ACCOUNTS - Final Accounts preparation
ACCOUNTS - Final Accounts preparation
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Company Information
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Contents
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Strategic report
for the year ended 31 December 2022
The directors present the Strategic report of Denby Potteries Limited ('the company') for the year ended 31 December 2022.
The company faced significant challenges during the year as initially strong demand reduced through the impact of global events on its customer base before picking up again towards the year end. Whilst the result was a turnover broadly in line with the prior year, the lag effect between these sharp changes in demand and re-setting factory throughputs caused operational inefficiencies. The company was able, however, to mitigate these on-costs through short term price increases to the customer base, protecting and maintaining the year-on-year gross margin. The resulting profit delivery after taxation for the year was £240,000 (2021: £175,000).
Key performance ratio 2022 2020 Gross margin 21.1% 20.2%
The company uses various financial instruments which include cash, other debtors, trade creditors and amounts due to group undertakings that arise directly from its operations. The main purpose of these financial instruments is to raise finance for the company's operations. The existence of these financial instruments exposes the company to a number of financial risks, which are described in more detail below:
Liquidity risk The company seeks to manage financial risk by ensuring sufficient liquidity is available to meet foreseeable needs and to invest cash assets safely and profitably. The company's policy throughout the year has been to achieve this objective through management's day to day business decisions rather than through setting maximum or minimum liquidity ratios. Interest rate risk The company finances its operations through retained profits and loans from external parties and other group companies. The interest rate exposure of the financial assets and liabilities of the company as at 31 December 2022 is shown in the Statement of financial position. The Statement of financial position includes debtors and creditors. These do not attract interest and are therefore subject to fair value interest rate risk. Credit risk The company's principal financial asset is cash. The credit risk associated with cash is limited as the counterparties have high credit ratings assigned by international credit-rating agencies. Macroeconomic risk The directors consider that the principal risk factors that could materially and adversely affect the company's future operating profits or financial position are the prevailing economic conditions and unforeseen, significant changes in the market.
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Strategic report (continued)
for the year ended 31 December 2022
The board recognises the key role played by stakeholders in the long-term success of the business and the consequent need for good working relationships and information sharing with stakeholders. The Company maintains very close relationships with its customers and against an uncertain demand pattern seeks to cascade consistent forecasts to its supply base. Investors and funders are routinely briefed on current and expected future performance and regular communication with employees is maintained.
This report was approved by the board on 3 May 2023 and signed on its behalf by:
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Directors' report
for the year ended 31 December 2022
The directors present their report and the financial statements of Denby Potteries Limited ('the company') for the year ended 31 December 2022.
The profit for the year, after taxation, amounted to £240,000 (2021 - £175,000).
The directors do not recommend a dividend for the year (2021 - no dividends).
The directors who served during the year were:
The directors are responsible for preparing the Strategic report, the Directors' 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 applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice), including Financial Reporting Standard 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland'. 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 for the company's financial statements and then apply them consistently;
∙make judgements and accounting estimates that are reasonable and prudent;
∙state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements;
∙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 to 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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Directors' report (continued)
for the year ended 31 December 2022
The business supplies unique, high quality branded goods and consequently has a strong continuity business model. However, demand for its products from end customers can be volatile and seasonal and so the business continues to work on making its operations as flexible and responsive as possible to meet these challenging demands.
The company places considerable value on the involvement of its employees and has continued to keep them informed on matters affecting them as employees and on the various factors affecting the performance of the company. This is achieved through formal and informal meetings and regular updates.
Applications for employment by disabled persons are always fully considered, bearing in mind the abilities of the applicant concerned. In the event of members of staff becoming disabled every effort is made to ensure that their employment with the company continues and that appropriate training is arranged. It is the policy of the company that the training, career development and promotion of disabled persons should, as far as possible, be identical to that of other employees.
Directors' and officers' insurance cover was in place throughout 2022 to provide appropriate cover for their reasonable actions on behalf of group companies.
There have been no significant events affecting the company's performance since the year end.
This report was approved by the board on 3 May 2023 and signed on its behalf by:
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Independent auditor's report to the members of Denby Potteries Limited
for the year ended 31 December 2022
We have audited the financial statements of Denby Potteries Limited ('the company') for the year ended 31 December 2022, which comprise the Statement of income and retained earnings, the Statement of financial position and the related notes, including a summary of 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' ('FRS 102') and the Companies Act 2006.
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 United Kingdom, including the Financial Reporting Council'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.
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.
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.
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Independent auditor's report to the members of Denby Potteries Limited (continued)
for the year ended 31 December 2022
In our opinion, based on the work undertaken in the course of the 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.
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 extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:
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Independent auditor's report to the members of Denby Potteries Limited (continued)
for the year ended 31 December 2022
Auditor's responsibilities for the audit of the financial statements (continued)
How the audit was considered capable of detecting irregularities including fraud Our approach to identifying and assessing the risks of material misstatement in respect of irregularities, including fraud and non-compliance with laws and regulations, was as follows:
∙the Senior Statutory Auditor ensured that the engagement team collectively had the appropriate competence, capabilities and skills to identify or recognise non-compliance with applicable laws and regulations;
∙we made enquiries of management as to where they considered there was susceptibility to fraud, and their knowledge of actual, suspected and alleged fraud;
∙we identified the laws and regulations that could reasonably be expected to have a material effect on the financial statements of the company through discussions with directors and other management at the planning stage;
∙the audit team held a discussion to identify any particular areas that were considered to be susceptible to misstatement, including with respect to fraud and non-compliance with laws and regulations; and
∙we focused our planned audit work on specific laws and regulations which we considered may have a direct material effect on the financial statements or the operations of the company including the Companies Act 2006, employment legislation and taxation legislation.
We assessed the extent of compliance with the laws and regulations identified above through:
∙making enquiries of management;
∙inspecting legal expenditure throughout the period for any potential litigation or claims; and
∙considering the internal controls in place that are designed to mitigate risks of fraud and non-compliance with laws and regulations.
To address the risk of fraud through management bias and override of controls, we:
∙determined the susceptibility of the company to management override of controls by checking the implementation of controls and enquiring of individuals involved in the financial reporting process during the period;
∙reviewed journal entries to identify unusual transactions;
∙performed analytical procedures to identify any large, unusual or unexpected transactions;
∙reviewed accounting estimates and evaluated where judgements or decisions made by management indicated bias on the part of the company's management;
∙tested the occurrence and accuracy of revenue by comparing to corresponding invoices and proofs of delivery; and
∙carried out substantive testing to check the occurrence and accuracy of expenditure.
In response to the risk of irregularities and non-compliance with laws and regulations, we designed procedures which included:
∙agreeing financial statement disclosures to underlying supporting documentation; and
∙enquiring of management as to actual and potential litigation and claims.
There are inherent limitations in our audit procedures described above. Irregularities that result from fraud might be inherently more difficult to detect than irregularities that result from error as they may involve deliberate concealment or collusion. Auditing standards also limit the audit procedures required to identify non-compliance with laws and regulations to enquiry of the directors and other management and the inspection of regulatory and legal correspondence, if any.
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our Auditor's report.
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Independent auditor's report to the members of Denby Potteries Limited (continued)
for the year ended 31 December 2022
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.
for and on behalf of
Senior statutory auditor
130 Wood Street
EC2V 6DL
4 May 2023
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Statement of income and retained earnings
for the year ended 31 December 2022
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Statement of financial position
as at
The financial statements were approved and authorised for issue by the board on 3 May 2023 and were signed on its behalf by:
The notes on pages 11 to 22 form part of these financial statements.
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Notes to the financial statements
for the year ended 31 December 2022
Denby Potteries Limited is a private company limited by shares and incorporated in England & Wales. The registered number is 06784072. The registered office is Denby Pottery, Denby, Derbyshire, DE5 8NX.
2.Accounting policies
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 102, 'The Financial Reporting Standard applicable in the UK and Republic of Ireland ('FRS 102') and the Companies Act 2006.
The preparation of financial statements in compliance with FRS 102 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:
The company has taken advantage of the following disclosure exemptions in preparing these financial statements, as permitted by the FRS 102:
∙the requirements of Section 7 Statement of Cash Flows;
∙the requirements of Section 3 Financial Statement Presentation paragraph 3.17(d);
∙the requirements of Section 11 Financial Instruments paragraphs 11.42, 11.44 to 11.45, 11.47, 11.48(a)(iii), 11.48(a)(iv), 11.48(b) and 11.48(c);
∙the requirements of Section 12 Other Financial Instruments paragraphs 12.26 to 12.27, 12.29(a), 12.29(b) and 12.29A;
∙the requirements of Section 26 Share-based Payment paragraphs 26.18(b), 26.19 to 26.21 and 26.23;
∙the requirements of Section 33 Related Party Disclosures paragraph 33.7.
This information is included in the consolidated financial statements of Denby Holdings Limited as at 31 December 2022 and these financial statements may be obtained from Companies House.
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Notes to the financial statements
for the year ended 31 December 2022
2.Accounting policies (continued)
Goodwill
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Notes to the financial statements
for the year ended 31 December 2022
2.Accounting policies (continued)
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.
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Notes to the financial statements
for the year ended 31 December 2022
2.Accounting policies (continued)
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. The directors do not consider that there were any significant areas of estimation uncertainty or application of judgement.
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Notes to the financial statements
for the year ended 31 December 2022
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Notes to the financial statements
for the year ended 31 December 2022
7.Taxation (continued)
The corporation tax rate has increased from 1 April 2023. From this date, the rate will taper from 19% for businesses with profit of less than £50,000 to 25% for businesses with profits over £250,000.
The deferred tax laibility has been calcualted at a rate of 25%.
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Notes to the financial statements
for the year ended 31 December 2022
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Notes to the financial statements
for the year ended 31 December 2022
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Notes to the financial statements
for the year ended 31 December 2022
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Notes to the financial statements
for the year ended 31 December 2022
Profit and loss account
Guarantees on behalf of group undertakings give rise to a contingent liability to the extent of all monies and other liabilities which are due to the company's asset finance providers. The maximum amount of contingency at the year end was £4,242,000 (2021: £2,045,000).
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Notes to the financial statements
for the year ended 31 December 2022
The company operates a defined contribution pension scheme. The assets of the scheme are held separately from those of the company in an independently administered fund. The pension cost charge represents contributions payable by the company to the fund and amounted to £320,000 (2021: £287,000). Contributions totalling £41,000 (2021: £41,000) were payable to the fund at the Statement of financial position date.
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Notes to the financial statements
for the year ended 31 December 2022
The parent undertaking of the company is Denby Group Limited, a company registered in the UK.
The smallest group of undertakings for which consolidated group accounts, which include the company, have been drawn up is headed by The largest group of undertakings for which consolidated accounts have been drawn up is that included by Hilco Trading, LLC. Copies of the group financial statements of Hilco Trading, LLC are available from that company's registered office, 5 Revere Drive, Suite 206, Northbrook, Illinois, 60062. The directors do not consider there to be an ultimate controlling party.
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