Bunting Magnetics Europe Limited - Limited company accounts 22.3

REGISTERED NUMBER: 00790396 (England and Wales)

Bunting Magnetics Europe Limited

Group Strategic Report,

Directors' Report and

Consolidated Financial Statements

for the Year Ended 31 December 2021

Page

Company Information

1

Group Strategic Report

2

Directors' Report

4

Independent Auditors' Report

5

Consolidated Statement of Comprehensive Income

8

Consolidated Balance Sheet

9

Company Balance Sheet

10

Consolidated Statement of Changes in Equity

11

Company Statement of Changes in Equity

12

Consolidated Cash Flow Statement

13

Notes to the Consolidated Financial Statements

14

Directors:

S A Ayling

R J Bunting

Secretary:

Y P Mills

Registered office:

NorthBridge Road

Berkhamsted

Hertfordshire

HP4 1EH

Registered number:

00790396 (England and Wales)

Auditors:

Haines Watts

Chartered Accountants and Statutory Auditor

178 Buckingham Avenue

Slough

Berkshire

SL1 4RD

The directors present their strategic report of the company and the group for the year ended 31 December 2021.

Principal Activity

The principal activity of the company is the manufacture and supply of magnets and magnetic separation solutions.

Review of business

The key financial performance indicators of the business are as follows:

2021

2020

£

£

Turnover

13,091

9,379

Gross Profit

3,780

2,671

Gross Margin

29%

28%

Operating Profit

328

278

2021 was a challenging year for all businesses, and Bunting Magnetics Europe was no exception. But we were able to consolidate our position, managing our growth in sales as well as managing the delays in logistics as the global economy came out of the restrictions imposed by the Coronavirus pandemic.

In October 2021 we successfully completed in acquiring the business assets of MagDev Ltd and its subsidiary Pilamec Ltd. This merger will bring together the combined magnet knowledge and expertise of Bunting and MagDev to create the UK's largest magnetics experts' team and a range of stock and customer magnets, magnetic assemblies, and magnetizing systems. Included in the turnover figure is post-acquisition turnover of £1m.

We were pleased to report a growth in over budgeted turnover of 16%. Given the impact of Brexit and Covid19, both sites remained extremely busy in respect of presales activity, and this is translating to sales in the first quarter of 2022, with sales ahead of both budget and the prior year.

Principal risks and uncertainties

The Board of Directors holds monthly management meetings to assess and monitor not just opportunities but also risk.

Covid-19 Pandemic

Manufacturing and sales continued without interruption in 2021, and our customers have had a continuous service. We have responded speedily to the various changes in lockdown etc. and have worked efficiently from home where necessary. We have made timely and relevant cost cuts, always ensuring strong cash reserves and profit

Whilst the pandemic continues to impact business operations, we are seeing a return to pre-pandemic sales activity, but we will continue to be responsive to changes in the environment and take action when needed.

Other Potential risks include:

Material cost fluctuations, which we continue to manage through monitoring market conditions and keeping to sensible margins. These are especially prevalent as we enter 2022 but will impact across the industry and therefore be passed on in selling price.

Brexit threatens UK businesses importing and exporting from and to the EU, and there have been inevitable supply and logistics issues. Bunting has mitigated this with our logistics partner, who have in place a unique system for shipping duty paid into Europe. This gives our European customer base the confidence to continue to trade with us. Our strong cash position enables us to increase stock levels of the components imported from the EU and the Rest of the world to mitigate against longer lead times.

Future Developments

Our building project is now complete, and our sales team has seen significant investment in 2021. These both give us the opportunity to organically grow, and the group remains acquisitive, and we continue to futureproof the business through process and efficiency drives to ensure we are ready for the anticipated growth.

On behalf of the board:

S A Ayling - Director

20 December 2022

The directors present their report with the financial statements of the company and the group for the year ended 31 December 2021.

Dividends

No dividends will be distributed for the year ended 31 December 2021.

Directors

The directors shown below have held office during the whole of the period from 1 January 2021 to the date of this report.

S A Ayling

R J Bunting

Other changes in directors holding office are as follows:

S Gilling - resigned 7 October 2021

Statement of directors' responsibilities

The directors are responsible for preparing the Group 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 United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). 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 ought to have taken as a director in order to make himself aware of any relevant audit information and to establish that the group's auditors are aware of that information.

On behalf of the board:

S A Ayling - Director

20 December 2022

Opinion

We have audited the financial statements of Bunting Magnetics Europe Limited (the 'parent company') and its subsidiaries (the 'group') for the year ended 31 December 2021 which comprise the Consolidated Statement of 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 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 31 December 2021 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

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 group's and the parent company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.

Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.

Other information

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

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, 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 an Auditors' 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.

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. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:

We gained an understanding of the legal and regulatory framework applicable to the company and the industry in which it operates, and considered the risk of acts by the company that were contrary to applicable laws and regulations, including fraud. We discussed with the Directors the policies and procedures in place regarding compliance with laws and regulations. We discussed amongst the audit team the identified laws and regulations, and remained alert to any indications of non-compliance.

During the audit we focussed on laws and regulations which could reasonably be expected to give rise to a material misstatement in the financial statements, including, but not limited to, the Companies Act 2006 and UK tax legislation. Our tests included agreeing the financial statement disclosures to underlying supporting documentation and enquiries with management.

Our procedures in relation to fraud included but were not limited to: inquires of management whether they have any knowledge of any actual, suspected or alleged fraud, and discussions amongst the audit team regarding risk of fraud such as opportunities for fraudulent manipulation of financial statements. We determined that the principal risks related to posting manual journal entries to manipulate financial performance and management bias through judgements in accounting estimates. We also addressed the risk of management override of internal controls, including testing journals and evaluating whether there was evidence of bias by the directors that represented a risk of material misstatement due to fraud.

Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading to a material misstatement in the financial statements or non-compliance with regulation. This risk increases the more that compliance with a law or regulation is removed from the events and transactions reflected in the financial statements, as we will be less likely to become aware of instances of non-compliance. The risk is also greater regarding irregularities occurring due to fraud rather than error, as fraud involves intentional concealment, forgery, collusion, omission or misrepresentation.

A further description of our responsibilities 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.

Use of our report

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

Jane Wills (Senior Statutory Auditor)

for and on behalf of Haines Watts

Chartered Accountants and Statutory Auditor

178 Buckingham Avenue

Slough

Berkshire

SL1 4RD

20 December 2022

Turnover

3

13,091,456

9,378,860

Cost of sales

(9,311,306

)

(6,707,441

)

Gross profit

3,780,150

2,671,419

Distribution costs

(243,322

)

(169,462

)

Administrative expenses

(3,209,046

)

(2,383,903

)

327,782

118,054

Other operating income

-

159,852

Operating profit

327,782

277,906

Interest payable and similar expenses

6

(58,157

)

(56,745

)

Profit before taxation

7

269,625

221,161

Tax on profit

8

(175,712

)

(96,526

)

Profit for the financial year

93,913

124,635

Other comprehensive income

-

-

Total comprehensive income for the year

93,913

124,635

Profit attributable to:

Owners of the parent

93,913

124,635

Total comprehensive income attributable to:

Owners of the parent

93,913

124,635

Fixed assets

Intangible assets

10

582,865

377,891

Tangible assets

11

3,306,567

3,245,198

Investments

12

-

-

3,889,432

3,623,089

Current assets

Stocks

13

3,282,130

1,818,936

Debtors

14

3,732,600

1,959,996

Cash in hand

1,277,729

1,021,716

8,292,459

4,800,648

Creditors

Amounts falling due within one year

15

6,949,192

3,008,725

Net current assets

1,343,267

1,791,923

Total assets less current liabilities

5,232,699

5,415,012

Creditors

Amounts falling due after more than one year

16

(1,494,946

)

(1,828,939

)

Provisions for liabilities

18

(153,450

)

(95,683

)

Net assets

3,584,303

3,490,390

Capital and reserves

Called up share capital

19

3,304

3,304

Retained earnings

20

3,580,999

3,487,086

Shareholders' funds

3,584,303

3,490,390

The financial statements were approved by the Board of Directors and authorised for issue on 20 December 2022 and were signed on its behalf by:

S A Ayling - Director

Fixed assets

Intangible assets

10

582,865

377,891

Tangible assets

11

3,243,251

3,245,198

Investments

12

183,444

3

4,009,560

3,623,092

Current assets

Stocks

13

3,135,538

1,818,936

Debtors

14

3,742,281

1,959,993

Cash in hand

1,224,944

1,021,716

8,102,763

4,800,645

Creditors

Amounts falling due within one year

15

6,903,846

3,008,725

Net current assets

1,198,917

1,791,920

Total assets less current liabilities

5,208,477

5,415,012

Creditors

Amounts falling due after more than one year

16

(1,494,946

)

(1,828,939

)

Provisions for liabilities

18

(137,621

)

(95,683

)

Net assets

3,575,910

3,490,390

Capital and reserves

Called up share capital

19

3,304

3,304

Retained earnings

20

3,572,606

3,487,086

Shareholders' funds

3,575,910

3,490,390

Company's profit for the financial year

85,520

124,635

The financial statements were approved by the Board of Directors and authorised for issue on 20 December 2022 and were signed on its behalf by:

S A Ayling - Director

Called up

share

Retained

Total

capital

earnings

equity

£

£

£

Balance at 1 January 2020

3,304

3,362,451

3,365,755

Changes in equity

Total comprehensive income

-

124,635

124,635

Balance at 31 December 2020

3,304

3,487,086

3,490,390

Changes in equity

Total comprehensive income

-

93,913

93,913

Balance at 31 December 2021

3,304

3,580,999

3,584,303

Called up

share

Retained

Total

capital

earnings

equity

£

£

£

Balance at 1 January 2020

3,304

3,362,451

3,365,755

Changes in equity

Total comprehensive income

-

124,635

124,635

Balance at 31 December 2020

3,304

3,487,086

3,490,390

Changes in equity

Total comprehensive income

-

85,520

85,520

Balance at 31 December 2021

3,304

3,572,606

3,575,910

Cash flows from operating activities

Cash generated from operations

24

1,135,516

466,348

Interest paid

(58,157

)

(56,745

)

Tax paid

(80,824

)

(100,749

)

Net cash from operating activities

996,535

308,854

Cash flows from investing activities

Purchase of intangible fixed assets

(452,313

)

-

Purchase of tangible fixed assets

(104,768

)

(1,267,438

)

Acquisition of subsidiary

(183,441

)

-

Net cash from investing activities

(740,522

)

(1,267,438

)

Increase/(decrease) in cash and cash equivalents

256,013

(958,584

)

Cash and cash equivalents at beginning of year

25

1,021,716

1,980,300

Cash and cash equivalents at end of year

25

1,277,729

1,021,716

1.	Statutory information

Bunting Magnetics Europe Limited is a private company, limited by shares , registered in England and Wales. The company's registered number and registered office address can be found on the General Information page.

2.	Accounting policies

Basis of preparing the financial statements

These financial statements have been prepared in accordance with Financial Reporting Standard 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland" and the Companies Act 2006. The financial statements have been prepared under the historical cost convention.

Going concern

The financial statements have been prepared on a going concern basis. The Directors have reviewed and considered relevant information. including the annual budget and future cash flows in making their assessment.

Basis of consolidation

The Group financial statements consolidate the financial statements of the Company and its subsidiary undertakings drawn up to 31 December each year. The results of subsidiaries acquired or sold are consolidated for the periods from or to the date on which control passed. Business combinations are accounted for under the purchase method. Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with those used by the Group. All intra-group transactions, balances, income and expenses are eliminated on consolidation.

The comparatives were not consolidated as the subsidiary was acquired during the financial year.

Significant judgements and estimates

The preparation of financial statements in conformity with generally accepted accounting practice requires management to make estimates and judgement that affect the reported amounts of assets and liabilities as well as the disclosure of contingent assets and liabilities at the balance sheet date and the reported amounts of revenues and expenses during the reporting period.

There is estimation uncertainty in calculating stock provisions. Slow moving and obsolete stocks are monitored during the year. Whilst every attempt is made to ensure that the stock provisions are as accurate as possible, there remain a risk that the provisions do not match the ultimate unrealised value of stock held.

There is estimation uncertainty in calculating estimated useful life of tangible and intangible fixed assets. Estimated useful lives are based on management's knowledge of historic useful life of similar assets and industry averages. Whilst every attempt is made to ensure that the depreciation provision is as accurate as possible, there remains a risk that the depreciation provision does not match the actual life of the asset.

Turnover

Turnover is measured at the fair value of the consideration received or receivable, excluding discounts, rebates, valued added taxes and other sales taxes. Turnover recognised on the dispatch of goods and rendering of services to the customer.

Goodwill

Goodwill represents the difference between amounts paid on the cost of a business combination and the acquirers interest in fair value of its identifiable assets and liabilities at date of acquisition. Goodwill is measured at cost less accumulated amortisation and accumulated impairment losses. Goodwill is being amortised on a straight line basis over its useful economic life which is estimated to be five to ten years.

Intangible assets

Intangible assets are initially measured at cost. After initial recognition, intangible assets are measured at cost less any accumulated amortisation and any accumulated impairment losses.

Computer software is being amortised evenly over its estimated useful life of three years.

Tangible fixed assets

Depreciation is provided at the following annual rates in order to write off each asset over its estimated useful life.

Freehold property

-

2% on cost

Improvements to property

-

2% on cost

Plant and machinery

-

15-25% on reducing balance

Fixtures and fittings

-

15% on reducing balance

Computer equipment

-

33% on cost and 10-33% on cost

Government grants

Government grants are recognised when there is reasonable assurance that the entity will comply with the conditions attaching to the grant and the grant will be received.

Investments in subsidiaries

Investments in subsidiary undertakings are recognised at cost.

Stock

Stocks are valued at the lower of cost and net realisable value, after making due allowance for obsolete and slow moving items.

Taxation

Taxation for the year comprises current and deferred tax. Tax is recognised in the Consolidated Statement of Comprehensive Income, except to the extent that it relates to items recognised in other comprehensive income or directly in equity.

Current or deferred taxation assets and liabilities are not discounted.

Current tax is recognised at the amount of tax payable using the tax rates and laws that have been enacted or substantively enacted by the balance sheet date.

Deferred tax

Deferred tax is recognised in respect of all timing differences that have originated but not reversed at the balance sheet date.

Timing differences arise from the inclusion of income and expenses in tax assessments in periods different from those in which they are recognised in financial statements. Deferred tax is measured using tax rates and laws that have been enacted or substantively enacted by the year end and that are expected to apply to the reversal of the timing difference.

Unrelieved tax losses and other deferred tax assets are recognised only to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits.

Foreign currencies

Assets and liabilities in foreign currencies are translated into sterling at the rates of exchange ruling at the balance sheet date. Transactions in foreign currencies are translated into sterling at the rate of exchange ruling at the date of transaction. Exchange differences are taken into account in arriving at the operating result.

Leasing commitments

Rentals paid under operating leases are charged to profit or loss on a straight line basis over the period of the lease.

Pension costs and other post-retirement benefits

The group operates a defined contribution pension scheme. Contributions payable to the group's pension scheme are charged to profit or loss in the period to which they relate.

Financial instruments

Financial assets and financial liabilities are recognised in the balance sheet when the company becomes a party to the contractual provisions of the instrument.

Trade and other debtors and creditors are classified as basic financial instruments and measured at initial recognition at transaction price. Debtors and creditors are subsequently measured at amortised cost using the effective interest rate method. A provision is established when there is objective evidence that the company will not be able to collect all amounts due.

Cash and cash equivalents are classified as basic financial instruments and comprise cash in hand and at bank and bank overdrafts which are an integral part of the company's cash management.

Financial liabilities and equity instruments issued by the company are classified in accordance with the substance of the contractual arrangements entered into and the definitions of a financial liability and an equity instrument. An equity instrument is any contract that evidences a residual interest in the assets of the company after deducting all of its liabilities. Equity instruments issued by the company are recorded at the proceeds received, net of direct issue costs.

3.

Turnover

The turnover and profit before taxation are attributable to the one principal activity of the group.

An analysis of turnover by geographical market is given below:

2021

2020

£

£

United Kingdom

8,743,193

5,626,312

Europe

2,568,008

2,421,679

Rest of the world

1,780,255

1,330,869

13,091,456

9,378,860

4.	Employees and directors

2021

2020

£

£

Wages and salaries

2,926,245

2,391,746

Social security costs

273,686

218,809

Other pension costs

121,282

117,591

3,321,213

2,728,146

The average number of employees during the year was as follows:

2021

2020

Sales

12

11

Administration

28

21

Production

33

24

73

56

The average number of employees by undertakings that were proportionately consolidated during the year was 73 (2020 - 56 ) .

5.	Directors' emoluments

2021

2020

£

£

Directors' remuneration

185,747

187,772

Directors' pension contributions to money purchase schemes

13,164

14,098

6.

Interest payable and similar expenses

2021

2020

£

£

Loan

58,157

56,745

7.	Profit before taxation

The profit is stated after charging/(crediting):

2021

2020

£

£

Other operating leases

62,004

1,784

Depreciation - owned assets

106,715

125,166

Goodwill amortisation

247,120

247,119

Computer software amortisation

219

3,399

Auditors' remuneration

47,400

20,250

Auditors' remuneration - non

audit services

2,750

1,475

Foreign exchange differences

(512

)

(44,105

)

8.

Taxation

Analysis of the tax charge

The tax charge on the profit for the year was as follows:

2021

2020

£

£

Current tax:

UK corporation tax

136,796

38,937

Prior year over provision

(7,290

)

-

Total current tax

129,506

38,937

Deferred tax

46,206

57,589

Tax on profit

175,712

96,526