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REGISTERED NUMBER: 01275439 (England and Wales)













SEARS MANUFACTURING CO. (EUROPE) LIMITED

STRATEGIC REPORT, DIRECTORS' REPORT AND

FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2021






SEARS MANUFACTURING CO. (EUROPE) LIMITED (REGISTERED NUMBER: 01275439)

CONTENTS OF THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021










Page

Company Information 1

Strategic Report 2

Directors' Report 4

Directors' Responsibilities Statement 5

Independent Auditors' Report 6

Statement of Comprehensive Income 10

Balance Sheet 11

Statement of Changes in Equity 12

Cash Flow Statement 13

Notes to the Cash Flow Statement 14

Notes to the Financial Statements 16


SEARS MANUFACTURING CO. (EUROPE) LIMITED

COMPANY INFORMATION
FOR THE YEAR ENDED 31 DECEMBER 2021







DIRECTORS: Mr J I Sears
Mr K M Wichelt





SECRETARY: Mr D H Davies





REGISTERED OFFICE: Unit 42 Rassau Industrial Estate
Rassau
Ebbw Vale
Gwent
NP23 5SD





REGISTERED NUMBER: 01275439 (England and Wales)





INDEPENDENT AUDITORS: Carr, Jenkins & Hood
Chartered Accountant & Registered Auditor
Oystermouth House
Charter Court, Phoenix Way
Swansea Enterprise Park
Swansea
SA7 9FS

SEARS MANUFACTURING CO. (EUROPE) LIMITED (REGISTERED NUMBER: 01275439)

STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2021


The directors present their strategic report for the year ended 31 December 2021.

REVIEW OF BUSINESS
The principal activity of the Company is that of the manufacture and supply of specialist seating for the agriculture, construction and industrial vehicle industries.

The strategy of the business is to increase its share of the specialist seating market through increasing sales to new and existing customers built on the following qualities: integrity, innovation, performance, durability, comfort, quality and service.

The group enjoys a number of competitive advantages including strong brand recognition; a well established reputation for price competitiveness; a knowledgeable and enthusiastic workforce and a strong customer focus throughout the business.

The underlying trading performance of the business decreased in FY'21 relative to FY'20. The major reasoning of the decreased performance was in respect of increased raw material and carriage costs.

An increase in overall turnover due to Covid-19 related restrictions being eased, however increased purchasing costs resulted in a lower gross profit margin achieved on sales relative to FY'20.

Whilst trading conditions are expected to remain challenging throughout FY'22, the board consider the group to be well positioned to manage and take on this challenge.

KPI's - Period ended 31 December 2021 31 December 2020
Turnover £22,914k £17,367k
Gross Margin £792k £1,347k
Cash at bank and in hand £3k £4k
Operating (loss)/profit £(1,606)k £(450)k

PRINCIPAL RISKS AND UNCERTAINTIES
The management of the business and the execution of the group's strategy are subject to a number of risks. The key business risks can be summarised as follows:

Risk Potential impact Mitigation




Competition from competitors


The last few years have seen many
manufacturing businesses suffer
from uncertain demand.
The business continues to grow its
market share. It has achieved this by
building customer awareness of its
offering and investing in product
development.





People




The business could be impacted by
the loss of key individuals.
The business looks to increase staff
engagement through (1) regular
opportunities to give feedback and to
influence future business
developments and (2) training and
progression opportunities.


SEARS MANUFACTURING CO. (EUROPE) LIMITED (REGISTERED NUMBER: 01275439)

STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2021


Price risk
The company is exposed to commodity price risk as a result of its operations. However, given the size of the company's operations, the cost of managing exposure to commodity price risk exceed any potential benefit. The directors will revisit the appropriateness of this policy should the company's operations change in size or nature.

Credit risk
The company's financial assets are cash and trade debtors. The company's credit risk is primarily attributable to its trade debtors which are presented in the balance sheet net of allowances for doubtful debts. The company has implemented policies that require appropriate credit checks on potential customers before sales are made.

Liquidity risk
The company actively maintains a mixture of long term and short term debt finance that is designed to ensure that the company has sufficient funds for operations and planned expansions.

Interest rate cash flow risk
The company has both interest bearing assets and interest bearing liabilities. Interest bearing assets compromise only cash balances, which earn interest at floating rates. The company has a policy of maintaining debt at floating rates. The directors will revisit the appropriateness of this policy should the company's operations change in size or nature.

Future prospects
The UK's decision to leave the European Union (EU) creates a degree of uncertainty in the economy in the short term. This may impact revenue and profitability however the strength of the company's brand together with it's quality products will stand the company in good stead.

In addition the company has been in discussions with customers and suppliers who have exposure overseas to mitigate risks caused by currency fluctuations and potential changes in important procedures.

ON BEHALF OF THE BOARD:





Mr K M Wichelt - Director


21 March 2022

SEARS MANUFACTURING CO. (EUROPE) LIMITED (REGISTERED NUMBER: 01275439)

DIRECTORS' REPORT
FOR THE YEAR ENDED 31 DECEMBER 2021


The directors present their report with the financial statements of the Company 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.

Mr J I Sears
Mr K M Wichelt

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 Company'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 Company's auditors are aware of that information.

AUDITORS
Carr, Jenkins & Hood were appointed as auditor to the company and in accordance with section 485 of the Companies Act 2006, a resolution proposing that they be re-appointed will be put at a General Meeting.

ON BEHALF OF THE BOARD:





Mr K M Wichelt - Director


21 March 2022

SEARS MANUFACTURING CO. (EUROPE) LIMITED (REGISTERED NUMBER: 01275439)

DIRECTORS' RESPONSIBILITIES STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2021


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 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 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 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 transactions and disclose with reasonable accuracy at any time the financial position of the Company 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 hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF
SEARS MANUFACTURING CO. (EUROPE) LIMITED


Opinion
We have audited the financial statements of Sears Manufacturing Co. (Europe) Limited (the 'Company') for the year ended 31 December 2021 which comprise the Statement of Comprehensive Income, Balance Sheet, Statement of Changes in Equity, Cash Flow Statement and Notes to the 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 Company's affairs as at 31 December 2021 and of its loss 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 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 directors are responsible for the other information. The other information comprises the information in the Strategic Report, the Directors' Report and the Directors' Responsibilities Statement, 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 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.

INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF
SEARS MANUFACTURING CO. (EUROPE) LIMITED


Matters on which we are required to report by exception
In the 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 where 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 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 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 Company or to cease operations, or have no realistic alternative but to do so.

INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF
SEARS MANUFACTURING CO. (EUROPE) LIMITED


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 and on the Financial Reporting Council's website, to detect material misstatements in respect of irregularities, including fraud.

We obtain an understanding of the legal and regulatory frameworks that the company operates in, focusing on those laws and regulations that had a direct effect on the Financial Statements or that had a fundamental effect on the operations of the company. The key laws and regulations we considered in this context included UK Companies Act and relevant tax legislation.

Audit procedures performed by the engagement team to respond to the risk of irregularities and non-compliance with laws and regulations, including fraud, include the following:

- discussions with management to enquire of any known instances of non-compliance with laws and regulations,
including fraud;
- discussions with management in respect of any actual or potential litigation claims;
- performing analytical procedures to identify any unusual or unexpected relationships that may indicate risks of
material misstatement due to fraud;
- testing the appropriateness of journal entries and other adjustments to address the risk of fraud through
management override of controls;
- review of accounting estimates and challenging assumptions made by management in respect of significant
estimates;
- review of the financial statement disclosures and testing to supporting documentation to assess compliance
with relevant laws and regulations; and
- evaluating the business rationale of any significant transactions that are unusual or outside the normal course
of business.

There are inherent limitations in the audit procedures which means we are less likely to become aware of instances of non-compliance with laws and regulations that are not closely related to events and transactions reflected in the financial statements. The risk of not detecting material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery or intentional misrepresentations, or through collusion.

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.

INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF
SEARS MANUFACTURING CO. (EUROPE) LIMITED


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.




Laura Farrow MSc BSc FCA (Senior Statutory Auditor)
for and on behalf of Carr, Jenkins & Hood
Chartered Accountant & Registered Auditor
Oystermouth House
Charter Court, Phoenix Way
Swansea Enterprise Park
Swansea
SA7 9FS

22 March 2022

SEARS MANUFACTURING CO. (EUROPE) LIMITED (REGISTERED NUMBER: 01275439)

STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2021

2021 2020
Notes £    £    £    £   

TURNOVER 4 22,913,704 17,366,997

Cost of sales 22,121,916 16,020,410
GROSS PROFIT 791,788 1,346,587

Distribution costs 1,252,246 441,504
Administrative expenses 1,150,892 1,493,981
2,403,138 1,935,485
(1,611,350 ) (588,898 )

Other operating income 5,000 139,376
OPERATING LOSS 6 (1,606,350 ) (449,522 )

Interest receivable and similar income - 153
(1,606,350 ) (449,369 )

Interest payable and similar expenses 7 121,319 119,808
LOSS BEFORE TAXATION (1,727,669 ) (569,177 )

Tax on loss 8 - -
LOSS FOR THE FINANCIAL YEAR (1,727,669 ) (569,177 )

SEARS MANUFACTURING CO. (EUROPE) LIMITED (REGISTERED NUMBER: 01275439)

BALANCE SHEET
31 DECEMBER 2021

2021 2020
Notes £    £    £    £   
ASSETS

FIXED ASSETS
Tangible assets 9 573,761 640,642

CURRENT ASSETS
Stocks 10 8,539,692 3,608,063
Debtors 11 4,557,421 3,738,205
Cash at bank and in hand 3,332 3,732
13,100,445 7,350,000
13,674,206 7,990,642

CAPITAL, RESERVES AND LIABILITIES

CAPITAL AND RESERVES
Called up share capital 12 1,000,000 1,000,000
Share premium 1,433,800 1,433,800
Retained earnings (4,494,323 ) (2,766,654 )
SHAREHOLDERS' FUNDS (2,060,523 ) (332,854 )

PROVISIONS FOR LIABILITIES 13 197,279 182,496

CREDITORS
Amounts falling due within one year 14 12,564,861 5,226,983
Amounts falling due after more than one
year

15

2,972,589

2,914,017
15,537,450 8,141,000
13,674,206 7,990,642

The financial statements were approved by the Board of Directors and authorised for issue on 21 March 2022 and were signed on its behalf by:





Mr K M Wichelt - Director


SEARS MANUFACTURING CO. (EUROPE) LIMITED (REGISTERED NUMBER: 01275439)

STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2021

Called up
share Retained Share Total
capital earnings premium equity
£    £    £    £   

Balance at 1 January 2020 1,000,000 (2,197,477 ) 1,433,800 236,323
Total comprehensive income - (569,177 ) - (569,177 )
Balance at 31 December 2020 1,000,000 (2,766,654 ) 1,433,800 (332,854 )
Total comprehensive income - (1,727,669 ) - (1,727,669 )
Balance at 31 December 2021 1,000,000 (4,494,323 ) 1,433,800 (2,060,523 )

SEARS MANUFACTURING CO. (EUROPE) LIMITED (REGISTERED NUMBER: 01275439)

CASH FLOW STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2021

2021 2020
Notes £    £   
Cash flows from operating activities
Cash generated from operations 1 218,887 (253,334 )
Interest paid (121,319 ) (119,808 )
Net cash from operating activities 97,568 (373,142 )

Cash flows from investing activities
Purchase of tangible fixed assets (111,446 ) (32,806 )
Interest received - 153
Net cash from investing activities (111,446 ) (32,653 )

Cash flows from financing activities
Loan repayments in year - 57,684
Net cash from financing activities - 57,684

Decrease in cash and cash equivalents (13,878 ) (348,111 )
Cash and cash equivalents at beginning of
year

2

(1,863,812

)

(1,515,701

)

Cash and cash equivalents at end of year 2 (1,877,690 ) (1,863,812 )

SEARS MANUFACTURING CO. (EUROPE) LIMITED (REGISTERED NUMBER: 01275439)

NOTES TO THE CASH FLOW STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2021


1. RECONCILIATION OF LOSS BEFORE TAXATION TO CASH GENERATED FROM OPERATIONS
2021 2020
£    £   
Loss before taxation (1,727,669 ) (569,177 )
Depreciation charges 178,328 277,313
(Decrease)/increase in provisions 14,783 (12,948 )
Finance costs 121,319 119,808
Finance income - (153 )
(1,413,239 ) (185,157 )
Increase in stocks (4,931,629 ) (177,955 )
Increase in trade and other debtors (819,216 ) (668,700 )
Increase in trade and other creditors 7,382,971 778,478
Cash generated from operations 218,887 (253,334 )

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 31 December 2021
31.12.21 1.1.21
£    £   
Cash and cash equivalents 3,332 3,732
Bank overdrafts (1,881,022 ) (1,867,544 )
(1,877,690 ) (1,863,812 )
Year ended 31 December 2020
31.12.20 1.1.20
£    £   
Cash and cash equivalents 3,732 63,084
Bank overdrafts (1,867,544 ) (1,578,785 )
(1,863,812 ) (1,515,701 )


SEARS MANUFACTURING CO. (EUROPE) LIMITED (REGISTERED NUMBER: 01275439)

NOTES TO THE CASH FLOW STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2021


3. ANALYSIS OF CHANGES IN NET DEBT

At 1.1.21 Cash flow At 31.12.21
£    £    £   
Net cash
Cash at bank and in hand 3,732 (400 ) 3,332
Bank overdrafts (1,867,544 ) (13,478 ) (1,881,022 )
(1,863,812 ) (13,878 ) (1,877,690 )
Debt
Debts falling due after 1 year (2,914,017 ) (58,572 ) (2,972,589 )
(2,914,017 ) (58,572 ) (2,972,589 )
Total (4,777,829 ) (72,450 ) (4,850,279 )

SEARS MANUFACTURING CO. (EUROPE) LIMITED (REGISTERED NUMBER: 01275439)

NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021


1. STATUTORY INFORMATION

Sears Manufacturing Co. (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 Company Information page.

2. ACCOUNTING POLICIES

Basis of preparing the financial statements
These financial statements have been prepared in accordance with FRS 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland" ("FRS 102") and the requirements of the Companies Act 2006.

The financial statements are prepared in sterling, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £.

The financial statements have been prepared on the historical cost convention. The principal accounting policies adopted are set out below.

Going concern
The directors believe that preparing the financial statements on the going concern basis is appropriate due to the continued support of the ultimate parent company, Sears Manufacturing Inc. The directors have received confirmation that Sears Manufacturing Inc intends to support the Company for a period of at least 1 year after these financial statements have been signed.

Turnover
Turnover is recognised when goods are invoiced, which corresponds to the date that goods are dispatched to customers. Turnover represents the invoiced value of goods supplied net of VAT and trade discounts.

Revenue from the sale of goods is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer (usually on dispatch of the goods), the amount of revenue can be measured reliably, it is probable that the economic benefits associated with the transaction will flow to the entity and the costs incurred or to be incurred in respect of the transaction can be measured reliably.

Tangible fixed assets
Tangible fixed assets are initially measured at cost and subsequently measured at cost or valuation, net of depreciation and any impairment losses.

Depreciation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:

Leasehold property improvements - Over lease period
Plant and machinery - 10 - 20 years on a straight line basis
Fixtures, fittings & equipment - 10 years straight line (equipment), 3 years straight line (computers)
Tooling - 5 years on a straight line basis

The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is credited or charged to profit or loss.

SEARS MANUFACTURING CO. (EUROPE) LIMITED (REGISTERED NUMBER: 01275439)

NOTES TO THE FINANCIAL STATEMENTS - continued
FOR THE YEAR ENDED 31 DECEMBER 2021


2. ACCOUNTING POLICIES - continued

Government grants
Government grants are recognised at the fair value of the asset received or receivable when there is reasonable assurance that the grant conditions will be met and the grants will be received.

A grant that specifies performance conditions is recognised in income when the performance obligations are met. Where a grant date does not specify performance conditions it is recognised in income when the proceeds are received or receivable. A grant received before the recognition criteria are satisfied is recognised as a liability.

Stocks
Stocks are stated at the lower of cost and net realisable value. Cost compromises direct materials and, where applicable, direct labour costs and those overheads that have been incurred in bringing the stocks to their present location and condition. Cost is calculated using the weighted average method.

At each reporting date, an assessment is made for impairment. Any excess of the carrying amount of stocks over its estimated selling price less costs to complete and sell is recognised as an impairment loss in profit or loss. Reversals of impairment losses are also recognised in profit or loss.

SEARS MANUFACTURING CO. (EUROPE) LIMITED (REGISTERED NUMBER: 01275439)

NOTES TO THE FINANCIAL STATEMENTS - continued
FOR THE YEAR ENDED 31 DECEMBER 2021


2. ACCOUNTING POLICIES - continued

Financial instruments
The company has elected to apply the provisions of Section 11 'Basic Financial Instruments' and Section 12 'Other Financial Instruments Issues' of FRS 102 to all of its financial instruments.

Financial instruments are recognised in the company's balance sheet when the company becomes party to the contractual provisions of the instrument.

Financial assets are classified into specific categories. The classification depends on the nature and purpose of the financial assets and is determined at the time of recognition.

Basic financial assets
Basic financial assets, which include debtors and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method unless the arrangement constitutes a financial transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised.

Other financial assets
Other financial investments, including investments in equity instruments which are not subsidiaries, associates or joint ventures, are initially measured at fair value, which is normally the transaction price. Such assets are subsequently carried at fair value and the changes in fair value are recognised in profit or loss, except that investments in equity instruments that are not publicly traded and whose fair values cannot be measured reliably are measured at cost less impairment.

Impairment of financial assets
Financial assets are assessed for indicators of impairment at each reporting end date.

Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected. The impairment loss is recognised in profit or loss.

Derecognition of financial assets
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the company transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.

Classification of financial liabilities
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the company after deducting all of its liabilities.

Basic financial liabilities
Basic financial liabilities, including creditors, bank loans, loans from fellow group companies, are initially recognised at transaction price unless the arrangement constitutes a financial transaction, where the debt instrument is measured at the present value of the future receipts discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.

Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.


SEARS MANUFACTURING CO. (EUROPE) LIMITED (REGISTERED NUMBER: 01275439)

NOTES TO THE FINANCIAL STATEMENTS - continued
FOR THE YEAR ENDED 31 DECEMBER 2021


2. ACCOUNTING POLICIES - continued
Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Amounts payable are classified as current liabilities if payment is due within one year or less. If not, thy are presented as non-current liabilities. Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.

Other financial liabilities
Derivatives, including interest rate swaps and forward foreign exchange contracts, are not basic financial instruments. Derivatives are initially recognised at fair value on the date a derivative is entered into and are subsequently re-measured at their fair value. Changes in the fair value of derivatives are recognised in profit or loss in finance costs or finance income as appropriate, unless hedge accounting is applied and the hedge is a cash flow hedge.

Debt instruments that do not meet the conditions in FRS 102 paragraph 11.9 are subsequently measured at fair value through profit or loss. Debt instruments may be designated as being measured at fair value through profit or loss to eliminate or reduce an accounting mismatch or if the instruments are measured and their performance evaluated on a fair value basis in accordance with a documented risk management or investment strategy.

Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the company after deducting all of its liabilities.

Derecognition of financial liabilities
Financial liabilities are derecognised when the company's contractual obligations expire or are discharged or cancelled.

Equity instruments
Equity instruments issued by the company are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the company.

Research and development expenditure
Research expenditure is written off against profits in the year in which it is incurred. Identifiable development expenditure is capitalised to the extent that the technical, commercial and financial feasibility can be demonstrated.

Foreign currencies
Transactions in currencies other than pounds sterling are recorded at the rates of exchange prevailing at the dates of the transactions. At each reporting end date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the reporting end date. Gains and losses arising on translation in the period are included in profit or loss.

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

Rentals payable under operating leases, including any lease incentives received, are charged to profit or loss on a straight line basis over the term of the relevant lease except where another more systematic basis is more representative of the time pattern in which economic benefits from the leases asset are consumed.

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

SEARS MANUFACTURING CO. (EUROPE) LIMITED (REGISTERED NUMBER: 01275439)

NOTES TO THE FINANCIAL STATEMENTS - continued
FOR THE YEAR ENDED 31 DECEMBER 2021


2. ACCOUNTING POLICIES - continued

The costs of short-term employee benefits are recognised as a liability and an expense, unless these costs are required to be recognised as part of the cost of stock or fixed assets.

The cost of any unused holiday entitlement is recognised in the period in which the employee's services are received.

Termination benefits are recognised immediately as an expense when the company id demonstrably committed to terminate the employment of an employee or to provide termination benefits.

Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.

Provisions
Provisions are recognised when the company has a legal or constructive present obligation as a result of a past event, it is probable that the company will be required to settle that obligation and a reliable estimate can be made of the amount of the obligation.

The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the reporting end date, taking into account the risks and uncertainties surrounding the obligation. Where the effect of the time value of money is material, the amount expected to be required to settle the obligation is recognised at present value. When a provision is measured at present value, the unwinding of the discount is recognised as a finance cost in profit or loss in the period in which it arises.

Warranties
The Company provides for warranties on products sold. Provision is made for the expected cost of meeting claims in respect of these arrangements.

3. CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY

In the application of the company's accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.

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 where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.

Critical judgements
The following judgements (apart from those involving estimates) have had the most significant effect on amounts recognised in the financial statements.

Stock valuation
Stock is valued at the lower of cost and net realisable value. Net realisable value includes, where necessary, provisions for slow moving and obsolete stocks. Calculation of these provisions requires judgements to be made, which include forecast consumer demand, the promotional, competitive and economic environment and stock loss trends.

Warrant provision
A warranty provision is recognised in relation to potential future warranty claims. The provision represents management's best estimate of expected future cash outflows. The estimate is based on past experience and industry averages for defective products.

SEARS MANUFACTURING CO. (EUROPE) LIMITED (REGISTERED NUMBER: 01275439)

NOTES TO THE FINANCIAL STATEMENTS - continued
FOR THE YEAR ENDED 31 DECEMBER 2021


4. TURNOVER

The turnover and loss before taxation are attributable to the one principal activity of the Company.

An analysis of turnover by class of business is given below:

2021 2020
£    £   
Sale of seating 22,913,704 17,366,997
22,913,704 17,366,997

An analysis of turnover by geographical market is given below:

2021 2020
£    £   
United Kingdom 5,645,368 4,270,501
Europe 12,408,525 10,309,680
United States of America 939,162 685,620
South America 3,046,934 1,309,877
Asia 574,495 432,673
Australasia 213,313 358,646
Africa 85,907 -
22,913,704 17,366,997

5. EMPLOYEES AND DIRECTORS
2021 2020
£    £   
Wages and salaries 2,825,845 2,421,129
Social security costs 253,092 190,055
Other pension costs 115,738 106,618
3,194,675 2,717,802

The average number of employees during the year was as follows:
2021 2020

Directors 2 2
Office and management 37 39
Manufacturing 61 51
100 92

2021 2020
£    £   
Directors' remuneration - -

SEARS MANUFACTURING CO. (EUROPE) LIMITED (REGISTERED NUMBER: 01275439)

NOTES TO THE FINANCIAL STATEMENTS - continued
FOR THE YEAR ENDED 31 DECEMBER 2021


6. OPERATING LOSS

The operating loss is stated after charging/(crediting):

2021 2020
£    £   
Hire of plant and machinery 182,164 174,177
Rent re operating leases 149,707 178,581
Depreciation - owned assets 178,327 277,313
Auditors' remuneration 18,500 20,000
Foreign exchange differences (521,019 ) 100,519
Research and development costs 26,156 21,339
Government grants (5,000 ) (5,000 )

7. INTEREST PAYABLE AND SIMILAR EXPENSES
2021 2020
£    £   
Interest on bank overdrafts 62,747 62,124
Interest payable to group 58,572 57,684
121,319 119,808

8. TAXATION

Analysis of the tax charge
No liability to UK corporation tax arose for the year ended 31 December 2021 nor for the year ended 31 December 2020.

Reconciliation of total tax charge included in profit and loss
The tax assessed for the year is higher than the standard rate of corporation tax in the UK. The difference is explained below:

2021 2020
£    £   
Loss before tax (1,727,669 ) (569,177 )
Loss multiplied by the standard rate of corporation tax in the UK of 19%
(2020 - 19%)

(328,257

)

(108,144

)

Effects of:
Expenses not deductible for tax purposes 2,031 10,706
Income not taxable for tax purposes (2,265 ) (950 )
Unutilised tax losses carried forward 326,503 73,162
Permanent capital allowances in excess of depreciation 1,988 25,226
Total tax charge - -

SEARS MANUFACTURING CO. (EUROPE) LIMITED (REGISTERED NUMBER: 01275439)

NOTES TO THE FINANCIAL STATEMENTS - continued
FOR THE YEAR ENDED 31 DECEMBER 2021


9. TANGIBLE FIXED ASSETS
Leasehold Fixtures
property Plant and and
improvement machinery fittings Tooling Totals
£    £    £    £    £   
COST
At 1 January 2021 1,082,467 1,319,554 388,355 882,048 3,672,424
Additions - 101,357 6,831 3,258 111,446
At 31 December 2021 1,082,467 1,420,911 395,186 885,306 3,783,870
DEPRECIATION
At 1 January 2021 1,064,918 810,140 302,081 854,643 3,031,782
Charge for year 17,549 142,713 10,656 7,409 178,327
At 31 December 2021 1,082,467 952,853 312,737 862,052 3,210,109
NET BOOK VALUE
At 31 December 2021 - 468,058 82,449 23,254 573,761
At 31 December 2020 17,549 509,414 86,274 27,405 640,642

10. STOCKS
2021 2020
£    £   
Raw materials 7,561,896 3,200,246
Work-in-progress 319,839 152,026
Finished goods 657,957 255,791
8,539,692 3,608,063

11. DEBTORS: AMOUNTS FALLING DUE WITHIN ONE YEAR
2021 2020
£    £   
Trade debtors 4,027,606 3,375,557
Other debtors 270,950 164,667
Prepayments and accrued income 258,865 197,981
4,557,421 3,738,205

12. CALLED UP SHARE CAPITAL


Allotted, issued and fully paid:
Number: Class: Nominal 2021 2020
value: £    £   
1,000,000 Ordinary Shares £1 1,000,000 1,000,000

SEARS MANUFACTURING CO. (EUROPE) LIMITED (REGISTERED NUMBER: 01275439)

NOTES TO THE FINANCIAL STATEMENTS - continued
FOR THE YEAR ENDED 31 DECEMBER 2021


12. CALLED UP SHARE CAPITAL - continued

The company has one class of ordinary shares which carry no right to fixed income, with each share also carrying an entitled to one vote in any circumstance.

13. PROVISIONS FOR LIABILITIES
2021 2020
£    £   
Other provisions
Warranty provision 197,279 182,496

Warranty
provision
£   
Balance at 1 January 2021 182,496
Provided during year 221,543
Utilised during year (206,760 )
Balance at 31 December 2021 197,279

The provision above represents the company's estimate of future liabilities under warranties provided on products.

14. CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR
2021 2020
£    £   
Bank loans and overdrafts (see note 16) 1,881,022 1,867,544
Trade creditors 2,806,480 1,181,267
Amounts owed to group undertakings 4,859,195 1,715,735
Social security and other taxes 79,772 66,437
Other creditors 1,340,058 152,292
Accruals and deferred income 1,598,334 243,708
12,564,861 5,226,983

15. CREDITORS: AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR
2021 2020
£    £   
Other loans (see note 16) 2,972,589 2,914,017

16. LOANS

An analysis of the maturity of loans is given below:

2021 2020
£    £   
Amounts falling due within one year or on demand:
Bank overdrafts 1,881,022 1,867,544

SEARS MANUFACTURING CO. (EUROPE) LIMITED (REGISTERED NUMBER: 01275439)

NOTES TO THE FINANCIAL STATEMENTS - continued
FOR THE YEAR ENDED 31 DECEMBER 2021


16. LOANS - continued
2021 2020
£    £   
Amounts falling due in more than five years:
Repayable otherwise than by instalments
Other loans 2,972,589 2,914,017

Long term creditors relate solely to loans from the Parent Company. There is no set repayment date. Interest is charged at a rate of 2% on this balance.

Bank overdrafts solely relates to an overdraft facility extended to the Company by the Company's bankers.

17. LEASING AGREEMENTS

Minimum lease payments under non-cancellable operating leases fall due as follows:
2021 2020
£    £   
Within one year 263,647 248,815
Between one and five years 192,031 130,029
455,678 378,844

The Company leases a factory under an operating lease from a related party. The lease expired during the year and is now on an annual rolling basis, therefore disclosed as within one year.

The Company also leases plant and equipment, with expiry dates between August 2023 and January 2026.

18. RELATED PARTY DISCLOSURES

Entities with control, joint control or significant influence over the entity
2021 2020
£    £   
Sales 471,842 353,151
Purchases 4,142,095 2,778,852
Management charge (105 ) (56,264 )
Amount due to related party 7,831,784 4,629,482

Other related parties
2021 2020
£    £   
Sales 119,267 103,401
Purchases 4,503,932 2,556,573
Amount due from related party 70,008 31,803
Amount due to related party 1,734,312 40,918

During the year, a total of key management personnel compensation of £ 402,360 (2020 - £ 594,565 ) was paid.

SEARS MANUFACTURING CO. (EUROPE) LIMITED (REGISTERED NUMBER: 01275439)

NOTES TO THE FINANCIAL STATEMENTS - continued
FOR THE YEAR ENDED 31 DECEMBER 2021


19. ULTIMATE CONTROLLING PARTY

The immediate and ultimate parent undertaking and controlling party is Sears Manufacturing Inc. Sears Manufacturing Inc is the parent undertaking of the smallest and largest group of undertakings to consolidate these financial statements at 31 December 2021. A copy of the consolidated financial statements may be obtained from Sears Manufacturing Inc, PO Box 3667, Davenport, IA 52808, Iowa, USA.