaviour with a shift away from expensive branded products to better value retailer own label equivalents that has not reverted back to earlier norms. |
Whilst the shift in consumer behaviour eventually had a positive impact on financial performance, the impact of the problems faced in FY22 flowed into the first half of FY23. Management's actions, the stabilisation of input costs and re-opening of the Asian market for animal healthcare products has resulted in a very pleasing return to profitability and positive cash generation which has continued into FY24. |
The directors monitor earnings before interest, tax, depreciation, amortization and one off costs (the Internal EBITDA) as a key measure of performance. Based upon the trading results of the first half of the current year the directors are confident of returning to pre-energy cost surge EBITDA profitability level for FY24 (see table below). |
2020 | 2021 | 2022 | 2023 | 2024 H1 |
Actual | Actual | Actual | Actual | Actual |
£'000s | £'000s | £'000s | £'000s | £'000s |
Revenue | 43,677 | 35,210 | 44,956 | 52,297 | 27,073 |
Profit before tax | 6,430 | 177 | (3,780) | 906 | 2,950 |
Add back: |
One off items | 458 | 111 | 120 | 162 | - |
Depreciation and amortisation |
471 |
551 |
606 |
608 |
303 |
Interest | 171 | 162 | 256 | 669 | 287 |
Internal EBITDA | 7,530 | 1,001 | (2,798) | 2,345 | 3,540 |
The Company holds the British Retail Consortium (BRC) accreditation at Grade AA, a Good Manufacturing Practice (GMP) license as well as its SEDEX registration and is SMETA compliant to this global standard for ethical working practices. In addition, the Company has Responsibly Sourced Pine Oil (RSPO) accreditation, ISO 9001, 14001 and 45001 certifications and has recently been awarded the ECOVADIS bronze sustainability grading at the first assessment. |
These are highly regarded and widely acknowledged approvals continue to support the Company's business growth and development. |
Future Prospects |
The directors expect the business to face a number of challenges in the next year driven by factors beyond their control; conflict in eastern Europe, high energy costs and elevated interest rates. Whilst these factors have the potential for an adverse impact on trading the directors believe that management is experienced and agile enough to meet these challenges and take advantage of opportunities that may arise. |
The directors have prepared profit and cashflow forecasts for the business until November 2025 based upon known factors and sensitised for possible risk factors. On the basis of these forecasts the directors believe that the business has sufficient resources to enable it to meet the challenges of the coming years, to grow profitably and to continue successfully in the future. |
COVENTRY CHEMICALS LIMITED (REGISTERED NUMBER: 01205963) |
STRATEGIC REPORT |
for the year ended 30 November 2023 |
PRINCIPAL RISKS AND UNCERTAINTIES |
Management and the Board regularly review the risks facing the business. |
The Directors consider that the principal risk factors that could materially affect the future operating profits or financial position of the business are contract loss, credit risk and commodity price risk. |
Contract loss |
The business continues to spread the risk across diverse markets and customer sectors where possible. This strategy ensures that no one customer or sector threatens the business as a whole. A wide customer portfolio, a large geographic spread and a diverse market platform deliver security against this risk. The Board monitor performance across all sectors on a regular basis to mitigate concentration and risk. |
Credit risk |
The business is exposed to potential credit related losses in the event of non-performance by the counterparties related to its export activity and potential failure of UK based customers. The company's credit control policy has been established to monitor customer performance and identify variation against agreed terms of trade to mitigate against this risk. Credit insurance cover has been put in place for selected UK and Overseas customers. |
Commodity price risk |
The business is exposed to changes in raw material prices, some of which are directly related to the price of oil and more broadly the cost of energy. There is generally no liquid or cost effective market for direct trading of such exposures. Where liquid markets do exist there may not be an acceptable level of correlation with the price of our particular commodities and the oil futures market. The directors therefore do not believe it is appropriate to hedge against changes in oil price. The directors closely monitor the commodity prices and where possible pass increases through to the end user. |
Liquidity and cashflow risk |
The Company has very good relationships with its funders who were extremely supportive throughout the periods affected by COVID and the consequential effects of the surge in energy prices. The Company hs adequate facilities to support its activities and operates with a prudent level of headroom. |
The Company holds financial instruments to finance its operations and manages risk arising from these operations and its sources of finance in accordance with its accounting policies. Working capital is funded, principally, by asset-based lending facilities. |
SECTION 172(1) STATEMENT |
The Board of Directors consider that, in the decisions taken during the year ended 30 November 2023, they have acted in a way they consider, in good faith, would be most likely to promote the success of the Company for the benefit of its members as a whole, having regard to (amongst other matters): |
- the likely consequences of any decision in the long term; |
- the interests of the Company's employees; |
- the need to foster the Company's business relationships with suppliers, customers and others; |
- the impact of the Company's operations on the community and the environment; |
- the desirability of the Company maintaining a reputation for high standards of business conduct and |
- the need to act fairly between members of the Company. |
Our intention is to behave responsibly and ensure that management operate the business in a responsible manner, operating within the high standards of business conduct and good governance expected for a business such as ours. |
Our section 172 statement summarises how the Board has factored stakeholder considerations into our decision-making, |
Section 172 of the Companies Act 2006 (the Act) imposes a duty on a director to act in a way that he or she considers, in good faith, would be most likely to promote the long-term success of the company for the benefit of its members as a whole. In doing So, the directors have regard to the various matters including the interests of stakeholders as well as various other matters. The Companies (Miscellaneous Reporting) Regulations 2018 require companies to report on how the Board has fulfilled the requirements of Section 172(1), including how the Board has factored stakeholder considerations into its decision-making. |
COVENTRY CHEMICALS LIMITED (REGISTERED NUMBER: 01205963) |
STRATEGIC REPORT |
for the year ended 30 November 2023 |
The Board is fully aware of and supports these requirements. We are pleased to describe below how the Company's Board engages with our stakeholders. |
The Company's key stakeholders have an important role to play in the successful operation of our business. Our Board are fully aware of, and take seriously, their responsibilities to those stakeholders under the Act. |
We believe that it is appropriate to consider the potential impact on our stakeholders when considering the Company's strategy and in making our key decisions. Indeed, these responsibilities are rooted in our culture, values and company purpose. |
The Board considers that, in its decisions and actions to date, it has acted in a way that would promote the success of the Company for the benefit of its members as a whole, while having regard to stakeholders and matters set out in Section 172(1) (a-f) of the Act. It has identified the Company's key stakeholders as our employees, customers, suppliers, the environment and communities in which we operate, and investors. It receives updates on each of these and takes steps to ensure that it remains well informed about them. |
Our decisions are made to have a long-term beneficial impact on the Company and to contribute to the Company's success. Our decisions take into account the impact of the Company's operations on the community and environment, and our wider societal responsibilities. The Board has put in place a structured governance model, with scheduled Board meetings and clear documentation and authority levels to control its decision-making process. Our governance model supports the Company in ensuring that decisions are considered, documented and reported upon, and in alignment with our strategic plans. Detailed budgets and re-forecasts are prepared to enable the Board to track performance and ensure that it is as expected, or that mitigation steps are taken to deliver performance in line with, or close to, expectations. The Board and individual directors operate within this structure, with the aim of promoting the success of the company and delivering long term shareholder value. Business proposals are documented in line with, and performance tracked against budgets and forecasts. |
Ongoing investments in the business and the market share position of the Company position the business positively for the future. |
Our employees are fundamental to the delivery of our plan. We aim to be a responsible employer in our approach to the pay and benefits our employees receive. The health, safety and well-being of our employees is one of our primary considerations in the way we do business. During the year, employees have been provided with information about the Company. Regular meetings are held between management and employees to allow a free flow of information. |
We also aim to act responsibly and fairly in how we engage and co-operate with all of our other primary stakeholders - our suppliers, debt providers, and shareholders - all of whom are integral to the success of the Company. |
During 2023 we have had regular face to face and online meetings with our key customers and suppliers. This allows us to successfully maintain and build on our relationships with them. |
Continuation/Future Development |
Price inflation is a key issue for our business and in 2023 we saw significant price increases from suppliers. These cost pressures have reduced as we move into 2024 but we still face a level of inflation. We will continue to discuss these inflationary pressures with our customers and pass them through to our customers in our product pricing where possible. |
We believe that the markets that we trade in will remain challenging in the year ahead, but after a year of recovery in 2023 an encouraging start to 2024 we are confident about the future. The loss of significant numbers of European workers from the UK following BREXIT and the difficulty in recruiting qualified experienced production engineers are both ongoing challenges, but nothing new. Both of these challenges are factored into our planning for the year ahead. As events unfold, we will respond, but we believe we are well positioned as a result of the market changes, which we believe will create new longer-term opportunities for us. |
COVENTRY CHEMICALS LIMITED (REGISTERED NUMBER: 01205963) |
STRATEGIC REPORT |
for the year ended 30 November 2023 |
Environmental, Social and Governance Performance Management |
Corporate responsibility is an integral part of our values. Our corporate responsibility strategy is underpinned by our commitment to the environment. Our aim is to continually reduce the impact we have on the environment in (i) the work place; (ii) the market place; and (iii) in our community. |
We currently: |
- Work closely with our suppliers and customers to source / produce products that meet high environmental and social standards |
- Are implementing our carbon emissions reduction plan |
- Have negotiated to use energy certified from 100% renewable sources when our current electricity contract expires |
- A significant proportion of our PET bottles are 100% rPET and we have plans in place to move this to 100% by the end of 2024. |
- Use fully recyclable cardboard shipping boxes and paper tape for all orders |
- Are actively seeking out better packaging solutions |
- Recycle waste where possible |
- Donate any unwanted stock to charities |
- Fund raise for our nominated charity |
- Operate an environmental management system certified to ISO 14001 |
We encourage all our employees to get involved, whether that means raising money for charities, volunteering or enhancing our contribution to the environment. |
ON BEHALF OF THE BOARD: |
COVENTRY CHEMICALS LIMITED (REGISTERED NUMBER: 01205963) |
REPORT OF THE DIRECTORS |
for the year ended 30 November 2023 |
The directors present their report with the financial statements of the company for the year ended 30 November 2023. |
PRINCIPAL ACTIVITY |
The principal activity of the company in the year under review was that of the manufacture and distribution of hygiene products. |
DIVIDENDS |
The total distribution of dividends for the year ended 30 November 2023 is £nil (2022: £nil). |
DIRECTORS |
The directors shown below have held office during the whole of the period from 1 December 2022 to the date of this report. |
FINANCIAL INSTRUMENTS |
The principal financial instruments of the company comprise bank balances and borrowings, trade creditors, trade debtors and hire purchase contracts. The main purpose of these instruments is to raise funds for the company's operations and to finance its continuing operations. Liquidity risk is managed by the use of bank balances, invoice discounting, overdraft facilities and selective use and active management of credit insurance along with efficient monitoring and forecasting of cash flow to ensure there are sufficient funds to meet liabilities. Trade debtors are managed in respect of credit and cash flow risk by policies monitoring the credit offered to customers, and regular monitoring of amounts outstanding for both time and credit limits. |
INDEMNITY PROVISION |
Third party indemnity cover for the directors was in place during the period and at the period end. |
STATEMENT OF DIRECTORS' RESPONSIBILITIES |
The directors are responsible for preparing the Strategic Report, the Report of the Directors and the financial statements in accordance with applicable law and regulations. |
Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period. In preparing these financial statements, the directors are required to: |
- | select suitable accounting policies and then apply them consistently; |
- | make judgements and accounting estimates that are reasonable and prudent; |
- | prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business. |
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company's transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. |
STATEMENT AS TO DISCLOSURE OF INFORMATION TO AUDITORS |
So far as the directors are aware, there is no relevant audit information (as defined by Section 418 of the Companies Act 2006) of which the company's auditors are unaware, and each director has taken all the steps that he ought to have taken as a director in order to make himself aware of any relevant audit information and to establish that the company's auditors are aware of that information. |
COVENTRY CHEMICALS LIMITED (REGISTERED NUMBER: 01205963) |
REPORT OF THE DIRECTORS |
for the year ended 30 November 2023 |
AUDITORS |
Magma Audit LLP has expressed its willingness to remain in office as auditor. |
ON BEHALF OF THE BOARD: |
REPORT OF THE INDEPENDENT AUDITORS TO THE MEMBERS OF |
COVENTRY CHEMICALS LIMITED |
Opinion |
We have audited the financial statements of Coventry Chemicals Limited (the 'company') for the year ended 30 November 2023 which comprise the Statement of Comprehensive Income, Balance Sheet, Statement of Changes in Equity and Notes to the Financial Statements, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 'The Financial Reporting Standard applicable in the UK and Republic of Ireland' (United Kingdom Generally Accepted Accounting Practice). |
In our opinion the financial statements: |
- | give a true and fair view of the state of the company's affairs as at 30 November 2023 and of its profit for the year then ended; |
- | have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and |
- | have been prepared in accordance with the requirements of the Companies Act 2006. |
Basis for opinion |
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditors' responsibilities for the audit of the financial statements section of our report. We are independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC's Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. |
Conclusions relating to going concern |
In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate. |
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue. |
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report. |
Other information |
The directors are responsible for the other information. The other information comprises the information in the Strategic Report and the Report of the Directors, but does not include the financial statements and our Report of the Auditors thereon. |
Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. |
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. |
Opinions on other matters prescribed by the Companies Act 2006 |
In our opinion, based on the work undertaken in the course of the audit: |
- | the information given in the Strategic Report and the Report of the Directors for the financial year for which the financial statements are prepared is consistent with the financial statements; and |
- | the Strategic Report and the Report of the Directors have been prepared in accordance with applicable legal requirements. |
Matters on which we are required to report by exception |
In the light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identified material misstatements in the Strategic Report or the Report of the Directors. |
We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion: |
- | adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or |
- | the financial statements are not in agreement with the accounting records and returns; or |
- | certain disclosures of directors' remuneration specified by law are not made; or |
- | we have not received all the information and explanations we require for our audit. |
REPORT OF THE INDEPENDENT AUDITORS TO THE MEMBERS OF |
COVENTRY CHEMICALS LIMITED |
Responsibilities of directors |
As explained more fully in the Statement of Directors' Responsibilities set out on page six, 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 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. |
Auditors' 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 a Report of the Auditors that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. |
The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below: |
Based on our understanding of the Company and the industry, we identified the principle risks of non-compliance with laws and regulations, and considered the extent to which non-compliance might have a material effect on the financial statements. We also considered those laws and regulations that have a direct impact on the preparation of the financial statements such as the Companies Act 2006, health and safety regulations and employment law. We evaluated management's incentives and opportunities for fraudulent manipulation of the financial statements (including the risk of override of controls) and determined that the principle risks were related to posting inappropriate journal entries, and management bias in accounting estimates. |
Audit procedures performed by the engagement team included: |
- Discussions with management, including consideration of known or suspected instances of non-compliance with laws and regulation, and fraud; |
- Identifying and testing journal entries, in particular any journal entries posted with unusual account combinations,or with unusual descriptions; |
- Challenging assumptions made by management in their significant accounting estimates, in particular the useful economic lives of tangible and intangible assets, stock provisions and impairment of debtors. |
There are inherent limitations in the audit procedures described above 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 would become aware of it. Also, the risk of not detecting material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment. |
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 Report of the Auditors. |
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 a Report of the Auditors 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. |
for and on behalf of |
Chartered Accountants |
Statutory Auditor |
Magma House, 16 Davy Court |
Castle Mound Way |
Rugby |
CV23 0UZ |
COVENTRY CHEMICALS LIMITED (REGISTERED NUMBER: 01205963) |
STATEMENT OF COMPREHENSIVE |
INCOME |
for the year ended 30 November 2023 |
2023 | 2022 |
Notes | £'000 | £'000 |
TURNOVER | 2 |
Cost of sales | ( |
) | ( |
) |
GROSS PROFIT |
Selling and distribution costs | ( |
) | ( |
) |
Administrative expenses | ( |
) | ( |
) |
OPERATING PROFIT/(LOSS) | 5 | ( |
) |
Interest payable and similar expenses | 6 | ( |
) | ( |
) |
PROFIT/(LOSS) BEFORE TAXATION | ( |
) |
Tax on profit/(loss) | 7 | ( |
) |
PROFIT/(LOSS) FOR THE FINANCIAL YEAR | ( |
) |
OTHER COMPREHENSIVE INCOME |
Property revaluation |
Income tax relating to other comprehensive income |
OTHER COMPREHENSIVE INCOME FOR THE YEAR, NET OF INCOME TAX |
TOTAL COMPREHENSIVE INCOME FOR THE YEAR |
( |
) |
COVENTRY CHEMICALS LIMITED (REGISTERED NUMBER: 01205963) |
BALANCE SHEET |
30 November 2023 |
2023 | 2022 |
Notes | £'000 | £'000 |
FIXED ASSETS |
Intangible assets | 8 |
Tangible assets | 9 |
CURRENT ASSETS |
Stocks | 10 |
Debtors | 11 |
Cash at bank |
CREDITORS |
Amounts falling due within one year | 12 | ( |
) | ( |
) |
NET CURRENT LIABILITIES | ( |
) | ( |
) |
TOTAL ASSETS LESS CURRENT LIABILITIES |
CREDITORS |
Amounts falling due after more than one year |
13 |
( |
) |
( |
) |
PROVISIONS FOR LIABILITIES | 17 | ( |
) |
NET ASSETS |
CAPITAL AND RESERVES |
Called up share capital | 18 |
Share premium | 19 |
Revaluation reserve | 19 |
Retained earnings | 19 |
SHAREHOLDERS' FUNDS |
The financial statements were approved by the Board of Directors and authorised for issue on |
COVENTRY CHEMICALS LIMITED (REGISTERED NUMBER: 01205963) |
STATEMENT OF CHANGES IN EQUITY |
for the year ended 30 November 2023 |
Called up |
share | Retained | Share | Revaluation | Total |
capital | earnings | premium | reserve | equity |
£'000 | £'000 | £'000 | £'000 | £'000 |
Balance at 1 December 2021 |
Changes in equity |
Total comprehensive income | - | ( |
) | - | ( |
) |
Balance at 30 November 2022 |
Changes in equity |
Total comprehensive income | - | - |
Balance at 30 November 2023 |
COVENTRY CHEMICALS LIMITED (REGISTERED NUMBER: 01205963) |
NOTES TO THE FINANCIAL STATEMENTS |
for the year ended 30 November 2023 |
1. | ACCOUNTING POLICIES |
General information |
The company is a private company limited by shares and is incorporated in England. The address of the registered office is Woodhams Road, Siskin Drive, Coventry, CV3 4FX. |
The company manufactures and distributes hygiene products. |
Statement of compliance |
These financial statements have been prepared in accordance with Financial Reporting Standard 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland" ("FRS 102) and the Companies Act 2006. The financial statements have been prepared under the historical cost convention, as modified by the revaluation of certain fixed assets. |
Summary of significant accounting policies |
The principal accounting policies applied in the preparation of these financial statements are set out below. These policies have been consistently applied to all years presented, unless otherwise stated. |
Basis of preparing the financial statements |
The financial statements are prepared in sterling, which is the functional and presentational currency of the company. Monetary amounts in these financial statements are rounded to the nearest £. |
The preparation of financial statements in conformity with FRS 102 requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the company's accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements are disclosed within accounting policies below. |
Going Concern |
At 30 November 2023 the company had net current liabilities of £1,977k (2022: £2,533k) and net assets of £1,273k (2023: £696k). For the year ended 30 November 2023 the company made a profit before tax of £906k (2022: loss £2,852k). |
The directors have prepared the financial statements on a going concern basis based upon financial forecasts which include a cash projection and on the assumption that the lenders will continue to provide ongoing facilities. On this basis the directors are confident that the company can continue as a going concern. |
Financial Reporting Standard 102 - reduced disclosure exemptions |
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; |
• | 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); |
• | the requirements of paragraphs 12.26, 12.27, 12.29(a), 12.29(b) and 12.29A; |
• | the requirement of paragraph 33.7. |
Critical accounting judgements and key sources of estimation uncertainty |
The company makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are addressed below. |
(i) Useful economic lives of tangible assets |
The annual depreciation charge for tangible assets is sensitive to changes in the estimated useful economic lives and residual values of the assets. The useful economic lives and residual values are re-assessed annually. They are amended when necessary to reflect current estimates, based on technological advancement, future investments, economic utilisation and the physical condition of the assets. |
(ii) Valuation of long leasehold building |
The company makes an estimate as to the fair value of the long leasehold building at the year end date. Management have utilised available data to assess the market values including but not limited to, the changes in the rental market and the economic climate. Management obtained a professional third party valuation on 22 July 2022, which valued the building on a market value basis. The Directors consider this valuation to be an accurate reflection of the fair value of the long leasehold building as at 30 November 2023. |
COVENTRY CHEMICALS LIMITED (REGISTERED NUMBER: 01205963) |
NOTES TO THE FINANCIAL STATEMENTS - continued |
for the year ended 30 November 2023 |
(iii) Useful economic lives of intangible assets |
The amortisation charge for intangible assets is sensitive to changes in the estimated useful economic lives and residual values of the assets. The useful economic lives and residual values are re-assessed annually. Where factors, such as technological advancement or changes in market price, indicate that residual value or useful life have changed, the residual value, useful life or amortisation rate are amended prospectively to reflect the new circumstances. |
(iv) Stock provisioning |
The company manufactures and sells cleaning chemicals and is subject to changing consumer demands. As a result it is necessary to consider the recoverability of the cost of stock and the associated provisioning required. When calculating the stock provision, management considers the nature and condition of the stock as well as applying assumptions around anticipated saleability of finished goods and future usage of raw materials. |
(v) Impairment of debtors |
The company makes an estimate of the recoverable value of trade and other debtors. When assessing impairment of trade and other debtors, management considers factors including the current credit rating of the debtor, the ageing profile of debtors and historical experience. |
Turnover |
Turnover is measured at the fair value of the consideration received or receivable and represents the amount receivable for goods supplied, net of returns, discounts and rebates allowed by the company and value added taxes. |
The company recognises revenue when (a) the significant risks and rewards of ownership have been transferred to the buyer; (b) the company retains no continuing involvement or control over the goods; (c) the amount of revenue can be measured reliably; (d) it is probable that future economic benefits will flow to the entity and (e) when the specific criteria relating to the each of company’s sales channels have been met. |
Intangible assets |
Intangible assets are stated at cost less accumulated amortisation and accumulated impairment losses. Amortisation is calculated, using the straight-line method, to allocate the depreciable amount of the assets to their residual values over their estimated useful lives, as follows: |
Acquired brands | - straight line over 10 years |
Development costs | - straight line over 10 years |
Licenses and trademarks | - straight line over 10 years |
Amortisation is charged to administrative expenses in the income statement. |
Where factors, such as technological advancement or changes in market price, indicate that residual value or useful life have changed, the residual value, useful life or amortisation rate are amended prospectively to reflect the new circumstances. |
The assets are reviewed for impairment if the above factors indicate that the carrying amount may be impaired. |
COVENTRY CHEMICALS LIMITED (REGISTERED NUMBER: 01205963) |
NOTES TO THE FINANCIAL STATEMENTS - continued |
for the year ended 30 November 2023 |
1. | ACCOUNTING POLICIES - continued |
Tangible fixed assets |
Tangible assets are stated at cost less accumulated depreciation and accumulated impairment losses. Cost includes the original purchase price, costs directly attributable to bringing the asset to its working condition for its intended use, dismantling and restoration costs. |
Land and buildings in the prior period were stated at cost less accumulated depreciation and accumulated impairment losses. |
Depreciation is provided at rates calculated to write off the cost of fixed assets, less their estimated residual value, over their expected useful lives on the following bases: |
Leasehold buildings | - | straight line over 40 years |
Plant and machinery | - | straight line over 4 to 10 years |
Fixtures and fittings | - | straight line over 4 to 10 years |
Motor vehicles | - | straight line over 4 years |
During the current year the directors have chosen to adopt the revaluation model for accounting for long leasehold buildings. The long leasehold buildings are carried at fair value less subsequent depreciation and impairment losses. |
Any movement in the fair value of the properties is reflected within Other Comprehensive Income for the year. Any associated deferred tax liability is taken to the profit and loss account in the year and offset against revaluation gains held in other reserves. |
Stocks |
Stocks are stated at the lower of cost and estimated selling price less costs to complete and sell. Stocks are recognised as an expense in the period in which the related revenue is recognised. |
Cost is determined on the first-in, first-out (FIFO) method. |
At the end of each reporting period stocks are assessed for impairment. If an item of stock is impaired, the identified stock is reduced to its selling price less costs to complete and sell and an impairment charge is recognised in the income statement. Where a reversal of the impairment is recognised the impairment charge is reversed, up to the original impairment loss, and is recognised as a credit in the income statement. |
Taxation |
The tax expense for the year comprises current and deferred tax. |
The tax expense for the year comprises current and deferred tax. Tax is recognised in the Statement of Comprehensive Income, 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. |
Deferred tax balances are recognised in respect of all timing differences that have originated but not reversed by the Balance Sheet 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; and |
- Any deferred tax balances are reversed if and when all conditions for retaining associated tax allowances have been met. |
Both current and deferred tax is determined using tax rates and laws that have been enacted or substantively enacted by the balance sheet date. |
Research and development |
Expenditure on research is written off in the year in which it is incurred. |
Expenditure on development is capitalised as an intangible asset and amortised over its useful life. Amortisation is charged from when the intangible asset is completed and the asset is able to be used for economic benefit. |
COVENTRY CHEMICALS LIMITED (REGISTERED NUMBER: 01205963) |
NOTES TO THE FINANCIAL STATEMENTS - continued |
for the year ended 30 November 2023 |
1. | ACCOUNTING POLICIES - continued |
Foreign currencies |
At each year 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 the year end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the income statement. |
Foreign exchange gains and losses that relate to borrowings and cash and cash equivalents are presented in the income statement within 'finance (expense)/income'. All other foreign exchange gains and losses are presented in the income statement within administrative expenses. |
Hire purchase and leasing agreements |
Assets obtained under hire purchase contracts and finance leases are capitalised as tangible assets and depreciated over the shorter of the lease term and their useful lives. Obligations under such agreements are included in creditors net of the finance charge. The finance element of the rental payment is charged to the income statement so as to produce a constant periodic rate of charge on the net obligation outstanding in each period. |
Rentals payable under operating leases are charged against income on a straight line basis over the lease term. |
Pension costs |
The company operates a defined contribution plan for its employees. A defined contribution plan is a pension plan under which the company pays fixed contributions into a separate entity. Once the contributions have been paid the company has no further payment obligations. The contributions are recognised as an expense when they are due. Amounts not paid are shown in accruals in the balance sheet. The assets of the plan are held separately from the company in independently administered funds. |
Invoice discounting |
The gross amount of invoice discounted debts are included in trade debtors and a corresponding liability in respect of proceeds received from factors are shown within current liabilities. Charges and interest are recognised in the income statement as they accrue. |
Share capital |
Ordinary shares are classified as equity. |
Financial instruments |
The company has chosen to adopt the Sections 11 and 12 of FRS 102 in respect of financial instruments. |
(i) Financial assets |
Basic financial assets, including trade and other receivables, cash and bank balances and investments are initially recognised at transaction price, 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. |
Such assets are subsequently carried at amortised cost using the effective interest method. |
(ii) Financial liabilities |
Basic financial liabilities, including trade and other payables, bank loans, other loans and loans from fellow group companies are initially recognised at transaction price, unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future payments discounted at a market rate of interest. |
Debt instruments are subsequently carried at amortised cost, using the effective interest rate method. |
Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Accounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade payables are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method. |
COVENTRY CHEMICALS LIMITED (REGISTERED NUMBER: 01205963) |
NOTES TO THE FINANCIAL STATEMENTS - continued |
for the year ended 30 November 2023 |
2. | TURNOVER |
The turnover and profit (2022 - loss) before taxation are attributable to the one principal activity of the company. |
An analysis of turnover by geographical market is given below: |
2023 | 2022 |
£'000 | £'000 |
United Kingdom |
Europe |
Rest of the world | 2,236 | 949 |
3. | EMPLOYEES AND DIRECTORS |
2023 | 2022 |
£'000 | £'000 |
Wages and salaries |
Social security costs |
Other pension costs |
The average number of employees during the year was as follows: |
2023 | 2022 |
Selling and distribution | 22 | 26 |
Administration | 11 | 10 |
Production | 188 | 159 |
4. | DIRECTORS' EMOLUMENTS |
2023 | 2022 |
£ | £ |
Directors' remuneration |
Key management personnel |
The directors consider the key management personnel to include the directors only. |
5. | OPERATING PROFIT/(LOSS) |
The operating profit (2022 - operating loss) is stated after charging: |
2023 | 2022 |
£'000 | £'000 |
Other operating leases |
Depreciation - owned assets |
Depreciation - assets on hire purchase contracts |
Brands amortisation |
Development costs amortisation |
Licenses and Trademarks amortisation |
Auditors' remuneration |
Foreign exchange differences |
Hire of plant and machinery |
COVENTRY CHEMICALS LIMITED (REGISTERED NUMBER: 01205963) |
NOTES TO THE FINANCIAL STATEMENTS - continued |
for the year ended 30 November 2023 |
6. | INTEREST PAYABLE AND SIMILAR EXPENSES |
2023 | 2022 |
£'000 | £'000 |
Bank overdraft and loan |
interest |
Invoice discounting interest |
Hire purchase interest |
7. | TAXATION |
Analysis of the tax charge/(credit) |
The tax charge/(credit) on the profit for the year was as follows: |
2023 | 2022 |
£'000 | £'000 |
Deferred tax | ( |
) |
Tax on profit/(loss) | ( |
) |
UK corporation tax has been charged at 19% . |
Reconciliation of total tax charge/(credit) included in profit and loss |
The tax assessed for the year is higher than the standard rate of corporation tax in the UK. The difference is explained below: |
2023 | 2022 |
£'000 | £'000 |
Profit/(loss) before tax | ( |
) |
Profit/(loss) multiplied by the standard rate of corporation tax in the UK of |
( |
) |
Effects of: |
Expenses not deductible for tax purposes |
Adjustments to tax charge in respect of previous periods | ( |
) | ( |
) |
Superdeduction | - | (3 | ) |
Group relief surrender | 117 | 94 |
Changes in rates | 30 | (191 | ) |
R&D enhanced deduction | (13 | ) | - |
Total tax charge/(credit) | 329 | (929 | ) |
Tax effects relating to effects of other comprehensive income |
There were no tax effects for the year ended 30 November 2023. |
2022 |
Gross | Tax | Net |
£'000 | £'000 | £'000 |
Property revaluation | - | 431 |
On 24 May 2021, the Finance Act 2021 was substantively enacted to introduce a main rate of corporation tax of 25%, with effect from 1 April 2023. |
Deferred tax has been provided at a rate of 25% on the basis that Finance Act 2021 had been substantively enacted by the balance sheet date. |
COVENTRY CHEMICALS LIMITED (REGISTERED NUMBER: 01205963) |
NOTES TO THE FINANCIAL STATEMENTS - continued |
for the year ended 30 November 2023 |
8. | INTANGIBLE FIXED ASSETS |
Licenses |
Development | and |
Brands | costs | Trademarks | Totals |
£'000 | £'000 | £'000 | £'000 |
COST |
At 1 December 2022 |
and 30 November 2023 |
AMORTISATION |
At 1 December 2022 |
Amortisation for year |
At 30 November 2023 |
NET BOOK VALUE |
At 30 November 2023 |
At 30 November 2022 |
9. | TANGIBLE FIXED ASSETS |
Long |
leasehold | Fixtures |
land & | Plant and | and | Motor |
buildings | machinery | fittings | vehicles | Totals |
£'000 | £'000 | £'000 | £'000 | £'000 |
COST OR VALUATION |
At 1 December 2022 | 2,088 | 6,495 | 797 | 4 | 9,384 |
Additions |
At 30 November 2023 |
DEPRECIATION |
At 1 December 2022 |
Charge for year |
At 30 November 2023 |
NET BOOK VALUE |
At 30 November 2023 |
At 30 November 2022 |
Cost or valuation at 30 November 2023 is represented by: |
Long |
leasehold | Fixtures |
land & | Plant and | and | Motor |
buildings | machinery | fittings | vehicles | Totals |
£'000 | £'000 | £'000 | £'000 | £'000 |
Valuation in 2022 | 431 | - | - | - | 431 |
Cost | 1,681 | 6,772 | 809 | 4 | 9,266 |
2,112 | 6,772 | 809 | 4 | 9,697 |
COVENTRY CHEMICALS LIMITED (REGISTERED NUMBER: 01205963) |
NOTES TO THE FINANCIAL STATEMENTS - continued |
for the year ended 30 November 2023 |
9. | TANGIBLE FIXED ASSETS - continued |
The long leasehold building is held at fair value as assessed by the directors at year end. The last formal external third party valuation was undertaken by Lambert Smith Hampton on 22 July 2022 on a market value basis determined by reference to market evidence. Lambert Smith Hampton are a member of the the RICS Valuer Registration Scheme and the valuation was prepared in accordance with the RICS Red Book Global Standards. The directors consider this valuation to be an accurate reflection of the fair value of the long leasehold building as at 30 November 2023. |
Fixed assets, included in the above, which are held under hire purchase contracts are as follows: |
Long |
leasehold |
land & | Plant and |
buildings | machinery | Totals |
£'000 | £'000 | £'000 |
COST OR VALUATION |
At 1 December 2022 |
Additions | - |
At 30 November 2023 | 145 |
DEPRECIATION |
At 1 December 2022 | 26 |
Charge for year | 15 |
At 30 November 2023 | 41 |
NET BOOK VALUE |
At 30 November 2023 | 104 |
At 30 November 2022 | 119 |
10. | STOCKS |
2023 | 2022 |
£'000 | £'000 |
Raw materials |
Finished goods |
Engineering stock | 70 | 70 |
11. | DEBTORS: AMOUNTS FALLING DUE WITHIN ONE YEAR |
2023 | 2022 |
£'000 | £'000 |
Trade debtors |
Amounts owed by group undertakings |
Other debtors |
Tax |
Deferred tax asset |
Prepayments and accrued income |
COVENTRY CHEMICALS LIMITED (REGISTERED NUMBER: 01205963) |
NOTES TO THE FINANCIAL STATEMENTS - continued |
for the year ended 30 November 2023 |
11. | DEBTORS: AMOUNTS FALLING DUE WITHIN ONE YEAR - continued |
Deferred tax asset |
2022 |
£'000 |
Accelerated capital allowances | ( |
) |
Tax losses carried forward |
Other timing differences | (101 | ) |
Amounts received of £7,279,000 (2022: £7,199,000) in respect of debtors which have been financed by invoice discounting have been included within creditors as proceeds of invoice discounted debts. |
12. | CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR |
2023 | 2022 |
£'000 | £'000 |
Proceeds of invoice discounted debts (see note 14) |
Bank loans and overdrafts (see note 14) |
Hire purchase contracts (see note 15) |
Trade creditors |
Amounts owed to group undertakings |
Tax |
Social security and other taxes |
VAT | 257 | 8 |
Other creditors |
Accruals and deferred income |
Included within other creditors are pensions payable of £32,824 (2022:£28,876) |
13. | CREDITORS: AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR |
2023 | 2022 |
£'000 | £'000 |
Bank loans (see note 14) |
Hire purchase contracts (see note 15) |
14. | LOANS |
An analysis of the maturity of loans is given below: |
2023 | 2022 |
£'000 | £'000 |
Amounts falling due within one year or on demand: |
Invoice discounting | 7,279 | 7,199 |
Bank loans |
Amounts falling due between one and two years: |
Bank loans |
Amounts falling due between two and five years: |
Bank loans |
COVENTRY CHEMICALS LIMITED (REGISTERED NUMBER: 01205963) |
NOTES TO THE FINANCIAL STATEMENTS - continued |
for the year ended 30 November 2023 |
15. | LEASING AGREEMENTS |
The future minimum hire purchase lease payments are as follows: |
2023 | 2022 |
£'000 | £'000 |
Not later than one year | 167 | 162 |
Later than one year and not later than five years | 206 | 276 |
Total gross payments | 373 | 438 |
Less: finance charges | (42 | ) | (57 | ) |
Carrying amount of liability | 331 | 381 |
Non-cancellable | operating leases |
2023 | 2022 |
£'000 | £'000 |
Within one year |
Between one and five years |
In more than five years |
The long term lease relates to the company's leasehold property which has 92 years remaining on the lease. |
16. | SECURED DEBTS |
The following secured debts are included within creditors: |
2023 | 2022 |
£'000 | £'000 |
Bank loans |
Hire purchase contracts | 331 | 381 |
Invoice discounting | 7,279 | 7,199 |
The banks loans and overdrafts are secured by a debenture and legal charges over the company's leasehold land and buildings. Proceeds of invoice discounted debt are secured over the trade debtors to which they relate. |
All bank loans are repayable within five years. Interest is payable at a rate of 2.75% on a loan of £588,000 and 3.1% on a loan of £237,000. |
The net obligations under hire purchase contracts are secured on the assets to which they relate. |
17. | PROVISIONS FOR LIABILITIES |
2023 |
£'000 |
Deferred tax |
Accelerated capital allowances |
Tax losses carried forward | ( |
) |
Other timing differences | 102 |
8 |
COVENTRY CHEMICALS LIMITED (REGISTERED NUMBER: 01205963) |
NOTES TO THE FINANCIAL STATEMENTS - continued |
for the year ended 30 November 2023 |
17. | PROVISIONS FOR LIABILITIES - continued |
Deferred |
tax |
£'000 |
Balance at 1 December 2022 | ( |
) |
Charge to Statement of Comprehensive Income during year |
Balance at 30 November 2023 |
18. | CALLED UP SHARE CAPITAL |
Allotted, issued and fully paid: |
Number: | Class: | Nominal | 2023 | 2022 |
value: | £'000 | £'000 |
Ordinary | 1 | 2 | 2 |
19. | RESERVES |
Retained | Share | Revaluation |
earnings | premium | reserve | Totals |
£'000 | £'000 | £'000 | £'000 |
At 1 December 2022 | 694 |
Profit for the year | - | - |
At 30 November 2023 | 1,271 |
20. | ULTIMATE AND IMMEDIATE PARENT COMPANY |
The Coventry Group Limited is the immediate parent company by virtue of its shareholding in the company. The Coventry Group Topco Limited is the ultimate parent company by virtue of its shareholding in the immediate parent company. |
The largest and smallest group in which the results of the company are consolidated for the current year ended is that headed by The Coventry Group Topco Limited. The consolidated accounts of this company are available to the public and may be obtained from Woodhams Road, Siskin Drive, Coventry, CV3 4FX. |
21. | CONTINGENT LIABILITIES |
The company is a member of a group VAT registration with its immediate parent company, The Coventry Group Limited. The company is jointly and severally liable for the liabilities of the VAT group to which it belongs. At 30 November 2023 the group VAT liability amounted to £257,000 (2022: £380,000), of which £257,000 (2022: £8,000) is a liability recognised in Coventry Chemicals Limited. |
22. | RELATED PARTY DISCLOSURES |
The company has taken advantage of exemption, under the terms of Financial Reporting Standard 102 'The Financial Reporting Standard applicable in the UK and Republic of Ireland', not to disclose related party transactions with wholly owned subsidiaries within the group. |
23. | ULTIMATE CONTROLLING PARTY |
The ultimate controlling party is S Quinlan, Director, by virtue of his majority shareholding in the ultimate parent company, The Coventry Group Topco Limited. |