The Valspar (UK) Holding Corporation Ltd - Limited company accounts 18.2

REGISTERED NUMBER: 03171339 (England and Wales)

STRATEGIC REPORT, REPORT OF THE DIRECTORS AND

FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2018

FOR

THE VALSPAR (UK) HOLDING CORPORATION

LIMITED

Page

Company Information

1

Strategic Report

2

Report of the Directors

4

Report of the Independent Auditors

6

Income Statement

8

Statement of Comprehensive Income/(Loss)

9

Statement of Financial Position

10

Statement of Changes in Equity

11

Notes to the Financial Statements

12

DIRECTORS:

J J Miklich

J M Donchess

D H Karnstein

REGISTERED OFFICE:

Avenue One

Station Lane

Witney

Oxfordshire

OX28 4XR

REGISTERED NUMBER:

03171339 (England and Wales)

AUDITORS:

Bradshaw Johnson

Chartered Accountants

Statutory Auditor

Croft Chambers

11 Bancroft

Hitchin

Hertfordshire

SG5 1JQ

The directors present their strategic report for the year ended 31 December 2018.

The comparative period was a 15 month period from 1 October 2017 to 31 December 2018.

PRINCIPAL ACTIVITIES

The principal activity of the Company is to act as a holding company. The Company's subsidiary undertakings activities

are the consumer business, manufacturing and distribution of coatings and ink to the metal packaging industry.

REVIEW OF BUSINESS

Profit and loss account

The loss for the year, after taxation, amounted to £1,865,825 (2017: £15,078,901). No dividend (2017: £nil) was

received or paid during the year.

Balance sheet

The directors re-assessed the holding value of the individual investments in subsidiary undertakings and concluded that

no additional impairment provisions were required for this year (2017: £11,474,061). Exchange differences that have

arisen on the loans within Investments amounted to £4,925,069 (2017: £nil).

Consolidation

Sherwin-Williams is the parent of the group in whose accounts the entity is consolidated.

PRINCIPAL RISKS AND UNCERTAINTIES

The Company has implemented a coordinated set of risk management and control systems, including strategic planning

and management reporting, to help anticipate, measure, monitor and manage its exposure to risk.

Risks which the Company faces include:

Foreign exchange risk

The Company has investments in companies based overseas. The Company is therefore exposed to foreign exchange

risk.

Interest Rate Risk

The Company has loans and borrowings, which are subject to floating interest rates. The Company is therefore exposed

to interest rate risk.

Investment Risk

The Company holds a number of investments. These companies operate in competitive environments. This competition

could lead to decreased performance of the Company's Investments and therefore lead to risk of impairment for the

Company.

ANALYSIS OF KEY PERFORMANCE INDICATORS

The Company measures its performance on a number of key performance indicators, including:

- accurate monthly accounts closed by day 3 of month end - monitored by corporate;

- balance sheet accounts reconciled by end of the following month - monitored by corporate;

- annual impairment reviews made on investments - monitored by corporate;

- loans rolled over and sufficient funding available for acquisitions, with minimal interest expense - monitored by

corporate;

- statutory accounts filed on time and no penalties incurred - evidenced by filing date;

- tax returns filed on time and no penalties incurred - evidenced by filing date and;

- clean audit reports, both internal and external, as evidenced by no material misstatements or audit qualifications -

evidenced by no misstatement.

ON BEHALF OF THE BOARD:

J J Miklich - Director

25 September 2019

The directors present their report with the financial statements of the company for the year ended 31 December 2018.

DIVIDENDS

No dividends will be paid for the year ended 31 December 2018 (2017 - £nil).

FUTURE DEVELOPMENTS

The Company will continue to hold existing and future investments in companies which are ultimately owned by

Sherwin-Williams.

DIRECTORS

J J Miklich has held office during the whole of the period from 1 January 2018 to the date of this report.

Other changes in directors holding office are as follows:

J M Donchess and D H Karnstein were appointed as directors after 31 December 2018 but prior to the date of this report.

E N G Braggio and A J Mistysyn ceased to be directors after 31 December 2018 but prior to the date of this report.

FINANCIAL INSTRUMENTS

The Company's financial risk management objectives and policies, including the exposure to market risk, credit risk and

liquidity risk are set out below.

The Company has implemented a co-ordinated set of risk management and control systems, including strategic planning

and management reporting, to help anticipate, measure, monitor and manage its exposure to risk.

DIRECTORS' LIABILITIES

The Company has granted an indemnity to one or more of its directors against liability in respect of proceedings brought

by third parties, subject to the conditions set out in section 234 of the Companies Act 2006. Such qualifying third party

indemnity provision remains in force as at the date of approving the directors' report.

GOING CONCERN

The company operates in a low growth market environment which is set to continue in 2019. The company continues to

manage its risk by developing innovation in its product range, and maintaining a very strong brand presence through

advertising and promotional literature spend. The company is financially sound and continues to have a strong customer

retention from its customer base who place a value on continuity of supply.

In assessing the appropriateness of the application of the going concern basis, the directors have considered the

uncertainties around the general economic environment, the current and future trading performance of the company and

the available cash. The directors have a reasonable expectation that the Company has adequate resources to continue in

operational existence for the foreseeable future. Accordingly, they continue to adopt the going concern basis in

preparing the financial statements.

The company is part of the Sherwin-Williams Company, a company incorporated in the United States of America. The

company is a listed fortune 500 company and provides comfort in respect of the provision of financial support to this

company to assist in meeting liabilities as and when they fall due to the extent that money is not otherwise available to

meet such liabilities.

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), including Financial Reporting Standard 102 'The

Financial Reporting Standard applicable in the UK and Republic of Ireland'. Under company law the directors must not

approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the

company and of the profit or loss of the company for that period. In preparing these financial statements, the directors

are required to:

-	select suitable accounting policies 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

The auditors, Bradshaw Johnson, will be proposed for re-appointment at the forthcoming Annual General Meeting.

ON BEHALF OF THE BOARD:

J J Miklich - Director

25 September 2019

Opinion

We have audited the financial statements of The Valspar (UK) Holding Corporation Limited (the 'company') for the year

ended 31 December 2018 which comprise the Income Statement, Statement of Comprehensive Income/(Loss),

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 company's affairs as at 31 December 2018 and of its loss for the 12 month period 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

We have nothing to report in respect of the following matters in relation to which the ISAs (UK) require us to report to

you where:

-	the directors' use of the going concern basis of accounting in the preparation of the financial statements is not appropriate; or

-

the directors have not disclosed in the financial statements any identified material uncertainties that may cast significant doubt about the company's ability to continue to adopt the going concern basis of accounting for a period of at least twelve months from the date when the financial statements are authorised for issue.

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 there is a material misstatement in the financial

statements or a material misstatement of the other information. 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 five, 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.

A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting

Council's website at https://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.

Neil C Harding (Senior Statutory Auditor)

for and on behalf of Bradshaw Johnson

Chartered Accountants

Statutory Auditor

Croft Chambers

11 Bancroft

Hitchin

Hertfordshire

SG5 1JQ

26 September 2019

TURNOVER

-

-

Administrative expenses

10,459

26,040

OPERATING LOSS

5

(10,459

)

(26,040

)

Impairment of Investments

6

-

11,474,061

(10,459

)

(11,500,101

)

Interest payable and similar expenses

7

3,048,785

3,578,800

LOSS BEFORE TAXATION

(3,059,244

)

(15,078,901

)

Tax on loss

8

-

-

LOSS FOR THE FINANCIAL YEAR

(3,059,244

)

(15,078,901

)

LOSS FOR THE YEAR

(3,059,244

)

(15,078,901

)

OTHER COMPREHENSIVE INCOME

Foreign currency exchange on investment

5,860,832

-

Income tax relating to other comprehensive income

(935,763

)

-

OTHER COMPREHENSIVE INCOME FOR THE YEAR, NET OF INCOME TAX

4,925,069

-

TOTAL COMPREHENSIVE INCOME/(LOSS) FOR THE YEAR

1,865,825

(15,078,901

)

FIXED ASSETS

Investments

9

168,648,501

163,723,432

CREDITORS

Amounts falling due within one year

10

145,939,944

142,880,700

NET CURRENT LIABILITIES

(145,939,944

)

(142,880,700

)

TOTAL ASSETS LESS CURRENT LIABILITIES

22,708,557

20,842,732

CAPITAL AND RESERVES

Called up share capital

12

1,000

1,000

Retained earnings

22,707,557

20,841,732

SHAREHOLDERS' FUNDS

22,708,557

20,842,732

The financial statements were approved by the Board of Directors on 25 September 2019 and were signed on its behalf by:

J J Miklich - Director

Called up

share

Retained

Total

capital

earnings

equity

£

£

£

Balance at 1 October 2016

1,000

35,920,633

35,921,633

Changes in equity

Total comprehensive loss

-

(15,078,901

)

(15,078,901

)

Balance at 31 December 2017

1,000

20,841,732

20,842,732

Changes in equity

Total comprehensive income

-

1,865,825

1,865,825

Balance at 31 December 2018

1,000

22,707,557

22,708,557

1.	STATEMENT OF COMPLIANCE

The Valspar (UK) Holding Corporation Limited is a limited company incorporated in England. The registered

office is:

Avenue One

Station Lane

Witney

Oxfordshire

OX28 4XR

The Company's financial statements have been prepared in compliance with FRS 102 as it applies to the financial

statements for the year ended 31 December 2018.

2.	ACCOUNTING POLICIES

Basis of preparing the financial statements

The financial statements have been prepared in accordance with applicable accounting standards. The financial

statements are prepared in sterling.

During the prior period the company has revised its presentation in order to align with fellow group companies

within the UK. The financial statements are presented to round £1s instead of £1,000s.

Going concern

The financial statements have been prepared on a going concern basis as Sherwin-Williams, the ultimate parent

undertaking, has agreed to provide adequate support to enable the Company to meet its liabilities as they fall due

for a period of at least 12 months from the date of approval of these financial statements.

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 Section 33 Related Party Disclosures paragraph 33.7.

Group financial statements

The financial statements contain information about The Valspar (UK) Holding Corporation Limited as an

individual company and do not contain consolidated financial information as the parent of a group. The

Company is exempt under Section 400 of the Companies Act 2006 from the requirements to prepare

consolidated financial statements as it and its subsidiary undertakings are included by full consolidation in the

consolidated financial statements of its parent, Sherwin-Williams, a Company registered in the United States of

America.

Judgements and key estimates

Investments in subsidiaries are recorded at cost. Where there is an indication of investment impairment,

impairment reviews are carried out annually using a discounted cash flow model.

Taxation

Taxation for the year comprises current tax. Tax is recognised in the Income Statement, except to the extent that

it relates to items recognised in other comprehensive income or directly in equity.

Current 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 taxation

Deferred tax is not recognised.

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 transaction. Exchange differences are taken into account in arriving at the

operating result.

Dividends

Income is recognised when the Company's right to receive payment is established.

Investment in subsidiaries

Investments held as fixed assets are stated at cost less any provisions for impairment. Investments are reviewed

annually for impairment if events or changes in circumstances indicate that the carrying amount may not be

recoverable.

Short-term debtors and creditors

Debtors and creditors with no stated interest rate and receivable or payable within one year are recorded at

transaction price. Any losses arising from impairment are recognised in the income statement in other operating

income.

3.	EMPLOYEES AND DIRECTORS

There were no staff and no staff costs for the year ended 31 December 2018 nor for the period ended 31

December 2017.

4.	DIRECTORS' REMUNERATION

Directors' remuneration for the year ended 31 December 2018 and period ended 31 December 2017 have been

borne by the ultimate parent undertaking. The directors of the Company are also directors or officers of other

companies within the Sherwin-Williams group. The directors' services to the Company do not occupy a

significant amount of their time. As such, the directors do not consider that they have received any remuneration

for their incidental services to the Company for the year ended 31 December 2018 and period ended 31

December 2017.

Share options in the ultimate parent undertaking are granted to the directors. During the year no directors

exercised share options (2017: nil).

5.	OPERATING LOSS

The operating loss is stated after charging:

Period

1.10.16

Year Ended

to

31.12.18

31.12.17

£

£

Auditors' remuneration

4,149

16,894

Professional services

2,520

6,365

6.	IMPAIRMENT OF INVESTMENT

31.12.18

31.12.17

£

£

Impairment of investment (note 9)

-

11,474,061

-

11,474,061

7.

INTEREST PAYABLE AND SIMILAR EXPENSES

Period

1.10.16

Year Ended

to

31.12.18

31.12.17

£

£

Bank loans and overdrafts

16,526

3

Interest payable to group

undertakings

3,032,259

3,578,797

3,048,785

3,578,800

8.

TAXATION

Analysis of the tax charge

No liability to UK corporation tax arose for the year ended 31 December 2018 nor for the period ended

31 December 2017.

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

1.10.16

Year Ended

to

31.12.18

31.12.17

£

£

Loss before tax

(3,059,244

)

(15,078,901

)

Loss multiplied by the standard rate of corporation tax in the UK of 19% (2017 - 19.400%)

(581,256

)

(2,925,307

)

Effects of:

Tax losses carried forward

-

183,237

Non-deductible impairment of investment

-

2,225,968

Group relief surrendered for nil payment

581,256

516,102

Total tax charge

-

-

Tax effects relating to effects of other comprehensive income

31.12.18

Gross

Tax

Net

£

£

£

Foreign currency exchange on investment

5,860,832

(935,763

)

4,925,069

Deferred taxation

The deferred tax asset not recognised in the financial statements is as follows:

2018

2017

Not

Not

Recognised

Recognised

Recognised

Recognised

£

£

£

£

Tax losses

-

707,365

-

709,020

Deferred tax asset (unrecognised)

-

707,365

-

709,020

In his budget of 8 July 2015, the Chancellor announced reductions in the UK corporation tax rate to 18% with

effect from 1 April 2020.

A decision has been made across the group that deferred tax is not considered to be recoverable and therefore

has not been recognised.

9.	INVESTMENTS

Loan

Equity

Totals

£

£

£

COST

At 1 January 2018

5,162,000

211,436,380

216,598,380

Exchange differences

4,925,069

-

4,925,069

At 31 December 2018

10,087,069

211,436,380

221,523,449

PROVISIONS

At 1 January 2018

and 31 December 2018

-

52,874,948

52,874,948

NET BOOK VALUE

At 31 December 2018

10,087,069

158,561,432

168,648,501

At 31 December 2017

5,162,000

158,561,432

163,723,432

The loan included within Investments, relates to interest free loans provided to The Valspar (Switzerland)

Holding Corporation (£9,009,763) and The Valspar (Italy) Corporation S.r.L (£1,077,306). These interest free

loans have no fixed repayment terms. These loans are not expected to be repaid within 12 months.

Details for the investments in which the Company (unless indicated) hold 20% or more of the nominal value of

any class of share capital are as follows:

Country of

Proportion of

registration or

voting rights and

Name of company

incorporation

Holding

shares held

The Valspar (UK) Corporation Limited

England and Wales

Ordinary shares

100%

The Valspar (France) Corporation S.A

France

Ordinary shares

100%

The Valspar (UK) Special Holding Corporation Ltd

England and Wales

Ordinary shares

100%

The Valspar (Spain) Corporation S.R.L

Spain

Ordinary shares

100%

The Valspar (Italy) Corporation S.R.L

Italy

Ordinary shares

98%

The Valspar (Switzerland) Holding Corporation

Switzerland

Ordinary shares

100%

The Valspar Powder Coatings Limited

England and Wales

Ordinary shares

100%

The Valspar (Finland) Corporation Oy

Finland

Ordinary shares

100%

Investment:

Verniplast SA* (held by a subsidiary undertaking)

Switzerland

Ordinary shares

35%

Inver Holding Srl* (held by a subsidiary undertaking)

Italy

Ordinary shares

100%

*Non-trading

All of the subsidiaries are unlisted and have accounting periods coterminous to The Valspar (UK) Holding

Corporation Limited.

All of the trading subsidiaries are involved in the manufacture and supply of coatings and inks.

In the opinion of the directors, the investments in and amounts due from the Company's subsidiary undertakings

are worth at least the amounts at which they are stated in the balance sheet.

10.

CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR

31.12.18

31.12.17

£

£

Bank loans and overdrafts (see note 11)

3,623,096

3,552,989

Amounts due to other group

undertakings

141,279,781

139,295,562

Accruals and deferred income

1,037,067

32,149

145,939,944

142,880,700

Amounts due to other group undertakings relate to original issue discount loan notes with applicable rates

ranging from 3.56% to 4.8169%, issued in 2016 from Group Companies (being The Valspar (UK) Finco Ltd

Partnership, and The Valspar (UK) Corporation Ltd). These notes have no fixed repayment date and are

repayable on demand.