FEDRIGONI_U.K._LIMITED - Accounts

The directors present the strategic report for the year ended 31 December 2022.

Fedrigoni U.K. Limited operates as a distributor of creative papers mainly within the U.K. and Ireland. It distributes only those papers manufactured by the Fedrigoni Group. The target customers for Fedrigoni U.K. Limited are commercial printers, paper convertors, publishers, paper merchants and office product dealers.

2022 saw a record year for volumes - from the packaging volumes that started in late 2021, winning new opportunities at the start of 2022 and a buoyant market in general. This was all despite us implementing three fairly significant price increases throughout the year to keep up with the rises in the price of pulp and energy. Demand started to taper at the end of the year, so we’re expecting the start of 2023 to be more challenging.

Results for the company show sales of £38,481,574 in 2022, and profit before taxation was £406,959, up from £375,919 in the previous year.

Fedrigoni U.K. Limited has a retail shop in central London under the Fabriano Boutique brand, selling high end stationery and leather goods. The store is a non-essential retail outlet and it has now virtually fully recovered to pre Covid levels. Sales were £323k.

Fedrigoni Group altered its transfer pricing policy in 2021, moving to a Transactional Net Margin Method. Detailed functional analysis was performed and this method better reflects the risk borne by each function within the group.

In 2022 we entered a cash pooling system with Fedrigoni S.p.A. A daily sweep is set for the bank every day to ensure our balance remains consistent, and all payments are covered. Both Fedrigoni UK and group are in a positive cash position.

From the perspective of the company, the principal risks and uncertainties are integrated with the principal risks of the group and are not managed separately. Accordingly, the principal risks and uncertainties of Fedrigoni U.K. Limited, which include those of the group, are discussed briefly below and in further detail within the group’s annual report which does not form part of this report.

The challenge the business faces for 2023 is managing a slower market demand coupled with customers high inventory levels and stubbornly high production costs. This will make the first quarter of 2023 in particular a more difficult period. The expectation is the market will begin to recover from the 2nd quarter onwards as customer inventory levels reduce along with production costs and an improvement in market demand.

We continue our focus on credit management as detailed in this report. This remains an important area of our business to manage.

The directors have considered the financial position of the company at 31 December 2022 and forecasts for a period of 12 months from the date of signing these financial statements. In light of these forecasts, they consider that the company has adequate resources to continue in operational existence for the foreseeable future.

For Fedrigoni UK, the directors have assessed the risks noted and their impact in terms of turnover, profit and cashflow, and ultimately believe the company will be self-sufficient and able to maintain a positive cash reserve for the twelve months following the signing of the audit report. Combined with a close to fully insured debtor book and Fedrigoni UK being an important component of the Group’s strategic distribution network, the directors consider that the preparation of the accounts on a going concern basis remains appropriate. Furthermore, one of the directors also sits on the group board and ensures the best interests of the company and the group are maintained.

Financial risk management

The company's operations expose it to a variety of financial risks that include the effects of changes in debt market prices, credit risk, liquidity risk and interest rate risk. In any event, the parent company assures the financial management of Fedrigoni U.K. Limited against those risks outlined. The company has in place a risk management programme that seeks to limit the adverse effects on the financial performance of the company by monitoring levels of debt finance and the related finance costs.

Given the size of the company, the directors have not delegated the responsibility of monitoring financial risk management to a sub-committee of the board. The board of directors considers that the below policies and procedures established are adequate and appropriate to manage the company's financial risks. Those policies and procedures are implemented by the company's finance department. This sets out specific guidelines to manage price risk, credit risk, liquidity risk, interest rate risk and currency risk, including circumstances where it would be appropriate to use financial instruments to manage these.

Liquidity risk

The company actively maintains a mixture of long-term and short-term debt finance that is designed to ensure the company has sufficient available funds for operation and planned expansions. The company has a debt factoring agreement with a third party lender.

Interest rate risk

The company's exposure to risk for the changes in interest rates relates primarily to the company's loan. The company's policy is to manage its interest cost using a variable market rate based on Euribor, which will fluctuate according to levels of working capital required.

Foreign current risk

The company is exposed to translation and transaction foreign exchange risk. To minimise the risk, the company purchases from Group companies in Pounds Sterling for goods to be sold in the U.K.

Credit risk

The company's principal financial assets are cash and trade debtors. Risks associated with cash are low as the company's banks have high credit ratings assigned by international credit rating agencies.

The principal credit risk lies with trade debtors. In order to manage credit risk the directors set limits for customers based on a combination of payment history and third party credit references. Credit limits are reviewed on a regular basis in conjunction with debt ageing and collection history. The company insures all the major debts and all limits that are not insured are agreed with senior management.

Price risk

The company is exposed to price risk as a result of the industry in which it operates. However, given the size of the company's operations, the costs of managing exposure to commodity price risk exceed any potential benefits. The directors will revisit the appropriateness of this policy should the company's operations change in size or nature.

The directors of Fedrigoni U. K. Limited consider the key performance indicators to be measured by the financial results of the business. Volumes are measured daily, and this is a clear indicator of our success and the performance of the wider market. Due to the transfer pricing policy, our main financial KPI is now fixed costs as a % of turnover. This is a group wide KPI that helps us manage our costs in proportion to our revenue.

Uninsured bad debts due to business failures have remained insignificant because of strong credit management.

Fedrigoni U.K. Limited has a vision to be the leading supplier of creative paper products and inspirational services.

Our strategy of working with distributors to manage certain channels has worked well and will continue. The groups strategy is to focus on key market pillars, luxury packaging, luxury publishing, identifying plastic to paper opportunities and reducing the reliance on filler products.

On behalf of the board

The directors present their annual report and financial statements for the year ended 31 December 2022.

The principal activity of the company continued to be that of importers and distributors of quality paper

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.

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

The results show a positive net result achieved. With a focus on improved sales management, customer relationship development and cost control, the directors confirm the next expectations of the company are to continue producing a satisfactory profit in the forthcoming years.

MHA Moore and Smalley were appointed as auditor to the company and in accordance with section 485 of the Companies Act 2006, a resolution proposing that they be re-appointed will be put at a General Meeting.

The company has chosen in accordance with Companies Act 2006, s. 414C(11) to set out in the company's strategic report information required by Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008, Sch. 7 to be contained in the directors' report. It has done so in respect of future developments, principal risks and uncertainties.

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

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

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

•     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.

We have audited the financial statements of Fedrigoni U.K. Limited (the 'company') for the year ended 31 December 2022 which comprise the statement of comprehensive income, the balance sheet, the statement of changes in equity and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).

In our opinion the financial statements:

•     give a true and fair view of the state of the company's affairs as at 31 December 2022 and of its profit for the year then ended;

•     have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and

•     have been prepared in accordance with the requirements of the Companies Act 2006.

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

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. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.

We have nothing to report in this regard.

Opinions on other matters prescribed by the Companies Act 2006

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

• the information given in the strategic report and the directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and

• the strategic report and the directors' report have been prepared in accordance with applicable legal requirements.

In the light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identified material misstatements in the strategic report or the directors' report. We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:

•     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 remuneration specified by law are not made; or

•     we have not received all the information and explanations we require for our audit.

As explained more fully in the directors' responsibilities statement, 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.

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.

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 specific procedures for this engagement and the extent to which these are capable of detecting irregularities, including fraud, are detailed below:

• Enquiries with management, about any known or suspected instances of non-compliance with laws and regulations and fraud;

• Challenging assumptions and judgements made by management in their key accounting estimates, in particular in relation to provisions and future performance in light of the impact of Brexit and Covid-19;

• Auditing the risk of management override of controls, including through testing journal entries and other adjustments for appropriateness; and

• Reviewing board minutes and legal and professional expenditure to identify any evidence of ongoing litigation or enquiries.

• Auditing the risk of fraud and management override of revenue by incorporating data analytics into our sampling of source entries and testing specific transactions to determine the completeness of revenue.

Because of the field in which the client operates we identified that employment law, health and safety legislation and compliance with the UK Companies Act are the areas most likely to have a material impact on the financial statements.

Owing to the inherent limitations of an audit, there is an unavoidable risk that some material misstatements in the financial statements may not be detected, even though the audit is properly planned and performed in accordance with the ISAs (UK). For instance, the further removed non-compliance is from the events and transactions reflected in the financial statements, the less likely the auditor is to become aware of it or to recognise the non-compliance.

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

Use of our report

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

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

Fedrigoni U.K. Limited is a private company limited by shares incorporated in England and Wales. The registered office is 1 Bartholomew Lane, London, EC2N 2AX.

The principal place of business of the company is Unit 11, Queens Park Industrial Estate, Studland Road, Northampton, NN2 6NE.

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

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

The financial statements have been prepared under the historical cost convention. The principal accounting policies adopted are set out below.

This company is a qualifying entity for the purposes of FRS 102, being a member of a group where the parent of that group prepares publicly available consolidated financial statements, including this company, which are intended to give a true and fair view of the assets, liabilities, financial position and profit or loss of the group. The company has therefore taken advantage of exemptions from the following disclosure requirements:

• Section 7 ‘Statement of Cash Flows’: Presentation of a statement of cash flow and related notes and disclosures;

• Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instrument Issues’: Interest income/expense and net gains/losses for each category of financial instrument; basis of determining fair values; details of collateral, loan defaults or breaches, details of hedges, hedging fair value changes recognised in profit or loss and in other comprehensive income;

• Section 26 ‘Share based Payment’: Share-based payment expense charged to profit or loss, reconciliation of opening and closing number and weighted average exercise price of share options, how the fair value of options granted was measured, measurement and carrying amount of liabilities for cash-settled share-based payments, explanation of modifications to arrangements;

• Section 33 ‘Related Party Disclosures’: Compensation for key management personnel.

The financial statements of the company are consolidated in the financial statements of Fedrigoni S.p.A. These consolidated financial statements are available from its registered office, Via Enrico Fermi, 131F, 37135, Verona, Italy.

Management is continuously assessing the impact of the coronavirus and Brexit on clients, suppliers, and employees. Regular contact is taking place throughout the supply chain to minimise any disruption, particularly with our distribution partners. The company do not foresee any significant disruptions in the near future. Actions have been taken in the past to enable the business to establish a strong financial platform, and this together with the current balance sheet strength positions the company well.true

The company is part of a group as detailed in the ultimate controlling party note which has a strong liquidity, considerable headroom in its covenants and is very strongly capitalised by its shareholders. Working capital is closely monitored, especially to protect timely collection of debtors. Fedrigoni UK is a strategic part of the group's distribution and relies entirely on supplies from within the group, which the directors believe will continue for the foreseeable future.

The company is expected to continue to generate positive cash flows on its own account for the foreseeable future, even after taking into account reasonably possible worst case scenarios. Cash balances at 31 December 2022 amounted to £0.77m (2021: £5.61m). The reduction compared to the previous years is due to the fact that the Company now operates under a cashpooling agreement with Ritrama (U.K.) Limited where the cash in concentrated to the Holding Company on a daily basis. The company can access further cash through this facility should the need arise.

After considering the impact of the above, at the time of approving the financial statements, the directors have a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future. Thus the directors continue to adopt the going concern basis of accounting in preparing the financial statements.

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

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

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

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

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

Where an indication of impairment exists, the carrying amount of the asset is assessed and written down immediately to its recoverable amount.

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

Costs are determined on a weighted average cost basis.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Derivatives, including interest rate swaps and forward foreign exchange contracts, are not basic financial instruments. Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured at their fair value. Changes in the fair value of derivatives are recognised in profit or loss in finance costs or finance income as appropriate, unless hedge accounting is applied and the hedge is a cash flow hedge.

Debt instruments that do not meet the conditions in FRS 102 paragraph 11.9 are subsequently measured at fair value through profit or loss. Debt instruments may be designated as being measured at fair value through profit or loss to eliminate or reduce an accounting mismatch or if the instruments are measured and their performance evaluated on a fair value basis in accordance with a documented risk management or investment strategy.

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

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

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

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

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

The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the profit and loss account, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset when the company has a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.

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

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

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

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

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

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

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

Transactions in currencies other than pounds sterling are recorded at the rates of exchange prevailing at the dates of the transactions. At each reporting end date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the reporting end date. Gains and losses arising on translation in the period are included in profit or loss.

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

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

The directors consider there to be no key judgements or estimates in the preparation of the financial statements.

Grant income relates to amounts received in the year through the Coronavirus Job Retention Scheme to reimburse wages paid in respect of staff placed on furlough.

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

Their aggregate remuneration comprised:

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

Fedrigoni U.K. Limited factors most sales invoices without recourse up to the credit limit as per the group facility agreement with Credit Agricole. Non-recourse trade debtors subject to factor are derecognised as trade debtors as the risk and rewards of ownership of the asset has been transferred from the company at the balance sheet date. Any balance above the credit limit is treated as with recourse and are not derecognised until paid. At the balance sheet date the company had derecognised factored trade debtor amounts totalling £4,627,151 (2021: £3,634,043).

Included within other creditors are debt factoring amounts received but not yet remitted to Credit Agricole totalling £898,897 (2021: £484,796).

Amounts owed to group undertakings are unsecured, interest free and repayable on demand.

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

Of the deferred tax liability set out above, £7,450 is expected to reverse within 12 months of the balance sheet date. The balance relates to accelerated capital allowances that are expected to mature in line with the depreciation charged on the fixed assets to which they relate.

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

The company has one class of ordinary shares which carry no right to fixed income.

The debt factor facility owed to Credit Agricole is secured by way of a cross pledge agreement dated 20 December 2020 in respect of amounts owed by the company and fellow subsidiary, Ritrama (U.K.) Limited. Amounts guaranteed on behalf of Ritrama (U.K.) Limited amount to £9,905,577 (2021: £7,798,481).

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

The company has taken advantage of the exemption permitted under Section 33 'Related Party Disclosures' paragraph 33.11 from disclosing transactions and outstanding balances with group companies.

The immediate parent undertaking of the company is Fedrigoni S.p.A, a company incorporated in Italy. Fedrigoni S.p.A's immediate shareholder is Fedrigoni Holding Limited, a company incorporated in England & Wales. The ultimate controlling party of Fedrigoni U.K. Limited is Bain Capital Investors LLC.

The smallest group of which Fedrigoni U.K. Limited is a member and for which consolidated financial statements are produced is Fedrigoni S.p.A. The consolidated financial statements of Fedrigoni S.p.A may be obtained by writing to Fedrigoni S.p.A., Via Enrico Fermi, 131F, 37135, Verona, Italy.

The largest group of which Fedrigoni U.K. Limited is a member and for which consolidated financial statements are produced is Fabric (BC) Investor S.a.r.l. The consolidated financial statements of Fabric (BC) Investor S.a.r.l may be obtained by writing to Fabric (BC) Investor S.a.r.l, 4, Rue Lou Hemmer, L - 1748 Luxembourg-Findel, Luxembourg, B223380.

The registered office of Fedrigoni S.p.A. is Via Enrico Fermi, 131F, 37135, Verona, Italy.

The registered office of Fabric (BC) Investor S.a.r.l is 4, rue Lou Hemmer, L-1748 Luxembourg-Findel, Luxembourg B223380.