Registered number:
00880499
B & W GROUP LTD
FINANCIAL STATEMENTS
FOR THE 18 MONTHS ENDED 30 MARCH 2021
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B & W GROUP LTD
COMPANY INFORMATION
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G I Edwards
(resigned 24 May 2022)
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D Duggins
(appointed
7 February 2020
, resigned
9 October 2020
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G Lee
(resigned
7 February 2020
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J I Kim
(resigned
29 November 2019
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G Yu
(resigned
7 February 2020
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L Courtney-Wheatley
(appointed
1 August 2022
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Chartered Accountants
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Statutory Auditors
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B & W GROUP LTD
CONTENTS
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Independent auditors' report
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Consolidated statement of profit or loss
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Consolidated statement of other comprehensive income
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Consolidated statement of financial position
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Company statement of financial position
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Consolidated statement of changes in equity
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Company statement of changes in equity
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Consolidated statement of cash flows
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Company statement of cash flows
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Notes to the consolidated financial statements
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B & W GROUP LTD
GROUP STRATEGIC REPORT
FOR THE 18 MONTHS ENDED 30 MARCH 2021
The Board of Directors, in line with their duties under s172 of the Companies Act 2006, act in a way they consider, in good faith, would be most likely to promote the success of the Company for the benefit of its members as a whole, and in doing so have regard to a range of matters when making decisions for the long term. Key decisions and matters that are of strategic importance to the Company are appropriately informed by s172 factors.
Through an open and transparent dialogue with our key stakeholders, we have been able to develop a clear understanding of their needs, assess their perspectives and monitor their impact on our strategic ambition and culture. As part of the Board’s decision-making process, the Board and its Committees consider the potential impact of decisions on relevant stakeholders whilst also having regard to a number of broader factors, including the impact of the Company’s operations on the community and environment, responsible business practices and the likely consequences of decisions in the long term. Illustrations of how s172 factors have been applied by the Board can be found throughout the Strategic Report and in particular the Board's approach to riosk management, R&D, carbon reporting and employee involvement.
The group’s strategy of building upon its leadership position in the premium audio category as a consumer driven business continued to be the focus of its activities during the period ended 30 March 2021 and will remain so going forwards.
During the financial period, the group launched the new 600 Anniversary Edition and Signature versions of 702 and 705 Premium Loudspeakers to great reviews. Alongside these successful launches the business focussed on the development and manufacture of the next generations of the 800 Diamond Series and the introduction of the group’s first in-ear true wireless headphones PI5 and PI7 for Spring 2021.
The group licences the use of its patented technology to automotive and premium television customers in connection with the Bowers & Wilkins brand. Revenues from this activity continued to grow as the group gets the full economic benefits of an increased portfolio of licensing agreements.
The group’s investment in research and development continues to be significant and not only continues to support the group’s core brand position, critical acclaim and strong sales demand, but also drives the innovative technology in the wireless speaker space enhancing the audio experience within the connected home. The group is committed to ensure that new products launched retain the quality expected of the Bowers & Wilkins brand.
The group has continued to invest in its manufacturing facilities with the innovative use of processes and robotics in the Zhuhai and Worthing, UK, operations.
In late 2019, the group’s then parent company EVA Automation Inc breached reporting covenants under the paid in kind (PIK) lenders’ loan agreement and consequently the lenders used their powers under the said agreement to appoint a sole director for the company. The PIK lenders and the company’s bankers entered into a series of standstill agreements to allow the interim funding of the group and its orderly sale. As part of the standstill arrangements, management undertook a substantial cost reduction exercise involving a reduction in head count across the group and the prioritising of projects to ensure that the group made the best use of its available resources and returned to trading profitability.
The Company and its subsidiaries were acquired by DEI Sales Inc. (Sound United) on 9 October 2020. The sale and acquisition process identified many sales and operational opportunities and synergies from the combination of the Bowers & Wilkins business with Sound United’s activities which Management has and continues to pursue. This includes post period end the transfer by B&W Group Ltd of its USA sub-group to DEI Sales Inc. After the year end the Sound United Group was acquired by Massimo Corporation as described in the post balance sheet events.
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B & W GROUP LTD
GROUP STRATEGIC REPORT (CONTINUED)
FOR THE 18 MONTHS ENDED 30 MARCH 2021
Taking account of planned product launches over the next 18 months, the growth of ecommerce sales and the positive impacts expected from building brand awareness, website activities, expanded licensing portfolio and synergy benefits, the directors consider the group to be well positioned to compete successfully going forward in an ever more ‘connected’ premium audio segment and in the high-quality headphone category. As part of the acquisition Sound United have provided and will continue to provide sufficient funding to ensure future growth
The combination of the investment in manufacturing, online presence and distribution networks means the group has the productive capacity, inventory, infrastructure and available finance to enable it to benefit from better than forecast sales growth should these occur, or scale back if necessary.
The group’s results continued to be impacted by foreign exchange movements. The directors continue to monitor and consider that the natural hedges of matched USD $ sales, USD $ purchase and USD $ denominated borrowings provides significant mitigation against normal fluctuations whilst providing flexibility and risk cover.
Financial key performance indicators
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The directors consider that the key measures of the group’s performance are the long term trends in the figures laid out below. The average monthly revenue has been calculating by dividing the revenue by the number of months in the period in order to make the figures more comparable.
Group Revenue and Gross Profit Percentage
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2021
Average monthly revenue
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2019
Average monthly revenue
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Loudspeakers and related equipment
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Wireless music systems (incl Formation)
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Add back: restructuring expenses
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Net current assets / (liabilities)
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B & W GROUP LTD
GROUP STRATEGIC REPORT (CONTINUED)
FOR THE 18 MONTHS ENDED 30 MARCH 2021
EBITDA is the profit from continuing operations before interest, tax, depreciation and amortisation. As the restructuring expenses are a one-off cost relating the acquisition by Sound United the directors consider it useful to exclude these.
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Financial summary and positions
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The group’s trading performance for the financial period saw a 20% increase in average monthly sales of the back of a combination of successful product launches and strong COVID-19 consumer demand for home entertainment equipment. The significant presence of recently released products in the overall sales mix boosted overall trading margin and outweighed the lower margins on Wireless music systems as building of the Formation brand in this highly competitive market required incentivisation.
The group’s strong trading performance was despite the headwinds suffered in the first 6 months of the period from its necessary exit from the EVA Automation Inc management and its need to refocus on core activities and the $37.1m expense of the resultant restructuring, refinancing and successful sale of the business to Sound United (comprising the $17.3m of restructiring expenses and $19.8m of interest and finance expenses).
Excluding these restructuring costs the group's cash flow from operating activities significantly improved during the period to $35.4m (2019: $11.9m) enabling the above described investments in research, new product development and manufacturing equipment. The post Sound United refinancing of the group has financially strengthened the business and positioned it well for growth.
Environmental
The group is committed to minimising the negative impact of its activities on the environment. The directors have taken steps to ensure that both the group and its suppliers comply with all relevant environmental legislation and in particular to Restriction Of Hazardous Substances in Electrical and Electronic Equipment II (ROHS), Registration, Evaluation, Authorisation and Restriction of Chemicals (REACH) and Waste Electrical and Electronic Equipment recycling (WEEE) directives and Energy Savings Opportunity Scheme (ESOS) regulations. The group is committed to sustainable operations and is reviewing all its operations against this goal.
Business risk management
As a group focussed on the distribution of its own and third party manufactured goods it is exposed to distributor and dealer, supply chain, production (including equipment issues), intellectual property, quality, and financial risks. The directors review and agree policies for managing each of these risks and they are summarised below. These policies have remained unchanged from previous financial years and up to the date of the approval of these financial statements.
Distributor and dealer risk
Significant fluctuations in the level of consumer demand for audio products and therefore the business undertaken by dealers and distributors can affect their viability and in particular liquidity. The business plans and forecasts of distributors and key retail channels together with their credit balances and payment history are continuously reviewed and appropriate action taken where necessary.
Supply chain risk
Problems with suppliers can result in delivery or quality issues affecting production, customer satisfaction and brand reputation. Suppliers are selected on the basis of technology, capacity, quality, compliance with environmental and employee standards and finally cost. Wherever possible the company seeks to create long term working partnerships with suppliers whereby quality and delivery performance is regularly monitored and commercial viability continually reviewed and appropriate insurance held against business interruption. The length of the business’ supply chain makes it susceptible to logistic disruption which it seeks to counteract by pre-emptive forecasting of requirements and freight demand as well as leveraging the agreements of the Sound
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B & W GROUP LTD
GROUP STRATEGIC REPORT (CONTINUED)
FOR THE 18 MONTHS ENDED 30 MARCH 2021
United with carriers.
Production risk
The group has a limited number of manufacturing facilities which if out of production through disaster or breakdown could affect the ability of the group to service its customers. In addition to appropriate insurance to cover catastrophic risk the group actively seeks to manage the production risk through business continuity plans and preventative maintenance.
Intellectual property risk
The group’s premium product positioning and brands are based in part on the use of unique and innovative technologies, designs and processes. Copying of such products and technologies can damage the brand and hence where appropriate new technologies are patented and designs and trademarks are registered with appropriate registries worldwide. The group actively monitors the use of its intellectual property and pursues redress where used inappropriately.
Quality risk
The reputation of the brands distributed by the group rests on the quality of the underlying product. Quality is maintained through a mixture of quality assurance (e.g. staff training) and quality control (e.g. testing at all stages from component through to final product). In recognition of the importance of this risk area the company has implemented ISO 9001 systems which are regularly audited both internally and externally. The group’s quality programmes are also implemented and monitored at supplier level.
Financial risk
The group is financed as part of the overall Sound United treasury activities with funding utilisation being carefully managed through budgeting and forecasting systems. Whilst currency movements, particularly US$:£, CNY:USD, Euro:£ and Euro:$, can affect reported revenue and cost of raw materials, at the net profit level the currency gain/loss on sales are substantially matched by currency loss/gain on purchasing.
The company seeks to manage financial risk by ensuring the Sound United treasury team are aware in good time of the level of sufficient liquidity required to meet foreseeable needs.
Research and development
Product development and innovation are considered key strategies to the group’s competitive position within the marketplace and accordingly the group continues to invest significantly in new products and technologies with 4% of continuing revenue (2019: 4%) being spent on research and development. Reflective of the long-term benefits of the investment in development activities is the capitalisation of and subsequent amortisation of development costs. Around 12 new products have been / are scheduled to be launched in the next financial year.
Employees
The group has continued its practice of keeping employees informed through staff briefings and newsletters of matters affecting them as employees and of the financial and economic factors affecting the performance of the Bowers & Wilkins business and of the Sound United group. The ethos of the Sound United group encourages involvement and feedback from employees on issues affecting the business.
The group is committed to employment practices based on equal opportunities for all employees irrespective of sex, race, colour, disability or sexual orientation. The group gives full and fair consideration to the employment of disabled persons having regard to their aptitudes and abilities irrespective of whether the disability arose before or during employment.
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B & W GROUP LTD
GROUP STRATEGIC REPORT (CONTINUED)
FOR THE 18 MONTHS ENDED 30 MARCH 2021
The group continues to invest in appropriate training and development opportunities for employees with both graduate and apprentice schemes in operation.
This report was approved by the board
and signed on its behalf.
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L Courtney-Wheatley
Director
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B & W GROUP LTD
DIRECTORS' REPORT
FOR THE 18 MONTHS ENDED 30 MARCH 2021
The directors present their report together with consolidated audited financial statements for the 18 months period ended 30 March 2021.
The group and company are principally engaged in the development, manufacture and wholesale distribution of high quality monitor loudspeakers, premium quality sound systems, high performance headphones, associated equipment and services and related licensing.
The group's profit for the 18 month financial period, after taxation, amounted to $
44,407,000
(2019 -
loss
$
31,804,000
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. The directors are not recommending any dividend be paid for the year (2019 - no dividend recommended).
The group has presented the accounts in United States Dollars in accordance with international accounting standards in conformity witht the Companies Act 2006.
The directors who served during the 18 months were:
Executive:
K Duffy
(appointed
9 October 2020
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B Muller
(appointed
9 October 2020
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S St Clair
(appointed
9 October 2020
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G I Edwards
(appointed
9 October 2020
, resigned
24 May 2022
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D Duggins
(appointed
7 February 2020
, resigned
9 October 2020
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G Lee
(resigned
7 February 2020
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J I Kim
(resigned
29 November 2019
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G Yu
(resigned
7 February 2020
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L Courtney-Wheatley was appointed to the board on 1 August 2022.
As provided by the Articles of Association, the directors have had during the last financial year, and continue to have, the benefit of a qualifying third party indemnity (as defined by Section 234 Companies Act 2006) through the maintenance of appropriate Directors and Officers liability insurance.
Research and development activities
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Product development and innovation are considered key strategies to the group's competitive position within the market place and accordingly the group continues to invest significantly in new products and technologies. More information is provided in the strategic report.
Details of the group's employee policy is included in the strategic report.
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B & W GROUP LTD
DIRECTORS' REPORT (CONTINUED)
FOR THE 18 MONTHS ENDED 30 MARCH 2021
Branches of the company outside the UK
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Throughout the period and until June 2022 B&W Group Ltd had a branch in Taiwan (7F, No.57 Xing ai Road, Neil Hu District, Taipei City). The primary purpose was to undertake research and development activities.
The company also operated sales branches in France, Germany, Belgium and the Netherlands which are continuing.
Directors' responsibilities statement
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The directors are responsible for preparing the Report and the financial statements in accordance with applicable law and regulation.
Company law requires the directors to prepare financial statements for each financial period. Under that law the directors have prepared the group financial statements and company financial statements in accordance with international accounting standards in conformity with the requirements of the Companies Act 2006.
Under company law the directors must not approve the consolidated financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Group and the Company and of the profit or loss of the Group for that period. In preparing the consolidated financial statements, the directors are required to:
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select suitable accounting policies and then apply them consistently;
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make judgements and estimates that are reasonable and prudent;
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state whether applicable international accounting standards in conformity with the requirements of the Companies Act 2006 have been followed for the group financial statements and have been followed for the company financial statements, subject to any material departures disclosed and explained in the financial statements; and
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prepare the financial statements on the going concern basis unless it is inappropriate to presume that the group and company will continue in business.
The directors are also responsible for safeguarding the assets of the group and company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the group and company's transactions and disclose with reasonable accuracy at any time the financial position of the group and company and enable them to ensure that the financial statements comply with the Companies Act 2006.
Disclosure of information to auditors
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In so far as the directors are aware:
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there is no relevant audit information of which the company's auditors are unaware; and
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the directors have taken all steps that they ought to have taken to make themselves aware of any relevant audit information and to establish that the auditors are aware of that information.
During the period the company made charitable donations of $4,859 (2019 - $4,210).
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B & W GROUP LTD
DIRECTORS' REPORT (CONTINUED)
FOR THE 18 MONTHS ENDED 30 MARCH 2021
Following the group’s acquisition by Sound United on 9 October 2020 Pricewaterhouse Coopers LLP resigned as independant auditors and Sound United’s auditors BDO LLP were appointed and will continue in office.
The group continues to adapt its operations in various ways to deal with the challenges arising from the COVID-19 pandemic, with the safety of staff being the most critical factor. Remote working together with social distancing measures and PPE implemented in offices and factories ensures a safe environment for staff to work in and allows operations to continue. In addition, the group monitors the business continuity plans of both its own operations and those of key suppliers in light of COVID 19 and variants thereof to mitigate impact on the group’s supply chain.
The COVID-19 pandemic continued to exert a significant impact on the group’s established retail channels and practices in 2021 as lockdowns and other restrictions on movement are enforced. This has been exacerbated by COVID-19 induced changes in consumer habits and consequent higher demand for Hi-Fi products The group has boosted its ecommerce and online support for consumers and is working with established dealers to ensure the best possible consumer experience in the circumstances, whilst supporting the survival of dealers who fulfilled deliveries on the group’s behalf.
The directors have reviewed the impact of the war between Russia and Ukraine on both sales and the group’s supply chain and are of the current opinion that it will not impact materially on the ongoing business or its results.
In times of economic uncertainty, including but not limited to high inflation, foreign exchange fluctuations, supply chain issues and shipping and logistical challenges the company has put in place several measures to minimise the risk to the business. These include: reviewing and securing key supplier pricing and agreements, initiating standard costing so the Purchase Price Variance (PPV) can be tracked and managed internally, setting flags in the ERP system to highlight potential issues at source and making changes to the sales/transfer pricing where deemed necessary, without damaging the competitiveness of the brand, to maintain expected margins.
On 12th April 2022 the Sound United group, of which B&W Group Ltd and its subsidiaries are part, was acquired by Masimo Corporation Inc thereby increasing the opportunities for the business in the healthcare sector.
The directors have a reasonable expectation that the group and company has adequate resources to continue in operational existence for the foreseeable future. The group and company therefore continue to adopt the going concern basis in preparing its consolidated and company financial statements.
Further details of this going concern assessment can be found in note 2, Significant accounting policies.
Details of the planned future developments of the group are detailed in the strategic report.
An analysis of the group’s financial performance is provided within the strategic report. The strategic report also includes details of management’s approach to risk management. More detailed analysis of financial risk management can be found in note 4, Financial risk management.
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B & W GROUP LTD
DIRECTORS' REPORT (CONTINUED)
FOR THE 18 MONTHS ENDED 30 MARCH 2021
Greenhouse gas emissions, energy consumption and energy efficiency action
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The B&W Group is in the formative stage of its carbon neutral project and with the help of external specialist consultants is still evaluating its carbon footprint. The period ended 30 March 2021 was an unusual period due to the impact of the Covid pandemic thus 2019 is being used as the base year for comparison. The findings indicate that over 85% of the parent group's carbon footprint (30,472t CO2e) is supply chain related, with manufacturing operations being the next highest contributor at 2,180t CO2e.
The Sound United Group as a whole produced 37,185 tonnes of CO2e of which 872 was scope 1, 3,628 was scope 2 and 32,684 was scope 3.
These preliminary figures will form part of the parent group's carbon reporting and future reduction strategy.
Anti-bribery and corruption
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The Group has an anti-bribery and anti-corruption policy in place. It is our policy:
• Not to give or offer, directly or indirectly, anything that either is or could reasonably be viewed to be a Bribe.
• Not to request or accept, directly or indirectly anything that is or could reasonably be viewed to be a Bribe.
• That any offered gifts, no matter how small, must be notfied to HR and, if they are confirmed to be acceptable,
it must be accepted for the Company Christmas Raffle or for general use within the office.
• That any offered hospitality must be notified to HR to confirm if they can attend or if it can be deemed as an
influence towards decision is should be declined immediately.
• That we do not to make political contributions and, therefore, no company within the Group is permitted to
make political contributions;
• That all officers, employees and representatives of the Group must use the Group’s property and information
technology appropriately and responsibly; and
• That each officer, employee and representative of the Group should avoid engaging in communications that are
illegal, would be a breach of the Code of Conduct or might bring the Group into disrepute.
The Group also has a number of other internal controls in place designed to minimise the risk of bribery and corruption.
This report was approved by the board and signed on its behalf.
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L Courtney-Wheatley
Director
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B & W GROUP LTD
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF B & W GROUP LTD
We have audited the financial statements of B & W Group Ltd (the 'parent Company') and its subsidiaries (the 'Group') for the period period ended 30 March 2021 which comprise the Consolidated Statement of Profit or Loss
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the Consolidated Statement of Other Comprehensive Income
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the Consolidated Statement of Financial Position, the Company Statement of Financial Position
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the Consolidated Statement of Cash Flows, the Company Statement of Cash Flows
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the Consolidated Statement of Changes in Equity, the Company Statement of Changes in Equity
and the notes to the accounts, including a summary of significant accounting policies The financial reporting framework that has been applied in their preparation is applicable law and international accounting standards in conformity with the requirements of the Companies Act 2006, and as regards the Parent Company financial statements, as applied in accordance with provisions of the Companies Act 2006.
In our opinion:
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the financial statements give a true and fair view of the state of the Group's and of the parent Company's affairs as at 30 March 2021 and of the Group's loss for the period then ended;
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the Group
financial statements have been properly prepared in accordance with international accounting standards in conformity with the requirements of the Companies Act 2006;
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the Parent Company financial statements have been properly prepared in accordance with International accounting standards in conformity with the requirements of the Companies Act 2006, and as applied in accordance with the provisions of the Companies Act 2006; and
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the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.
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 Auditor’s responsibilities for the audit of the financial statements section of our report. We are independent of the Group and the Parent Company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Conclusions relating to going concern
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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:
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the Directors' use of the going concern basis of accounting in the preparation of the financial statements is not appropriate; or
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the directors have not disclosed in the financial statements any identified material uncertainties that may cast significant doubt about the Group's or the parent
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.
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B & W GROUP LTD
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF B & W GROUP LTD (CONTINUED)
The Directors are responsible for the other information. The other information comprises the information included in the Directors report and financial statements, other than the financial statements and our auditor’s report thereon. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the financial statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Opinion on other matters prescribed by the Companies Act 2006
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In our opinion, based on the work undertaken in the course of the audit:
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the information given in the Strategic report and Directors’ report for the financial period for which the financial statements are prepared is consistent with the financial statements; and
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the Strategic report and Directors’ report have been prepared in accordance with applicable legal requirements.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the Group and the Parent Company and its environment obtained in the course of the audit, we have not identified material misstatements in the Strategic report and Directors’ report.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:
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adequate accounting records have not been kept by the Parent Company, or returns adequate for our audit have not been received from branches not visited by us; or
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the Parent Company
financial statements are not in agreement with the accounting records and returns; or
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certain disclosures of Directors' remuneration specified by law are not made; or
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we have not received all the information and explanations we require for our audit.
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B & W GROUP LTD
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF B & W GROUP LTD (CONTINUED)
Responsibilities of directors
As explained more fully in the Statement of Directors Responsibilities, 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 is 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 Group’s and the Parent 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 Group or the Parent Company or to cease operations, or have no realistic alternative but to do so.
Auditors' responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s 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.
This report is made solely to the Parent 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 Parent 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 Parent Company and the Parent Company’s members as a body, for our audit work, for this report, or for the opinions we have formed.
Joe Lucey
(Senior Statutory Auditor)
for and on behalf of
BDO LLP, Statutory Auditor
Chartered Accountants
Statutory Auditors
London, UK
16 September 2022
BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127)
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B & W GROUP LTD
CONSOLIDATED STATEMENT OF PROFIT OR LOSS
FOR THE 18 MONTHS ENDED 30 MARCH 2021
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As restated
Year ended
30 September
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Changes in inventories of finished goods and work in progress
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Raw materials and consumables used
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Employee benefit expenses
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Depreciation and amortisation expense
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Other administrative expenses
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Loss from continuing operations
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Loss on discontinued operations, net of tax
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The notes on pages 29 to 89 form part of these financial statements.
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B & W GROUP LTD
CONSOLIDATED STATEMENT OF OTHER COMPREHENSIVE INCOME
FOR THE 18 MONTHS ENDED 30 MARCH 2021
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As restated
Year ended
30 September
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Total comprehensive income
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The notes on pages 29 to 89 form part of these financial statements.
The accompanying accounting policies and notes form an integral part of these financial statements.
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B & W GROUP LTD
REGISTERED NUMBER:
00880499
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT
30 MARCH 2021
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Property, plant and equipment
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Other non-current investments
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Trade and other receivables
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Trade and other receivables
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Cash and cash equivalents
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Assets in disposal groups classified as held for sale
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B & W GROUP LTD
REGISTERED NUMBER:
00880499
CONSOLIDATED STATEMENT OF FINANCIAL POSITION (CONTINUED)
AS AT
30 MARCH 2021
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Liabilities directly associated with assets in disposal groups classified as held for sale
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B & W GROUP LTD
REGISTERED NUMBER:
00880499
CONSOLIDATED STATEMENT OF FINANCIAL POSITION (CONTINUED)
AS AT
30 MARCH 2021
Issued capital and reserves attributable to owners of the parent
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The financial statements on pages 4 to 89 were approved and authorised for issue by the board of directors and were signed on its behalf by:
................................................
L Courtney-Wheatley
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The notes on pages 29 to 89 form part of these financial statements.
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B & W GROUP LTD
REGISTERED NUMBER:
00880499
COMPANY STATEMENT OF FINANCIAL POSITION
AS AT
30 MARCH 2021
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Property, plant and equipment
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Other non-current investments
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Trade and other receivables
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Cash and cash equivalents
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B & W GROUP LTD
REGISTERED NUMBER:
00880499
COMPANY STATEMENT OF FINANCIAL POSITION (CONTINUED)
AS AT
30 MARCH 2021
|
B & W GROUP LTD
REGISTERED NUMBER:
00880499
COMPANY STATEMENT OF FINANCIAL POSITION (CONTINUED)
AS AT
30 MARCH 2021
Issued capital and reserves attributable to owners of the parent
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The Company's loss for the 18 months was $
31,237
(2019 - $
54,401
).
The accompanying accounting policies and notes form an integral part of these financial statements.
The company has taken advantage of section 408 of the Companies Act 2006 and has not included its own profit and loss account in these financial statements.
The financial statements on pages 4 to 89 were approved and authorised for issue by the board of directors and were signed on its behalf by:
................................................
L Courtney-Wheatley
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The notes on pages 29 to 89 form part of these financial statements.
|
B & W GROUP LTD
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE 18 MONTHS ENDED
30 MARCH 2021
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Retained earnings (restated)
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Total attributable to equity holders of parent (restated)
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At 1 October 2018 (as previously stated)
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Prior year adjustment (Note 37)
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At 1 October 2018 (as restated)
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Impairment of restricted share units (RSU) issued to employees
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Implementation of IFRS 16
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At 1 October 2019 (adjusted balance)
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Issue of share capital
(Note 23)
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The notes on pages 29 to 89 form part of these financial statements.
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B & W GROUP LTD
COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE 18 MONTHS ENDED
30 MARCH 2021
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Retained earnings (restated)
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At 1 October 2018 (as previously stated)
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Prior year adjustment (Note 37)
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At 1 October 2018 (as restated)
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Impairment of restricted share units (RSU) issued to employees
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Implementation of IFRS 16 (Note 34)
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At 1 October 2019 (adjusted balance)
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Issue of share capital (Note 23)
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The notes on pages 29 to 89 form part of these financial statements.
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B & W GROUP LTD
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE 18 MONTHS ENDED 30 MARCH 2021
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As restated
Year ended 30 September
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Cash flows from operating activities
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Depreciation of property, plant and equipment
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Impairment of intangibles
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Amortisation of intangible fixed assets
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Impairment losses on investments
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Amortisation of ROU assets
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Research & development expenditure credit
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Provision for loan to parent company
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Loss/(gain) on sale of property, plant and equipment
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Cash transferred to held-for-sale asset
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Restricted stock unit (income) / expense
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Net foreign exchange loss
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Movements in working capital:
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Decrease/(increase) in trade and other receivables
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Decrease/(increase) in inventories
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Increase in trade and other payables
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Decrease in provisions and employee benefits
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Cash generated from/(used in) operations
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Net cash generated from/(used in) operating activities
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B & W GROUP LTD
CONSOLIDATED STATEMENT OF CASH FLOWS (CONTINUED)
FOR THE 18 MONTHS ENDED 30 MARCH 2021
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Cash flows from investing activities
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Purchases of property, plant and equipment
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Proceeds from disposal of property, plant and equipment
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Payments to acquire financial assets
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Net cash used in investing activities
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Cash flows from financing activities
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Loan from / (to) parent company
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Proceeds from bank borrowings
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Repayment of bank borrowings
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Payments of finance lease creditors
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Interest paid on ROU liabilities
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Payment of lease liabilities
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Net cash from financing activities
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Net cash increase in cash and cash equivalents
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Cash and cash equivalents at the beginning of period
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Exchange gains on cash and cash equivalents
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Cash and cash equivalents at the end of the period
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The notes on pages 29 to 89 form part of these financial statements.
As part of the sale of the company and its subsidiaries to the Sound United Group the borrowings from external parties and EVA Automation Inc were repaid in full through a mixture of share capital conversion and cash injection. There were therefore significant non-cash transactions in the year which include the the issue of $28,820,231 of share capital used to repay borrowings.
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B & W GROUP LTD
COMPANY STATEMENT OF CASH FLOWS
FOR THE 18 MONTHS ENDED 30 MARCH 2021
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As restated
Year ended 30 September
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Cash flows from operating activities
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Depreciation of property, plant and equipment
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Amortisation of intangible fixed assets
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Impairment losses on intangible assets
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Amortisation of ROU assets
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Research and development expenditure credit
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Provision for loan to parent company
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Loss/(gain) on sale of property, plant and equipment
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Restricted stock unit (income) / expense
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Net foreign exchange loss
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Movements in working capital:
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Increase in trade and other receivables
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(Increase)/decrease in inventories
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Increase in trade and other payables
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Increase/(decrease) in provisions and employee benefits
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Cash generated from operations
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Net cash used in operating activities
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B & W GROUP LTD
COMPANY STATEMENT OF CASH FLOWS (CONTINUED)
FOR THE 18 MONTHS ENDED 30 MARCH 2021
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Cash flows from investing activities
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Purchases of property, plant and equipment
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Proceeds from disposal of property, plant and equipment
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Payments to acquire financial assets
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Net cash used in investing activities
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Cash flows from financing activities
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Loan from / (to) parent company
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Proceeds from bank borrowings
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Repayment of bank borrowings
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Payments of finance lease creditors
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Interest paid on ROU liabilities
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Payment of lease liabilities
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Net cash from financing activities
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Net cash increase in cash and cash equivalents
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Cash and cash equivalents at the beginning of 18 months
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Exchange gains on cash and cash equivalents
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Cash and cash equivalents at the end of the 18 months
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The notes on pages 29 to 89 form part of these financial statements.
As part of the sale of the company and its subsidiaries to the Sound United Group the borrowings from external parties and EVA Automation Inc were repaid in full through a mixture of share capital conversion and cash injection. There were therefore significant non-cash transactions in the year which include the the issue of $28,820,231 of share capital used to repay borrowings.
|
|
B & W GROUP LTD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE 18 MONTHS ENDED 30 MARCH 2021
B & W Group Ltd
(the 'Company') is a private limited company incorporated and resident in England & Wales. The Company's registered office is at Dale Road, Worthing, West Sussex, BN11 2BH. These consolidated financial statements comprise the Company and its subsidiaries (collectively the 'Group' and individually 'Group companies'). The Group is primarily involved in the manufacture and wholesale distribution of high quality loudspeakers, high performance headphones and associated equipment and services..
2.
Accounting policies
The financial statements have been prepared in accordance with international accounting standards in conformity with the requirements of the Companies Act 2006. The financial statements have been prepared under the historical cost convention as modified by the revaluation of financial assets and financial liabilities at fair value through profit or loss.
The preparation of financial statements in conformity with these standards requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the group and company’s accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements are disclosed in note 3, Critical accounting estimates and assumptions. The group and company’s business activities, together with the factors likely to affect its future development, performance and position are set out in the strategic report and within the report of the directors of these financial statements.
The principal accounting policies of the group and company are set out below. These policies have been consistently applied throughout the financial period.
The financial statements have been prepared for the 18 month period from 1 October 2019 to 30 March 2021 to align them with the new parent company's accounting dates. As a result the comparatives disclosed in the accounts which are for a 12 month period will not be entirely comparable. See Note 37 for details of the prior period restatement.
Under S.454 of the Companies Act 2006 the directors may, on a voluntary basis, amend the financial statements if they subsequently prove to be defective.
Functional and presentational currencies
The functional currency of the group and all companies in the group is US Dollars (USD) due to the proportion of sales and other transactions denominated in USD. The consolidated and company financial statements are presented in USD which is the group and company’s presentation currency.
The conversion rates used for GBP:USD was 1.3041 for the statement of financial position dated 30 September 2018, 1.2323 for the statement of financial position dated 30 September 2019 and 1.3786 for the statement of financial position dated 30 March 2021.
|
B & W GROUP LTD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE 18 MONTHS ENDED 30 MARCH 2021
2.
Accounting policies (continued)
The group had to adapt its operations in various ways to deal with the emerging challenges it faced from the COVID-19 pandemic; the safety of staff being the most critical factor. Remote working together with social distancing measures and PPE implemented in offices and factories ensured a safe environment for staff to work in and allowed operations to continue. In addition, the group reviewed the business continuity plans of both its own operations and those of key suppliers to ensure that processes were sufficiently robust and that appropriate COVID-19 responses were in hand. The COVID-19 pandemic also exerted a significant impact on the group’s established sales distribution channels and practices. In order to adapt to lockdowns and other restrictions on consumer movement, the group moved to increase those consumer products available to buy online whilst continuing to work with established dealers to both ensure the best possible customer experience under the circumstances and support their survival.
Following the acquisition of the company and group by DEI Sales Inc (known as the Sound United Group) on 9 October 2020, the group was refinanced and provided with sufficient funding through a long term promissory note that day-to-day working capital needs could be financed from cash and without external borrowings. Further, immediately after the period end the promissory note was repaid from the proceeds of the sale of the US distribution subsidiary to the parent company and the company and group became debt free with adequate free cash for foreseeable working capital and investment needs. The current economic and political conditions resulting from the recovery from the COVID pandemic and Ukraine war creates uncertainty over the level of demand for the group’s products and supply chain challenges. The group’s and the company’s forecasts and projections, which take account of reasonably possible changes in trading and supply chain performance, show the group and company should trade cash positive and therefore be able to operate within the current level of cash resources.
In light of the above, and after reviewing the group and company's forecasts and projections, the directors have a reasonable expectation that the group and company has adequate resources to continue in operational existence for the foreseeable future. As at the end of July 2022 the Group has net assets of $8.9m including $4.7m of cash. The Group had no new external borrowings.
The group and company therefore continue to adopt the going concern basis in preparing its consolidated and company financial statements.
|
B & W GROUP LTD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE 18 MONTHS ENDED 30 MARCH 2021
2.
Accounting policies (continued)
|
|
Changes in accounting policy and disclosure
|
New standards, amendments and interpretations
The below new standards, amendments or interpretations were adopted in the financial statements for the period ended 30 March 2021:
The Group applied IFRS 16 using the modified retrospective approach, under which the cumulative effect of initial application is recognised in retained earnings at 1 October 2019. Accordingly, the comparative information presented for 2019 is not restated – i.e. it is presented, as previously reported, under IAS 17 and related interpretations. The details of the changes in accounting policies are disclosed below. Additionally, the disclosure requirements in IFRS 16 have not generally been applied to comparative information.
Previously, the Group determined at contract inception whether an arrangement was or contained a lease under IFRIC 4 Determining whether an Arrangement contains a Lease. The Group now assesses whether a contract is or contains a lease based on the definition of a lease.
On transition to IFRS 16, the Group elected to apply the practical expedient to grandfather the assessment of which transactions are leases. The Group applied IFRS 16 only to contracts that were previously identified as leases. Contracts that were not identified as leases under IAS 17 and IFRIC 4 were not reassessed for whether there is a lease under IFRS 16. Therefore, the definition of a lease under IFRS 16 was applied only to contracts entered into or changed on or after 1 October 2019
As a lessee, the Group leases many assets including property, production equipment and IT equipment. The Group previously classified leases as operating or finance leases based on its assessment of whether the lease transferred significantly all of the risks and rewards incidental to ownership of the underlying asset to the Group. Under IFRS 16, the Group recognises right-of-use assets and lease liabilities for most of these leases – i.e. these leases are on-balance sheet. At commencement or on modification of a contract that contains a lease component, the Group allocates the consideration in the contract to each lease component on the basis of its relative stand-alone price. However, for leases of property the Group has elected not to separate non-lease components and account for the lease and associated non-lease components as a single lease component.
Previously, the Group classified property leases as operating leases under IAS 17. On transition, for these leases, lease liabilities were measured at the present value of the remaining lease payments, discounted at the Group’s incremental borrowing rate as at 1 October 2019. Right-of-use assets are measured at either:
- their carrying amount as if IFRS 16 had been applied since the commencement date, discounted using the Group’s incremental borrowing rate at the date of initial application: the Group applied this approach to its largest property lease; or
– an amount equal to the lease liability, adjusted by the amount of any prepaid or accrued lease payments: the Group applied this approach to all other leases.
The Group has tested its right-of-use assets for impairment on the date of transition and has concluded that there is no indication that the right-of-use assets are impaired.
The Group used a number of practical expedients when applying IFRS 16 to leases previously classified as operating leases under IAS 17. In particular, the Group:
– did not recognise right-of-use assets and liabilities for leases for which the lease term ends within 12 months of the date of initial application;
– did not recognise right-of-use assets and liabilities for leases of low value assets (e.g. IT equipment);
– excluded initial direct costs from the measurement of the right-of-use asset at the date of initial application; and
|
B & W GROUP LTD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE 18 MONTHS ENDED 30 MARCH 2021
2.
Accounting policies (continued)
– used hindsight when determining the lease term.
The Group leases a number of items of production equipment. These leases were classified as finance leases under IAS 17. For these finance leases, the carrying amount of the right-of-use asset and the lease liability at 1 October 2019 were determined at the carrying amount of the lease asset and lease liability under IAS 17 immediately before that date.
Please see note 32 for the impact of the change in accounting policy.
The group financial statements consolidate the financial statements of the company and of its principal subsidiary undertakings, drawn up to 30 March 2021, under uniform accounting policies. When necessary, amounts reported by subsidiaries have been adjusted to conform to the group’s accounting policies. Inter-company transactions, balances and unrealised gains and losses on transactions between group companies are eliminated.
The group controls an entity when the group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the group. They are deconsolidated from the date that control ceases.
The group applies the acquisition method to account for business combinations. The consideration transferred for the acquisition of a subsidiary is the fair value of the assets transferred. The consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration arrangement. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. Acquisition-related costs are expensed as incurred.
When the group ceases to have control any retained interest in the entity, the entity is re-measured to its fair value at the date when control is lost, with the change in carrying amount recognised in profit or loss. The fair value is the initial carrying amount for the purposes of subsequently accounting for the retained interest as an associate, joint venture or financial asset. In addition, any amounts previously recognised in other comprehensive income in respect of that entity are accounted for as if the group had directly disposed of the related assets or liabilities. This may mean that amounts previously recognised in other comprehensive income are reclassified to profit or loss.
|
B & W GROUP LTD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE 18 MONTHS ENDED 30 MARCH 2021
2.
Accounting policies (continued)
Functional and presentation currency
Items included in the financial statements of each of the group’s entities are measured using the currency of the primary economic environment in which each entity operates (‘the functional currency’). The consolidated and company financial statements are presented in USD which is the group and company’s presentation currency.
Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions or valuation where settlement of such transactions occurs and from the translation of assets and liability at period-end exchange rates. Foreign exchange gains and losses resulting from the settlement of monetary assets and liabilities denominated in foreign currencies are recognised in the income statement.
All foreign exchange gains and losses are presented in the income statement within ‘other operating income’ and ‘other operating expenses.’
All assets and liabilities are converted into USD at the date of the statement of financial position. Any foreign exchange differences arising due to the different exchange rates at year ends are recognised in the statement of profit and loss for the year.
Share capital and share premium are translated into USD at the historic rate. This treatment causes a foreign exchange difference between equity and net assets as they are recorded at different rates. The effective foreign exchange on equity balances is recorded in the foreign exchange reserve. Subsequent transactions are translated at the date of the transaction.
Group companies
The results and financial position of all the group entities (none of which has the currency of a hyper-inflationary economy) that have a functional currency different from the presentation currency are translated into the presentation currency as follows:
a) assets and liabilities for each statement of financial position presented are translated at the closing rate at the date of that statement of financial position;
b) income and expenses for each income statement are translated at average exchange rates (unless this average is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the rate on the dates of each transaction); and
c) all resulting exchange differences are recognised in other comprehensive income.
Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated at the closing rate. Exchange differences arising are recognised in other comprehensive income.
|
B & W GROUP LTD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE 18 MONTHS ENDED 30 MARCH 2021
2.
Accounting policies (continued)
Revenue comprises the fair value for the supply of goods delivered and services performed, net of value-added tax and other similar based sales taxes, rebates and discounts and after eliminating sales within the group. Revenue is recognised within the financial year in which the performace obligation has been satisfied such as the goods have been delivered, services performed or royalties earned in accordance with the contracts. Service revenue relates to after sale service and royalties relates to licencing of technology.
The amount of revenue is determined by reference to the prices fixed in contracts with the customers and discounts are cacluated in accordance with those contracts. These are usually on a price per unit basis. There is therefore little judgement involved in determining the recognition and amount of revenue earned.
Warranty and remorse provisions are accounted for seperately from revenue.
|
|
Property, plant and equipment
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Property, plant and equipment are stated at historical cost less accumulated depreciation and recognised impairment.
Depreciation is calculated to write down the cost of all property, plant and equipment except freehold land over their expected useful economic lives. The assets’ useful economic lives are reviewed, and adjusted if appropriate, at the end of each reporting period.
The rates/periods generally applicable are:
Freehold land Not depreciated
Freehold buildings 25 – 50 years straight line
Short leasehold premises Straight line over the period of the lease
Plant, equipment and vehicles 2 – 10 years straight line
Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the group and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognised. All other repairs and maintenance are charged to the income statement during the financial year in which they are incurred.
An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on disposal or retirement of an item of property, plant and equipment is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognised in profit or loss.
Purchased intangibles for intellectual property and trademarks are capitalised on the statement of financial
position where the economic benefit to the group is greater than one year and then written off over the
expected useful economic life, currently five years. Management have assessed this based on the historic
life cycles of products and consider it an appropriate method to match the expenditure to the revenue.
Goodwill arises on the acquisition of subsidiaries and represents the excess of the consideration
transferred, the amount of any non-controlling interest in the acquiree and the acquisition-date fair value of
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B & W GROUP LTD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE 18 MONTHS ENDED 30 MARCH 2021
2.
Accounting policies (continued)
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Intangible assets (continued)
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any previous equity interest in the acquiree over the fair value of the identifiable net assets acquired. If the
total of consideration transferred, non-controlling interest recognised and previously held interest
measured at fair value is less than the fair value of the net assets of the subsidiary acquired, in the case of
a bargain purchase, the difference is recognised directly in the income statement.
Customer lists, goodwill and purchased brands / trademarks are capitalised based on a reasonable
assessment of cost on the statement of financial position where the economic benefit to the group is
greater than one year and then written off over the expected useful economic life. The useful economic life
will be assessed on forecast cash flows from the assets based on management’s experience of similar
intangibles.
For the purpose of impairment testing, goodwill acquired in a business combination is allocated to each of
the cash-generating units (CGUs), or groups of CGUs, that is expected to benefit from the synergies of
the combination. Each unit or group of units to which the goodwill is allocated represents the lowest level
within the entity at which the goodwill is monitored for internal management purposes. Goodwill is
monitored at a subsidiary level with impairments being considered for each subsidiary individually.
Goodwill impairment reviews are undertaken annually or more frequently if events or changes in
circumstances indicate a potential impairment. The carrying value of the CGU containing the goodwill is
compared to the recoverable amount, which is the higher of value in use and the fair value less costs of
disposal. Any impairment is recognised immediately as an expense and is not subsequently reversed.
Development expenditure is capitalised in accordance with the policy below.
Research expenditure is recognised in the income statement in the year it is incurred. Internal development expenditure is capitalised only if it meets the recognition criteria of IAS 38, ‘Intangible assets’. Where there is uncertainty that the criteria will be met, the expenditure is recognised in the income statement and any capitalised development expenditure is written off to the income statement as it is incurred.
Development expenditure comprises of staff costs for time spent on the projects, related overheads, direct costs and external fees and is capitalised only when the following criteria are demonstrated:
- The technical feasibility of completing the product so that it will be available for use or sale.
- The intention to complete the product and use or sell it.
- The ability to use the product or to sell it.
- How the product will generate probable future economic benefits.
- The availability of adequate technical, financial and other resources to complete the development and to use or sell the product.
- The ability to measure reliably the expenditure attributable to the product during its development.
Development costs capitalised are amortised based on the actual sales in the year as a percentage of the estimated total sales throughout its lifecycle. Estimates for each product are reviewed on an annual basis and the amortisation is updated to reflect revised forecasts and actual sales.
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B & W GROUP LTD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE 18 MONTHS ENDED 30 MARCH 2021
2.
Accounting policies (continued)
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Impairment of non-financial assets
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Intangible assets that have an indefinite useful life or intangible assets not ready to use are not subject to amortisation and are tested annually for impairment. Assets that are subject to amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs of disposal and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are largely independent cash inflows (CGUs). Prior impairments of non-financial assets (other than goodwill) are reviewed for possible reversal at each reporting date.
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Investment in subsidiary undertakings
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Investments in subsidiary undertakings are measured at cost less amounts written off. Impairments are charged to Impairment Charge in the profit or loss.
Investments in subsidiary undertakings held for resale within twelve months are included in assets.
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Cash and cash equivalents
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For the purpose of presentation in the statement of cash flows, cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short-term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities in the statement of financial position.
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Discontinued operations and non-current assets held for sale
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Non-current assets and disposal groups are classified as held for sale if their carrying amount will be recovered principally through a sale transaction rather than through continuing use. This condition is regarded as met only when the asset (or disposal group) is available for immediate sale in its present condition subject only to terms that are usual and customary for sales of such asset (or disposal group) and its sale is highly probable. Management must be committed to the sale, which should be expected to qualify for recognition as a completed sale within one year from the date of classification.
When the Group is committed to a sale plan involving loss of control of a subsidiary, all of the assets and liabilities of that subsidiary are classified as held for sale when the criteria described above are met, regardless of whether the Group will retain a non-controlling interest in its former subsidiary after the sale.
Non-current assets (and disposal groups) classified as held for sale are measured at the lower of their carrying amount and fair value less costs to sell.
A discontinued operation is a component of the Group's business that represents a separate major line of business or geographical area of operations or is a subsidiary acquired exclusively with a view to resale, that has been disposed of, has been abandoned or that meets the criteria to be classified as held for sale. In this case it is the North American subsidiaries and operations.
Discontinued operations are presented in the consolidated statement of comprehensive income as a single line which comprises the post-tax profit or loss of the discontinued operation along with the post-tax gain or loss recognised on the re-measurement to fair value less costs
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B & W GROUP LTD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE 18 MONTHS ENDED 30 MARCH 2021
2.
Accounting policies (continued)
Inventories are stated at the lower of cost and net realisable value. Costs of inventories are determined using prooduction costs on a weighted average basis. Net realisable value represents the estimated selling price for inventories less all estimated costs of completion and costs necessary to make the sale. Provision has been made, where necessary, for slow moving and obsolete stock.
The tax expense for the period comprises current and deferred tax. Tax is recognised in the profit or loss, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case, the tax is also recognised in other comprehensive income or directly in equity, respectively.
The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the statement of financial position date in the countries where the company and its subsidiaries operate and generate taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.
The company claims the research and development expenditure credit (RDEC). This is treated like a grant in the accounts in line with standard practice, resulting in income being recognised in the accounts within other income, rather than within taxation. The RDEC can be used to reduce tax payable or, if the company is in a tax loss position, can be claimed as a tax refund.
Deferred income tax is recognised on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. However, deferred tax liabilities are not recognised if they arise from the initial recognition of goodwill; deferred income tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantively enacted by the statement of financial position date and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled.
Deferred income tax assets are recognised only to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised.
Deferred income tax liabilities are provided on taxable temporary differences arising from investments in subsidiaries, associates and joint arrangements, except for any deferred income tax liability where the timing of the reversal of the temporary difference is controlled by the group and it is probable that the temporary difference will not reverse in the foreseeable future.
Deferred income tax assets are recognised on deductible temporary differences arising from investments in subsidiaries, associates and joint arrangements only to the extent that it is probable the temporary difference will reverse in the future and there is sufficient taxable profit available against which the temporary difference can be utilised.
Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred income taxes assets and liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities where there is an intention to settle the balances on a net basis.
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B & W GROUP LTD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE 18 MONTHS ENDED 30 MARCH 2021
2.
Accounting policies (continued)
The Group assesses whether a contract is or contains a lease, at inception of a contract. The Group recognises 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 Group recognises 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 Group 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 the 'Loans and borrowings' line in the Consolidated statement of financial position.
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 Group 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 'Property, Plant and Equipment' and 'Leasehold Property' lines, as applicable, in the Consolidated statement of financial position.
The Group applies IAS 36 to determine whether a right-of-use asset is impaired and accounts for any identified impairment loss as described in note 2.7.
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 Group has used this practical expedient.
Contributions to defined contribution pension schemes are charged to the consolidated statement of comprehensive income in the 18 months to which they relate.
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B & W GROUP LTD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE 18 MONTHS ENDED 30 MARCH 2021
2.
Accounting policies (continued)
Finance income is recognised using the effective interest method. When a loan is impaired, the group reduces the carrying amount to its recoverable amount, being the estimated future cash flow discounted at the original effective interest rate of the instrument, and continues unwinding the discount as interest income. Finance income on impaired loans is recognised using the original effective interest rate.
Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less provision for impairment.
These amounts represent liabilities for goods and services provided to the group prior to the end of financial year which are unpaid. The amounts are unsecured and are paid within agreed terms. Trade and other payables are presented as current liabilities unless payment is not due within 12 months after the reporting period. They are recognised initially at their fair value and subsequently measured at amortised cost using the effective interest method.
Ordinary shares are classified as equity.
Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds.
Provisions are recognised when the group has a present obligation (legal or constructive) as a result of a past event, it is probable that the group will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation.
The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation. The basis for the estimates is explained in note 4, Critical accounting estimates and assumptions.
Classification
The group classifies its financial assets, excluding derivatives, as loans and receivables. Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are included in current assets, except for maturities greater than 1 year after the end of the reporting period, which are classified as non-current assets. Financial assets comprise ‘trade and other receivables’, ‘amounts owed by group undertakings’ and ‘cash and cash equivalents’. Derivatives are classified as financial assets and liabilities at fair value through profit or loss.
Financial liabilities (excluding derivatives) and equity instruments are classified according to the substance of the contractual obligations entered into. An equity instrument is any contract that evidences a residual interest in the entity after deducting all of its financial liabilities.
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B & W GROUP LTD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE 18 MONTHS ENDED 30 MARCH 2021
2.
Accounting policies (continued)
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Financial instruments (continued)
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Where the contractual obligations of financial instruments (including share capital) are equivalent to a similar debt instrument, those financial instruments are classed as financial liabilities. Financial liabilities are presented as such in the statement of financial position and are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Finance costs and gains or losses relating to financial liabilities are included in the profit or loss.
Where the contractual terms of share capital do not have any terms meeting the definition of a financial liability then this is classed as an equity instrument. Dividends and distributions relating to equity instruments are taken directly to reserves. Financial liabilities comprise ‘trade and other payables’, ‘borrowings’ and ‘amounts owed to related parties’.
Recognition and measurement
Financial assets and liabilities are recognised when the group becomes party to the contractual provisions of the financial instrument. Financial assets are derecognised when the rights to receive cash flows from the investments have expired or have been transferred and the group has transferred substantially all risks and rewards of ownership. Financial liabilities are derecognised when the obligation specified in the contract is discharged, cancelled or expires.
Trade receivables are amounts due from customers for goods sold or services performed in the ordinary course of business. Cash and cash equivalents include cash in hand, deposits held at call with banks, other short-term highly liquid investments with original maturities of three months or less and bank overdrafts. In the statement of financial position, bank overdrafts are shown within borrowings in current liabilities. The quality of receivables is discussed within note 5, Financial risk management and note 17 Trade and other receivables.
Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Borrowings comprise of overdrafts, finance leases, bank, intercompany and other loans which are disclosed in note 19, Borrowings.
Loans and receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less provision for impairment in accordance with IFRS 9.
Financial liabilities are recognised initially at fair value, net of transaction costs incurred. Any difference between the proceeds (net of transaction costs) and the redemption value is recognised in the income statement over the period of the borrowings using the effective interest method. Fees paid on the establishment of loan facilities are recognised as transaction costs of the loan to the extent that it is probable that some or all of the facility will be drawn down. In this case, the fee is deferred until the draw-down occurs. To the extent there is no evidence that it is probable that some or all of the facility will be drawn down, the fee is capitalised as a pre-payment for liquidity services and amortised over the period of the facility to which it relates.
Financial assets and liabilities that are recognised at fair value are re-measured to fair value at each reporting date. Fair value gains and losses are recognised in the income statement in finance income and finance costs respectively. Fair value measurements can be made at three levels:
Level 1 - quoted prices (unadjusted) in active markets for identical assets or liabilities;
Level 2 - inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices) (Level 2); and
Level 3 - inputs for the asset or liability that are not based on observable market data (unobservable inputs).
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B & W GROUP LTD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE 18 MONTHS ENDED 30 MARCH 2021
2.
Accounting policies (continued)
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Financial instruments (continued)
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The company does not currently hold any financial instruments requiring remeasurement to fair value and has not designated any investments in equity instruments to be measured this way.
I
mpairment of financial assets carried at amortised cost
The directors assess at the end of each reporting period whether there is objective evidence that a financial asset or group of financial assets is impaired. A financial asset or a group of financial assets is impaired and impairment losses are incurred only if there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset (a ‘loss event’) and that loss event (or events) has an impact on the estimated future cash flows of the financial asset or group of financial assets that can be reliably estimated. Further details on management’s approach to managing capital is included within note 5, Financial risk management.
General and specific borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset are capitalised during the period of time that is required to complete and prepare the asset for its intended use or sale. Qualifying assets are assets that necessarily take a substantial period of time to get ready for their intended use or sale.
Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalisation. Other borrowing costs are expensed in the period in which they are incurred.
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Borrowings and loans payable
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Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently measured at amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption amount is recognised in profit or loss over the period of the borrowings using the effective interest method. Fees paid on the establishment of loan facilities are recognised as transaction costs of the loan to the extent that it is probable that some or all of the facility will be drawn down. In this case, the fee is deferred until the draw down occurs. To the extent there is no evidence that it is probable that some or all of the facility will be drawn down, the fee is capitalised as a prepayment for liquidity services and amortised over the period of the facility to which it relates.
Borrowings are removed from the statement of financial position when the obligation specified in the contract is discharged, cancelled or expired. The difference between the carrying amount of a financial liability that has been extinguished or transferred to another party and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognised in profit or loss as other income or finance costs.
Borrowings are classified as current liabilities unless the group has an unconditional right to defer settlement of the liability for at least 12 months after the reporting period.
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B & W GROUP LTD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE 18 MONTHS ENDED 30 MARCH 2021
2.
Accounting policies (continued)
Government grants are not recognised until there is reasonable assurance that the Group will comply with the conditions attaching to them and that the grants will be received.
Government grants are recognised in profit or loss on a systematic basis over the periods in which the Group recognises as expenses the related costs for which the grants are intended to compensate. Specifically, government grants whose primary condition is that the Group should purchase, construct or otherwise acquire non-current assets are recognised as deferred revenue in the consolidated statement of financial position and transferred to profit or loss on a systematic and rational basis over the useful lives of the related assets.
Government grants that are receivable as compensation for expenses or losses already incurred or for the purpose of giving immediate financial support to the Group with no future related costs are recognised in profit or loss in the period in which they become receivable.
The benefit of a government loan at a below-market rate of interest is treated as a government grant, measured as the difference between proceeds received and the fair value of the loan based on prevailing market interest rates.
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Short-term and other long-term employee benefits
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Liabilities for wages and salaries, including non-monetary benefits and accumulating sick leave that are expected to be settled wholly within 12 months after the end of the period in which the employees render the related service are recognised in respect of employees’ services up to the end of the reporting period and are measured at the amounts expected to be paid when the liabilities are settled. The liabilities are presented as current employee benefit obligations in the statement of financial position.
The obligations are presented as current liabilities in the statement of financial position if the entity does not have an unconditional right to defer settlement for at least twelve months after the reporting period, regardless of when the actual settlement is expected to occur.
Post-employment obligations
Staff may belong to a group personal pension plan or money purchase scheme (defined contribution schemes). The assets of the schemes are administered in funds independent from those of the group. Figures in the accounts relate to the amounts paid, or due, to the independent pension fund.
Restricted share units
In view of the insolvent position of the previous ultimate parent company EVA Automation Inc., the restricted share units (RSUs) have $nil value. Consequently, values relating to RSUs were reversed in the financial statements in the prior year.
Holiday pay
Holiday entitlement varies across the group, depending on entitlement in line with the entities’ jurisdictions and accruals are made to reflect holiday owing to employees.
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B & W GROUP LTD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE 18 MONTHS ENDED 30 MARCH 2021
2.
Accounting policies (continued)
Provision is made for the amount of any dividend declared, being appropriately authorised and no longer at the discretion of the entity, on or before the end of the reporting period but not distributed at the end of the reporting period.
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Forthcoming accounting requirements
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There are a number of new standards and amendments to standards and interpretations effective for annual periods beginning on or after 1 January 2021 which have not been applied in preparing these financnial statements such as IFRS 17 Insurance Contracts and Interest Rate Benchmark Reform Phase 2 amendments. None of these are expected to have a significant effect on the financial statements of the group or company.
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B & W GROUP LTD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE 18 MONTHS ENDED 30 MARCH 2021
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Accounting estimates and judgments
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3.1
Judgements and sources of estimation uncertainty
The preparation of the consolidated financial statements requires management to make judgements, estimates and assumptions in applying the Group’s accounting policies to determine the reported amounts of assets, liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances. Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis, with revisions to accounting estimates applied prospectively.
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3.2 Estimates and assumptions
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Critical judgements, apart from those involving estimations, that are applied in the preparation of the consolidated financial statements are discussed below:
Development costs
Management considers that the capitalization of development costs to be a critical judgement based on the material size of the costs. The guidance in IAS38 for capitalisation is included within the research and development accounting policy and management applies these policies when deciding whether it is appropriate to capitalise these costs.
Management uses their experience from previous products and their knowledge of the market to ascertain whether it is appropriate to capitalise costs. Forecast sales are then used to assess whether the product can be expected to generate more funds than the development costs capitalised. If the future sales review reveals that previously capitalised items are no longer fully recoverable then the existing balance will be impaired.
Impairment of goodwill
Management undertakes an annual review of the goodwill and compares these values to the discounted net present value of forecast cash flows for the next 5 years to determine whether the asset requires impairment. Forecast cash flows are based on a mixture of historic performance of the entity, forecast launch of new products and knowledge of any change in relationships with key customers. Cash flows are normally discounted at a pre-tax discount of 12.5% to provide a present value of future cash flows.
Management considers 5 years to be a reasonable estimate as the group has had historically stable relationships with its primary customers with steady income from this core base and therefore the expectation of a similar level of future profit is reasonable.
Warranty/remorse provision
The warranty provision comprised of warranty costs and remorse returns is based on the actual warranty costs and remorse expense incurred in the current financial period. The directors have assumed that the costs will remain materially consistent year on year. The assumption is supported by the minimal level of problems with existing products post period end.
The remorse provision is based on historic remorse rates applied to sales within the final quarter of the period. The remorse policy of 3 months means only sales in the final quarter will be affected by remorse returns. The provision rate is calculated by using an average remorse rate by product for the first three quarters of the period; there being no reason for the remorse rate to change materially in the final quarter.
Warranty and remorse returns post period end have been reviewed by management and deemed materially in line with the provision recognised.
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B & W GROUP LTD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE 18 MONTHS ENDED 30 MARCH 2021
3.
Accounting estimates and judgments (continued)
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3.2 Estimates and assumptions (continued)
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Inventories provision
Management perform regular reviews of inventory held to assess whether a provision is necessary against specific products or materials based on its age, condition and popularity within the relevant market. Provisioning is therefore undertaken on a product line basis.
As part of the review of the provisioning, management will also review whether general production costs are being correctly assigned to stock. Management will review absorption rates to ensure these are reasonable and adjust if necessary.
Inventory returned from customers is initially fully provisioned. Once each individual stock item has been assessed the provision will be adjusted, or removed, to reflect the product’s condition and potential for resale.
Investment in subsidiary undertakings
Investments in subsidiary undertakings are stated at cost less accumulated impairment. Management undertakes an annual review of the net cost of these holdings in subsidiaries compared to forecast cash flows to determine whether any impairment to be made or adjusted.
Forecast cash flows are based on a mixture of historic performance of the entity, forecast launch of new products and knowledge of any change in relationships with key customers. These cash flows are normally discounted at a pre-tax discount of 13% to provide a present value thereof.
Deferred tax asset
The company has had significant tax losses. As a result there is a potential for a considerable deferred tax asset. Deferred tax assets are only recognised if it is reasonably foreseeable that the company will be able to get an economic advantage from the asset in the foreseeable future. The company are prudently treating the foreseeable future as within 3 years.
Management do not expect the company to produce a significant taxable profit in the next few years due to material planned investment in research and development. The investment in research and development has tax benefits which make it unlikely that the company will use tax losses other than in connection with a reversal of capital allowance timing differences.
Management have decided to recognise a deferred tax asset for such tax losses on the basis that it can be offset against the company’s deferred tax liability and the tax charges arising from these liabilities.
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B & W GROUP LTD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE 18 MONTHS ENDED 30 MARCH 2021
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Financial Risk Management
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The Business risk management note within the Strategic report includes the group’s business objectives, policies and processes for managing its financial risk management objectives and its exposure to credit risk and liquidity risk. In addition, note 19 to the financial statements sets out the group’s borrowings which were at all times within its agreed facilities.
Capital management
The group has exposure to three main areas of risk - foreign exchange currency exposure, customer credit exposure and liquidity risk. The group has taken several steps to address this.
Foreign exchange transactional currency exposure
The group is exposed to currency exchange rate risk due to a proportion of its receivables and operating expenses being denominated in non-US Dollar currencies. There are currently no official hedges used, however efforts have been made to limit foreign exchange impact within the group by selling between group companies in US Dollars where appropriate.
Customer credit exposure
The group may offer credit terms to its customers which allow for payment of the debt after delivery of the goods or services subject to an individual analysis of credit worthiness. The group is at risk to the extent that a customer may be unable to pay the debt on the specified due date. This risk is mitigated by the strong on-going customer relationships, strong credit control procedures and recovery of the goods as a final option.
The group monitors debtor days to maintain an assessment of credit exposure and recovery. As of 30 March 2021, debtor days were 37.4 (2019 54.2). There were no trade receivables past due and not impaired. The group believe the credit quality of financial assets is therefore reasonably high and expect the receivables to be recoverable. The group has a dedicated credit control team that monitors payments and debtor ageing and determines the credit risk of new customers using external credit rating agencies as well as local information.
Liquidity risk
The previous banking facilities have been replaced by funding from the new parent company group; the Sound United group manages its cash requirements through forecasts prepared for Sound United’s group treasury function and is supported by a larger but informal cash pooling arrangement meaning the liquidity risk is quite low. The company has a rolling 52 week cash forecast which enable their part of the Group’s cash requirements to be anticipated.
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B & W GROUP LTD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE 18 MONTHS ENDED 30 MARCH 2021
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The following is an analysis of the Group's revenue for the 18 months from continuing operations:
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Analysis of revenue by country of destination:
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Turnover achieved by product segment was:
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Loudspeakers & related equipment
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Wireless music systems (Incl Formation)
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B & W GROUP LTD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE 18 MONTHS ENDED 30 MARCH 2021
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Government grants receivable
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(Loss)/profit on disposal of property, plant and equipment
|
|
|
|
|
|
|
|
Other operating income relates to the Research and Development Expenditure Credit and discounts received.
|
|
|
|
The Group obtained the following services from the Group's auditors:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fees payable to the Group's auditors for the statutory audit of the Group's financial statements
|
|
|
|
Fees payable to the Group's auditors for US reporting disclosure
|
|
|
|
|
|
|
|
Corporate structure advisory services
|
|
|
|
|
|
|
|
B & W GROUP LTD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE 18 MONTHS ENDED 30 MARCH 2021
|
Employee benefit expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Employee benefit expenses (including directors) comprise:
|
|
|
|
|
|
|
|
Defined contribution pension cost
|
|
|
|
Restricted Share Unit Scheme
|
|
|
|
Social security contributions and similar taxes
|
|
|
|
|
|
|
|
Key management personnel compensation
Key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the Group, including the directors of the Company listed on page 1.
The emoluments of the highest paid director was $460,000 (2019 - $27,000)
Nil (2019: $nil) retirement benefits were accrued for any director in respect of money purchase schemes.
|
|
The monthly average number of persons, including the directors, employed by the Group during the period was as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
B & W GROUP LTD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE 18 MONTHS ENDED 30 MARCH 2021
|
Employee benefit expenses (including directors) comprise:
|
|
|
|
|
|
|
|
Defined contribution pension cost
|
|
|
|
Restricted Share Unit Scheme
|
|
|
|
Social security contributions and similar taxes
|
|
|
|
|
|
|
|
The monthly average number of persons, including the directors, employed by the Company during the period was as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
These are the legal and professional fees associated with the acquisition of B&W Group by Sound United and the settlement of it's existing financing arrangements. Included in loan interest paid within finance expenses is £19.8m of interest and make good fees paid on settlement of these facilities.
|
|
B & W GROUP LTD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE 18 MONTHS ENDED 30 MARCH 2021
|
Group Other Administrative Expenses
|
|
|
|
|
|
|
As restated
Year ended 30 September
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Product development costs
|
|
|
|
Commissions and royalties
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Legal and professional fees
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Staff training and welfare
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign exchange differences
|
|
|
|
|
|
|
|
|
|
|
|
B & W GROUP LTD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE 18 MONTHS ENDED 30 MARCH 2021
|
Group Finance income and expense
|
|
Recognised in profit or loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest on lease liabilities
|
|
|
|
Loans from group undertakings
|
|
|
|
Other loan interest payable
|
|
|
|
Other amounts payable on settlement of finance arrangements
|
|
|
|
Hire purchase interest payable
|
|
|
|
|
|
|
|
B & W GROUP LTD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE 18 MONTHS ENDED 30 MARCH 2021
|
|
|
12.1 Income tax recognised in profit or loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustments in respect of prior years
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Origination and reversal of timing differences
|
|
|
|
Deferred tax reclassified to discontinued operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
B & W GROUP LTD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE 18 MONTHS ENDED 30 MARCH 2021
12.
Group tax expense (continued)
|
12.1 Income tax recognised in profit or loss (continued)
|
|
|
The reasons for the difference between the actual tax charge for the period and the standard rate of corporation tax in the United Kingdom applied to losses for the period are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax using the Company's domestic tax rate of 19% (2019:19%)
|
|
|
|
Expenses not deductible for tax purposes, other than goodwill, amortisation and impairment
|
|
|
|
Capital allowances for the year in excess of depreciation
|
|
|
|
Higher rate taxes on overseas earnings
|
|
|
|
Adjustments to tax charge in respect of prior periods
|
|
|
|
Other timing differences leading to an increase/(decrease) in taxation
|
|
|
|
|
|
|
|
Adjustment for restatement of prior period
|
|
|
|
Book profit on chargeable assets
|
|
|
|
Transfer of tax to discontinued operations
|
|
|
|
Unrelieved tax losses carried forward
|
|
|
|
Other differences leading to an increase/(decrease) in the tax charge
|
|
|
|
|
|
|
|
B & W GROUP LTD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE 18 MONTHS ENDED 30 MARCH 2021
12.
Group tax expense (continued)
|
|
12.2 Deferred tax balances
|
|
The following is the analysis of deferred tax assets/(liabilities) presented in the consolidated statement of financial position:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred tax assets - Group
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Transfer from Liabilities
|
|
|
|
|
Transfer to Held for Sale
|
|
|
|
|
|
|
|
|
|
Deferred tax liabilities - Group
|
|
B & W GROUP LTD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE 18 MONTHS ENDED 30 MARCH 2021
|
Deferred tax assets - Company
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Transfer from Liabilities
|
|
|
|
|
|
|
|
|
|
Deferred tax liabilities - Company
|
The deferred tax asset stems from the impact of provisions made within the company, the timing difference is expected to be realised within the next 12 months.
Unrelieved tax losses of $82,664,000 (2019: $57,635,000) remain available to offset against future taxable trading profits. No deferred tax asset has been recognised for these losses due to the uncertainty over the recovery of the losses in the future. The un-provided deferred tax asset as a result of these losses is $15,585,000 (2019: $10,951,000). This is based on a tax rate of 19% as a significant proportion of these losses are expected to be used before the rate of corporation tax increases to 25% from 1 April 2023.
|
B & W GROUP LTD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE 18 MONTHS ENDED 30 MARCH 2021
|
Loss for the financial period
|
The company has taken advantage of section 408 of the Companies Act 2006 and has not included its own profit and loss account in these financial statements. The group loss for the financial period includes a loss of $31,237,000 (2019: loss of $31,804,000), which is included in the financial statements of the parent company.
No dividends were paid in respect of the financial period ended 30 March 2021 (2019 - $nil).
|
|
|
Discontinued operations represents the activities of Equity International Inc, a wholly owned US distribution subsidiary of B&W Group Limited which was sold to the company's parent post year end (31st March 2021), however it continues to distribute the company's products.
|
|
Loss on discontinued operations
|
|
|
18 months ended 30 March 2021
$000
|
Year ended 30 September 2019
$000
|
|
|
|
|
|
Expenses other than finance costs
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The statement of cash flows includes the following amounts relating to discontinued operations:
|
|
18 months ended 30 March 2021
$000
|
Year ended 30 September 2019
$000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash from discontinued operations
|
|
|
|
B & W GROUP LTD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE 18 MONTHS ENDED 30 MARCH 2021
|
Property, plant and equipment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Short-term leasehold property
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Transfers between classes
|
|
|
|
|
|
|
Foreign exchange movements
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Implementation of IFRS 16 (Note 32)
|
|
|
|
|
|
|
At 1 October 2019 (adjusted balance)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Re-classified to assets held for sale
|
|
|
|
|
|
|
Transfers between classes
|
|
|
|
|
|
|
Foreign exchange movements
|
|
|
|
|
|
|
|
|
|
|
|
|
|
B & W GROUP LTD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE 18 MONTHS ENDED 30 MARCH 2021
16.
Property, plant and equipment (continued)
|
|
|
Short-term leasehold property
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated depreciation and impairment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Transfers between classes
|
|
|
|
|
|
|
Foreign exchange movements
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Charge for the period - owned assets
|
|
|
|
|
|
|
Charge for the period - financed assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Re-classified to assets held for sale
|
|
|
|
|
|
|
Transfers between classes
|
|
|
|
|
|
|
Foreign exchange movements
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16.1. Assets held under leases
|
|
The net book value of owned and leased assets included as "Property, plant and equipment" in the Consolidated statement of financial position is as follows:
|
|
|
|
|
|
|
|
|
|
|
Property, plant and equipment owned
|
|
|
|
|
|
|
|
|
B & W GROUP LTD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE 18 MONTHS ENDED 30 MARCH 2021
16.
Property, plant and equipment (continued)
|
16.1 Assets held under leases (continued)
|
|
Information about right-of-use assets is summarised below:
Net book value
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation charge for the 18 months ended
|
|
|
|
|
|
|
|
|
|
|
|
Additions to right-of-use assets
|
|
|
|
|
|
|
|
|
|
|
|
Additions to right-of-use assets
|
|
|
B & W GROUP LTD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE 18 MONTHS ENDED 30 MARCH 2021
|
|
|
|
|
|
|
|
Plant, Machinery and Motor
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustment to opening balances on account of retrospective application of IFRS 16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Transfer to Held for Sale Group
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Plant, Machinery and Motor
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustment to opening balances on account of retrospective application of IFRS 16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Transfer to Held for Sale Group
|
|
|
|
|
|
|
|
|
|
B & W GROUP LTD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE 18 MONTHS ENDED 30 MARCH 2021
|
|
|
|
|
|
|
|
Plant, Machinery and Motor
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Included within the statement of profit or loss is an expense of $8,482 relating to low value leases exempt from recognition under IFRS 16. There is also $920,002 of expenses relating to short term leases ending within 12 months of application which are exempt from recognition under IFRS 16.
|
|
|
|
Short-term leasehold property
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Implementation of IFRS 16 (Note 32)
|
|
|
|
|
|
|
At 1 October 2019 (adjusted balance)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Transfers between classes
|
|
|
|
|
|
|
|
|
|
|
|
|
|
B & W GROUP LTD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE 18 MONTHS ENDED 30 MARCH 2021
16.
Property, plant and equipment (continued)
|
|
|
Short-term leasehold property
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated depreciation and impairment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Charge for the period - owned assets
|
|
|
|
|
|
|
Charge for the period - financed assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Transfers between classes
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16.2. Assets held under leases
|
|
The net book value of owned and leased assets included as "Property, plant and equipment" in the Company Statement of financial position is as follows:
|
|
|
|
|
|
|
|
|
|
|
Property, plant and equipment owned
|
|
|
|
|
|
|
|
|
B & W GROUP LTD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE 18 MONTHS ENDED 30 MARCH 2021
16.
Property, plant and equipment (continued)
|
16.2 Assets held under leases (continued)
|
|
Information about right-of-use assets is summarised below:
Net book value
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation charge for the 18 months ended
|
|
|
|
|
|
|
|
|
|
|
|
Additions to right-of-use assets
|
|
|
|
|
|
|
|
|
|
|
|
Additions to right-of-use assets
|
|
|
B & W GROUP LTD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE 18 MONTHS ENDED 30 MARCH 2021
|
|
|
|
|
|
|
|
Plant, Machinery and Motor Vehicles
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustment to opening balances on account of retrospective application of IFRS 16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Plant, Machinery and Motor
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustment to opening balances on account of retrospective application of IFRS 16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
B & W GROUP LTD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE 18 MONTHS ENDED 30 MARCH 2021
|
|
|
|
|
|
|
|
Plant, Machinery and Motor
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Included within the statement of profit or loss is an expense of $920,002 relating to short term leases ending within 12 months of application which are exempt from recognition under IFRS 16.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign exchange movement
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign exchange movement
|
|
|
|
|
|
|
|
|
|
|
|
B & W GROUP LTD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE 18 MONTHS ENDED 30 MARCH 2021
17.
Intangible assets (continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated amortisation and impairment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign exchange movement
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
During the period, the group expensed $8,638,000 (2019: $1,822,000) relating to research activities.
Management have reviewed the intangible assets held at the period end for projects that are no longer commercially viable and as a result have recognised an impairment of $34,000 (2019: $169,000).
Following the separation of B&W Group from EVA Automotive Inc and it's acquisition by Sound United, the intellectual property associated with the formation speaker technology was acquired by Sound United and recharged to B&W for $1,200,000 and forms part of the external additions in the period.
|
|
B & W GROUP LTD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE 18 MONTHS ENDED 30 MARCH 2021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign exchange movement
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated amortisation and impairment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign exchange movement
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
During the period, the company expensed $8,638,000 (2019: $1,822,000) relating to research activities.
Management have reviewed the intangible assets held at the period end for projects that are no longer commercially viable and as a result have recognised an impairment of $34,000 (2019: $169,000).
|
|
B & W GROUP LTD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE 18 MONTHS ENDED 30 MARCH 2021
|
Other non-current investments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investments in subsidiary companies
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
During the financial period the company conducted an impairment review of its subsidiaries and has consequently recorded an impairment of $89,000 (2019: $19,479,000). The adjustments are detailed below:
B&W Group Finland. The subsidiary has a capital contribution with B&W Group Limited that was increased by $137,000 (2019 - $189,000). The investment is not considered to be recoverable and therefore it is impaired to a carrying value of nil.
The company also made an investment of $94,000 in B&W Japan which has been impaired.
Due the re-structuring of the business following the acquisition by Sound United the carrying value of the investments in the following companes have been impaired; B&W Group Belgium NV ($364,000) and B&W Group Asia Ltd ($16,000). The impairment of B&W Group Germany GmbH has been reversed by $523,000.
The previous impairment of the investment in Equity International Inc has been reversed (2019: fully impaired) due to it's sale post year end to Sound United for $21.7m. The investment is included in assets held for sale at $16,663,000.
All other investments were not considered to require impairment. Any reasonable change in assumptions would not cause a material impairment.
Management believe the carrying value of the remaining investments is supported by their underlying cash flows.
A list of investments held by the company as of 30 March 2021 can be seen in note 31.
|
|
B & W GROUP LTD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE 18 MONTHS ENDED 30 MARCH 2021
|
|
|
|
|
|
|
|
|
|
|
|
|
Finished goods and goods for resale
|
|
|
|
|
|
|
|
The amount of inventories recognised as an expense during 2021 was $
65,009,000
(2019 - $
73,105,000
)
.
|
|
There were no significant differences between the replacement cost and the values disclosed for inventories. Finished goods are stated net of any provisions for obsolete and slow moving stock. The provision included in the accounts was $5,045,000 (2019 - $5,042,000) for the group.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Finished goods and goods for resale
|
|
|
|
|
|
|
|
The amount of inventories recognised as an expense during 2021 was $
49,432,000
(2019 - $
32,033,000
)
.
|
|
There were no significant differences between the replacement cost and the values disclosed for inventories. Finished goods are stated net of any provisions for obsolete and slow moving stock. The provision included in the accounts was $3,004,000 (2019 - $2,719,000) for the company.
|
|
B & W GROUP LTD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE 18 MONTHS ENDED 30 MARCH 2021
|
|
Trade and other receivables
|
|
|
|
|
|
|
|
|
|
Non-current trade receivables
|
|
|
|
Total non-current trade and other receivables
|
|
|
|
|
|
|
|
|
|
|
|
Receivables from related parties
|
|
|
|
Total financial assets other than cash and cash equivalents classified as loans and receivables
|
|
|
|
Prepayments and accrued income
|
|
|
|
|
|
|
|
|
|
|
|
Total current trade and other receivables
|
|
|
|
|
|
|
|
|
|
|
|
Receivables from related parties
|
|
|
|
Total financial assets other than cash and cash equivalents classified as loans and receivables
|
|
|
|
Prepayments and accrued income
|
|
|
|
|
|
|
|
|
|
|
|
Total current trade and other receivables
|
|
|
|
B & W GROUP LTD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE 18 MONTHS ENDED 30 MARCH 2021
20.
Trade and other receivables (continued)
|
Amounts owed by group undertakings relate to current accounts that are incurred in the course of normal trading activity. Balances are unsecured, repayable on demand and overdue balances incur interest of 4% to reflect a market rate of interest. The carrying value of trade and other receivables held at amortised cost approximates fair value.
Deferred income relates to royalties recieved in advance and will be earned over a period of 8 years. During the 18 months ending 31 March 2021, $1,781,115 was recognised in income.
Trade receivables balances are stated net of any provisions for bad debts. At the date of the statement of financial position, group trade receivables included a provision of $141,000 (2019 - $29,000) and company trade receivables included a provision of $132,000 (2019 - $21,000). The credit losses are calculated using the Groups historical loss rates adjusted for current and forward looking information in the countries where the Group operates. See Note 25 for further information about the treatment of these financial instruments.
As of 30 March 2021, group debtors contained $nil due in over 12 months (30 September 2019 - $235,000).
|
|
B & W GROUP LTD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE 18 MONTHS ENDED 30 MARCH 2021
|
|
|
|
|
|
|
|
|
Total non-current trade and other payables
|
|
|
|
|
|
|
|
|
|
|
|
Payables to related parties
|
|
|
|
|
|
|
|
|
|
|
|
Total financial liabilities, excluding loans and borrowings, classified as financial liabilities measured at amortised cost
|
|
|
|
Other payables - tax and social security payments
|
|
|
|
|
|
|
|
Total current trade and other payables
|
|
|
|
The carrying value of trade and other payables classified as financial liabilities measured at amortised cost approximates fair value.
Deferred income relates to royalties received in advance and will be earned over a period of 8 years. During the 18 months ended 30 March 2021 $1,781,000 was recognised in income.
|
|
B & W GROUP LTD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE 18 MONTHS ENDED 30 MARCH 2021
|
|
|
|
|
|
|
|
|
Total non-current trade and other payables
|
|
|
|
|
|
|
|
|
|
|
|
Payables to related parties
|
|
|
|
|
|
|
|
|
|
|
|
Total financial liabilities, excluding loans and borrowings, classified as financial liabilities measured at amortised cost
|
|
|
|
Other payables - tax and social security payments
|
|
|
|
|
|
|
|
Total current trade and other payables
|
|
|
|
Amounts owed to group undertakings relate to current accounts that are incurred in the course of normal trading activity. Balances are unsecured, repayable on demand and overdue balances incur interest of 4% to reflect a market rate of interest.
|
|
B & W GROUP LTD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE 18 MONTHS ENDED 30 MARCH 2021
|
|
|
|
|
|
|
|
|
Collateralised borrowings
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Collateralised borrowings
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total loans and borrowings
|
|
|
The carrying value of loans and borrowings classified as financial liabilities measured at amortised cost approximates fair value.
|
B & W GROUP LTD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE 18 MONTHS ENDED 30 MARCH 2021
|
|
|
|
|
|
|
|
|
Collateralised borrowings
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Collateralised borrowings
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total loans and borrowings
|
|
|
|
The average rate payable on the bank loans and overdrafts was 11.8% (2019: 11.8%) and these were secured by fixed and floating charges over certain assets of the group. The average rate payable on the other loans was 8.4% (2019: 8.4%) during the period. The bank overdrafts and loans of the group were secured by a fixed and floating charge over its assets which have since been released.
Bank loans comprise of fixed term loans of $nil (2019 - $2,500,000) for the group and company, revolver credit facilities of $nil (2019 - $21,990,000) for the group and $nil (2019 - $13,925,000) for the company and mortgages of $nil (2019 - $1,331,000) for the group.
Mezzanine finance comprised of term loans with interest that may be rolled up (paid in kind ‘PIK’), exit fees and make whole fees totalling as at 30 March 2021 of $nil (2019 - $32,935,000) for the group and company.The make whole fees and exit fees paid on this in the period totalled $19.8m.
The mezzanine finance was repaid on 9 October 2020. It was repaid partly in cash and partly by the novation to EVA Automation Inc of $28.82m in return for new shares in the company.
At 30 March 2021 the company had a $12m promissory note from its parent company which has since been repaid.
|
The carrying value of loans and borrowings classified as financial liabilities measured at amortised cost and approximates to fair value.
|
B & W GROUP LTD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE 18 MONTHS ENDED 30 MARCH 2021
|
|
Warranty & remorse provision
|
|
|
|
|
|
|
|
|
|
|
Charged to profit or loss
|
|
|
Utilised during the period
|
|
|
Foreign exchange movements
|
|
|
|
|
|
Due within one year or less
|
|
|
|
|
Warranty & remorse provision
Provision for warranty work is made according to IAS 37 ‘Provisions, contingent liabilities and contingent assets.’ The amount provided is the directors’ best estimate of the obligation likely to arise. The provisions are all for costs expected to be realised in the next financial year.
|
|
Warranty & remorse provision
|
|
|
|
|
|
|
|
|
|
|
Charged to profit or loss
|
|
|
Utilised during the period
|
|
|
Foreign exchange movements
|
|
|
|
|
|
Due within one year or less
|
|
|
|
|
|
B & W GROUP LTD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE 18 MONTHS ENDED 30 MARCH 2021
23.
Provisions (continued)
Warranty & remorse provision
Provision for warranty work is made according to IAS 37 ‘Provisions, contingent liabilities and contingent assets.’ The amount provided is the directors’ best estimate of the obligation likely to arise. The provisions are all for costs expected to be realised in the next financial year.
|
Assets and liabilities classified as held for sale
|
|
|
(i)
General description
As part of the acquisition of the B&W group by the Sound United group on 9 October 2020 the directors announced their intention to consolidate US sales operations and to transfer Equity International Inc from B&W Group Limited to DEI Sales Inc. Equity International Inc had been a wholly owned subsidiary of B&W Group Ltd distributing Bowers & Wilkins product in North America which it continues to do but now as part of Sound United’s US operations. The transfer completed on the 31st of March 2021 at its fair value of $21.7m.
|
(ii) Assets and liabilities held for sale
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities held for sale
|
|
|
B & W GROUP LTD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE 18 MONTHS ENDED 30 MARCH 2021
|
(iii) Assets and liabilities held for sale
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred Ordinary
shares of $
1.621250
each
|
|
|
|
Ordinary
shares of $
1.603703
each
|
|
|
|
|
|
|
|
Preferred Ordinary shares of $
1.621250
each
|
|
|
|
|
|
At 1 October and 30 March
|
|
|
|
|
|
Ordinary shares of $
1.603703
each
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
B & W GROUP LTD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE 18 MONTHS ENDED 30 MARCH 2021
25.
Share capital (continued)
|
Shares Issued in the period
|
On 9 October 2020, the then PIK lenders converted $28,820,231 of the company’s liability to them into one hundred ordinary shares fully paid. Later the same day, DEI Sales Inc (Sound United) acquired these shares and all the other issued share capital in B&W Group Ltd. Following the acquisition a second issue of one hundred ordinary shares fully paid up was issued to DEI Sales Inc at a premium of $62,000,000 , to enable the B&W group to repay all outstanding loans and banking facilities and to provide sufficient working capital for the business to continue as a going concern.
Share premium
The share premium reserve represents the amount paid for shares in excess of their nominal values. This reserve is non-distributable.
Capital contribtion
The Capital reserve represents amounts contributed by the parent company with no intention of repayment and no issue of share capital in return
Foreign exchange reserve
This comprises the foreign currency reserve established at the date that the functional currency was changed to USD as of 1 October 2014.
Retained earnings
The retained earning account comprises the balance of profits accumulated over the life of the company.
|
B & W GROUP LTD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE 18 MONTHS ENDED 30 MARCH 2021
|
|
Financial instruments - fair values and risk management
|
|
|
|
|
Accounting classifications
|
|
As described in Note 4 the Group is exposed through its operations to the following financial risks:
- Credit risk
- Foreign exchange risk, and
- Liquidity risk.
In common with all other businesses, the Group is exposed to risks that arise from its use of financial instruments. Note 4 describes the Group's objectives, policies and processes for managing those risks and the methods used to measure them. Further quantitative information in respect of these risks is presented throughout these financial statements. There have been no substantive changes in the Group's exposure to financial instrument risks, its objectives, policies and processes for managing those risks or the methods used to measure them from previous periods unless otherwise stated in this note.
The principal financial instruments used by the Group, from which financial instrument risk arises, are as follows:
- Trade receivables
- Cash and cash equivalents
- Trade and other payables
Financial instruments not measured at fair value includes cash and cash equivalents, trade and other receivables, trade and other payables, and loans and borrowings. Due to their short-term nature, the carrying value of cash and cash equivalents, trade and other receivables, and trade and other payables approximates their fair value. For details of the fair value hierarchy, valuation techniques, and significant unobservable inputs related to determining the fair value of loans and borrowings, which are classified in level 3 of the fair value hierarchy.
The following table shows the carrying amounts and fair values of financial assets and financial liabilities. It does not include fair value information for financial assets and financial liabilities not measured at fair value if the carrying amount is a reasonable approximation of fair value.
For all financial assets and liabilities measured at amortised cost their fair values approximate their carrying values. All financial instruments are considered to be level 3 (unobservable inputs).
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial assets that are debt instruments held at amortised cost
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
|
|
|
Amounts owed by group undertakings
|
|
|
|
|
|
Amounts owed by parent companies
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
B & W GROUP LTD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE 18 MONTHS ENDED 30 MARCH 2021
|
Financial liabilities held at amortised cost
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amounts owed to parent companies
|
|
|
|
|
|
Amounts owed to group undertakings
|
|
|
|
|
|
Loan from ultimate parent company
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accruals and deferred income
|
|
|
|
|
|
|
|
|
|
|
|
Related party transactions
|
Company
During the period the company paid expenses of $nil (2019: $42,000) on behalf of Bowers & Wilkins Holding Ltd, the ultimate UK parent company prior to the sale of the company to Sound United.
At 30 March 2021 the company was owed $nil from EVA Automation Inc (2019: $102,000) relating to expenses paid on their behalf. In addition, the company received a $3,500,000 (2019: $4,491,000) capital contribution from EVA in November 2019.
On 9 October 2020 the company received from DEI Sales Inc, its parent company, $62m as share capital and a further $25m by way of a promissory note of which $13m was subsequently repaid prior to the period end and the balance immediately post period end.
The company has taken the exemption permitted under IAS 24 to not disclose transactions with other entities within the group.
During the period the Company made sales of $3,471,000 to Sound United.
At 30 March 2021 the company owed $13,209,000 to DEI Sales Inc it's parent company.
Group
During the period the Group paid expenses of $nil (2019: $42,000) on behalf of Bowers & Wilkins Holding Ltd, the ultimate UK parent company prior to the sale of the Group to Sound United. .
During the period the Group paid expenses of $nil (2019: $25,000) on behalf of EVA Automation Inc (EVA) the prevous ultimate parent company. EVA paid expenses of $nil (2019: $328,000) on behalf of the group. At 30 March 2021 the Group owed EVA $nil (2019: $204,000 owed by EVA) relating to expenses paid on our/their behalf.
During the period the Group received a $3,500,000 (2018: $4,491,000) capital contribution from EVA. At 30 March 2021 the Group owed EVA $nil (2019: $8,700,000).
|
B & W GROUP LTD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE 18 MONTHS ENDED 30 MARCH 2021
28.
Related party transactions (continued)
The Group uses the sales, distribution and logistics arrangements of its fellow operations within Sound United on an arms length trading basis. Likewise it sells products to Sound United's distribution operations on a comparable basis to those terms of third party distributors.
At 30 March 2021 the Group had trade payables of $2,382,000 owed to Group companies and trade receivables of $1,234,000 due from Group companies.
During the period the Group made sales of $3,471,000 to Sound United.
At 30 March 2021 the Group owed $13,209,000 to DEI Sales Inc it's parent company.
See note 23 for details of the share based payments with related partties.
Key Management Personnel
Key management personnel are limited to the group’s directors. Details of their compensation are included within note 8. During the period management received no post-employment benefits, share based payments or non-monetary benefits.
Group
Authorised and contracted for $29,000 (2019 - $155,000)
Company
Authorised and contracted for $3,000 (2019 - $136,000)
Group
The company and it's subsidiaries have provided cross guarantees in respect of finance facilities made available to its immediate parent company DEI Sales Inc in connection with it's financing of the Sound United group including B&W Group Ltd. At 30 March 2021 the facilities secured amounted to $329m.
Company
Cross guarantees in respect of subsidiary borrowings $nil (2019 - $8,066,000)
Audit exemption guarantee:
The company has guaranteed the period end liabilities of B&W Group (Logistics) Ltd (company number 05259045) under section 479A of the Companies Act 2006 and as such the subsidiary has taken advantage of the audit exemption.
|
B & W GROUP LTD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE 18 MONTHS ENDED 30 MARCH 2021
Staff may belong to a group personal pension plan or money purchase scheme (defined contribution schemes). The assets of the schemes are administered in funds independent from those of the group. The pension cost charged represents contributions payable to the schemes and amounted to $2,606,000 for the group (30 September 2019: $1,275,000) and $1,611,000 for the company (30 September 2019: $979,000). At 30 March 2021 the group owed $1,480,000 (30 September 2019: $659,000) and the company owed $148,000 (30 September 2019: $116,000) to pension schemes.
DEI Sales Inc. of 5541 Fermi Ct, Carlsbad, CA 92008, United States acquired B&W Group Ltd on the 9 October 2020 and the ultimate parent company became Viper Holdings Corporation Inc of 54th Floor, 200 Clarendon Street, Boston, Massachusetts.
On 12th April the Sound United group, of which B&W Group Ltd and its subsidiaries are part, was acquired by Masimo Corporation Inc, a publically traded company.
|
Post balance sheet events
|
The group continues to adapt its operations in various ways to deal with the challenges arising from the COVID-19 pandemic, with the safety of staff being the most critical factor. Remote working together with social distancing measures and PPE implemented in offices and factories ensures a safe environment for staff to work in and allows operations to continue. In addition, the group monitors the business continuity plans of both its own operations and those of key suppliers in light of COVID 19 and variants thereof to mitigate impact on the group’s supply chain.
The COVID-19 pandemic continues to exert a significant impact on the group’s established retail channels and practices as lockdowns and other restrictions on movement are enforced. This has been acerbated by COVID -19 induced changes in consumer habits and consequent higher demand for Hi-Fi products The group has boosted its ecommerce and online support for consumers and is working with established dealers to ensure the best possible consumer experience in the circumstances, whilst supporting the survival of dealers who fulfilled deliveries on the group’s behalf.
The directors have reviewed the impact of the war between Russia and Ukraine on both sales and the group’s supply chain and are of the current opinion that it will not impact materially on the ongoing business or its results.
On 12th April 2022 February the Sound United group, of which B&W Group Ltd and its subsidiaries are part, was acquired by Masimo Corporation Inc thereby increasing the opportunities for the business in the healthcare sector.
The directors have a reasonable expectation that the group and company has adequate resources to continue in operational existence for the foreseeable future. The group and company therefore continue to adopt the going concern basis in preparing its consolidated and company financial statements.
Further details of this going concern assessment can be found in note 2, Significant accounting policies.
|
B & W GROUP LTD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE 18 MONTHS ENDED 30 MARCH 2021
|
Notes supporting statement of cash flows
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash at bank available on demand
|
|
|
|
Cash and cash equivalents in the statement of financial position
|
|
|
|
|
|
|
|
Bank overdrafts used for cash management purposes
|
|
|
|
Cash and cash equivalents in the statement of cash flows
|
|
|
As part of the sale of the company and its subsidiaries to the Sound United Group the borrowings from external parties and EVA Automation Inc were repaid in full through a mixture of share capital conversion and cash injection. There were therefore significant non-cash transactions in the year which include the the issue of $28,820,000 of share capital used to repay borrowings in addition the amount shown in the cashflow statement.
|
B & W GROUP LTD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE 18 MONTHS ENDED 30 MARCH 2021
|
|
|
Details of the Group's material subsidiaries at the end of the reporting period are as follows:
|
|
|
|
|
Place of incorporation and operation
|
Proportion of ownership
interest and voting
power held by the
Group (%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3) B&W Group China Limited
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6) B&W Group Germany Gmbh
|
|
|
|
|
|
7) B&W Group (Logistics) Ltd
|
|
|
|
|
|
8) B&W Group Production (HK) Ltd
|
|
|
|
|
|
9) B&W Group (Schweiz) Gmbh
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11) B&W Group Nederland BV
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13) Bowers & Wilkins Australia Pty Limited
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14) Bowers & Wilkins Korea Inc
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15) Bowers & Wilkins Trading (Zhuhai) Co Ltd
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16) Equity International (Canada) Inc
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17) Equity International Inc
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19) B&W Group Japan Limited
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B & W GROUP LTD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE 18 MONTHS ENDED 30 MARCH 2021
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Effects of changes in accounting policies
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The Group adopted IFRS 16 and IFRIC 23 with a transition date of 1 January 2019. The Group has chosen not to restate comparatives on adoption of both standards, and therefore, the revised requirements are not reflected in the prior year financial statements. Rather, these changes have been processed at the date of initial application and recognised in the opening equity balances. Details of the impact these two standards have had are given below. Other new and amended standards and Interpretations issued by the IASB did not impact the Group as they are either not relevant to the Group’s activities or require accounting which is consistent with the Group’s current accounting policies.
IFRS 16 Leases Effective 1 January 2019, IFRS 16 has replaced IAS 17 Leases and IFRIC 4 Determining whether an Arrangement Contains a Lease. IFRS 16 provides a single lessee accounting model, requiring the recognition of assets and liabilities for all leases, together with options to exclude leases where the lease term is 12 months or less, or where the underlying asset is of low value. IFRS 16 substantially carries forward the lessor accounting in IAS 17, with the distinction between operating leases and finance leases being retained. The Group does not have significant leasing activities acting as a lessor.
The Group adopted IFRS 16 using the modified retrospective approach, with recognition of transitional adjustments on the date of initial application, without restatement of comparative figures. The Group elected to apply the practical expedient to not reassess whether a contract is, or contains a lease at the date of initial application. Contracts entered into before the transition date that were not identified as leases under IAS 17 and IFRIC 4 were not reassessed. The definition of a lease under IFRS 16 was applied only to contracts entered into or changed on or after 1 January 2019. IFRS 16 provides for certain optional practical expedients, including those related to the initial adoption of the standard.
The Group applied the following practical expedients when applying IFRS 16 to leases previously classified as operating leases under IAS 17:
(a) Apply a single discount rate to a portfolio of leases with reasonably similar characteristics;
(b) Exclude initial direct costs from the measurement of right-of-use assets at the date of initial application for leases where the right-of-use asset was determined as if IFRS 16 had been applied since the commencement date;
(c) Reliance on previous assessments on whether leases are onerous as opposed to preparing an impairment review under IAS 36 as at the date of initial application; and
(d) Applied the exemption not to recognise right-of-use assets and liabilities for leases with less than 12 months of lease term remaining as of the date of initial application.
As a lessee, the Group previously classified leases as operating or finance leases based on its assessment of whether the lease transferred substantially all of the risks and rewards of ownership. Under IFRS 16, the Group recognizes right-of-use assets and lease liabilities for most leases. However, the Group has elected not to recognise right-of-use assets and lease liabilities for some leases of low value assets based on the value of the underlying asset when new or for short-term leases with a lease term of 12 months or less.
This has resulted in the company recognising net assets of £2.166m (per note 14) and a liability of £2.232m with a reduction in brought forward retained profits of £0.066m.
The group has recognised net assets of £9.206m, a liability of £9.938m and a reduction in brought forward retained profits of £0.732m.
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B & W GROUP LTD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE 18 MONTHS ENDED 30 MARCH 2021
These consolidated financial statements have been restated to correct for an error in the accounting for foreign exchange gains and losses. Previously, as at 30 September 2015, the Company and all its subsidiaries in the group changed functional currency from various local currencies to USD. At the same time the presentation currency was also changed to USD. The books and records of each company remained in their historic currencies and the translation adjustments from the books and records to the functional currency were incorrectly recorded within the FX Reserve. In accordance with IAS 21, an FX reserve should have been recorded upon change in functional and presentational currency, and Fx gains or losses arising upon the translation of the books and records to the functional currency should have been recorded in the statement of profit or loss. Accordingly, these consolidated financial statements include restatements to establish the FX reserve at the date of change in functional and presentational currency, and to correctly record translation adjustments from underlying books and records to functional currency within the statement of profit or loss.
Group
This has increased the loss for the year ended 30 September 2019 from $(31,805,000) to $(33,963,000) and reduced the retained earning reserve at 30 September 2019 from $(41,098,000) to $(52,496,000). The Foreign Exchange reserve has increased from $(9,569,000) to $3,421,000. Share Capital has reduced from $3,462,000 to $3,380,000 and Share Premium has reduced from $34,791,000 to $33,281,000. The overall equity position has not changed.
Company
This has increased the loss for the year ended 30 September 2019 from $(52,442,000) to $(54,401,000) and reduced the retained earning reserve at 30 September 2019 from $(54,022,000) to $(66,537,000). The Foreign Exchange reserve has increased from $(10,970,000) to $3,137,000. Share Capital has reduced from $3,462,000 to $3,380,000 and Share Premium has reduced from $34,791,000 to $33,281,000. The overall equity position has not changed.
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B & W GROUP LTD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE 18 MONTHS ENDED 30 MARCH 2021
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The groups financing is managed as part of the Sound United treasury function against an objective to consistently reduce borrowings through profitable trading and strong working capital management whilst permitting capital investments necessary for long term growth.
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The Group is not subject to any externally imposed capital requirements.
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The gearing ratios at 30 March 2021 and 30 September 2019 were as follows:
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Cash and cash equivalents (including cash and bank balances in a disposal group held for sale)
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Net debt to total equity ratio
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As part of the sale of the company and its subsidiaries to the Sound United Group the borrowings from external parties and EVA Automation Inc were repaid in full through a mixture of share capital conversion and cash injection and via a $12m promissory note. The promissory note was redeemed upon the sale of Equity International Inc immedately after the period end.
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