NDC Polipak Limited - Period Ending 2016-12-31

Registration number: 03858503

NDC Polipak Limited

Annual Report and Financial Statements

for the Year Ended 31 December 2016

Bissell & Brown Ltd
Chartered Accountants
Charter House
56 High Street
Sutton Coldfield
West Midlands
B72 1UJ

NDC Polipak Limited

Contents

Company Information	1
Strategic Report	2 to 4
Directors' Report	5
Statement of Directors' Responsibilities	6
Independent Auditor's Report	7 to 8
Profit and Loss Account and Retained Earnings	9
Statement of Recognised Gains and Losses	10
Balance Sheet	11
Statement of Changes in Equity	12
Statement of Cash Flows	13
Notes to the Financial Statements	14 to 29

NDC Polipak Limited

Company Information

Directors

N M Grove A J Cox P N Cox G F Grove

Registered office

c/o Bissell & Brown Ltd Charter House 56 High Street Sutton Coldfield West Midlands B72 1UJ

Auditors

Bissell & Brown Ltd Chartered Accountants Charter House 56 High Street Sutton Coldfield West Midlands B72 1UJ

Page 1

NDC Polipak Limited

Strategic Report for the Year Ended 31 December 2016

The directors present their strategic report for the year ended 31 December 2016.

Principal activity

The principal activity of the company is the manufacture and distribution of pre-packed damp proofing solutions, polythene films and building accessories for the DIY and building industry sectors as well as the manufacturing of both high performance film bags and bulk polypropylene sacks.

Fair review of the business

We aim to present a balanced and comprehensive review of the development and performance of our business during the year and its position at the year end. Our review is consistent with the size and non-complex nature of our business and is written in the context of the risks and uncertainties we face.

The results for the year, as set out on pages 9 and 10 show a profit on ordinary activities before tax of £181,664 (2015: £218,238). The shareholders' funds total £3,666,675 (2015: £3,618,865).

The performance of the Company has produced encouraging results. With strong demand in our core UK and Ireland markets, growth has continued to exceed our expectations. Our focus on customer service has seen us offer our customers good value products with a high quality of service. We have also seen an improvement in the amount of new business across all of our core markets.

The company's key financial and other performance indicators are those that communicate the financial performance and strength of the company as a whole, these being turnover and earnings before interest taxation depreciation and amortisation (EBITDA).

During the financial year turnover increased from £13,980,220 to £15,269,118. This was due to an increase in demand for products across the business. EBITDA decreased from £708,208 to £710,621.

Page 2

NDC Polipak Limited

Strategic Report for the Year Ended 31 December 2016

Principal risks and uncertainties

The directors believe that the principal risks and uncertainties which affect the business are:

Market demand
The markets for the company's products are subject to variations in market demand. This is partly related to the general level of disposable income and the effect on the DIY market and the level of activity in the construction industry.

Waste material prices and availability
The company's key inputs for recycling and manufacture are a range of flexible plastic and similar waste materials from a wide range of sources. Management seeks to maintain excellent relations with existing suppliers and continually expand the range of sources of feed stock to ensure that its key raw material supply is secure.

Prime material prices
The price of prime compound material fluctuates as it is a widely traded commodity. Though not directly linked, the price of prime compound material has an influence on the general market price level for the waste products and recycled polymer compounds which are its feed stock. Management monitors prime material prices and seeks to manage buying so as to remain competitive on film products.

Government policy
The recycling industry is subject to and is affected by a range of government regulations. Management keeps up to date with regulation through membership of trade bodies and ensures that the business complies with all of its obligations.

Credit risk
The company sells to customers on credit and is therefore subject to the risk of non-payment due to financial failure of a customer. Credit checks and references are taken on new and existing accounts and credit limits are set. Credit insurance is used by the business where and when it is felt to be appropriate.
Liquidity
Forecast short term and long term cash generation and usage are regularly reviewed by the directors and management to monitor the company's free cash resources.

Exchange rates
The company's principal exchange rate exposure is to the US Dollar and Euro. The company buys in both denominations and as such there is exposure to foreign exchange rate fluctuations. A weak sterling relative to the dollar and Euro has an adverse impact on the business and results in higher priced purchases. Management monitor the exchange rates and have facilities in place to use forward exchange contracts to mitigate risk as appropriate.

Energy costs
As a process business and a significant consumer of energy our business can be impacted by major price movements. Management monitor energy prices and look to lock in prices when advantageous. Management are committed to improving the efficiency of production equipment in order to reduce costs at each manufacturing site.

Weather conditions
A number of products are dependent on seasonal weather conditions and certain weather conditions could lead to reduced demand for some of our products. Management are committed to diversifying the market portfolio to mitigate this risk and also closely monitor stock levels for seasonal products.

Page 3

NDC Polipak Limited

Strategic Report for the Year Ended 31 December 2016

Approved by the Board on 12 September 2017 and signed on its behalf by:

.........................................
N M Grove
Director

Page 4

NDC Polipak Limited

Directors' Report for the Year Ended 31 December 2016

The directors present their report and the financial statements for the year ended 31 December 2016.

Directors of the company

The directors who held office during the year were as follows:

N M Grove

A J Cox

P N Cox

G F Grove

Financial instruments

Objectives and policies

The company's operations are exposed to a range of financial risks including the effects of changes in interest rates on debt, foreign currency rates, credit risk and liquidity risk.

The company's principal financial instruments comprise sterling, US Dollars and Euro cash balances, together with trade debtors and trade creditors that arise directly from its operations.

Future developments

The directors view the prospects for the business confidently. The Company's strategy is to invest in expanding output to take advantage of the growth opportunities which the directors and management believe exist in the market.

Going concern

The directors have prepared detailed financial forecasts going forward. These forecasts make reasonable assumptions concerning revenue

Disclosure of information in the strategic report

In accordance with section 414C(11) of the Companies Act 2006 (Strategic Report and Directors' Report) Regulations 2013, we have included fair review of the company's business, review of principal risks and uncertainties, financial instruments and review of key performance indicators within the Strategic Report as set out on page 1 to 3.

Disclosure of information to the auditors

Each director has taken steps that they ought to have taken as a director in order to make themselves aware of any relevant audit information and to establish that the company's auditors are aware of that information. The directors confirm that there is no relevant information that they know of and of which they know the auditors are unaware.

Approved by the Board on 12 September 2017 and signed on its behalf by:

.........................................
N M Grove
Director

Page 5

NDC Polipak Limited

Statement of Directors' Responsibilities

The directors acknowledge their responsibilities for preparing the Annual Report and the financial statements in accordance with applicable law and regulations.

Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with 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 apply them consistently;

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

•	state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements; and

•	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.

Page 6

NDC Polipak Limited

Independent Auditor's Report to the Members of NDC Polipak Limited

We have audited the financial statements of NDC Polipak Limited for the year ended 31 December 2016, set out on pages 9 to 29. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice).

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.

Respective responsibilities of directors and auditor

As explained more fully in the Statement of Directors' Responsibilities (set out on page 6), the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit and express an opinion on the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board’s (APB’s) Ethical Standards for Auditors to the financial statements.

Scope of the audit of the financial statements

An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of: whether the accounting policies are appropriate to the company’s circumstances and have been consistently applied and adequately disclosed; the reasonableness of significant accounting estimates made by the directors; and the overall presentation of the financial statements. In addition, we read all the financial and non-financial information in the Annual Report to identify material inconsistencies with the audited financial statements and to identify any information that is apparently materially incorrect based on, or materially inconsistent with, the knowledge acquired by us in the course of performing the audit. If we become aware of any apparent material misstatements or inconsistencies we consider the implications for our report.

Opinion on the financial statements

In our opinion the financial statements:

•	give a true and fair view of the state of the company's affairs as at 31 December 2016 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.

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.

Page 7

NDC Polipak Limited

Independent Auditor's Report to the Members of NDC Polipak Limited

Opinion on other matter 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 Directors' Report for the financial year for which the financial statements are prepared is consistent with the financial statements; and

•	the Strategic Report and Directors' Report have been prepared in accordance with applicable legal requirements.

In the light of our 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 and the Directors' Report.

Matters on which we are required to report by exception

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.

......................................
John James Taheny (Senior Statutory Auditor)
For and on behalf of Bissell & Brown Ltd, Statutory Auditors

Charter House
56 High Street
Sutton Coldfield
West Midlands
B72 1UJ

12 September 2017

Page 8

NDC Polipak Limited

Profit and Loss Account and Retained Earnings for the Year Ended 31 December 2016

	Note	2016 £	2015 £
Turnover		15,269,118	13,980,220
Cost of sales		(12,908,176)	(11,858,850)
Gross profit		2,360,942	2,121,370
Distribution costs		(579,328)	(537,250)
Administrative expenses		(1,739,542)	(1,496,620)
Other operating income		195,995	187,302
Operating profit		238,067	274,802
Interest payable and similar charges		(56,403)	(56,564)
Profit before tax		181,664	218,238
Taxation		(176,635)	(33,552)
Profit for the financial year		5,029	184,686
Retained earnings brought forward		1,865,950	1,577,229
Transfer to other reserves		27,074	108,225
Restatements of retained earnings		-	(4,190)
Retained earnings carried forward		1,898,053	1,865,950

The notes on pages 14 to 29 form an integral part of these financial statements.

Page 9

NDC Polipak Limited

Statement of Recognised Gains and Losses for the Year Ended 31 December 2016

	Note	2016 £	2015 £
Profit for the year		5,029	184,686
Surplus/(deficit) on revaluation of other assets		42,781	(82,441)
P&l reserve - Transfer from another reserve		27,074	108,225
Reclassification from financial instruments loan present value reserve		(27,074)	(25,784)
		42,781	-
Total comprehensive income for the year		47,810	184,686

The notes on pages 14 to 29 form an integral part of these financial statements.

Page 10

NDC Polipak Limited

(Registration number: 03858503)
Balance Sheet as at 31 December 2016

	Note	2016 £	2015 £
Fixed assets
Tangible assets	12	4,775,041	4,087,269
Current assets
Stocks	14	1,807,472	2,170,329
Debtors	15	3,242,216	3,005,658
Cash at bank and in hand		430,147	116,404
		5,479,835	5,292,391
Creditors: Amounts falling due within one year	17	(4,570,504)	(4,180,496)
Net current assets		909,331	1,111,895
Total assets less current liabilities		5,684,372	5,199,164
Creditors: Amounts falling due after more than one year	17	(1,615,105)	(1,311,561)
Provisions for liabilities	18	(402,592)	(268,738)
Net assets		3,666,675	3,618,865
Capital and reserves
Called up share capital	20	1,000,000	1,000,000
Share premium reserve		260,000	260,000
Revaluation reserve		277,167	234,386
Financial instruments loan present value reserve		231,455	258,529
Profit and loss account		1,898,053	1,865,950
Total equity		3,666,675	3,618,865

Approved and authorised by the Board on 12 September 2017 and signed on its behalf by:
 

.........................................

N M Grove

Director

The notes on pages 14 to 29 form an integral part of these financial statements.

Page 11

NDC Polipak Limited

Statement of Changes in Equity for the Year Ended 31 December 2016

	Share capital £	Share premium £	Revaluation reserve £	Financial instruments loan present value reserve £	Profit and loss account £	Total £
At 1 January 2016	1,000,000	260,000	234,386	258,529	1,865,950	3,618,865
Profit for the year	-	-	-	-	5,029	5,029
Other comprehensive income	-	-	42,781	(27,074)	27,074	42,781
Total comprehensive income	-	-	42,781	(27,074)	32,103	47,810
At 31 December 2016	1,000,000	260,000	277,167	231,455	1,898,053	3,666,675

 

	Share capital £	Share premium £	Revaluation reserve £	Financial instruments loan present value reserve £	Profit and loss account £	Total £
At 1 January 2015	1,000,000	260,000	316,827	284,313	1,573,039	3,434,179
Profit for the year	-	-	-	-	184,686	184,686
Other comprehensive income	-	-	(82,441)	(25,784)	108,225	-
Total comprehensive income	-	-	(82,441)	(25,784)	292,911	184,686
At 31 December 2015	1,000,000	260,000	234,386	258,529	1,865,950	3,618,865

The notes on pages 14 to 29 form an integral part of these financial statements.

Page 12

NDC Polipak Limited

Statement of Cash Flows for the Year Ended 31 December 2016

	Note	2016 £	2015 £
Cash flows from operating activities
Profit for the year		5,029	184,686
Adjustments to cash flows from non-cash items
Depreciation and amortisation	6	528,957	492,720
Loss on disposal of tangible assets	5	6,368	2,191
Finance costs	7	56,403	56,564
Income tax expense	11	176,635	33,552
		773,392	769,713
Working capital adjustments
Decrease/(increase) in stocks	14	362,857	(239,451)
(Increase)/decrease in trade debtors	15	(236,558)	429,120
Increase in trade creditors	17	545,716	25,201
Decrease in deferred income, including government grants		(67,854)	(175,121)
Net cash flow from operating activities		1,377,553	809,462
Cash flows from investing activities
Acquisitions of tangible assets		(1,358,597)	(1,047,309)
Proceeds from sale of tangible assets		135,500	19,910
Acquisition of intangible assets	13	-	(2,750)
Net cash flows from investing activities		(1,223,097)	(1,030,149)
Cash flows from financing activities
Interest paid	7	(56,403)	(56,564)
Proceeds from bank borrowing draw downs		-	228,122
Repayment of bank borrowing		(100,450)	-
Repayment of other borrowing		27,074	25,784
Payments to finance lease creditors		290,323	8,551
Net cash flows from financing activities		160,544	205,893
Net increase/(decrease) in cash and cash equivalents		315,000	(14,794)
Cash and cash equivalents at 1 January		115,147	129,941
Cash and cash equivalents at 31 December		430,147	115,147

The notes on pages 14 to 29 form an integral part of these financial statements.

Page 13

NDC Polipak Limited

Notes to the Financial Statements for the Year Ended 31 December 2016

1	General information

The company is a private company limited by share capital incorporated in England & Wales. The company's registration number is 03858503.

The address of its registered office is:
c/o Bissell & Brown Ltd
Charter House
56 High Street
Sutton Coldfield
West Midlands
B72 1UJ
United Kingdom

The principal place of business is:
1 Garratts Lane
Old Hill
Cradley Heath
West Midlands
B64 5RE

These financial statements were authorised for issue by the Board on 12 September 2017.

2	Accounting policies

Summary of significant accounting policies and key accounting estimates

The principal accounting policies applied in the preparation of these financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated.

Statement of compliance

These financial statements were prepared in accordance with Financial Reporting Standard 102 'The Financial Reporting Standard applicable in the UK and Republic of Ireland'.

Basis of preparation

These financial statements have been prepared using the historical cost convention except that as disclosed in the accounting policies certain items are shown at fair value.

The financial statements are presented in sterling which is the functional currency of the company and rounded to the nearest £.

Revenue recognition

Turnover comprises the fair value of the consideration received or receivable for the sale of goods and provision of services in the ordinary course of the company’s activities. Turnover is shown net of sales/value added tax, returns, rebates and discounts.

The company recognises revenue when:
The amount of revenue can be reliably measured;
it is probable that future economic benefits will flow to the entity;
and specific criteria have been met for each of the company's activities.

Page 14

NDC Polipak Limited

Notes to the Financial Statements for the Year Ended 31 December 2016

Government grants

Government grants are recognised at the fair value of the asset received or receivable. Grants are not recognised until there is reasonable assurance that the company will comply with the conditions attaching to them and the grants will be received.
Government grants are recognised using the accrual model and the performance model.

Under the accrual model, government grants relating to revenue are recognised on a systematic basis over the periods in which the company recognises the related costs for which the grant is intended to compensate. Grants that are receivable as compensation for expenses or losses already incurred or for the purpose of giving immediate financial support to the entity with no future related costs are recognised in income in the period in which it becomes receivable.

Grants relating to assets are recognised in income on a systematic basis over the expected useful life of the asset. Where part of a grant relating to an asset is deferred, it is recognised as deferred income and not deducted from the carrying amount of the asset.

Under the performance model, where the grant does not impose specified future performance-related conditions on the recipient, it is recognised in income when the grant proceeds are received or receivable. Where the grant does impose specified future performance-related conditions on the recipient, it is recognised in income only when the performance-related conditions have been met. Where grants received are prior to satisfying the revenue recognition criteria, they are recognised as a liability.

Foreign currency transactions and balances

Foreign currency transactions are initially recorded in the functional currency, by applying the spot exchange rate as at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are translated at the exchange rate ruling at the reporting date, with any gains or losses being taken to the profit and loss account.

Tax

The tax expense for the period comprises deferred tax. Tax is recognised in profit or loss, except that a change attributable to an item of income or expense recognised as other comprehensive income is also recognised directly in other comprehensive income.

Deferred income tax is recognised on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements and on unused tax losses or tax credits in the company. Deferred income tax is determined using tax rates and laws that have been enacted or substantively enacted by the reporting date.

The carrying amount of deferred tax assets are reviewed at each reporting date and a valuation allowance is set up against deferred tax assets so that the net carrying amount equals the highest amount that is more likely than not to be recovered based on current or future taxable profit.

Tangible assets

Tangible fixed assets are stated at cost (or deemed cost) or valuation less accumulated depreciation and accumulated impairment losses.

Cost includes costs directly attributable to making the asset capable of operating as intended.

Depreciation

Depreciation is charged so as to write off the cost of assets, other than land and properties under construction over their estimated useful lives, as follows:

Asset class	Depreciation method and rate
Short leasehold property	straight line over the life of the lease

Page 15

NDC Polipak Limited

Notes to the Financial Statements for the Year Ended 31 December 2016

Plant & machinery	15-30%
Fixtures & fittings	15-30%
Motor vehicles	25%

Goodwill

Goodwill arises on business acquisitions and represents the excess of the cost of the acquisition over the company's interest in the net amount of the identifiable assets, liabilities and contingent liabilities of the acquired business.

Goodwill is measured at cost less accumulated amortisation and accumulated impairment losses. It is amortised on a straight line basis over its useful life. Where a reliable estimate of the useful life of goodwill or intangible assets cannot be made, the life is presumed not to exceed five years.

Intangible assets

Intangible assets are initially recorded at cost, and are subsequently stated at cost less any accumulated amortisation and impairment losses. Any intangible assets carried at a revalued amount, are recorded at the fair value at the date of revaluation, as determined by reference to an active market, less any subsequent accumulated amortisation and subsequent accumulated impairment losses.

Intangible assets acquired as part of a business combination are recorded at the fair value at the acquisition date.

Cash and cash equivalents

Cash and cash equivalents comprise cash on hand and call deposits, and other short-term highly liquid investments that are readily convertible to a known amount of cash and are subject to an insignificant risk of change in value.

Trade debtors

Trade debtors are amounts due from customers for merchandise sold or services performed in the ordinary course of business.

Trade debtors are recognised initially at the transaction price. They are subsequently measured at amortised cost using the effective interest method, less provision for impairment. A provision for the impairment of trade debtors is established when there is objective evidence that the company will not be able to collect all amounts due according to the original terms of the receivables.

Stocks

Stocks are stated at the lower of cost and estimated selling price less costs to complete and sell. Cost is determined using the first-in, first-out (FIFO) method.

The cost of finished goods and work in progress 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. At each reporting date, stocks are assessed for impairment. If stocks are impaired, the carrying amount is reduced to its selling price less costs to complete and sell; the impairment loss is recognised immediately in profit or loss.

Page 16

NDC Polipak Limited

Notes to the Financial Statements for the Year Ended 31 December 2016

Trade creditors

Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Accounts payable are classified as current liabilities if the company does not have an unconditional right, at the end of the reporting period, to defer settlement of the creditor for at least twelve months after the reporting date. If there is an unconditional right to defer settlement for at least twelve months after the reporting date, they are presented as non-current liabilities.

Trade creditors are recognised initially at the transaction price and subsequently measured at amortised cost using the effective interest method.

Borrowings

Interest-bearing borrowings are initially recorded at fair value, net of transaction costs. Interest-bearing borrowings are subsequently carried at amortised cost, with the difference between the proceeds, net of transaction costs, and the amount due on redemption being recognised as a charge to the Profit and Loss Account over the period of the relevant borrowing.

Interest expense is recognised on the basis of the effective interest method and is included in interest payable and similar charges.

Borrowings are classified as current liabilities unless the company has an unconditional right to defer settlement of the liability for at least twelve months after the reporting date.

Leases

Leases in which substantially all the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases are charged to profit or loss on a straight-line basis over the period of the lease. Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee.

Assets held under finance leases are recognised at the lower of their fair value at inception of the lease and the present value of the minimum lease payments. These assets are depreciated on a straight-line basis over the shorter of the useful life of the asset and the lease term. The corresponding liability to the lessor is included in the Balance Sheet as a finance lease obligation.

Lease payments are apportioned between finance costs in the Profit and Loss Account and reduction of the lease obligation so as to achieve a constant periodic rate of interest on the remaining balance of the liability.

Share capital

Ordinary shares are classified as equity. Equity instruments are measured at the fair value of the cash or other resources received or receivable, net of the direct costs of issuing the equity instruments. If payment is deferred and the time value of money is material, the initial measurement is on a present value basis.

Defined contribution pension obligation

A defined contribution plan is a pension plan under which fixed contributions are paid into a pension fund and the company has no legal or constructive obligation to pay further contributions even if the fund does not hold sufficient assets to pay all employees the benefits relating to employee service in the current and prior periods.

Contributions to defined contribution plans are recognised as employee benefit expense when they are due. If contribution payments exceed the contribution due for service, the excess is recognised as a prepayment.

Page 17

NDC Polipak Limited

Notes to the Financial Statements for the Year Ended 31 December 2016

Share based payments

The company issues equity-settled and cash-settled share-based payments to certain employees (including directors). Equity-settled share-based payments are measured at fair value at the date of grant. The fair value determined at the grant date of the equity-settled share-based payments is expensed on a straight-line basis over the vesting period, together with a corresponding increase in equity, based upon the company's estimate of the shares that will eventually vest.

Fair value is measured using the Black-Scholes Pricing Model. The expected life used in the model has been adjusted, based on management's best estimate, for the effects of non-transferability, exercise restrictions and behavioural considerations.

Where the terms of an equity-settled transaction are modified, as a minimum an expense is recognised as if the terms had not been modified. In addition, an expense is recognised for any increase in the value of the transaction as a result of the modification, as measured at the date of modification.

Where an equity-settled transaction is cancelled, it is treated as if it had vested on the date of the cancellation, and any expense not yet recognised for the transaction is recognised immediately. However, if a new transaction is substituted for the cancelled transaction, and designated as a replacement transaction on the date that it is granted, the cancelled and new transactions are treated as if they were a modification of the original transaction, as described in the previous paragraph.

For cash-settled share-based payments, a liability equal to the portion of the goods and services received is recognised at the current fair value determined at each balance sheet date.

Page 18

NDC Polipak Limited

Notes to the Financial Statements for the Year Ended 31 December 2016

Financial instruments

Classification
Trade debtors
Trade debtors which are receivable within one year and which do not constitute a financing transaction are initially measured at the transaction price. Trade debtors are subsequently measured at amortised cost, being the transaction price less any amounts settled and any impairment losses.

Where the arrangement with a trade debtor constitutes a financing transaction, the debtor is initially and subsequently measured at the present value of future payments discounted at a market rate of interest for a similar debt instrument.

A provision for impairment of trade debtors is established when there is objective evidence that the amounts due will not be collected according to the original terms of the contract. Impairment losses are recognised in profit or loss for the excess of the carrying value of the trade debtor over the present value of the future cash flows discounted using the original effective interest rate. Subsequent reversals of an impairment loss that objectively relate to an event occurring after the impairment loss was recognised, are recognised immediately in profit or loss.
 Recognition and measurement
Financial instruments are classified as liabilities and equity instruments according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the Company after deducting all of its liabilities.

Trade creditors
Trade creditors payable within one year that do not constitute a financing transaction are initially measured at the transaction price and subsequently measured at amortised cost, being the transaction price less any amounts settled.

Where the arrangement with a trade creditor constitutes a financing transaction, the creditor is initially and subsequently measured at the present value of future payments discounted at a market rate of interest for a similar instrument.

Borrowings
Borrowings are initially recognised at the transaction price, including transaction costs, and subsequently measured at amortised cost using the effective interest method. Interest expense is recognised on the basis of the effective interest method and is included in interest payable and other similar charges.

Commitments to receive a loan are measured at cost less impairment.
 Impairment
A financial asset is derecognised only when the contractual rights to cash flows expire or are settled, or substantially all the risks and rewards of ownership are transferred to another party, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party. A financial liability (or part thereof) is derecognised when the obligation specified in the contract is discharged, cancelled or expires.
 

3

Revenue

The analysis of the company's revenue for the year from continuing operations is as follows:

	2016 £	2015 £
Sale of goods	15,269,118	13,980,220

Page 19

NDC Polipak Limited

Notes to the Financial Statements for the Year Ended 31 December 2016

4	Other operating income

The analysis of the company's other operating income for the year is as follows:

	2016 £	2015 £
Government grants	195,995	187,302

5	Other gains and losses

The analysis of the company's other gains and losses for the year is as follows:

	2016 £	2015 £
Gain (loss) on disposal of property, plant and equipment	(6,368)	(2,191)

6	Operating profit

Arrived at after charging/(crediting)

	2016 £	2015 £
Depreciation expense	528,957	489,970
Amortisation expense	-	2,750
Operating lease expense - plant and machinery	-	1,203
Loss on disposal of property, plant and equipment	6,368	2,191

7	Interest payable and similar expenses

	2016 £	2015 £
Interest on obligations under finance leases and hire purchase contracts	9,720	11,472
Interest expense on other finance liabilities	46,683	45,092
	56,403	56,564

Page 20

NDC Polipak Limited

Notes to the Financial Statements for the Year Ended 31 December 2016

8	Staff costs

The aggregate payroll costs (including directors' remuneration) were as follows:

	2016 £	2015 £
Wages and salaries	2,294,912	1,982,596
Social security costs	182,348	152,848
Pension costs, defined contribution scheme	66,713	3,813
Other employee expense	6,558	3,835
	2,550,531	2,143,092

The average number of persons employed by the company (including directors) during the year, analysed by category was as follows:

	2016 No.	2015 No.
Production and warehouse	85	74
Management and administration	19	17
	104	91

9	Directors' remuneration

The directors' remuneration for the year was as follows:

	2016 £	2015 £
Remuneration	178,741	160,408
Contributions paid to money purchase schemes	44,147	56
	222,888	160,464

During the year the number of directors who were receiving benefits and share incentives was as follows:

	2016 No.	2015 No.
Accruing benefits under money purchase pension scheme	2	2

10	Auditors' remuneration

	2016 £	2015 £
Audit of the financial statements	13,340	10,359

 

Page 21

NDC Polipak Limited

Notes to the Financial Statements for the Year Ended 31 December 2016

11

Taxation

Tax charged/(credited) in the income statement

	2016 £	2015 £
Deferred taxation
Arising from origination and reversal of timing differences	176,635	33,552

The tax on profit before tax for the year is the same as the standard rate of corporation tax in the UK (2015 - the same as the standard rate of corporation tax in the UK) of 20% (2015 - 20%).

The differences are reconciled below:

	2016 £	2015 £
Profit before tax	181,664	218,238
Corporation tax at standard rate	36,333	43,648
Effect of expense not deductible in determining taxable profit (tax loss)	14,712	1,252
Deferred tax expense from unrecognised temporary difference from a prior period	176,635	33,552
Tax decrease from effect of capital allowances and depreciation	(22,751)	(75,092)
Tax (decrease)/increase from effect of unrelieved tax losses carried forward	(33,709)	25,034
Other tax effects for reconciliation between accounting profit and tax expense (income)	5,415	5,158
Total tax charge	176,635	33,552

Deferred tax

Deferred tax assets and liabilities

2016	Asset £	Liability £
Accelerated capital allowances	-	390,556
Revaluation of tangible assets	-	51,778
unused tax losses	39,742	-
	39,742	442,334

2015	Asset £	Liability £
Accelerated capital allowances	-	251,421
Revaluation of tangible assets	-	94,559
unused tax losses	77,242	-
	77,242	345,980

Page 22

NDC Polipak Limited

Notes to the Financial Statements for the Year Ended 31 December 2016

12	Tangible assets

	Land and buildings £	Furniture, fittings and equipment  £	Motor vehicles  £	Plant and equipment  £	Total £
Cost or valuation
At 1 January 2016	748,257	409,773	84,280	4,161,807	5,404,117
Additions	259,693	31,178	-	1,067,726	1,358,597
Disposals	-	-	-	(264,680)	(264,680)
At 31 December 2016	1,007,950	440,951	84,280	4,964,853	6,498,034
Depreciation
At 1 January 2016	119,039	166,085	24,155	1,007,569	1,316,848
Charge for the year	89,084	45,688	18,431	375,754	528,957
Eliminated on disposal	-	-	-	(122,812)	(122,812)
At 31 December 2016	208,123	211,773	42,586	1,260,511	1,722,993
Carrying amount
At 31 December 2016	799,827	229,178	41,694	3,704,342	4,775,041
At 31 December 2015	629,218	243,688	60,125	3,154,238	4,087,269

Included within the net book value of land and buildings above is £799,827 (2015 - £629,218) in respect of short leasehold land and buildings.
 

Page 23

NDC Polipak Limited

Notes to the Financial Statements for the Year Ended 31 December 2016

Assets held under finance leases and hire purchase contracts

The net carrying amount of tangible assets includes the following amounts in respect of assets held under finance leases and hire purchase contracts:

	2016 £	2015 £
Plant and machinery	751,257	803,344
Vehicles	33,205	49,807
	784,462	853,151

13	Intangible assets

	Goodwill  £	Trademarks, patents and licenses  £	Total £
Cost or valuation
At 1 January 2016	319,377	2,750	322,127
At 31 December 2016	319,377	2,750	322,127
Amortisation
At 1 January 2016	319,377	2,750	322,127
At 31 December 2016	319,377	2,750	322,127
Carrying amount
At 31 December 2016	-	-	-
At 31 December 2015	-	-	-

The aggregate amount of research and development expenditure recognised as an expense during the period is £Nil (2015 - £Nil).
 

14

Stocks

	2016 £	2015 £
Raw materials and consumables	592,851	742,431
Finished goods and goods for resale	1,214,621	1,427,898
	1,807,472	2,170,329

Page 24

NDC Polipak Limited

Notes to the Financial Statements for the Year Ended 31 December 2016

15

Debtors

	Note	2016 £	2015 £
Trade debtors		2,943,558	2,765,941
Amounts owed by related parties	25	128,060	128,060
Other debtors		129,185	68,406
Prepayments		41,413	43,251
Total current trade and other debtors		3,242,216	3,005,658

16	Cash and cash equivalents

	2016 £	2015 £
Cash on hand	118	316
Cash at bank	413,249	68,582
Short-term deposits	16,780	47,506
	430,147	116,404
Bank overdrafts	-	(1,257)
Cash and cash equivalents in statement of cash flows	430,147	115,147

17

Creditors

	Note	2016 £	2015 £
Due within one year
Loans and borrowings	21	182,770	338,478
Trade creditors		2,046,525	1,596,178
Amounts due to related parties	25	340,695	351,809
Social security and other taxes		221,596	293,690
Other creditors		27,553	33,380
Accrued expenses		705,648	731,939
CID facility		1,045,717	835,022
		4,570,504	4,180,496
Due after one year
Loans and borrowings	21	448,233	103,909
Deferred income		598,327	666,181
Other non-current financial liabilities		568,545	541,471
		1,615,105	1,311,561

Page 25

NDC Polipak Limited

Notes to the Financial Statements for the Year Ended 31 December 2016

The CID facility of £1,045,717 (2015: £835,022) relates to advances against debtors under the terms of an invoice finance facility with HSBC Bank Plc

HSBC Bank Plc, HSBC Invoice Finance (UK) Limited and HSBC Asset Finance (UK) Limited hold debentures, fixed and floating charges over certain company assets.

18	Deferred tax and other provisions

	Deferred tax £	Total £
At 1 January 2016	268,738	268,738
Additional provisions	133,854	133,854
At 31 December 2016	402,592	402,592

19	Pension and other schemes

Defined contribution pension scheme

The company operates a defined contribution pension scheme. The pension cost charge for the year represents contributions payable by the company to the scheme and amounted to £66,713 (2015 - £3,813).

 

20	Share capital

Allotted, called up and fully paid shares

	2016		2015
	No.	£	No.	£
A Ordinary shares of £1 each	800,000	800,000	800,000	800,000
B Ordinary shares of £1 each	200,000	200,000	200,000	200,000
	1,000,000	1,000,000	1,000,000	1,000,000

Rights, preferences and restrictions

A Ordinary shares have the following rights, preferences and restrictions: Holders of the A ordinary share capital have a right to vote and receive dividends.

B Ordinary shares have the following rights, preferences and restrictions: Holders of the B ordinary share capital have a right to vote and receive dividends.

Page 26

NDC Polipak Limited

Notes to the Financial Statements for the Year Ended 31 December 2016

21	Loans and borrowings

	2016 £	2015 £
Current loans and borrowings
Bank borrowings	24,050	228,122
Bank overdrafts	-	1,257
Finance lease liabilities	158,720	109,099
	182,770	338,478

	2016 £	2015 £
Non-current loans and borrowings
Bank borrowings	103,622	-
Finance lease liabilities	344,611	103,909
	448,233	103,909

22	Obligations under leases and hire purchase contracts

Operating leases

The total of future minimum lease payments is as follows:

	2016 £	2015 £
Not later than one year	269,646	269,646
Later than one year and not later than five years	1,305,919	1,308,482
Later than five years	117,428	119,992
	1,692,993	1,698,120

The amount of non-cancellable operating lease payments recognised as an expense during the year was £296,850 (2015 - £287,709).

Page 27

NDC Polipak Limited

Notes to the Financial Statements for the Year Ended 31 December 2016

23	Share-based payments

Employee share option scheme

Scheme details and movements

At the start of the year, the company had a share option scheme for 1 employee, a director. During the year 1 employee was added to the scheme. Options are exercisable at a £0.755. The vesting period is 7-10 years. The options are settled in equity once exercised.

Options are forfeited if the employee leaves the company before the options vest.

During the year, one employee left, and forfeited his rights to the share options, therefore this left 1 director with rights to the share option.

The inputs into the black-schole pricing model are as follows:
Weighted average share price £3 (2015 £3)
Weighted average exercise price £1 (2015 £1)
Expected volatility 98% (2015 98%)
Expected Life 7-10 yrs (2015 8 yrs)
Expected dividend yield 2% (2015 2%)

The movements in the number of share options during the year were as follows:

	2016 Number	2015 Number
Outstanding, start of period	25,000	50,000
Granted during the period	25,000	-
Forfeited during the period	-	(25,000)
Outstanding, end of period	50,000	25,000

The movements in the weighted average exercise price of share options during the year were as follows:

	2016 £	2015 £
Outstanding, start of period	38,000.00	38,000.00
Granted during the period	19,000.00	-
Forfeited during the period	-	(19,000.00)

24	Contingent liabilities

Letter of Credits outstanding £118,426

HSBC Bank Plc has an unlimited multilateral guarantee dated 12 November 2013 given by the company and Park Lane Developments (Midlands) Limited.

The company has a guarantee dated 09 September 2011 in favour HM Revenue & Customs for £30,000.

Page 28

NDC Polipak Limited

Notes to the Financial Statements for the Year Ended 31 December 2016

25	Related party transactions

Summary of transactions with other related parties

Included in debtors falling due within one year is £27,135 (2015 £27,135). Included in creditors falling due more than one year after the balance sheet date is an discounted amount of £568,545 (2015: £541,471) due to Sturge Industries Limited.

Sturge Industries Limited is a related party by virtue of P N Cox being a director and the ultimate controlling party in both companies. No interest is being charged on the loan.

Included in debtors is an amount of £100,925 (2015: £100,925) owing from Evesham Properties Limited, a company in which Mrs A J Cox is a director. During the period the company was charged rent of £162,709 (2015: £162,709). No interest is being charged on the loan.

During the year the company made purchases of £Nil (2015: £329,587) and paid rent £125,000 (2015: £125,000), Included in creditors due within one year is an amount of £340,695 (2015: £340,695) with Park Lane Developments (Midlands) Limited
 

26	Financial instruments

Categorisation of financial instruments

	2016 £	2015 £
Financial liabilities measured at fair value through profit or loss	568,545	541,471
	568,545	541,471

Financial liabilities measured at fair value

Sturge Industries Limited Loan
There is a loan included in creditors due over 1 year due to Sturge Industries Limited, a company which Paul Cox is a director. The loan has no interest or repayment terms attached to it. The loan is only repayable with full shareholder approval. As such the directors assess the likely repayment date at each balance sheet date.

As the loan is intended to be available for a longer term but the timing of cash flows is uncertain; the directors have assessed the loan at each balance sheet date. The directors have prepared the basis for repayment at 10 years from 31/12/2013. As there are no terms the directors have used a 5% interest rate to calculate the fair value of the loan.

The result is that the fair value of the loan has been calculated at £568,545 (2015 £541,471). Interest payable has been charged to the profit and loss account totalling £27,074 (2015 £25,784). The difference has been taken to other reserves and will be released over the estimated life span of the loan.

The fair value is £568,545 (2015 - £541,471) and the change in value included in profit or loss is £27,074 (2015 - £25,784).

Page 29