Strategic Report
Corporate Governance
Financial Statements
Notes to the UK GAAP Parent Company Financial Statements
For the year ended 31 December 2013
1. SIGNIFICANT ACCOUNTING POLICIES
Basis of preparation
The Company’s financial statements are prepared on the historical cost basis, except for derivative financial instruments which are stated at their fair value, and
in accordance with applicable UK accounting standards. The financial statements have been prepared on a going concern basis, for the reasons outlined in the
Financial Review on page 28.
The following accounting policies have been applied consistently in dealing with items which are considered material in relation to the Company’s financial
statements.
Profit and loss account
Under Section 408 (3) of the Companies Act 2006, the Company is exempt from the requirement to present its own profit and loss account.
Related party transactions
As the parent company of the British Polythene Industries PLC Group (the financial statements for which can be found on pages 89 to 121), the Company
has taken advantage of the exemption contained in FRS 8 and has therefore not disclosed transactions or balances with entities which are wholly owned
subsidiaries of the Group.
Foreign currencies
Transactions in currencies other than pounds sterling are recorded at the rates of exchange prevailing on the dates of the transactions. At each balance
sheet date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the balance sheet date.
Non-monetary assets and liabilities carried at historical cost that are denominated in foreign currencies are translated at the rates prevailing at the date
when the historical cost was determined. Gains and losses arising on retranslation are included in the profit and loss account for the year.
Taxation
The Company’s tax charge is based on the result for the year and tax rates in force during the year. Estimation of the tax charge requires an assessment
to be made of the potential tax treatment of certain items which will only be resolved once finally agreed with the relevant tax authorities.
Deferred taxation
Deferred tax is recognised, without discounting, in respect of all timing differences between the treatment of certain items for taxation and accounting
purposes which have arisen but not reversed by the balance sheet date, except as otherwise required by FRS 19. A net deferred tax asset is regarded as
recoverable and therefore recognised only when, on the basis of all available evidence, it can be regarded as more likely than not that there will be sufficient
taxable profits from which the future reversal of the underlying timing differences can be deducted.
Investments
Investments are stated at cost less provisions for any impairment.
Derivative financial instruments
Certain derivative financial instruments are designated as hedges in line with the Company’s treasury policy. Hedges are classified as follows:
• Fair value hedges that hedge the exposure to changes in the fair value of a recognised asset or liability.
• Cash flow hedges that hedge exposure to variability in cash flows that is either attributable to a particular risk associated with a recognised asset
or liability or a forecast transaction.
For fair value hedges, any gain or loss from remeasuring the hedging instrument at fair value is recognised in the profit and loss account. Any gain or loss on
the hedged item attributable to the hedged risk is adjusted against the carrying amount of the hedged item and similarly recognised in the profit and loss
account.
For cash flow hedges, the portion of the gain or loss on the hedging instrument that is determined to be an effective hedge, as defined by FRS 26, is
recognised in equity, with any ineffective portion recognised in the profit and loss account. When hedged cash flows result in the recognition of a nonfinancial asset or liability, the associated gains or losses previously recognised in equity are included in the initial measurement of the asset or liability.
For all other cash flow hedges, the gains or losses that are recognised in equity are transferred to the profit and loss account in the same period in which
the hedged cash flows affect the profit and loss account.
Any gains or losses arising from changes in fair value of derivative financial instruments not designated as hedges are recognised in the profit and loss account.
When a hedging instrument is sold, terminated or exercised, or the entity revokes designation of the hedge relationship but the hedged forecast transaction is
still expected to occur, the cumulative gain or loss at that point remains in equity and is recognised in accordance with the above policy when the transaction
occurs. If the hedged transaction is no longer expected to take place, the cumulative unrealised gain or loss recognised in equity is recognised immediately in
the profit and loss account.
British Polythene Industries PLC Annual Report and Accounts 2013
123
Notes to the UK GAAP Parent Company Financial Statements
For the year ended 31 December 2013 (Continued)
1. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Financial guarantee contracts
Where the Company enters into financial guarantee contracts to guarantee the indebtedness of other companies within the Group, the Company considers
these to be insurance arrangements, and accounts for them as such. In this respect, the Company treats the guarantee contract as a contingent liability until
such time as it becomes probable that the Company will be required to make a payment under the guarantee.
Share-based payments
The fair value of employee share options granted is calculated at grant date and the resulting cost is charged to the profit and loss account over the
performance period of the options with a corresponding increase in equity. The value of the charge is adjusted to reflect expected and actual levels
of options vesting. Failures to vest as a result of market conditions are not reversed.
Treasury shares
When share capital recognised as equity is repurchased, the amount of the consideration paid, including directly attributable costs, is recognised as
a change in equity. Repurchased shares are classified as treasury shares and presented as a deduction from profit and loss reserves.
Provisions and contingent liabilities
In accordance with FRS 12 “Provisions, Contingent Liabilities and Contingent Assets”, provisions are recognised where there is a present obligation as
a result of a past event, it is probable that a transfer of economic benefits will be required to settle the obligation and a reliable estimate can be made
of the amount of the obligation. If these conditions are not met, no provision is recognised. However, contingent liabilities are disclosed in the notes to
the financial statements, unless the possibility of a transfer of economic benefits is remote. Contingent gains are not recognised unless realisation of
the profit is virtually certain.
Dividends payable
Dividends payable to the Company’s shareholders are recorded as a liability in the period in which the dividends are approved.
Retirement benefit obligations
The Company participates in a group-wide scheme, the British Polythene Pension Scheme, which has a defined benefit section (providing benefits based on
final pensionable pay) and a defined contribution section. The assets of the Scheme are held separately from those of the Company. The pension costs for
the defined contribution section are charged to the profit and loss account on the basis of contributions due in respect of the financial year. In relation to the
defined benefit section of the Scheme, the Company is unable to identify its share of the underlying assets and liabilities on a consistent and reliable basis and
therefore, as required by FRS 17, the Company accounts for this Scheme as a defined contribution scheme. As a result, the amount charged to the profit and
loss account in respect of the defined benefit section represents the contributions payable to the Scheme in respect of the year.
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Strategic Report
Corporate Governance
2. FIXED ASSET INVESTMENTS
Financial Statements
Subsidiary Undertakings
Equity
£’m
Non-equity
£’m
Total
£’m
Shares at cost less provisions
At 1 January 2013
Movement during year
119.1
2.2
14.5
(0.2)
133.6
2.0
At 31 December 2013
121.3
14.3
135.6
SUBSIDIARY UNDERTAKINGS
As indicated below, the Company owns the whole issued share capital of all subsidiary undertakings. The principal subsidiary undertakings are as follows:
Company
Country of incorporation
Trade
British Polythene Limited
AT Films Inc*
BPI PLC
Flexfilm Limited
Jordan Plastics Limited
BPI Europe BV*
Combipac BV*
Formipac France SA*
Irish Polythene Industries Limited
Venture Hong Kong Limited (75% owned)*
BPI China +
England
Canada
England
England
Northern Ireland
Netherlands
Netherlands
France
Republic of Ireland
Hong Kong
China
Polythene Manufacturer
Polythene Manufacturer
Property Company
Polythene Manufacturer
Polythene Printer
Holding Company
Polythene Manufacturer
Distribution Company
Distribution Company
Holding Company
Polythene Manufacturer
* Shares held through an intermediate holding company.
+ 20% owned through a subsidiary undertaking.
The Company also has an interest in the British Polythene Industries Pension Funding Limited Partnership the results of which are consolidated into the Group’s
financial statements. The Company has taken advantage of the exemption available under regulation 7 of the Partnership (Accounts) Regulations, 2008 and
has therefore not appended the accounts of the qualifying partnership (which do not need to be filed at Companies House) to these financial statements.
3. DEBTORS
Trade debtors
Amounts due by subsidiary undertakings
Prepayments and accrued income
Other debtors
Group relief receivable
2013
£’m
2012
£’m
0.4
39.0
0.1
1.5
0.5
0.1
35.0
0.3
1.8
0.4
41.5
37.6
4. DERIVATIVE FINANCIAL INSTRUMENTS
The Company considers the Group disclosures found at Note 16 to the consolidated financial statements to satisfy all FRS 29 disclosure requirements in relation
to financial instruments.
5. OTHER CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR
Trade creditors
Other taxes and social security
Accruals and deferred income
Other creditors
Amounts due to subsidiary undertakings
British Polythene Industries PLC Annual Report and Accounts 2013
2013
£’m
2012
£’m
0.8
0.9
1.1
1.0
31.3
0.4
1.2
1.5
0.2
33.7
35.1
37.0
125
Notes to the UK GAAP Parent Company Financial Statements
For the year ended 31 December 2013 (Continued)
6. CALLED UP SHARE CAPITAL
Allotted called up and fully paid
Equity
26,921,731 (2012: 26,611,146) ordinary shares of 25p each
2013
£’m
2012
£’m
6.7
6.6
7. SHARE PREMIUM ACCOUNT
£’m
At 1 January 2013
On shares issued
25.3
0.6
At 31 December 2013
25.9
8. OTHER RESERVES
Total
other
reserves
£’m
Merger
reserve
£’m
Capital
Redemption
reserve
£’m
Capital
reserve
£’m
At 1 January 2013
Movement during the year
6.5
–
7.2
–
0.1
–
(0.9)
0.5
12.9
0.5
At 31 December 2013
6.5
7.2
0.1
(0.4)
13.4
2013
£’m
2012
£’m
At 1 January
Profit for the financial year
Dividends paid
Increase in own shares held
FRS 20 charge in relation to equity settled transactions
39.3
4.5
(3.5)
(2.1)
1.6
39.5
2.0
(3.3)
(1.3)
2.4
At 31 December
39.8
39.3
2013
£’m
2012
£’m
Opening shareholders’ funds
84.1
84.0
Profit for the financial year
Dividends paid
Increase in share premium reserve
New shares subscribed (net of expenses)
Increase in own shares held
FRS 20 charge in relation to equity-settled transactions
Movement in hedging reserve
4.5
(3.5)
0.6
0.1
(2.1)
1.6
0.5
2.0
(3.3)
0.2
–
(1.3)
2.4
0.1
1.7
0.1
85.8
84.1
9. PROFIT AND LOSS ACCOUNT
Hedging
reserve
£’m
The profit after taxation for the year amounted to £4.5 million (2012: £2.0 million).
10. RECONCILIATION OF MOVEMENT IN SHAREHOLDERS’ FUNDS
Net movement in shareholders’ funds
Closing shareholders’ funds
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Strategic Report
Corporate Governance
Financial Statements
11. OWN SHARES HELD
2013
£’m
2012
£’m
Cost of own shares held
At 1 January
Shares purchased
Movement relative to shares vested under the restricted share plan
3.2
2.1
–
2.3
1.3
(0.4)
At 31 December
5.3
3.2
The cost of own shares held represents shares held by the British Polythene Industries Employee Share Ownership Trust to satisfy the Company’s liabilities
under share-based payment plans. The market value of the shares is £9.2 million (2012: £4.1 million).
Movements in the numbers of shares held
At 1 January
Number of shares allocated to employees
Shares purchased
Date of
allocation
2013
Number
of shares
2013
Date of
allocation
2012
1,031,388
– 09/03/2013
Various
394,983
Various
At 31 December
1,426,371
Number
of shares
2012
854,071
(187,683)
365,000
1,031,388
12. DIVIDENDS
2013
£’m
2012
£’m
Amounts recognised as distributions to equity holders in the year:
Final dividend for the year ended 31 December 2012 of 9.0p per share (2011: final dividend of 8.5p)
Interim dividend for the year ended 31 December 2013 of 4.5p per share (2012: 4.2p)
2.3
1.2
2.2
1.1
Proposed final dividend for the year ended 31 December 2013 of 10.0p per share (2012: final dividend of 9.0p)
3.5
2.7
3.3
2.3
The proposed final dividend was approved by the Board on 28 February 2014 and has not been included as a liability as at 31 December 2013.
13. CONTINGENT LIABILITIES
As highlighted under risk factors on page 16, the Group is involved in certain claims and litigation. In the opinion of the Directors, liabilities, if any, arising
from these claims and litigation will not have a material adverse effect on the Group’s consolidated financial position or results.
The Company has guaranteed the bank overdrafts of certain subsidiaries amounting at 31 December 2013 to £0.8 million (2012: £3.2 million) including
interest from time to time thereon. The Company also has an obligation under the Group VAT registration amounting at 31 December 2013 to £3.4 million
(2012: £3.6 million).
The company has also entered into a contract to guarantee the indebtedness of a third party in relation to a lease contract. In the event of default, the
company could be held liable for future contracted lease payments for up to five years from 29 July 2010. This represents a contingent liability to the company
of the present value of these payments. This amounted to £0.3 million at 31 December 2013 (2012: £0.4 million).
14. SHARE-BASED PAYMENTS
The Company considers the IFRS 2 Group disclosures found at Note 28 to the consolidated financial statements to satisfy all FRS 20 disclosure requirements.
15. PENSIONS
Defined Contribution Schemes
The assets of the defined contribution section of the British Polythene Pension Scheme and other defined contribution schemes are held separately from
those of the Group, being invested with a number of insurance companies.
The pension charge includes contributions payable to the various insurance companies.
British Polythene Industries PLC Annual Report and Accounts 2013
127
Notes to the UK GAAP Parent Company Financial Statements
For the year ended 31 December 2013 (Continued)
15. PENSIONS (CONTINUED)
Defined Benefit Scheme
The Company is a member of a larger group-wide pension scheme providing benefits based on pensionable pay. As the Company is unable to identify its
share of the Scheme assets and liabilities on a reliable and consistent basis, as permitted by FRS 17 “Retirement benefits”, the Scheme is accounted for as if it
were a defined contribution scheme. The Company made contributions of £0.1 million (2012: £0.1 million) in the year. There were no outstanding or prepaid
Company contributions at either the beginning or the end of the financial year. On 30 September 2010 the Scheme ceased future accruals and all active
members’ past service benefits were preserved on this date.
The assets of the defined benefit section are invested in a self-administered trust fund and hence are also separated from the Group’s business assets.
FRS 17 Disclosures
The Company considers that the IAS 19 Group disclosures found at Note 29 to the consolidated financial statements satisfies all FRS 17 disclosure requirements.
16. RELATED PARTY TRANSACTIONS
The company has a related party relationship with its subsidiaries, with its Directors and executive officers including key management personnel, and with
the British Polythene Pension Scheme. Disclosures relating to Directors are shown on pages 61 to 81.
Transactions with wholly owned subsidiaries of British Polythene Industries PLC Group are not disclosed on the basis of the exemption contained in FRS 8.
At 31 December 2013, the company has intercompany debtor balances with two non-wholly owned subsidiaries; £0.8m with BPI China (2012: £0.8m) and
£0.7m with Venture Hong Kong Limited (2012: £0.8m). The balances relate to intercompany loans.
Remuneration of key management personnel
The remuneration of the key management personnel of the Company is set out below, in aggregate:
Short-term employee benefits
Share-based payments
Post-employment benefits
128
2013
£’m
2012
£’m
1.8
0.9
0.1
1.9
0.3
0.1
2.8
2.3