Introduction
The company's principal activities during the year were the manufacture and sale of electronic servo motors.
CTD is part of the Nidec Group, a USD $12 billion revenue manufacturer of electric motors and related electronics components. The Nidec Group includes more than 300 subsidiaries and employs more than 140,000 individuals globally. Nidec’s head office is based in Japan. CTD is part of the CIS-A business which is head quartered in St Louis, USA.
The principal activity during the 12 months was the manufacture and sale of electromechanical and electronic devices. The Company manufactures two complementary servo motor ranges: Unimotor FM targets applications where continuous duty, medium inertia are key factors; Unimotor HD is the compact, high dynamic range, targeting applications where these features add value. The percentage of sales represented by HD is growing as it becomes increasingly well-received by large OEM customers.
The company coordinates the group’s investment in people, products, facilities and customer facing activities. Whilst overall managerial control is exercised by the Main Board of Nidec Motion Control its subsidiaries are allowed a significant degree of autonomy and all the group’s employees are encouraged to exercise their initiative, skills and use their local knowledge to promote the growth of the group.
Markets and Trends
According to the research report, the "Servo Motors and Drives Market by Offering (Hardware, Software and Services), Product Type (Servo Motors, Servo Drives), System, Voltage, Communication Protocol, Brake Technology, Material of Construction, Industry, and Region - Global Forecast to 2025" is projected to grow from USD 13.9 billion in 2020 to USD 16.8 billion by 2025; it is expected to grow at a CAGR of 4.0% from 2020 to 2025. The key factors fuelling the growth of this market include the growing automation in factories, rising adoption of international standards for motor efficiency, development of user-friendly motion control libraries and packages for motors and drives, and increasing production of vehicles. Servo motors are the most sophisticated motion control devices. They incorporate advanced design methods, high-force magnet materials, and precise dimensional tolerance. Although not a specific class of motors, these electrical devices are designed and intended to be used in motion control applications that involve exceptional performance, quick reversing, and high accuracy positioning and high levels of efficiency. In addition, they offer easy installation and involve no maintenance cost, thus driving their demand over the forecast period. Rapid growth and advancements in automation, coupled with increasing adoption of battery driven AGV’s, are some of the substantial drivers influencing market growth.
Objectives
The company’s main objective is to grow through continued investment in its marketing initiatives, product development, manufacturing processes and sales network. CTD leverages two sales channels from Nidec’s ACIM and M&DE Business segments – leveraging Automation Centre’s, which allows it to position technical expertise near to its customers, clearly differentiates it from its competitors and this, combined with the launch of innovative new products and continuing focus on its delivery performance, will allow the company to maintain and improve its market position. Customer base consists of OEM and distributors with a Global customer base and a varied number of market segment applications.
Strategy
The company strives to follow business best practice, as detailed by its parent company, and has implemented procedures to ensure that it complies with all applicable safety, ethical, environmental and legislative requirements. The company is focused on producing and delivering high quality, competitive products and services to meet its customers’ requirements and to this end will continue to invest in people and processes. An increasing focus for the company is on battery driven AGV’s, productivity improvement through automation and environmentally friendly operations.
The business outlook is looking strong. With a healthy order book and a strong performance in the financial year.
The company has now improved and increased its supply channels for the sourcing of material to ensure that material shortages are limited and productivity relatively unaffected. Subsequently the raw material and commodities prices have also increased when sourcing from Chinese and European suppliers. Distribution costs have subsequently increased 33% due to carriers increasing their prices, as well as the increase in duty costs due.
Labour shortages were overcome by retaining existing staff by offering a performance related bonus for the year and additional staff were recruited with additional incentives such as recruitment bonuses and ongoing performance related bonuses.
Forecasted Sales for the Year Ended 31st March 2023 are at £18.3m an increase of 17.1%. The current order book is healthy seeing large orders from key customers and overall, the business outlook is very positive.
New products continue to be developed and new customers acquired. CTD now has a mix of customers including larger OEMs. Growth is planned and improved margins will be seen due to supply base change. CTD is supporting multiple sales channels across Nidec and has strong growth strategies in place.
Principal risks and uncertainties
In all business operations, risk management and process control are a priority, and the Board of Directors are ultimately responsible for considering major risks. The following are key areas of risk to the business:
Foreign exchange
The company is exposed to currency risk in the form of 'transaction risk' in respect of products manufactured in the UK and sold across the world in other currencies.
Raw material prices
The current economic outlook and high inflation rates is having an impact on material pricing. Although prices of key commodities have increased, CTD is committed to identify opportunities to reduce our cost base through negotiation and alternative suppliers. Any increases or volatility in prices and shortages in supply can affect the company's performance.
Corporate Social Responsibility
The company has a strong commitment to business ethics which includes regular communication to all employees regarding the importance of conducting business in a legal and responsible manner.
Disruption to Operations
The company has well-developed disaster recovery plans designed to deal with disruption to its manufacturing operations and IT infrastructure.
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| 12 Months |
| 12 Months |
| 12 Months |
| 18 Months |
| 12 Months |
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| March 2022 |
| March 2021 |
| March 2020 |
| March 2019 |
| Sep 2017 |
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Sales |
| £15.6m |
| £11.2m |
| £15.3m |
| £24.7m |
| £15.5m |
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Pre tax profit Percentage | 0.5% |
| -8.2% |
| 6.0% |
| 11.3% |
| 21.5% | |
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Capital expenditure | £0.3m |
| £0.3m |
| £0.9m |
| £1.1m |
| £0.3m | |
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Number of employees | 109 |
| 111 |
| 120 |
| 117 |
| 105 | |
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Average remuneration per employee | £35.7k |
| £35.3k |
| £35.8k |
| £54.3k |
| £35.2k |
The company’s turnover and income is derived from sales made to other Group companies and external trade customers. During the year ended 31 March 2022 it recorded an operating profit of £102,430 (year ended 31 March 2021: loss of £895,335) and a pre-tax profit of £77,931 (year to 31 March 2021: loss of £920,056). Net assets reduced to £11,876,585 (31 March 2021: £12,066,507). No significant changes in the principal activities of the business are anticipated in the foreseeable future.
On behalf of the board
The directors present their annual report and financial statements for the year ended 31 March 2022.
The loss for the year, after taxation, amounted to £189,922 (2021 - £855,053).
There were no dividends declared or paid in the 12-month period to 31 March 2022 (12-months to 31 March 2021: £niI ).
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
The company's current policy concerning the payment of trade creditors is to follow the CBI's Prompt Payers Code (copies are available from the CBI, Centre Point, 103 New Oxford Street, London WC1A 1DU).
The company's current policy concerning the payment of trade creditors is to:
settle the terms of payment with suppliers when agreeing the terms of each transaction;
ensure that suppliers are made aware of the terms of payment by inclusion of the relevant terms in contracts; and
pay in accordance with the company's contractual and other legal obligations.
Trade creditors of the company at the year end were equivalent to 44 day's purchases, based on the average daily amount invoiced by suppliers during the year.
Control Techniques Dynamics Limited will continue to act as a trading company providing servo technology and products within Nidec Group and externally. CTD will continue to be part of the Nidec Motion Control Business Unit and support the needs of multiple Nidec Group companies. CTD is continually developing new technological advancements and will focus in FY22 on high speed motors and integrated servo and controller solutions to meet their customers' needs.
Control Techniques Dynamics Limited continue to invest in research and development activities in the field of servo motors and electronic variable speed drives.
Engagement with employees
Regular formal and informal meetings are held with employees to discuss the progress of the company with them and to invite their views and comments. Training and career development are actively encouraged and are available to all employees based upon their ability and the requirements of the company.
Disabled employees
The company seeks to ensure that full and fair consideration is given to applications from disabled persons, and also makes every effort to find alternative work (including retraining if necessary) for existing employees who become unable to carry out the job for which they are employed.
Qualifying third party indemnity provisions
The directors benefited from third party indemnity provisions in place during the financial year and at the date of this report.
Matters covered in the strategic report
Some elements of the Directors’ Report are included in the Strategic Report and have not been repeated here. These can be found within the Strategic Report on pages 1 to 3.
COVID-19 continues to have an impact on the company’s operations and markets. The Directors have considered the impact of COVID-19 in preparing these financial statements, in particular in relation to their assessment that the going concern basis of preparation should be used.
The auditor, Langdowns DFK Limited, is deemed to be reappointed under section 487(2) of the Companies Act 2006.
The company has net current assets of £9.3 million as at 31 March 2022 and made a loss for the year then ended of £0.19 million. The company earns its revenue from the manufacture and sale of electronic servo motors. It meets its day to day working capital requirements from its own profits and reserves. The company also has access to the Group cash pool, and this gives them easy access to funds, if required, to safeguard against potential downside risks posed by COVID-19. The company has prepared cashflow forecasts for the period to 31 March 2023 including a severe but plausible downside case which shows reductions in revenue caused by COVID-19. As set out in Note 2 to the financial statements, the going concern basis of accounting has been adopted in preparing these financial statements on the basis that the company will continue to be self-sufficient for at least the next twelve months from the date these financial statements are approved.
We have audited the financial statements of Control Techniques Dynamics Limited (the 'company') for the year ended 31 March 2022 which comprise the profit and loss account, the balance sheet, the statement of changes in equity and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 101 Reduced Disclosure Framework (United Kingdom Generally Accepted Accounting Practice).
Basis for opinion
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
Other information
The directors are responsible for the other information. The other information comprises the information in the Strategic Report and the Directors' Report but does not include the financial statements and our Report of the Auditors thereon.
Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of our audit:
the information given in the strategic report and the directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
the strategic report and the directors' report have been prepared in accordance with applicable legal requirements.
We also consider areas that are at a higher risk of causing material misstatement in the financial statements due to irregularities, including those resulting from fraud and how such fraud may occur. We discuss with senior management the key controls in place to mitigate the risk of fraud and enquire as to whether they are aware of, or suspect, any fraudulent activities having taken place.
Throughout the audit, we maintain an appropriate level of professional scepticism when provided with information and explanations. We consider the appropriateness of significant accounting journals that were processed during the year, assess the reasonableness of any significant accounting estimates and consider whether there were any indications of bias by management during the year that represents a risk of material misstatement due to fraud. We also carry out analytical procedures to identify any unusual or unexpected variances to expectations as these may be an indication of management over-ride or management bias.
Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading to a material misstatement in the financial statements or non-compliance with regulation. This risk increases the more that compliance with a law or regulation is removed from the events and transactions reflected in the financial statements, as we will be less likely to become aware of instances of non-compliance. The risk is also greater regarding irregularities occurring due to fraud rather than error, as fraud involves intentional concealment, forgery, collusion, omission or misrepresentation.
A further description of our responsibilities is available on the Financial Reporting Council's website at: https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.
Use of our report
This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company’s members those matters we are required to state to them in 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.
There are no recognised gains and losses other than those passing through the profit and loss account.
The notes on pages 13 to 27 form part of these financial statements.
The notes on pages 13 to 27 form part of these financial statements.
The notes on pages 13 to 27 form part of these financial statements.
In the application of the company's accounting policies, the directors are required to make judgments, 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 historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period or in the period of revision and future periods if the revision affects both the current and future periods.
Control Techniques Dynamics Limited is a private limited company incorporated, domiciled and registered in Great Britain and based at South Way, Andover, Hampshire, SP10 5AB. The registered number is 00741360.
The financial statements are prepared in sterling, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £.
As permitted by FRS 101, the company has taken advantage of the following disclosure exemptions from the requirements of IFRS:
the requirements of IFRS 7 Financial Instruments: Disclosures;
the requirements of paragraphs 91-99 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 79(a)(iv) of IAS 1;
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, 111 and 134-136 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 paragraph 17 and 18A of IAS 24 Related Party Disclosures;
the requirements in IAS 24 Related Party Disclosures to disclose related party transactions entered into between two or more members of a group, provided that any subsidiary which is a party to the transaction is wholly owned by such a member.
Sale of goods
Revenue from the sale of goods is recognised on the satisfaction of performance obligations, such as the transfer of a promised good, identified in the contract between the Company and the customer.
A receivable is recognised when the goods are delivered as this is the point in time that the consideration is unconditional because only the passage of time is required before the payment is due.
Interest income
Interest income is recognised in profit or loss using the effective interest method.
Finance costs
Finance costs are charged to profit or loss over the term of the debt using the effective interest method so that the amount charged is at a constant rate on the carrying amount. Issue costs are initially recognised as a reduction in the proceeds of the associated capital instrument.
Depreciation is provided on the following basis:
The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is recognised in the profit and loss account.
Stocks are stated at the lower of cost and net realisable value, being the estimated selling price less costs to complete and sell. Cost is based on the cost of purchase on a weighted average basis. Work in progress and finished goods include labour and attributable overheads.
At each balance sheet date, stocks are assessed for impairment. If stock is 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.
The Company always recognises lifetime ECL for trade receivables and amounts due on contracts with customers. The expected credit losses on these financial assets are estimated based on the Company's historical credit loss experience, adjusted for factors that are specific to the debtors, general economic conditions and an assessment of both the current as well as the forecast direction of conditions at the reporting date, including time value of money where appropriate. Lifetime ECL represents the expected credit losses that will result from all possible default events over the expected life of a financial instrument.
Impairment excluding stocks and deferred tax assets
Financial assets (including trade and other debtors)
A financial asset not carried at fair value through profit or loss is assessed at each reporting date to determine whether there is objective evidence that it is impaired. A financial asset is impaired if objective evidence indicates that a loss event has occurred after the initial recognition of the asset, and that the loss event had a negative effect on the estimated future cash flows of that asset that can be estimated reliably.
An impairment loss in respect of a financial asset measured at amortised cost is calculated as the difference between its carrying amount and the present value of the estimated future cash flows discounted at the asset's original effective interest rate. For financial instruments measured at cost less impairment an impairment is calculated as the difference between its carrying amount and the best estimate of the amount that the Company would receive for the asset if it were to be sold at the reporting date. Interest on the impaired asset continues to be recognised through the unwinding of the discount. When a subsequent event causes the amount of impairment loss to decrease, the decrease in impairment loss is reversed through profit or loss.
Non-financial assets
The carrying amounts of the Company's non-financial assets, other than stocks and deferred tax assets, are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, then the assets recoverable amount is estimated. For goodwill, and intangible assets that have indefinite useful lives or that are not yet available for use, the recoverable amount is estimated each year at the same time.
Impairment losses recognised in respect of CGUs are allocated first to reduce the carrying amount of any goodwill allocated to the units, and then to reduce the carrying amounts of the other assets in the unit (group of units) on a pro rata basis.
In respect of other assets, impairment losses recognised in prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset's carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised.
The Company recognises financial liabilities when it becomes a party to the contractual arrangements of the instrument. Financial liabilities are de-recognised when they are discharged or when the contractual terms expire.
Creditors are obligations to pay of goods or services that have been acquired in the ordinary course of business from suppliers.
Creditors are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method.
At amortised cost
Financial liabilities which are neither contingent consideration of an acquirer in a business combination, held for trading, nor designated as at fair value through profit or loss are subsequently measured at amortised cost using the effective interest method. This is a method of calculating the amortised cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments through the expected life of the financial liability, or where appropriate a shorter period, to the amortised cost of a financial liability.
The tax expense for the year comprises current and deferred tax. Tax is recognised in profit or loss except that a charge attributable to an item of income and expense recognised as other comprehensive income or to an item recognised directly in equity is also recognised in other comprehensive income or directly in equity respectively.
Provisions are made where an event has taken place that gives the Company a legal or constructive obligation that probably requires settlement by a transfer of economic benefit, and a reliable estimate can be made of the amount of the obligation.
Provisions are charged as an expense to profit or loss in the year that the Company becomes aware of the obligation, and are measured at the best estimate at the Balance sheet date of the expenditure required to settle the obligation, taking into account relevant risks and uncertainties.
When payments are eventually made, they are charged to the provision carried in the Balance sheet.
The Company as a lessee
The Company assesses whether a contract is or contains a lease, at inception of a contract. The Company recognizes a right-of-use asset and a corresponding lease liability with respect to all lease agreements in which it is the lessee, except for short-term leases (defined as leases with a lease term of 12 months or less) and leases of low value assets. For these leases, the Company recognizes the lease payments as an operating expense on a straight-line basis over the term of the lease unless another systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed.
The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted by using the rate implicit in the lease. If this rate cannot be readily determined, the Company uses its incremental borrowing rate.
Lease payments included in the measurement of the lease liability comprise:
fixed lease payments (including in-substance fixed payments), less any lease incentives; The lease liability is included in 'Creditors' on the Balance sheet.
The lease liability is subsequently measured by increasing the carrying amount to reflect interest on the lease liability (using the effective interest method) and by reducing the carrying amount to reflect the lease payments made.
The right-of-use assets comprise the initial measurement of the corresponding lease liability, lease payments made at or before the commencement day and any initial direct costs. They are subsequently measured at cost less accumulated depreciation and impairment losses.
Right-of-use assets are depreciated over the shorter period of lease term and useful life of the underlying asset. If a lease transfers ownership of the underlying asset or the cost of the right-of-use asset reflects that the Company expects to exercise a purchase option, the related right-of-use asset is depreciated over the useful life of the underlying asset. The depreciation starts at the commencement date of the lease.
The right-of-use assets are included in the 'Tangible Fixed Assets line in the Balance sheet.
The Company applies IAS 36 to determine whether a right-of-use asset is impaired and accounts for any identified impairment loss as described in Tangible fixed assets
As a practical expedient, IFRS 16 permits a lessee not to separate non-lease components, and instead account for any lease and associated non-lease components as a single arrangement. The Company has used this practical expedient.
Research and development
In the research phase of an internal project it is not possible to demonstrate that the project will generate future economic benefits and hence all expenditure on research shall be recognised as an expense when it is incurred. Intangible assets are recognised from the development phase of a project if and only if certain specific criteria are met in order to demonstrate the asset will generate probable future economic benefits and that its cost can be reliably measured. The capitalised development costs are subsequently amortised on a straight-line basis over their useful economic lives, which range from 3 to 6 years.
If it is not possible to distinguish between the research phase and the development phase of an internal project, the expenditure is treated as if it were all incurred in the research phase only.
The average monthly number of persons (including directors) employed by the company during the year was:
Their aggregate remuneration comprised:
During the year retirement benefits were accruing to 1 director {2021 - 1) in respect of defined contribution pension schemes.
Factors affecting tax charge for the year
The tax assessed for the year is lower than (2021 - lower than) the standard rate of corporation tax in the UK of 19% (2021 - 19%). The differences are explained below:
Deferred taxes at the balance sheet date have been measured using these enacted tax rates and reflected in these financial statements.
Tangible fixed assets includes right-of-use assets, as follows:
The write-down of stocks to net realisable value amounted to £nil (2021: £nil). The write-down is included in cost of sales.
The amounts owed by group undertakings are unsecured, interest free, have no fixed date of repayment and are repayable on demand.
The Cashpool asset represents cash funds that Control Techniques Dynamics Limited have entered into a pooled cash account that is not in their legal ownership. Legal ownership is held by another Nidec- group company. These funds remain readily accessible and available to the company.
The amounts owed to group undertakings are unsecured, interest free, have no fixed date of repayment and are repayable on demand.
Lease liabilities are classified based on the amounts that are expected to be settled within the next 12 months and after more than 12 months from the reporting date, as follows:
Company as a lessee
During the period, the company leased property (land and premises) and a number of items of plant (forklifts) for its operations.
Right-of-use assets related to lease properties that do not meet the definition of investment properties are presented as property, plant and equipment. These have been presented as Long-term Leasehold properties, with a right-of-use asset value of £729,758 (31 March 2021:£729,758) and plant and machinery with a right-of-use value of £55,853 (31 March 2021:£65,054) . The closing book value of leased property as at 31 March 2022 was £643,410 (31 March 2021: £676,416).
There were no additions of right-of-use assets in the year, there was one disposal of plant and machinery with a right-of-use value of £9,201. Depreciation charged in the year on right-of-use assets was as follows: on leased property £17,235, on leased plant and machinery £11,171.
The following are the major deferred tax liabilities and assets recognised by the company and movements thereon during the current and prior reporting period.
Share premium account
There have been no changes in equity affecting the Share Premium account in either the current or previous years.
Profit and loss account
All gains and losses are reflected in the Profit and Loss account.
At the balance sheet date the Company was a subsidiary of Nidec Corporation, which was the ultimate parent company incorporated in Japan. The immediate parent undertaking is Nidec Control Techniques Limited, a company incorporated in Great Britain.
The largest group in which the results of the company are consolidated is that headed by Nidec Corporation. Copies of the annual financial statements of the ultimate holding company are available from: Nidec Corporation, 338 Kuzetonoshiro-cho, Minami-ku, Kyoto 601-8205, JAPAN.
No other group financial statements include the results of the Company.