Registration number:
for the Year Ended 31 May 2024
PET AGG Limited
Contents
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Company Information |
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Director's Report |
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Statement of Director's Responsibilities |
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Independent Auditor's Report |
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Income Statement |
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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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Statement of Cash Flows |
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Notes to the Financial Statements |
PET AGG Limited
Company Information
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Director |
Mr Karthik Narasimhan |
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Registered office |
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Accountants |
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Auditor |
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PET AGG Limited
Director's Report for the Year Ended 31 May 2024
The director presents his report and the financial statements for the year ended 31 May 2024.
Director of the company
The director, who held office during the year, was as follows:
The following director was appointed after the year end:
Principal activity
The principal activity of the company is to act as a holding company. The Company’s main subsidiary, PET UK1 Limited, forms part of a group engaged in the manufacture of sustainable PET‑based packaging products, including recyclable, recycled and refillable solutions. The group operates through multiple manufacturing sites and partner facilities and serves a diversified customer base across its core markets.
Going concern
The financial statements have been prepared on a going concern basis. The Company is a holding company whose principal asset is its investment in PET UK 1 Limited and it does not undertake trading activities. The Company has no cash balances or external borrowings, and its obligations are limited in nature, giving rise to minimal liquidity risk.
The director has assessed the ability of PET UK 1 Limited to continue as a going concern and are satisfied that the investment has adequate resources to continue in operational existence for the foreseeable future. The investment delivered strong trading performance, with EBITDA exceeding budgeted expectations, and is generating sufficient cash flows to meet its debt obligations as they fall due.
The Company continues to perform in line with expectations, with the underlying business generating sufficient cash flows to meet its operational and capital requirements as they fall due.
Accordingly, the director considers it appropriate to prepare the financial statements on a going concern basis.
Disclosure of information to the auditor
The director has taken steps that he ought to have taken as a director in order to make himself aware of any relevant audit information and to establish that the company's auditor is aware of that information. The director confirms that there is no relevant information that he knows of and of which he knows the auditor is unaware.
Approved by the
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PET AGG Limited
Statement of Director's Responsibilities
The director acknowledges his responsibilities for preparing the Annual Report and the financial statements in accordance with applicable law and regulations.
Company law requires the director to prepare financial statements for each financial year. Under that law the director has elected to prepare the financial statements in accordance with UK adopted International Financial Reporting Standards (IFRSs). Under company law the director must not approve the financial statements unless he is 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 director is required to:
• | select suitable accounting policies and apply them consistently; |
• | make judgements and accounting estimates that are reasonable and prudent; |
• | state whether applicable UK adopted International Financial Reporting Standards (IFRSs) have been followed, subject to any material departures disclosed and explained in the financial statements; and |
• | prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business. |
The director is 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 him to ensure that the financial statements comply with the Companies Act 2006. He is 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.
PET AGG Limited
Independent Auditor's Report to the Members of PET AGG Limited
Opinion
In our opinion the financial statements:
• | give a true and fair view of the state of the company's affairs as at 31 May 2024 and of its profit and cash flows for the year then ended; |
• | have been properly prepared in accordance with UK adopted international accounting standards; and |
• | have been prepared in accordance with the requirements of the Companies Act 2006. |
We have audited the financial statements of PET AGG Limited ("the Company") for the year ended 31 May 2024 which comprise the following:
• Income statement
• Statement of Comprehensive Income
• Statement of Financial Position
• Statement of Changes in Equity
• Statement of Cash Flows
• Material accounting policy information
• Notes 1 to 12 to the financial statements
The financial reporting framework that has been applied in their preparation is applicable law and UK adopted international accounting standards.
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 responsibilities for the audit of the financial statements section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Independence
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.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the director's 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. 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.
Our responsibilities and the responsibilities of the Director with respect to going concern are described in the relevant sections of this report.
PET AGG Limited
Independent Auditor's Report to the Members of PET AGG Limited
Other information
The Director is responsible for the other information. The other information comprises the information included in the Annual Report and Financial Statements, other than the financial statements and our auditor’s 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.
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.
Other Companies Act 2006 reporting
In our opinion, based on the work undertaken in the course of the audit:
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the information given in the Director's Report for the financial year for which the financial statements are prepared is consistent with the financial statements; and |
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the Director's Report has been prepared in accordance with applicable legal requirements. |
In the light of our knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identified material misstatements in the Director's Report.
We have nothing to report in respect of the following matters where 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 the director
As explained more fully in the Statement of Director's Responsibilities, the Director is 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 Director 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 Director is 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 Director either intend to liquidate the Company or to cease operations, or have no realistic alternative but to do so.
PET AGG Limited
Independent Auditor's Report to the Members of PET AGG Limited
Auditor 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. However, the primary responsibility for the prevention and detection of fraud rests with both those charged with governance of the Company and management.
Extent to which the audit was capable of detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below.
Non-compliance with laws and regulations
Based on:
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Our understanding of the Company and the industry in which it operates; |
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Discussion with management and those charged with governance; and |
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Obtaining an understanding of the Company’s policies and procedures regarding compliance with laws and regulations |
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we considered the significant laws and regulations to be Companies Act 2006, United Kingdom adopted international accounting standards, UK tax legislation along with the equivalent legislation of the countries in which the company’s indirectly owned subsidiaries operate.
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Enquires of management whether there were any litigations and claims; |
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Review of minutes of meetings of those charged with governance for any instances of non-compliance with laws and regulations; |
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Review of correspondence with regulatory and tax authorities for any instances of non-compliance with laws and regulations; |
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Review of financial statement disclosures and agreeing to supporting documentation; |
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Fraud
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Enquiry with management and those charged with governance regarding any known or suspected instances of fraud; |
PET AGG Limited
Independent Auditor's Report to the Members of PET AGG Limited
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Obtaining an understanding of the Company’s policies and procedures relating to:
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Review of minutes of meetings of those charged with governance for any known or suspected instances of fraud; |
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Discussion amongst the engagement team as to how and where fraud might occur in the financial statements; and |
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Performing analytical procedures to identify any unusual or unexpected relationships that may indicate risks of material misstatement due to fraud. |
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Based on our risk assessment, we considered the areas most susceptible to fraud to be management override of controls and the fair value assessment of the investment held.
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Assessing the risk of management override by challenging valuation inputs that may indicate biased outcomes; |
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Reviewing the valuation methodology and challenge of the key assumptions, including discount rates, growth rates, valuation multiples, and valuation weightings; |
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Agree forecast cash flows and EBITDA used in the valuation to investee entity budgets and forecasts, and assessing the consistency with historical performance; and |
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Involving a valuation expert to independently assess the appropriateness of the valuation methodology and the reasonableness of key assumptions. |
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We also communicated relevant identified laws and regulations and potential fraud risks to all engagement team members who were all deemed to have appropriate competence and capabilities and remained alert to any indications of fraud or non-compliance with laws and regulations throughout the audit.
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A further description of our responsibilities is available on the Financial Reporting Council’s website at: 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.
PET AGG Limited
Independent Auditor's Report to the Members of PET AGG Limited
......................................
For and on behalf of
Reading
Berkshire
RG1 1AZ
BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127).
PET AGG Limited
Income Statement for the Year Ended 31 May 2024
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Note |
2024 |
2023 |
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Gain on investment at fair value through profit or loss |
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- |
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Operating profit |
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- |
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Profit before tax |
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- |
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Profit for the year |
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- |
The above results were derived from continuing operations.
PET AGG Limited
Statement of Comprehensive Income for the Year Ended 31 May 2024
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2024 |
2023 |
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Profit for the year |
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- |
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Total comprehensive income for the year |
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- |
PET AGG Limited
(Registration number: 14127621)
Statement of Financial Position as at 31 May 2024
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Note |
31 May |
(As restated) |
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Assets |
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Non-current assets |
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Investment in subsidiary at fair value through profit or loss |
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Equity and liabilities |
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Equity |
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Share capital |
18,713,224 |
18,713,224 |
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Retained earnings |
13,245,749 |
- |
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Total equity |
31,958,973 |
18,713,224 |
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Total equity and liabilities |
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The Financial Statements were approved and authorised for issue by the Board of Directors and were signed on its behalf by:
Approved by the
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PET AGG Limited
Statement of Changes in Equity for the Year Ended 31 May 2024
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Share capital |
Retained earnings |
Total |
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At 1 June 2023 |
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- |
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Profit for the year |
- |
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Total comprehensive income |
- |
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At 31 May 2024 |
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Share capital |
Total |
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At 1 June 2022 |
- |
- |
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New share capital subscribed |
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At 31 May 2023 |
18,713,224 |
18,713,224 |
PET AGG Limited
Statement of Cash Flows for the Year Ended 31 May 2024
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Note |
2024 |
2023 |
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Cash flows from operating activities |
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Profit for the year |
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- |
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Adjustments to cash flows from non-cash items |
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Investment in subsidiary fair value change |
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- |
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Net cash flow from operating activities |
- |
- |
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Cash flows from investing activities |
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Acquisition of subsidiaries |
- |
- |
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Cash flows from financing activities |
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Proceeds from issue of ordinary shares, net of issue costs |
- |
- |
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Net change in cash and cash equivalents |
- |
- |
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Cash and cash equivalents at 1 June |
- |
- |
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Cash and cash equivalents at 31 May |
- |
- |
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During the 31 May 2023 period, cash flows used in/from investing and financing activities included a non cash transaction of £18,713,224 which represents the investment acquisition cost and the company's share capital.
PET AGG Limited
Notes to the Financial Statements for the Year Ended 31 May 2024
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General information |
The company is a private company limited by share capital, incorporated and domiciled in England and Wales.
The address of its registered office is:
England
These financial statements were authorised for issue by the
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Accounting policies |
Statement of compliance
The company financial statements have been prepared in accordance with International Financial Reporting Standards and its interpretations adopted by the UK ("UK adopted IFRSs").
These financial statements are the Company's first prepared in accordance with IFRS, and the adoption of IFRS has not resulted in any material changes to the amounts previously reported.
Basis of preparation
The financial statements have been prepared in accordance with adopted IFRSs and under historical cost accounting rules.
The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the company's accounting policies.
New or amended Accounting Standards and Interpretations adopted
The Company has adopted all of the new or amended Accounting Standards and Interpretations issued by the International Accounting Standards Board ('IASB') that are mandatory for the current reporting period. There was no material impact to the financial statements as a result of the adoption of these standards.
Any new or amended Accounting Standards or Interpretations that are not yet mandatory have not been early adopted.
Exemption from preparing group accounts
The company has taken advantage of the exemption in section 31 of 'IFRS 10 - Consolidated Financial Statements' to not prepare consolidated financial statements and to record the investment in subsidiaries at Fair Value through Profit or loss.
Summary of material accounting policies and key accounting estimates
The principal accounting policies applied in the preparation of these financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated.
PET AGG Limited
Notes to the Financial Statements for the Year Ended 31 May 2024
Going concern
The financial statements have been prepared on a going concern basis. The Company is a holding company whose principal asset is its investment in PET UK 1 Limited and it does not undertake trading activities. The Company has no cash balances or external borrowings, and its obligations are limited in nature, giving rise to minimal liquidity risk.
The director has assessed the ability of PET UK 1 Limited to continue as a going concern and are satisfied that the investment has adequate resources to continue in operational existence for the foreseeable future. The investment delivered strong trading performance, with EBITDA exceeding budgeted expectations, and is generating sufficient cash flows to meet its debt obligations as they fall due.
The Company continues to perform in line with expectations, with the underlying business generating sufficient cash flows to meet its operational and capital requirements as they fall due.
Accordingly, the director considers it appropriate to prepare the financial statements on a going concern basis.
Changes in accounting policy
None of the standards, interpretations and amendments effective for the first time from 1 June 2023 have had a material effect on the financial statements.
None of the standards, interpretations and amendments which are effective for periods beginning after 1 June 2023 and which have not been adopted early, are expected to have a material effect on the financial statements.
Prior period adjustments
The amounts originally included in the prior period's financial statements for share capital and investments were the Euro values, instead of the presentational currency which is Pounds Sterling. The investment of £21,795,042 stated in the prior year has been restated to £18,713,224 which is the sterling equivalent at the date of the original transaction. The share capital value of £21,795,042 stated in the prior year has been restated to £18,713,224, the sterling equivalent at the date of the original transaction.
Foreign currency transactions and balances
The Company’s transactions are primarily denominated in Euros; however, the financial statements are presented in Pounds Sterling for reporting purposes.
PET AGG Limited
Notes to the Financial Statements for the Year Ended 31 May 2024
Investments
Investments in securities are measured at fair value. Any movements in fair value during the year are recorded in the profit and loss account.
Subsidiaries are entities controlled by the Company. Control exists when the Company is exposed, or has rights, to variable returns from its involvement with the subsidiary entity and has the ability to affect those returns through its power over the subsidiary entity. In accordance with the exemption under IFRS 10 Consolidated Financial Statements, the Company is an investment entity. The Company does not have any subsidiaries that provide investment management services and are not themselves investment entities. As a result, the Company does not consolidate any of its subsidiaries.
Investments in subsidiaries comprise of equity interests and loans but in respect of each subsidiary are treated as a single investment as investment decisions are made considering both instruments. Investments in subsidiaries are treated as financial assets measured at fair value through profit or loss (FVPL), as further explained below.
The company values its investments at fair value. The fair value methodology maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are those that market participants would use in pricing the asset or liability based on market data obtained from sources independent of the Fund.
Unobservable inputs reflect the Company’s assumptions about the inputs market participants would use in pricing the asset or liability developed based on the best information available in the circumstances.
Share capital
Ordinary shares are classified as equity. Equity instruments are measured at the fair value of the cash or other resources received or receivable, net of the direct costs of issuing the equity instruments. If payment is deferred and the time value of money is material, the initial measurement is on a present value basis.
Financial instruments
Accounting estimates and assumptions
The preparation of the financial statements requires management to make estimates and assumptions that affect the reported amounts of certain financial assets, liabilities, income and expenses.
The use of estimates and assumptions is principally limited to the determination of provisions for impairment and the valuation of financial instruments, as explained in more detail below:-
Provisions for impairment
In determining impairment of financial assets, judgement is required in the estimation of the amount and timing of future cash flows as well as an assessment of whether the credit risk on the financial asset has increased significantly since initial recognition and incorporation of forward-looking information in the measurement of ECL.
PET AGG Limited
Notes to the Financial Statements for the Year Ended 31 May 2024
Fair value of financial assets and liabilities
Where the fair value of financial assets and liabilities cannot be derived from active markets, they are determined using a variety of valuation techniques that include the use of mathematical models. The input to these models is derived from observable markets where available, but where this is not feasible, a degree of judgement is required in determining assumptions used in the models. Changes in assumptions used in the models could affect the reported fair value of financial assets and liabilities.
The Company includes in this category equity instruments including investments in subsidiaries. There are no consolidated subsidiaries.
Fair value measurement and hierarchy
Fair value is the price that would be received on the sale of an asset, or paid to transfer a liability, in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction takes place either in the principal market for the asset or liability, or in the absence of a principal market, in the most advantageous market. It is based on the assumptions that market participants would use when pricing the asset or liability, assuming they act in their economic best interest. A fair value measurement of a non‑financial asset takes into account the best and highest value use for that asset.
The fair value hierarchy to be applied under IFRS 13 is as follows:
Level 1: Quoted (unadjusted) market prices in active markets for identical assets or liabilities.
Level 2: Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable.
Level 3: Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable.
For assets and liabilities that are carried at fair value and which will be recorded in the financial information on a recurring basis, the Company will determine whether transfers have occurred between levels in the hierarchy by reassessing categorisation at the end of each reporting period.
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Critical accounting judgements and key sources of estimation uncertainty |
The preparation of the Financial Statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amount of assets, liabilities, income and expenses. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to the accounting estimates are recognised in the period in which the estimates are revised and in any future periods affected.
During the year the Director considered the following significant judgements:
PET AGG Limited
Notes to the Financial Statements for the Year Ended 31 May 2024
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PET AGG Limited
Notes to the Financial Statements for the Year Ended 31 May 2024
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Other gains and losses |
The analysis of the company's other gains for the year is as follows:
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2024 |
2023 |
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Investment in subsidiary fair value movement |
13,245,749 |
- |
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Staff costs |
The average number of persons employed by the company (including the director) during the year, analysed by category was as follows:
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2024 |
2023 |
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Management |
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The employee in PET AGG Limited relates to the director of the Company, who is remunerated through other group entities.
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Auditors' remuneration |
The auditors' remuneration for the current year is £50,000 (2023: £Nil) and is settled by other group entities.
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Investments |
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Subsidiaries |
£ |
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Cost or valuation |
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At 1 June 2022 |
- |
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Additions |
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At 31 May 2023 |
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At 1 June 2023 |
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Fair value movement |
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At 31 May 2024 |
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Carrying amount |
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At 31 May 2024 |
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At 31 May 2023 |
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PET AGG Limited
Notes to the Financial Statements for the Year Ended 31 May 2024
Details of the subsidiaries as at 31 May 2024 are as follows:
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Name of subsidiary |
Principal activity |
Registered office |
Proportion of ownership interest and voting rights held |
2023 |
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Holding company |
England & Wales |
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Intermediate holding company |
England & Wales |
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Intermediate holding company |
England & Wales |
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Management of Intellectual Property |
England & Wales |
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Manufacturing and sales of beverage packaging |
Czech Republic |
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Dormant company |
Germany |
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Dormant company |
England & Wales |
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Sales of and distribution of beverage packaging |
Germany |
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Intermediate holding company |
Sweden |
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Manufacturing and sales of beverage packaging |
Sweden |
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Intermediate holding company |
Cyprus |
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PET AGG Limited
Notes to the Financial Statements for the Year Ended 31 May 2024
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Name of subsidiary |
Principal activity |
Registered office |
Proportion of ownership interest and voting rights held |
2023 |
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Manufacturing and sales of beverage packaging |
Russia |
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Manufacturing and sales of beverage packaging |
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Sales and distribution of beverage packaging |
Canada |
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Intermediate holding company |
England & Wales |
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Dormant company |
England & Wales |
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Sale of beverage packaging |
Thailand |
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Dormant company |
Sweden |
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Sales of beverage packaging |
Chile |
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Sales of beverage packaging |
Mexico |
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Sales of beverage packaging |
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Sales of beverage packaging |
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Intermediate holding company |
England & Wales |
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PET AGG Limited
Notes to the Financial Statements for the Year Ended 31 May 2024
All subsidiaries except PET UK1 Limited are indirectly owned.
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Share capital |
Allotted, called up and fully paid shares
|
31 May |
31 May |
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No. |
£ |
No. |
£ |
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1 |
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1 |
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18,713,223 |
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18,713,223 |
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The Company's share capital is denominated in Euros. For the purposes of the financial statements the corresponding amounts have been presented in Pound Sterling, translated at a historic exchange rate of 0.8586 from €21,795,042 to £18,713,224.
Ordinary shares have full voting, dividend and capital distribution rights. The shares do not confer any rights of redemptions.
Redeemable shares have full voting, dividend and capital distributions rights. The shares may be redeemed by the Company. Management has no intention to redeem these shares until exit. As such, management intends to classify the Redeemable shares as equity and not a liability.
PET AGG Limited
Notes to the Financial Statements for the Year Ended 31 May 2024
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Fair value measurement |
Fair Value measurement
Valuation approach and methodology
The fair value of the Company’s Level 3 investments is determined using a combination of income-based and market-based valuation techniques. Management applies a weighted approach, selecting methodologies that are considered most appropriate to the characteristics of the investment and current market conditions.
The valuation process incorporates internally prepared forecasts together with inputs and assumptions reviewed by the investment team. Key valuation parameters, including discount rates, long-term growth rates and other market-based metrics, are benchmarked against relevant industry data and observable market information where available.
Valuation process
Valuations are prepared quarterly by the investment team, with year-end valuations conducted by an independent external specialist. The valuation process incorporates internal forecasts alongside relevant market-based data, and includes the application of professional judgement, such as adjustments to key assumptions (including cost of equity) where appropriate.
Valuations are reviewed and approved by the investment committee prior to finalisation.
The following tables provide the fair value measurement hierarchy of the company's investment.
Assets measured at fair value
2024
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Date of valuation |
Level 3 |
Total |
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Investment in subsidiary |
31/05/2024 00:00:00 |
31,958,973 |
31,958,973 |
Assets measured at fair value
2023
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Date of valuation |
Level 3 |
Total |
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Investment in subsidiary |
31/05/2023 00:00:00 |
18,713,224 |
18,713,224 |
The basis of the valuation of the investment in subsidiary is fair value. The investment in subsidiary is revalued internally on a quarterly basis, with the year end valuation supported by an external specialist.
PET AGG Limited
Notes to the Financial Statements for the Year Ended 31 May 2024
Level 3 recurring fair value measurements
2024
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Opening balance |
Gains or losses recognised in profit or loss |
Purchases |
Closing balance |
|
|
Investment in subsidiary |
18,713,224 |
13,245,749 |
- |
31,958,973 |
Level 3 recurring fair value measurements
2023
|
Opening balance |
Gains or losses recognised in profit or loss |
Purchases |
Closing balance |
|
|
Investment in subsidiary |
- |
- |
18,713,224 |
18,713,224 |
The investment was measured at fair value at 31 May 2023, which was based on the original transaction price. No fair value gain or loss was recognised in the prior period.
Sensitivity analysis
The range of sensitivities in respect of the fair value movement of the Company's investments is detailed below.
The classification of an investment within Level 3 is based upon the significance of the unobservable inputs to the overall fair value measurement. Because of the inherent uncertainty of valuation of these Level 3 investments, those estimated values may differ significantly from values that would have been used had a ready market for the investments existed. Such differences could be material
The following table summarizes the valuation techniques and significant unobservable inputs used for the Company's investment that is categorized in Level 3 of the fair value hierarchy as of May 31, 2024.
|
Unobservable inputs |
Range (weighted averaged) |
Sensitivity |
|
Discount rate |
(14.7%) |
1% change would increase/decrease fair value by £1,505,000 |
|
Growth rate |
(1%) |
0.25% change would increase/decrease fair value by £268,000 |
|
Enterprise value |
5.3x to 6.3x (5.7x) |
0.4x change would increase/decrease fair value by £1,111,000 |
|
Financial risk review |
This note presents information about the company’s exposure to financial risks and the company’s management of capital.
PET AGG Limited
Notes to the Financial Statements for the Year Ended 31 May 2024
Liquidity risk
The Company’s investment is composed primarily of illiquid, privately held investments. As a result, there is no readily available market for the Company’s interests in such portfolio companies. Therefore, there is no assurance that the Company will be able to recognise liquidity for such investments in a timely manner, if at all.
Market risk
The Company’s investments are long-term and highly illiquid and there is no assurance that the Company will achieve its investment objectives, including targeted returns. The fair value of investments will generally fluctuate with, among other things, general economic conditions, the condition of certain financial markets, developments or trends in any particular industry, the financial condition of the issuer, domestic or international economic or political events, natural disasters, and pandemic or health crises.
|
Currency Risk |
The Company may hold financial instruments and enter into transactions denominated in currencies other than its functional currency. Consequently, the Company may be exposed to risks that the exchange rate of its currency relative to other currencies may change in a manner that has an adverse effect on the value of that portion of the Company’s assets or liabilities denominated in currencies other than the functional currency.
Operational Risk
Operational risk is the potential for loss caused by a deficiency in information, communications, transaction processing and settlement, and accounting systems. The Company and the Director maintain controls and procedures for the purpose of mitigating operational risk.
|
Parent and ultimate parent undertaking |
|
Non adjusting events after the financial period |
|
|