Setco Automotive (UK) Limited Company accounts
Setco Automotive (UK) Limited Company accounts
COMPANY REGISTRATION NUMBER:
5628324
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FINANCIAL STATEMENTS |
YEAR ENDED 31 MARCH 2023
Contents |
Pages |
Officers and professional advisers
1
Strategic report
2 to 3
Directors' report
4 to 5
Independent auditor's report to the members
6 to 9
Profit and loss account
10
Balance sheet
11
Statement of changes in equity
12
Statement of cash flows
13
Notes to the financial statements
14 to 22
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OFFICERS AND PROFESSIONAL ADVISERS |
The board of directors |
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Company secretary |
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Registered office |
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Auditor |
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Chartered Accountants & statutory auditor |
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35 Westgate |
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Huddersfield |
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HD1 1PA |
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Bankers |
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10 Market Place |
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Bradford |
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BD1 1XW |
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Solicitors |
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3 The Quadrant |
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Warwick Road |
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Coventry |
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CV1 2DY |
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STRATEGIC REPORT |
YEAR ENDED 31 MARCH 2023
The directors present their report for the financial year ended 31 March 2023. Principal activity and business review
The principal activity of the company during the year continued to be the assembly and distribution of clutches and associated products within the commercial vehicle sector
. The subsidiary company also operates in this sector. Performance and developments during the year The company incurred an operating loss of £376k compared to a loss of £666k in 2022 before exceptional gains. This loss included a stock write down of £76K (2022: £250K). The UK operation procures stock principally the parent company on an arms-length pricing formula. In the 2023 financial year, turnover was £2.51m, an increase of 15.5% compared to the previous year. This increase is a result of better market conditions after the worst of the COVID pandemic. The group strategy of maximising export sales continue to show positive results in a small way. However, margins are lower than home trade and this impacts on the UK site profitability. Balancing this to the overall group strategy is the fact that this export growth consumes a a higher proportion of internally manufactured products. The principal focus of the UK operation remains to develop new products for the worldwide MHCV clutch and individual series product designs. The UK operation is tasked with identifying and delivering a sustainable market development strategy in its areas of responsibility, utilising the world class manufacturing facilities in India backed by a quality product. Principal risks and uncertainties The company maintains strong relationships with each of its customers and has established credit control parameters. Foreign currency exposure is managed through various hedging arrangements. Security of product supply is assisted through access to group manufacturing facilities. Secondary suppliers are also available. Financial instruments The company's principal financial instruments comprise bank balances, trade creditors, trade debtors and loans from the parent company. The main purpose of these instruments is to raise funds for the company's operations and to finance the company's operations. Price risk is managed by monitoring and reacting to changes in market rates. The company's approach to managing other risks applicable to the financial instruments concerned is shown below. In respect of loans these comprise loans from the parent company. The company manages the liquidity risk by ensuring there are sufficient funds to meet the payments. Trade debtors are managed in respect of credit and cash flow by policies concerning the credit offered to customers and the regular monitoring of amounts outstanding for both time and credit limits. Credit insurance arrangements are also in place. Trade creditors liquidity risk is managed by ensuring sufficient funds are available to meet amounts due. Research and development The company continues to track and make use of technical developments and strives to develop new processes that increase efficiency in all aspects of the company's operations. The focus for the dedicated R&D team is to further develop the product range, improve the engineering facilities and enhance the technical knowledge required to meet the expectations of the major European OEMs. Financial key performance indicators The directors use a range of key performance indicators to aid management of the company. These include measures on orders received and outstanding, gross margin achieved, cash generation and stock turnover. Outlook While we see a lot of relaxation in the strict lockdowns that were in place during the COVID - 19 outbreak, we are still far away from the normality we had before the pandemic. Challenges and disruption remains in various markets including Europe. The management continue to examine opportunities for further development of the business and its efficiencies. The company has successfully launched new products, including AdBlue and workshop aerosol products, in the market. These products have been well received by customers and we see a good potential to expand the product range in the near future. Various cost rationalisation initiatives have been implemented during the year which have started showing positive results for the company. This, coupled with management focus on a. Introduction of clutch related truck components b. Introduction of non-clutch related truck components c. Independent 'Business to Consumer' e-commerce platform d. Distribution of machined iron castings into UK and Europe will result in substantial improvement in company's performance. Considering the results of the current financial year up to the date of this report, the directors are reasonably confident the company can continue to trade for at the least the next twelve months from the date of approval of these financial statements. They have received assurances from the parent company that, if necessary, the parent company will provide additional working capital facilities and subordinate amounts owed to it in favour of amounts owed to external creditors.
This report was approved by the board of directors on 23 May 2023 and signed on behalf of the board by:
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Director |
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DIRECTORS' REPORT |
YEAR ENDED 31 MARCH 2023
The directors present their report and the financial statements of the company for the year ended
31 March 2023
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Directors
The directors who served the company during the year were as follows:
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(Resigned
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(Resigned
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None of the directors hold any shares in the company.
U H Sheth
and J B S Gujral
hold 27,628,630 and 20,000 shares respectively in the parent company, Setco Automotive Limited.
Dividends
The directors do not recommend the payment of a dividend.
Disclosure of information in the strategic report
Directors' responsibilities statement
Each of the persons who is a director at the date of approval of this report confirms that:
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so far as they are aware, there is no relevant audit information of which the company's auditor is unaware; and - they have taken all steps that they ought to have taken as a director to make themselves aware of any relevant audit information and to establish that the company's auditor is aware of that information.
This report was approved by the board of directors on
23 May 2023
and signed on behalf of the board by:
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Director |
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INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF
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YEAR ENDED 31 MARCH 2023
Opinion
Basis for opinion
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
Emphasis of matter: Going concern
Other information
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of the audit:
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the information given in the strategic report and the directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
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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
Responsibilities of directors
Auditor's responsibilities for the audit of the financial statements
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.
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(Senior Statutory Auditor) |
For and on behalf of |
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Chartered Accountants & statutory auditor |
35 Westgate |
Huddersfield |
HD1 1PA |
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PROFIT AND LOSS ACCOUNT |
YEAR ENDED 31 MARCH 2023
2023 |
2022 |
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Note |
£ |
£ |
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Turnover |
4 |
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Cost of sales |
(
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(
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------------ |
------------ |
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Gross profit |
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Distribution costs |
(
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(
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Administrative expenses |
(
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(
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Other operating income |
5 |
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Stock write down |
(
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(
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Gain on sale of intangible assets |
– |
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------------ |
------------ |
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Operating (loss)/profit |
6 |
(
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------------ |
------------ |
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(Loss)/profit before taxation |
(
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Tax on (loss)/profit from ordinary activities |
10 |
– |
– |
------------ |
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(Loss)/profit for the financial year and total comprehensive income |
(
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------------ |
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All the activities of the company are from continuing operations.
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BALANCE SHEET |
2023 |
2022 |
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Note |
£ |
£ |
Fixed assets
Tangible assets |
12 |
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Investments |
13 |
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Current assets
Stocks |
14 |
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Debtors |
15 |
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Cash at bank and in hand |
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------------ |
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Creditors: amounts falling due within one year |
16 |
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Net current assets |
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Total assets less current liabilities |
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Creditors: amounts falling due after more than one year |
17 |
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Net assets |
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Capital and reserves
Called up share capital |
20 |
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Profit and loss account |
21 |
(
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(
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Shareholders funds |
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These financial statements were approved by the
board of directors
and authorised for issue on
23 May 2023
, and are signed on behalf of the board by:
|
Director |
Company registration number:
5628324
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STATEMENT OF CHANGES IN EQUITY |
YEAR ENDED 31 MARCH 2023
Called up share capital |
Profit and loss account |
Total |
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£ |
£ |
£ |
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At 1 April 2021 |
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(
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(
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Profit for the year |
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Total comprehensive income for the year |
– |
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At 31 March 2022 |
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(
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Loss for the year |
(
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(
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------------ |
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Total comprehensive income for the year |
– |
(
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(
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------------ |
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------------ |
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At 31 March 2023 |
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(
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STATEMENT OF CASH FLOWS |
YEAR ENDED 31 MARCH 2023
2023 |
2022 |
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£ |
£ |
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Cash flows from operating activities
(Loss)/profit for the financial year |
(
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Adjustments for: |
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Depreciation of tangible assets |
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Government grant income |
– |
(
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Changes in: |
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Stocks |
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Trade and other debtors |
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(
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Trade and other creditors |
(
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------------ |
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Cash generated from operations |
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------------ |
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Net cash from operating activities |
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------------ |
------------ |
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Cash flows from investing activities
Purchase of tangible assets |
– |
(
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------------ |
------------ |
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Net cash used in investing activities |
– |
(
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Cash flows from financing activities
Proceeds from loans from group undertakings |
– |
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Repayment of loans from group undertakings |
(
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(
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Government grant income |
– |
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Net cash used in financing activities |
(
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(
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Net decrease in cash and cash equivalents |
(
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(
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Cash and cash equivalents at beginning of year |
367,118 |
895,544 |
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Cash and cash equivalents at end of year |
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NOTES TO THE FINANCIAL STATEMENTS |
YEAR ENDED 31 MARCH 2023
1.
General information
The company is a private company limited by shares, registered in England and Wales. The address of the registered office is York Avenue, Haslingden, Rossendale, Lancashire, BB4 4HU.
2.
Statement of compliance
3.
Accounting policies
Basis of preparation
Consolidated financial statements
The financial statements present information about the company as an individual undertaking. The company has taken advantage of the exemption in S401 Companies Act 2006 from the obligation to prepare and deliver consolidated financial statements as the results are included in the accounts of a larger group.
Going concern
Debtors and creditors receivable/payable within one year
Debtors and creditors with no stated interest rate and receivable or payable within one year are recorded attransaction price. Any losses arising from impairment are recognised in the profit and loss account in other administrative expenses.
Changes in accounting policies
Judgements and key sources of estimation uncertainty
Revenue recognition
Operating leases
Intangible assets
Amortisation
Amortisation is calculated so as to write off the cost of an asset, less its estimated residual value, over the useful life of that asset as follows:
Development costs |
- |
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If there is an indication that there has been a significant change in the revenue generation, useful life or residual value of an intangible asset, the amortisation rate is revised accordingly to reflect the new estimates.
Tangible assets
Depreciation
Depreciation is calculated so as to write off the cost or valuation of an asset, less its residual value, over the useful economic life of that asset as follows:
Plant & machinery |
- |
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Computer equipment |
- |
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Investments
Investments are initially recorded at cost and are subject to an annual impairment review. Profits or losses arising from disposals of fixed asset investments are treated as part of the results from ordinary activities. Revaluations of investments are recorded through the profit and loss account.
Impairment of fixed assets
Stocks
Government grants
Financial instruments
Defined contribution plans
4.
Turnover
Turnover arises from:
2023 |
2022 |
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£ |
£ |
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Sale of goods |
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The percentage of turnover attributable to overseas markets was 39% (2022: 36%).
5.
Other operating income
2023 |
2022 |
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£ |
£ |
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Government grant income |
– |
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R&D tax credit |
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------------ |
------------ |
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6.
Operating profit
Operating profit or loss is stated after charging:
2023 |
2022 |
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£ |
£ |
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Depreciation of tangible assets |
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------------ |
------------ |
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7.
Auditor's remuneration
2023 |
2022 |
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£ |
£ |
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Fees payable for the audit of the financial statements |
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------------ |
------------ |
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Fees payable to the company's auditor for other services:
Other non-audit services |
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------------ |
------------ |
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8.
Staff costs
The average number of persons employed by the company during the year, including the directors, amounted to:
2023 |
2022 |
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No. |
No. |
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Production staff |
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Administrative staff |
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------------ |
------------ |
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------------ |
------------ |
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The aggregate payroll costs incurred during the year, relating to the above, were:
2023 |
2022 |
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£ |
£ |
|
Wages and salaries |
|
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Social security costs |
|
|
Other pension costs |
|
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------------ |
------------ |
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------------ |
------------ |
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9.
Directors' remuneration
The directors' aggregate remuneration in respect of qualifying services was:
2023 |
2022 |
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£ |
£ |
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Remuneration |
|
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------------ |
------------ |
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10.
Tax on (loss)/profit from ordinary activities
Reconciliation of tax income
The tax assessed on the (loss)/profit on ordinary activities for the year is higher than (2022: lower than) the
standard rate of corporation tax in the UK
of
19
% (2022:
19
%).
2023 |
2022 |
|
£ |
£ |
|
(Loss)/profit on ordinary activities before taxation |
(
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|
------------ |
------------ |
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(Loss)/profit on ordinary activities by rate of tax |
(
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|
Deferred tax not recognised |
|
(
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------------ |
------------ |
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Tax on (loss)/profit |
– |
– |
------------ |
------------ |
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The company has tax losses arising in the UK of £3.96m (2022: £3.58m) that are available for offset against future taxable profits.
Deferred tax assets have not been recognised in respect of these losses as the period over which they may be utilised is uncertain. They have been considered when assessing deferred tax in relation to the revaluation of investments.
11.
Intangible assets
Development costs |
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£ |
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Cost |
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At 1 April 2022 and 31 March 2023 |
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------------ |
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Amortisation |
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At 1 April 2022 and 31 March 2023 |
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------------ |
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Carrying amount |
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At 31 March 2023 |
– |
------------ |
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At 31 March 2022 |
– |
------------ |
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12.
Tangible assets
Plant and machinery |
Equipment |
Total |
|
£ |
£ |
£ |
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Cost |
|||
At 1 April 2022 and 31 March 2023 |
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------------ |
------------ |
------------ |
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Depreciation |
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At 1 April 2022 |
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Charge for the year |
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------------ |
------------ |
------------ |
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At 31 March 2023 |
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------------ |
------------ |
------------ |
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Carrying amount |
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At 31 March 2023 |
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------------ |
------------ |
------------ |
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At 31 March 2022 |
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------------ |
------------ |
------------ |
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13.
Investments
Shares in group undertakings |
|
£ |
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Cost |
|
At 1 April 2022 and 31 March 2023 |
|
------------ |
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Impairment |
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At 1 April 2022 and 31 March 2023 |
– |
------------ |
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Carrying amount |
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At 31 March 2023 |
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------------ |
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At 31 March 2022 |
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------------ |
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Subsidiaries, associates and other investments
The company's subsidiary undertakings are as follows:
Details of investments | Proportion held by company | Nature of business | ||
Setco Automotive (NA) Inc | 2,625 (2019: 2,625) shares of $1000 each | 100% | Manufacturing and distribution of | |
clutches, compressors, hydraulic pressure converters and miscellaneous parts. | ||||
2023 | 2022 | ||
£ | £ | ||
Capital and reserves | 3,274,378 | 2,764,367 | |
Profit for the year | 326,968 | 1,409,558 | |
Based on the current and forward trading profit of the subsidiary company the directors revalued the carrying value of the investment to £3m. This valuation was based on a financial appraisal undertaken by the auditor of the subsidiary company. Given the availability of indexation allowance and tax losses generally no deferred tax provision has been recognised. The original cost of the investment was £1,669,230 and the revaluation gain of £1,330,770 was recognised in the financial statements for the year ended 31 March 2018.
14.
Stocks
2023 |
2022 |
|
£ |
£ |
|
Goods for re-sale and consumables |
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------------ |
------------ |
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15.
Debtors
2023 |
2022 |
|
£ |
£ |
|
Trade debtors |
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Amounts owed by group undertakings |
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Prepayments and accrued income |
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------------ |
------------ |
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------------ |
------------ |
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16.
Creditors:
amounts falling due within one year
2023 |
2022 |
|
£ |
£ |
|
Trade creditors |
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Amounts owed to group undertakings |
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Accruals and deferred income |
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Social security and other taxes |
|
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------------ |
------------ |
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------------ |
------------ |
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17.
Creditors:
amounts falling due after more than one year
2023 |
2022 |
|
£ |
£ |
|
Amounts owed to group undertakings |
|
|
------------ |
------------ |
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18.
Employee benefits
Defined contribution plans
The amount recognised in profit or loss as an expense in relation to defined contribution pension plans was £
13,577
(2022: £
14,734
).
19.
Government grants
The amounts recognised in the financial statements for government grants are as follows:
2023 |
2022 |
|
£ |
£ |
|
Recognised in other operating income:
Government grants recognised directly in income |
– |
|
------------ |
------------ |
|
20.
Called up share capital
Issued, called up and fully paid
2023 |
2022 |
|||
No. |
£ |
No. |
£ |
|
|
|
2,014,269 |
|
2,014,269 |
|
|
720,000 |
|
720,000 |
------------ |
------------ |
------------ |
------------ |
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------------ |
------------ |
------------ |
------------ |
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21.
Reserves
22.
Analysis of changes in net debt
At 1 Apr 2022 |
Cash flows |
At 31 Mar 2023 |
|
£ |
£ |
£ |
|
Cash at bank and in hand |
|
(91,311) |
|
Debt due within one year |
(2,325,539) |
128,771 |
(2,196,768) |
Debt due after one year |
(4,183,931) |
– |
(4,183,931) |
------------ |
------------ |
------------ |
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(
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(
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------------ |
------------ |
------------ |
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NOTES TO THE FINANCIAL STATEMENTS (continued) |
YEAR ENDED 31 MARCH 2023
23.
Operating leases
The total future minimum lease payments under non-cancellable operating leases are as follows:
2023 |
2022 |
|
£ |
£ |
|
Not later than 1 year |
|
|
Later than 1 year and not later than 5 years |
|
|
------------ |
------------ |
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------------ |
------------ |
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24.
Related party transactions
The company has traded with other group companies on normal commercial terms during the year. Balances outstanding with these companies at the balance sheet date are disclosed within debtors and creditors above. The parent company has confirmed that it will provide adequate working capital facilities and finance guarantees to enable the company to continue to trade for at the least the next twelve months from the date of approval of these financial statements. In addition, the parent company has agreed to subordinate amounts owed to it in favour of amounts owed to external creditors.
25.
Controlling party