Company registration number 01726045 (England and Wales)
PAPERGRAPHICS LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
PAPERGRAPHICS LIMITED
COMPANY INFORMATION
Directors
Mr N C Atkins
Mr J E Selby
Mr D M Gilbertson
Company number
01726045
Registered office
Diva Innovation Centre
Crompton Way
Crawley
West Sussex
RH10 9QR
Auditor
Sumer Audit
5 Peveril Court
6-8 London Road
Crawley
West Sussex
RH10 8JE
PAPERGRAPHICS LIMITED
CONTENTS
Page
Strategic report
1
Directors' report
2
Directors' responsibilities statement
3
Independent auditor's report
4 - 6
Statement of comprehensive income
7
Statement of financial position
9
Statement of changes in equity
8
Notes to the financial statements
10 - 21
PAPERGRAPHICS LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2023
- 1 -

The directors present the strategic report for the year ended 31 December 2023.

Review of the business

Revenue in 2023 was very slightly ahead of 2022 at £25,901k, compared to the previous year’s £25,814k.

 

With increased stability in exchange rate markets, EBITDA returned to expected levels.

 

The rate of inflation continued to have a significant effect, not just on our results, but on those of our customers too. Leading to higher-than-expected costs, specifically staff costs & bad debts. Where possible, the impact of these increases has been partially mitigated by savings in other areas & price increases.

Principal risks and uncertainties

Currency risks

The group trades globally, in multiple currencies, and is therefore exposed to risks associated with changes in exchange rates. At times, these risks are minimised through the use of forward exchange contracts.

 

Legislative risks

Due to the international nature of our group, World events & the UK’s trade agreements with the rest of the world continue to have an impact on our customers & supply chain. The directors regularly monitor this, to ensure that any possible threats are mitigated.

 

 

Inflation & Interest Rates

The continuing high levels of inflation and interest rates continue to pose a risk to the group. Where possible, our increases in costs are recovered either through efficiency improvements, or by changes in our pricing.

 

Key performance indicators

The company uses a range of financial performance measures to monitor the management of the business effectively; the most significant of these are the key performance indicators (KPIs).

The KPIs on operations for the year ended 31 December 2023, with comparatives for the prior two financial years, are set out below:

 

2023

2022

2021

Turnover (£’000)

25,901

25,814

21,768

Gross profit (£’000)

6,856

6,421

5,356

Gross margin (%)

26.5

24.9

24.6

EBITDA (£’000)

1,231

1,044

1,650

 

On behalf of the board

Mr N C Atkins
Director
22 August 2024
PAPERGRAPHICS LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 DECEMBER 2023
- 2 -

The directors present their annual report and financial statements for the year ended 31 December 2023.

Principal activities

The principal activity of the company continued to be that of the supply of speciality technology printing consumables.

Results and dividends

The results for the year are set out on page 7.

No ordinary dividends were paid. The directors do not recommend payment of a final dividend.

Directors

The directors who held office during the year and up to the date of signature of the financial statements were as follows:

Mr N C Atkins
Mr J E Selby
Mr D M Gilbertson
Auditor

The auditor, Sumer Audit, is deemed to be reappointed under section 487(2) of the Companies Act 2006.

Matters covered in the strategic report

The company has chosen in accordance with Companies Act 2006, s. 414C(11) to set out in the company's strategic report information required by Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008, Sch. 7 to be contained in the directors' report. It has done so in respect of financial instruments, principal risks and uncertainties and future developments.

Statement of disclosure to auditor

So far as each person who was a director at the date of approving this report is aware, there is no relevant audit information of which the company’s auditor is unaware. Additionally, the directors individually have taken all the necessary steps that they ought to have taken as directors in order to make themselves aware of all relevant audit information and to establish that the company’s auditor is aware of that information.

Medium-sized companies exemption

This report has been prepared in accordance with the provisions applicable to companies entitled to the medium-sized companies exemption.

On behalf of the board
Mr N C Atkins
Director
22 August 2024
PAPERGRAPHICS LIMITED
DIRECTORS' RESPONSIBILITIES STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2023
- 3 -

The directors are responsible for preparing the annual report and the financial statements in accordance with applicable law and regulations.

 

Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period. In preparing these financial statements, the directors are required to:

 

 

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.

PAPERGRAPHICS LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF PAPERGRAPHICS LIMITED
- 4 -
Opinion

We have audited the financial statements of Papergraphics Limited (the 'company') for the year ended 31 December 2023 which comprise the statement of comprehensive income, the statement of financial position, the statement of changes in equity and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).

In our opinion the financial statements:

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Conclusions relating to going concern

In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.

 

Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.

 

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

Other information

The other information comprises the information included in the annual report other than the financial statements and our auditor's report thereon. The directors are responsible for the other information contained within the annual report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.

 

We have nothing to report in this regard.

Opinions on other matters prescribed by the Companies Act 2006

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

PAPERGRAPHICS LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF PAPERGRAPHICS LIMITED
- 5 -
Matters on which we are required to report by exception

In the light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identified material misstatements in the strategic report or the directors' report.

 

We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:

Responsibilities of directors

As explained more fully in the directors' responsibilities statement, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the directors are responsible for assessing the company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.

Auditor's responsibilities for the audit of the financial statements

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

Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below.

 

In identifying and assessing risks of material misstatement in respect of irregularities, including fraud and non-compliance with laws and regulations, our procedures included the following:

 

knowledge of any actual, suspected or alleged fraud; and

 

As a result of these procedures, we considered the opportunities and incentives that may exist within the company for fraud. We are also required to perform specific procedures to respond to the risk of management override. As a result of performing the above, we identified the following areas as those most likely to have an impact on the financial statements: employment law and compliance with the UK Companies Act.

PAPERGRAPHICS LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF PAPERGRAPHICS LIMITED
- 6 -

In addition to the above, our procedures to respond to risks identified included the following:

 

 

Due to the inherent limitations of an audit, there is an unavoidable risk that some material misstatements in the financial statements may not be detected, even though the audit is properly planned and performed in accordance with the ISAs (UK). For instance, the further removed non-compliance is from the events and transactions reflected in the financial statements, the less likely the auditor is to become aware of it or to recognise the non-compliance.

A further description of our responsibilities is available on the Financial Reporting Council’s website at: https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.

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.

Robert Dowling FCA (Senior Statutory Auditor)
For and on behalf of Sumer Audit
22 August 2024
Chartered Accountants
Statutory Auditor
Crawley
Sumer Audit is the trading name of Sumer Auditco Limited
PAPERGRAPHICS LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2023
- 7 -
2023
2022
Notes
£
£
Revenue
3
25,900,601
25,813,840
Cost of sales
(19,044,946)
(19,392,550)
Gross profit
6,855,655
6,421,290
Distribution costs
(1,151,436)
(950,626)
Administrative expenses
(4,744,023)
(4,876,799)
Other operating expenses
(2,125)
(8,500)
Operating profit
4
958,071
585,365
Investment income
4,495
5,677
Finance costs
7
(95,673)
(63,976)
Profit before taxation
866,893
527,066
Tax on profit
8
(229,000)
(170,000)
Profit for the financial year
637,893
357,066

The Statement of Comprehensive Income has been prepared on the basis that all operations are continuing operations.

PAPERGRAPHICS LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2023
- 8 -
Share capital
Retained earnings
Total
£
£
£
Balance at 1 January 2022
1,000,158
4,309,896
5,310,054
Year ended 31 December 2022:
Profit and total comprehensive income for the year
-
357,066
357,066
Balance at 31 December 2022
1,000,158
4,666,962
5,667,120
Year ended 31 December 2023:
Profit and total comprehensive income for the year
-
637,893
637,893
Balance at 31 December 2023
1,000,158
5,304,855
6,305,013
PAPERGRAPHICS LIMITED
STATEMENT OF FINANCIAL POSITION
AS AT
31 DECEMBER 2023
31 December 2023
- 9 -
2023
2022
Notes
£
£
£
£
Non-current assets
Goodwill
9
444,446
616,668
Property, plant and equipment
10
309,332
237,961
753,778
854,629
Current assets
Inventories
11
3,139,208
3,864,701
Trade and other receivables
12
9,709,851
9,277,952
Cash and cash equivalents
1,156,991
1,889,978
14,006,050
15,032,631
Current liabilities
13
(8,414,815)
(10,199,140)
Net current assets
5,591,235
4,833,491
Total assets less current liabilities
6,345,013
5,688,120
Provisions for liabilities
Deferred tax liability
15
40,000
21,000
(40,000)
(21,000)
Net assets
6,305,013
5,667,120
Equity
Called up share capital
17
1,000,158
1,000,158
Retained earnings
5,304,855
4,666,962
Total equity
6,305,013
5,667,120

These financial statements have been prepared in accordance with the provisions relating to medium-sized companies.

The financial statements were approved by the board of directors and authorised for issue on 22 August 2024 and are signed on its behalf by:
Mr N C Atkins
Director
Company registration number 01726045 (England and Wales)
PAPERGRAPHICS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
- 10 -
1
Accounting policies
Company information

Papergraphics Limited is a private company limited by shares incorporated in England and Wales. The registered office is Diva Innovation Centre, Crompton Way, Crawley, West Sussex, RH10 9QR.

1.1
Accounting convention

These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006.

The financial statements are prepared in sterling, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £1.

The financial statements have been prepared under the historical cost convention. The principal accounting policies adopted are set out below.

The company is a qualifying entity for the purposes of FRS 102, being a member of a group where the parent of that group prepares publicly available consolidated financial statements, including this company, which are intended to give a true and fair view of the assets, liabilities, financial position and profit or loss of the group. The company has therefore taken advantage of exemptions from the following disclosure requirements for parent company information presented within the consolidated financial statements:

 

1.2
Going concern

At the time of approving the financial statements, the directors have a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future, The directors have considered relevant information, including the company's principal risks and uncertainties, the annual budget, forecast future cash flows and the impact of subsequent events in making their assessment. Based on these assessments and having regard to the resources available to the entity, the directors have concluded that there is no material uncertainty and that they can continue to adopt the going concern basis in preparing the annual report and financial statements.true

1.3
Revenue

Revenue is recognised at the fair value of the consideration received or receivable for goods provided in the normal course of business, and is shown net of VAT and other sales related taxes. The fair value of consideration takes into account trade discounts, settlement discounts and volume rebates.

Revenue from the sale of goods is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer (usually on dispatch of the goods), the amount of revenue can be measured reliably, it is probable that the economic benefits associated with the transaction will flow to the entity and the costs incurred or to be incurred in respect of the transaction can be measured reliably.

1.4
Intangible fixed assets - goodwill

Goodwill represents the excess of the cost of acquisition of incorporated businesses over the fair value of net assets acquired. It is initially recognised as an asset at cost and is subsequently measured at cost less accumulated amortisation and accumulated impairment losses. Goodwill is considered to have a finite useful life and is amortised on a systematic basis over its expected life, which is 5 years in relation to the goodwill acquired from Craftec Limited and 9 years in relation to the goodwill acquired from CWE Solutions Limited.

PAPERGRAPHICS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 11 -
1.5
Intangible fixed assets other than goodwill

Intangible assets acquired separately from a business are recognised at cost and are subsequently measured at cost less accumulated amortisation and accumulated impairment losses. Intangible assets acquired on business combinations are recognised separately from goodwill at the acquisition date if the fair value can be measured reliably.

Patents and licences are valued at cost less accumulated amortisation.

Amortisation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:

Patents & licences
25% straight line
1.6
Property, plant and equipment

Property, plant and equipment are initially measured at cost and subsequently measured at cost or valuation, net of depreciation and any impairment losses.

Depreciation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:

Leasehold land and buildings
25% straight line
Plant and equipment
25% straight line & 15% diminishing balance
Fixtures and fittings
25% straight line
Motor vehicles
25% straight line

The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is credited or charged to profit or loss.

1.7
Impairment of non-current assets

At each reporting period end date, the company reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss.

Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.

 

If the recoverable amount of an asset is estimated to be less than its carrying amount, the carrying amount of the asset is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.

1.8
Inventories

Inventories are stated at the lower of cost and estimated selling price less costs to complete and sell. Cost comprises direct materials and, where applicable, direct labour costs and those overheads that have been incurred in bringing the inventories to their present location and condition.

At each reporting date, an assessment is made for impairment. Any excess of the carrying amount of inventories over its estimated selling price less costs to complete and sell is recognised as an impairment loss in profit or loss. Reversals of impairment losses are also recognised in profit or loss.

PAPERGRAPHICS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 12 -
1.9
Cash and cash equivalents

Cash and cash equivalents are basic financial assets and include cash in hand and deposits held at call with banks.

1.10
Financial instruments

The company has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.

 

Financial instruments are recognised in the company's statement of financial position when the company becomes party to the contractual provisions of the instrument.

 

Financial assets and liabilities are offset, with the net amounts presented in the financial statements, when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.

 

The company enters into basic financial instruments transactions that result in the recognition of financial assets and liabilities like trade and other accounts receivable and payable and loans from related parties.

Debt instruments like loans and other accounts receivable and payable are initially measured at present value of the future payments and subsequently at amortised cost using the effective interest method; Debt instruments that are payable or receivable within one year are measured, initially and subsequently, at the undiscounted amount of the cash or other consideration expected to be paid or received.

 

Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership to another entity. Financial liabilities are derecognised when, and only when, the company’s obligations are discharged, cancelled, or they expire.

Other financial assets

Other financial assets, including investments in equity instruments which are not subsidiaries, associates or joint ventures, are initially measured at fair value, which is normally the transaction price. Such assets are subsequently carried at fair value and the changes in fair value are recognised in profit or loss, except that investments in equity instruments that are not publicly traded and whose fair values cannot be measured reliably are measured at cost less impairment.

Impairment of financial assets

Financial assets, other than those held at fair value through profit and loss, are assessed for indicators of impairment at each reporting end date.

 

Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected. If an asset is impaired, the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset’s original effective interest rate. The impairment loss is recognised in profit or loss.

 

If there is a decrease in the impairment loss arising from an event occurring after the impairment was recognised, the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been, had the impairment not previously been recognised. The impairment reversal is recognised in profit or loss.

Derecognition of financial assets

Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the company transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.

PAPERGRAPHICS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 13 -
Other financial liabilities

Derivatives, including interest rate swaps and forward foreign exchange contracts, are not basic financial instruments. Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured at their fair value. Changes in the fair value of derivatives are recognised in profit or loss in finance costs or finance income as appropriate, unless hedge accounting is applied and the hedge is a cash flow hedge.

 

Debt instruments that do not meet the conditions in FRS 102 paragraph 11.9 are subsequently measured at fair value through profit or loss. Debt instruments may be designated as being measured at fair value through profit or loss to eliminate or reduce an accounting mismatch or if the instruments are measured and their performance evaluated on a fair value basis in accordance with a documented risk management or investment strategy.

Derecognition of financial liabilities

Financial liabilities are derecognised when the company’s contractual obligations expire or are discharged or cancelled.

1.11
Equity instruments

Equity instruments issued by the company are recorded at the proceeds received, net of direct issue costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the company.

1.12
Taxation

The tax expense represents the sum of the tax currently payable and deferred tax.

Current tax

The tax currently payable is based on taxable profit for the year.

Deferred tax

Deferred tax liabilities are generally recognised for all timing differences and deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Such assets and liabilities are not recognised if the timing difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.

1.13
Employee benefits

The costs of short-term employee benefits are recognised as a liability and an expense, unless those costs are required to be recognised as part of the cost of stock or non-current assets.

 

The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received.

1.14
Retirement benefits

Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.

1.15
Leases

Rentals payable under operating leases, including any lease incentives received, are charged to profit or loss on a straight line basis over the term of the relevant lease except where another more systematic basis is more representative of the time pattern in which economic benefits from the leases asset are consumed.

PAPERGRAPHICS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 14 -
1.16
Foreign exchange

Transactions in currencies other than pounds sterling are recorded at the rates of exchange prevailing at the dates of the transactions. At each reporting end date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the reporting end date. Gains and losses arising on translation in the period are included in profit or loss.

2
Judgements and key sources of estimation uncertainty

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.

Key sources of estimation uncertainty

The estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are as follows.

Inventory

The management has made key assumptions in determining the appropriate impairment provision against inventory items held at the end of the reporting period, as detailed in noted 1.8. The inventory provision was £200,818 (2022: £213,714) as at 31 December 2023.

Impairment of goodwill

The management has estimated the useful life of the goodwill in relation to the transfer of trade from Craftec Paper Limited and CWE Solutions Limited to be 5 and 9 years, respectively. At each reporting date, the management consider the fair value of the goodwill and if it is less than the carrying value, then the goodwill is impaired to bring the carrying value down to its fair value, as detailed in note 1.7.

3
Revenue

An analysis of the company's revenue is as follows:

2023
2022
£
£
Revenue analysed by class of business
Sale of goods
25,900,601
25,813,840
2023
2022
£
£
Revenue analysed by geographical market
United Kingdom
22,829,754
22,721,811
Europe
2,960,446
2,958,434
Rest of the World
110,401
133,595
25,900,601
25,813,840
PAPERGRAPHICS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
3
Revenue
(Continued)
- 15 -
2023
2022
£
£
Other revenue
Interest income
4,495
5,677
4
Operating profit
2023
2022
Operating profit for the year is stated after charging/(crediting):
£
£
Exchange (gains)/losses
(8,259)
105,193
Fees payable to the company's auditor for the audit of the company's financial statements
30,939
30,405
Depreciation of owned property, plant and equipment
95,931
131,023
Amortisation of intangible assets
172,222
322,222
Impairment of inventories recognised or reversed
(22,116)
(11,570)
Operating lease charges
449,130
472,468
5
Directors' remuneration
2023
2022
£
£
Remuneration for qualifying services
205,704
179,861
Company pension contributions to defined contribution schemes
45,858
23,374
251,562
203,235

The number of directors for whom retirement benefits are accruing under defined contribution schemes amounted to 2 (2022 - 1).

Remuneration disclosed above include the following amounts paid to the highest paid director:
2023
2022
£
£
Remuneration for qualifying services
154,450
105,331
Company pension contributions to defined contribution schemes
32,500
19,624
PAPERGRAPHICS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 16 -
6
Employees

The average monthly number of persons (including directors) employed by the company during the year was:

2023
2022
Number
Number
Sales
15
14
Administration
28
30
Production
7
9
Warehouse
8
8
Total
58
61

Their aggregate remuneration comprised:

2023
2022
£
£
Wages and salaries
2,282,631
2,210,184
Social security costs
230,479
249,968
Pension costs
68,317
52,889
2,581,427
2,513,041
7
Finance costs
2023
2022
£
£
Interest on bank overdrafts and loans
9,995
15,946
Interest on invoice finance arrangements
85,678
48,030
95,673
63,976
8
Taxation
2023
2022
£
£
Current tax
UK corporation tax on profits for the current period
210,000
174,000
Deferred tax
Origination and reversal of timing differences
19,000
(4,000)
Total tax charge
229,000
170,000
PAPERGRAPHICS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
8
Taxation
(Continued)
- 17 -

The actual charge for the year can be reconciled to the expected charge for the year based on the profit or loss and the standard rate of tax as follows:

2023
2022
£
£
Profit before taxation
866,893
527,066
Expected tax charge based on the standard rate of corporation tax in the UK of 23.52% (2022: 19.00%)
203,893
100,143
Tax effect of expenses that are not deductible in determining taxable profit
958
1,766
Depreciation on assets not qualifying for tax allowances
48
283
Amortisation on assets not qualifying for tax allowances
40,508
61,222
Other permanent differences
1,322
-
0
Deferred tax adjustments in respect of prior years
(6,400)
-
0
Effect of roundings
(12,858)
1,746
Effect of change in deferred tax rate
-
0
7,900
Impact of super-deduction allowance
-
0
(3,060)
Effect of difference in deferred tax rate
1,529
-
0
Taxation charge for the year
229,000
170,000
9
Intangible fixed assets
Goodwill
Patents & licences
Total
£
£
£
Cost
At 1 January 2023 and 31 December 2023
3,076,091
7,653
3,083,744
Amortisation and impairment
At 1 January 2023
2,459,423
7,653
2,467,076
Amortisation charged for the year
172,222
-
0
172,222
At 31 December 2023
2,631,645
7,653
2,639,298
Carrying amount
At 31 December 2023
444,446
-
0
444,446
At 31 December 2022
616,668
-
0
616,668

The goodwill above is in relation to acquisition of the trade of CWE Solutions Limited and Craftec Paper Limited, both fellow subsidiaries. The trades in relation to CWE Solutions and Craftec Paper Limited were acquired in December 2016 and July 2017 respectively. The shares of CWE Solutions are held by Pure Genius Holdings Limited and the shares of Craftec Paper Limited are held by Diva Europe Limited. The useful life of the goodwill is expected to be 10 and 6 years in relation to CWE Solutions Limited, and Craftec Paper Limited respectively.

PAPERGRAPHICS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 18 -
10
Property, plant and equipment
Leasehold land and buildings
Plant and equipment
Fixtures and fittings
Motor vehicles
Total
£
£
£
£
£
Cost
At 1 January 2023
587,740
1,175,440
640,889
168,308
2,572,377
Additions
-
0
-
0
187,899
-
0
187,899
Disposals
-
0
-
0
-
0
(25,350)
(25,350)
At 31 December 2023
587,740
1,175,440
828,788
142,958
2,734,926
Depreciation and impairment
At 1 January 2023
587,536
993,910
631,004
121,966
2,334,416
Depreciation charged in the year
202
54,583
32,070
9,076
95,931
Eliminated in respect of disposals
-
0
-
0
-
0
(4,753)
(4,753)
At 31 December 2023
587,738
1,048,493
663,074
126,289
2,425,594
Carrying amount
At 31 December 2023
2
126,947
165,714
16,669
309,332
At 31 December 2022
204
181,530
9,885
46,342
237,961
11
Inventories
2023
2022
£
£
Finished goods and goods for resale
3,139,208
3,864,701
12
Trade and other receivables
2023
2022
Amounts falling due within one year:
£
£
Trade receivables
3,604,832
3,555,106
Amounts owed by group undertakings
5,895,236
5,432,505
Other receivables
78,607
127,319
Prepayments and accrued income
131,176
163,022
9,709,851
9,277,952

Amounts owed by group undertakings have no terms and are therefore repayable on demand. Whilst the classification as current debtors reflect the contractual nature of the loans, the company does not seek repayment of these loans until the group undertaking is financially able to do so.

PAPERGRAPHICS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 19 -
13
Current liabilities
2023
2022
Notes
£
£
Bank loans
14
2,023,121
2,881,441
Trade payables
3,791,217
4,205,705
Amounts owed to group undertakings
1,433,242
1,652,288
Corporation tax
53,243
166,977
Other taxation and social security
304,063
456,097
Accruals and deferred income
809,929
836,632
8,414,815
10,199,140

Bank loans and overdrafts are secured, see note 17.

14
Borrowings
2023
2022
£
£
Bank loans
2,023,121
2,881,441
Payable within one year
2,023,121
2,881,441

Bank loans totalling £2,023,121 relate to invoice discounting which are secured by fixed charges over the company's receivables listing.

15
Deferred taxation

Deferred tax assets and liabilities are offset where the company has a legally enforceable right to do so. The following is the analysis of the deferred tax balances (after offset) for financial reporting purposes:

Liabilities
Liabilities
2023
2022
Balances:
£
£
Decelerated capital allowances
40,000
21,000
2023
Movements in the year:
£
Liability at 1 January 2023
21,000
Charge to profit or loss
19,000
Liability at 31 December 2023
40,000
PAPERGRAPHICS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
15
Deferred taxation
(Continued)
- 20 -

The directors have considered the deferred taxation note above and concluded that it is not possible to state the estimated assets and liabilities which will reverse within the next 12 months. This is due to the level of reversal being dependent on events which are not yet know.

16
Retirement benefit schemes
2023
2022
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
68,317
52,889

The company operates a defined contribution pension scheme for all qualifying employees. The assets of the scheme are held separately from those of the company in an independently administered fund.

17
Share capital
2023
2022
£
£
Ordinary share capital
Issued and fully paid
1,000,158 Ordinary shares of £1 each
1,000,158
1,000,158

 

The company's ordinary shares, which carry no right to fixed income, each carry the right to one vote at general meetings of the company.

18
Financial commitments, guarantees and contingent liabilities

A cross guarantee and debenture exists in relation to liabilities owed to National Westminster Bank Plc by Pure Genius Holdings, Pure Genius Facilities Management Limited, Craftec Paper Limited, Papergraphics Limited, Diva Europe Limited, CWE Solutions Limited and Pure Genius Properties Limited. The outstanding liabilities at the year end were £5,481,584 (2022 - £2,636,269).

 

There is also a cross guarantee and debenture in relation to the liabilities due to RBS Invoice Finance Limited by Papergraphics Limited, Diva Europe Limited, Craftec Paper Limited, Pure Genius Facilities Management Limited, Pure Genius Properties Limited and Pure Genius Holdings Limited. The outstanding liabilities at the year end were £2,023,121 (2022 - £2,881,441).

19
Operating lease commitments
Lessee

At the reporting end date the company had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:

2023
2022
£
£
Within one year
414,697
414,082
Between two and five years
1,429,446
1,512,126
In over five years
1,265,000
1,595,000
3,109,143
3,521,208
PAPERGRAPHICS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 21 -
20
Related party transactions
Transactions with related parties

At the balance sheet date, the company was owed £17,241 (2022 - £16,309) from the directors.

21
Ultimate controlling party

The ultimate parent company is Pure Genius Holdings Limited, a company registered in England. The registered office and principal place of business is Diva Innovation Centre, Crompton Way, Crawley, West Sussex, RH10 9QR.

 

The financial statements of the company are consolidated in the financial statements of Pure Genius Holdings Limited. Copies of the consolidated financial statements are available from Companies House.

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