Company registration number 04927813 (England and Wales)
UNION COLOURS LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 DECEMBER 2023
UNION COLOURS LIMITED
COMPANY INFORMATION
Directors
B Zhu
H Rui
Secretary
B Zhu
Company number
04927813
Registered office
Union House
Hempshaw Lane
Stockport
Cheshire
SK1 4LG
Auditor
Chadwick & Company (Manchester) Limited
Chartered Accountants
Statutory Auditors
Capital House
272 Manchester Road
Droylsden
Manchester
M43 6PW
UNION COLOURS LIMITED
CONTENTS
Page
Strategic report
1 - 2
Directors' report
3 - 4
Independent auditor's report
5 - 7
Statement of comprehensive income
8
Balance sheet
9
Statement of changes in equity
10
Statement of cash flows
11
Notes to the financial statements
12 - 21
UNION COLOURS LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 30 DECEMBER 2023
- 1 -
The directors present the strategic report for the year ended 30 December 2023.
Review of the business
The company continued its unflinching efforts in streamlining its operations and adapting to the difficult market conditions and operating environment. The extraordinary and decisive adjustment in personnel structure and management workflow made by the company in the last few years has ensured that it can meet the challenges it may face in the future. Despite the increased difficulties the company was facing in 2023, the gross profit margin was maintained even though there was a small decrease in total revenue.
The unit in the Netherlands continued to grow its team and gain its footing in managing EU and non-UK clients of its respective markets. The work done in 2020 ensured its continuous growth in establishing a steady and strong workforce. It was well positioned in dealing with the aftermath of Brexit and impact of the pandemic. The Netherlands unit was the new HQ for managing not only EU operations but also UK operations, which was the inevitable outcome of the Brexit situation. The company continued to evaluate and monitor this new structure with the result that during the year the ownership of the subsidiary in the Netherlands was transferred to another company in the group.
There was no doubt that the adjustment and the new structure maintained the security of the company's position in compliance with REACH requirement in the post Brexit environment, which provided the assurance to the clients and suppliers for the UK and EU market as intended. This resulted in very little change in the revenue and market share for the company, which verified the group strategy was the right one. The progress made by the company on supply chain, credit control and customer service were carried out further in 2023. Without it, the company would not be able to take on the extremely difficult market condition brought by the fast-changing world economy, global logistic breakdown and COVID-19 impact. The company not only survived in this challenging environment but also prepared for the post pandemic world.
Global supply chain was chaotic and broken in 2021 and through some of 2022, which heavily impacted our raw materials supply and our deliveries to the clients. The demand of the market was becoming more irregular and making the requirement of the service even more difficult to manage. The company protected the core clients and continued to explore new market positions during 2023. However, the competition was also fierce and the company had to adapt and adjust to many sales battlegrounds to maintain its market share. Fortunately, the right strategy and foundation work in previous years supported the struggle in this challenging year.
As always, the Group supported Union Colours operations and never changed its view on the future of the company's development in UK and EU market. The business is changing, the only constant is the Group Head Office in China supporting the company's efforts in surviving and thriving in this ever-changing new world.
Business Environment
The company has continued to operate in a difficult environment of supply shortage, restrictions on trade activities during part of 2023 due to increased competition from competitors. The business managed to keep its core positions and regained some lost positions in previous trading period.
As expected, competition in the commodity sector continued in 2023 for volume business. The company consistently carried out its strategy in supply chain management and focus its efforts on its core product range improvement, which protected its core clients base and further developed new customer reach.
The early steps the company took to serve the post Brexit UK market and to improve the supply network paid dividends.
The theme on the increased requirement for environmental demand and legislative restrictions continued into 2023, not only in UK and EU market, but also in the world for the industry. The company continued its work in product compliance and technical improvement to satisfy the clients' growing requests on those aspects.
UNION COLOURS LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 30 DECEMBER 2023
- 2 -
Principal risks and uncertainties
The company's principal financial instruments are comprised of bank balances, invoice discounting facilities, forward currency contracts, trade creditors, trade debtors and inter-group loans. The main purpose of these instruments is to provide funds to finance the company's operations. The main risks arising from the financial instruments are interest rate risk, liquidity risk and foreign currency risk.
Due to the nature of the financial instruments used by the company there is no exposure to price risk. The company's approach to managing other risks applicable to the financial instruments are set out below.
In respect of bank balances, liquidity risk is managed by maintaining a balance between the continuity funding and flexibility through the use of an invoice discounting loan facility at a floating rate of interest.
In respect of inter-group loans, these are interest free and are repayable on demand. The directors have, however, received assurances that group head office will support the operation and the company will not be required to make such payments until it has adequate financial resources.
Trade debtors are managed in respect of credit and cash flow risk by policies concerning the credit offered to customers and the regular monitoring of amounts outstanding for both time and credit limits. The company insures all its trade debtors and this gives additional comfort in respect of bad debts.
Trade creditors' liquidity risk is managed by ensuring that sufficient funds are available to meet amounts due.
The company seeks to manage foreign exchange risk by matching receipts and payments in foreign currencies as far as possible and by being guided under the group foreign currency management. Currency risk was largely unrealised gain or loss, which was carried by Group finance control.
Key performance indicators
The board of directors routinely monitor the following financial key performance indicators
- Turnover against budget and comparative period
- Gross profit (value and percentage) against budget and comparative period
- Administrative and other expenses against budget and comparative period
- Cash flow against budget and profit for the period
Key performance indicators for the year:
Profit ratios
Gross profit margin 15.10% (2022 15.14%)
Net profit margin (4.44)% (2022 (17.68%))
Total turnover €2,331,209 (2022 €2,824,730)
Solvency ratios
Current ratio 0.96 (2022 0.98)
Quick ratio 0.74 (2022 0.76)
B Zhu
Secretary
21 December 2024
UNION COLOURS LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 30 DECEMBER 2023
- 3 -
The directors present their annual report and financial statements for the year ended 30 December 2023.
Principal activities
The principal activity of the company continued to be that of the importation and selling wholesale organic pigments.
Results and dividends
The results for the year are set out on page 8.
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:
B Zhu
H Rui
Research and development
The company has continues to invest in research and development during 2023 and this has continued into 2024.
Auditor
In accordance with the company's articles, a resolution proposing that Chadwick & Company (Manchester) Limited be reappointed as auditor of the company will be put at a General Meeting.
Energy and carbon report
As the company has not consumed more than 40,000 kWh of energy in this reporting period, it qualifies as a low energy user under these regulations and is not required to report on its emissions, energy consumption or energy efficiency activities.
Statement of directors' responsibilities
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:
select suitable accounting policies and then apply them consistently;
make judgements and accounting estimates that are reasonable and prudent;
state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements;
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company’s transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
UNION COLOURS LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 30 DECEMBER 2023
- 4 -
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.
By order of the board
B Zhu
Secretary
21 December 2024
UNION COLOURS LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF UNION COLOURS LIMITED
- 5 -
Opinion
We have audited the financial statements of Union Colours Limited (the 'company') for the year ended 30 December 2023 which comprise the statement of comprehensive income, the balance sheet, the statement of changes in equity, the statement of cash flows 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:
give a true and fair view of the state of the company's affairs as at 30 December 2023 and of its loss for the year then ended;
have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
have been prepared in accordance with the requirements of the Companies Act 2006.
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, as disclosed in note 1.2 of these financial statements, 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.
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:
the information given in the strategic report and the directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
the strategic report and the directors' report have been prepared in accordance with applicable legal requirements.
UNION COLOURS LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF UNION COLOURS LIMITED (CONTINUED)
- 6 -
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:
adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or
the financial statements are not in agreement with the accounting records and returns; or
certain disclosures of remuneration specified by law are not made; or
we have not received all the information and explanations we require for our audit.
Responsibilities of directors
As explained more fully in the directors' responsibilities statement, 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.
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.
Extent to which the audit was considered capable of detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below.
We considered and updated our knowledge of the company's specific industry and its regulatory environment, and reviewed the company's documentation surrounding the policies and procedures relating to fraud and compliance with laws and regulations. We also enquired of management about their own identification and assessment of the risks of irregularities. Based on this understanding, we identified and assessed the risks of material misstatement in the financial statements and designed and performed audit procedures in response to those risks.
We identified the key laws and regulations that have a direct effect on the determination of material amounts and disclosures in the financial statements, the most significant of these are the Health and Safety At Work Act 1974 and the UK Companies Act 2006. We also gained knowledge of the legal and regulatory frameworks which do not have a direct effect on the financial statements but compliance with which may be fundamental to the company's ability to operate or to avoid a material penalty.
Audit response to risks identified
The audit engagement team were made aware of the potential opportunities and incentives that may exist within the company for fraudulent activity and how and where fraud might occur or be concealed within the financial statements.
UNION COLOURS LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF UNION COLOURS LIMITED (CONTINUED)
- 7 -
In common with all audits under ISAs (UK), we are also required to perform specific procedures to respond to the risk of management override of controls. In addressing the risk of fraud through management override of controls, we tested the appropriateness of journal entries and other manual adjustments; assessed whether the judgements made in making accounting estimates are indicative of a potential bias; and evaluated the business rationale of any significant transactions that are unusual or outside the normal course of business.
In addition to the above, we designed procedures which included:
performing detailed audit work on areas identified as being susceptible to management bias and override of controls, such as provisions, estimates and journal entries, evaluating the business rationale of significant transactions outside the normal course of business and reviewing accounting estimates for indicators of bias;
Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading to a material misstatement in the financial statements or non-compliance with regulation. This risk increases the more that compliance with a law or regulation is removed from the events and transactions reflected in the financial statements, as we will be less likely to become aware of instances of non-compliance. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
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.
Tracey Connor BSc FCA
Senior Statutory Auditor
For and on behalf of Chadwick & Company (Manchester) Limited
24 December 2024
Chartered Accountants
Statutory Auditor
Chartered Accountants
Statutory Auditors
Capital House
272 Manchester Road
Droylsden
Manchester
M43 6PW
UNION COLOURS LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 DECEMBER 2023
- 8 -
2023
2022
Notes
€
€
Turnover
2
2,331,209
2,824,730
Cost of sales
(1,979,280)
(2,397,121)
Gross profit
351,929
427,609
Administrative expenses
(471,232)
(1,168,305)
Other operating income
15,837
248,441
Operating loss
3
(103,466)
(492,255)
Interest payable and similar expenses
7
(5,723)
Amounts written off investments
8
-
(1,450)
Loss before taxation
(103,466)
(499,428)
Tax on loss
9
Loss for the financial year
(103,466)
(499,428)
The profit and loss account has been prepared on the basis that all operations are continuing operations.
UNION COLOURS LIMITED
BALANCE SHEET
AS AT 30 DECEMBER 2023
30 December 2023
- 9 -
2023
2022
Notes
€
€
€
€
Fixed assets
Tangible assets
10
295
1,903
Investments
11
100
295
2,003
Current assets
Stocks
12
798,586
827,862
Debtors
13
2,636,177
2,596,285
Cash at bank and in hand
243,056
318,589
3,677,819
3,742,736
Creditors: amounts falling due within one year
14
(3,839,168)
(3,832,636)
Net current liabilities
(161,349)
(89,900)
Total assets less current liabilities
(161,054)
(87,897)
Creditors: amounts falling due after more than one year
15
(5,356,042)
(5,325,733)
Net liabilities
(5,517,096)
(5,413,630)
Capital and reserves
Called up share capital
18
12,005
12,005
Profit and loss reserves
(5,529,101)
(5,425,635)
Total equity
(5,517,096)
(5,413,630)
The financial statements were approved by the board of directors and authorised for issue on 21 December 2024 and are signed on its behalf by:
B Zhu
Director
Company registration number 04927813 (England and Wales)
UNION COLOURS LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 DECEMBER 2023
- 10 -
Share capital
Profit and loss reserves
Total
€
€
€
Balance at 1 January 2022
12,005
(4,926,207)
(4,914,202)
Year ended 30 December 2022:
Loss and total comprehensive income
-
(499,428)
(499,428)
Balance at 30 December 2022
12,005
(5,425,635)
(5,413,630)
Year ended 30 December 2023:
Loss and total comprehensive income
-
(103,466)
(103,466)
Balance at 30 December 2023
12,005
(5,529,101)
(5,517,096)
UNION COLOURS LIMITED
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 DECEMBER 2023
- 11 -
2023
2022
Notes
€
€
€
€
Cash flows from operating activities
Cash (absorbed by)/generated from operations
20
(105,962)
770,828
Interest paid
(5,723)
Net cash (outflow)/inflow from operating activities
(105,962)
765,105
Investing activities
Proceeds from disposal of subsidiaries
100
1,450
Proceeds from disposal of investments
(1,450)
Net cash generated from/(used in) investing activities
100
-
Financing activities
Repayment of borrowings
30,309
(567,227)
Net cash generated from/(used in) financing activities
30,309
(567,227)
Net (decrease)/increase in cash and cash equivalents
(75,553)
197,878
Cash and cash equivalents at beginning of year
303,700
105,822
Cash and cash equivalents at end of year
228,147
303,700
Relating to:
Cash at bank and in hand
243,056
318,589
Bank overdrafts included in creditors payable within one year
(14,909)
(14,889)
UNION COLOURS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 DECEMBER 2023
- 12 -
1
Accounting policies
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 €.
The financial statements have been prepared under the historical cost convention, [modified to include the revaluation of freehold properties and to include investment properties and certain financial instruments at fair value]. The principal accounting policies adopted are set out below.
1.2
Going concern
Notwithstanding that the company net liabilities of €5,517,096 (2022 - €5,413,630) at the balance sheet date, the financial statements have been prepared on a going concern basis. At that date the company owed €5,536,878 (2022 - €5,505,569) to its shareholders who have confirmed that they will not seek repayment for the foreseeable future and will continue to support operations of the company as required. Accordingly, the directors consider that the company has adequate funding to meet its financial obligations as they fall due for the foreseeable future.true
1.3
Turnover
Turnover is recognised at the fair value of the consideration received or receivable for goods and services 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
Research and development expenditure
Research expenditure is written off against profits in the year in which it is incurred. Identifiable development expenditure is capitalised to the extent that the technical, commercial and financial feasibility can be demonstrated.
1.5
Tangible fixed assets
Tangible fixed assets 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:
Plant and equipment
20% Straight line
Fixtures and fittings
20% Straight line
Computers
25% - 33% Straight line
Motor vehicles
20% Startight 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.
UNION COLOURS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 DECEMBER 2023
1
Accounting policies
(Continued)
- 13 -
1.6
Fixed asset investments
Interests in subsidiaries, associates and jointly controlled entities are initially measured at cost and subsequently measured at cost less any accumulated impairment losses. The investments are assessed for impairment at each reporting date and any impairment losses or reversals of impairment losses are recognised immediately in profit or loss.
A subsidiary is an entity controlled by the company. Control is the power to govern the financial and operating policies of the entity so as to obtain benefits from its activities.
An associate is an entity, being neither a subsidiary nor a joint venture, in which the company holds a long-term interest and where the company has significant influence. The company considers that it has significant influence where it has the power to participate in the financial and operating decisions of the associate.
Entities in which the company has a long term interest and shares control under a contractual arrangement are classified as jointly controlled entities.
1.7
Impairment of fixed assets
At each reporting period end date, the company reviews the carrying amounts of its tangible 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 (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the company estimates the recoverable amount of the cash-generating unit to which the asset belongs.
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.
Recognised impairment losses are reversed if, and only if, the reasons for the impairment loss have ceased to apply. 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.
1.8
Stocks
Stocks 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 stocks to their present location and condition.
Stocks held for distribution at no or nominal consideration are measured at the lower of cost and replacement cost, adjusted where applicable for any loss of service potential.
At each reporting date, an assessment is made for impairment. Any excess of the carrying amount of stocks 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.
UNION COLOURS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 DECEMBER 2023
1
Accounting policies
(Continued)
- 14 -
1.9
Cash and cash equivalents
Cash and cash equivalents are basic financial assets and include cash in hand, deposits held at call with banks, other short-term liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities.
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 balance sheet 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.
Basic financial assets
Basic financial assets, which include debtors and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised.
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.
UNION COLOURS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 DECEMBER 2023
1
Accounting policies
(Continued)
- 15 -
Classification of financial liabilities
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the company after deducting all of its liabilities.
Basic financial liabilities
Basic financial liabilities, including creditors, bank loans, loans from fellow group companies and preference shares that are classified as debt, are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future payments discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.
Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.
Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Amounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.
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 transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the company.
1.12
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 fixed 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.
1.13
Retirement benefits
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
UNION COLOURS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 DECEMBER 2023
1
Accounting policies
(Continued)
- 16 -
1.14
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.
1.15
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.
1.16
Company information
Union Colours Limited is a private company limited by shares incorporated in England and Wales. The registered office is Union House, Hempshaw Lane, Stockport, Cheshire, SK1 4LG.
2
Turnover
2023
2022
€
€
Turnover analysed by class of business
Sale of goods
2,331,209
2,824,730
2023
2022
€
€
Turnover analysed by geographical market
United Kingdonm
2,331,209
2,824,730
3
Operating loss
2023
2022
Operating loss for the year is stated after charging/(crediting):
€
€
Exchange (gains)/losses
(231,505)
354,591
Research and development costs
4,768
6,652
Depreciation of owned tangible fixed assets
1,608
2,114
Operating lease charges
9,816
9,149
4
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
15,000
15,000
UNION COLOURS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 DECEMBER 2023
- 17 -
5
Employees
The average monthly number of persons (including directors) employed by the company during the year was:
2023
2022
Number
Number
Administrative staff
4
4
Management staff
1
1
Sales staff
2
2
Total
7
7
Their aggregate remuneration comprised:
2023
2022
€
€
Wages and salaries
308,435
380,857
Social security costs
30,730
47,932
Pension costs
23,237
30,217
362,402
459,006
6
Directors' remuneration
2023
2022
€
€
Remuneration for qualifying services
27,900
36,523
Company pension contributions to defined contribution schemes
-
2,901
27,900
39,424
7
Interest payable and similar expenses
2023
2022
€
€
Interest on financial liabilities measured at amortised cost:
Interest on invoice finance arrangements
5,723
8
Amounts written off investments
2023
2022
€
€
Other gains and losses
-
(1,450)
UNION COLOURS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 DECEMBER 2023
- 18 -
9
Taxation
The actual charge for the year can be reconciled to the expected credit for the year based on the profit or loss and the standard rate of tax as follows:
2023
2022
€
€
Loss before taxation
(103,466)
(499,428)
Expected tax credit based on the standard rate of corporation tax in the UK of 25.00% (2022: 25.00%)
(25,867)
(124,857)
Unutilised tax losses carried forward
25,680
125,126
Permanent capital allowances in excess of depreciation
187
(269)
Taxation charge for the year
-
-
10
Tangible fixed assets
Plant and equipment
Fixtures and fittings
Computers
Motor vehicles
Total
€
€
€
€
€
Cost
At 31 December 2022 and 30 December 2023
45,877
38,674
172,448
25,375
282,374
Depreciation and impairment
At 31 December 2022
44,457
38,191
172,448
25,375
280,471
Depreciation charged in the year
1,160
448
1,608
At 30 December 2023
45,617
38,639
172,448
25,375
282,079
Carrying amount
At 30 December 2023
260
35
295
At 30 December 2022
1,420
483
1,903
11
Fixed asset investments
2023
2022
Notes
€
€
Investments in subsidiaries
100
UNION COLOURS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 DECEMBER 2023
11
Fixed asset investments
(Continued)
- 19 -
Movements in fixed asset investments
Shares in subsidiaries
€
Cost or valuation
At 31 December 2022
100
Disposals
(100)
At 30 December 2023
-
Carrying amount
At 30 December 2023
-
At 30 December 2022
100
12
Stocks
2023
2022
€
€
Raw materials and consumables
798,586
827,862
13
Debtors
2023
2022
Amounts falling due within one year:
€
€
Trade debtors
565,705
526,979
Amounts owed by group undertakings
2,053,345
2,053,345
Other debtors
164
118
Prepayments and accrued income
16,963
15,843
2,636,177
2,596,285
14
Creditors: amounts falling due within one year
2023
2022
Notes
€
€
Bank loans and overdrafts
16
14,909
14,889
Trade creditors
869,026
12,513
Amounts owed to group undertakings
2,761,066
3,251,652
Taxation and social security
171,934
478,482
Other creditors
4,871
Accruals and deferred income
17,362
75,100
3,839,168
3,832,636
UNION COLOURS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 DECEMBER 2023
14
Creditors: amounts falling due within one year
(Continued)
- 20 -
At the balance sheet date secured creditors amounted to €14,909 (2022 - €14,889). The secured creditors comprise of amounts owed to HSBC Invoice Financing, the company's invoice discounter and reflected in bank loans and overdrafts. A fixed and floating charge in the form of a debenture has been taken by HSBC Invoice Financing over the company's assets.
15
Creditors: amounts falling due after more than one year
2023
2022
Notes
€
€
Other borrowings
16
5,356,042
5,325,733
16
Loans and overdrafts
2023
2022
€
€
Bank overdrafts
14,909
14,889
Loans from group undertakings
5,356,042
5,325,733
5,370,951
5,340,622
Payable within one year
14,909
14,889
Payable after one year
5,356,042
5,325,733
17
Retirement benefit schemes
2023
2022
Defined contribution schemes
€
€
Charge to profit or loss in respect of defined contribution schemes
23,237
30,217
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.
18
Share capital
2023
2022
2023
2022
Ordinary share capital
Number
Number
€
€
Issued and fully paid
Ordinary of €1.2005 each
10,000
10,000
12,005
12,005
19
Ultimate controlling party
Sincol Corporation is a company that owns 50% of Union Colours Limited.
Longyu Pigment & Chemical Company Limited is a company that owns 50% of Union Colours Limited.
The ultimate controlling party is Changzhou North American Chemicals Group Limited (CZNA) a company incorporated in China. The company owns the majority of Sincol Corporation and Longyu Pigment & Chemical Company Limited who jointly own 100% of the company's issued share capital.
UNION COLOURS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 DECEMBER 2023
- 21 -
20
Cash (absorbed by)/generated from operations
2023
2022
€
€
Loss for the year after tax
(103,466)
(499,428)
Adjustments for:
Finance costs
5,723
Depreciation and impairment of tangible fixed assets
1,608
2,114
Other gains and losses
-
1,450
Movements in working capital:
Decrease/(increase) in stocks
29,276
(204,761)
Increase in debtors
(39,892)
(100,529)
Increase in creditors
6,512
1,566,259
Cash (absorbed by)/generated from operations
(105,962)
770,828
21
Analysis of changes in net debt
31 December 2022
Cash flows
30 December 2023
€
€
€
Cash at bank and in hand
318,589
(75,533)
243,056
Bank overdrafts
(14,889)
(20)
(14,909)
303,700
(75,553)
228,147
Borrowings excluding overdrafts
(5,325,733)
(30,309)
(5,356,042)
(5,022,033)
(105,862)
(5,127,895)
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