Registered number:
FOR THE YEAR ENDED 30 SEPTEMBER 2024
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COMPANY INFORMATION
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CONTENTS
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GROUP STRATEGIC REPORT
FOR THE YEAR ENDED 30 SEPTEMBER 2024
The directors presents their strategic report for the year ended 30 September 2024.
The main business of Grafton Commodity Trading (the "Company") is to speculate on the future price of commodities, currencies, equities, and bonds primarily using cash or derivative contracts. Additionally, the Company operates a commodity logistics and storage business through its Grafton Warehouse Services and Grafton Logistics Services subsidiaries.
The Group's performance overall showed growth within the subsidiary companies but was challenging for Grafton Commodity Trading Ltd. The trading division's performance faced another frustrating year as traders found it difficult to gauge the various inputs that go into determining market prices. These being supply and demand, liquidity, volatility, market positioning, inflationary environment, changes to fiscal and monetary policy, the continued war in Ukraine and the overall political climate. Specifically, the announcement of stimulus measures in China during the last week of the fiscal year caused the trading book to flip from profit to loss in the last days of the period. Energy markets in 2024 were particularly demanding to navigate and were the biggest drag on profits. There has been no change in strategy and risk management will continue to be paramount within the trading business. Despite these challenges the business maintains a strong balance sheet with ample liquidity for the risks it takes. The warehousing and logistics division continued to serve clients at its storage hubs in both Europe and Asia. 2024 saw an expansion of storage locations to include Owensboro in the US, and Gwangyang in South Korea. The Group also entered the Singapore warehouse sector with a strong presence adding a substantial footprint with which to serve it clients. Singapore saw a substantial increase in base metals being stored as oversupply and weakening demand led to excess stock. Lead and zinc have been the primary drivers to this increased demand. The outlook for 2025 is forecast to be strong for metal storage as the global economy continues to face challenges. Group revenues for warehousing and logistics increased to $13.83M (2023: $7.87M).
The assessment of risks faced by the Group and the development of strategies for dealing with these risks is achieved on an ongoing basis through the way in which the group is controlled and managed. The risk management process seeks to enable the early identification, evaluation and effective management of the key risks facing the business at an operational level and to operate internal controls, which adequately mitigate these risks. The group regularly assesses its risk management activities to ensure good practice in all areas.
The principal risk the Group faces is an incorrect assessment of market conditions resulting in a loss of equity capital due to unprofitable trading positions. The Group has no outstanding debt and has no current plans to take on debt. Over the entirety of its history, the Group has produced a return on equity capital that is satisfactory given the risk level of the underlying business. The Group is aware that short term returns can be volatile and may be negative over an extended period of time, but believes that it will be able to keep providing acceptable risk adjusted returns over time. The metric that the Group uses to gauge success is return on equity. The directors consider that the principal risks and uncertainty to the business relate to its ability to continue to balance the risk profile for the investments, managing and diversify the Group's trading activities.
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GROUP STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 30 SEPTEMBER 2024
The activities of the Group and Company are under the control of the Directors, who ensure there are effective systems and controls in place to identify, monitor and manage risks arising in the business.
The directors monitor risk exposure through several internal IT systems. The directors believe that the continuous review and monitoring of risk promotes a strict risk control cultural within the organisation.
The directors consider the operating profit or loss of the Group and Company as the key performance indicator as set out in the Statement of Comprehensive Income on page 9.
The directors consider the other key performance indicator of the business to be sales volume in the subsidiary undertakings.
This report was approved by the board on 11 April 2025 and signed on its behalf.
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DIRECTORS' REPORT
FOR THE YEAR ENDED 30 SEPTEMBER 2024
The directors present their report and the financial statements for the year ended 30 September 2024.
The directors who served during the year were:
The directors are responsible for preparing the Group Strategic Report, the Directors' Report and the consolidated financial statements in accordance with applicable law and regulations.
In preparing these financial statements, the directors are required to:
∙select suitable accounting policies for the Group'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 Group 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 the Group 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 the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
The directors are responsible for the maintenance and integrity of the corporate and financial information included on the Group's website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements and other information included in Directors' Reports may differ from legislation in other jurisdictions.
The loss for the year, after taxation, amounted to $2,334,852 (2023 - loss $7,051,211).
The results for the year are set out on page 9, a review of the business is included in the Strategic Report.
No dividend was paid during the year (2023 - $NIL)
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DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 30 SEPTEMBER 2024
The Company plans to opportunistically add revenue generating traders in the future, expanding its expertise into areas such as electricity, natural gas, crude oil and oil products. Additionally, the Group plans to further invest in its warehouse and logistics businesses depending on market conditions.
There have been no significant events affecting the Group since the year end.
Under section 487(2) of the Companies Act 2006, Sopher + Co LLP will be deemed to have been reappointed as auditors 28 days after these financial statements were sent to members or 28 days after the latest date prescribed for filing the accounts with the registrar, whichever is earlier.
This report was approved by the board on
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INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF GRAFTON COMMODITY TRADING LIMITED
In our opinion the financial statements:
∙give a true and fair view of the state of the Group's and of the parent Company's affairs as at 30 September 2024 and of the Group's 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 Auditors' responsibilities for the audit of the financial statements section of our report. We are independent of the Group 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 Group's or the parent 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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INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF GRAFTON COMMODITY TRADING LIMITED (CONTINUED)
The directors are responsible for the other information. The other information comprises the information included in the Annual Report, other than the financial statements and our Auditors' Report thereon. 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.
In connection with our audit of the financial statements, 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 audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the financial statements or a material misstatement of the other information. 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 Group 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 Group 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 Group and the parent Company and its environment obtained in the course of the audit, we have not identified material misstatements in the Group 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 by the parent Company, or returns adequate for our audit have not been received from branches not visited by us; or
∙the parent Company 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.
As explained more fully in the Directors' Responsibilities Statement set out on page 3, 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 Group's and the parent 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 Group or the
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INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF GRAFTON COMMODITY TRADING LIMITED (CONTINUED)
parent Company or to cease operations, or have no realistic alternative but to do so.
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 Auditors' 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 Group 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:
Our approach to identifying and assessing the risks of material misstatement in respect of irregularities, including fraud and non-compliance with laws and regulations, was as follows:
∙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 commodity trading, warehousing and logistics sectors;
∙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, taxation legislation and data protection, anti-bribery, employment, environmental and health and safety legislation;
∙we assessed the extent of compliance with the laws and regulations identified above through making enquiries of management and inspecting legal correspondence; 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;
∙considering the internal controls in place to mitigate risks of fraud and non-compliance with laws and regulations; and
∙understanding the design of the Company’s remuneration policies.
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 journal entries to identify unusual transactions;
∙assessed whether judgments and assumptions made in determining the accounting estimates were indicative of potential bias; and
∙investigated the rationale behind significant or unusual transactions.
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INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF GRAFTON COMMODITY TRADING LIMITED (CONTINUED)
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 HMRC, relevant regulators and the Company’s legal advisors.
There are inherent limitations in our audit procedures described above. The more removed that laws and regulations are from financial transactions, the less likely it is that we would become aware of non-compliance. Auditing standards also limit the audit procedures required to identify non-compliance with laws and regulations to enquiry of the directors and other management and the inspection of regulatory and legal correspondence, if any. Material misstatements that arise due to fraud can be harder to detect than those that arise from error as they may involve deliberate concealment or collusion.
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 Auditors' 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 Auditors' 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 Auditors
5 Elstree Gate
Elstree Way
Borehamwood
Hertfordshire
WD6 1JD
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CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 SEPTEMBER 2024
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CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 SEPTEMBER 2024
The financial statements were approved and authorised for issue by the board and were signed on its behalf on
The notes on pages 18 to 36 form part of these financial statements.
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CONSOLIDATED STATEMENT OF FINANCIAL POSITION (CONTINUED)
AS AT 30 SEPTEMBER 2024
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COMPANY STATEMENT OF FINANCIAL POSITION
AS AT 30 SEPTEMBER 2024
The financial statements were approved and authorised for issue by the board and were signed on its behalf on
The notes on pages 18 to 36 form part of these financial statements.
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CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (CONTINUED)
FOR THE YEAR ENDED 30 SEPTEMBER 2024
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