Registered number:
FOR THE YEAR ENDED 31 DECEMBER 2022
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ARMSTRONG (U.K.) INVESTMENTS
CONTENTS
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ARMSTRONG (U.K.) INVESTMENTS
COMPANY INFORMATION
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ARMSTRONG (U.K.) INVESTMENTS
STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2022
The Company is a holding Company for a group of companies which manufacture and sell building materials and commercial improvement products.
The Company's results for the year are set out on page 9. The Company's losses for the financial year after taxation was £5,160,956 (2021: £27,667).
Since the Company is a non-trading holding Company the directors believe that analysis using key performance indicators is not necessary or appropriate for an understanding of the development, performance or position of the business of the Company. The Company holds an investment in Knauf Ceiling Solutions Limited. The business has seen a declining demand for metal ceilings both in the UK and in Europe due to intense competition from small local suppliers in many markets. Consequently, following a review of the metal ceilings business of Knauf, it was decided to shut the factory in Stafford in October 2023 which is owned by Knauf Ceiling Solutions Limited and concentrate production in one plant owned by Knauf. As a result, it is expected the scale of Knauf Ceiling Solutions Limited will be reduced to that of a sales agent for other plants and therefore the value of the business needs to be adjusted to reflect this. The investment held in Knauf Ceiling Solutions Limited has been written down to £nil during the year. The factory closure will be completed in early 2025.
From the perspective of the Company, the principal risks and uncertainties are integrated with the principal risks of Gebr. Knauf KG, the Company's ultimate parent company, and are not managed separately. Accordingly, the principal risks and uncertainties of Gebr. Knauf KG, which include those of the Company, are discussed in the directors' report Gebr. Knauf KG's financial statements.
The most significant operational affiliate of the Company is Knauf Ceiling Solutions UK Limited. Due to surplus
production capacity within the Knauf Group a review took place in 2023 and it was decided to close the plant based in Stafford. Following the closure of the Stafford plant it is expected that Knauf Ceiling Solutions Limited will return to profitability in 2025 when some of the ongoing contracts connected with the plant have unwound.
Post year-end, the Company dissolved its investments in Ceiling Solutions Armstrong FZE, Armstrong World
Industries Mauritius and Worthington Armstrong Ventures Mauritius. The Company realised no gain or loss on the dissolution of these investments.
This report was approved by the board and signed on its behalf.
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ARMSTRONG (U.K.) INVESTMENTS
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 DECEMBER 2022
The directors present their report and the financial statements for the year ended 31 December 2022.
The loss for the year, after taxation, amounted to £5,160,956 (2021 - loss £27,667).
An interim dividend of £713,769 (2021: £nil) was declared in the financial year and paid on 29 March 2023 following receipt of a dividend from a subsidiary undertaking.
The directors who served during the year were:
This report was approved by the board and signed on its behalf.
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ARMSTRONG (U.K.) INVESTMENTS
DIRECTORS' RESPONSIBILITIES STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2022
The directors are responsible for preparing the strategic report, the directors' report and the financial statements in accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice), including Financial Reporting Standard 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland'. 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 for the Company's financial statements and then apply them consistently;
∙make judgments 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 to 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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ARMSTRONG (U.K.) INVESTMENTS
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF ARMSTRONG (U.K.) INVESTMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
We have audited the financial statements of Armstrong (U.K.) Investments (the 'Company') for the year ended 31 December 2022, which comprise the profit and loss account, the balance sheet, the statement of changes in equity and the related notes, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland' (United Kingdom Generally Accepted Accounting Practice).
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 United Kingdom, including the Financial Reporting Council'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.
In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the Company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
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ARMSTRONG (U.K.) INVESTMENTS
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF ARMSTRONG (U.K.) INVESTMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
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.
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 the directors' report have been prepared in accordance with applicable legal requirements.
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.
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ARMSTRONG (U.K.) INVESTMENTS
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF ARMSTRONG (U.K.) INVESTMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:
∙the engagement partner ensured that the engagement team collectively had the appropriate competence,
capabilities and skills to identify or recognise non-compliance with applicable laws and regulations;
∙we identified the laws and regulations applicable to the Company through discussions with directors and
other management, and from our commercial knowledge and experience of the industry;
∙we focused on specific laws and regulations which we considered may have a direct material effect on the
financial statements or the operations of the Company, including the Companies Act 2006 and taxation legislation;
∙we assessed the extent of compliance with the laws and regulations identified above through making
enquiries of management; and
∙identified laws and regulations were communicated within the audit team regularly and the team remained
alert to instances of non-compliance throughout the audit
We assessed the susceptibility of the Company’s financial statements to material misstatement, including
obtaining an understanding of how fraud might occur, by:
∙making enquiries of management as to where they considered there was susceptibility to fraud, their
knowledge of actual, suspected and alleged fraud; and
∙considering the internal controls in place to mitigate risks of fraud and non-compliance with laws and
regulations.
To address the risk of fraud through management bias and override of controls, we:
∙performed analytical procedures to identify any unusual or unexpected relationships;
∙tested a sample of journal entries to identify unusual transactions;
∙assessed whether judgements and assumptions made in determining the accounting estimates set out in
note 3 were indicative of potential bias; and
∙investigated the rationale behind significant or unusual transactions.
In response to the risk of irregularities and non-compliance with laws and regulations, we designed procedures
which included, but were not limited to:
∙agreeing financial statement disclosures to underlying supporting documentation;
∙reading the minutes of meetings of those charged with governance;
∙enquiring of management as to actual and potential litigation and claims; and
∙reviewing correspondence with HM Revenue and Customs.
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ARMSTRONG (U.K.) INVESTMENTS
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF ARMSTRONG (U.K.) INVESTMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
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 is also greater regarding irregularities occurring due to fraud rather than error, as fraud involves intentional concealment, forgery, collusion, omission or misrepresentation.
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's 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.
for and on behalf of
Chartered Accountants
Statutory Auditor
16 Great Queen Street
Covent Garden
WC2B 5AH
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ARMSTRONG (U.K.) INVESTMENTS
PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 31 DECEMBER 2022
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ARMSTRONG (U.K.) INVESTMENTS
BALANCE SHEET
AS AT 31 DECEMBER 2022
The financial statements were approved and authorised for issue by the board and were signed on its behalf by:
The notes on pages 12 to 21 form part of these financial statements.
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ARMSTRONG (U.K.) INVESTMENTS
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2022
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ARMSTRONG (U.K.) INVESTMENTS
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
Armstrong (U.K.) Investments is a holding Company for a group of companies which manufacture and sell building materials and commercial improvement products.
The Company is a private company limited by shares and incorporated in England and Wales. The address of its registered office and principal place of business is Harman House, 1 George Street, Uxbridge, Middlesex, United Kingdom, UB8 1QQ. The financial statements are presented in Sterling (£), which is the functional currency of the Company. Monetary amounts in these financial statements are rounded to the nearest £000.
2.Accounting policies
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 102, the Financial Reporting Standard applicable in the UK and the Republic of Ireland and the Companies Act 2006.
The preparation of financial statements in compliance with FRS 102 requires the use of certain critical accounting estimates. It also requires management to exercise judgment in applying the Company's accounting policies (see note 3).
The company was, at the end of the year, a wholly-owned subsidiary of Gebr. Knauf KG, whose registered address is given in Note 12. Gebr. Knauf KG prepares consolidated financial statements, in which the company is included. In accordance with the exemption given in Section 401 of the Companies Act 2006, the company is not required to produce, and has not published, consolidated accounts.
The following principal accounting policies have been applied:
After making enquiries, the directors have a reasonable expectation that the company has adequate
resources to continue in operational existence and meet its liabilities as they fall due for the foreseeable future, being a period of at least twelve months from the date these financial statements were approved. Accordingly, they continue to adopt the going concern basis in preparing the financial statements.
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ARMSTRONG (U.K.) INVESTMENTS
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
2.Accounting policies (continued)
Functional and presentation currency
Transactions and balances
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ARMSTRONG (U.K.) INVESTMENTS
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
2.Accounting policies (continued)
The Company has elected to apply Sections 11 and 12 of FRS 102 in respect of financial instruments.
Financial assets and financial liabilities are recognised when the Company becomes party to the contractual provisions of the instrument.
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.
The Company’s policies for its major classes of financial assets and financial liabilities are set out below.
Financial assets
Basic financial assets, including trade and other debtors, cash and bank balances, intercompany working capital balances, and intercompany financing are initially recognised at transaction price, unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest for a similar debt instrument. Financing transactions are those in which payment is deferred beyond normal business terms or is financed at a rate of interest that is not a market rate.
Such assets are subsequently carried at amortised cost using the effective interest method, less any impairment.
Financial liabilities
Basic financial liabilities, including trade and other 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 for a similar debt instrument. Financing transactions are those in which payment is deferred beyond normal business terms or is financed at a rate of interest that is not a market rate.
Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.
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ARMSTRONG (U.K.) INVESTMENTS
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
2.Accounting policies (continued)
Impairment of financial assets
Financial assets measured at cost and amortised cost are assessed at the end of each reporting period for objective evidence of impairment. If objective evidence of impairment is found, an impairment loss is recognised in the profit and loss account.
For financial assets measured at cost less impairment, the impairment loss is measured as the difference between the asset's carrying amount and the best estimate of the amount the Company would receive for the asset if it were to be sold at the reporting date.
For financial assets measured at amortised cost, the impairment loss is measured as the difference between the asset's carrying amount and the present value of estimated cash flows discounted at the asset's original effective interest rate. If the financial asset has a variable interest rate, the discount rate for measuring any impairment loss is the current effective interest rate determined under the contract.
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 and financial liabilities
Financial assets are derecognised when (a) the contractual rights to the cash flows from the asset expire or are settled, or (b) substantially all the risks and rewards of the ownership of the asset are transferred to another party or (c) despite having retained some significant risks and rewards of ownership, control of the asset has been transferred to another party who has the practical ability to unilaterally sell the asset to an unrelated third party without imposing additional restrictions.
Financial liabilities are derecognised when the liability is extinguished, that is when the contractual obligation is discharged, cancelled or expires.
Offsetting of financial assets and financial liabilities
Financial assets and liabilities are offset and the net amount reported in the balance sheet when there is an 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.
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ARMSTRONG (U.K.) INVESTMENTS
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
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ARMSTRONG (U.K.) INVESTMENTS
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
In the Spring Budget 2021, the UK Government announced that from 1 April 2023 the corporation tax rate would increase to 25% for companies with profits of over £250,000. A small profits rate has also been introduced for companies with profits of £50,000 or less so that they continue to pay corporation tax at 19%. From this date companies with profits between £50,000 and £250,000 will pay tax at the main rate of 25% reduced by a marginal relief providing a gradual increase in the effective corporation tax rate. This law has been substantively enacted.
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ARMSTRONG (U.K.) INVESTMENTS
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
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ARMSTRONG (U.K.) INVESTMENTS
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
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ARMSTRONG (U.K.) INVESTMENTS
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
Other reserves
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ARMSTRONG (U.K.) INVESTMENTS
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
As at the balance sheet date, the Company was a wholly owned subsidiary undertaking of
The Company's ultimate parent undertaking is
The Chief Financial Officer
Gebr. Knauf KG
Am Bahnhof 7
97346 Iphofen
Germany
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