CPI_WILLIAM_CLOWES_LIMITE - Accounts
CPI_WILLIAM_CLOWES_LIMITE - Accounts
The directors present the strategic report and financial statements for the year ended 31 March 2022.
Business Strategy & Objectives
The company’s strategy and that of the broader CPI Group continues to be focused on optimising production, growing market share and to create value for our customers.
Revenue for the year ended 31 March 2022 was £8.6m (2021: £7.3m), a increase of 17.8% on the previous year. Gross profit for the year ended 31 March 2022 was £3.15m (2021: £2.32m), a increase of 35.8% on the previous year.
The directors believe that the company will continue to trade profitably at gross margin level in the future, and continues to be a strategic member of the CPI Group.
During the year ended 31 March 2022 CPI saw a increase in the volumes in the market in which CPI William Clowes Limited operates. Run lengths continue to decline resulting in higher re-print activity. The wider CPI Group company will continue to invest in the most appropriate technology to keep pace with the market changes. CPI William Clowes Limited benefited from a number of cost saving initiatives during the year giving rise to improved results despite the drop in volume.. The company continues to monitor its cost base in order to mitigate pressure from market price reductions and increase in material costs.
The directors are satisfied that the company is well placed to react to external market forces and to meet customer demands.
Principal Risks
The principal risks of the business revolve around the Group’s ability to maintain order intake, high quality production to pre-agreed deadlines and management of costs and overheads in a highly competitive environment. The increase in orders coupled with reducing run lengths is a key challenge for the industry. The company will continue to focus on maintaining operational efficiency despite these challenges.
Key Performance Indicators
The company considers its key performance indicators to be turnover and gross profit, and regularly monitors its performance by measuring these figures against budgets and forecasts. Turnover and gross profit are reflected in the profit and loss account. The Board and management team also regularly monitor the performance of the company through a range of key performance indicators, which are related to health and safety performance, and a number of operational metrics related to efficiencies and output.
Refinancing
Since the balance sheet date the company (as part of CPI Group (UK) Ltd) has completed a refinancing exercise for the benefit of the CPI UK operating companies. The refinancing involved the renegotiation of the hire purchase facilities over an extended period, as well as a new £4m loan facility that can be drawn down. The funds generated from the facility have been used to fully repay the government backed CLBILS loan, held at UK parent company level, as well as an accelerated payment of £5.850m to the trustees of the Defined benefit pension scheme.
On behalf of the board
The directors present their annual report and financial statements for the year ended 31 March 2022.
The results for the year are set out on page 9.
No ordinary dividends were paid. The directors do not recommend payment of a final dividend. (2021: £Nil).
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
The details of the accounting policy on going concern are set out in note 1.2.
The auditor, KPMG LLP, are deemed to be reappointed under section 487(2) of the Companies Act 2006.
select suitable accounting policies and then apply them consistently; make judgements and 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; and assess the company's ability to continue as a going concern, disclosing as applicable, matters related to going concern; and use the going concern basis of accounting unless they either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.
We have audited the financial statements of CPI William Clowes Limited (the 'company') for the year ended 31 March 2022 which comprise the profit and loss account, the balance sheet, the statement of changes in equity and related notes, including the accounting policies in note 1.
give a true and fair view of the state of the company's affairs as at 31 March 2022 and of its profit for the year then ended; have been properly prepared in accordance with UK accounting standards, including FRS 101 ; and have been prepared in accordance with the requirements of the Companies Act 2006.
Basis for opinion
Going concern
The directors have prepared the financial statements on the going concern basis as they do not intend to liquidate the company or to cease its operations, and as they have concluded that the company’s financial position means that this is realistic. They have also concluded that there are no material uncertainties that could have cast significant doubt over its ability to continue as a going concern for at least a year from the date of approval of the financial statements (“the going concern period”).
In our evaluation of the directors’ conclusions, we considered the inherent risks to the company’s business model and analysed how those risks might affect the company’s financial resources or ability to continue operations over the going concern period.
Our conclusions based on this work:
we consider that the directors’ use of the going concern basis of accounting in the preparation of the financial statements is appropriate;
we have not identified, and concur with the directors’ assessment that there is not, a material uncertainty related to events or conditions that, individually or collectively, may cast significant doubt on the company's ability to continue as a going concern for the going concern period.
However, as we cannot predict all future events or conditions and as subsequent events may result in outcomes that are inconsistent with judgements that were reasonable at the time they were made, the above conclusions are not a guarantee that the company will continue in operation.
Fraud and breaches of laws and regulations – ability to detect
Identifying and responding to risks of material misstatement due to fraud
To identify risks of material misstatement due to fraud (“fraud risks”) we assessed events or conditions that could indicate an incentive or pressure to commit fraud or provide an opportunity to commit fraud. Our risk assessment procedures included:
• Enquiring of directors as to the Company’s high-level policies and procedures to prevent and detect fraud, as well as whether they have knowledge of any actual, suspected or alleged fraud.
• Reading Board minutes.
• Considering remuneration incentive schemes and performance targets for senior management and directors.
• Using analytical procedures to identify any unusual or unexpected relationships
We communicated identified fraud risks throughout the audit team and remained alert to any indications of fraud throughout the audit.
As required by auditing standards, and taking into account possible pressures to meet profit targets and our overall knowledge of the control environment, we perform procedures to address the risk of management override of controls and the risk of fraudulent revenue recognition, in particular the risk that revenue is recorded in the wrong period, and the risk that Company’s management may be in a position to make inappropriate accounting entries.
We did not identify any additional fraud risks.
We performed procedures including:
• Identifying journal entries to test based on risk criteria and comparing the identified entries to supporting documentation. These included those posted with unusual account pairings.
Identifying and responding to risks of material misstatement due to non-compliance with laws and regulations
We identified areas of laws and regulations that could reasonably be expected to have a material effect on the financial statements from our general commercial and sector experience, and through discussion with the directors (as required by auditing standards), and from inspection of the Company’s regulatory and legal correspondence and discussed with the directors and other management the policies and procedures regarding compliance with laws and regulations.
We communicated identified laws and regulations throughout our team and remained alert to any indications of non-compliance throughout the audit.
The potential effect of these laws and regulations on the financial statements varies considerably.
The Company is subject to laws and regulations that directly affect the financial statements including financial reporting legislation (including related companies legislation), distributable profits legislation, and taxation legislation. We assessed the extent of compliance with these laws and regulations as part of our procedures on the related financial statement items.
Whilst the Company is subject to many other laws and regulations, we did not identify any others where the consequences of non-compliance alone could have a material effect on amounts or disclosures in the financial statements.
Context of the ability of the audit to detect fraud or breaches of law or regulation
Owing to the inherent limitations of an audit, there is an unavoidable risk that we may not have detected some material misstatements in the financial statements, even though we have properly planned and performed our audit in accordance with auditing standards. For example, the further removed non-compliance with laws and regulations is from the events and transactions reflected in the financial statements, the less likely the inherently limited procedures required by auditing standards would identify it.
In addition, as with any audit, there remained a higher risk of non-detection of fraud, as these may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal controls. Our audit procedures are designed to detect material misstatement. We are not responsible for preventing non-compliance or fraud and cannot be expected to detect non-compliance with all laws and regulations.
Strategic report and directors’ report
The directors are responsible for the strategic report and the directors’ report. Our opinion on the financial statements does not cover those reports and we do not express an audit opinion thereon.
Our responsibility is to read the strategic report and the directors’ report and, in doing so, consider whether, based on our financial statements audit work, the information therein is materially misstated or inconsistent with the financial statements or our audit knowledge. Based solely on that work:
we have not identified material misstatements in the strategic report and the directors’ report;
in our opinion the information given in those reports for the financial year is consistent with the financial statements; and
in our opinion those reports have been prepared in accordance with the Companies Act 2006.
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; or the directors were not entitled to take advantage of the small companies exemption from the requirement to prepare a strategic report.
A further description of our responsibilities for the audit of the financial statements is located on the website of the Financial Reporting Council at: http://www.frc.org.uk/auditorsresponsibilities.
The purpose of our audit work and to whom we owe our responsibilities
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.
The profit and loss account has been prepared on the basis that all operations are continuing operations.
There are no other comprehensive income in either period other than the results shown above.
The notes on pages 13 to 28 form part of these financial statements.
CPI William Clowes Limited is a company limited by shares incorporated and domiciled in England and Wales. The registered office is 110 Beddington Lane, Croydon, CR0 4TD.
Cash Flow Statement and related notes; Certain disclosures regarding revenue; Certain disclosures regarding leases; Comparative period reconciliations for share capital, tangible fixed assets, intangible assets and investment properties Disclosures in respect of transactions with wholly owned subsidiaries; Disclosures in respect of capital management; The effects of new but not yet effective IFRSs; An additional balance sheet for the beginning of the earliest comparative Disclosures in respect of the compensation of Key Management Personnel; Disclosures of transactions with a management entity that provides key management personnel services to the company; and Disclosures required by in respect of the cash flows of discontinued operations.
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 £000.
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 recognised in the profit and loss account.
Depreciation methods, useful lives and residual values are reviewed at each balance sheet date.
Depreciation is provided at rates calculated to write off the cost less estimated residual value of each asset over its expected useful life, as follows:
Financial assets (including trade and other debtors)
A financial asset not carried at fair value through profit or loss is assessed at each reporting date to determine whether there is objective evidence that it is impaired. A financial asset is impaired if objective evidence indicates that a loss event has occurred after the initial recognition of the asset, and that the loss event had a negative effect on the estimated future cash flows of that asset that can be estimated reliably.
An impairment loss in respect of a financial asset measured at amortised cost is calculated as the difference between its carrying amount and the present value of the estimated future cash flows discounted at the asset’s original effective interest rate. For financial instruments measured at cost less impairment an impairment is calculated as the difference between its carrying amount and the best estimate of the amount that the Company would receive for the asset if it were to be sold at the reporting date. Interest on the impaired asset continues to be recognised through the unwinding of the discount. When a subsequent event causes the amount of impairment loss to decrease, the decrease in impairment loss is reversed through profit or loss.
An impairment loss in respect of goodwill is not reversed.
Non-financial assets
The carrying amounts of the Company’s non-financial assets, other than stocks and deferred tax assets, are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, then the asset’s recoverable amount is estimated.
The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. For the purpose of impairment testing, assets that cannot be tested individually are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or groups of assets (the “cash-generating unit”).
An impairment loss is recognised if the carrying amount of an asset or its CGU exceeds its estimated recoverable amount. Impairment losses are recognised in profit or loss. Impairment losses recognised in respect of CGUs are allocated first to reduce the carrying amount of any goodwill allocated to the units, and then to reduce the carrying amounts of the other assets in the unit (group of units) on a pro rata basis.
In respect of other assets, impairment losses recognised in prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset's carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised.
Net realisable value is the estimated selling price less all estimated costs of completion and costs to be incurred in marketing, selling and distribution.
IFRS 13 establishes a single source of guidance for all fair value measurements. IFRS 13 does not change when an entity is required to use fair value, but rather provides guidance on how to measure fair value under IFRS when fair value is required or permitted. The company is exempt under FRS 101 from the disclosure requirements of IFRS 13. There was no impact on the company from the adoption of IFRS 13.
Tax on the profit or loss for the year comprises current and deferred tax. Tax is recognised in the profit and loss account except to the extent that it relates to items recognised directly in equity or other comprehensive income, in which case it is recognised directly in equity or other comprehensive income.
Current tax is the expected tax payable or receivable on the taxable income or loss for the year, using tax rates enacted or substantively enacted at the balance sheet date, and any adjustment to tax payable in respect of previous years.
Deferred tax is provided on temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. The following temporary differences are not provided for: the initial recognition of goodwill; the initial recognition of assets or liabilities that affect neither accounting nor taxable profit other than in a business combination, and differences relating to investments in subsidiaries to the extent that they will probably not reverse in the foreseeable future. The amount of deferred tax provided is based on the expected manner of realisation or settlement of the carrying amount of assets and liabilities, using tax rates enacted or substantively enacted at the balance sheet date.
A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which the temporary difference can be utilised.
The Company has applied IFRS 16 using the modified retrospective approach and therefore the comparative information has not been restated and continues to be reported under IAS 17.
At inception, the company assesses whether a contract is, or contains, a lease within the scope of IFRS 16. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. Where a tangible asset is acquired through a lease, the company recognises a right-of-use asset and a lease liability at the lease commencement date. Right-of-use assets are included within tangible fixed assets, apart from those that meet the definition of investment property.
The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date plus any initial direct costs and an estimate of the cost of obligations to dismantle, remove, refurbish or restore the underlying asset and the site on which it is located, less any lease incentives received.
The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term. The estimated useful lives of right-of-use assets are determined on the same basis as those of other tangible fixed assets. The right-of-use asset is periodically reduced by impairment losses, if any, and adjusted for certain remeasurements of the lease liability.
The lease liability is initially measured at the present value of the lease payments that are unpaid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the company's incremental borrowing rate. Lease payments included in the measurement of the lease liability comprise fixed payments, variable lease payments that depend on an index or a rate, amounts expected to be payable under a residual value guarantee, and the cost of any options that the company is reasonably certain to exercise, such as the exercise price under a purchase option, lease payments in an optional renewal period, or penalties for early termination of a lease.
The lease liability is measured at amortised cost using the effective interest method. It is remeasured when there is a change in: future lease payments arising from a change in an index or rate; the company's estimate of the amount expected to be payable under a residual value guarantee; or the company's assessment of whether it will exercise a purchase, extension or termination option. When the lease liability is remeasured in this way, a corresponding adjustment is made to the carrying amount of the right-of-use asset, or is recorded in profit or loss if the carrying amount of the right-of-use asset has been reduced to zero.
The company has elected not to recognise right-of-use assets and lease liabilities for short-term leases of machinery that have a lease term of 12 months or less, or for leases of low-value assets including IT equipment. The payments associated with these leases are recognised in profit or loss on a straight-line basis over the lease term.
Non-derivative financial instruments
Non-derivative financial instruments comprise trade and other debtors, cash and cash equivalents, and trade and other creditors.
Trade and other debtors
Trade and other debtors are recognised initially at fair value. Subsequent to initial recognition they are measured at amortised cost using the effective interest method, less any impairment losses.
Trade and other creditors
Trade and other creditors are recognised initially at fair value. Subsequent to initial recognition they are measured at amortised cost using the effective interest method.
Cash and cash equivalent
Cash and cash equivalents comprise cash balances and call deposits. Bank overdrafts that are repayable on demand and form and integral part of the Company's cash management are included as a component of cash and cash equivalents.
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, if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.
The estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are outlined below.
Stock and work in progress is valued at the lower cost and net realisable value. Net realisable value includes, where necessary, provisions for slow moving and obsolete stocks.
Tangible fixed assets are depreciated over their useful lives taking into account residual values, where appropriate. The actual lives of the assets and residual values are assessed annually and may vary depending on a number of factors. In re-assessing asset lives, factors such as technological innovation, product life cycles and maintenance programmes are taken into account. Residual value assessments consider issues such as future market conditions, the remaining life of the asset and projected disposal values.
The Company enters a provision for expected credit losses of trade receivables based on discussion with the customer, account manager and the Group CFO.
Lease liabilities
The discount rate used to calculate the lease liability is the incremental borrowing rate. Incremental borrowing rates are determined based on a series of inputs including: the term of the arrangement; the amount of funds 'borrowed'; a country-specific risk adjustment based on the economic environment, currency and date at which the lease is entered into; and an adjustment for the company's credit risk.
An analysis of the company's turnover is as follows:
Turnover and profit before taxation were generated wholly from the company's principal activity of book manufacture.
The company's net assets are all employed in the United Kingdom and are utilised in the company's principal activity.
The average monthly number of persons (including directors) employed by the company during the year was:
Their aggregate remuneration comprised:
The Directors were employed by, and received their emoluments from CPI UK Management Co Limited during the period. These Directors holding office during the year consider their services to the Company to be incidental to their other duties within CPI Group and accordingly no remuneration has been apportioned to the Company (2021: £nil).
The charge for the year can be reconciled to the profit/(loss) per the profit and loss account as follows:
The company has estimated losses of £1,862,036 (2021:£2,139,674) available for carry forward against future trading profits.
The company has deferred tax assets of £628,218 (2021:£378,680) of which £465,509 (2021:£406,538) relates to losses. In accordance with the guidelines of IAS 19 Deferred Taxation, the deferred tax asset has not been provided due to the uncertainty surrounding its recovery.
An increase in the UK corporation tax rate from 19% to 25% (effective 1 April 2023) was substantively enacted on 24 May 2021. This will increase the company's future current tax charge accordingly. The deferred tax asset at 31 March 2022 has been calculated based on these rates, reflecting the expected timing of reversal of the related timing difference (2021: 19%).
Tangible fixed assets includes right-of-use assets, as follows:
Raw material and work in progress recognised as cost of sales in the year amount to £2,090,808 (2021: £2,058,071).
There was no write down of stocks in the current or previous year.
The directors consider that the carrying amount of debtors is approximately equal to their fair value.
Trade accounts receivable are due within one year. The impairment of trade accounts receivables reflects the level of expected losses on the customer portfolio from the outset of the receivable. The non-collection risk on trade receivables is minimal, and this is reflected in the level of the allowance, which 8% of gross receivables at the end of 2022 (2021: 9%). At the year end the Company has no significant trade receivables overdue but not impaired
Finance lease obligations are classified based on the amounts that are expected to be settled within the next 12 months and after more than 12 months from the reporting date, as follows:
It is the company's policy to lease certain equipment under finance leases. The average lease term is five years. The average effective borrowing rate for the year was 8%. Interest rates are fixed at the contract date. All leases are on a fixed repayment basis and no arrangements have been entered into for contingent rental payments.
The fair value of the company's lease obligations is approximately equal to their carrying amount.
The amounts included within amounts due to group undertakings are interest free and repayable on demand.
All the assets and shares of the company are charged with a debenture in favour of Royal Bank of Scotland plc and in order to secure certain financing arrangements between CPI SA, its subsidiary undertakings and its bank. The borrowings of the Group under these arrangements are disclosed in the consolidated accounts of the ultimate holding company, Elpis Holdings Limited.
Deferred revenues are classified based on the amounts that are expected to be settled within the next 12 months and after more than 12 months from the reporting date, as follows:
A brief summary of the rights of each class of shares is set out below. These rights are set out in full in the company's articles of association.
'A' and 'B' ordinary shares
The holders of the 'A' and 'B' shares have equal rights as regards dividends, voting and in the event of a winding up of the company the sharing of net proceeds. All shares are equity shares.
The capital contribution reserve has arisen as a result of the write off of a loan with an associated company that has now been liquidated, resulting in a capital contribution from the immediate parent undertaking.
During the year, CPI William Clowes entered into transactions with Cameron France Investissement and CPI S.A.S..
During the year, the management charges from Cameron France Investissement to CPI William Clowes amounted to £92,383 (2021: £61,944) and from CPI S.A.S. to CPI William Clowes Limited amounted to £107,611 (2021: £102,302).
At the balance sheet date the amount due from CPI William Clowes Limited to Cameron France Investissement was £91,888 (2020: £43,832) and to CPI S.A.S. was £137,744 (2021: £79,171).
The Company has been a subsidiary undertaking of Elpis Holdings Limited, which is the ultimate parent company and is incorporated in the United Kingdom, since 9 April 2019. The smallest undertaking for which group financial statements are prepared is Cameron France Holdings SAS, incorporated in France, and the largest group is Elpis Holdings Limited. No other group financial statements include the results of the company. The consolidated financial statements of this group is available to the public and may be obtained from Elma House, Beaconsfield Close, Hatfield, AL10 8YG.