Company registration number 03949982 (England and Wales)
PUNJAB PAPER CONVERTERS LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 SEPTEMBER 2024
PUNJAB PAPER CONVERTERS LIMITED
COMPANY INFORMATION
Directors
Mrs T Arshid
Mr M Arshad
Company number
03949982
Registered office
Lower Warehouse Site
Lower Eccleshill Road
Darwen
Lancashire
BB3 0RP
Auditor
Pierce C A Limited
Mentor House
Ainsworth Street
Blackburn
Lancashire
BB1 6AY
Business address
Lower Warehouse Site
Lower Eccleshill Road
Darwen
Lancashire
BB3 0RP
PUNJAB PAPER CONVERTERS LIMITED
CONTENTS
Page
Strategic report
1 - 2
Directors' report
3
Directors' responsibilities statement
4
Independent auditor's report
5 - 7
Profit and loss account
8
Statement of comprehensive income
9
Balance sheet
10
Statement of changes in equity
11
Statement of cash flows
12
Notes to the financial statements
13 - 25
PUNJAB PAPER CONVERTERS LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 30 SEPTEMBER 2024
- 1 -

The directors present the strategic report for the year ended 30 September 2024.

Review of the business

Our principal trading activity is the manufacture and sale of bathroom tissue and kitchen towel to wholesalers for sale to the retail consumer markets (mainly the convenience store sector) and the Away from Home (AFH) market which includes hospitality and industrial sectors.

The company continues to promote and develop its own brands Soft Lux, Double Lux, Your Choice, and Use It!. There has been increased activity in production for private labels.

As in the previous year, there remains a challenge to maintain supply and overcome issues arising from availability of paper, supply times and rising costs of manufacture.

During this financial period, the turnover recorded was lower than the previous period. This was due to the fall in average price per case. However, it is encouraging to note that the total number of cases sold was higher than in the previous year and this helped to minimise the effect of the lower average unit sales price.

In July 2024 the company invested in line 2 to develop a new technique that increased production and quality of product.

Line 3 provided increased sales in the year to September 24. As envisaged, it has enabled us to meet current demand in a more cost-efficient manner. It is planned to develop line 3 further in the year to September 25 to further improve operational efficiency. This will enable higher quality kitchen towel to be manufactured and meet the requirements of a new market for the company.

Principal risks and uncertainties

The variety of our customer base means that the company is somewhat protected from the extreme variations in individual sectors.

During the year, the company secured a £350,000 loan from Funding Circle to provide working capital. This enables the company to trade in an efficient manner when there are delays in international shipping and additional paper stock has had to be ordered at short notice.

The company is exposed to positive and negative effects due to currency fluctuations as certain of its suppliers are US dollar and Euro denominated. The directors have entered into currency hedging options throughout the year to minimise the effect of exceptional movement in exchange rates.

The directors are grateful to the company’s supplier base who continued to support the business through the working capital challenges that faced the business during the period to 30 September 2024.

The company believes that it is well placed to face the key risks associated with new competitors entering the market and fluctuations in the price of paper and customer demand by keeping lower stock levels together with awareness of the prices customers expect in the market.

Development and performance

The directors monitor the performance of the company by reference to turnover, waste reduction and profitability. Turnover was lower during the period as a result of the decreased average case price compared to the prior period.

The average case price has continued to fall in the period from October 24 to the present date. However, it is encouraging to note that the turnover of the company is higher compared to the previous period last year due to an increase in the number of units sold.

In the first half of the year to September 2024, non-operating costs following the restructuring in the prior year continued to make a significant impact on the performance of the company. By strengthening the internal management team these costs were reduced in the second half of the year. The full benefit of these savings will be seen in future years.

Full year interest charges in the current year also impacted heavily on the company. These are forecast to reduce in future as levels of borrowings will be lower as loans are repaid.

 

PUNJAB PAPER CONVERTERS LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 30 SEPTEMBER 2024
- 2 -
Key performance indicators

The company has achieved a 18% gross profit in the current year (prior period 13 month to 30 September 2023 18%).

The EBITDA in the year to 30 September 2024 was £433k (prior period 13 month to 30 September 2023 £967k).

Other information and explanations

Our aim is to increase the company's market share by adding new pack formats and new products. The manufacturing process is under constant review to enable machinery to operate at optimum efficiency.

The company's production, sales and financial performances are reviewed monthly to ensure that any opportunity to increase the performance of the company is acted upon and to minimise the effect of any challenges that may be encountered.

On behalf of the board

.............................................
Mr M Arshad
Director
Date: .............................................
PUNJAB PAPER CONVERTERS LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 30 SEPTEMBER 2024
- 3 -

The directors present their annual report and financial statements for the year ended 30 September 2024.

Principal activities

The principal activity of the company continued to be that of the manufacture of hygiene products from paper conversion.

Results and dividends

The results for the year are set out on page 8.

No ordinary dividends were paid. The directors do not recommend payment of a final dividend.

Directors

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

Mrs T Arshid
Mr M Arshad
Statement of disclosure to auditor

So far as each person who was a director at the date of approving this report is aware, there is no relevant audit information of which the company’s auditor is unaware. Additionally, the directors individually have taken all the necessary steps that they ought to have taken as directors in order to make themselves aware of all relevant audit information and to establish that the company’s auditor is aware of that information.

Medium-sized companies exemption

This report has been prepared in accordance with the provisions applicable to companies entitled to the medium-sized companies exemption.

On behalf of the board
Mr M Arshad
Director
2 May 2025
PUNJAB PAPER CONVERTERS LIMITED
DIRECTORS' RESPONSIBILITIES STATEMENT
FOR THE YEAR ENDED 30 SEPTEMBER 2024
- 4 -

The directors are responsible for preparing the annual report and the financial statements in accordance with applicable law and regulations.

 

Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period. In preparing these financial statements, the directors are required to:

 

 

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.

PUNJAB PAPER CONVERTERS LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF PUNJAB PAPER CONVERTERS LIMITED
- 5 -
Opinion

We have audited the financial statements of Punjab Paper Converters Limited (the 'company') for the year ended 30 September 2024 which comprise the profit and loss account, the statement of comprehensive income, the balance sheet, the statement of changes in equity, the statement of cash flows and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).

In our opinion the financial statements:

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.

Material uncertainty related to going concern

We draw attention to Note 1.3 in the financial statements which indicates that the company has incurred a loss for the year to 30 September 2024 and has substantial borrowings. As stated in Note 1.3, this indicates that a material uncertainty exists that may cast doubt on the company's ability to continue as a going concern.

 

Our opinion is not modified in this matter.

 

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.

 

Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.

Other information

The other information comprises the information included in the annual report other than the financial statements and our auditor's report thereon. The directors are responsible for the other information contained within the annual report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.

 

We have nothing to report in this regard.

Opinions on other matters prescribed by the Companies Act 2006

In our opinion, based on the work undertaken in the course of our audit:

PUNJAB PAPER CONVERTERS LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF PUNJAB PAPER CONVERTERS LIMITED (CONTINUED)
- 6 -
Matters on which we are required to report by exception

In the light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identified material misstatements in the strategic report or the directors' report.

 

We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:

Responsibilities of directors

As explained more fully in the directors' responsibilities statement, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the directors are responsible for assessing the company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.

Auditor's responsibilities for the audit of the financial statements

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

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

In identifying and assessing risks of material misstatements in respect of irregularities (including fraud) we considered the following:

 

We have also performed specific procedures to consider the risk of management override and of fraud arising in significant transactions outside the normal course of business.

We did not identify a material risk of non-compliance with laws and regulations or of fraud.

A further description of our responsibilities is available on the Financial Reporting Council’s website at: https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.

Use of our report

This report is made solely to the company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's members as a body, for our audit work, for this report, or for the opinions we have formed.

PUNJAB PAPER CONVERTERS LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF PUNJAB PAPER CONVERTERS LIMITED (CONTINUED)
- 7 -
Paul Moulding
Senior Statutory Auditor
For and on behalf of Pierce C A Limited
2 May 2025
Statutory Auditor
Mentor House
Ainsworth Street
Blackburn
Lancashire
BB1 6AY
PUNJAB PAPER CONVERTERS LIMITED
PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 30 SEPTEMBER 2024
- 8 -
Year
Period
ended
ended
30 September
30 September
2024
2023
Notes
£
£
Turnover
3
12,659,562
14,510,734
Cost of sales
(10,344,432)
(11,872,913)
Gross profit
2,315,130
2,637,821
Distribution costs
(1,017,244)
(953,886)
Administrative expenses
(1,224,113)
(1,070,291)
Other operating income
9,200
9,966
Operating profit
4
82,973
623,610
Interest payable and similar expenses
7
(491,507)
(220,694)
(Loss)/profit before taxation
(408,534)
402,916
Tax on (loss)/profit
8
77,425
(116,415)
(Loss)/profit for the financial year
(331,109)
286,501

The profit and loss account has been prepared on the basis that all operations are continuing operations.

PUNJAB PAPER CONVERTERS LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 SEPTEMBER 2024
- 9 -
Year
Period
ended
ended
2024
2023
£
£
(Loss)/profit for the year
(331,109)
286,501
Other comprehensive income
Tax relating to other comprehensive income
47,806
18,535
Total comprehensive income for the year
(283,303)
305,036
PUNJAB PAPER CONVERTERS LIMITED
BALANCE SHEET
AS AT
30 SEPTEMBER 2024
30 September 2024
- 10 -
2024
2023
Notes
£
£
£
£
Fixed assets
Tangible assets
10
8,540,999
8,832,843
Current assets
Stocks
11
1,477,847
1,092,930
Debtors
12
2,530,972
2,361,298
Cash at bank and in hand
109,224
172,581
4,118,043
3,626,809
Creditors: amounts falling due within one year
13
(5,515,271)
(4,579,540)
Net current liabilities
(1,397,228)
(952,731)
Total assets less current liabilities
7,143,771
7,880,112
Creditors: amounts falling due after more than one year
14
(2,724,290)
(3,052,097)
Provisions for liabilities
Deferred tax liability
17
915,607
1,040,838
(915,607)
(1,040,838)
Net assets
3,503,874
3,787,177
Capital and reserves
Called up share capital
19
50,000
50,000
Revaluation reserve
1,823,533
1,825,347
Profit and loss reserves
1,630,341
1,911,830
Total equity
3,503,874
3,787,177

These financial statements have been prepared in accordance with the provisions relating to medium-sized companies.

The financial statements were approved by the board of directors and authorised for issue on 2 May 2025 and are signed on its behalf by:
Mr M Arshad
Director
Company registration number 03949982 (England and Wales)
PUNJAB PAPER CONVERTERS LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 SEPTEMBER 2024
- 11 -
Share capital
Revaluation reserve
Profit and loss reserves
Total
£
£
£
£
Balance at 1 September 2022
50,000
1,860,567
1,571,574
3,482,141
Period ended 30 September 2023:
Profit
-
-
286,501
286,501
Other comprehensive income:
Tax relating to other comprehensive income
-
18,535
-
0
18,535
Total comprehensive income
-
18,535
286,501
305,036
Transfers
-
(53,755)
53,755
-
Balance at 30 September 2023
50,000
1,825,347
1,911,830
3,787,177
Year ended 30 September 2024:
Loss
-
-
(331,109)
(331,109)
Other comprehensive income:
Tax relating to other comprehensive income
-
47,806
-
0
47,806
Total comprehensive income
-
47,806
(331,109)
(283,303)
Transfers
-
(49,620)
49,620
-
Balance at 30 September 2024
50,000
1,823,533
1,630,341
3,503,874
PUNJAB PAPER CONVERTERS LIMITED
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 SEPTEMBER 2024
- 12 -
2024
2023
Notes
£
£
£
£
Cash flows from operating activities
Cash generated from operations
24
818,731
407,141
Interest paid
(491,507)
(220,694)
Net cash inflow from operating activities
327,224
186,447
Investing activities
Purchase of tangible fixed assets
(58,598)
(519,324)
Proceeds from disposal of tangible fixed assets
-
0
24,683
Net cash used in investing activities
(58,598)
(494,641)
Financing activities
Repayment of borrowings
736,345
(593,417)
Proceeds from new bank loans
370,650
1,548,000
Repayment of bank loans
(1,411,286)
(685,222)
Payment of finance leases obligations
(28,106)
(141,010)
Net cash (used in)/generated from financing activities
(332,397)
128,351
Net decrease in cash and cash equivalents
(63,771)
(179,843)
Cash and cash equivalents at beginning of year
172,581
352,424
Cash and cash equivalents at end of year
108,810
172,581
Relating to:
Cash at bank and in hand
109,224
172,581
Bank overdrafts included in creditors payable within one year
(414)
-
0
PUNJAB PAPER CONVERTERS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 SEPTEMBER 2024
- 13 -
1
Accounting policies
Company information

Punjab Paper Converters Limited is a private company limited by shares incorporated in England and Wales. The registered office is Lower Warehouse Site, Lower Eccleshill Road, Darwen, Lancashire, BB3 0RP.

1.1
Reporting period

These financial statements have been prepared for the year ended 30 September 2024. The comparative period financial statements are for the thirteen month period 1 September 2022 to 30 September 2023.

1.2
Accounting convention

These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006.

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

The financial statements have been prepared under the historical cost convention, modified to include the revaluation of freehold properties. The principal accounting policies adopted are set out below.

1.3
Going concern

These financial statements are prepared on the going concern basis. The directors have a reasonable expectation that the company will continue in operational existence for the foreseeable future. However, the directors are aware of certain material uncertainties which may cause doubt on the company's ability to continue as a going concern.

 

In the year to September 2024 the company has incurred an operating loss. This company incurred significant administrative overheads in the 6 month period to March 2024 following the restructuring of the company in the year to September 2023. Going forward these costs have not been incurred.

During the year the company took on additional borrowings to meet working capital requirements. At September 2024 the company had net current liabilities.

The company has disposed of its trading premises after the year end and entered into a lease agreement with the purchaser. This has enabled borrowings to be reduced significantly and will also reduce the funding requirement for the next few years.

The company has invested in significant production capacity in order to increase efficiencies for future periods. The manufacturing process is kept under constant review to ensure optimum performance.

The directors have considered the company's funding requirements for a period of 18 months from the date of approval of the financial statements and continue to work closely with its finance providers. They consider that the company will have sufficient funds to meets its obligations for the foreseeable future and have therefore continued to prepare the financial statements on a going concern basis.

1.4
Turnover

Turnover is recognised at the fair value of the consideration received or receivable for goods and services provided in the normal course of business, and is shown net of VAT and other sales related taxes. The fair value of consideration takes into account trade discounts, settlement discounts and volume rebates.

 

When cash inflows are deferred and represent a financing arrangement, the fair value of the consideration is the present value of the future receipts. The difference between the fair value of the consideration and the nominal amount received is recognised as interest income.

PUNJAB PAPER CONVERTERS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 SEPTEMBER 2024
1
Accounting policies
(Continued)
- 14 -

Revenue from the sale of goods is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer (usually on dispatch of the goods), the amount of revenue can be measured reliably, it is probable that the economic benefits associated with the transaction will flow to the entity and the costs incurred or to be incurred in respect of the transaction can be measured reliably.

1.5
Intangible fixed assets - goodwill

Goodwill represents the excess of the cost of acquisition of unincorporated businesses over the fair value of net assets acquired. It is initially recognised as an asset at cost and is subsequently measured at cost less accumulated amortisation and accumulated impairment losses. Goodwill is considered to have a finite useful life and is amortised on a systematic basis over its expected life, which is 20 years.

 

1.6
Tangible fixed assets

Tangible fixed assets are initially measured at cost and subsequently measured at cost or valuation, net of depreciation and any impairment losses.

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

Freehold land and buildings
2% on cost
Plant and machinery
5% reducing balance
Fixtures, fittings and equipment
15% reducing balance
Computer equipment
15% reducing balance

The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is credited or charged to profit or loss.

Commissioning costs are capitalised within plant and machinery but not depreciated until commissioning is complete.

1.7
Impairment of fixed assets

At each reporting period end date, the company reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the company estimates the recoverable amount of the cash-generating unit to which the asset belongs.

1.8
Stocks

Stocks are stated at the lower of cost and estimated selling price less costs to complete and sell. Cost comprises direct materials and, where applicable, direct labour costs and those overheads that have been incurred in bringing the stocks to their present location and condition.

At each reporting date, an assessment is made for impairment. Any excess of the carrying amount of stocks over its estimated selling price less costs to complete and sell is recognised as an impairment loss in profit or loss. Reversals of impairment losses are also recognised in profit or loss.

1.9
Cash and cash equivalents

Cash and cash equivalents are basic financial assets and include cash in hand, deposits held at call with banks, other short-term liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities.

PUNJAB PAPER CONVERTERS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 SEPTEMBER 2024
1
Accounting policies
(Continued)
- 15 -
1.10
Financial instruments

The company has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.

 

Financial instruments are recognised in the company's balance sheet when the company becomes party to the contractual provisions of the instrument.

 

Financial assets and liabilities are offset, with the net amounts presented in the financial statements, when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.

Basic financial assets

Basic financial assets, which include debtors and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised.

Other financial assets

Other financial assets, including investments in equity instruments which are not subsidiaries, associates or joint ventures, are initially measured at fair value, which is normally the transaction price. Such assets are subsequently carried at fair value and the changes in fair value are recognised in profit or loss, except that investments in equity instruments that are not publicly traded and whose fair values cannot be measured reliably are measured at cost less impairment.

Impairment of financial assets

Financial assets, other than those held at fair value through profit and loss, are assessed for indicators of impairment at each reporting end date.

 

Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected. If an asset is impaired, the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset’s original effective interest rate. The impairment loss is recognised in profit or loss.

 

If there is a decrease in the impairment loss arising from an event occurring after the impairment was recognised, the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been, had the impairment not previously been recognised. The impairment reversal is recognised in profit or loss.

Derecognition of financial assets

Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the company transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.

Classification of financial liabilities

Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the company after deducting all of its liabilities.

PUNJAB PAPER CONVERTERS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 SEPTEMBER 2024
1
Accounting policies
(Continued)
- 16 -
Basic financial liabilities

Basic financial liabilities, including creditors, bank loans, loans from fellow group companies and preference shares that are classified as debt, are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future payments discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.

 

Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.

 

Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Amounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.

Derecognition of financial liabilities

Financial liabilities are derecognised when the company’s contractual obligations expire or are discharged or cancelled.

1.11
Equity instruments

Equity instruments issued by the company are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the company.

1.12
Taxation

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

Current tax

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

Deferred tax

Deferred tax liabilities are generally recognised for all timing differences and deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Such assets and liabilities are not recognised if the timing difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.

1.13
Employee benefits

The costs of short-term employee benefits are recognised as a liability and an expense, unless those costs are required to be recognised as part of the cost of stock or fixed assets.

 

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

 

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

1.14
Retirement benefits

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

PUNJAB PAPER CONVERTERS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 SEPTEMBER 2024
1
Accounting policies
(Continued)
- 17 -
1.15
Leases

Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessees. All other leases are classified as operating leases.

 

Assets held under finance leases are recognised as assets at the lower of the assets fair value at the date of inception and the present value of the minimum lease payments. The related liability is included in the balance sheet as a finance lease obligation. Lease payments are treated as consisting of capital and interest elements. The interest is charged to profit or loss so as to produce a constant periodic rate of interest on the remaining balance of the liability.

Rentals payable under operating leases, including any lease incentives received, are charged to profit or loss on a straight line basis over the term of the relevant lease except where another more systematic basis is more representative of the time pattern in which economic benefits from the leases asset are consumed.

1.16
Government grants

Government grants are recognised at the fair value of the asset received or receivable when there is reasonable assurance that the grant conditions will be met and the grants will be received.

 

A grant that specifies performance conditions is recognised in income when the performance conditions are met. Where a grant does not specify performance conditions it is recognised in income when the proceeds are received or receivable. A grant received before the recognition criteria are satisfied is recognised as a liability.

2
Judgements and key sources of estimation uncertainty

In the application of the company’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.

 

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.

3
Turnover and other revenue
2024
2023
£
£
Turnover analysed by class of business
Manufacture and supply of hygiene paper products
12,659,562
14,510,734
2024
2023
£
£
Turnover analysed by geographical market
United Kingdom
12,472,979
14,333,434
Europe
186,583
177,300
12,659,562
14,510,734
PUNJAB PAPER CONVERTERS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 SEPTEMBER 2024
3
Turnover and other revenue
(Continued)
- 18 -
2024
2023
£
£
Other revenue
Grants received
9,200
9,966
4
Operating profit
2024
2023
Operating profit for the year is stated after charging/(crediting):
£
£
Exchange gains
(110,698)
(8,126)
Government grants
(9,200)
(9,966)
Fees payable to the company's auditor for the audit of the company's financial statements
15,000
9,500
Depreciation of owned tangible fixed assets
350,442
343,197
Operating lease charges
228,331
107,730
5
Employees

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

2024
2023
Number
Number
Production
42
36
Sales and distribution
9
8
Administration
8
7
Total
59
51

Their aggregate remuneration comprised:

2024
2023
£
£
Wages and salaries
1,727,872
1,508,489
Social security costs
163,936
81,295
Pension costs
31,120
25,526
1,922,928
1,615,310
PUNJAB PAPER CONVERTERS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 SEPTEMBER 2024
- 19 -
6
Directors' remuneration
2024
2023
£
£
Remuneration for qualifying services
142,136
92,683
Company pension contributions to defined contribution schemes
2,493
1,313
144,629
93,996
7
Interest payable and similar expenses
2024
2023
£
£
Interest on financial liabilities measured at amortised cost:
Interest on bank overdrafts and loans
261,074
40,380
Interest on invoice finance arrangements
98,744
80,448
Other interest on financial liabilities
121,808
90,405
481,626
211,233
Other finance costs:
Interest on finance leases and hire purchase contracts
9,881
3,124
Other interest
-
0
6,337
491,507
220,694
8
Taxation
2024
2023
£
£
Deferred tax
Origination and reversal of timing differences
(77,425)
116,415

The actual (credit)/charge for the year can be reconciled to the expected (credit)/charge for the year based on the profit or loss and the standard rate of tax as follows:

2024
2023
£
£
(Loss)/profit before taxation
(408,534)
402,916
Expected tax (credit)/charge based on the standard rate of corporation tax in the UK of 25.00% (2023: 25.00%)
(102,134)
100,729
Tax effect of expenses that are not deductible in determining taxable profit
7,600
-
0
Tax effect of income not taxable in determining taxable profit
-
0
(2,492)
Permanent capital allowances in excess of depreciation
-
0
(357)
Depreciation on assets not qualifying for tax allowances
17,109
18,535
Taxation (credit)/charge for the year
(77,425)
116,415
PUNJAB PAPER CONVERTERS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 SEPTEMBER 2024
8
Taxation
(Continued)
- 20 -

In addition to the amount (credited)/charged to the profit and loss account, the following amounts relating to tax have been recognised directly in other comprehensive income:

2024
2023
£
£
Deferred tax arising on:
Revaluation of property
(47,806)
(18,535)
9
Intangible fixed assets
Goodwill
£
Cost
At 1 October 2023 and 30 September 2024
31,980
Amortisation and impairment
At 1 October 2023 and 30 September 2024
31,980
Carrying amount
At 30 September 2024
-
0
At 30 September 2023
-
0
10
Tangible fixed assets
Freehold land and buildings
Plant and machinery
Fixtures, fittings and equipment
Computer equipment
Total
£
£
£
£
£
Cost or valuation
At 1 October 2023
3,200,000
6,927,959
32,505
32,947
10,193,411
Additions
-
0
58,598
-
0
-
0
58,598
At 30 September 2024
3,200,000
6,986,557
32,505
32,947
10,252,009
Depreciation and impairment
At 1 October 2023
74,140
1,242,130
28,175
16,123
1,360,568
Depreciation charged in the year
68,436
279,030
590
2,386
350,442
At 30 September 2024
142,576
1,521,160
28,765
18,509
1,711,010
Carrying amount
At 30 September 2024
3,057,424
5,465,397
3,740
14,438
8,540,999
At 30 September 2023
3,125,860
5,685,829
4,330
16,824
8,832,843
PUNJAB PAPER CONVERTERS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 SEPTEMBER 2024
10
Tangible fixed assets
(Continued)
- 21 -

The net carrying value of tangible fixed assets includes the following in respect of assets held under finance leases or hire purchase contracts.

2024
2023
£
£
Plant and machinery
-
0
597,700

Land and buildings with a carrying amount of £3,057,424 were revalued at £3,200,000 on 1 July 2022 by Eddisons, independent valuers not connected with the company, on the basis of market value. The valuation conforms to International Valuation Standards and was based on recent market transactions on arm's length terms for similar properties.

Land and buildings are carried at valuation. If the assets were measured using the historic cost model, the carrying amount would be £676,905 and the historic cost £940,827.

11
Stocks
2024
2023
£
£
Raw materials and consumables
1,146,114
804,169
Finished goods and goods for resale
331,733
288,761
1,477,847
1,092,930
12
Debtors
2024
2023
Amounts falling due within one year:
£
£
Trade debtors
2,246,393
2,135,841
Other debtors
295
8,733
Prepayments and accrued income
284,284
216,724
2,530,972
2,361,298
PUNJAB PAPER CONVERTERS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 SEPTEMBER 2024
- 22 -
13
Creditors: amounts falling due within one year
2024
2023
Notes
£
£
Bank loans and overdrafts
15
196,584
154,800
Obligations under finance leases
16
-
0
28,106
Other borrowings
15
474,483
503,170
Trade creditors
2,420,923
1,957,106
Taxation and social security
941,686
491,771
Other creditors
1,304,674
936,082
Accruals and deferred income
176,921
508,505
5,515,271
4,579,540
14
Creditors: amounts falling due after more than one year
2024
2023
Notes
£
£
Bank loans and overdrafts
15
311,194
1,393,200
Other borrowings
15
2,413,096
1,648,064
Other creditors
-
0
10,833
2,724,290
3,052,097
Amounts included above which fall due after five years are as follows:
Payable by instalments
48,057
-
15
Loans and overdrafts
2024
2023
£
£
Bank loans
507,364
1,548,000
Bank overdrafts
414
-
0
Other loans
2,887,579
2,151,234
3,395,357
3,699,234
Payable within one year
671,067
657,970
Payable after one year
2,724,290
3,041,264
PUNJAB PAPER CONVERTERS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 SEPTEMBER 2024
15
Loans and overdrafts
(Continued)
- 23 -

Bank loans include an amount of £1,393,200 (2023 - £1,548,000) due to Praetura Commercial Finance Limited which is secured on the freehold property and £352,564 (2023 - £nil) which has been secured by a personal guarantee from one of the directors.

 

The company uses invoice discounting, provided by Praetura Commercial Finance Limited, in respect of its eligible debts. The facility is secured by a fixed and floating charge over the company's assets. The amount outstanding at 30 September 2024 was £1,249,283 (2023 - £901,356).

 

Other loans include a loan for the purchase of plant and machinery of £1,363,029 (2023 - £1,851,239) which is unsecured.

 

 

16
Finance lease obligations
2024
2023
Future minimum lease payments due under finance leases:
£
£
Within one year
-
0
28,106
17
Deferred taxation

The following are the major deferred tax liabilities and assets recognised by the company and movements thereon:

Liabilities
Liabilities
2024
2023
Balances:
£
£
Accelerated capital allowances
843,136
785,681
Tax losses
(481,377)
(346,497)
Revaluations
553,848
601,654
915,607
1,040,838
2024
Movements in the year:
£
Liability at 1 October 2023
1,040,838
Credit to profit or loss
(77,425)
Credit to other comprehensive income
(47,806)
Liability at 30 September 2024
915,607
PUNJAB PAPER CONVERTERS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 SEPTEMBER 2024
- 24 -
18
Retirement benefit schemes
2024
2023
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
31,120
25,526

The company operates a defined contribution pension scheme for all qualifying employees. The assets of the scheme are held separately from those of the company in an independently administered fund.

19
Share capital
2024
2023
2024
2023
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Ordinary shares of £1 each
50,000
50,000
50,000
50,000
20
Operating lease commitments
Lessee

At the reporting end date the company had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:

2024
2023
£
£
Within one year
171,284
152,919
Between two and five years
445,417
343,577
616,701
496,496
21
Events after the reporting date

Subsequent to the year end the company sold the freehold property from which it trades for £3m and entered into a lease to occupy the premises for 10 years. The company also repaid approximately £1.4m of borrowings out of the sale proceeds.

22
Related party transactions
2024
2023
Amounts due to related parties
£
£
Key management personnel
286,150
299,995

Amounts due to key management personnel relates to loans due to the two directors. The loans are unsecured and interest free.

PUNJAB PAPER CONVERTERS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 SEPTEMBER 2024
- 25 -
23
Directors' transactions

Dividends totalling £0 (2023 - £0) were paid in the year in respect of shares held by the company's directors.

Mr M Arshad has provided a personal guarantee to Praetura Commercial Finance.

 

The directors have provided covenants to Praetura Commercial Finance not to draw on the loan monies introduced whilst the facilities are in place to the company. The balances outstanding at 30 September 2024 were £286,150.

 

 

24
Cash generated from operations
2024
2023
£
£
(Loss)/profit for the year after tax
(331,109)
286,501
Adjustments for:
Taxation (credited)/charged
(77,425)
116,415
Finance costs
491,507
220,694
Depreciation and impairment of tangible fixed assets
350,442
343,197
Movements in working capital:
(Increase)/decrease in stocks
(384,917)
44,914
Increase in debtors
(169,674)
(736,196)
Increase in creditors
939,907
131,616
Cash generated from operations
818,731
407,141
25
Analysis of changes in net debt
1 October 2023
Cash flows
30 September 2024
£
£
£
Cash at bank and in hand
172,581
(63,357)
109,224
Bank overdrafts
-
0
(414)
(414)
172,581
(63,771)
108,810
Borrowings excluding overdrafts
(3,699,234)
304,291
(3,394,943)
Obligations under finance leases
(28,106)
28,106
-
(3,554,759)
268,626
(3,286,133)
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