Company registration number 00165772 (England and Wales)
COFCO INTERNATIONAL UK LTD
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
COFCO INTERNATIONAL UK LTD
COMPANY INFORMATION
Directors
M Dordery
V Ruberti Rezende
Secretary
C Reed
Company number
00165772
Registered office
15 The Havens
Ransomes Europark
Ipswich
IP3 9SJ
Auditor
Ensors Accountants LLP
Connexions
159 Princes Street
Ipswich
IP1 1QJ
COFCO INTERNATIONAL UK LTD
CONTENTS
Page
Strategic report
1 - 2
Directors' report
3 - 4
Directors' responsibilities statement
5
Independent auditor's report
6 - 8
Income statement
9
Statement of financial position
10 - 11
Statement of changes in equity
12
Statement of cash flows
13
Notes to the financial statements
14 - 36
COFCO INTERNATIONAL UK LTD
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

The result for the period after taxation amounted to a profit of £1,990,354 (period ended 31 December 2022 - profit of £2,959,543).

 

Key performance indicators for the Company are gross margin and total equity as expressed by net asset value. Gross margin for the period decreased from £13,959,867 for year ended 31 December 2022 to £12,493,968, whilst total equity increased during the period to £18,049,182 from £17,558,828 for the year ended 31 December 2022.

 

During the period, there were no material changes to the operating environment of the sector in which the Company is active.

Principal risks and uncertainties

The directors are committed to operating an effective risk policy. This includes position, contract, foreign exchange and credit risk. The managers and commercial staff have a clear understanding of risks facing the Company, which are supported by effective procedures and systems.

 

Position risk

The trading functions of the Company operate within agreed limits which are authorised by the Board. The Company manages and controls these through a number of hedging mechanisms, including futures and options.

 

Foreign exchange risk

The Company is involved in both import and export contracts which are principally traded in Euros. These contracts are matched with corresponding forward exchange transactions to limit the risk of foreign exchange movements.

 

Commodity price exposure

The Company recognises that it has an exposure to forward commodity contracts. To manage this the Company operates a mark-to-market policy of these contracts and reports the financial positions as part of its normal monthly reporting procedures.

 

Credit risk

The Company operates a thorough credit risk management policy. This is applied by all counterparties being approved and credit limits set accordingly. These limits are reviewed on a regular basis and take into account payment history, latest financial information, local knowledge, and credit rating agency assessments.

 

Contract risk

The business undertakes a regular review of all its contracts and terms of trade. This ensures that they protect the Company and represent best practice for our suppliers and customers.

COFCO INTERNATIONAL UK LTD
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 2 -
Section 172(1) statement

During the financial year the directors have complied with their duty to meet the requirements of section 172 (1) of the Companies Act 2006. The directors believe they have acted in a way they consider, in good faith, would promote the success of the Company for the benefit of its members as a whole.

 

The directors consider the key stakeholders affected by the actions of the Company to be customers, suppliers, banks and financial institutions, employees, government organisations, and regulators. The directors, on behalf of the Company, engage with each of these stakeholders in a way that meets their level of interest and influence.

 

The directors consider principal decisions to be those that have a material impact on the Company and its stakeholders. During the financial year the Company has taken a number of strategic and operational decisions that the directors consider will promote the long-term success and sustainability of the Company. The key elements of this are contained within the Company’s annual Strategic Review which aligns local strategy with that of the parent entity.

 

The directors have engaged in a number of initiatives having regard to the impact of the company’s operations on the community and the environment.

 

The directors have continued to promote and encourage the company’s reputation for high standards of business conduct.

On behalf of the board

M Dordery
Director
19 September 2024
COFCO INTERNATIONAL UK LTD
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 DECEMBER 2023
- 3 -

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

Principal activities

The principal activity of the Company continued to be the procurement, marketing and distribution of combinable crops, sowing seeds, and fertilisers. Almost all activities remain within the United Kingdom and European Union.

Results and dividends

The results for the year are set out on page 9.

No ordinary dividends were paid. During 2023, the directors recommended payment of a final dividend totalling £1,500,000 in respect of the year ended 31 December 2022, which is accrued in these financial statements. This is due to be paid in early 2024. No dividend has been recommended in respect of the year ended 31 December 2023.

Directors

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

M Dordery
V Ruberti Rezende
Qualifying third party indemnity provisions

The Company has taken out insurance to indemnify, against third party proceedings, the directors of the Company whilst serving on the board of the Company. These indemnity policies subsisted throughout the period and remain in place as at the date of this report.

Financial instruments

The Company has access to a bank overdraft facility, the main purpose of which is to finance the Company's operations. The Company also has trade and other receivables that arise directly from its operations.

Future developments

The Company has benefited from an ongoing capital expenditure programme. Directors consider that the Company is well placed to meet future challenges successfully.

Auditor

In accordance with the Company's articles, a resolution will be put at a General Meeting, proposing that Ensors Accountants LLP be reappointed as auditor of the Company.

Energy and carbon report

COFCO International UK Limited's annual UK energy usage for the financial year ended 31 December 2023 was:

2023
2022
Energy consumption
kWh
kWh
Aggregate of energy consumption in the year
- Electricity purchased
580,862
676,178
- Fuel consumed for transport
2,085,315
2,026,755
2,666,177
2,702,933
COFCO INTERNATIONAL UK LTD
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 4 -
2023
2022
Emissions of CO2 equivalent
metric tonnes
metric tonnes
Scope 1 - direct emissions
- Gas combustion
-
-
- Fuel consumed for owned transport
359,040
313,274
359,040
313,274
Scope 2 - indirect emissions
- Electricity purchased
119,053
130,759
Scope 3 - other indirect emissions
- Fuel consumed for transport not owned by the
162,289
199,920
Total gross emissions
640,382
643,953
Intensity ratio
Tonnes CO2e per employee
6.47
6.50
Quantification and reporting methodology

We have followed the 2019 HM Government Environmental Reporting Guidelines. We have also used the GHG Reporting Protocol – Corporate Standard and have used the 2023 UK Government’s Conversion Factors for Company Reporting.

Intensity measurement

The chosen intensity measurement ratio is total gross emissions in metric tonnes CO2e per employee, the recommended ratio for the sector.

Statement of disclosure to auditor

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 auditor is 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 auditor is aware of that information.

Going concern

On the basis of their assessment of the financial position of the company and availability of banking facilities provided by the parent undertaking the directors have a reasonable expectation that the Company will continue to be able to meet its obligations as they fall due. Thus, the directors continue to adopt the going concern basis of accounting in preparing the annual financial statements.

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 risk disclosures.

On behalf of the board
M Dordery
Director
19 September 2024
COFCO INTERNATIONAL UK LTD
DIRECTORS' RESPONSIBILITIES STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2023
- 5 -

The directors are responsible for preparing the Strategic Report, the Directors' 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 International Financial Reporting Standards (IFRSs) as adopted by the United Kingdom. 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 or of the Company for that period. In preparing these financial statements, International Accounting Standard 1 requires that directors:

 

 

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.

COFCO INTERNATIONAL UK LTD
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF COFCO INTERNATIONAL UK LTD
- 6 -
Opinion

We have audited the financial statements of COFCO International UK Ltd (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 a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the United Kingdom.

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:

COFCO INTERNATIONAL UK LTD
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF COFCO INTERNATIONAL UK LTD
- 7 -
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 and the Directors' Report.

 

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:

Responsibilities of directors

As explained more fully in the Directors' Responsibilities Statement, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

 

In preparing the financial statements, the directors are responsible for assessing the company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.

Auditor's responsibilities for the audit of the financial statements

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

The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below.

In identifying and assessing risks of material misstatement in respect of irregularities, including fraud, the audit engagement team:

 

Our audit was designed to include tests of detail together with an assessment of the control environment to enable us to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement due to fraud. Through discussion with directors and management, and from our own knowledge of and experience of the sector in which the company operates we identified the following areas where we consider there is a higher risk of fraud: transactions with related parties, revenue recognition, existence of stock, mark to market commodity valuation, and management override of systems and control. We note that the client has various internal controls in place to reduce the susceptibility of the company to material misstatement due to fraud.

COFCO INTERNATIONAL UK LTD
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF COFCO INTERNATIONAL UK LTD
- 8 -

Auditor's responsibilities for the audit of the financial statements (continued)

We performed audit procedures to address the risks noted above, which included the following:

 

There are inherent limitations in our audit procedures described above. The more removed that laws and regulations are from financial transactions, the less likely it is we would become aware of non-compliance.

 

Material misstatements that arise due to fraud can be harder to detect that those that arise from error as they may involve deliberate concealment of collusion.

 

It is the primary responsibility of management, with the oversight of those charged with governance, to ensure that the entity's operations are conducted in accordance with the provisions of laws and regulations and for the prevention and detection of fraud.

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.

Malcolm McGready (Senior Statutory Auditor)
For and on behalf of Ensors Accountants LLP
24 September 2024
Chartered Accountants
Statutory Auditor
Connexions
159 Princes Street
Ipswich
IP1 1QJ
COFCO INTERNATIONAL UK LTD
INCOME STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2023
- 9 -
2023
2022
Notes
£
£
Revenue
4
226,856,121
277,556,169
Cost of sales
(214,362,153)
(263,596,301)
Gross profit
12,493,968
13,959,868
Other operating income
-
3,059
Administrative expenses
(9,755,344)
(9,407,055)
Operating profit
5
2,738,624
4,555,872
Investment revenues
9
119,139
106,240
Finance costs
10
(204,996)
(571,431)
Other gains and losses
11
(10,300)
-
0
Profit before taxation
2,642,467
4,090,681
Income tax expense
12
(652,113)
(1,131,138)
Profit and total comprehensive income for the year
1,990,354
2,959,543

The statement of comprehensive income has been prepared on the basis that all operations are continuing operations.

COFCO INTERNATIONAL UK LTD
STATEMENT OF FINANCIAL POSITION
AS AT
31 DECEMBER 2023
31 December 2023
- 10 -
2023
2022
Notes
£
£
Non-current assets
Property, plant and equipment
15
6,828,209
6,405,693
Investments
-
0
10,300
6,828,209
6,415,993
Current assets
Inventories
17
13,838,950
28,991,382
Trade and other receivables
18
24,951,273
31,486,955
Current tax recoverable
92,102
-
0
Cash and cash equivalents
-
0
707
38,882,325
60,479,044
Current liabilities
Trade and other payables
25
24,368,620
46,064,598
Current tax liabilities
-
0
300,368
Borrowings
23
103,512
103,694
Lease liabilities
26
599,300
611,386
Provisions
28
283,522
463,446
25,354,954
47,543,492
Net current assets
13,527,371
12,935,552
Non-current liabilities
Lease liabilities
26
1,272,318
963,220
Deferred tax liabilities
27
1,034,080
829,497
2,306,398
1,792,717
Net assets
18,049,182
17,558,828
Equity
Called up share capital
30
5,813,455
5,813,455
Revaluation reserve
31
652,194
662,832
Retained earnings
11,583,533
11,082,541
Total equity
18,049,182
17,558,828
COFCO INTERNATIONAL UK LTD
STATEMENT OF FINANCIAL POSITION (CONTINUED)
AS AT
31 DECEMBER 2023
31 December 2023
- 11 -
The financial statements were approved by the board of directors and authorised for issue on 19 September 2024 and are signed on its behalf by:
M Dordery
Director
Company registration number 00165772 (England and Wales)
COFCO INTERNATIONAL UK LTD
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2023
- 12 -
Share capital
Revaluation reserve
Retained earnings
Total
Notes
£
£
£
£
Balance at 1 January 2022
5,813,455
673,470
8,112,360
14,599,285
Year ended 31 December 2022:
Profit and total comprehensive income for the year
-
-
2,959,543
2,959,543
Transactions with owners in their capacity as owners:
Transfer from revaluation reserve
-
(10,638)
10,638
-
Balance at 31 December 2022
5,813,455
662,832
11,082,541
17,558,828
Year ended 31 December 2023:
Profit and total comprehensive income for the year
-
-
1,990,354
1,990,354
Transactions with owners in their capacity as owners:
Dividends
13
-
-
(1,500,000)
(1,500,000)
Transfer from revaluation reserve
-
(10,638)
10,638
-
Balance at 31 December 2023
5,813,455
652,194
11,583,533
18,049,182
COFCO INTERNATIONAL UK LTD
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2023
- 13 -
2023
2022
Notes
£
£
£
£
Cash flows from operating activities
Cash generated from/(absorbed by) operations
37
1,900,361
(957,847)
Interest paid
(204,996)
(571,431)
Income taxes paid
(840,000)
-
0
Net cash inflow/(outflow) from operating activities
855,365
(1,529,278)
Investing activities
Purchase of property, plant and equipment
(355,053)
(461,494)
Proceeds from disposal of property, plant and equipment
61,500
2,766,374
Interest received
119,139
106,240
Net cash (used in)/generated from investing activities
(174,414)
2,411,120
Financing activities
Payment of lease liabilities
(681,476)
(877,847)
Net cash used in financing activities
(681,476)
(877,847)
Net (decrease)/increase in cash and cash equivalents
(525)
3,995
Cash and cash equivalents at beginning of year
(102,987)
(106,982)
Cash and cash equivalents at end of year
(103,512)
(102,987)
Relating to:
Bank balances and short term deposits
-
707
Bank overdrafts
(103,512)
(103,694)
COFCO INTERNATIONAL UK LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
- 14 -
1
Accounting policies
Company information

COFCO International UK Ltd is a private company limited by shares incorporated in England and Wales. The registered office is 15 The Havens, Ransomes Europark, Ipswich, IP3 9SJ.

 

The financial statements of the company for the year ended 31 December 2023 were authorised for issue by the board of directors on 19/09/202419 September 2024 and the Statement of Financial Position was signed on the board's behalf by Mr Mark Dordery.

1.1
Accounting convention

The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted for use in the United Kingdom and with those parts of the Companies Act 2006 applicable to companies reporting under IFRS, except as otherwise stated.

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

The financial statements have been prepared under the historical cost convention, modified to include inventories, investments held in listed trade investments, open forward contracts at market value, and the revaluation of freehold properties. The principal accounting policies adopted are set out below.

1.2
Going concern

The directors have at the time of approving the financial statements, a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future. Thus they continue to adopt the going concern basis of accounting in preparing the financial statements.true

1.3
Revenue

Revenue is only recognised when certain criteria are met.

 

Firstly, a contract must exist. A contract exists when: it has been approved and the parties are committed to performing their respective obligations; each party’s rights can be identified; payment terms can be identified; the contact has commercial substance; and it is probable that consideration will be collected in respect of goods and services transferred to the customer.

 

Secondly, the Company must be able to identify the performance obligations within the contract. A performance obligation is a promise to transfer either a distinct good or service or a series of distinct goods or services. At contract inception, the Company assesses the goods or services promised to a customer and identifies each promise to transfer as either: a good or service that is distinct; or a series of distinct goods and services that are substantially the same and have the same pattern of delivery to the customer.

 

Next it is necessary to determine the transaction price. This involves an assessment of whether or not the revenue might be variable, contain a significant financing component, include non-cash consideration or involve payments back to the customer.

 

Next, it is necessary to allocate the transaction price. The transaction price is allocated to each separate performance obligation based on their relative standalone selling prices. Discounts are typically allocated to all performance obligations in an arrangement based on their relative standalone selling prices. i.e. so that discount is allocated proportionately across all performance obligations.

 

Revenue is then recognised when or as performance obligations are satisfied by transferring control of the promised goods or services to the customer.

Revenue, which arises principally from the sale of goods, excludes Value Added Tax.

 

Revenue from the sale of goods is recognised on an invoice basis which coincides with dispatch of goods and is the point when the customer obtains control over the goods.

COFCO INTERNATIONAL UK LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 15 -

Gains or losses on stock holdings are recognised by reference to period end market value with any unrealised amount included in the results for the period. The net unrealised forward contract gain or loss is included in the balance sheet as an asset or liability as appropriate.

 

Transactions which are contracted pre-period end for execution post-period end are included with the period if they are cash settled or circled out with opposite transactions as at 31 December and recognised as realised.

1.4
Property, plant and equipment

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

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

Land and buildings
2-10% per annum
Office equipment
10-33% per annum
Plant and machinery
10-20% per annum
Motor vehicles
10-20% per annum

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 recognised in the income statement.

1.5
Non-current investments

Investments in subsidiaries, associates and joint ventures are held at historical cost less any applicable provision for impairment.

1.6
Impairment of tangible and intangible assets

The Company assesses at each reporting date whether there is an indication that an asset may be impaired. If any such indication exists, or when annual impairment testing for an asset is required, the Company makes an estimate of the asset’s recoverable amount in order to determine the extent of the impairment loss. An asset’s recoverable amount is the higher of an asset’s or cash-generating unit’s fair value less costs to sell and its value in use and is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets. Where the carrying amount of an asset exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. Impairment losses on continuing operations are recognised in the income statement in those expense categories consistent with the function of the impaired asset.

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

 

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

 

Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.

COFCO INTERNATIONAL UK LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 16 -
1.7
Inventories

Inventories (with the exception of seed and fertilizer) are stated at fair value less cost to sell in accordance with the requirements of IAS 2 applied to commodity broker-traders. Changes in value less cost to sell are recognised in profit or loss in the period of change.

 

Inventories of seed and fertilizer are stated at the lower of cost and net realisable value. Cost includes all costs incurred in bringing each product to its present location and condition.

Net realisable value is the estimated selling price less all estimated costs of completion and costs to be incurred in marketing, selling and distribution.

1.8
Cash and cash equivalents

Cash and short term deposits in the balance sheet comprise cash at banks and in hand and short term deposits with an original maturity of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities.

1.9
Financial assets

Financial assets are recognised in the company's statement of financial position when the company becomes party to the contractual provisions of the instrument. Financial assets are classified into specified categories, depending on the nature and purpose of the financial assets.

 

At initial recognition, financial assets classified as fair value through profit and loss are measured at fair value and any transaction costs are recognised in profit or loss. Financial assets not classified as fair value through profit and loss are initially measured at fair value plus transaction costs.

Financial assets at fair value through profit or loss

Financial assets are classified as at FVTPL when the financial asset is held for trading. This is the case if:

 

 

Financial assets at FVTPL are stated at fair value with any gains or losses arising on remeasurement recognised in profit or loss. The net gain or loss recognised in profit or loss incorporates any dividend or interest earned on the financial asset. Interest and dividends are included in 'Investment income' and gains and losses on remeasurement included in 'other gains and losses' in the statement of comprehensive income. Contracts that are not held for physical delivery are accounted for at FVTPL.

Financial assets held at amortised cost

Financial assets with fixed or determinable payments and fixed maturity dates that the Company has the positive intent and ability to hold to maturity are classified as held to maturity investments.

 

Held to maturity investments are measured at amortised cost using the effective interest method less any impairment, with revenue recognised on an effective yield basis.

 

The effective interest method is a method of calculating the amortised cost of a debt instrument and of allocating the interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts through the expected life of the debt instrument to the net carrying amount on initial recognition.

COFCO INTERNATIONAL UK LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 17 -
Financial assets at fair value through other comprehensive income

Debt instruments are classified as financial assets measured at fair value through other comprehensive income where the financial assets are held within the company’s business model whose objective is achieved by both collecting contractual cash flows and selling financial assets, and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

 

A debt instrument measured at fair value through other comprehensive income is recognised initially at fair value plus transaction costs directly attributable to the asset. After initial recognition, each asset is measured at fair value, with changes in fair value included in other comprehensive income. Accumulated gains or losses recognised through other comprehensive income are directly transferred to profit or loss when the debt instrument is derecognised.

Financial assets classified as available for sale are measured at fair value with gains and losses arising from changes in fair value recognised in other comprehensive income. Where an AFS financial asset is disposed of or determined to be impaired, the cumulative gain or loss previously recognised in other comprehensive income is reclassified to profit or loss.

 

Dividends and interest earned on AFS financial assets are included in the investment income line item in the statement of comprehensive income.

Impairment of financial assets

Financial assets carried at amortised cost and FVOCI are assessed for indicators of impairment at each reporting end date.

 

The expected credit losses associated with these assets are estimated on a forward-looking basis. A broad range of information is considered when assessing credit risk and measuring expected credit losses, including past events, current conditions, and reasonable and supportable forecasts that affect the expected collectability of the future cash flows of the instrument.

Derecognition of financial assets

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.

1.10
Financial liabilities

The company recognises financial debt when the company becomes a party to the contractual provisions of the instruments. Financial liabilities are classified as either 'financial liabilities at fair value through profit or loss' or 'other financial liabilities'.

Financial liabilities at fair value through profit or loss

Financial liabilities are classified as measured at fair value through profit or loss when the financial liability is held for trading. A financial liability is classified as held for trading if:

 

 

Financial liabilities at fair value through profit or loss are stated at fair value with any gains or losses arising on remeasurement recognised in profit or loss.

COFCO INTERNATIONAL UK LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 18 -
Other financial liabilities

Obligations for loans and borrowings are recognised when the Company becomes party to the related contracts and are measured initially at the fair value of consideration received less directly attributable transaction costs.

 

After initial recognition, interest bearing loans and borrowings are subsequently measured at amortised cost using the effective interest method.

 

Gains and losses arising on the repurchase, settlement or otherwise cancellation of liabilities are recognised retrospectively in finance revenue and finance cost.

Derecognition of financial liabilities

The Company uses derivative financial instruments such as forward currency contracts and forward purchase contracts to mitigate its risks associated with foreign currency and commodity price fluctuations. Derivative financial instruments are initially recognised at fair value on the date on which a derivative contract is entered into and are subsequently remeasured at fair value. Derivatives are carried as assets when the fair value is positive and as liabilities when the fair value is negative.

 

The fair value of forward currency contracts is calculated by reference to current forward exchange rates for contracts with similar maturity profiles.

 

The company does not apply the hedge accounting requirements of IAS 39.

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
Derivatives

Derivatives are initially recognised at fair value at the date a derivative contract is entered into and are subsequently remeasured to fair value at each reporting end date. The resulting gain or loss is recognised in profit or loss immediately unless the derivative is designated and effective as a hedging instrument, in which event the timing of the recognition in profit or loss depends on the nature of the hedge relationship.

 

A derivative with a positive fair value is recognised as a financial asset, whereas a derivative with a negative fair value is recognised as a financial liability. A derivative is presented as a non-current asset or liability if the remaining maturity of the instrument is more than 12 months and it is not expected to be realised or settled within 12 months. Other derivatives are classified as current.

1.13
Taxation

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

Current tax

The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the income statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The company’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.

COFCO INTERNATIONAL UK LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 19 -
Deferred tax

Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary 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.

 

The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the income statement, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset when the company has a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.

1.14
Provisions

Provisions are recognised when the company has a legal or constructive present obligation as a result of a past event and it is probable that the company will be required to settle that obligation, and a reliable estimate can be made of the amount of the obligation.

 

The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the reporting end date, taking into account the risks and uncertainties surrounding the obligation. Where a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows.

 

When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, a receivable is recognised as an asset if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably.

1.15
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 inventories or non-current assets.

 

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

 

Termination benefits are recognised immediately as an expense when the company is demonstrably committed to terminate the employment of an employee or to provide termination benefits.

1.16
Retirement benefits

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

1.17
Leases

At inception, the company assesses whether a contract is, or contains, a lease within the scope of IFRS 16. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. Where a tangible asset is acquired through a lease, the company recognises a right-of-use asset and a lease liability at the lease commencement date. Right-of-use assets are included within property, plant and equipment, apart from those that meet the definition of investment property.

COFCO INTERNATIONAL UK LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 20 -

The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date plus any initial direct costs and an estimate of the cost of obligations to dismantle, remove, refurbish or restore the underlying asset and the site on which it is located, less any lease incentives received.

 

The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term. The estimated useful lives of right-of-use assets are determined on the same basis as those of other property, plant and equipment. The right-of-use asset is periodically reduced by impairment losses, if any, and adjusted for certain remeasurements of the lease liability.

The lease liability is initially measured at the present value of the lease payments that are unpaid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the company's incremental borrowing rate. Lease payments included in the measurement of the lease liability comprise fixed payments, variable lease payments that depend on an index or a rate, amounts expected to be payable under a residual value guarantee, and the cost of any options that the company is reasonably certain to exercise, such as the exercise price under a purchase option, lease payments in an optional renewal period, or penalties for early termination of a lease.

The lease liability is measured at amortised cost using the effective interest method. It is remeasured when there is a change in: future lease payments arising from a change in an index or rate; the company's estimate of the amount expected to be payable under a residual value guarantee; or the company's assessment of whether it will exercise a purchase, extension or termination option. When the lease liability is remeasured in this way, a corresponding adjustment is made to the carrying amount of the right-of-use asset, or is recorded in profit or loss if the carrying amount of the right-of-use asset has been reduced to zero.

The company has elected not to recognise right-of-use assets and lease liabilities for short-term leases of machinery that have a lease term of 12 months or less, or for leases of low-value assets including IT equipment. The payments associated with these leases are recognised in profit or loss on a straight-line basis over the lease term.

1.18
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.

COFCO INTERNATIONAL UK LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 21 -
2
Adoption of new and revised standards and changes in accounting policies

While there are a number of standards, amendments and interpretation which have been issued and are not yet effective which have not been adopted by the company, the directors have assessed their impact and are satisfied they will not have a material impact on the company.

 

Some accounting pronouncements which have become effective from 1 January 2023 and have therefore been adopted do not have a significant impact on the Company’s financial results or position as follows:

 

 

Standards, amendments and interpretations to existing standards that are not yet effective and have not been adopted early by the Company:

 

3
Critical accounting estimates and judgements

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, if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.

 

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

Key sources of estimation uncertainty
Useful economic lives of tangible non-current assets

The annual depreciation charge for tangible non-current assets is sensitive to changes in the estimated useful economic lives and residual values of the assets concerned. These lives and values are re-assessed annually and are amended when necessary to reflect current estimates based on a number of factors such as economic utilisation and physical condition. See note 1.5 for the useful economic lives of each class of assets.

Impairment of trade recievables

The company makes an estimate of the recoverable value of trade and other debtors. When assessing impairment, management considers factors including the credit rating of the debtor, the ageing profile of debtors, and historical experience. See note 17 for the net carrying amount of the debtors and associated impairment provision.

Present value of lease liabilities

Lease liabilities are initially measured at the present value of the lease payments due after the commencement date of the lease. The future lease payments have been discounted to present value using the Company’s incremental borrowing rate of 3% (at commencement of the lease) as the discount rate.

COFCO INTERNATIONAL UK LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
3
Critical accounting estimates and judgements
(Continued)
- 22 -
Market value of inventories and contracts

Certain inventories and forward contracts are revalued to market value. The market value of a contract or inventory holding depends on a number of factors, including the market value of the underlying commodity, the date of contract execution and the location of the commodity. While the commodity values are assessed at each period end based on quoted market prices, there is an element of judgement in respect of modifying these values for other factors such as the location of the commodity and the date of the contract.

4
Revenue

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

2023
2022
£
£
Revenue analysed by class of business
Trading combinable crops and the sale of arable inputs
212,401,231
263,803,679
Handling of crops and feed
2,526,904
2,448,881
Sales, processing and distribution of sowing seed
11,927,986
11,303,609
226,856,121
277,556,169

In the opinion of the directors the Company trades predominantly within the single geographical market of Europe.

5
Operating profit
2023
2022
Operating profit for the year is stated after charging/(crediting):
£
£
Exchange losses
1,504
707
Depreciation of property, plant and equipment
872,023
1,072,275
Profit on disposal of property, plant and equipment
(22,498)
(105,740)
Cost of goods sold recognised as an expense
213,836,002
262,870,653
Reversal of impairment loss recognised on trade receivables
(166,795)
-
0
6
Auditor's remuneration
2023
2022
Fees payable to the company's auditor and associates:
£
£
For audit services
Audit of the financial statements of the company
55,000
51,400
For other services
Tax services
14,500
13,550
COFCO INTERNATIONAL UK LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 23 -
7
Employees

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

2023
2022
Number
Number
Traders and administration
74
73
Industrial
25
26
Total
99
99

Their aggregate remuneration comprised:

2023
2022
£
£
Wages and salaries
5,390,287
4,845,782
Social security costs
585,027
558,186
Pension costs
344,440
300,208
6,319,754
5,704,176
8
Directors' remuneration
2023
2022
£
£
Remuneration for qualifying services
306,823
275,864
Company pension contributions to defined contribution schemes
25,309
24,216
332,132
300,080

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

Remuneration disclosed above include the following amounts paid to the highest paid director:
2023
2022
£
£
Remuneration for qualifying services
306,823
275,864
Company pension contributions to defined contribution schemes
25,309
24,216
COFCO INTERNATIONAL UK LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
(Continued)
- 24 -
9
Investment income
2023
2022
£
£
Interest income
Financial instruments measured at amortised cost:
Other interest income on financial assets
119,139
106,240
Income above relates to assets held at amortised cost, unless stated otherwise.
10
Finance costs
2023
2022
£
£
Interest on bank overdrafts and loans
3,099
3,458
Interest on lease liabilities
64,478
42,649
Other interest payable
137,419
525,324
Total interest expense
204,996
571,431
11
Other gains and losses
2023
2022
£
£
Other gains and losses
(10,300)
-

The trade and assets of COFCO International UK Limited's subsidiaries were hived up into COFCO International UK Limited in a previous period. The investments in subsidiaries have been impaired accordingly and recognised as an expense in other gains and losses above.

12
Income tax expense
2023
2022
£
£
Current tax
UK corporation tax on profits for the current period
447,530
300,368
Adjustments in respect of prior periods
-
0
1,273
Total UK current tax
447,530
301,641
Deferred tax
Origination and reversal of temporary differences
204,583
829,497
Total tax charge
652,113
1,131,138
COFCO INTERNATIONAL UK LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
12
Income tax expense
(Continued)
- 25 -

As of 1 April 2023, the main rate of UK corporation tax increased from 19% to 25%. The effective tax rate for 2023 is 23.52% (2022: 19%). Future profits are expected to be taxed at the UK main rate of corporation tax of 25%.

The charge for the year can be reconciled to the profit per the income statement as follows:

2023
2022
£
£
Profit before taxation
2,642,467
4,090,681
Expected tax charge based on a corporation tax rate of 23.50% (2022: 19.00%)
620,980
777,229
Effect of expenses not deductible in determining taxable profit
14,181
13,296
Change in unrecognised deferred tax assets
-
0
3,431
Adjustment in respect of prior years
-
0
1,273
Effect of change in UK corporation tax rate
12,650
198,256
Fixed asset differences
4,302
137,653
Taxation charge for the year
652,113
1,131,138
13
Dividends
2023
2022
2023
2022
Amounts recognised as distributions:
per share
per share
Total
Total
£
£
£
£
Ordinary
Final dividend paid
0.26
-
1,500,000
-
0
14
Impairments

Impairment tests have been carried out where appropriate and the following impairment losses have been recognised in profit or loss:

2023
2022
£
£
In respect of:
Fixed asset investments
10,300
-
Recognised in:
Other gains and losses
10,300
-
COFCO INTERNATIONAL UK LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 26 -
15
Property, plant and equipment
Land and buildings
Plant and machinery
Office equipment
Motor vehicles
Total
£
£
£
£
£
Cost or valuation
At 1 January 2022
3,718,044
2,251,719
1,237,883
4,003,028
11,210,674
Additions
15,277
368,629
27,083
289,630
700,619
Disposals
(6,839)
-
0
-
0
(22,277)
(29,116)
At 31 December 2022
3,726,482
2,620,348
1,264,966
4,270,381
11,882,177
Additions
51,450
192,050
57,544
1,032,497
1,333,541
Disposals
-
0
(4,400)
-
0
(501,910)
(506,310)
At 31 December 2023
3,777,932
2,807,998
1,322,510
4,800,968
12,709,408
Accumulated depreciation and impairment
At 1 January 2022
969,779
555,573
1,164,104
1,732,051
4,421,507
Charge for the year
360,442
191,376
28,204
492,253
1,072,275
Eliminated on disposal
-
0
-
0
-
0
(17,298)
(17,298)
At 31 December 2022
1,330,221
746,949
1,192,308
2,207,006
5,476,484
Charge for the year
81,989
224,621
26,539
538,874
872,023
Eliminated on disposal
-
0
(4,400)
-
0
(462,908)
(467,308)
At 31 December 2023
1,412,210
967,170
1,218,847
2,282,972
5,881,199
Carrying amount
At 31 December 2023
2,365,722
1,840,828
103,663
2,517,996
6,828,209
At 31 December 2022
2,396,261
1,873,399
72,658
2,063,375
6,405,693

Property, plant and equipment includes right-of-use assets, as follows:

Right-of-use assets
2023
2022
£
£
Net values at the year end
Property
257,327
297,373
Plant and machinery
77,343
-
Motor vehicles
2,027,942
1,965,757
2,362,612
2,263,130
Total additions in the year
988,234
239,125
Depreciation charge for the year
Property
40,046
312,110
Plant and machinery
27,745
-
Motor vehicles
328,348
418,484
396,139
730,594
COFCO INTERNATIONAL UK LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
15
Property, plant and equipment
(Continued)
- 27 -

Included within Land and Buildings of the Company are properties with carrying values of £1,337,880 (2022: £1,354,672) that have been revalued. These properties were valued by Fenn Wright Chartered Surveyors as at 1 October 2014, on the basis of fair value supported by market evidence in accordance with the Appraisal and Valuation Manual of The Royal Institution of Chartered Surveyors.

Revaluation surpluses were recognised on transition to IFRS. The valuations for these specific assets were taken to be the deemed cost as at 1 October 2014 in accordance with transitional arrangements.

If the land and buildings were measured using the cost model, the carrying amounts would have been approximately £668,792 (2022 - £686,783), being cost £921,669 (2022 - £921,669) and depreciation £252,877 (2022 - £234,886).

16
Credit risk

Credit risk is the risk of financial loss to the company if a customer or counterparty to a financial instrument fails to meet its contractual obligations and arises principally from the company's receivables from customers.

 

The company operates a thorough credit risk management policy. This is applied by all counterparties being approved and credit limits set accordingly. These limits are reviewed on a regular basis and take into account payment history, latest financial information, local knowledge, and credit rating assessments.

The carrying amount of financial assets recorded in the financial statements, which is net of impairment losses, represents the company's maximum exposure to credit risk. The company does not hold any collateral or other credit enhancements to cover this credit risk.

17
Inventories
2023
2022
£
£
Commodities for resale
13,838,950
28,991,382

The carrying amount of inventories carried at fair value less costs to sell is £7,177,756 (2022: £17,093,612).

COFCO INTERNATIONAL UK LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 28 -
18
Trade and other receivables
2023
2022
£
£
Trade receivables
16,716,469
22,615,836
Provision for bad and doubtful debts
(153,343)
(166,795)
16,563,126
22,449,041
Amount due from parent undertaking
1,620,930
-
0
Prepayments and accrued income
6,767,217
9,037,914
24,951,273
31,486,955

Trade receivables disclosed above are classified as loans and receivables and are therefore measured at amortised cost.

Amounts due from group undertakings are unsecured, interest bearing, have no fixed date of repayment and are repayable on demand.

19
Trade receivables - credit risk
Fair value of trade receivables

The directors consider that the carrying amount of trade and other receivables is approximately equal to their fair value.

Expected credit loss assessment
2023
2022
Balance
Rate
Loss allowance
Balance
Rate
Loss allowance
Trade receivables
£
%
£
£
%
£
1 - 30 days
1,190,229
-
-
2,971,049
-
-
31 - 60 days
249,992
-
-
514,801
-
-
61 - 90 days
52,372
-
-
276,780
-
-
91 days and over
153,343
100
153,343
166,795
100
166,795
1,645,936
153,343
3,929,425
166,795

No significant receivable balances are impaired at the reporting end date.

Movement in the allowances for impairment of trade receivables
2023
2022
£
£
Balance at 1 January 2023
166,795
-
Additional allowance recognised
153,343
166,795
Amounts recovered in the year
(166,795)
-
Balance at 31 December 2023
153,343
166,795
COFCO INTERNATIONAL UK LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 29 -
20
Fair value

The fair value of financial assets and liabilities held at fair value has been estimated using the following fair value hierarchy:

 

Level 1: The unadjusted quoted price in an active market for identical assets or liabilities that the entity can access at the measurement date.

 

Level 2: Inputs other than quoted prices included within level 1 that are observable (i.e. developed using market data) for the asset or liability, either directly or indirectly.

 

Level 3: Inputs are unobservable (i.e. for which market data is unavailable for the asset or liability).

 

There have been no transfers between categories in the current or preceding period.

 

The company's financial assets and liabilities have been fair valued using the above hierarchy categories as follows:

 

Inventories (excluding those measured at the lower of cost and net realisable value) and forward commodity contracts are deemed Level 2. These are valued based on current market prices for the relevant commodities.

21
Liquidity risk

Liquidity risk is the risk that the company will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset.

 

Liquidity risk arises principally on the trade and other payables of the company.

 

The company has access to significant cash reserves from the wider COFCO Group and therefore the directors consider that the company is well placed to meet its short-term liabilities as they become due.

22
Fair value of financial liabilities

The directors consider that the carrying amounts of financial liabilities carried at amortised cost in the financial statements approximate to their fair values.

23
Borrowings
2023
2022
£
£
Borrowings held at amortised cost:
Bank overdrafts
103,512
103,694

Bank overdrafts are secured by a letter of set off of financial statements with other group companies.

24
Market risk
Market risk management

Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and commodity prices, will affect the company's income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return.

COFCO INTERNATIONAL UK LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
24
Market risk
(Continued)
- 30 -
Foreign exchange risk

The carrying amounts of the company's foreign currency denominated monetary assets and liabilities at the reporting date are as follows:

Assets
Liabilites
2023
2022
2023
2022
£
£
£
£
Euro
1,309,744
40,773
1,634,331
1,487,069
USD
-
33,107
648,468
2,132,328
1,309,744
73,880
2,282,799
3,619,397

The company is exposed to currency risk to the extent that there is a mismatch in the currencies in which sales and purchases are denominated. The functional currencies of the company are primarily Sterling and the Euro.

 

The company aims to eliminate foreign exchange risk by managing exposure on a daily basis. The risk is dependent on the movement in the US dollar to Sterling exchange rate and the Euro to Sterling exchange rate.

 

The effect of a 5% strengthening in the Dollar/Euro against Sterling at the reporting date would, all other variables being held constant, have not resulted in an increase/ decrease in the post-tax profit for the year as all of the company's foreign currency transactions are fully hedged to Sterling.

Interest rate risk

At the year end date the company held interest bearing financial liabilities totalling £1,975,130 (2022: £24,059,793). Of these financial liabilities, £1,871,618 (2022: £1,574,606) relate to fixed rate interest bearing liabilities.

 

Whilst the company takes steps to minimise its exposure to cash flow interest rate risk, changes in interest rates will have an impact on profit.

 

The effect of a 50 basis points increase in the interest rate at the reporting date on the variable rate debt carried at that date would, all other variables being held constant, have resulted in an decrease of the company's post-tax profit for the year of £518 (2022: £112,426).

 

A 50 basis points decrease in the interest rate would, on the same basis, have increased post-tax profit by the same amount.

Commodity price risk

The company is exposed to commodity price risks arising from financial assets and liabilities held at fair value through profit and loss for trading purposes.

 

The company has formal procedures in place to manage the risk of commodity price fluctuations and to reduce the company's exposure to such fluctuations to an acceptable level. The maximum exposure of the company to commodity price fluctuations is limited as the portfolio of traded commodities is diverse and exposure to individual commodity market movements is subject to fixed limits, which are regularly reviewed.

COFCO INTERNATIONAL UK LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 31 -
25
Trade and other payables
2023
2022
£
£
Trade payables
9,271,928
10,890,563
Amount owed to parent undertaking
1,463,717
22,128,575
Accruals
10,498,988
10,285,074
Social security and other taxation
2,704,405
2,490,262
Other payables
429,582
270,124
24,368,620
46,064,598

Trade payables and accruals principally comprise amounts outstanding for trade purchases and ongoing costs. Trade and other creditors are non interest bearing and are normally settled on 28 day credit terms. The directors consider that the carrying amount of trade payables approximates to their fair value.

 

Derivative contracts are placed on behalf of COFCO International UK Limited by a parent company. In the majority of cases, these contracts are in the name of companies other than COFCO International UK Limited. COFCO International UK Limited is exposed to the economic effect of these contracts that have been entered into by another group company, who are acting as agents on their behalf of COFCO International UK Limited.

 

Amounts due to group undertakings are unsecured, interest bearing, have no fixed date of repayment and are repayable on demand.

26
Lease liabilities
2023
2022
Maturity analysis
£
£
Within one year
676,260
645,390
In two to five years
1,299,878
880,876
In over five years
110,000
151,969
Total undiscounted liabilities
2,086,138
1,678,235
Future finance charges and other adjustments
(214,520)
(103,629)
Lease liabilities in the financial statements
1,871,618
1,574,606

Lease liabilities are classified based on the amounts that are expected to be settled within the next 12 months and after more than 12 months from the reporting date, as follows:

2023
2022
£
£
Current liabilities
599,300
611,386
Non-current liabilities
1,272,318
963,220
1,871,618
1,574,606
COFCO INTERNATIONAL UK LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
26
Lease liabilities
(Continued)
- 32 -
2023
2022
Amounts recognised in profit or loss include the following:
£
£
Interest on lease liabilities
64,478
42,649

The fair value of the company's lease obligations is approximately equal to their carrying amount.

 

The company leases various warehouses under non-cancellable lease agreements. The leases have varying lease terms, escalation clauses and renewal rights.

 

The company also leases various items of plant and equipment under non-cancellable lease agreements.

27
Deferred taxation

The following are the major deferred tax liabilities and assets recognised by the company and movements thereon during the current and prior reporting period.

Accelerated capital allowances
Provisions
Total
£
£
£
Balance at 1 January 2022
-
0
-
-
0
Deferred tax movements in prior year
Charge/(credit) to profit or loss
956,978
(127,481)
829,497
Liability at 1 January 2023
956,978
(127,481)
829,497
Deferred tax movements in current year
Charge/(credit) to profit or loss
142,649
61,934
204,583
Liability at 31 December 2023
1,099,627
(65,547)
1,034,080

The deferred tax liability set out above relating to accelerated capital allowances is expected to reverse in line with the depreciation of fixed assets. The deferred tax asset in respect of provisions is anticipated to reverse within 12 months.

28
Provisions for liabilities
2023
2022
£
£
Contractual obligations
283,522
463,446
All provisions are expected to be settled within 12 months from the reporting date.
COFCO INTERNATIONAL UK LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
28
Provisions for liabilities
(Continued)
- 33 -
Movements on provisions:
Contractual obligations
£
At 1 January 2023
463,446
Additional provisions in the year
74,164
Utilisation of provision
(254,088)
At 31 December 2023
283,522

Due to the nature of the Company’s industry it is sometimes necessary to make provisions for certain expenses arising during the course of trading. Provisions are made in respect of outflows relating to various liabilities for goods and/or services, the future reimbursement of which by third parties is uncertain, in terms of both timing and extent.

29
Retirement benefit schemes
2023
2022
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
344,440
300,208

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. No contributions were unpaid at the end of the current year or the prior period.

30
Share capital
2023
2022
2023
2022
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Ordinary of £1 each
5,813,455
5,813,455
5,813,455
5,813,455
31
Revaluation reserve
2023
2022
£
£
At the beginning of the year
662,832
673,470
Transfer to retained earnings
(10,638)
(10,638)
At the end of the year
652,194
662,832

The revaluation reserve arose on the valuation of certain tangible fixed assets (see note 12).

32
Contingent liabilities

In the normal course of trade the company gives guarantees in respect of certain contractual obligations. In addition the company, as a direct subsidary of COFCO International BV, has entered into an arrangement of cross guarantees with group bankers.

COFCO INTERNATIONAL UK LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 34 -
33
Capital risk management

The company manages its capital to ensure that it will be able to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital.

 

The capital structure of the company consists of debt from its parent company, cash and cash equivalents and equity comprising share capital, reserves and retained earnings. The company reviews the capital structure annually and as part of this review considers that cost of capital and the risks associated with each class of capital.

 

The company is not subject to any externally imposed capital requirements.

34
Related party transactions
Remuneration of key management personnel

The remuneration of key management personnel, including directors, is set out below in aggregate for each of the categories specified in IAS 24 Related Party Disclosures.

2023
2022
£
£
Short-term employee benefits
886,519
797,008
Post-employment benefits
202,793
113,032
1,089,312
910,040
Other transactions with related parties

During the year the company entered into the following transactions with related parties:

Sale of goods
Purchase of goods
2023
2022
2023
2022
£
£
£
£
Parent company
2,201,837
-
0
-
0
-
0
Other related parties
13,950,489
27,407,437
2,989,898
27,127
16,152,326
27,407,437
2,989,898
27,127
Interest expense
Management charges
2023
2022
2023
2022
£
£
£
£
Parent company
-
-
10,990
314,507
Other related parties
137,419
450,250
-
-
137,419
450,250
10,990
314,507
COFCO INTERNATIONAL UK LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
34
Related party transactions
(Continued)
- 35 -

The following amounts were outstanding at the reporting end date:

2023
2022
Amounts due to related parties
£
£
Parent company
12,055
22,128,575

The following amounts were outstanding at the reporting end date:

2023
2022
Amounts due from related parties
£
£
Parent company
157,213
-
Other related parties
1,308,661
33,107
1,465,874
33,107
35
Controlling party

The parent company of COFCO International UK Ltd is COFCO International Netherlands BV and its registered office is Weena 505, 3013 AL Rotterdam, The Netherlands.

The ultimate parent company is COFCO Group, a Company incorporated in China.

 

The COFCO International UK Limited financial statements are consolidated into the COFCO International (HK) Limited consolidated financial statements. This is the smallest group into which this entity is consolidated that prepares consolidated financial statements for public use.

 

The largest group into which the entity is consolidated in COFCO Group.

36
Off balance sheet arrangements

The company is not (and has not been) party to any arrangements that are not reflected on its balance sheet that give rise to a material risk or benefit, other than short term operating leases as disclosed in note 26.

COFCO INTERNATIONAL UK LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 36 -
37
Cash generated from/(absorbed by) operations
2023
2022
£
£
Profit for the year before income tax
2,642,467
4,090,681
Adjustments for:
Finance costs
204,996
571,431
Investment income
(119,139)
(106,240)
Gain on disposal of property, plant and equipment
(22,498)
(105,740)
Depreciation and impairment of property, plant and equipment
872,023
1,072,275
Other gains and losses
10,300
-
Decrease in provisions
(179,924)
(480,145)
Movements in working capital:
Decrease/(increase) in inventories
15,152,432
(6,011,348)
Decrease/(increase) in trade and other receivables
6,535,682
(4,695,706)
(Decrease)/increase in trade and other payables
(23,195,978)
4,706,945
Cash generated from/(absorbed by) operations
1,900,361
(957,847)
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