Menzolit Ltd. - Limited company accounts 23.2

REGISTERED NUMBER: 02184127 (England and Wales)

MENZOLIT LTD.

STRATEGIC REPORT, REPORT OF THE DIRECTORS AND

FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2023

Page

Company Information

1

Strategic Report

2

Report of the Directors

3

Report of the Independent Auditors

5

Statement of Comprehensive Income

8

Statement of Financial Position

9

Statement of Changes in Equity

10

Notes to the Financial Statements

11

DIRECTORS:

J Montobbio

W H Folger

SECRETARY:

T Bulcock

REGISTERED OFFICE:

Farrington Road Industrial Estate

Farrington Road

Burnley

Lancashire

BB11 5DB

REGISTERED NUMBER:

02184127 (England and Wales)

AUDITORS:

DJH Mitten Clarke Audit Limited

Accountants

Statutory Auditors

The Exchange

5 Bank Street

Bury

BL9 0DN

The directors present their strategic report for the year ended 31 December 2023.

REVIEW OF BUSINESS

The results for the period and financial position of the company are shown in the annexed financial statements.

2023 has shown a consolidation of the good results of the previous year, with activity remaining at high level while raw materials have stabilised.

The final turnover for 2023 is above the previous year, and margins and profitability have moved in the same direction. Investment on an own solar farm has contributed to a significant decrease of the energy bill.

There were no Health and Safety incidents to be reported.

The company has no single loan to be paid.

PRINCIPAL RISKS AND UNCERTAINTIES

The directors have assessed the main risk facing the company is the high interest rate and inflation potentially impacting the level of activity of Menzolit customers.

Forecasts prepared by the directors show stability for the company, in terms of both turnover and profitability, but the short-term risk mentioned above cannot be neglected.

By the month of September the Company decided to stop the agency contract with Sertec Limited. The case is still open.

KEY PERFORMANCE INDICATORS

The company appraises business performance and stability according to key performance indicators.

2023

2022

Change

Revenue

£20,348,378

£19,842,498

+2.5%

Gross Profit Margin %

20.6%

18.8%

+1.8%

Profit Before Tax Margin %

6.4%

5.9%

+0.5%

FUTURE DEVELOPMENTS

Menzolit Ltd will continue to invest in upgrading the plant and training for the workforce to maintain its competitiveness. The company will reinforce its very close relationship with key customers, to provide a foundation to grow and expand the business organically.

In collaboration with sister companies in Spain and Italy, the company continues to develop new products and several new products are expected to be launched during the next financial year.

ON BEHALF OF THE BOARD:

J Montobbio - Director

29 April 2024

The directors present their report with the financial statements of the company for the year ended 31 December 2023.

PRINCIPAL ACTIVITY

The principal activity of the company in the year under review was that of the production, marketing and sale of thermoset moulding compounds (SMC/BMC).

DIVIDENDS

The total distribution of dividends for the year ended 31 December 2023 will be £250,000.

DIRECTORS

The directors shown below have held office during the whole of the period from 1 January 2023 to the date of this report.

J Montobbio

W H Folger

DISCLOSURE IN THE STRATEGIC REPORT

Identification of the information for which the company has chosen, in accordance with s414C(11) of the Companies Act, to set out in the company's strategic report which would otherwise be required by Schedule 7 of the 'Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008' to be contained in the directors' report.

STATEMENT OF DIRECTORS' RESPONSIBILITIES

The directors are responsible for preparing the 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 of the profit or loss of the company for that period. In preparing these financial statements, the directors are required to:

-	select suitable accounting policies and then apply them consistently;

-	make judgements and accounting estimates that are reasonable and prudent;

-	prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.

The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company's transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

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 company'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 company's auditors are aware of that information.

AUDITORS

DJH Mitten Clarke Audit Limited has indicated its willingness to be reappointed for another term and appropriate arrangements are being made for it to be deemed reappointed as auditor in the absence of an Annual General Meeting.

ON BEHALF OF THE BOARD:

J Montobbio - Director

29 April 2024

Opinion

We have audited the financial statements of Menzolit Ltd. (the 'company') for the year ended 31 December 2023 which comprise the Statement of Comprehensive Income, Statement of Financial Position, Statement of Changes in Equity and 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 company's affairs as at 31 December 2023 and of its profit for the year then ended;

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

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

Basis for opinion

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

Conclusions relating to going concern

In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.

Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.

Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.

Other information

The directors are responsible for the other information. The other information comprises the information in the 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 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 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 company and its environment obtained in the course of the audit, we have not identified material misstatements in the 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, or returns adequate for our audit have not been received from branches not visited by us; or

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

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

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

Responsibilities of directors

As explained more fully in the Statement of Directors' Responsibilities set out on page three, 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 company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.

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.

Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:

As part of our planning process:

- We enquired of management the systems and controls the company has in place, the areas of the financial statements that are mostly susceptible to the risk of irregularities and fraud, and whether there was any known, suspected or alleged fraud. The company did not inform us of any known, suspected or alleged fraud.

- We obtained an understanding of the legal and regulatory frameworks applicable to the company. We determined that the following were most relevant: FRS 102, Companies Act 2006, Health & Safety legislation and Control of Substances Hazardous to Health 2002.

- We considered the incentives and opportunities that exist in the company, including the extent of management bias, which present a potential for irregularities and fraud to be perpetuated, and tailored our risk assessment accordingly.

Using our knowledge of the company, together with the discussions held with the company at the planning stage, we formed a conclusion on the risk of misstatement due to irregularities including fraud and tailored our procedures according to this risk assessment.

The key procedures we undertook to detect irregularities including fraud during the course of the audit included:

- Identifying and testing journal entries, in particular those that were significant and unusual

- Reviewing the financial statement disclosures and determining whether accounting policies have been appropriately applied.

- Reviewing and challenging the assumptions and judgements used by management in their significant accounting estimates, in particular in relation to depreciation.

- Assessing the extent of compliance, or lack of, with the relevant laws and regulations.

- Testing key revenue lines for evidence of management bias.

- Performing a physical verification of key assets, including inventories.

- Obtaining third-party confirmation of material bank and loan balances.

- Documenting and verifying all significant related party balances and transactions.

- Reviewing documentation such as the company board minutes, correspondence with solicitors, for discussions of irregularities including fraud.

Owing to the inherent limitations of an audit, there is an unavoidable risk that we may not have detected some material misstatements in the financial statements even though we have properly planned and performed our audit in accordance with auditing standards. The primary responsibility for the prevention and detection of irregularities and fraud rests with the directors of the entity.

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.

Kate Hughes (Senior Statutory Auditor)

for and on behalf of DJH Mitten Clarke Audit Limited

Accountants

Statutory Auditors

The Exchange

5 Bank Street

Bury

BL9 0DN

29 April 2024

REVENUE

3

20,348,378

19,842,498

Cost of sales

(16,157,017

)

(16,106,960

)

GROSS PROFIT

4,191,361

3,735,538

Administrative expenses

(2,880,886

)

(2,572,402

)

OPERATING PROFIT

5

1,310,475

1,163,136

Interest payable and similar expenses

6

-

(1,818

)

PROFIT BEFORE TAXATION

1,310,475

1,161,318

Tax on profit

7

(326,496

)

(292,696

)

PROFIT FOR THE FINANCIAL YEAR

983,979

868,622

OTHER COMPREHENSIVE INCOME

-

-

TOTAL COMPREHENSIVE INCOME FOR THE YEAR

983,979

868,622

FIXED ASSETS

Intangible assets

9

283,315

-

Property, plant and equipment

10

4,148,553

3,799,313

4,431,868

3,799,313

CURRENT ASSETS

Inventories

11

1,952,112

2,225,126

Debtors

12

2,352,885

2,077,863

Cash at bank

345,622

1,058,640

4,650,619

5,361,629

CREDITORS

Amounts falling due within one year

13

(1,706,077

)

(2,715,351

)

NET CURRENT ASSETS

2,944,542

2,646,278

TOTAL ASSETS LESS CURRENT LIABILITIES

7,376,410

6,445,591

PROVISIONS FOR LIABILITIES

15

(554,089

)

(357,249

)

NET ASSETS

6,822,321

6,088,342

CAPITAL AND RESERVES

Called up share capital

16

3,116,947

3,116,947

Retained earnings

3,705,374

2,971,395

SHAREHOLDERS' FUNDS

6,822,321

6,088,342

The financial statements were approved by the Board of Directors and authorised for issue on 29 April 2024 and were signed on its behalf by:

J Montobbio - Director

Called up

share

Retained

Total

capital

earnings

equity

£

£

£

Balance at 1 January 2022

3,116,947

2,102,773

5,219,720

Changes in equity

Total comprehensive income

-

868,622

868,622

Balance at 31 December 2022

3,116,947

2,971,395

6,088,342

Changes in equity

Dividends

-

(250,000

)

(250,000

)

Total comprehensive income

-

983,979

983,979

Balance at 31 December 2023

3,116,947

3,705,374

6,822,321

1.	STATUTORY INFORMATION

Menzolit Ltd. is a private company, limited by shares, registered in England and Wales. The company's registered number is 02184127 and the registered office address is Farrington Road Industrial Estate, Farrington Road, Burnley, England, BB11 5DB.

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.

Going concern

At the statement of financial position date, the company had retained earnings of £3,705,374 (2022: £2,971,395). The directors have a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future. Therefore, the directors continue to adopt the going concern basis in preparing the financial statements

The company has mitigated against rising raw materials costs by increasing its stock holding. It has an energy contract in place until September 2023 to reduce the risks associated with a volatile market, and plans to reduce costs through the installation of solar panels.

The company has cash reserves of £345,622 (2022: £1,058,640) at the statement of financial position date.

The company has prepared a detailed budget for 2024 and forecasts for the following two years that show continued profitability. Menzolit regularly updates its forecasts to reflect the latest information available and stress tests any changes to the plan. Close relationships developed with key customers assist in creating accurate forecasting data and enable Menzolit to react swiftly to changes and mitigate the effects of any variance from the plan. Discretionary costs will be amended throughout the year depending on the status of the company.

In addition, the company has significantly reduced the liabilities of the company in the year by paying all outstanding loans. Furthermore, due to the repayment of loans and continued profitability, it was decided that a dividend of £250,000 would be paid in December 2023 and providing accuracy in our continued projections, there is an intention to pay further dividends to Senata in 2024. Finally, Menzolit Limited has the unreserved support of the Senata Group.

Financial Reporting Standard 102 - reduced disclosure exemptions

The company has taken advantage of the following disclosure exemptions in preparing these financial statements, as permitted by FRS 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland":

•

the requirements of Section 7 Statement of Cash Flows;

•

the requirement of paragraph 33.7.

Significant judgements and estimates

In the application of the company's accounting policies, the directors are required to make estimates and judgements. The estimates are based on historical experience and other relevant factors. Actual results may differ from these estimates.

The estimates are continually evaluated. Revisions to accounting estimates are recognised in the period in which the estimate is revised.

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.

Estimating the useful economic life of an asset and the anticipated residual value are considered key in calculating an appropriate depreciation charge.

Making judgement based on historical experience on the level of provision required for impairment of inventories. Further information received after the statement of financial position date may impact on the level of provision required.

Revenue

Revenue represents the sale of goods excluding discounts, rebates and value added tax. Sales of goods are recognised when the company has delivered products to the customer, the customer has accepted the products and collection of the related receivables is anticipated.

Intangible assets

Intangible assets are initially measured at cost. After initial recognition, intangible assets are measured at cost less any accumulated amortisation and any accumulated impairment losses.

Costs relating to the SAP implementation beginning in 2023 have not been amortised as this is still in the development stage.

Property, plant and equipment

Depreciation is provided at the following annual rates in order to write off each asset over its estimated useful life.

Land

- Not provided

Freehold property

- Straight line over 25 and 50 years

Plant and machinery

- Straight line between 15 and 20 years

Fixtures and fittings

- Straight line between 4 and 10 years

The residual values, estimated useful lives and depreciation methods of property, plant and equipment are reviewed, and adjusted as appropriate, at each statement of financial position date. The effects of any revision are recognised in the income statement when the change arises.

Inventories

Inventories are valued at the lower of cost and net realisable value, after making due allowance for obsolete and slow-moving items. Net realisable value is estimated selling price less costs to complete and sell.

The cost represents actual purchase price.

Finished goods cost includes an appropriate proportion of fixed and variable overheads.

At each reporting date, inventories are assessed for impairment. If inventory is impaired, the carrying amount is reduced to its selling price less costs to complete and sell. The impairment loss is recognised immediately in the income statement.

Financial instruments

The company only enters into basic financial instruments transactions that result in the recognition of financial assets and liabilities like trade and other accounts receivable and payable, loans from banks and other third parties and loans to related parties.

Financial assets that are measured at cost and amortised cost are assessed at the end of each reporting period for objective evidence of impairment. If objective evidence of impairment is found, an impairment loss is recognised in the income statement.

Basic financial liabilities are initially measured at transaction price and subsequently measured at amortised cost.

Taxation

Taxation for the year comprises current and deferred tax. Tax is recognised in the Statement of Comprehensive Income, except to the extent that it relates to items recognised in other comprehensive income or directly in equity.

Current or deferred taxation assets and liabilities are not discounted.

Current tax is recognised at the amount of tax payable using the tax rates and laws that have been enacted or substantively enacted by the statement of financial position date.

Deferred tax

Deferred tax is recognised in respect of all timing differences that have originated but not reversed at the statement of financial position 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.

Foreign currencies

Monetary assets and liabilities in foreign currencies are translated into sterling at the rates of exchange ruling at the statement of financial position date. Transactions in foreign currencies are translated into sterling at the rate of exchange ruling at the date of the transaction. Exchange differences are taken into account in arriving at the operating result.

Leasing commitments

Rentals paid under operating leases are charged to the income statement on a straight-line basis over the period of the lease.

Pension costs and other post-retirement benefits

The company operates a defined contribution pension scheme. Contributions payable to the company's pension scheme are charged to the income statement in the period to which they relate.

Dividends

Equity dividends are recognised when they become legally payable and are no longer at the discretion of the company.

3.

REVENUE

The revenue and profit before taxation are attributable to the one principal activity of the company.

An analysis of revenue by geographical market is given below:

2023

2022

£

£

United Kingdom

19,432,201

19,247,223

Europe

916,177

595,275

20,348,378

19,842,498

4.	EMPLOYEES AND DIRECTORS

2023

2022

£

£

Wages and salaries

1,343,755

1,325,615

Social security costs

122,208

122,853

Other pension costs

101,162

99,911

1,567,125

1,548,379

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

2023

2022

Management

5

5

Production and sales staff

27

30

Administration

3

3

35

38

2023

2022

£

£

Directors' remuneration

86,957

85,985

5.	OPERATING PROFIT

The operating profit is stated after charging:

2023

2022

£

£

Hire of plant and machinery

40,288

48,874

Other operating leases

32,722

36,740

Depreciation - owned assets

387,280

345,182

Auditors' remuneration

13,328

13,260

Foreign exchange differences

6,502

10,379

6.

INTEREST PAYABLE AND SIMILAR EXPENSES

2023

2022

£

£

Interest payable

-

1,818

In the prior year interest was charged on the loans from Admira GmbH and Mitras GmbH at a rate of 1.75%.

7.

TAXATION

Analysis of the tax charge

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

2023

2022

£

£

Current tax:

UK corporation tax

129,656

199,784

Deferred tax

196,840

92,912

Tax on profit

326,496

292,696

Reconciliation of total tax charge included in profit and loss

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

2023

2022

£

£

Profit before tax

1,310,475

1,161,318

Profit multiplied by the standard rate of corporation tax in the UK of 25% (2022 - 19%)

327,619

220,650

Effects of:

Expenses not deductible for tax purposes

7,032

(10,970

)

Prior period changes in deferred tax

-

(2,724

)

Changes in corporation tax rate

(8,155

)

-

Change in deferred tax rate

-

85,740

Total tax charge

326,496

292,696

8.

DIVIDENDS

2023

2022

£

£

Ordinary shares shares of £1 each

Interim

250,000

-

9.	INTANGIBLE FIXED ASSETS

Computer

software

£

COST

Additions

283,315

At 31 December 2023

283,315

NET BOOK VALUE

At 31 December 2023

283,315

10.	PROPERTY, PLANT AND EQUIPMENT

Fixtures

Freehold

Freehold

Plant and

and

property

land

machinery

fittings

Totals

£

£

£

£

£

COST

At 1 January 2023

1,779,214

181,744

3,858,859

727,680

6,547,497

Additions

383,178

-

325,936

27,406

736,520

At 31 December 2023

2,162,392

181,744

4,184,795

755,086

7,284,017

DEPRECIATION

At 1 January 2023

439,711

-

1,837,742

470,731

2,748,184

Charge for year

41,443

-

266,509

79,328

387,280

At 31 December 2023

481,154

-

2,104,251

550,059

3,135,464

NET BOOK VALUE

At 31 December 2023

1,681,238

181,744

2,080,544

205,027

4,148,553

At 31 December 2022

1,339,503

181,744

2,021,117

256,949

3,799,313

11.	INVENTORIES

2023

2022

£

£

Raw materials

1,431,848

1,645,411

Finished goods

520,264

579,715

1,952,112

2,225,126

12.

DEBTORS: AMOUNTS FALLING DUE WITHIN ONE YEAR

2023

2022

£

£

Trade debtors

1,791,016

1,661,549

Amounts owed by group undertakings

119,884

124,078

Other debtors

305,406

292,236

Corporation tax

136,579

-

2,352,885

2,077,863