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Registered number: 08114486
DS SMITH BUSINESS SERVICES LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 APRIL 2022
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DS SMITH BUSINESS SERVICES LIMITED
COMPANY INFORMATION
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DS SMITH BUSINESS SERVICES LIMITED
CONTENTS
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Directors' Responsibilities Statement
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Independent Auditor's Report
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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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Notes to the Financial Statements
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DS SMITH BUSINESS SERVICES LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 30 APRIL 2022
The Directors present their annual report and the financial statements for the year ended 30 April 2022.
The principal activity of the Company is to act as a shared services centre for the DS Smith Group (the ‘Group’), primarily offering human resource and financial services to Group companies. There has been no significant change in the Company’s principal activity in the year under review. The Directors are not aware, at the date of this report, of any likely significant changes in the Company’s activities in the forthcoming financial year.
The results for the financial year show a profit before taxation of £995,000 (2021: profit £755,000) and net assets of £2,227,000 (2021: net liabilities of £1,903,000). The main KPI for the Company, Return on sales, calculated as operating profit before interest and tax, as a percentage of revenue, has increased from 11.2% in 2021 to 16.5% in 2022. The increase in return on sales is largely due to a decrease in employee numbers and resultant labour costs. During the year, DS Smith Holdings Limited, the Company's immediate parent company, injected £3,000,000 cash into the Company in exchange for shares. The cash was used by the Company to repay the loan payable to DS Smith Plc and reduce its bank overdraft. Given the nature of the Company’s activities, the Directors are satisfied with the underlying performance of the business during the year.
The profit for the year, after taxation, amounted to £1,130,000 (2021 - £594,000).
The Directors have not proposed or paid a dividend for the year ended 30 April 2022 (2021: £nil).
The Directors who held office during the year and to the date of signing the financial statements were:
A P Jennings (appointed 3 December 2021)
C A Grant (resigned 30 April 2022)
Directors' and officers' liability insurance
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During the year and up to the date of approval of these financial statements, the ultimate parent company maintained qualifying third-party indemnity arrangements for the benefit of directors of companies within the Group, including the Directors of the Company.
No political contributions were made during the year (2021: £nil).
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DS SMITH BUSINESS SERVICES LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 30 APRIL 2022
Financial risk management policy
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The Company’s operations expose it to a variety of financial risks that include liquidity risk and interest rate risk. Where applicable, the Company follows the Group policy. The Company’s financial risk management is centralised to capitalise on economies of scale and synergy effects and to minimise operational risks.
Liquidity risk
The Company actively manages its liquidity risk by short-term debt finance with the Group Treasury function, supported by external borrowings where appropriate, designed to ensure the Company has sufficient available funds for operations.
Interest rate risk
The Group Treasury function is responsible for identifying and managing interest rate exposure.
The principal activity of the Company is to act as a shared services centre for the Group and is party to a number of intergroup transactions. The Directors expect that this will remain the case in the future and that the general level of activity for the Company will remain consistent with 2022.
There continues to be global uncertainty within the macroeconomic environment as a result of the Russian invasion of Ukraine and rising inflation, particularly following significant increases in energy costs. However, these are mitigated by effective supplier arrangements, long-term hedging arrangements and rising packaging prices. The Group has demonstrated resilience throughout the Covid-19 pandemic and customer demand remains strong, especially in the FMCG sector which represents over 80% of our volumes. In a challenging supply chain environment, our large scale, security of supply and high service levels have driven ongoing gains with our customers including large multinational companies. The Group remains focused on resilient end markets, including in the US and in regions where demand is buoyant and new sites have been opened. The Group continues to carefully manage our cost base and is confident for the year ahead, expecting a further substantial improvement in performance.
The financial statements have been prepared using the going concern basis of accounting. In making their assessment on the appropriateness of using the going concern basis, the Directors have considered any material uncertainties relating to events or conditions that may cast significant doubt upon the continuing use of the going concern basis of accounting in future periods. The Directors have considered a period of at least 12 months from the date the financial statements are authorised for issue. The Company's business activities, together with the factors likely to affect its future development, performance and position are set out above. The financial position of the Company is as shown in the statement of financial position on page 10. At 30 April 2022 the Company reported net current assets of £1,512,000 (2021: net current liabilities of £2,825,000) and net assets of £2,227,000 (2021: net liabilities of £1,903,000). The Company's ultimate parent Company and controlling party is DS Smith Plc, whose financial statements include the Group's objectives, policies and processes for managing its capital; its financial risk management objectives; details of its financial instruments and hedging activities; and its exposures to credit risk and liquidity risk. The Company has access to considerable financial resources from across the Group. As a consequence, the Directors believe that the Company is well placed to manage its business risks successfully despite the current uncertain economic outlook. Taking into consideration the financial performance and financial position of the Company, they continue to adopt the going concern basis in preparing the financial statements.
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DS SMITH BUSINESS SERVICES LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 30 APRIL 2022
Engagement with employees
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The Company is fully committed to ensuring that sufficient emphasis is placed on employee involvement and communication through a variety of methods, and continues to keep employees informed on matters affecting them as employees and on the various factors affecting the performance of the Company and the wider Group. The Company is committed to both the principle and achievement of equal opportunities in employment and policies are designed to provide such equality irrespective of sex, creed, ethnic origin, nationality, sexual orientation, age or disability. Dependent upon their skills and abilities, the Company applies the same criteria to disabled persons as it does to other employees whether in selection, promotion or training. If any employee becomes disabled during employment with the Company, every effort is made to find suitable continuing employment. The Company fully recognises its responsibilities and continues to promote all aspects of health and safety in the interests of its employees and members of the public.
Disclosure of information to auditor
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Each of the persons who are Directors at the time when this Directors' Report is approved has confirmed that:
∙so far as the Director is aware, there is no relevant audit information of which the Company's auditor is unaware, and
∙the Director has taken all the steps that ought to have been taken as a Director in order to be aware of any relevant audit information and to establish that the Company's auditor is aware of that information.
This confirmation is given and should be interpreted in accordance with the provisions of Section 418 of the Companies Act 2006.
Post balance sheet events
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Subsequent to the year end, on 2 November 2022, the Company's immediate parent undertaking injected £25,000,000 cash into the Company in exchange for the issue of one share, fully paid up. The cash was subsequently placed on deposit with the ultimate parent undertaking, DS Smith Plc.
At the 2022 AGM of DS Smith Plc, the Company’s ultimate parent company, held on 6 September 2022 Ernst & Young LLP (EY) were appointed as external auditor to the Group. Accordingly Deloitte LLP will not be seeking reappointment as auditor of the Company at the conclusion of their current term of office. There are no circumstances connected with the resignation of Deloitte LLP as external auditor which should be brought to the attention of the stakeholders of the Company.
This report was approved by the board on 23 November 2022 and signed on its behalf.
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DS SMITH BUSINESS SERVICES LIMITED
DIRECTORS' RESPONSIBILITIES STATEMENT
FOR THE YEAR ENDED 30 APRIL 2022
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), including Financial Reporting Standard 101 ‘Reduced Disclosure Framework’. Under company law the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Company and of the profit or loss of the Company for that period.
In preparing these financial statements, the Directors are required to:
∙select suitable accounting policies and then apply them consistently;
∙make judgements and accounting estimates that are reasonable and prudent;
∙prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
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DS SMITH BUSINESS SERVICES LIMITED
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF DS SMITH BUSINESS SERVICES LIMITED
Report on the audit of the financial statements
Opinion
In our opinion the financial statements of DS Smith Business Services Limited (the ‘company’):
∙give a true and fair view of the state of the company’s affairs as at 30 April 2022 and of its profit for the year then ended;
∙have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice, including Financial Reporting Standard 101 “Reduced Disclosure Framework” and
∙have been prepared in accordance with the requirements of the Companies Act 2006.
We have audited the financial statements which comprise:
∙the statement of comprehensive income;
∙the statement of financial position;
∙the statement of changes in equity;
∙the related notes 1 to 25.
The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 101 “Reduced Disclosure Framework” (United Kingdom Generally Accepted Accounting Practice).
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 Financial Reporting Council’s (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.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors’ use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the company’s ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
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.
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DS SMITH BUSINESS SERVICES LIMITED
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF DS SMITH BUSINESS SERVICES LIMITED
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.
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.
A further description of our responsibilities for the audit of the financial statements is located on the FRC’s website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.
Extent to which the audit was considered 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.
We considered the nature of the company’s industry and its control environment, and reviewed the company’s documentation of their policies and procedures relating to fraud and compliance with laws and regulations. We also enquired of management about their own identification and assessment of the risks of irregularities.
We obtained an understanding of the legal and regulatory framework that the company operates in, and identified the key laws and regulations that:
∙had a direct effect on the determination of material amounts and disclosures in the financial statements. These included UK Companies Act, pensions legislation, tax legislation; and
∙do not have a direct effect on the financial statements but compliance with which may be fundamental to the company’s ability to operate or to avoid a material penalty.
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DS SMITH BUSINESS SERVICES LIMITED
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF DS SMITH BUSINESS SERVICES LIMITED
We discussed among the audit engagement team regarding the opportunities and incentives that may exist within the organisation for fraud and how and where fraud might occur in the financial statements.
In common with all audits under ISAs (UK), we are also required to perform specific procedures to respond to the risk of management override. In addressing the risk of fraud through management override of controls, we tested the appropriateness of journal entries and other adjustments; assessed whether the judgements made in making accounting estimates are indicative of a potential bias; and evaluated the business rationale of any significant transactions that are unusual or outside the normal course of business.
In addition to the above, our procedures to respond to the risks identified included the following:
∙reviewing financial statement disclosures by testing to supporting documentation to assess compliance with provisions of relevant laws and regulations described as having a direct effect on the financial statements;
∙performing analytical procedures to identify any unusual or unexpected relationships that may indicate risks of material misstatement due to fraud;
∙enquiring of management concerning actual and potential litigation and claims, and instances of non-compliance with laws and regulations; and
∙reading minutes of meetings of those charged with governance.
Report on other legal and regulatory requirements
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of the audit:
∙the information given in the directors’ report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
∙the directors’ report has been prepared in accordance with applicable legal requirements.
In the light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identified any material misstatements in the directors’ report.
Matters on which we are required to report by exception
Under the Companies Act 2006 we are required to report in respect of the following matters 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; or
∙the directors were not entitled to prepare the financial statements in accordance with the small companies regime and take advantage of the small companies’ exemptions in preparing the directors’ report and from the requirement to prepare a strategic report.
We have nothing to report in respect of these matters.
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.
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DS SMITH BUSINESS SERVICES LIMITED
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF DS SMITH BUSINESS SERVICES LIMITED
David Hedditch (Senior statutory auditor)
For and on behalf of
Deloitte LLP
5 Callaghan Square
Cardiff
United Kingdom
CF10 5BT
23 November 2022
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DS SMITH BUSINESS SERVICES LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 APRIL 2022
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Interest payable and similar expenses
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Profit for the financial year
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There were no recognised gains and losses for 2022 or 2021 other than those included in the statement of comprehensive income. The results above are from continuing operations.
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The notes on pages 13 to 28 form part of these financial statements.
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DS SMITH BUSINESS SERVICES LIMITED
REGISTERED NUMBER: 08114486
STATEMENT OF FINANCIAL POSITION
AS AT 30 APRIL 2022
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Property, plant and equipment
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Trade and other receivables: amounts falling due after more than one year
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Trade and other receivables: amounts falling due within one year
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Cash and cash equivalents
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Trade and other payables: amounts falling due within one year
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Net current assets/(liabilities)
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Total assets less current liabilities
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Trade and other payables: amounts falling due after more than one year
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Provisions for liabilities
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The financial statements of DS Smith Business Services Limited (registered number: 08114486) were approved and authorised for issue by the board and were signed on its behalf on 23 November 2022.
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DS SMITH BUSINESS SERVICES LIMITED
REGISTERED NUMBER: 08114486
STATEMENT OF FINANCIAL POSITION (CONTINUED)
AS AT 30 APRIL 2022
The notes on pages 13 to 28 form part of these financial statements.
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DS SMITH BUSINESS SERVICES LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 APRIL 2022
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Comprehensive income for the year
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Total comprehensive income for the year
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Comprehensive income for the year
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Total comprehensive income for the year
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Shares issued during the year
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The notes on pages 13 to 28 form part of these financial statements.
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DS SMITH BUSINESS SERVICES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 APRIL 2022
DS Smith Business Services Limited ("the Company") is a private company limited by shares incorporated in the United Kingdom under the Companies Act 2006 and is registered in England and Wales and whose shares are not publicly traded. The registered office is located at 350 Euston Road, London, NW1 3AX. The principal activity is as a shared services centre for the DS Smith Group (the ‘Group’).
2.Accounting policies
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Basis of preparation of financial statements
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The financial statements have been prepared under the historical cost convention unless otherwise specified within these accounting policies and in accordance with Financial Reporting Standard 101 'Reduced Disclosure Framework' and the Companies Act 2006.
The preparation of financial statements in compliance with FRS 101 requires the use of certain critical accounting estimates. It also requires management to exercise judgement in applying the Company's accounting policies (see note 3).
The following principal accounting policies have been applied:
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Financial Reporting Standard 101 - reduced disclosure exemptions
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The Company has taken advantage of the following disclosure exemptions under FRS 101:
∙the requirements of IFRS 7 Financial Instruments: Disclosures
∙the requirements of the second sentence of paragraph 110 and paragraphs 113(a), 114, 115, 118, 119(a) to (c), 120 to 127 and 129 of IFRS 15 Revenue from Contracts with Customers
∙the requirements of paragraph 52, the second sentence of paragraph 89, and paragraphs 90, 91 and 93 of IFRS 16 Leases. The requirements of paragraph 58 of IFRS 16, provided that the disclosure of details in indebtedness relating to amounts payable after 5 years required by company law is presented separately for lease liabilities and other liabilities, and in total
∙the requirement in paragraph 38 of IAS 1 'Presentation of Financial Statements' to present comparative information in respect of:
- paragraph 73(e) of IAS 16 Property, Plant and Equipment;
- paragraph 118(e) of IAS 38 Intangible Assets;
∙the requirements of IAS 7 Statement of Cash Flows
∙the requirements of paragraphs 30 and 31 of IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors
∙the requirements of paragraph 17 and 18A of IAS 24 Related Party Disclosures
∙the requirements of paragraphs 130(f)(ii), 130(f)(iii), 134(d)-134(f) and 135(c)-135(e) of IAS 36 Impairment of Assets.
The accounting policies set out below have, unless otherwise stated, been applied consistently to all periods presented in these financial statements.
The following new standards, amendments or interpretations have been adopted by the Company as of 1 May 2021:
• Interest Rate Benchmark Reform Phase 2 (Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16); and
• Covid 19 Related Rent Concessions – amendments to IFRS 16
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DS SMITH BUSINESS SERVICES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 APRIL 2022
2.Accounting policies (continued)
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Financial Reporting Standard 101 - reduced disclosure exemptions (continued)
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The adoption of the amendments has not had a material effect on the results for the year or the financial position at the year end. Where relevant, equivalent disclosures have been made in the Group accounts.
The financial statements have been prepared using the going concern basis of accounting. In making their assessment on the appropriateness of using the going concern basis, the Directors have considered any material uncertainties relating to events or conditions that may cast significant doubt upon the continuing use of the going concern basis of accounting in future periods. The Directors have considered a period of at least 12 months from the date the financial statements are authorised for issue. The Company's business activities, together with the factors likely to affect its future development, performance and position are set out above. The financial position of the Company is as shown in the statement of financial position on page 10. At 30 April 2022 the Company reported net current assets of £1,512,000 (2021: net current liabilities of £2,825,000) and net assets of £2,227,000 (2021: net liabilities of £1,903,000). The Company's ultimate parent Company and controlling party is DS Smith Plc, whose financial statements include the Group's objectives, policies and processes for managing its capital; its financial risk management objectives; details of its financial instruments and hedging activities; and its exposures to credit risk and liquidity risk. The Company has access to considerable financial resources from across the Group. As a consequence, the Directors believe that the Company is well placed to manage its business risks successfully despite the current uncertain economic outlook. Taking into consideration the financial performance and financial position of the Company, they continue to adopt the going concern basis in preparing the financial statements.
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Foreign currency translation
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Functional and presentation currency
The Company's functional and presentational currency is Sterling (£) as this is the currency of the primary economic environment in which the Company operates.
Transactions and balances
Foreign currency transactions are translated into the functional currency using the spot exchange rates at the dates of the transactions.
At each period end foreign currency monetary items are translated using the closing rate. Non-monetary items measured at historical cost are translated using the exchange rate at the date of the transaction and non-monetary items measured at fair value are measured using the exchange rate when fair value was determined.
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DS SMITH BUSINESS SERVICES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 APRIL 2022
2.Accounting policies (continued)
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured. Revenue is measured as the fair value of the consideration received or receivable, excluding discounts, rebates, value added tax and other sales taxes. The following criteria must also be met before revenue is recognised:
For fixed-price contracts, revenue is recognised based on the actual service provided to the end of the reporting period as a proportion of the total services to be provided because the customer receives and uses the benefits simultaneously.
Finance costs are charged to profit or loss over the term of the debt using the effective interest method so that the amount charged is at a constant rate on the carrying amount. Issue costs are initially recognised as a reduction in the proceeds of the associated capital instrument.
All borrowing costs are recognised in profit or loss in the year in which they are incurred.
Defined contribution pension plan
The Company operates a defined contribution plan for its employees. A defined contribution plan is a pension plan under which the Company pays fixed contributions into a separate entity. Once the contributions have been paid the Company has no further payment obligations.
The contributions are recognised as an expense in profit or loss when they fall due. Amounts not paid are shown in accruals as a liability in the Statement of Financial Position. The assets of the plan are held separately from the Company in independently administered funds.
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DS SMITH BUSINESS SERVICES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 APRIL 2022
2.Accounting policies (continued)
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Current and deferred taxation
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Income tax on the profit or loss for the year comprises current and deferred tax. Income tax is recognised in profit or loss except to the extent that it relates to items recognised directly in equity, in which case it is recognised in equity. Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted at the balance sheet date, and any adjustment to tax payable in respect of previous years.
For the year ended 30 April 2021 and prior years the Group policy is, for the tax charge during the year, the ultimate parent company DS Smith Plc pays the tax charged on behalf of the entity and the balance is stated as payable balance to Plc and in case of tax credit balance, the Company surrenders current year tax losses to other members of the DS Smith Group, and receives payment for those tax losses at the rate of tax prevailing in the year.
For the year ended 30 April 2022 and onwards, DS Smith Group entities will no longer receive payment for current year tax losses surrendered or make payment for group relief claimed at the rate of tax prevailing in the year.
Deferred tax is provided for using the statement of financial position liability method, providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. 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 reporting 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 asset can be utilised. Deferred tax assets are reduced to the extent that it is no longer probable that the related tax benefit will be realised.
Intangible assets are initially recognised at cost. After recognition, under the cost model, intangible assets are measured at cost less any accumulated amortisation and any accumulated impairment losses.
Amortisation of intangible assets is charged to the income statement on a straight-line basis over the estimated useful lives of intangible assets, not exceeding 20 years, unless such lives are indefinite. Intangible assets are amortised from the date they are available for use.
Tangible fixed assets under the cost model are stated at historical cost less accumulated depreciation and any accumulated impairment losses. Historical cost includes expenditure that is directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management.
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DS SMITH BUSINESS SERVICES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 APRIL 2022
2.Accounting policies (continued)
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Tangible fixed assets (continued)
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Depreciation is charged so as to allocate the cost of assets less their residual value over their estimated useful lives, using the straight-line method.
Depreciation is provided on the following basis:
The assets' residual values, useful lives and depreciation methods are reviewed, and adjusted prospectively if appropriate, or if there is an indication of a significant change since the last reporting date.
Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised in profit or loss.
The carrying values of tangible fixed assets are reviewed for impairment when events or changes in circumstances indicate that the carrying value may not be recoverable. Any impairment in the value of property, plant and equipment is charged to the income statement as appropriate.
Right-of-use motor vehicles are depreciated on a straight-line basis over the lease terms, or the useful life if shorter.
Short-term debtors are measured at transaction price, less any impairment. Loans receivable are measured initially at fair value, net of transaction costs, and are measured subsequently at amortised cost using the effective interest method, less any impairment.
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Cash and cash equivalents
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Cash is represented by cash in hand and deposits with financial institutions repayable without penalty on notice of not more than 24 hours. Cash equivalents are highly liquid investments that mature in no more than three months from the date of acquisition and that are readily convertible to known amounts of cash with insignificant risk of change in value.
Creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers.
Creditors are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method.
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DS SMITH BUSINESS SERVICES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 APRIL 2022
2.Accounting policies (continued)
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Provisions for liabilities
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Provisions are made where an event has taken place that gives the Company a legal or constructive obligation that probably requires settlement by a transfer of economic benefit, and a reliable estimate can be made of the amount of the obligation.
Provisions are charged as an expense to profit or loss in the year that the Company becomes aware of the obligation, and are measured at the best estimate at the reporting date of the expenditure required to settle the obligation, taking into account relevant risks and uncertainties.
When payments are eventually made, they are charged to the provision carried in the Statement of Financial Position.
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Judgements in applying accounting policies and key sources of estimation uncertainty
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In the application of the accounting policies, which are described in note 2, the Directors are required to make judgements, estimates and assumptions about the carrying amounts 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 Directors do not deem there to be any critical accounting judgements or estimation uncertainty in the preparation of the financial statements.
The whole of the turnover is attributable to services provided to other companies within the Group and arises wholly within the United Kingdom.
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The operating profit is stated after charging:
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Depreciation of tangible fixed assets
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Amortisation of intangible assets, including goodwill
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DS SMITH BUSINESS SERVICES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 APRIL 2022
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Fees payable to the Company's auditor and its associates for the audit of the Company's annual financial statements
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No fees in relation to non-audit services were paid to the Company’s Auditor in the current or preceding year.
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Cost of defined contribution scheme
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The average monthly number of employees, including the Directors, during the year was as follows:
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Management and administration
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DS SMITH BUSINESS SERVICES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 APRIL 2022
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The highest paid Director received remuneration of £159,000 (2021 - £229,000).
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The value of the Company's contributions paid to a defined contribution pension scheme in respect of the highest paid Director amounted to £nil (2021 - £nil).
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The emoluments of the remaining Directors are paid by other companies within the Group which make no specific recharge to the Company. The Directors who served during the year are also Directors of a number of fellow subsidiaries within the Group. It is not practicable to make an accurate apportionment of the emoluments in respect of each of the subsidiaries. Accordingly, their emoluments are disclosed in the financial statements of the respective companies with which they have their primary employment contracts.
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Interest payable on amounts owed to fellow Group undertakings
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DS SMITH BUSINESS SERVICES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 APRIL 2022
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Current tax on profits for the year
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Adjustments in respect of previous periods
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Origination and reversal of timing differences
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Adjustment in respect of prior years
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Taxation on profit on ordinary activities
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Factors affecting tax charge for the year
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The tax assessed for the year is lower than (2021: higher than) the standard rate of corporation tax in the UK of 19% (2021: 19%). The differences are explained below:
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Profit on ordinary activities before tax
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Profit on ordinary activities multiplied by standard rate of corporation tax in the UK of 19% (2021: 19%)
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Group relief claimed not paid for
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Effect of change in corporation tax rate
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Adjustment in respect of prior years
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Total tax (credit)/charge for the year
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DS SMITH BUSINESS SERVICES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 APRIL 2022
10.Tax on profit (continued)
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Factors that may affect future tax charges
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The Finance Act 2021 included a 6% increase in the main UK corporation tax rate to 25% from 1 April 2023, which was substantively enacted on 10 June 2021. Accordingly, the deferred tax balances have been remeasured in the current year.
In future years, the tax charge will be affected by the extent to which any capital gains can either be rolled over or sheltered by capital losses within the Group as well as subsequently enacted changes in tax rate.
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Assets under construction
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Charge for the year on owned assets
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DS SMITH BUSINESS SERVICES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 APRIL 2022
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Property, plant and equipment
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Assets under construction
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Charge for the year on owned assets
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Charge for the year on right-of-use assets
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DS SMITH BUSINESS SERVICES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 APRIL 2022
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Trade and other receivables
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Amounts falling due after more than one year
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Amounts falling due within one year
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Amounts owed by fellow Group undertakings
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Prepayments and accrued income
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No interest was charged on amounts owed by fellow subsidiary undertakings, which have no fixed repayment date and are therefore classified as repayable on demand. All amounts owed by fellow subsidiary undertakings are unsecured.
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Cash and cash equivalents
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Cash and cash equivalents
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DS SMITH BUSINESS SERVICES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 APRIL 2022
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Trade and other payables: amounts falling due within one year
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Amounts owed to fellow Group undertakings
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Accruals and deferred income
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Interest was charged on the amounts owed to fellow Group undertakings as below. In January 2022, the amount owed below was repaid.
- £661,000 at 2.5% with no fixed date of repayment.
No interest was charged on all other amounts owed to Group undertakings, which have no fixed repayment date and are therefore classified as repayable on demand. All amounts owed to Group undertakings are unsecured.
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Trade and other payables: amounts falling due after more than one year
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Lease liabilities are due as follows:
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Between one year and five years
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DS SMITH BUSINESS SERVICES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 APRIL 2022
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Credited to profit or loss
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The deferred tax asset is made up as follows:
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Depreciation in excess of capital allowances
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Charged to profit or loss
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Authorised, allotted, called up and fully paid
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2 (2021 - 1) Ordinary shares of £1.00 each
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On 12 January 2022 the Company’s immediate parent undertaking injected £3,000,000 cash into the Company in exchange for shares. This transaction resulted in the following: an increase in share capital of £1; an increase in share premium of £2,999,999; a reduction in amounts owed to the ultimate parent company of £667,769 and a reduction in bank overdrafts of £2,332,231.
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DS SMITH BUSINESS SERVICES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 APRIL 2022
The Company is a participant in the Group’s uncommitted overdraft facility with a net limit of £5m. The participants in the facility cross-guarantee the overdrawn balances under the facility. Further information can be found in the Group’s annual report which does not form part of this report.
The pension cost contributions charged during the year relating to the defined contribution scheme amounted to £307,000 (2021: £349,000). There were no contributions prepaid or accrued at the year-end (2021: £nil).
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Related party transactions
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The Company has taken the exemption available under FRS 101 from disclosing related party transactions entered into between two or more members of the DS Smith Group, provided that the fellow group entities are wholly-owned by the Group. See note 8 for details of Directors’ remuneration.
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Post balance sheet events
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Subsequent to the year end, on 2 November 2022, the Company's immediate parent undertaking injected £25,000,000 cash into the Company in exchange for the issue of one share, fully paid up. The cash was subsequently placed on deposit with the ultimate parent undertaking, DS Smith Plc.
Although the post year end capital injection is a non-adjusting post balance sheet event, had the transaction happened prior to the year end, the balance sheet of the company would have been as per the following pro-forma information:
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Provisions and non-current liabilities
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DS SMITH BUSINESS SERVICES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 APRIL 2022
The Company’s immediate parent company is DS Smith Holdings Limited, a company incorporated in the United Kingdom, whose registered office is 350 Euston Road, London, NW1 3AX.
The ultimate parent company and the ultimate controlling party is DS Smith Plc, a company incorporated in the United Kingdom.
DS Smith Plc represents both the largest and smallest group of undertakings for which Group financial statements are prepared and of which the Company is a member. Copies of the Group financial statements are available from the Company Secretary of DS Smith Plc at its registered office, 350 Euston Road, London, NW1 3AX.
The Company does not have any subsidiary undertakings.
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