Registered number: 08114486
DS SMITH BUSINESS SERVICES LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 APRIL 2024
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DS SMITH BUSINESS SERVICES LIMITED
COMPANY INFORMATION
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Level 3 1 Paddington Square
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DS SMITH BUSINESS SERVICES LIMITED
CONTENTS
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Directors' Responsibilities Statement
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Independent Auditor's Report
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Statement of Comprehensive Income
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Statement of Financial Position
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Statement of Changes in Equity
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Notes to the Financial Statements
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DS SMITH BUSINESS SERVICES LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 30 APRIL 2024
The Directors present their strategic report for the year ended 30 April 2024.
The principal activity of the Company is to act as a shared services centre for the DS Smith Group (the ‘Group’), primarily offering human resource and financial services to Group companies. There has been no significant change in the Company’s principal activity in the year under review. The Directors are not aware, at the date of this report, of any likely significant changes in the Company’s activities in the forthcoming financial year.
Business review and key performance indicators
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The results for the financial year show a profit before taxation of £1,610,000 (2023: £905,000) and net assets of £29,196,000 (2023: £28,130,000). No dividends were paid during the year (2023: £nil). The main KPI for the Company, Return on sales, calculated as operating profit before interest and tax, as a percentage of revenue, has decreased from 2.8% in 2023 to -1.0% in 2024. Whilst revenue has increased in comparison with the prior year, the decrease in return on sales is largely due to an increase in administrative expenses associated with the onboarding of additional services to other companies within the Group, with the average monthly number of employees increasing from 104 employees in 2023 to 116 employees in 2024. During the prior year, DS Smith Holdings Limited, the Company's immediate parent company, injected £25,000,000 cash into the Company in exchange for shares. The cash was placed on deposit with DS Smith Plc, the Company's ultimate parent company.
The Company is a wholly owned subsidiary of DS Smith Plc and operates as part of the Group. On this basis the Company's Directors believe that there are no further performance indicators for the Company which might be necessary for an understanding of the development, performance or position of the business.
The principal activity of the Company is to act as a shared service centre that is principally party to intra-group transactions. The Directors expect that this will remain the case in the future and that the general level of activity for the Company will remain consistent with 2024.
Combination with International Paper
In April 2024, the Boards of International Paper Company and DS Smith Plc reached an agreement and recommended the combination of International Paper Company with DS Smith Plc. The all-share acquisition of DS Smith Plc by International Paper Company received the approval of the DS Smith Plc shareholders on 7 October 2024 and the International Paper Company shareholders on 11 October 2024. The combination is still subject to regulatory approvals.
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DS SMITH BUSINESS SERVICES LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 30 APRIL 2024
Financial risk management objectives and policies
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Where applicable, the Company follows the Group policy. The Company’s financial risk management is centralised to capitalise on economies of scale and synergy effects and to minimise operational risks.
Interest rate risk
The Company has interest-bearing receivables held with DS Smith Plc and arise from the operation of the Group’s cash pooling arrangements in the UK. The DS Smith Group treasury function is responsible for identifying and managing interest rate exposure.
Credit risk
The Company’s credit risk is primarily attributable to its receivables held on the statement of financial position, all of which are inter-group. Recoverability of these receivables is reviewed regularly against the statement of financial position of the counterparty. If required, credit risk is further mitigated through a letter of support from the ultimate parent undertaking.
Liquidity risk
The Company actively manages its liquidity risk by short-term debt finance with Group treasury, supported by external borrowings where appropriate, that is designed to ensure the Company has sufficient available funds for operations.
Foreign exchange risk
The Company is exposed to foreign currency exchange rate fluctuations between sterling and the euro.
Principal risks and uncertainties
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There continues to be global uncertainty within the macroeconomic environment as a result of the war in Ukraine and the Middle East and the cost of living crisis. Raw material and other input costs also remain high although energy prices have started to decline. However, these are mitigated by effective supplier arrangements, long-term hedging arrangements and rising packaging prices. The Group continues to carefully manage our cost base and is confident for the year ahead that sufficient methods are in place to mitigate these increased costs.
This report was approved by the board and signed on its behalf.
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DS SMITH BUSINESS SERVICES LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 30 APRIL 2024
The Directors present their report and the financial statements for the year ended 30 April 2024.
The profit for the year, after taxation, amounted to £1,066,000 (2023: £903,000).
The Directors have not proposed or paid a dividend for the year ended 30 April 2024 (2023: £nil).
The Directors who held office during the year and to the date of signing the financial statements were:
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R N Pike (appointed 10 August 2023)
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L K Piper (appointed 27 November 2023)
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A P Jennings (resigned 5 May 2023)
Directors' and officers' liability insurance
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During the year and up to the date of approval of these financial statements, the ultimate parent company maintained qualifying third-party indemnity arrangements for the Directors and other Officers of the Company.
No political contributions were made during the year (2023: £nil).
The financial statements have been prepared using the going concern basis of accounting. In making their assessment on the appropriateness of using the going concern basis, the Directors have considered any material uncertainties relating to events or conditions that may cast significant doubt upon the continuing use of the going concern basis of accounting in future periods. The Directors have considered a period of at least 12 months from the date the financial statements are authorised for issue.
The Company's business activities, together with the factors likely to affect its future development, performance and position are set out above. The financial position of the Company is as shown in the statement of financial position on page 11. At 30 April 2024, the Company reported net assets of £29,196,000 (2023: £28,130,000).
The financial Statements have been prepared using the going concern basis of accounting. The Company has been issued a support letter from its ultimate parent company, DS Smith Plc, confirming ongoing financial support in meeting liabilities as they fall due for a period of at least 12 months from the day of approval of accounts. DS Smith Plc has undertaken its own assessment of going concern, which it has confirmed, and this is disclosed on page 19 of the DS Smith Plc Half Year report for the period ended 31 October 2024. The Directors are satisfied that no events took place after the release of the DS Smith Plc Half Year results that give rise to any uncertainties relating to going concern, and accordingly the directors considered it is appropriate to rely upon this support in making their going concern assessment for these financial statements. The Directors are satisfied that the Company has adequate resources to meet its operational needs for a period of at least 12 months from the day of approval of the accounts and accordingly they continue to adopt the going concern basis in preparing the financial statements.
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DS SMITH BUSINESS SERVICES LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 30 APRIL 2024
Disclosure of information to auditor
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Each of the persons who are Directors at the time when this Directors' Report is approved has confirmed that:
∙so far as the Director is aware, there is no relevant audit information of which the Company's auditor is unaware, and
∙the Director has taken all the steps that ought to have been taken as a Director in order to be aware of any relevant audit information and to establish that the Company's auditor is aware of that information.
This confirmation is given and should be interpreted in accordance with the provisions of Section 418 of the Companies Act 2006.
Ernst & Young LLP (EY) were appointed as external auditor to the Company in 2024 and will be proposed for reappointment in accordance with Section 285 of the Companies Act 2006.
This report was approved by the board and signed on its behalf.
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DS SMITH BUSINESS SERVICES LIMITED
DIRECTORS' RESPONSIBILITIES STATEMENT
FOR THE YEAR ENDED 30 APRIL 2024
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), including Financial Reporting Standard 101 ‘Reduced Disclosure Framework’. Under company law the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Company and of the profit or loss of the Company for that period.
In preparing these financial statements, the Directors are required to:
∙select suitable accounting policies and then apply them consistently;
∙make judgements and accounting estimates that are reasonable and prudent;
∙prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
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DS SMITH BUSINESS SERVICES LIMITED
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF DS SMITH BUSINESS SERVICES LIMITED
Opinion
We have audited the financial statements of DS Smith Business Services Limited (the “Company”) for the year ended 30 April 2024 which comprise the Statement of Comprehensive Income, the Statement of Financial Position, the Statement of Changes in Equity and the related notes 1 to 22, including material accounting policy information. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards including FRS 101 “Reduced Disclosure Framework” (United Kingdom Generally Accepted Accounting Practice).
In our opinion, the financial statements:
•give a true and fair view of the company’s affairs as at 30 April 2024 and of its profit for the year then ended;
•have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
•have been prepared in accordance with the requirements of the Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the 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 12 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. However, because not all future events or conditions can be predicted, this statement is not a guarantee as to the company’s ability to continue as a going concern.
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 this 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
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DS SMITH BUSINESS SERVICES LIMITED
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF DS SMITH BUSINESS SERVICES LIMITED
Other information (continued)
misstatement of the other information, we are required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of the audit:
•the information given in the strategic report and the directors’ report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
•the strategic report and directors’ report have been prepared in accordance with applicable legal requirements.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identified material misstatements in the strategic report or 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 directors’ 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 set out on page 5, 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.
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DS SMITH BUSINESS SERVICES LIMITED
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF DS SMITH BUSINESS SERVICES LIMITED
Explanation as to what extent 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 irregularities, including fraud. The risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery or intentional misrepresentations, or through collusion. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below. However, the primary responsibility for the prevention and detection of fraud rests with both those charged with governance of the entity and management.
•We obtained an understanding of the legal and regulatory frameworks that are applicable to the company and determined that the most significant are those that relate to the reporting framework (FRS 101 and Companies Act 2006) and compliance with the relevant direct and indirect tax regulations in the United Kingdom. In addition, the company has to comply with laws and regulations relating to its operations, including health and safety, employees, data protection, and anti-bribery and corruption.
•We understood how the Company is complying with those frameworks by making inquiries of management and those charged with governance to understand how the Company maintains and communicates its policies and procedures in these areas. We also understood the controls put in place by management to reduce the opportunities for fraudulent transactions.
•We assessed the susceptibility of the company’s financial statements to material misstatement, including how fraud might occur through internal team conversations and inquiry of management and those charged with governance to understand where they considered there was susceptibility to fraud. We also considered performance targets and the potential incentives or opportunities to manage earnings. We considered the programmes and controls that the Company has established to address the risks identified, or that otherwise prevent, deter and detect fraud; and how senior management monitors those programmes and controls. Where the risk was considered to be higher, we performed audit procedures to address the each identified fraud risk. These procedures included testing manual journals and were designed to provide reasonable assurance that the financial statements were free from material fraud.
•Based on this understanding we designed our audit procedures to identify noncompliance with such laws and regulations. Our procedures involved review of board minutes and correspondence with relevant authorities, where applicable, and inquiries of Company and DS Smith Plc group management and those charged with governance, legal counsel, and internal audit. Based on procedures performed, we have not identified any actual or possible instances of noncompliance with laws and regulations.
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council’s website at https://www.frc.org.uk /auditorsresponsibilities. This description forms part of our auditor’s report.
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DS SMITH BUSINESS SERVICES LIMITED
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF DS SMITH BUSINESS SERVICES LIMITED
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.
Luke Little (Senior statutory auditor)
for and on behalf of
Ernst & Young LLP
The Paragon
Counterslip
Bristol
BS1 6BX
16 January 2025
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DS SMITH BUSINESS SERVICES LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 APRIL 2024
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Operating and administrative expenses
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Interest receivable and similar income
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Interest payable and similar expenses
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Profit and total comprehensive income for the financial year
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There were no recognised gains and losses for 2024 or 2023 other than those included in the statement of comprehensive income.
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The notes on pages 14 to 27 form part of these financial statements.
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DS SMITH BUSINESS SERVICES LIMITED
REGISTERED NUMBER: 08114486
STATEMENT OF FINANCIAL POSITION
AS AT 30 APRIL 2024
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Property, plant and equipment
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Trade and other receivables: amounts falling due after more than one year
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Trade and other receivables: amounts falling due within one year
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Cash and cash equivalents
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Trade and other payables: amounts falling due within one year
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Total assets less current liabilities
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Provisions for liabilities
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The financial statements of DS Smith Business Services Limited (registered number: 08114486) were approved and authorised for issue by the board and were signed on its behalf on 16 January 2025.
The notes on pages 14 to 27 form part of these financial statements.
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DS SMITH BUSINESS SERVICES LIMITED
REGISTERED NUMBER: 08114486
STATEMENT OF FINANCIAL POSITION (CONTINUED)
AS AT 30 APRIL 2024
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DS SMITH BUSINESS SERVICES LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 APRIL 2024
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Comprehensive income for the year
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Total comprehensive income for the year
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Shares issued during the year
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Comprehensive income for the year
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Total comprehensive income for the year
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The notes on pages 14 to 27 form part of these financial statements.
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DS SMITH BUSINESS SERVICES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 APRIL 2024
DS Smith Business Services Limited ("the Company") is a private company limited by shares incorporated in the United Kingdom under the Companies Act 2006 and is registered in England and Wales and whose shares are not publicly traded. The registered office is located at Level 3, 1 Paddington Square, London, W2 1DL.
The nature of the Company’s operations and its principal activity are set out in the Strategic report on page 1.
Monetary amounts in these financial statements are rounded to the nearest £1,000.
2.Accounting policies
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Basis of preparation of financial statements
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The financial statements have been prepared under the historical cost convention unless otherwise specified within these accounting policies and in accordance with Financial Reporting Standard 101 'Reduced Disclosure Framework' and the Companies Act 2006.
The preparation of financial statements in compliance with FRS 101 requires the use of certain critical accounting estimates. It also requires management to exercise judgement in applying the Company's accounting policies (see note 3).
The following principal accounting policies have been applied:
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Financial Reporting Standard 101 - reduced disclosure exemptions
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The Company has taken advantage of the following disclosure exemptions under FRS 101:
∙the requirements of IFRS 7 Financial Instruments: Disclosures
∙the requirements of the second sentence of paragraph 110 and paragraphs 113(a), 114, 115, 118, 119(a) to (c), 120 to 127 and 129 of IFRS 15 Revenue from Contracts with Customers
∙the requirements of paragraph 52, the second sentence of paragraph 89, and paragraphs 90, 91 and 93 of IFRS 16 Leases. The requirements of paragraph 58 of IFRS 16, provided that the disclosure of details in indebtedness relating to amounts payable after 5 years required by company law is presented separately for lease liabilities and other liabilities, and in total
∙the requirement in paragraph 38 of IAS 1 'Presentation of Financial Statements' to present comparative information in respect of:
- paragraph 73(e) of IAS 16 Property, Plant and Equipment;
- paragraph 118(e) of IAS 38 Intangible Assets;
∙the requirements of IAS 7 Statement of Cash Flows
∙the requirements of paragraphs 30 and 31 of IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors
∙the requirements of paragraph 17 and 18A of IAS 24 Related Party Disclosures
∙the requirements of paragraphs 130(f)(ii), 130(f)(iii), 134(d)-134(f) and 135(c)-135(e) of IAS 36 Impairment of Assets.
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DS SMITH BUSINESS SERVICES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 APRIL 2024
2.Accounting policies (continued)
The financial statements have been prepared using the going concern basis of accounting. In making their assessment on the appropriateness of using the going concern basis, the Directors have considered any material uncertainties relating to events or conditions that may cast significant doubt upon the continuing use of the going concern basis of accounting in future periods. The Directors have considered a period of at least 12 months from the date the financial statements are authorised for issue.
The Company's business activities, together with the factors likely to affect its future development, performance and position are set out above. The financial position of the Company is as shown in the statement of financial position on page 11. At 30 April 2024, the Company reported net assets of £29,196,000 (2023: £28,130,000).
The financial Statements have been prepared using the going concern basis of accounting. The Company has been issued a support letter from its ultimate parent company, DS Smith Plc, confirming ongoing financial support in meeting liabilities as they fall due for a period of at least 12 months from the day of approval of accounts. DS Smith Plc has undertaken its own assessment of going concern, which it has confirmed, and this is disclosed on page 19 of the DS Smith Plc Half Year report for the period ended 31 October 2024. The Directors are satisfied that no events took place after the release of the DS Smith Plc Half Year results that give rise to any uncertainties relating to going concern, and accordingly the directors considered it is appropriate to rely upon this support in making their going concern assessment for these financial statements. The Directors are satisfied that the Company has adequate resources to meet its operational needs for a period of at least 12 months from the day of approval of the accounts and accordingly they continue to adopt the going concern basis in preparing the financial statements.
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Foreign currency translation
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Functional and presentation currency
The Company's functional and presentational currency is Sterling (£) as this is the currency of the primary economic environment in which the Company operates.
Transactions and balances
Foreign currency transactions are translated into the functional currency using the spot exchange rates at the dates of the transactions.
At each period end foreign currency monetary items are translated using the closing rate. Non-monetary items measured at historical cost are translated using the exchange rate at the date of the transaction and non-monetary items measured at fair value are measured using the exchange rate when fair value was determined.
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DS SMITH BUSINESS SERVICES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 APRIL 2024
2.Accounting policies (continued)
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured. Revenue is measured as the fair value of the consideration received or receivable, excluding value added tax. The following criteria must also be met before revenue is recognised:
For fixed-price contracts, revenue is recognised based on the actual service provided to the end of the reporting period as a proportion of the total services to be provided because the customer receives and uses the benefits simultaneously.
Interest income is recognised in profit or loss using the effective interest method.
Finance costs are charged to profit or loss over the term of the debt using the effective interest method so that the amount charged is at a constant rate on the carrying amount. Issue costs are initially recognised as a reduction in the proceeds of the associated capital instrument.
Defined contribution pension plan
The Company operates a defined contribution plan for its employees. A defined contribution plan is a pension plan under which the Company pays fixed contributions into a separate entity. Once the contributions have been paid the Company has no further payment obligations.
The contributions are recognised as an expense in profit or loss when they fall due. Amounts not paid are shown in accruals as a liability in the Statement of Financial Position. The assets of the plan are held separately from the Company in independently administered funds.
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DS SMITH BUSINESS SERVICES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 APRIL 2024
2.Accounting policies (continued)
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Current and deferred taxation
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Income tax on the profit or loss for the year comprises current and deferred tax. Income tax is recognised in profit or loss except to the extent that it relates to items recognised directly in equity, in which case it is recognised in equity. Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted at the balance sheet date, and any adjustment to tax payable in respect of previous years.
For the year ended 30 April 2022 and onwards, DS Smith Group entities will no longer receive payment for current year tax losses surrendered or make payment for group relief claimed at the rate of tax prevailing in the year. However, where an entity has negative reserves and losses which will be surrendered to other members of the DS Smith Group, the claimant company will need to make payment for those tax losses at the rate of tax prevailing in the year.
Deferred tax is provided for using the statement of financial position liability method, providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. The amount of deferred tax provided is based on the expected manner of realisation or settlement of the carrying amount of assets and liabilities, using tax rates enacted or substantively enacted at the reporting date.
A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which the asset can be utilised. Deferred tax assets are reduced to the extent that it is no longer probable that the related tax benefit will be realised.
The Pillar Two Income tax rules will apply to the DS Smith Group and subsidiaries for the financial year commencing on 1 May 2024. The company has applied the exemption from recognising and disclosing information about deferred tax assets and liabilities related to Pillar Two income taxes as required in the amendments to FRS 101 International Tax reform - Pillar two model rules effective 1 January 2023.
Intangible assets are initially recognised at cost. After recognition, under the cost model, intangible assets are measured at cost less any accumulated amortisation and any accumulated impairment losses.
Amortisation of intangible assets is charged to the income statement on a straight-line basis over the estimated useful lives of intangible assets, not exceeding 20 years, unless such lives are indefinite. Intangible assets are amortised from the date they are available for use.
The estimated useful lives are as follows:
Computer software and other intangibles 3 - 10 years
Tangible fixed assets under the cost model are stated at historical cost less accumulated depreciation and any accumulated impairment losses. Historical cost includes expenditure that is directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management.
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DS SMITH BUSINESS SERVICES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 APRIL 2024
2.Accounting policies (continued)
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Tangible fixed assets (continued)
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Depreciation is charged so as to allocate the cost of assets less their residual value over their estimated useful lives, using the straight-line method.
The estimated useful lives are as follows:
The assets' residual values, useful lives and depreciation methods are reviewed, and adjusted prospectively if appropriate, or if there is an indication of a significant change since the last reporting date.
Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised in profit or loss.
The carrying values of tangible fixed assets are reviewed for impairment when events or changes in circumstances indicate that the carrying value may not be recoverable. Any impairment in the value of property, plant and equipment is charged to the income statement as appropriate.
Right-of-use motor vehicles are depreciated on a straight-line basis over the lease terms, or the useful life if shorter.
Assets under construction are not subject to depreciation until completion. The cost of a self-constructed asset is measured by directly attributable costs, including direct materials, direct labour costs and unavoidable costs that are directly attributable to the constructed activity. Once the asset under construction is ready for use or sale then it is reclassified into its appropriate asset category and depreciation shall commence.
Short-term debtors are measured at transaction price, less any impairment. Loans receivable are measured initially at fair value, net of transaction costs, and are measured subsequently at amortised cost using the effective interest method, less any impairment.
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Cash and cash equivalents
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Cash is represented by cash in hand and deposits with financial institutions repayable without penalty on notice of not more than 24 hours. Cash equivalents are highly liquid investments that mature in no more than three months from the date of acquisition and that are readily convertible to known amounts of cash with insignificant risk of change in value.
Creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers.
Creditors are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method.
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DS SMITH BUSINESS SERVICES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 APRIL 2024
2.Accounting policies (continued)
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Provisions for liabilities
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Provisions are made where an event has taken place that gives the Company a legal or constructive obligation that probably requires settlement by a transfer of economic benefit, and a reliable estimate can be made of the amount of the obligation.
Provisions are charged as an expense to profit or loss in the year that the Company becomes aware of the obligation, and are measured at the best estimate at the reporting date of the expenditure required to settle the obligation, taking into account relevant risks and uncertainties.
When payments are eventually made, they are charged to the provision carried in the Statement of Financial Position.
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Judgements in applying accounting policies and key sources of estimation uncertainty
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In the application of the accounting policies, which are described in note 2, the Directors are required to make judgements, estimates and assumptions about the carrying amounts 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 Directors do not deem there to be any critical accounting judgements or estimation uncertainty in the preparation of the financial statements.
The whole of the turnover is attributable to services provided to other companies within the Group and arises mainly within the United Kingdom.
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The operating (loss)/profit is stated after charging:
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Depreciation of tangible fixed assets (note 13)
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Amortisation of intangible assets (note 12)
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DS SMITH BUSINESS SERVICES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 APRIL 2024
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The Auditor’s remuneration of £23,498 (2023: £25,070) for the statutory audit of the Company’s financial statements for the current and previous year has been borne and not recharged by another Group undertaking. No fees in relation to non-audit services were paid to the Company’s Auditor in the current or preceding year.
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Cost of defined contribution scheme
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The average monthly number of employees, including the Directors, during the year was as follows:
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Management and administration
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All the Directors are remunerated by other group undertakings. It is considered that the level of their qualifying services to the Company is negligible compared to their main roles. There are no management charges from these group undertakings for their services. Consequently they determine that given the level of the services required, that the proportion of their salary relating to their services provided to this company is insignificant. Therefore a £nil apportionment is made (2023: £nil).
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Interest receivable on amounts owed by ultimate parent company
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DS SMITH BUSINESS SERVICES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 APRIL 2024
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Current tax on profits for the year
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Origination and reversal of timing differences
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Adjustment in respect of prior years
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Factors affecting tax charge for the year
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The tax assessed for the year is higher than (2023: lower than) the standard rate of corporation tax in the UK of 25.0% (2023: 19.5%). The differences are explained below:
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Profit on ordinary activities before tax
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Profit on ordinary activities multiplied by standard rate of corporation tax in the UK of 25.0% (2023: 19.5%)
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Group relief claimed not paid for
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Effect of change in corporation tax rate
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Adjustment in respect of prior years
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Total tax charge for the year
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DS SMITH BUSINESS SERVICES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 APRIL 2024
11.Tax on profit (continued)
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Factors that may affect future tax charges
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In future years, the tax charge will be affected by subsequently enacted changes in tax rate.
The Finance Act 2021 included a 6% increase in the main UK corporation tax rate to 25% from 1 April 2023, which was substantially enacted on 10 June 2021.
The UK Government has enacted legislation in respect of Pillar Two introducing a global minimum effective tax rate of 15% and a domestic minimum top up tax. The rules will apply to the Company for the financial year commencing on 1 May 2024. Additional disclosures on Pillar Two are included in the annual Group financial statements of DS Smith Plc, the ultimate parent of the Company.
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Assets under construction
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Transfers from property, plant and equipment
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Transfers between classes
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Charge for the year on owned assets
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DS SMITH BUSINESS SERVICES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 APRIL 2024
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Property, plant and equipment
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Assets under construction
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Transfers to intangible assets
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Transfers between classes
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DS SMITH BUSINESS SERVICES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 APRIL 2024
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Trade and other receivables
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Amounts falling due after more than one year
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Amounts owed by ultimate parent company
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Deferred tax asset (note 16)
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Interest is charged on the amount owed by ultimate parent company as follows:
- £27,403,989 (2023: £25,716,678) at 12 month SONIA, plus margin of 1.74%, which is repayable on 2 November 2025.
- £1,109,723 (2023: £nil) at 1 month SONIA, plus margin of 1.26% (2023: 1.17%), which is repayable on 1 March 2027.
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Amounts falling due within one year
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Amounts owed by Group undertakings
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Prepayments and accrued income
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Amounts owed by Group undertakings is comprised of:
An amount owed by the ultimate parent company, with interest charged as follows:
- £nil (2023: £992,879) at 1 month SONIA plus credit adjustment spread of 0.0326%, plus margin of 1.17%, which is repayable on 1 March 2027.
No interest was charged on all other amounts owed by Group undertakings, all of which have no fixed repayment date and are therefore classified as repayable on demand. All amounts owed by Group undertakings are unsecured.
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DS SMITH BUSINESS SERVICES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 APRIL 2024
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Trade and other payables: amounts falling due within one year
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Amounts owed to fellow Group undertakings
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Accruals and deferred income
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No interest was charged on amounts owed to Group undertakings, which have no fixed repayment date and are therefore classified as repayable on demand. All amounts owed to Group undertakings are unsecured.
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Charged to profit or loss
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The deferred tax asset is made up as follows:
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Depreciation in excess of capital allowances
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DS SMITH BUSINESS SERVICES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 APRIL 2024
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Charged to profit or loss
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The dilapidations provision relates to a leasehold property previously occupied by DS Smith Business Services Limited and represents the liability to restore the property to the same condition as at inception of the lease. The expected timing of settlement is uncertain.
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Authorised, allotted, called up and fully paid
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3 (2023: 3) Ordinary shares of £1.00 each
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On 2 November 2022 the Company’s immediate parent undertaking injected £25,000,000 cash into the Company in exchange for shares. This transaction resulted in the following: an increase in share capital of £1; an increase in share premium of £24,999,999 and an increase in the amount owed by the ultimate parent company of £25,000,000.
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The Company is a participant in the Group’s uncommitted overdraft facility with a net limit of £5m. The participants in the facility cross-guarantee the overdrawn balances under the facility. Further information can be found in the Group’s annual report which does not form part of this report.
The pension cost contributions charged during the year relating to the defined contribution scheme amounted to £393,000 (2023: £309,000). There were no contributions prepaid or accrued at the year-end (2023: £nil).
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Related party transactions
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The Company has taken the exemption available under FRS 101 from disclosing related party transactions entered into between two or more members of the DS Smith Group, provided that the fellow group entities are wholly-owned by the Group. See note 8 for details of Directors’ remuneration.
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DS SMITH BUSINESS SERVICES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 APRIL 2024
The Company’s immediate parent company is DS Smith Holdings Limited, a company incorporated in the United Kingdom, whose registered office is Level 3, 1 Paddington Square, London, W2 1DL.
The ultimate parent company and the ultimate controlling party is DS Smith Plc, a company incorporated in the United Kingdom.
DS Smith Plc represents both the largest and smallest group of undertakings for which Group financial statements are prepared and of which the Company is a member. Copies of the Group financial statements are available from the Company Secretary of DS Smith Plc at its registered office, Level 3, 1 Paddington Square, London, W2 1DL.
The Company does not have any subsidiary undertakings.
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