FPS_FLEXIBLES_UK_LIMITED - Accounts

The director presents the strategic report for the year ended 31 December 2023.

Revenue for FY 2023 was £24,059,597 compared with FY 2022 £32,490,327. It should be noted when comparing year on year, that FY 2022 was extended to a 14 month fiscal year period to accommodate changing to calendar 12 month fiscal year for 2023, following the transition to FPS being a stand-alone business within the Al Dabbagh Group structure. The business again remained stable from a customer and profitability perspective during FY 23 despite market economical downturn in specific sectors at specific periods during the year.

Raw Material costs and inbound shipping costs were much less volatile when compared with FY 2022, however, it is fair to say that that market competitiveness became more prevalent in FY 2023 similar to pre-Covid 19 times. Commercially, our main focus was to defend our positions with existing customers whilst maintaining margins and profitability. Market downturn affected our ability to achieve top line sales according to budget, however, a combination of contingency in terms of spending combined with sales margin focus ensured we achieved a close to budget OP. The fertiliser market declined in Q2 resulting in lower sales than anticipated, however, we remained steadfast in terms of maintaining our share of wallet at key customers during times of reduced demands. The fertiliser market improved significantly during Q3-Q4 in which we were well positioned to ensure the second half of the year returned sales volumes and revenues in line with budget expectations. Our sales of 4-loop products reduced during the second half of 2023 as a result of lower demands from some of our key customers.

Customer loyalty was solid during FY 2023 and we achieved very positive feedback from our annual Net Promoter Score Survey maintaining our position as an industry leader service provider. Our unique ability to flex our own manufacturing output together with the utilisation of third-party suppliers for both components and finished products continued to be very important in the fertiliser sector. This ability allowed us to meet short-term challenges in terms of flexing our production to satisfy customer demand. Opportunities to have more face-to-face meetings with customers increased during FY 2023 which enabled us to ensure key customer relationships were maintained in a pro-active manner.

In accordance with the business sustainability objectives, we successfully transitioned all of our fertiliser customers to products containing min 30% PCR (or min 30% PIR for UN bags) and thus ensuring that we were exempt of UK PPT charges and at the same time ensuring we met customer sustainability objectives and targets. We will extend this activity into the 4-Loop industrial sectors in FY 2024. During FY 2023, FPS achieved Ecovadis Gold Medal award and launched our first FPS sustainability report.

Delivering on sustainability has escalated to one of the Top Three commercial expectations at our larger and key customers. FPS continues to execute on our strategy to be at the forefront of sustainable industrial packaging; during 2023, we started recycling of used big bags to PCR for use in new bags at our recycling hub in Romania which provides a circular economy solution for our customers. We also became a brand ambassador for the UK based Green Tractor Scheme, striving to eliminate plastic waste in the farming sector – FPS is active in this respect together with our Key customers who have also joined the scheme.

The business has continued to meet its obligations in the context of the UK PPT regulations for those products not containing and not able to contain recycled materials

Despite economic challenges, we oversaw a stable period in terms of operating profit achieving £864,596 in FY 2023. (2022: £684,391)

Liquidity risk

Liquidity risk is the risk that the company will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The company's approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the company's reputation. The company, as part of the wider Flexibles Group, has access to the support of its parent company, FPS Investments B.V., in relation to its financing arrangements.

Credit risk

Credit risk is the risk of financial loss to the company if a customer fails to meet its contractual obligations and arises principally from the company's receivables from customers.

The company’s trade receivables and receivables from group undertakings are stated after allowances for bad and doubtful debts based on management’s assessment of creditworthiness.

The company's exposure to credit risk is influenced mainly by the individual characteristics of each customer, including the default risk.

The company has established a credit policy under which each new customer is analysed individually for creditworthiness before payment and delivery terms and conditions are offered. Purchase limits are established for each customer, which represent the maximum open amount without requiring approval. There is no deemed concentration of credit risk.

Goods are sold subject to retention of title clauses, so that in the event of non-payment the company may have a secured claim.

Market risk

Market risk is the risk that changes in market prices, such as foreign exchange rates and interest rates will affect the company's income. The objective of market risk management is to manage and control market risk exposures within acceptable parameters. The company's exposure in this respect is not material to its operations. Pricing mechanisms are agreed with major customers to cover exchange rate fluctuation and changes in the raw material index. By adopting this procedure, sensitivity to exchange rate exposure and raw material index fluctuations are automatically reflected in the sale price of a bag.

The company has effectively managed the post Brexit challenges in terms of importing and exporting and is competent in terms of associated documentary controls,

Our continued objective is to continue to keep all of our employees safe and to provide a safe working environment for all our employees. Our UK Plant continues to produce products entirely for the fertiliser industry which is fully related to the UK food chain. Market expectations for FY2024 in this sector are improved with less seasonality due to market demand increasing and fewer challenges in terms of energy costs related to production at our customers. We have again taken into account increased inflationary operating costs at our plant and our suppliers' and customers' businesses alike and continue to ensure that increased costs are effectively accounted for in the sales prices of our products. Products produced at our UK plant represents around 55% of our business, with the remaining 45% of our business comprising mainly 4-Loop bags purchased from inter-company factories and approved third-party suppliers.

In terms of managing the UK packaging tax (PPT) which was introduced in April 2022, all of our UK factory produced products to the fertiliser sector now contain a minimum 30% PCR or PIR and thus no PPT is due. Where possible, for all other sectors, we will introduce products during 2024 with minimum PCR or PIR content, which will be favourable from both a sustainable and commercial aspect. In addition, we continue to manage pricing with customers on monthly or quarterly basis via formal price adjustment mechanisms which account for variable costs such as indexes, transport etc. We also continue to operate spot pricing for customers that are not contracted and again take the variable cost factors into account when calculating sales prices

Working capital key performance indicators are analysed and reviewed on a monthly basis. The individual components of the working capital cycle are reviewed i.e. Days Sales Outstanding (DSO) and Days Inventory Outstanding (DIO). Generally, when comparing the working capital key performance indicators 2023 to 2022, there has been little change.

Revenue is measured on a monthly basis against budget and the previous year’s performance. Revenue is reviewed on a combined basis for the three individual business sectors, 1-Loop, 4-Loop & Aggregates with all negative variances being investigated. The same process is adopted for both Gross Profit and Operating Profit.

The company manages its capital to ensure that it will be able to continue as a going concern. Finance is managed by the local finance team reporting to the Group Finance Management structure and funding managed by Group Treasury.

The company continues to review ongoing market dynamics as well as working practices and product innovation activities to ensure it remains flexible and agile to meet changing customer needs on time and in full. The business reviews efficiency levels continually whilst ensuring quality is maintained in all its processes.

The aim for the coming 12 months is to retain our current market share at both customers and industrial sectors alike. We are targeting growth in all sectors as market conditions improve, We are planning to enhance and expand our talent within the commercial team alongside efficiency improvements and new product innovations to promote future growth. The company will also continue to introduce the use of recycled materials within its products as a sustainable value add and the promotion of circular economy objectives during the course of 2024.

The Director has assessed the going concern status of the Company by reference to a number of factors. In particular, the Director has considered the stability of market demand, the fact that the business is not overly dependent on any single customer or supplier and the fact that the business continues to retain its key staff. The Director considers of particular importance the fact that revenues are effectively distributed over a number of market sectors and customers including, agriculture, chemical, food, construction and pharmaceutical. Although there are significant increased costs which are impacting all businesses, the Board are positive about the ongoing ability to be competitive, providing added value and maintaining a solid level of profitability going forward. Therefore revenues and profitability of the Company continue to be positive and we are confident to manage the cash position of the Company effectively.

The Director therefore has full confidence in relation to the business as a going concern.

On behalf of the board

The director presents his annual report and financial statements for the year ended 31 December 2023.

The principal activity is the manufacture, importing and trading of polypropylene bags.

The results for the year are set out on the Income Statement and Statement of Financial Position.

No ordinary dividends were paid. The director does not recommend payment of a final dividend.

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

The company has made qualifying third party indemnity provisions for the benefit of its director during the year. These provisions remain in force at the reporting date.

The company's current policy concerning the payment of trade creditors is to follow the CBI's Prompt Payers Code (copies are available from the CBI, Centre Point, 103 New Oxford Street, London WC1A 1DU).

The company's current policy concerning the payment of trade creditors is to:

• settle the terms of payment with suppliers when agreeing the terms of each transaction;

• ensure that suppliers are made aware of the terms of payment by inclusion of the relevant terms in contracts; and

• pay in accordance with the company's contractual and other legal obligations.

Trade creditors of the company at the year end were equivalent to 51 day's purchases, based on the average daily amount invoiced by suppliers during the year.

The company continues to review ongoing market dynamics as well as working practices and product innovation activities to ensure it remains flexible and agile to meet changing customer needs on time and in full. The business reviews efficiency levels continually whilst ensuring quality is maintained in all its processes.

The aim for the coming 12 months is to retain our current market share at both customers and industrial sectors alike. We are targeting growth in all sectors as market conditions improve, We are planning to enhance and expand our talent within the commercial team alongside efficiency improvements and new product innovations to promote future growth. The company will also continue to introduce the use of recycled materials within its products as a sustainable value add and the promotion of circular economy objectives during the course of 2024.

The auditor, Azets Audit Services Limited, is deemed to be reappointed under section 487(2) of the Companies Act 2006.

Each director in office at the date of approval of this annual report confirms that:

•     so far as the director is aware, there is no relevant audit information of which the company's auditor is unaware, and

•     the director has taken all the steps that he / she ought to have taken as a director in order to make himself / herself aware of any relevant audit information and to establish that the company's auditor is aware of that information.

This confirmation is given and should be interpreted in accordance with the provisions of section 418 of the Companies Act 2006.

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

Company law requires the director to prepare financial statements for each financial year. Under that law the director has elected to prepare the financial statements in accordance with International Financial Reporting Standards (IFRSs) as adopted by the United Kingdom. Under company law the director must not approve the financial statements unless he is 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, International Accounting Standard 1 requires that directors:

•     properly select and apply accounting policies;

•     present information, including accounting policies, in a manner that provides relevant, reliable, comparable and understandable information;

•     provide additional disclosures when compliance with the specific requirements in IFRSs are insufficient to enable users to understand the impact of particular transactions, other events and conditions on the entity's financial position and financial performance; and

•     make an assessment of the company's ability to continue as a going concern.

The director is 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. He is 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 FPS Flexibles UK Limited (the 'company') for the year ended 31 December 2023 which comprise the statement of comprehensive income, the statement of financial position, the statement of changes in equity, the statement of cash flows 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 UK adopted international accounting standards.

In our opinion the financial statements:

•     give a true and fair view of the state of the company's affairs as at 31 December 2023 and of its profit for the year then ended;

•     have been properly prepared in accordance with UK adopted international accounting standards; 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 director's 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 director 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 director is 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 director's report for the financial year for which the financial statements are prepared is consistent with the financial statements; and

• the strategic report and the director's 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 director's 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 director's 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 director's responsibilities statement, the director is 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 director determines 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 director is 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 director either intends to liquidate the company or to cease operations, or has 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.

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.

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

Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above and on the Financial Reporting Council’s website, to detect material misstatements in respect of irregularities, including fraud.

We obtain and update our understanding of the entity, its activities, its control environment, and likely future developments, including in relation to the legal and regulatory framework applicable and how the entity is complying with that framework.  Based on this understanding, we identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion.  This includes consideration of the risk of acts by the entity that were contrary to applicable laws and regulations, including fraud.

In response to the risk of irregularities and non-compliance with laws and regulations, including fraud, we designed procedures which included:

• Enquiry of management and those charged with governance around actual and potential litigation and claims as well as actual, suspected and alleged fraud; 

• Reviewing minutes of meetings of those charged with governance;

• Assessing the extent of compliance with the laws and regulations considered to have a direct material effect on the financial statements or the operations of the company through enquiry and inspection; 

• Reviewing financial statement disclosures and testing to supporting documentation to assess compliance with applicable laws and regulations;

• Performing audit work over the risk of management bias and override of controls, including testing of journal entries and other adjustments for appropriateness, evaluating the business rationale of significant transactions outside the normal course of business and reviewing accounting estimates for indicators of potential bias. 

• Performing audit work over the timing and recognition of revenue and in particular whether it has been recorded in the correct accounting period.

Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading to a material misstatement in the financial statements or non-compliance with regulation.  This risk increases the more that compliance with a law or regulation is removed from the events and transactions reflected in the financial statements, as we will be less likely to become aware of instances of non-compliance.  The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

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 statement of comprehensive income has been prepared on the basis that all operations are continuing operations.

FPS Flexibles UK Limited is a private company limited by shares incorporated in England and Wales. The registered office is Dalton Airfield, Dalton, Thirsk, North Yorkshire, YO7 3HE. The company's principal activities and nature of its operations are disclosed in the director's report.

The reporting period is 12 months to 31 December 2023. The comparative figures relate to a 14 month period to 31 December 2022. Therefore the comparatives figure are not wholly comparable to the new year.

The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted for use in the United Kingdom and with those parts of the Companies Act 2006 applicable to companies reporting under IFRS, except as otherwise stated.

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 £1.

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

The director has considered all factors, including in the wider economy, as part of their assessment of going concern. Although the current economic and political climate creates both cashflow and profitability risks for the company, the company continues to trade profitably and is cash generative. Budgets and cashflows have been prepared using assumptions for customer demand and supply chain costs. These budgets and cashflows indicate continuing profitability and cash generation, consequently the director believes on balance that the company has sufficient resources to enable trading to continue for a period of at least one year from the date of approval of the financial statements. Accordingly, these financial statements have been prepared on the going concern basis.true

Revenue is measured based on the consideration specified in a contract with a customer and excludes amounts collected on behalf of third parties. The company recognises revenue when it transfers control of a product or service to a customer.

The company recognises revenue from the following major sources:

• Sale of polypropylene bags

The nature, timing of satisfaction of performance obligations and significant payment terms of the company's major sources of revenue are as follows:

The company's standard payment terms are between 30 and 60 days following the date of the invoice. Contracts with customers are based on a fixed price at the point of sale. Revenue is recognised when the risk and rewards of ownership is transferred to the customer. There are no long-term or financing arrangements across the group.

Property, plant and equipment 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:

Assets in the course of construction are not depreciated.

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 income statement.

At each reporting end date, the company reviews the carrying amounts of its tangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the company estimates the recoverable amount of the cash-generating unit to which the asset belongs.

Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.

If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.

Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.

Inventories 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 inventories to their present location and condition.

Net realisable value is the estimated selling price less all estimated costs of completion and costs to be incurred in marketing, selling and distribution.

Cash and cash equivalents 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.

Financial assets are recognised in the company's statement of financial position when the company becomes party to the contractual provisions of the instrument. Financial assets are classified into specified categories, depending on the nature and purpose of the financial assets.

At initial recognition, financial assets classified as fair value through profit and loss are measured at fair value and any transaction costs are recognised in profit or loss. Financial assets not classified as fair value through profit and loss are initially measured at fair value plus transaction costs.

Financial instruments are classified as financial assets measured at amortised cost where the objective is to hold these assets in order to collect contractual cash flows, and the contractual cash flows are solely payments of principal and interest. They arise principally from the provision of goods and services to customers (eg trade receivables). They are initially recognised at fair value plus transaction costs directly attributable to their acquisition or issue, and are subsequently carried at amortised cost using the effective interest rate method, less provision for impairment where necessary.

Financial assets carried at amortised cost and FVOCI are assessed for indicators of impairment at each reporting end date.

The expected credit losses associated with these assets are estimated on a forward-looking basis. A broad range of information is considered when assessing credit risk and measuring expected credit losses, including past events, current conditions, and reasonable and supportable forecasts that affect the expected collectability of the future cash flows of the instrument.

Trade receivables

Trade receivables that do not contain a significant financing component and are recognised initially at fair value and thereafter at amortised cost less provision for impairment. Impairment provisions for current and non-current trade receivables are recognised based on a simplified approach within IFRS 9 using a provision matrix in the determination of the lifetime expected credit losses.  During this process the probability of the non-payment of the trade receivable is assessed.  This probability is then multiplied by the amount of the gross trade receivables to determine the expected credit loss for the trade receivables.  For trade receivables, which are reported net, such provisions are recorded in a separate provision account with the loss being recognised within administration cost in the statement of comprehensive income.  On confirmation that the trade receivable will not be collected, the gross carrying value is written off against the associated provision.

Receivables from group undertakings

Amounts receivable from group undertakings are initially measured at fair value and subsequently measured at amortised cost.  Impairment provisions are recognised based on the general approach within IFRS 9, which requires an assessment of whether there has been a significant increase in credit risk since initial recognition of the facility.  Assessment of the requirement of a provision made based on 12-month expected credit losses, or lifetime credit losses, as appropriate.

Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership to another entity.

The company recognises financial debt when the company becomes a party to the contractual provisions of the instruments. Financial liabilities are classified as either 'financial liabilities at fair value through profit or loss' or 'other financial liabilities'.

Other financial liabilities, including borrowings, trade payables and other short-term monetary liabilities, are initially measured at fair value net of transaction costs directly attributable to the issuance of the financial liability. They are subsequently measured at amortised cost using the effective interest method. For the purposes of each financial liability, interest expense includes initial transaction costs and any premium payable on redemption, as well as any interest or coupon payable while the liability is outstanding.

Financial liabilities are derecognised when, and only when, the company’s obligations are discharged, cancelled, or they expire.

Equity instruments issued by the company are recorded at the proceeds received, net of direct issue 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 income statement 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 is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary 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 income statement, 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 inventories or non-current 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.

At inception, the company assesses whether a contract is, or contains, a lease within the scope of IFRS 16. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. Where a tangible asset is acquired through a lease, the company recognises a right-of-use asset and a lease liability at the lease commencement date. Right-of-use assets are included within property, plant and equipment, apart from those that meet the definition of investment property.

The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date plus any initial direct costs and an estimate of the cost of obligations to dismantle, remove, refurbish or restore the underlying asset and the site on which it is located, less any lease incentives received.

The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term. The estimated useful lives of right-of-use assets are determined on the same basis as those of other property, plant and equipment. The right-of-use asset is periodically reduced by impairment losses, if any, and adjusted for certain remeasurements of the lease liability.

The lease liability is initially measured at the present value of the lease payments that are unpaid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the company's incremental borrowing rate. Lease payments included in the measurement of the lease liability comprise fixed payments, variable lease payments that depend on an index or a rate, amounts expected to be payable under a residual value guarantee, and the cost of any options that the company is reasonably certain to exercise, such as the exercise price under a purchase option, lease payments in an optional renewal period, or penalties for early termination of a lease.

The lease liability is measured at amortised cost using the effective interest method. It is remeasured when there is a change in: future lease payments arising from a change in an index or rate; the company's estimate of the amount expected to be payable under a residual value guarantee; or the company's assessment of whether it will exercise a purchase, extension or termination option. When the lease liability is remeasured in this way, a corresponding adjustment is made to the carrying amount of the right-of-use asset, or is recorded in profit or loss if the carrying amount of the right-of-use asset has been reduced to zero.

The company has elected not to recognise right-of-use assets and lease liabilities for short-term leases of machinery that have a lease term of 12 months or less, or for leases of low-value assets including IT equipment. The payments associated with these leases are recognised in profit or loss on a straight-line basis over the lease term.

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.

New accounting standards applicable for the first time this period have not had any impact on the financial statements.

At the date of authorisation of these financial statements, the following Standards and Interpretations, which have not yet been applied in these financial statements, were in issue but not yet effective (and in some cases had not yet been adopted by the UK). None are expected to have an impact on the financial statements of the Company.

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

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

The estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are outlined below.

Where the interest rate implicit in the lease cannot be readily determined, lease liabilities are discounted at the lessee’s incremental borrowing rate. This is the rate of interest that the lessee would have to pay to borrow over a similar term, and with a similar security, the funds necessary to obtain an asset of a similar value to the right-of-use asset in a similar economic environment. This involves assumptions and estimates, which would affect the carrying value of the lease liabilities and the corresponding right-of-use assets.

To determine the incremental borrowing rate the company uses recent third-party financing as a starting point, and adjusts this for conditions specific to the lease such as its term and security.

Inventories are valued at the lower cost and net realisable value. Net realisable value includes, where necessary, provisions for slow moving and obsolete inventories. Calculation of these provisions requires judgements to be made, which include forecast consumer demand, the promotional, competitive and economic environment and inventory loss trends.

The expected loss rates are based on the company’s historical credit losses experienced over the three year period prior to the period end. The historical loss rates are then adjusted for current and forward-looking information on macroeconomic factors affecting the company’s customers. The company has identified the gross domestic product (GDP), unemployment rate and inflation rate as the key macroeconomic factors in the countries where the company operates.

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

Their aggregate remuneration comprised:

The number of directors for whom retirement benefits are accruing under defined contribution schemes amounted to 1 (2022 - 1).

As total directors' remuneration was less than £200,000 in the current year, no disclosure is provided for that year.

The charge for the year can be reconciled to the profit per the income statement as follows:

The main corporation tax rate increased to 25% from 1 April 2023, from the previously enacted 19%. All deferred taxes at the reporting date are therefore measured at 25% (2022 - 25%)

The directors consider that the carrying amounts of financial assets carried at amortised cost in the financial statements approximate to their fair values.

This investment represents 1% of the ordinary shares in LLC Storsack Ukraine, a private company incorporated in Ukraine, which manufactures and supplies flexible packaging for domestic use and exports.

An impairment loss of £187,738 (2022 - £215,279) was recognised in cost of sales against stock during the year due to slow-moving and obsolete stock.

Receivables from group undertakings are unsecured, interest-free and repayable on demand.

The company does not hold any collateral as security.

The director considers that the carrying amount of trade and other receivables is approximately equal to their fair value.

The Company applies the IFRS 9 simplified approach to measuring expected credit losses using a lifetime expected credit loss provision for trade receivables. To measure expected credit losses on a collective basis, trade receivables are grouped based on similar credit risk and aging.

The expected loss rates are based on the Company’s historical credit losses experienced over the three year period prior to the period end. The historical loss rates are then adjusted for current and forward-looking information on macroeconomic factors affecting the Company’s customers. The Company has identified the gross domestic product (GDP), unemployment rate and inflation rate as the key macroeconomic factors in the countries where the Company operates.

The company's principal financial liabilities comprise trade payables and group undertakings. The main purpose of these financial liabilities is to provide finance for the company's operations. The company has various financial assets such as inventories and cash, which arise directly from its operations.

Credit risk

The company’s trade receivables and receivables from group undertakings are stated after allowances for bad and doubtful debts based on management’s assessment of creditworthiness.

The company's exposure to credit risk is influenced mainly by the individual characteristics of each customer, including the default risk.

The company has established a credit policy under which each new customer is analysed individually for creditworthiness before payment and delivery terms and conditions are offered. Purchase limits are established for each customer, which represent the maximum open amount without requiring approval. There is no deemed concentration of credit risk.

Goods are sold subject to retention of title clauses, so that in the event of non-payment the company may have a secured claim.

The maximum exposure to credit risk arising on the Company’s financial assets at the reporting date is equal to the carrying value of assets for both 31 December 2023 and 31 December 2022.

Liquidity risk

The company's approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the company's reputation. The company, as part of the wider Flexibles Group, has access to the support of its parent company, FPS Investments B.V., in relation to its financing arrangements.

Market risk

The objective of market risk management is to manage and control market risk exposures within acceptable parameters. The company's exposure in this respect is not material to its operations. Pricing mechanisms are agreed with major customers to cover exchange rate fluctuation and changes in the raw material index. By adopting this procedure, sensitivity to exchange rate exposure and raw material index fluctuations are automatically reflected in the sale price of a bag.

The carrying amounts of financial liabilities which expose the company to cash flow interest rate risk are as follows:

Interest rate risk arises predominantly on lease liabilities, which are recognised on a present value basis only with no cash interest payable, and as such the company is not exposed to a material interest rate risk.

Trade payables are outstanding supplier accounts within the normal credit terms which vary from 30 to 60 days.

Payables to group undertakings are unsecured, interest-free and repayable on demand.

Lease liabilities are classified based on the amounts that are expected to be settled within the next 12 months and after more than 12 months from the reporting date, as follows:

The following are the major deferred tax liabilities and assets recognised by the company and movements thereon during the current and prior reporting period.

In addition to the deferred tax liability above, the company has additional unrecognised gross tax losses of £323,693 (2022: £323,693) relating to a non-trade loan relationship deficit carried forward.

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.

As at the year end the company had unpaid pension contributions totalling £23,296 (2022 - £25,857).

All ordinary shares carry voting rights and full rights to profit and capital distribution.

Amounts recognised in profit or loss as an expense during the period in respect of lease arrangements are as follows:

The gearing ratio at end of the reporting period was as follows:

Period ended 31 December 2023

The company regards its capital as comprising its shareholders' funds and cash. The company seeks to manage its capital in such a manner that the company safeguards its ability to continue as a going concern and to fund its future development. In continuing as a going concern, it seeks to provide returns to shareholders as well as enabling repayment of its liabilities as a trading business. The company is meeting its objective as shown on the income statement, with revenues increasing and profits still being generated.

During the year the company entered into the following transactions with related parties:

The following amounts were outstanding at the reporting end date:

The following amounts were outstanding at the reporting end date:

At 31 December 2023 the immediate parent company of the company was FPS Investments B.V., a company registered in the Netherlands. FPS Investments B.V., forms part of a group, headed by the Al-Dabbagh Group.