Saraco Industries Holdings Limited - Limited company accounts 23.1

REGISTERED NUMBER: 12821248 (England and Wales)

SARACO INDUSTRIES HOLDINGS LIMITED

Group Strategic Report, Report of the Directors and

Audited Consolidated Financial Statements

for the Year Ended 31 December 2022

Page

Company Information

1

Group Strategic Report

2

Report of the Directors

4

Report of the Independent Auditors

6

Consolidated Income Statement

10

Consolidated Other Comprehensive Income

11

Consolidated Balance Sheet

12

Company Balance Sheet

13

Consolidated Statement of Changes in Equity

14

Company Statement of Changes in Equity

15

Consolidated Cash Flow Statement

16

Notes to the Consolidated Cash Flow Statement

17

Notes to the Consolidated Financial Statements

19

DIRECTORS:

I M Bapu

H Patel

REGISTERED OFFICE:

Parkside House

167 Chorley New Road

Bolton

Lancashire

BL1 4RA

REGISTERED NUMBER:

12821248 (England and Wales)

SENIOR STATUTORY AUDITOR:

Robert Stafford BA(Hons) FCA

AUDITORS:

SCCA Ltd T/a Stafford & Co

Chartered Accountants

and Statutory Auditor

3 The Studios

320 Chorley Old Road

Bolton

Lancashire

BL1 4JU

The directors present their strategic report of the company and the group for the year ended 31 December 2022.

REVIEW OF BUSINESS

The principal activity of the group continues to be that of manufacturing and distribution of household and babywipes.

2022

2021

£

Turnover

22,110,671

17,025.916

Gross profit

3,256,803

2,539,338

Net profit before tax

1,398,497

1,222,546

Turnover percentage growth / (decline) year on year

29.9%

(12.5%

)

Gross profit percentage

14.7%

14.9%

Net profit before tax percentage

6.3%

7.2%

Saraco Industries Holdings Limited turnover increased by £5.1m from prior year, which was largely down to organic growth with existing customers, which was helped by increasing the capacity in manufacturing plant.

Even with increasing raw material prices, Saraco managed to maintain the gross profit percentage, but higher turnover has meant an increase in administration costs. Therefore profit before tax reduced slightly in the year. The existing strategy to have a large portfolio of suppliers, ensures that competition in prices is controlled, and regular supply of raw materials is maintained.

The additions to existing machinery have helped increase the capacity and allows further flexibility in our manufacturing plant. This drives the efficiencies that we have been targeting and also helps manage manufacturing scrap. Plant maintenance is key to the business to ensure reduced downtime and with additional machinery less changeovers are needed. This additional capacity can only further help growth of Saraco, who continues to increase it's share in the UK market.

We continue to diversify in to new market segments to open up opportunities in markets where we had very little presence previously. This strategic move bodes well for future growth.

The increase in trading accounts continues to be key in our development and our risk spreading strategy. New accounts are being secured constantly and importantly are being retained, therefore growth in active accounts continue to remain on a steady and upward trajectory.

Resource planning, upskilling, multiskilling, succession programs continue and are key to driving further production efficiencies and company agility.

Saraco is now targeting improving on material usage and maximising efficiencies from their enhanced machinery.

PRINCIPAL RISKS AND UNCERTAINTIES

The group makes little use of financial instruments other than an operational bank account, so its exposure to credit risk, liquidity risk and cash flow risk is not material for the assessment of the assets, liabilities, financial position and profit and loss of the company.

PRICE RISK

The group is exposed to commodity price risk as a result of its operations. The directors believe that the group has adequate controls established to ensure that prices charged to customers reflect any potential large price increases.

FOREIGN EXCHANGE RISK

The group operates internationally and is exposed to foreign exchange risk arising from various currency exposures, primarily with respect to Euros. Foreign risk arises from future commercial transaction and recognised assets and liabilities.

HEALTH SAFETY AND ENVIRONMENT

The key tenet of the business continues to be health, safety, quality and the environment. The health and safety of all employees remains paramount.

Our policy aims to provide and support a culture where health, safety, quality and the environment is at the top of everyone's agenda. This has been achieved by ensuring that all our staff, operatives and sub-contractors receive adequate training, have the correct personal protective equipment and feel empowered to raise any concerns that they may have.

ON BEHALF OF THE BOARD:

I M Bapu - Director

29 September 2023

The directors present their report with the financial statements of the company and the group for the year ended 31 December 2022.

PRINCIPAL ACTIVITY

The principal activity of the group in the year under review was that of manufacture and distribution of disposable hygiene products.

DIVIDENDS

The total distribution of dividends for the year ended 31st December 2022 will be £232,850.

DIRECTORS

The directors shown below have held office during the whole of the period from 1 January 2022 to the date of this report.

I M Bapu

H Patel

POLITICAL DONATIONS AND EXPENDITURE

During the year the company made a charitable donation of £142,871 (2021: £95,365).

STATEMENT OF DIRECTORS' RESPONSIBILITIES

The directors are responsible for preparing the Group Strategic Report, the Report of the Directors 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 the group and of the profit or loss of the group 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 and the group's transactions and disclose with reasonable accuracy at any time the financial position of the company and the group 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 the group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

STATEMENT AS TO DISCLOSURE OF INFORMATION TO AUDITORS

So far as the directors are aware, there is no relevant audit information (as defined by Section 418 of the Companies Act 2006) of which the group's auditors are unaware, and each director has taken all the steps that he ought to have taken as a director in order to make himself aware of any relevant audit information and to establish that the group's auditors are aware of that information.

AUDITORS

The auditors, SCCA Ltd T/a Stafford & Co, will be proposed for re-appointment at the forthcoming Annual General Meeting.

ON BEHALF OF THE BOARD:

I M Bapu - Director

29 September 2023

Opinion

We have audited the financial statements of Saraco Industries Holdings Limited (the 'parent company') and its subsidiaries (the 'group') for the year ended 31 December 2022 which comprise the Consolidated Income Statement, Consolidated Other Comprehensive Income, Consolidated Balance Sheet, Company Balance Sheet, Consolidated Statement of Changes in Equity, Company Statement of Changes in Equity, Consolidated Cash Flow Statement and Notes to the Consolidated Cash Flow Statement, Notes to the Financial Statements, 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' (United Kingdom Generally Accepted Accounting Practice).

In our opinion the financial statements:

-	give a true and fair view of the state of the group's and of the parent company affairs as at 31 December 2022 and of the group's 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 Auditors' responsibilities for the audit of the financial statements section of our report. We are independent of the group 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 group's and the parent 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 directors are responsible for the other information. The other information comprises the information in the Group Strategic Report and the Report of the Directors, but does not include the financial statements and our Report of the Auditors thereon.

Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements, 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 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 the audit:

-	the information given in the Group Strategic Report and the Report of the Directors for the financial year for which the financial statements are prepared is consistent with the financial statements; and

-	the Group Strategic Report and the Report of the Directors have been prepared in accordance with applicable legal requirements.

Matters on which we are required to report by exception

In the light of the knowledge and understanding of the group and the parent company and its environment obtained in the course of the audit, we have not identified material misstatements in the Group Strategic Report or the Report of the Directors.

We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion:

-	adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received from branches not visited by us; or

-	the parent company financial statements are not in agreement with the accounting records and returns; or

-	certain disclosures of directors' remuneration specified by law are not made; or

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

Responsibilities of directors

As explained more fully in the Statement of Directors' Responsibilities set out on page four, 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 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 group's and the parent 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 group or the parent company or to cease operations, or have no realistic alternative but to do so.

Auditors' 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 a Report of the Auditors 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.

The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:

Our audit procedures were primarily directed towards testing the accounting systems in operation upon which we have based our assessment of the financial statements for the year ended 31 December 2022.

We planned our audit so that we have so that we would have a reasonable expectation of detecting material misstatements in the financial statements resulting from irregularities, fraud or non-compliance with laws or regulations.

Extent to which the audit was considered capable of detecting irregularities, including fraud

In identifying and assessing risks of material misstatement in respect of irregularities, including fraud and non-compliance with laws and regulations, our procedures included the following:

- The engagement partner ensured that the engagement team collectively had the appropriate competence, capabilities and skills to identify or recognise non-compliance with applicable laws and regulations.

- Enquiring of management whether they are aware of any non-compliance with laws and regulations.

- Enquiring of management whether they are aware of any actual, suspected or alleged fraud.

- Enquiring of management whether they had internal controls established to mitigate risk related to fraud or non-compliance with laws and regulations.

- Discussions amongst the engagement team on how and where fraud might occur in the financial statements and any potential indicators of fraud. As part of this discussion, we identified potential for fraud in the following areas; posting of unusual journal and fraudulent revenue recognition.

- Obtaining an understanding of the regulatory framework the company operates in focusing on those laws and regulations that had a direct effect on the financial statements or that had a fundamental effect on the operations. The key laws and regulations that we considered in this context included; the financial framework the company operates under (FRS102) , the UK Companies Act, tax legislation, environmental legislation and licensing legislation.

Audit response to risks identified

Fraud due to management override

- To address the risk of fraud through management bias and override of controls, we:

- Audited the risk of management override of controls, including through testing journal entries for appropriateness.

- Assessed whether judgements and assumptions made in determining the accounting estimates included in the financial statements showed indications of potential bias; and

- Investigated the rationale behind any significant or unusual transactions included in the financial statements.

Fraudulent revenue recognition

- To address the risk of fraudulent revenue recognition we:

- Performed testing on a sample of turnover transactions that occurred during the financial year.

- Performed cut-off testing on turnover around the year end.

Irregularities and non-compliance with laws and regulations

In response to the risk of irregularities and non-compliance with laws and regulations, we designed procedures which included, but are not limited to:

- Agreeing financial statement disclosures to underlying supporting documentation.

- Enquiring of management as to actual and potential litigation claims they are aware of.

- Reviewing legal costs nominals for evidence of potential litigation or claims.

- Reviewing correspondence with regulators for evidence of non-compliance with laws and regulations.

The test nature and other inherent limitations of an audit, together with the inherent limitations of any accounting and internal control system, mean that there is an unavoidable risk that even some material misstatements in respect of irregularities may remain undiscovered even though the audit is properly planned and performed in accordance with ISAs (UK). Furthermore, the more removed that laws and regulations are from financial transactions, the less likely that we would become aware of non-compliance.

Our examination should therefore not be relied upon to disclose all such material misstatements or frauds, errors or instances of non-compliance that might exist. The responsibility for the detection and prevention of fraud, error and non-compliance with laws or regulations rests with the directors.

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 Report of the Auditors.

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 a Report of the Auditors 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.

Robert Stafford BA(Hons) FCA (Senior Statutory Auditor)

for and on behalf of SCCA Ltd T/a Stafford & Co

Chartered Accountants

and Statutory Auditor

3 The Studios

320 Chorley Old Road

Bolton

Lancashire

BL1 4JU

29 September 2023

SARACO INDUSTRIES HOLDINGS LIMITED (REGISTERED NUMBER: 12821248)

Consolidated

Income Statement

FOR THE YEAR ENDED 31 DECEMBER 2022

Period

18/8/20

Year Ended

to

31/12/22

31/12/21

as restated

(Unaudited)

Notes

£

TURNOVER

22,110,671

17,025,916

Cost of sales

18,853,868

14,486,578

GROSS PROFIT

3,256,803

2,539,338

Administrative expenses

1,930,333

1,383,800

1,326,470

1,155,538

Other operating income

3

95,578

75,571

OPERATING PROFIT

6

1,422,048

1,231,109

Interest payable and similar expenses

7

23,551

8,563

PROFIT BEFORE TAXATION

1,398,497

1,222,546

Tax on profit

8

379,565

213,971

PROFIT FOR THE FINANCIAL YEAR

1,018,932

1,008,575

Profit attributable to:

Owners of the parent

1,018,932

1,008,575

SARACO INDUSTRIES HOLDINGS LIMITED (REGISTERED NUMBER: 12821248)

Consolidated

Other Comprehensive Income

FOR THE YEAR ENDED 31 DECEMBER 2022

Period

18/8/20

Year Ended

to

31/12/22

31/12/21

as restated

(Unaudited)

Notes

£

PROFIT FOR THE YEAR

1,018,932

1,008,575

OTHER COMPREHENSIVE INCOME

-

TOTAL COMPREHENSIVE INCOME
FOR THE YEAR

1,018,932

1,008,575

Total comprehensive income attributable to:

Owners of the parent

1,018,932

1,008,575

SARACO INDUSTRIES HOLDINGS LIMITED (REGISTERED NUMBER: 12821248)

Consolidated Balance Sheet

31 DECEMBER 2022

2022

2021

as restated

(Unaudited)

Notes

£

FIXED ASSETS

Tangible assets

12

5,588,466

5,380,575

Investments

13

-

5,588,466

5,380,575

CURRENT ASSETS

Stocks

14

3,635,092

1,412,455

Debtors

15

6,340,942

5,180,344

Cash at bank

1,095,119

1,378,651

11,071,153

7,971,450

CREDITORS

Amounts falling due within one year

16

9,137,237

6,594,142

NET CURRENT ASSETS

1,933,916

1,377,308

TOTAL ASSETS LESS CURRENT
LIABILITIES

7,522,382

6,757,883

CREDITORS

Amounts falling due after more than one
year

17

(580,667

)

(717,317

)

PROVISIONS FOR LIABILITIES

21

(363,103

)

(248,036

)

NET ASSETS

6,578,612

5,792,530

CAPITAL AND RESERVES

Called up share capital

22

200

Retained earnings

23

6,578,412

5,792,330

SHAREHOLDERS' FUNDS

6,578,612

5,792,530

The financial statements were approved by the Board of Directors and authorised for issue on 29 September 2023 and were signed on its behalf by:

I M Bapu - Director

SARACO INDUSTRIES HOLDINGS LIMITED (REGISTERED NUMBER: 12821248)

Company Balance Sheet

31 DECEMBER 2022

2022

2021

as restated

(Unaudited)

Notes

£

FIXED ASSETS

Tangible assets

12

10,350

13,800

Investments

13

200

10,550

14,000

CURRENT ASSETS

Debtors

15

1,157

-

Cash at bank

5,528

50

6,685

50

CREDITORS

Amounts falling due within one year

16

-

11,766

NET CURRENT ASSETS/(LIABILITIES)

6,685

(11,716

)

TOTAL ASSETS LESS CURRENT
LIABILITIES

17,235

2,284

CAPITAL AND RESERVES

Called up share capital

22

200

Retained earnings

23

17,035

2,084

SHAREHOLDERS' FUNDS

17,235

2,284

Company's profit for the financial year

247,801

35,724

The financial statements were approved by the Board of Directors and authorised for issue on 29 September 2023 and were signed on its behalf by:

I M Bapu - Director

Called up

share

Retained

Total

capital

earnings

equity

£

Balance at 18 August 2020

-

4,990,201

Changes in equity

Issue of share capital

200

-

200

Dividends

-

(206,446

)

(206,446

)

Total comprehensive income

-

1,008,575

Balance at 31 December 2021

200

5,792,330

5,792,530

Changes in equity

Dividends

-

(232,850

)

(232,850

)

Total comprehensive income

-

1,018,932

Balance at 31 December 2022

200

6,578,412

6,578,612

Called up

share

Retained

Total

capital

earnings

equity

£

Changes in equity

Issue of share capital

200

-

200

Dividends

-

(33,640

)

(33,640

)

Total comprehensive income

-

35,724

Balance at 31 December 2021

200

2,084

2,284

Changes in equity

Dividends

-

(232,850

)

(232,850

)

Total comprehensive income

-

247,801

Balance at 31 December 2022

200

17,035

17,235

SARACO INDUSTRIES HOLDINGS LIMITED (REGISTERED NUMBER: 12821248)

Consolidated Cash Flow Statement

FOR THE YEAR ENDED 31 DECEMBER 2022

Period

18/8/20

Year Ended

to

31/12/22

31/12/21

as restated

(Unaudited)

Notes

£

Cash flows from operating activities

Cash generated from operations

1

660,094

2,369,095

Interest paid

(23,551

)

(8,563

)

Tax paid

(384,401

)

620,184

Net cash from operating activities

252,142

2,980,716

Cash flows from investing activities

Purchase of tangible fixed assets

(582,552

)

(476,242

)

Net cash from investing activities

(582,552

)

(476,242

)

Cash flows from financing activities

New loans in year

-

476,667

Loan repayments in year

(110,000

)

-

Amount withdrawn by directors

-

(1,494,522

)

Share issue

-

200

Equity dividends paid

(232,850

)

(206,446

)

Net cash from financing activities

(342,850

)

(1,224,101

)

(Decrease)/increase in cash and cash equivalents

(673,260

)

1,280,373

Cash and cash equivalents at beginning of
year

2

1,280,373

-

Cash and cash equivalents at end of year

2

607,113

1,280,373

1.	RECONCILIATION OF PROFIT BEFORE TAXATION TO CASH GENERATED FROM OPERATIONS

Period

18/8/20

Year Ended

to

31/12/22

31/12/21

as restated

(Unaudited)

£

Profit before taxation

1,398,497

1,222,546

Depreciation charges

374,661

304,166

Decrease in amounts due from associated

17,517

(17,517

)

Increase in amounts due to associated

99,111

84,985

Finance costs

23,551

8,563

1,913,337

1,602,743

Increase in stocks

(2,222,637

)

(1,412,455

)

Increase in trade and other debtors

(1,178,115

)

(3,668,305

)

Increase in trade and other creditors

2,147,509

5,847,112

Cash generated from operations

660,094

2,369,095

2.	CASH AND CASH EQUIVALENTS

The amounts disclosed on the Cash Flow Statement in respect of cash and cash equivalents are in respect of these Balance Sheet amounts:

Year ended 31 December 2022

31/12/22

1/1/22

£

Cash and cash equivalents

1,095,119

1,378,651

Bank overdrafts

(488,006

)

(98,278

)

607,113

1,280,373

Period ended 31 December 2021

31/12/21

18/8/20

as restated

(Unaudited)

£

Cash and cash equivalents

1,378,651

-

Bank overdrafts

(98,278

)

-

1,280,373

-

3.	ANALYSIS OF CHANGES IN NET FUNDS

At 1/1/22

Cash flow

At 31/12/22

£

Net cash

Cash at bank

1,378,651

(283,532

)

1,095,119

Bank overdrafts

(98,278

)

(389,728

)

(488,006

)

1,280,373

(673,260

)

607,113

Debt

Debts falling due within 1 year

(110,000

)

-

(110,000

)

Debts falling due after 1 year

(366,667

)

110,000

(256,667

)

(476,667

)

110,000

(366,667

)

Total

803,706

(563,260

)

240,446

1.	STATUTORY INFORMATION

Saraco Industries Holdings Limited is a private company, limited by shares , registered in England and Wales. The company's registered number and registered office address can be found on the General Information page.

2.	ACCOUNTING POLICIES

Basis of preparing the financial statements

These financial statements have been prepared in accordance with Financial Reporting Standard 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland" and the Companies Act 2006. The financial statements have been prepared under the historical cost convention.

Basis of consolidation

The Group financial statements consolidate the financial statements of the Company and its subsidiary undertakings up to the 31st December 2022. The results of the subsidiaries acquired are consolidated for the period from or to the date on which control passed. Acquisitions are accounted for under the acquisition method.

Critical accounting judgements and key sources of estimation uncertainty

In the application of the companies accounting policies, the directors' are required to make judgments, 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 key critical judgements and estimates applied are stock impairment.

The Directors do not consider any significant estimates or judgements are expected to affect the company's assets and liabilities over the next 12 months.

Turnover

Turnover is measured at the fair value of the consideration received or receivable, net of discounts and value added taxes. Turnover includes revenue earned from the sale of goods and from the rendering of services. Turnover from the sale of goods is recognised when the significant risks and rewards of ownership of the goods have been transferred to the buyer.

Tangible fixed assets

Tangible fixed assets are measured at cost less accumulative depreciation and any accumulative impairment

losses.

Depreciation is provided on all tangible fixed assets, other than freehold land, at rates calculated to write off the costs, less estimated residual value, of each assets evenly over its expected useful life, as follows:

Freehold buildings

- 2% straight line

Leasehold land and building

- Over the lease term

Plant and machinery

- 20% straight

Fixtures and fittings

- 20% straight line

Motor vehicles

- 25% straight line

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

Other income - government grants & rents received

Other income consists of rents received, which relates to rental of commercial property and government grants which are released to the profit and loss account over the term of the grant.

Stocks

Stocks held for distribution at no or nominal consideration are measured at the lower of cost and replacement cost, adjusted where applicable for any loss of service potential.

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.

Stocks are stated at the lower of cost and estimated selling price less costs to complete and sell. For finished goods, 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 conditions.

Taxation

A current tax liability is recognised for the tax payable on the taxable profit of the current and past periods. A

current tax asset is recognised in respect of a tax loss that can be carried back to recover tax paid in a previous period. Deferred tax is recognised in respect of all timing differences between the recognition of incomes and expenses in the financial statement and their inclusion in tax assessments. Unrelieved tax losses and other deferred tax assets are recognised only to the extent that is it probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Deferred tax is measured using the tax rates and laws that have been enacted or substantively enacted by the reporting date and that are expected to apply to the reversal of the timing difference, except for revalued land and investment properly where the tax rate that applies to the sale of the asset is used. Current and deferred tax assets and liabilities are not discounted.

Deferred tax

Deferred tax is recognised in respect of all timing differences that have originated but not reversed at the balance sheet date.

Timing differences arise from the inclusion of income and expenses in tax assessments in periods different from those in which they are recognised in financial statements. Deferred tax is measured using tax rates and laws that have been enacted or substantively enacted by the year end and that are expected to apply to the reversal of the timing difference.

Unrelieved tax losses and other deferred tax assets are recognised only to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits.

Research and development

Expenditure on research and development is written off in the year in which it is incurred.

Foreign currencies

Assets and liabilities in foreign currencies are translated into sterling at the rates of exchange ruling at the balance sheet date. Transactions in foreign currencies are translated into sterling at the rate of exchange ruling at the date of transaction. Exchange differences are taken into account in arriving at the operating result.

Hire purchase and leasing commitments

Rentals paid under operating leases are charged to profit or loss on a straight line basis over the period of the lease.

Pension costs and other post-retirement benefits

The group operates a defined contribution pension scheme. Contributions payable to the group's pension scheme are charged to profit or loss in the period to which they relate.

Foreign currency translation

Transactions in foreign currencies are initially recognised at the rate of exchange ruling at the date of the transactions. At the end of each reporting period foreign currency monetary items are translated at the closing rate of exchange. Non monetary items that are measured at historical costs are translated at the rate ruling at the date of transaction. All differences are charged to profit and loss.

Debtors

Short term debtors are measured at transaction price (which is usually the invoice price), less any impairment losses for bad and doubtful debts. Loans and other financial assets are initially recognised at transaction price including any transaction costs and subsequently measured at amortised cost determined using the effective interest method, less any impairment losses for bad and doubtful debts.

Creditors

Short term creditors are measured at transaction price(which is usually the invoice price). Loans and other financial liabilities are initially recognised at transaction price net of any transaction costs and subsequently measured at amortised costs determined using the effective interest method.

3.	OTHER OPERATING INCOME

Period

18/8/20

Year Ended

to

31/12/22

31/12/21

as restated

(Unaudited)

£

Rents received

64,128

44,121

Sundry receipts

31,450

95,578

75,571

4.	EMPLOYEES AND DIRECTORS

Period

18/8/20

Year Ended

to

31/12/22

31/12/21

as restated

(Unaudited)

£

Wages and salaries

1,984,046

1,454,388

Social security costs

154,346

85,469

Other pension costs

15,772

23,931

2,154,164

1,563,788

The average number of employees during the year was as follows:

Period

18/8/20

Year Ended

to

31/12/22

31/12/21

as restated

(Unaudited)

Office and administration

20

16

Production and warehouse

73

63

93

79

The average number of employees by undertakings that were proportionately consolidated during the year was NIL (2021 - NIL).

5.	DIRECTORS' EMOLUMENTS

Period

18/8/20

Year Ended

to

31/12/22

31/12/21

as restated

(Unaudited)

£

Directors' remuneration

111,383

93,550

The number of directors to whom retirement benefits were accruing was as follows:

Defined benefit schemes

3

6.	OPERATING PROFIT

The operating profit is stated after charging:

Period

18/8/20

Year Ended

to

31/12/22

31/12/21

as restated

(Unaudited)

£

Hire of plant and machinery

81,247

77,764

Depreciation - owned assets

374,661

304,166

Auditors' remuneration

11,000

5,500

7.

INTEREST PAYABLE AND SIMILAR EXPENSES

Period

18/8/20

Year Ended

to

31/12/22

31/12/21

as restated

(Unaudited)

£

Bank interest

6,971

828

Bank loan interest

16,580

7,735

23,551

8,563

8.

TAXATION

Analysis of the tax charge

The tax charge on the profit for the year was as follows:

Period

18/8/20

Year Ended

to

31/12/22

31/12/21

as restated

(Unaudited)

£

Current tax:

UK corporation tax

264,498

156,750

Under/(over) provision of tax

-

(1,356

)

Total current tax

264,498

155,394

Deferred tax

115,067

58,577

Tax on profit

379,565

213,971

Reconciliation of total tax charge included in profit and loss

The tax assessed for the year is higher than the standard rate of corporation tax in the UK. The difference is explained below:

Period

18/8/20

Year Ended

to

31/12/22

31/12/21

as restated

(Unaudited)

£

Profit before tax

1,398,497

1,222,546

Profit multiplied by the standard rate of corporation tax in the UK of 19 %
(2021 - 19 %)

265,714

232,284

Effects of:

Expenses not deductible for tax purposes

315

10,929

Capital allowances in excess of depreciation

(183

)

(25,537

)

Deferred tax movement

115,067

(3,705

)

Structures & building allowances

(1,348

)

-

Total tax charge

379,565

213,971

9.	INDIVIDUAL INCOME STATEMENT

As permitted by Section 408 of the Companies Act 2006, the Income Statement of the parent company is not presented as part of these financial statements.

10.

DIVIDENDS

Period

18/8/20

Year Ended

to

31/12/22

31/12/21

as restated

(Unaudited)

£

Ordinary shares of 0.01 each

Interim

232,850

206,446

11.	PRIOR YEAR ADJUSTMENT

Land and buildings to the value of £3,888,166 were incorrectly included as owned by the ultimate holding company Saraco Industries Holdings Ltd, by transfer as a dividend in specie, however the legal transfer of the assets was not completed. As such the properties have been reinstated as owned by Saraco Industries Limited. This adjustments only impacts on the individual company balance sheet and profit and loss account, but not the consolidated financial statements.

£

Retained earnings before prior year adjustment

3,627,937

Reverse and and buildings - depreciation charge

49,014

Intercompany dividend - reversed

(3,674,867

)

Retained earnings as restated at 31/12/2021

2,084

12.	TANGIBLE FIXED ASSETS

Group

Improvements

Fixtures

to

Plant and

and

Motor

property

machinery

fittings

vehicles

Totals

£

COST

At 1 January 2022

3,888,116

2,611,313

17,250

138,152

6,654,831

Additions

352,234

215,028

-

15,290

582,552

At 31 December 2022

4,240,350

2,826,341

17,250

153,442

7,237,383

DEPRECIATION

At 1 January 2022

262,263

965,381

3,450

43,162

1,274,256

Charge for year

49,014

287,079

3,450

35,118

374,661

At 31 December 2022

311,277

1,252,460

6,900

78,280

1,648,917

NET BOOK VALUE

At 31 December 2022

3,929,073

1,573,881

10,350

75,162

5,588,466

At 31 December 2021

3,625,853

1,645,932

13,800

94,990

5,380,575

Company

Fixtures

and

fittings

£

COST

At 1 January 2022

and 31 December 2022

17,250

DEPRECIATION

At 1 January 2022

3,450

Charge for year

3,450

At 31 December 2022

6,900

NET BOOK VALUE

At 31 December 2022

10,350

At 31 December 2021

13,800

13.	FIXED ASSET INVESTMENTS

Company

Shares in

group

undertakings

£

COST

At 1 January 2022

and 31 December 2022

200

NET BOOK VALUE

At 31 December 2022

200

At 31 December 2021

200

The group or the company's investments at the Balance Sheet date in the share capital of companies include the following:

Subsidiary

Saraco Industries Limited

Registered office: Parkside House, 167 Chorley New Road, Bolton, BL1 4RA

Nature of business: Manufacturing

%

Class of shares:

holding

Ordinary

100.00

14.

STOCKS

Group

2022

2021

as restate

(Unaudited

£

Stocks

3,635,092

1,412,455

15.

DEBTORS

Group

Company

2022

2021

2022

2021

as restated

(Unaudited)

£

Amounts falling due within one year:

Trade debtors

4,187,702

2,978,553

-

Amounts owed by associates

-

17,517

-

Other debtors

94,357

118,657

-

Directors' current accounts

1,494,522

-

VAT

-

1,157

-

Prepayments

78,642

85,376

-

5,855,223

4,694,625

1,157

-

Amounts falling due after more than one

year:

Other debtors

485,719

-

Aggregate amounts

6,340,942

5,180,344

1,157

-

16.

CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR

Group

Company

2022

2021

2022

2021

as restated

(Unaudited)

£

Bank loans and overdrafts (see note 18)

598,006

208,278

-

Trade creditors

6,248,980

4,484,556

-

11,766

Amounts owed to associates

184,096

84,985

-

Tax

684,514

804,417

-

Social security and other taxes

56,212

40,911

-

VAT

799,015

423,958

-

Other creditors

299,564

220,227

-

Accruals and deferred income

266,850

326,810

-

9,137,237

6,594,142

-

11,766

17.

CREDITORS: AMOUNTS FALLING DUE AFTER MORE THAN ONE
YEAR

Group

2022

2021

as restate

(Unaudited

£

Bank loans (see note 18)

256,667

366,667

Other creditors

324,000

350,650

580,667

717,317

18.

LOANS

An analysis of the maturity of loans is given below:

Group

2022

2021

as restate

(Unaudited

£

Amounts falling due within one year or on

demand:

Bank overdrafts

488,006

98,278

Bank loans

110,000

598,006

208,278

Amounts falling due between one and two

years:

Bank loans - 1-2 years

110,000

Amounts falling due between two and five

years:

Bank loans - 2-5 years

146,667

256,667

19.	LEASING AGREEMENTS

Minimum lease payments fall due as follows:

Group

Non-cancellable operating

leases

2022

2021

as restated

(Unaudited)

£

Within one year

22,563

Between one and five years

29,197

51,760

74,323

20.	SECURED DEBTS

The following secured debts are included within creditors:

Group

2022

2021

as restate

(Unaudited

£

Bank overdrafts

488,006

98,278

Bank loans

366,667

476,667

854,673

574,945

Loans and overdrafts are secured by a debenture and legal charges in favour of National Westminster Bank PLC registered at Companies House dated 27 March 2012, 7 June 2012 and 7 February 2019. The charge is in respect of all property and fixed assets.

21.	PROVISIONS FOR LIABILITIES

Group

2022

2021

as restate

(Unaudited

£

Deferred tax

363,103

248,036

Group

Deferred

tax

£

Balance at 1 January 2022

248,036

Charge to Income Statement during year

115,067

Balance at 31 December 2022

363,103

22.	CALLED UP SHARE CAPITAL

Allotted and issued:

Number:

Class:

Nominal

2022

2021

value:

£

20,000

Share capital 1

0.01

200

23.

RESERVES

Group

Retained

earnings

£

At 1 January 2022

5,792,330

Profit for the year

1,018,932

Dividends

(232,850

)

At 31 December 2022

6,578,412

Company

Retained

earnings

£

At 1 January 2022

2,084

Profit for the year

247,801

Dividends

(232,850

)

At 31 December 2022

17,035

24.	DIRECTORS' ADVANCES, CREDITS AND GUARANTEES

The following advances and credits to a director subsisted during the year ended 31 December 2022 and the period ended 31 December 2021:

2022

2021

as restated

(Unaudited)

£

I M Bapu

Balance outstanding at start of year

1,494,522

-

Amounts advanced

-

1,614,045

Amounts repaid

-

(119,523

)

Amounts written off

-

Amounts waived

-

Balance outstanding at end of year

1,494,522

The loan is an interest free loan and is repayable on demand.

25.	RELATED PARTY DISCLOSURES

During the year, total dividends of £232,850 were paid to the directors .

During the year Saraco Industries Ltd made a loan to Sublyme Cosmetics Ltd, a related company. The amount due from Sublyme Cosmetics Ltd at 31 December 2022 is £Nil (2021: £17,517). The loan is interest free with no security.

During the year Saraco Industries Ltd had a loan from Sublyme Cosmetics Ltd, a related company. The amount due to Sublyme Cosmetics Ltd at 31 December 2022 is £94,112 (2021: £Nil). The loan is interest free with no security.

During the year Saraco Industries Ltd made sales to Dexter & Waddle Ltd to the value of £71,677 (£106,630 - 2021). These transactions were on a normal arms length basis.

During the year Saraco Industries Ltd repaid a loan to Dexter & Waddle Ltd, a related company. The amount due to Dexter & Waddle Ltd at 31 December 2022 is £89,985 (2021: £84,985). The loan is interest free with no security.

26.	ULTIMATE CONTROLLING PARTY

The ultimate controlling party is, Idris Bapu and Ashfield Enterprises Ltd by virtue of there majority shareholding.