Registered number: 01780413
ESCATEC MECHATRONICS LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
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ESCATEC MECHATRONICS LIMITED
COMPANY INFORMATION
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Chartered Accountants & Statutory Auditor
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ESCATEC MECHATRONICS LIMITED
CONTENTS
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Independent Auditor's Report
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Statement of Comprehensive Income
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Statement of Changes in Equity
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Notes to the Financial Statements
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ESCATEC MECHATRONICS LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2022
The Directors present their strategic report for the year ended 31 December 2022.
As part of the wider Escatec Group, the Company continues its focus as a Manufacturing Services partner providing original equipment manufacturing with low risk, end to end, procurement, manufacturing and supply chain solutions including printed circuit board assembly through to the manufacture of complex, highly configurable, electro-mechanical products. The Company focuses on meeting or exceeding its customers’ exacting requirements for quality, cost and OTIF delivery (on time in full) alongside the various ongoing initiatives to maximise efficiency.
The 12-month period to December 2022 showed a reduction in sales, over the previous 15-month period to December 2021. Demand softened from a significant customer and will continue to do so during 2023, before being forecast to recover in 2024. For all other customers, demand was broadly in line with expectation. 2023 will therefore show a fall in sales compared to the previous year but is expected to rise significantly in 2024.
During the period, supply chain issues, as a result of the pandemic and the war in Ukraine, had a material effect on both profitability and efficiency. Foreign exchange volatility and inflation in the period increased our costs, which also had a detrimental impact on our profitability.
Principal risks and uncertainties
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The Directors constantly review risks and uncertainties that face the business, a key example is the ongoing disruption in the global electronic component supply chain. The business continues to work closely with our suppliers and customers to mitigate the risk.
The Directors recognise that cyber attacks are becoming more common place and the business has taken steps to enhance cyber security. The Company is accredited to ISO 27001 (information security management standard) across all sites and has continual staff training in place to ensure staff are aware of potential threats.
It is the Company’s payment policy to negotiate the best commercial terms with its suppliers in all sectors, and to ensure that those suppliers clearly understand the terms on which payments will be made. In addition, the business looks to ensure that all procurement activities are conducted in a fair, objective, and transparent manner by using best practice in the application of ethical standards.
Key performance indicators
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The Directors measure financial performance (sales, gross margin, stock turns, cash flow), and customer and employee satisfaction, as indicators of the success of the Company. The internal systems and processes are aligned to these KPI’s and enable the management team to monitor movement and progress against them.
Brexit
Brexit related friction at the EU border has resulted in the business reviewing supply chain activities and localising supplies where possible.
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ESCATEC MECHATRONICS LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
COVID-19
The direct impact of COVID-19 on the business in 2022 was significantly reduced from the previous year. The business continues to follow the relevant government advice and has continued to operate throughout the pandemic.
This report was approved by the board and signed on its behalf.
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ESCATEC MECHATRONICS LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 DECEMBER 2022
The Directors present their report and the financial statements for the year ended 31 December 2022.
The current period is 12 months and the prior period is 15 months, therefore the periods are not comparable.
The profit for the year, after taxation, amounted to £365,903 (2021 - £2,469,849).
During the year dividends of £300,000 were paid (2021 - £5,944,586).
The Directors who served during the year were:
Directors' responsibilities statement
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The Directors are responsible for preparing the Strategic Report, the Directors' Report and the financial statements in accordance with applicable law and regulations.
Company law requires the Directors to prepare financial statements for each financial year. Under that law the Directors have elected to prepare the financial statements in accordance with applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice), including Financial Reporting Standard 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland'. Under company law the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Company and of the profit or loss of the Company for that period.
In preparing these financial statements, the Directors are required to:
∙select suitable accounting policies for the Company's financial statements and then apply them consistently;
∙make judgements and accounting estimates that are reasonable and prudent;
∙state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements;
∙prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Company and to enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
The principal activity of the Company is the provision of electro-mechanical and electronics manufacturing services (EMS).
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ESCATEC MECHATRONICS LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
Sales are expected to fall slightly in 2023 compared to 2022. The slower sales will be in the first half year but recovering in the second half. The fall is predominantly due to a major customer's technology cycle.
There is a potential upside to that assessment as the pipeline for new customers could bring even stronger sales in the second half than we are currently forecasting.
The Company’s sales focus will continue to be on developing strong strategic partnerships with customers in key industrial electronics manufacturing sectors, with a specific emphasis on industrial automation, process control, test and measurement and laboratory technology.
The Company’s sales and marketing activity is now being incorporated into the wider Escatec Group, giving existing and potential customers a greater range of manufacturing services across a wider geographic footprint.
Engagement with employees
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In 2022 our Czech Republic sites passed a SMETA (Sedex Members Ethical Trade Audit) for ethical trade compliance as part of the Group’s wider ESG (Ethical, Social & corporate Governance) stance. A key part of that assessment is focused on staff welfare and conditions and we were praised for the level of staff involvement and communication at all levels.
We continue to strive for all employees to be fully engaged with the business and were pleased that we could resume face to face Listening Groups that give all employees the opportunity to discuss any issues with a member of the Senior Leadership Team.
Going concern
The Directors have considered the budgets and cashflow forecasts for the Company and wider Escatec Group for a period of at least 12 months from the Balance Sheet date and are able to confirm that these documents show that the Company is able to meet its liabilities as they fall due. The Directors ensure the wider Escatec Group only supply customers who are financially sound and only purchase stock and enter into commitments with suppliers where these are backed up by orders or Service Level Agreements with those customers. As such the financial statements have been prepared on a going concern basis.
Matters covered in the Strategic Report
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As permitted by Paragraph 1A of Schedule 7 to the Large and Medium-sized Companies and Groups (Accounts and reports) Regulations 2008 certain matters which are required to be disclosed in the Directors' Report have been omitted as they are included in the Strategic Report instead. These matters relate to business review, principle risks and uncertainties, supplier payment policy and key performance indicators.
Disclosure of information to Auditor
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Each of the persons who are Directors at the time when this Directors' Report is approved has confirmed that:
∙so far as the Directors are aware, there is no relevant audit information of which the Company's auditor is unaware, and
∙The Direcors have taken all the steps that ought to have been taken as a Director in order to be aware of any relevant audit information and to establish that the Company's auditor is aware of that information.
Post balance sheet events
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There have been no significant events affecting the Company since the year end.
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ESCATEC MECHATRONICS LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
The Auditor, Mazars LLP, will be proposed for reappointment in accordance with section 485 of the Companies Act 2006.
This report was approved by the board and signed on its behalf.
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ESCATEC MECHATRONICS LIMITED
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF ESCATEC MECHATRONICS LIMITED
Opinion
We have audited the financial statements of Escatec Mechatronics Limited (the ‘Company’) for the year ended 31 December 2022 which comprise the Statement of Comprehensive Income, the Balance Sheet, the Statement of Changes in Equity and Notes to the Financial Statements, including a summary of significant accounting policies.
The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (United Kingdom Generally Accepted Accounting Practice).
In our opinion, the financial statements:
∙give a true and fair view of the state of the Company’s affairs as at 31 December 2022 and of its profit for the year then ended;
∙have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
∙have been prepared in accordance with the requirements of the Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the financial statements section of our report. We are independent of the Company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard and 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
In auditing the financial statements, we have concluded that the Directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the Company’s ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the Directors with respect to going concern are described in the relevant sections of this report.
Other information
The other information comprises the information included in the Annual Report, other than the financial statements and our Auditor’s Report thereon. The Directors are responsible for the other information contained within the Annual Report. 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.
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ESCATEC MECHATRONICS LIMITED
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF ESCATEC MECHATRONICS LIMITED
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 course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of the audit:
∙the information given in the Strategic Report and the Directors' Report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
∙the Strategic Report and the Directors' Report have been prepared in accordance with applicable legal requirements.
Matters on which we are required to report by exception
In light of the knowledge and understanding of the Company and its environment obtained in the course of the audit, we have not identified material misstatements in the Strategic Report or the 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:
∙adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or
∙the financial statements are not in agreement with the accounting records and returns; or
∙certain disclosures of Directors' remuneration specified by law are not made; or
∙we have not received all the information and explanations we require for our audit.
Responsibilities of Directors
As explained more fully in the Directors' Responsibilities Statement set out on page 3, 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 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 intend either to liquidate the Company or to cease operations, or have no realistic alternative but to do so.
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ESCATEC MECHATRONICS LIMITED
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF ESCATEC MECHATRONICS LIMITED
Auditor's 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.
The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud.
Based on our understanding of the Company and its industry, we considered that non-compliance with the following laws and regulations might have a material effect on the financial statements: employment regulation, health and safety regulation, the Bribery Act and GDPR.
To help us identify instances of non-compliance with these laws and regulations, and in identifying and assessing the risks of material misstatement in respect to non-compliance, our procedures included, but were not limited to:
∙Inquiring of management and, where appropriate, those charged with governance, as to whether the Company is in compliance with laws and regulations, and discussing their policies and procedures regarding compliance with laws and regulations;
∙Inspecting correspondence, if any, with relevant licensing or regulatory authorities;
∙Communicating identified laws and regulations to the engagement team and remaining alert to any indications of non-compliance throughout our audit; and
∙Considering the risk of acts by the Company which were contrary to applicable laws and regulations, including fraud.
We also considered those laws and regulations that have a direct effect on the preparation of the financial statements, such as tax legislation, pension legislation and the Companies Act 2006.
In addition, we evaluated the Directors' and management’s incentives and opportunities for fraudulent manipulation of the financial statements, including the risk of override of controls, and determined that the principal risks were related to posting manual journal entries to manipulate financial performance, management bias through judgements and assumptions in significant accounting estimates, in particular in relation to, revenue recognition (which we pinpointed to the cut-off risk) and significant one-off or unusual transactions.
Our audit procedures in relation to fraud included but were not limited to:
∙Making enquiries of the Directors and management on whether they had knowledge of any actual, suspected or alleged fraud;
∙Gaining an understanding of the internal controls established to mitigate risks related to fraud;
∙Discussing amongst the engagement team the risks of fraud; and
∙Addressing the risks of fraud through management override of controls by performing journal entry testing.
There are inherent limitations in the audit procedures described above and the primary responsibility for the prevention and detection of irregularities including fraud rests with management. As with any audit, there remained a risk of non-detection of irregularities, as these may involve collusion, forgery, intentional omissions, misrepresentations or the override of internal controls.
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ESCATEC MECHATRONICS LIMITED
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF ESCATEC MECHATRONICS LIMITED
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 Auditor’s Report.
Use of the audit report
This report is made solely to the Company's members as a body in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the Company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company's members as a body for our audit work, for this report, or for the opinions we have formed.
Thomas Cooke (Senior statutory auditor)
for and on behalf of
Mazars LLP
Chartered Accountants and Statutory Auditor
The Pinnacle
160 Midsummer Boulevard
Milton Keynes
MK9 1FF
3 April 2023
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ESCATEC MECHATRONICS LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2022
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Year ended 31 December 2022
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15 months ended 31 December 2021
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Interest payable and expenses
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Profit for the financial year
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There were no recognised gains and losses for 2022 or 2021 other than those included in the Statement of Comprehensive Income.
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There was no other comprehensive income for 2022 (2021 - £NIL).
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The notes on pages 13 to 29 form part of these financial statements.
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ESCATEC MECHATRONICS LIMITED
REGISTERED NUMBER: 01780413
BALANCE SHEET
AS AT 31 DECEMBER 2022
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Cash and cash equivalents
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Creditors: amounts falling due within one year
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Total assets less current liabilities
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Creditors: amounts falling due after more than one year
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Provisions for liabilities
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The financial statements were approved and authorised for issue by the board and were signed on its behalf by:
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ESCATEC MECHATRONICS LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2022
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Comprehensive income for the year
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Total comprehensive income for the year
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Shares issued during the year
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Total transactions with owners
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Comprehensive income for the year
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Total comprehensive income for the year
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Total transactions with owners
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The notes on pages 13 to 29 form part of these financial statements.
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ESCATEC MECHATRONICS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
Escatec Mechatronics Limited (the "Company") is a private company limited by shares, incorporated in England and Wales. The address of its registered office and principal place of business is Paragon House, Wolseley Road, Kempston, Bedford, MK42 7UP.
Company number is 01780413.
The principal activity of the Company is the provision of electro-mechanical and electronics manufacturing services (EMS).
These financial statements have been presented in Pound Sterling (£) as this is the currency of the primary economic environment in which the Company operates.
Monetary amounts in these financial statements have been rounded to the nearest £.
The prior year financial statements were prepared for a 15 month period and therefore the results are not directly comparable with the 12 month period to 31 December 2022.
2.Accounting policies
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Basis of preparation of financial statements
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The financial statements have been prepared under the historical cost convention unless otherwise specified within these accounting policies and in accordance with Financial Reporting Standard 102, the Financial Reporting Standard applicable in the UK and the Republic of Ireland and the Companies Act 2006.
The preparation of financial statements in compliance with FRS 102 requires the use of certain critical accounting estimates. It also requires management to exercise judgement in applying the Company's accounting policies (see note 3).
The following principal accounting policies have been applied:
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ESCATEC MECHATRONICS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
2.Accounting policies (continued)
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Financial Reporting Standard 102 - reduced disclosure exemptions
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The Company has taken advantage of the following disclosure exemptions in preparing these financial statements, as permitted by the FRS 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland":
• the requirements of Section 4 Statement of Financial Position paragraph 4.12(a) (iv);
• the requirements of Section 7 Statement of Cash Flows;
• the requirements of Section 3 Financial Statement Presentation paragraph 3.17(d);
• the requirements of Section 11 Financial Instruments paragraphs 11.42, 11.44 to 11.45, 11.47, 11.48(a)(iii), 11.48(a)(iv), 11.48(b) and 11.48(c);
• the requirements of Section 12 Other Financial Instruments paragraphs 12.26 to 12.27, 12.29(a), 12.29(b) and 12.29A;
• the requirements of Section 33 Related Party Disclosures paragraph 33.7.
This information is included in the consolidated financial statements of ESACTEC Group Sdn Bhd at 31 December 2022 and these financial statements may be obtained from the Malaysian's company register.
The Directors have considered the budgets and cashflow forecasts for the Company and wider Escatec Group for a period of at least 12 months from the Balance Sheet date and are able to confirm that these documents show that the Company is able to meet its liabilities as they fall due. The Directors ensure the wider Escatec Group only supply customers who are financially sound and only purchase stock and enter into commitments with suppliers where these are backed up by orders or Service Level Agreements with those customers. As such the financial statements have been prepared on a going concern basis.
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured. Revenue is measured as the fair value of the consideration received or receivable, excluding discounts, rebates, value added tax and other sales taxes. The following criteria must also be met before revenue is recognised:
Sale of goods
Revenue from the sale of goods is recognised when all of the following conditions are satisfied:
- the Company has despatched goods;
- the Company has transferred the significant risks and rewards of ownership to the buyer;
- the Company retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold;
the amount of revenue can be measured reliably;
- it is probable that the Company will receive the consideration due under the transaction; and
the costs incurred or to be incurred in respect of the transaction can be measured reliably.
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ESCATEC MECHATRONICS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
2.Accounting policies (continued)
Tangible fixed assets under the cost model are stated at historical cost less accumulated depreciation and any accumulated impairment losses. Historical cost includes expenditure that is directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management.
The Company adds to the carrying amount of an item of fixed assets the cost of replacing part of such an item when that cost is incurred, if the replacement part is expected to provide incremental future benefits to the Company. The carrying amount of the replaced part is derecognised. Repairs and maintenance are charged to profit or loss during the period in which they are incurred.
Depreciation is charged so as to allocate the cost of assets less their residual value over their estimated useful lives, using the straight-line method.
Depreciation is provided on the following basis:
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Period to the first break clause in the lease
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Production and other equipment
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The assets' residual values, useful lives and depreciation methods are reviewed, and adjusted prospectively if appropriate, or if there is an indication of a significant change since the last reporting date.
Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised in the Statement of Comprehensive Income.
Stocks are stated at the lower of cost and net realisable value, being the estimated selling price less costs to complete and sell. Cost is based on the cost of purchase on a first in, first out basis. Work in progress and finished goods include labour and attributable overheads.
At each Balance Sheet date, stocks are assessed for impairment. If stock is impaired, the carrying amount is reduced to its selling price less costs to complete and sell. The impairment loss is recognised immediately in the Statement of Comprehensive Income.
Short-term debtors are measured at transaction price, less any impairment.
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Cash and cash equivalents
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Cash is represented by cash in hand and deposits with financial institutions repayable without penalty on notice of not more than 24 hours. Cash equivalents are highly liquid investments that mature in no more than three months from the date of acquisition and that are readily convertible to known amounts of cash with insignificant risk of change in value.
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ESCATEC MECHATRONICS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
2.Accounting policies (continued)
The Company only enters into basic financial instrument transactions that result in the recognition of financial assets and liabilities like trade and other debtors and creditors, loans from banks and other third parties, loans to related parties and investments in ordinary shares.
Debt instruments (other than those wholly repayable or receivable within one year), including loans and other accounts receivable and payable, are initially measured at present value of the future cash flows and subsequently at amortised cost using the effective interest method. Debt instruments that are payable or receivable within one year, typically trade debtors and creditors, are measured, initially and subsequently, at the undiscounted amount of the cash or other consideration expected to be paid or received. However, if the arrangements of a short-term instrument constitute a financing transaction, like the payment of a trade debt deferred beyond normal business terms or in case of an out-right short-term loan that is not at market rate, the financial asset or liability is measured, initially at the present value of future cash flows discounted at a market rate of interest for a similar debt instrument and subsequently at amortised cost, unless it qualifies as a loan from a director in the case of a small company, or a public benefit entity concessionary loan.
Financial assets that are measured at cost and amortised cost are assessed at the end of each reporting period for objective evidence of impairment. If objective evidence of impairment is found, an impairment loss is recognised in the Statement of Comprehensive Income.
For financial assets measured at amortised cost, the impairment loss is measured as the difference between an asset's carrying amount and the present value of estimated cash flows discounted at the asset's original effective interest rate. If a financial asset has a variable interest rate, the discount rate for measuring any impairment loss is the current effective interest rate determined under the contract.
For financial assets measured at cost less impairment, the impairment loss is measured as the difference between an asset's carrying amount and best estimate of the recoverable amount, which is an approximation of the amount that the Company would receive for the asset if it were to be sold at the balance sheet date.
Financial assets and liabilities are offset and the net amount reported in the Balance Sheet when there is an enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.
Short-term creditors are measured at the transaction price. Other financial liabilities, including bank loans, are measured initially at fair value, net of transaction costs, and are measured subsequently at amortised cost using the effective interest method.
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ESCATEC MECHATRONICS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
2.Accounting policies (continued)
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Foreign currency translation
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Transactions and balances
Foreign currency transactions are translated into the functional currency using the spot exchange rates at the dates of the transactions.
At each period end foreign currency monetary items are translated using the closing rate. Non-monetary items measured at historical cost are translated using the exchange rate at the date of the transaction and non-monetary items measured at fair value are measured using the exchange rate when fair value was determined.
Foreign exchange gains and losses resulting from the settlement of transactions and from the translation at period-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the Statement of Comprehensive Income except when deferred in other comprehensive income as qualifying cash flow hedges.
Finance costs are charged to the Statement of Comprehensive Income over the term of the debt using the effective interest method so that the amount charged is at a constant rate on the carrying amount. Issue costs are initially recognised as a reduction in the proceeds of the associated capital instrument.
Equity dividends are recognised when they become legally payable. Interim equity dividends are recognised when paid. Final equity dividends are recognised when approved by the shareholders at an annual general meeting.
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Operating leases: the Company as lessee
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Rentals paid under operating leases are charged to the Statement of Comprehensive Income on a straight-line basis over the lease term.
Defined contribution pension plan
The Company operates a defined contribution plan for its employees. A defined contribution plan is a pension plan under which the Company pays fixed contributions into a separate entity. Once the contributions have been paid the Company has no further payment obligations.
The contributions are recognised as an expense in the Statement of Comprehensive Income when they fall due. Amounts not paid are shown in accruals as a liability in the Balance Sheet. The assets of the plan are held separately from the Company in independently administered funds.
A liability is recognised to the extent of any unused holiday pay entitlement which is accrued at the Balance Sheet date and carried forward to future periods. This is measured at the undiscounted salary cost of the future holiday entitlement so accrued at the Balance Sheet date.
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ESCATEC MECHATRONICS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
2.Accounting policies (continued)
All borrowing costs are recognised in the Statement of Comprehensive Income in the year in which they are incurred.
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Provisions for liabilities
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Provisions are made where an event has taken place that gives the Company a legal or constructive obligation that probably requires settlement by a transfer of economic benefit, and a reliable estimate can be made of the amount of the obligation.
Provisions are charged as an expense to the Statement of Comprehensive Income in the year that the Company becomes aware of the obligation and are measured at the best estimate at the balance sheet date of the expenditure required to settle the obligation, taking into account relevant risks and uncertainties.
When payments are eventually made, they are charged to the provision carried in the Balance Sheet.
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Judgements in applying accounting policies and key sources of estimation uncertainty
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In applying the Company's accounting policies, the Directors are required to make judgements, estimates and assumptions in determining the carrying amounts of assets and liabilities. The Directors' judgements, estimates and assumptions are based on the most reliable evidence available at the time when the decisions are made, and are based on historical experience and other factors that are considered to be applicable. Due to inherent subjectivity involved in making such judgements, estimates and assumptions, the actual results and outcomes may differ.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised, if the revisions affect only that period, or in the period of the revision and future periods, if the revision affects both current and future periods.
The key estimates and assumptions made in these accounts are:
Bad debts are provided for on a specific basis, based on management's best estimate of the recoverable amounts.
Stock is provided for using stock movement calculations, with consideration given to expected future movements on specific items.
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ESCATEC MECHATRONICS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
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An analysis of turnover by class of business is as follows:
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Year ended 31 December 2022
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15 months ended 31 December 2021
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Total turnover derived from its principal activity
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Analysis of turnover by country of destination:
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Year ended 31 December 2022
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15 months ended 31 December 2021
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The operating profit is stated after charging/(crediting):
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Year ended 31 December 2022
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15 months ended 31 December 2021
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Depreciation of tangible fixed assets
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Profit on sale of fixed assets
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ESCATEC MECHATRONICS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
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Year ended 31 December 2022
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15 months ended 31 December 2021
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Fees payable to the Company's Auditor for the audit of the Company's annual financial statements
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Year ended 31 December 2022
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15 months ended 31 December 2021
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Fees payable to the Company's Auditor in respect of:
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Staff costs, including Directors' remuneration, were as follows:
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Year ended 31 December 2022
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15 months ended 31 December 2021
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Cost of defined contribution scheme
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The average monthly number of employees, including the Directors, during the year was as follows:
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Year ended 31 December 2022
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15 months ended 31 December 2021
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ESCATEC MECHATRONICS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
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Year ended 31 December 2022
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15 months ended 31 December 2021
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Company contributions to defined contribution pension schemes
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During the year retirement benefits were accruing to 1 Director (2021 - 1) in respect of defined contribution pension schemes.
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The highest paid Director received remuneration of £252,433 (2021 - £188,069).
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The value of the Company's contributions paid to a defined contribution pension scheme in respect of the highest paid Director amounted to £11,272 (2021 - £13,349).
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Interest payable and similar expenses
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Year ended 31 December 2022
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15 months ended 31 December 2021
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Finance leases and hire purchase contracts
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ESCATEC MECHATRONICS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
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Year ended 31 December 2022
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15 months ended 31 December 2021
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Current tax on profits for the year
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Adjustments in respect of previous periods
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Origination and reversal of timing differences
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Taxation on profit on ordinary activities
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ESCATEC MECHATRONICS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
10.Taxation (continued)
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Factors affecting tax charge for the year/period
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The tax assessed for the year/period is lower than (2021 - lower than) the standard rate of corporation tax in the UK of 19% (2021 - 19%). The differences are explained below:
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Year ended 31 December 2022
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15 months ended 31 December 2021
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Profit on ordinary activities before tax
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Profit on ordinary activities multiplied by standard rate of corporation tax in the UK of 19% (2021 - 19%)
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Expenses not deductible for tax purposes
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Fixed asset timing differences
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Adjustments to tax charge in respect of prior periods
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Income not taxable for tax purposes
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Total tax charge for the year/period
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Factors that may affect future tax charges
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The UK Government announced in the 2021 budget that from 1 April 2023, the rate of corporation tax in the United Kingdom would increase from 19% to 25%. Companies with profits of £50,000 or less would continue to be taxed at 19%, which was a new small profits rate. Where taxable profits were between £50,000 and £250,000, the higher 25% rate would apply but with a marginal relief applying as profits increased.
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Year ended 31 December 2022
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15 months ended 31 December 2021
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Dividends paid £0.001 per share (2021 - £9.95 per share)
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ESCATEC MECHATRONICS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
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Charge for the year on owned assets
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Raw materials and consumables
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Work in progress (goods to be sold)
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Finished goods and goods for resale
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The amount of stock written off in the period was £Nil (2021 - £70,114).
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ESCATEC MECHATRONICS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
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Prepayments and accrued income
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Deferred taxation (note 19)
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Cash and cash equivalents
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ESCATEC MECHATRONICS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
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Creditors: Amounts falling due within one year
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Amounts owed to group undertakings
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Other taxation and social security
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Obligations under finance lease and hire purchase contracts
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Accruals and deferred income
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Included within bank overdrafts are advances in respect of financed debtors of £4,443,805 (2021 - £2,887,642) which are secured against the Company's debtors ledger.
Amounts owed to group undertakings are unsecured, interest free and repayable on demand.
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Creditors: Amounts falling due after more than one year
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Net obligations under finance leases and hire purchase contracts
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Hire purchase and finance leases
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Minimum lease payments under hire purchase fall due as follows:
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ESCATEC MECHATRONICS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
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Charged to the Statement of Comprehensive Income
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The deferred taxation balance is made up as follows:
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Accelerated capital allowances
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Tax losses carried forward
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Allotted, called up and fully paid
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223,008,575 (2021 - 223,008,575) Ordinary shares of £0.01 each
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The Company has one class of ordinary shares which carry voting rights but no rights to fixed income.
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ESCATEC MECHATRONICS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
Share premium account
Share premium represents the difference between the nominal value of shares and the amount paid on issue.
Retained earnings
Retained earnings represents the cumulative profits and losses of the Company after the payment of dividends.
The Company operates a defined contribution pension scheme. The assets of the scheme are held separately from the Company in independently administered funds. The pension cost charge represents contributions payable by the Company to the funds and amounted to £235,677 (2021 - £267,883). There were outstanding contributions at the period end amounting to £36,552 (2021 - £81,522).
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Commitments under operating leases
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At 31 December 2022 the Company had future minimum lease payments due under non-cancellable operating leases for each of the following periods:
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24.Other financial commitments
At the year end the Company was not committed to the purchase of any forward contracts.
At the year end, the Company approved and contracted capital of expenditure of £61,252 for plant, property and equipment.
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Related party transactions
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The Company has taken advantage of the exemption available in accordance within Section 33 'Related party disclosure' of FRS 102 not to disclose transactions entered into between two or more members of a group that are wholly owned.
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ESCATEC MECHATRONICS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
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Post balance sheet events
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There have been no significant events affecting the Company since the year end.
Escatec Sweden AB is the immediate parent company, a company registered in Sweden.
The ultimate Parent Company of Escatec Mechatronics Limited is Escatec Holdings Limited, a company incorporated in Malaysia.
At 31 December 2022, C Albin was considered to be the ultimate controlling party of Escatec Holdings Limited, by virtue of his shareholdings.
The largest group in which the results of the Company are consolidated is that headed by ESCATEC Group Sdn Bhd. The consolidated group accounts of ESCATEC Group Sdn Bhd are available to the public and may be obtained from the Malaysian's company register.
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