Racelogic Limited - Limited company accounts 20.1

REGISTERED NUMBER: 02743719 (England and Wales)

Group Strategic Report, Report of the Directors and

Consolidated Financial Statements for the Year Ended 30 September 2020

for

Racelogic Limited

Page

Company Information

1

Group Strategic Report

2

Report of the Directors

5

Report of the Independent Auditors

7

Consolidated Income Statement

9

Consolidated Other Comprehensive Income

10

Consolidated Balance Sheet

11

Company Balance Sheet

12

Consolidated Statement of Changes in Equity

13

Company Statement of Changes in Equity

14

Consolidated Cash Flow Statement

15

Notes to the Consolidated Cash Flow Statement

16

Notes to the Consolidated Financial Statements

17

DIRECTORS:

J A D Thomas

H F Thuillier

C Smith

K Bursnall

Mrs A J Clifton

G R Mackie

I M Jones

SECRETARY:

M J Marshall

REGISTERED OFFICE:

Swan Business Park

Unit 10 -11 Osier Way

Buckingham

MK18 1TB

REGISTERED NUMBER:

02743719 (England and Wales)

SENIOR STATUTORY AUDITOR:

Nicola Beeson

AUDITORS:

NB Consulting Limited

Chartered Accountants and Statutory Auditors

2 Foxglove Close

Buckingham

MK18 1FU

The directors present their strategic report of the company and the group for the year ended 30 September 2020.

REVIEW OF BUSINESS

The group and company's principal activity during the year continued to be the design and manufacture of electronic systems for the automotive, motorsport and satellite receiver industries. Investment was also made into more research and market development for our unique indoor positioning systems in new sectors such as motion pictures and gaming.

This was an unprecedented year for all businesses and Racelogic was no exception. Trading was strong for the first six months of the year through to March but took a strong downturn from April as COVID-19 took hold of the world. April 2020 was the first month in the last two decades where we didn't cover our operating costs.

From May 2020 onwards we saw a steady recovery in sales starting with those countries in the Far East that took the brunt of COVID early and were therefore quicker to recover. We also changed our marketing focus to provide testing solutions for engineers working remotely or that could be operated whilst maintaining social distancing.

By the year end sales had started to return to their pre COVID levels and our profitability, helped in part by the UK government furlough scheme, started to return in line with sales.

Our outlook for the next financial year remains positive and our diverse range of products, along with our wide geographic sales spread, should see us continue to grow in a post pandemic world.

Usually we consider our key financial performance indicators are those that communicate the financial performance and strength of the company. These indicators are turnover, gross profit margins and net profits. Given the disruption to the business caused by COVID related lockdowns and restrictions on commercial activities during the year, we were pleased we managed to hold year on year turnover to a fall of just 22%, whilst our gross margin remained steady at 65.7%. This reduction in sales, whilst still incurring fixed operating costs and retaining and increasing staffing levels, also meant that net profits before tax (EBIT) decreased by 45% to £2,492,231.

There was also a corresponding drop in the value of stock to £2,156,962 (2019 - £2,487,621) as we took a more cautious approach to procurement during the year.

Whilst the group had some leaner months in the middle of the year it has entered the new financial year in a strong and stable position. On this basis it is considered appropriate to prepare the accounts on an ongoing basis.

PRINCIPAL RISKS AND UNCERTAINTIES

All comments regarding future plans reflect the knowledge and information available to the directors as at the date of this report and may be subject to the effect of unforeseen events outside of their control.

The COVID-19 pandemic is far from over and some of our markets are experiencing their second or third lockdowns. However, most of our client organisations have adapted to this new world and are continuing to develop new vehicles, bring new GNSS based products to market or create movie content.

Customers

As no one end user customer in any one country represents more than 1% of our annual sales, we are more resilient than most to a global pandemic as our risk is spread across countries and market sectors. For example, whilst India and Brazil struggle to gain control of the pandemic, sales to China and the USA are growing faster than ever. We have also seen growth in sales of our LabSat range as the 'Internet of things' creates demand for more location aware devices and record sales for our Motorsport products as the USA and Europe return to motor racing.

Suppliers

Our largest supplier continued to trade on a skeleton staff during the first few months of lockdown but quickly returned to full staff to cope with current demand. Whilst our top ten supplier's skills are specialist in their nature, their skills are not unique and our business continuity plans allow for us to move orders from one supplier to a secondary supplier, or source, in the event of a local shutdown.

Staff

During the UK lockdown the main Buckingham office operated on a reduced number of production and warehouse staff to ensure urgent orders were shipped. The majority of staff were either sent to work from home where possible or furloughed where this wasn't practical. By the end of the financial year, there was only one, part-time, member of staff on the furlough scheme. We have recruited seven new staff since March 2020.

Cashflow

Although Brexit completed with a trade deal to avoid tariffs between the UK and EU member states, we are still seeing a general uplift in issues with couriers charging administration fees and additional shipping charges on our products. We have also had a number of customers demand that they are supplied from our German branch to avoid having to reclaim VAT in their own country. If this trend continues, we could be forced to make Racelogic GmbH a full trading company rather than a commissioned agency for the UK. This will increase costs slightly and will move some profit to Germany where it will be taxed accordingly.

We are also seeing a component shortage in the semiconductor industry caused by the growth in demand for electric vehicles and IOT devices. This has meant that we have had to forward order critical components to ensure supply.

RESEARCH AND DEVELOPMENT

The next financial year will see the launch of the new variants of VB3iS, (the S2 and the SD) and the VBOX Sigma low cost RTK solution. We will also be launching a new LabSat Realtime solution along with updates to our VIPS indoor positioning system.

The group will continue to invest in research and development and will seek to take advantage of the enlarged resource pool of engineers and software developers available because of business closures and changes to UK contractor tax regulations under IR35.

ON BEHALF OF THE BOARD:

G R Mackie - Director

16 June 2021

The directors present their report with the financial statements of the company and the group for the year ended 30 September 2020.

DIVIDENDS

During the year the following interim dividends were paid:

18/10/2019 - £15,774.52

9/12/2019 - £1,500,000

28/09/2020 - £2,000,000

The directors recommend that no final dividend be paid on either the Ordinary or B Ordinary shares.

The total distribution of dividends for the year ended 30 September 2020 will be £3,515,775. £3,346,488 on Ordinary shares and £169,287 on B Ordinary shares.

DIRECTORS

The directors shown below have held office during the whole of the period from 1 October 2019 to the date of this report.

J A D Thomas

H F Thuillier

C Smith

K Bursnall

Mrs A J Clifton

G R Mackie

I M Jones

DISCLOSURE IN THE STRATEGIC REPORT

Future developments and details of research and development as required under Schedule 7 of the Companies Act 2006 to be disclosed in the Directors' Report are set out in the Strategic Report in accordance with section 414(C) of the Companies Act 2006.

STATEMENT OF DIRECTORS' RESPONSIBILITIES

The directors are responsible for preparing the Group Strategic Report, the Report of the Directors and the financial statements in accordance with applicable law and regulations.

Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law), including Financial Reporting Standard 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 the group and of the profit or loss of the group for that period. In preparing these financial statements, the directors are required to:

-	select suitable accounting policies and then apply them consistently;

-	make judgements and accounting estimates that are reasonable and prudent;

-	prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.

The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company's and the group's transactions and disclose with reasonable accuracy at any time the financial position of the company and the group and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the company and the group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

STATEMENT AS TO DISCLOSURE OF INFORMATION TO AUDITORS

So far as the directors are aware, there is no relevant audit information (as defined by Section 418 of the Companies Act 2006) of which the group's auditors are unaware, and each director has taken all the steps that he or she ought to have taken as a director in order to make himself or herself aware of any relevant audit information and to establish that the group's auditors are aware of that information.

AUDITORS

The auditors, NB Consulting Limited, will be proposed for re-appointment at the forthcoming Annual General Meeting.

ON BEHALF OF THE BOARD:

G R Mackie - Director

16 June 2021

Opinion

We have audited the financial statements of Racelogic Limited (the 'parent company') and its subsidiaries (the 'group') for the year ended 30 September 2020 which comprise the Consolidated Income Statement, Consolidated Other Comprehensive Income, Consolidated Balance Sheet, Company Balance Sheet, Consolidated Statement of Changes in Equity, Company Statement of Changes in Equity, Consolidated Cash Flow Statement and Notes to the Consolidated Cash Flow Statement, 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 Financial Reporting Standard 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 group's and of the parent company affairs as at 30 September 2020 and of the group's profit for the year then ended;

-	have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and

-	have been prepared in accordance with the requirements of the Companies Act 2006.

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditors' responsibilities for the audit of the financial statements section of our report. We are independent of the group 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

We have nothing to report in respect of the following matters in relation to which the ISAs (UK) require us to report to you where:

-	the directors' use of the going concern basis of accounting in the preparation of the financial statements is not appropriate; or

-

the directors have not disclosed in the financial statements any identified material uncertainties that may cast significant doubt about the group's ability to continue to adopt the going concern basis of accounting for a period of at least twelve months from the date when the financial statements are authorised for issue.

Other information

The directors are responsible for the other information. The other information comprises the information in the Group Strategic Report and the Report of the Directors, but does not include the financial statements and our Report of the Auditors thereon.

Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether 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.

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 Group Strategic Report and the Report of the Directors for the financial year for which the financial statements are prepared is consistent with the financial statements; and

-	the Group Strategic Report and the Report of the Directors 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 Group Strategic Report or the Report of the Directors.

We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion:

-	adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received from branches not visited by us; or

-	the parent company 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 Statement of Directors' Responsibilities set out on page five, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the directors are responsible for assessing the 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 a Report of the Auditors 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 Report of the Auditors.

Use of our report

This report is made solely to the company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in a Report of the Auditors 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.

Nicola Beeson (Senior Statutory Auditor)

for and on behalf of NB Consulting Limited

Chartered Accountants and Statutory Auditors

2 Foxglove Close

Buckingham

MK18 1FU

17 June 2021

TURNOVER

3

14,880,546

18,959,550

Cost of sales

5,102,300

6,372,125

GROSS PROFIT

9,778,246

12,587,425

Administrative expenses

7,396,898

8,029,746

2,381,348

4,557,679

Other operating income

4

112,231

-

OPERATING PROFIT

6

2,493,579

4,557,679

Interest receivable and similar income

-

1,361

2,493,579

4,559,040

Interest payable and similar expenses

7

1,348

-

PROFIT BEFORE TAXATION

2,492,231

4,559,040

Tax on profit

8

95,829

432,038

PROFIT FOR THE FINANCIAL YEAR

2,396,402

4,127,002

Profit attributable to:

Owners of the parent

2,396,402

4,127,002

PROFIT FOR THE YEAR

2,396,402

4,127,002

OTHER COMPREHENSIVE INCOME

Currency translation differences

108,821

67,737

Income tax relating to other comprehensive income

-

-

OTHER COMPREHENSIVE INCOME FOR THE YEAR, NET OF INCOME TAX

108,821

67,737

TOTAL COMPREHENSIVE INCOME FOR THE YEAR

2,505,223

4,194,739

Total comprehensive income attributable to:

Owners of the parent

2,505,223

4,194,739

FIXED ASSETS

Tangible assets

11

1,510,910

1,618,554

Investments

12

-

-

1,510,910

1,618,554

CURRENT ASSETS

Stocks

13

2,156,962

2,487,621

Debtors

14

1,587,176

1,603,837

Cash at bank

1,666,962

1,804,693

5,411,100

5,896,151

CREDITORS

Amounts falling due within one year

15

891,296

527,690

NET CURRENT ASSETS

4,519,804

5,368,461

TOTAL ASSETS LESS CURRENT LIABILITIES

6,030,714

6,987,015

CREDITORS

Amounts falling due after more than one year

16

(65,256

)

-

PROVISIONS FOR LIABILITIES

20

(58,000

)

(58,000

)

NET ASSETS

5,907,458

6,929,015

CAPITAL AND RESERVES

Called up share capital

21

113

113

Share premium

22

761,458

772,463

Capital redemption reserve

22

10

10

Non Distributable Reserves

22

150,193

41,372

Retained earnings

22

4,995,684

6,115,057

SHAREHOLDERS' FUNDS

5,907,458

6,929,015

The financial statements were approved by the Board of Directors and authorised for issue on 16 June 2021 and were signed on its behalf by:

G R Mackie - Director

FIXED ASSETS

Tangible assets

11

1,414,286

1,475,981

Investments

12

21,789

21,789

1,436,075

1,497,770

CURRENT ASSETS

Stocks

13

1,983,989

2,364,477

Debtors

14

1,822,953

1,945,967

Cash at bank

1,347,309

1,487,244

5,154,251

5,797,688

CREDITORS

Amounts falling due within one year

15

773,270

417,540

NET CURRENT ASSETS

4,380,981

5,380,148

TOTAL ASSETS LESS CURRENT LIABILITIES

5,817,056

6,877,918

PROVISIONS FOR LIABILITIES

20

58,000

58,000

NET ASSETS

5,759,056

6,819,918

CAPITAL AND RESERVES

Called up share capital

21

113

113

Share premium

22

761,458

772,463

Capital redemption reserve

22

10

10

Retained earnings

22

4,997,475

6,047,332

SHAREHOLDERS' FUNDS

5,759,056

6,819,918

Company's profit for the financial year

2,465,918

4,032,981

The financial statements were approved by the Board of Directors and authorised for issue on 16 June 2021 and were signed on its behalf by:

G R Mackie - Director

Called up

share

Retained

Share

capital

earnings

premium

£

£

£

Balance at 1 October 2018

113

5,769,512

757,631

Changes in equity

Issue of share capital

-

-

14,832

Dividends

-

(3,781,457

)

-

Total comprehensive income

-

4,127,002

-

Balance at 30 September 2019

113

6,115,057

772,463

Changes in equity

Issue of share capital

-

-

(11,005

)

Dividends

-

(3,515,775

)

-

Total comprehensive income

-

2,396,402

-

Balance at 30 September 2020

113

4,995,684

761,458

Capital

Non

redemption

Distributable

Total

reserve

Reserves

equity

£

£

£

Balance at 1 October 2018

10

(26,365

)

6,500,901

Changes in equity

Issue of share capital

-

-

14,832

Dividends

-

-

(3,781,457

)

Total comprehensive income

-

67,737

4,194,739

Balance at 30 September 2019

10

41,372

6,929,015

Changes in equity

Issue of share capital

-

-

(11,005

)

Dividends

-

-

(3,515,775

)

Total comprehensive income

-

108,821

2,505,223

Balance at 30 September 2020

10

150,193

5,907,458

Called up

Capital

share

Retained

Share

redemption

Total

capital

earnings

premium

reserve

equity

£

£

£

£

£

Balance at 1 October 2018

113

5,795,808

757,631

10

6,553,562

Changes in equity

Issue of share capital

-

-

14,832

-

14,832

Dividends

-

(3,781,457

)

-

-

(3,781,457

)

Total comprehensive income

-

4,032,981

-

-

4,032,981

Balance at 30 September 2019

113

6,047,332

772,463

10

6,819,918

Changes in equity

Issue of share capital

-

-

(11,005

)

-

(11,005

)

Dividends

-

(3,515,775

)

-

-

(3,515,775

)

Total comprehensive income

-

2,465,918

-

-

2,465,918

Balance at 30 September 2020

113

4,997,475

761,458

10

5,759,056

Cash flows from operating activities

Cash generated from operations

1

3,359,899

4,826,581

Interest paid

(1,348

)

-

Government grants

112,231

-

Tax paid

(149,113

)

(700,762

)

Net cash from operating activities

3,321,669

4,125,819

Cash flows from investing activities

Purchase of tangible fixed assets

(143,183

)

(225,461

)

Sale of tangible fixed assets

4,139

37,505

Interest received

-

1,361

Net cash from investing activities

(139,044

)

(186,595

)

Cash flows from financing activities

New loans in year

93,531

-

Share issue

-

43,704

Share buyback

(11,005

)

(28,872

)

Equity dividends paid

(3,515,775

)

(3,781,457

)

Net cash from financing activities

(3,433,249

)

(3,766,625

)

(Decrease)/increase in cash and cash equivalents

(250,624

)

172,599

Cash and cash equivalents at beginning of year

2

1,804,693

1,547,326

Effect of foreign exchange rate changes

112,893

84,768

Cash and cash equivalents at end of year

2

1,666,962

1,804,693

1.	RECONCILIATION OF PROFIT BEFORE TAXATION TO CASH GENERATED FROM OPERATIONS

30.9.20

30.9.19

£

£

Profit before taxation

2,492,231

4,559,040

Depreciation charges

243,407

236,072

Profit on disposal of fixed assets

(791

)

(36,699

)

Government grants

(112,231

)

-

Finance costs

1,348

-

Finance income

-

(1,361

)

2,623,964

4,757,052

Decrease/(increase) in stocks

330,659

(293,121

)

Decrease in trade and other debtors

69,945

586,760

Increase/(decrease) in trade and other creditors

335,331

(224,110

)

Cash generated from operations

3,359,899

4,826,581

2.	CASH AND CASH EQUIVALENTS

The amounts disclosed on the Cash Flow Statement in respect of cash and cash equivalents are in respect of these Balance Sheet amounts:

Year ended 30 September 2020

30.9.20

1.10.19

£

£

Cash and cash equivalents

1,666,962

1,804,693

Year ended 30 September 2019

30.9.19

1.10.18

£

£

Cash and cash equivalents

1,804,693

1,547,326

3.	ANALYSIS OF CHANGES IN NET FUNDS

At 1.10.19

Cash flow

At 30.9.20

£

£

£

Net cash

Cash at bank

1,804,693

(137,731

)

1,666,962

1,804,693

(137,731

)

1,666,962

Debt

Debts falling due within 1 year

-

(28,275

)

(28,275

)

Debts falling due after 1 year

-

(65,256

)

(65,256

)

-

(93,531

)

(93,531

)

Total

1,804,693

(231,262

)

1,573,431