Wychem Limited - Limited company accounts 17.3

REGISTERED NUMBER: 00956213 (England and Wales)

Directors' Report and

Audited Financial Statements

for the Year Ended 31 December 2017

for

Wychem Limited

Page

Company Information

1

Directors' Report

2

Independent Auditors' Report

3

to

4

Statement of Comprehensive Income

5

Balance Sheet

6

Statement of Changes in Equity

7

Notes to the Financial Statements

8

to

17

DIRECTORS:

Dr B Schlosser

Mr G R Morgan

REGISTERED OFFICE:

Eldo House

Kempson Way

Suffolk Business Park

Bury St Edmunds

Suffolk

IP32 7AR

REGISTERED NUMBER:

00956213 (England and Wales)

SENIOR STATUTORY AUDITOR:

J Knights ACA BSc

INDEPENDENT AUDITORS:

Knights Lowe Limited

Chartered Accountants

and Statutory Auditors

Eldo House, Kempson Way

Suffolk Business Park

Bury St Edmunds

Suffolk

IP32 7AR

The directors present their report with the financial statements of the company for the year ended 31 December 2017.

PRINCIPAL ACTIVITY

The principle activity of the company in the year under review was the manufacture of chemicals.

DIVIDENDS

During the year, no dividends have been paid and the directors recommend that no final dividend is paid.

DIRECTORS

Dr B Schlosser has held office during the whole of the period from 1 January 2017 to the date of this report.

Other changes in directors holding office are as follows:

Mr O Geindreau - resigned 20 February 2017

Ms C Lila-Ambroise - resigned 20 February 2017

Mr G R Morgan - appointed 20 February 2017

STATEMENT OF DIRECTORS' RESPONSIBILITIES

The directors are responsible for preparing the Directors' 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), including Financial Reporting Standard

101 'Reduced Disclosure Framework'. 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.

ON BEHALF OF THE BOARD:

Mr G R Morgan - Director

31 January 2018

Opinion

We have audited the financial statements of Wychem Limited (the 'company') for the year ended 31 December 2017

on pages five to seventeen. The financial reporting framework that has been applied in their preparation is applicable

law and United Kingdom Accounting Standards, including Financial Reporting Standard 101 'Reduced Disclosure

Framework' (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 Auditors' 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.

In our opinion the financial statements:

-	give a true and fair view of the state of the company's affairs as at 31 December 2017 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 the provisions available for small entities , in the circumstances set out in note twenty one to the financial

statements, 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

Directors' Report, but does not include the financial statements and our Auditors' Report thereon.

Our opinion on the financial statements does not cover the other information and 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, 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.

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

-	the Directors' Report has 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 Directors' Report.

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; or

-	the directors were not entitled to prepare the financial statements in accordance with the small companies regime and take advantage of the small companies' exemption from the requirement to prepare a Strategic Report.

Responsibilities of directors

As explained more fully in the Statement of Directors' Responsibilities set out on page two, 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.

Our 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 an Auditors' Report that includes our opinion.

Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with

ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and

are considered material if, individually or in the aggregate, they could reasonably be expected to influence the

economic decisions of users taken on the basis of these financial statements.

A further description of our responsibilities 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 Auditors'

Report.

J Knights ACA BSc (Senior Statutory Auditor)

for and on behalf of Knights Lowe Limited

Chartered Accountants

and Statutory Auditors

Eldo House, Kempson Way

Suffolk Business Park

Bury St Edmunds

Suffolk

IP32 7AR

14 February 2018

TURNOVER

3,773,453

4,408,501

Cost of sales

3,095,214

3,033,005

GROSS PROFIT

678,239

1,375,496

Distribution costs

134,166

125,087

Administrative expenses

469,402

336,429

603,568

461,516

74,671

913,980

Other operating income

17,718

176,360

OPERATING PROFIT

92,389

1,090,340

Interest receivable and similar income

412

1,999

92,801

1,092,339

Interest payable and similar expenses

3

12,554

30,667

PROFIT BEFORE TAXATION

4

80,247

1,061,672

Tax on profit

5

(26,898

)

188,180

PROFIT FOR THE FINANCIAL YEAR

107,145

873,492

OTHER COMPREHENSIVE INCOME

Item that may be reclassified subsequently to profit or loss:

Capital reduction scheme

-

500,000

Income tax relating to item of other comprehensive income

-

-

OTHER COMPREHENSIVE INCOME FOR THE YEAR, NET OF INCOME TAX

-

500,000

TOTAL COMPREHENSIVE INCOME FOR THE YEAR

107,145

1,373,492

FIXED ASSETS

Tangible assets

7

1,836,652

1,659,184

CURRENT ASSETS

Stocks

8

1,201,631

1,070,063

Debtors

9

598,201

354,034

Cash at bank and in hand

536

126,260

1,800,368

1,550,357

CREDITORS

Amounts falling due within one year

10

1,044,530

653,291

NET CURRENT ASSETS

755,838

897,066

TOTAL ASSETS LESS CURRENT LIABILITIES

2,592,490

2,556,250

CREDITORS

Amounts falling due after more than one year

11

(133,078

)

(221,083

)

PROVISIONS FOR LIABILITIES

14

(137,200

)

(120,100

)

NET ASSETS

2,322,212

2,215,067

CAPITAL AND RESERVES

Called up share capital

15

800,000

800,000

Share premium

559,930

559,930

Retained earnings

962,282

855,137

SHAREHOLDERS' FUNDS

2,322,212

2,215,067

The financial statements have been prepared in accordance with the provisions of Part 15 of the Companies Act 2006 relating to small companies.

The financial statements were approved by the Board of Directors on 31 January 2018 and were signed on its behalf by:

Mr G R Morgan - Director

Called up

share

Retained

Share

Total

capital

earnings

premium

equity

£

£

£

£

Balance at 1 January 2016

800,000

231,645

1,059,930

2,091,575

Changes in equity

Issue of share capital

-

-

(500,000

)

(500,000

)

Dividends

-

(750,000

)

-

(750,000

)

Total comprehensive income

-

1,373,492

-

1,373,492

Balance at 31 December 2016

800,000

855,137

559,930

2,215,067

Changes in equity

Total comprehensive income

-

107,145

-

107,145

Balance at 31 December 2017

800,000

962,282

559,930

2,322,212

1.	ACCOUNTING POLICIES

Basis of preparation

These financial statements have been prepared in accordance with Financial Reporting Standard 101 "Reduced Disclosure Framework" and the Companies Act 2006. The financial statements have been prepared under the historical cost convention.

The company has taken advantage of the following disclosure exemptions in preparing these financial

statements, as permitted by FRS 101 "Reduced Disclosure Framework":

•

the requirements of IFRS 7 Financial Instruments: Disclosures;

•

the requirements of paragraphs 91 to 99 of IFRS 13 Fair Value Measurement;

•

the requirement in paragraph 38 of IAS 1 Presentation of Financial Statements to present comparative information in respect of:

-

paragraph 73(e) of IAS 16 Property, Plant and Equipment;

•

the requirements of paragraphs 10(d), 10)(f), 16, 38A, 38B, 38C, 38D, 40A, 40B, 40C, 40D and 111 of IAS 1 Presentation of Financial Statements;

•

the requirements of paragraphs 134 to 136 of IAS 1 Presentation of Financial Statements;

•

the requirements of IAS 7 Statement of Cash Flows;

•

the requirements of paragraphs 30 and 31 of IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors;

•

the requirements of paragraphs 17 and 18A of IAS 24 Related Party Disclosures;

•

the requirements of paragraphs 134(d) to 134(f) and 135(c) to 135(e) of IAS 36 Impairments of Assets.

Significant judgements and estimates

In the application of the Company's accounting policies, which are described below, the directors are required

to make judgements, estimates and assumptions about the carrying amounts of assets and liabilities that are

not readily apparent from other sources. The estimates and associated assumptions are based on, company

standard procedures, historical experience and other factors that are considered to be relevant. Actual results

may differ from these estimates.

The estimated and underlying assumptions are reviewed on an ongoing basis. Revision to accounting estimates

are recognised in the period in which the estimate is revised if revision affects only that period, or in the period

of the revision and future periods if the revision affects both current and future periods.

Critical judgements and key sources of estimation uncertainty in applying the Company's accounting policies

The following are critical judgements including those involving estimations, that the directors have made in the

process of applying the Company's accounting policies and that have the most significant effect on the amounts

recognised in the financial statements.

Depreciation of tangible fixed assets

Tangible fixed assets are recognised at cost and depreciated on the basis appropriate to charge to the profit

and loss the economic consumption of those assets during the accounting period. The charge is calculated as

described below and is based on, standard company policy and the directors knowledge of the reduction in the

residual value of plant and machinery and other fixed assets on average over the investment cycle of each class

of asset. The rates of depreciation are kept under review such that assets are written down to the residual

value of nil at the end of the economic lives of those assets.

Stock obsolescence provision

A provision is made against slow moving stock in accordance with company policy and, where relevant based

on the condition or expected future usage of individual stock lines. The charge is calculated as described below

such that stock holding value represents stock that can reasonably be expected to be realised within the

succeeding two financial periods at or above the holding value.

Turnover and revenue recognition

Turnover represents the sale of goods net of discounts and excluding value added tax.

The major part of the company's business is the manufacture of chemicals to its customers' precise

specifications and usually under customers prescribed terms and conditions (with the exception of pricing

which is decided largely by the Company). Sales orders are received and normal sales credit terms of 30 days

net or more are extended. It is not practice nor is it appropriate given the nature of the business to request

stage payments. Legal title to purchased and processed materials and all risks associated with the holding and

manufacture of materials remains wholly with Wychem Ltd until such point that quality control procedures are

satisfactorily completed and processed chemicals are accepted by customers usually at the time of delivery or

collection. There is no contractual or financial penalty levied on customers if sales orders are cancelled or varied

at any stage before completion. It is therefore the acceptance of stock by customers that is the trigger point for

the recognition of revenue under this element of the company's business.

Tangible fixed assets

Depreciation is provided at the following annual rates in order to write off each asset over its estimated useful life or, if held under a finance lease, over the lease term, whichever is the shorter.

Freehold property

-

2% straight line on buildings

Plant and machinery

-

10 years straight line

Fixtures and fittings

-

3 years straight line and 10 years straight line

Motor vehicles

-

6 years straight line

The company does not capitalise the cost of replacement parts of significant equipment such as reactors and

replacement components that form part of the factory unless such equipment is individually recognised and

the asset is replaced in its entirety or being substantially added to or improved. Other expenditure is capitalised

where the underlying asset has a useful life of over two years.

Stocks

Stock and work in progress are valued at the lower of cost and net realisable value. Cost is calculated on a

standard mark down from selling price, being currently 50%. Work in progress comprises materials, labour and

overheads incurred appropriate to the stage of manufacture.

Provision is made against slow moving and obsolete stock so as to fully provide after stock lines are held for

more than two years.

Stocks of machine component parts are held at cost. Provision is made to the extent the condition and

potential life of such components has deteriorated as at the accounting date.

Taxation

Current taxes are based on the results shown in the financial statements and are calculated according to local

tax rules, using tax rates enacted or substantially enacted by the balance sheet date.

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

balance sheet date.

Research and development

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

Foreign currencies

Assets and liabilities in foreign currencies are translated into sterling at the rates of exchange ruling at the

balance sheet date. Transactions in foreign currencies are translated into sterling at the rate of exchange ruling

at the date of transaction. Exchange differences are taken into account in arriving at the operating result.

Leasing commitments

Rentals payable under operating leases are charged to the profit and loss account on a straight line basis over

the period of the lease.

Related party transactions

On an annual basis, group entities, directors, key management, their close families and other entities in which

those parties have significant control are identified as parties related to the company and an assessment is

made of the potential type of transactions, if any that may be had with those parties. A review is then made of

company transactions material to each party identified and such are disclosed in the notes to the financial

statements together with the name of the relevant related party, the relationship to the company and the

amount owing or owed to the related party at the accounting date.

Financial liabilities - bank loans

The company's term loans are accounted for at cost which is not materially different to the treatment required

by IAS 39 which stipulates amortised cost.

Other working capital elements

Trade debtors and other debtors

Trade debtors, which generally have 30-60 day terms, are recognised and carried at the lower of their original

invoiced value and recoverable amount. Balances expressed in foreign currencies are converted to Sterling at

the exchange rates prevailing at the balance sheet date. Provision for impairment is made through profit or

loss when there is objective evidence that the Company will not be able to recover balances in full. Balances are

written off when the probability of recovery is assessed as being remote.

Trade creditors

Trade creditors, which generally have 30 day credit terms, are recognised and carried at the lower of their

original invoiced value and the payable amount. Balances expressed in foreign currencies are converted to

Sterling at the exchange rates prevailing at the balance sheet date.

2.	EMPLOYEES AND DIRECTORS

2017

2016

£

£

Gross pay (including benefits in kind)

851,014

758,198

Social security

80,834

79,629

Pension contributions

40,322

36,602

Total staff costs (including pensions benefits and social security)

972,170

874,429

The average number employed during the year was as follows:

2017

2016

Manufacturing and distribution

23

22

Administration

2

2

25

24

2017

2016

£

£

Director's remuneration

-

-

3.

INTEREST PAYABLE AND SIMILAR EXPENSES

2017

2016

£

£

Bank interest

2,953

11,660

Interest on tax liabilities

212

-

Hire purchase interest

442

664

Bank charges

8,947

18,343

12,554

30,667

4.	PROFIT BEFORE TAXATION

The profit before taxation is stated after charging/(crediting):

2017

2016

£

£

Cost of inventories recognised as expense

3,095,214

3,033,005

Depreciation - owned assets

131,623

92,165

Depreciation - assets on hire purchase contracts

1,312

-

Profit on disposal of fixed assets

(300

)

(200

)

Audit fee - Company

15,950

15,500

Audit fee - Immediate Parent

-

2,500

Auditor's non-audit fees

8,130

7,812

Foreign exchange differences

39,021

(2,672

)

Hire of plant and machinery

29,403

32,015

Research and development

349,562

351,880

5.

TAXATION

Analysis of tax (income)/expense

2017

2016

£

£

Current tax:

Tax on profit for the year

-

144,580

Prior period tax adjustments

(43,998

)

-

Total current tax

(43,998

)

144,580

Deferred tax

17,100

43,600

Total tax (income)/expense in statement of comprehensive income

(26,898

)

188,180

Factors affecting the tax expense

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

explained below:

2017

2016

£

£

Profit before income tax

80,247

1,061,672

Profit multiplied by the standard rate of corporation tax in the UK of 19.247% (2016 - 20%)

15,445

212,334

Effects of:

Depreciation (less)/greater than capital allowances

(16,590

)

(24,775

)

Non-deductible expenses

1,096

743

Research & development tax credit

-

(13,877

)

Prior year adjustments - group relief

(44,583

)

-

Prior year adjustments - other

585

(29,845

)

Deferred tax

17,100

43,600

Losses carried forward

49

-

Tax (income)/expense

(26,898

)

188,180

Tax effects relating to effects of other comprehensive income

There were no tax effects for the year ended 31 December 2017.

2016

Gross

Tax

Net

£

£

£

Capital reduction scheme

500,000

-

500,000

6.

DIVIDENDS

2017

2016

£

£

Ordinary shares of £1 each

Interim

-

750,000

7.	TANGIBLE FIXED ASSETS

Fixtures

Freehold

Plant and

and

Motor

property

machinery

fittings

vehicles

Totals

£

£

£

£

£

COST

At 1 January 2017

1,504,482

2,618,900

383,272

11,644

4,518,298

Additions

64,293

190,637

47,478

7,995

310,403

Disposals

-

-

-

(7,250

)

(7,250

)

At 31 December 2017

1,568,775

2,809,537

430,750

12,389

4,821,451

DEPRECIATION

At 1 January 2017

502,262

2,100,814

248,514

7,524

2,859,114

Charge for year

26,387

81,140

22,808

2,600

132,935

Eliminated on disposal

-

-

-

(7,250

)

(7,250

)

At 31 December 2017

528,649

2,181,954

271,322

2,874

2,984,799

NET BOOK VALUE

At 31 December 2017

1,040,126

627,583

159,428

9,515

1,836,652

At 31 December 2016

1,002,220

518,086

134,758

4,120

1,659,184

The net book value of tangible fixed assets includes £ 11,788 (2016 - £ 13,100 ) in respect of assets held under

hire purchase contracts.

8.

STOCKS

2017

2016

£

£

Raw materials

285,561

302,011

Work-in-progress

248,263

131,501

Finished goods

529,290

512,750

Fuel stocks

3,922

4,160

Engineering stocks

134,595

119,641

1,201,631

1,070,063

In 2016 specific provision was made in respect of raw materials purchased in 2015 which are obsolete due to

the cancellation of a substantial sales order. The amount of that provision at 31 December 2016 was £76,509.

At 31 December 2017 the stock is wholly written down under the standard policy for stock obsolescence.

9.

DEBTORS: AMOUNTS FALLING DUE WITHIN ONE YEAR

2017

2016

£

£

Trade debtors

391,747

181,903

Corporation tax

56,884

-

VAT

113,428

125,523

Prepayments

36,142

46,608

598,201

354,034