Registered number: 05342169
SHIMADZU UK LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
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COMPANY INFORMATION
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Mr Y Hirao (appointed 28 April 2023)
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CLA Evelyn Partners Limited
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Chartered Accountants & Statutory Auditor
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Bank of Tokyo-Mitsubishi UFG
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National Westminster Bank
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CONTENTS
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Directors' Responsibilities Statement
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Independent Auditor's Report
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Statement of Comprehensive Income
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Statement of Financial Position
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Statement of Changes in Equity
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Notes to the Financial Statements
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STRATEGIC REPORT
FOR THE YEAR ENDED 31 MARCH 2023
The directors present their Strategic Report for the year ended 31 March 2023.
The Company's principal activity is the sale and service of analytical instruments and material testing machines.
As shown in the Company's Statement of Comprehensive Income on page 12, the Company's revenue has increased by 0.3% to £15,283k (2022 - £15,237k). Profit before taxation is down by 47% to £1,154k (2022 - £2,182k). This broadly similar revenue between 2022 and 2023 was caused by supply chain issues in Q1, which although resolved later in the year, prevented any significant increase in revenue. The decrease in profit was due to an increase in Sales, General and Administrative Expenses, the most significant component of which was salary.
The Statement of Financial Position on page 13 shows that the Company's financial position at the year end is, in net asset terms, an increase from the prior year to £7,189k (2022 - £6,253k). This is attributable to the profit made in the year.
Financial key performance indicators
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The board monitors progress on the overall strategy by reference to certain KPI's as follows:
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Average number of employees
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These KPI's have been chosen in order to give a snapshot of the overall top line performance and profitability of the business.
Revenue is monitored to ensure the long-term growth of the business and to check that the revenue is sufficient over the course of the year to allow the budgeted investments to take place prudently. Revenue increased 0.3% between FY22 and FY23, as discussed earlier, with supply chain issues limiting the opportunity for growth. The revenue outlook for FY24 looks positive, given the easing in supply chain issues and the order backlog which has developed through the year.
Gross profit and gross profit margin have been selected as KPIs in order to ensure the underlying costs to the business remain under control. Gross profit margin will be a good underlying measure should turnover decrease, which should also lead to a decrease in gross profit. Gross profit declined slightly in FY23 on an increase in Cost of Sale and this also had the impact of reducing gross profit margin, as turnover levels were broadly similar.
Profit before taxation is a KPI in order to track the overall profitability of the Company. In Shimadzu UK’s case, there are rarely any exceptional items in the profit before taxation and so it is a consistent measure of performance. In FY23 profit before taxation declined significantly, largely due to an increase in Sales General and Administration Costs. Wages increased due to an increase in headcount and inflationary pressures, while those same inflationary pressures also increased travel and car costs through the year.
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STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
Financial key performance indicators (continued)
We monitor headcount as a KPI to ensure that the business maintains its efficiency and resources are being used appropriately. We recruited steadily though FY23 to maintain and improve the service to our customers and to support our business growth plans.
Non-financial performance measures
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The Company also takes a wider view of the business and what it needs to be successful, for example customer satisfaction measures on areas such as delivery, service and response times. Given the nature of the business, for the purpose of this Strategic Report, the Company's directors are of the opinion that evaluation using key performance indicators is not necessary for an understanding of the development, performance or position of the business.
Principal risks and uncertainties
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Competitive risk
The markets for the Company's products and services are very competitive and price sensitive. Aggressive pricing by competitors has been evident during the year and is expected to continue. We will continue to emphasise the value of complete customer solutions to combat pricing pressures.
Economic risk
The macro economic factors that surround the Company’s markets remain challenging. In the event of worsening economic conditions, and the resulting uncertainty of customers’ capital expenditure, demand for the Company’s products and/or services could decline. Inflation, while declining in the UK and Globally may continue to make pricing more challenging. We will continue to monitor sales pipeline and cycles closely to enable appropriate actions should there be a significant economic deterioration.
Political risk
UK domestic political risk is now minimal. There may be some ongoing challenges with relationships with the EU, particularly around the Horizon programme, but this is not of the scale of previous risks. The wider political risk now involves economic and political shocks from the war in Ukraine. There is risk of the conflict escalating further which may have difficult to foresee consequences. On a Global scale there is the increasing political and economic decoupling between the US and China, which may also introduce further uncertainties.
Financial risk
The Company is also presented with a number of financial risks which are discussed in the Directors' Report.
Looking forward into the Financial Year from April 1st there are again grounds for cautious optimism. Shimadzu Corporation continues to develop and manufacture class-leading solutions across its portfolio. It is looking to continue to invest in its growth in the UK as a marketplace in an advanced economy with a leading edge scientific capability. Against this positive outlook must be balanced the low growth rate and higher interest rates for the UK economy forecast for 2023 and 2024 and wider weakness in parts of the global economy. This is also coupled to a weaker forecast for business investment in 2023 and into 2024. Despite this more challenging business environment, the quality of Shimadzu’s support for the sectors it serves leads to this cautious optimism for continued growth.
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STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
This report was approved by the board and signed on its behalf.
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DIRECTORS' REPORT
FOR THE YEAR ENDED 31 MARCH 2023
The directors present their report and the audited financial statements for the Company for the year ended 31 March 2023.
The profit for the year, after taxation, amounted to £936,319 (2022 - £1,794,343).
The directors consider the result for the year and the year-end position to be satisfactory. The directors do not recommend the payment of a dividend (2022 - £Nil) and no dividends (2022 - £Nil) have been paid during the year.
The directors who served during the year and up to the date of approval of financial statements were:
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J Takashima (resigned 28 April 2023)
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Y Hirao (appointed 28 April 2023)
The directors have made an assessment which concluded that it is appropriate to prepare these accounts on a going concern basis. This assessment included a review of cashflow forecasts which cover a period of at least 12 months from the date of approval of these accounts. The review also included consideration of a plausible worst case scenario, including a potential deterioration in trading, and in such a scenario the directors expected the company to continue to have access to sufficient cash to continue to trade and meet all liabilities as they fall due for payment.
The company remains profitable and has no external loans. The company is party to a cash pooling arrangement operated by the parent group and at 31 March 2023 the company was owed approximately £4.5m by the parent group under this arrangement as set out in note 14. The directors expect to have ready access to cash via this longstanding group arrangement and in the unlikely situation that the agreement was terminated the company would recover the above significant cash balance.
Financial risk management objectives and policies
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The Company's activities expose it to a number of financial risks including cash flow risk, credit risk and liquidity risk. The Company's principal objective is to manage risk by following the group's processes and procedures. The parent company specify terms and conditions to manage credit, cash flow and liquidity risks. The directors ensure they adhere to these policies.
Cash flow risk
The Company's activities expose it primarily to the financial risks of changes in foreign currency exchange rates. The Company does not actively manage this risk, as the significant exposure remains internal to the group.
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DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
Financial risk management objectives and policies (continued)
Credit risk
The Company's principal financial assets are bank balances and trade receivables.
The Company's credit risk is primarily attributed to its trade receivables. The amounts presented in the Statement of Financial Position are net of provisions for doubtful debts. An allowance for impairment is made where there is an identified loss event which, based on previous experience, is evidence of a reduction in the recoverability of the cash flows.
The credit risk on liquid funds is limited because the counterparties are banks with high credit-ratings assigned by international credit-rating agencies. In the normal course of business the Company obtains certain supplies from overseas.
The Company has no significant concentration of credit risk, with exposure spread over a large number of customers.
Liquidity risk
In order to maintain liquidity to ensure that sufficient funds are available for ongoing operations and future developments, the Company has access to debt finance from the parent company.
Brexit
With the implementation of the Trade and Cooperation Agreement between the UK and EU, the UK completed its departure from the EU. The agreement meant that there were no tariffs on goods traded between the EU and UK. Where the goods are imported into the EU and then onto the UK, the tariff applied is the goods is the UK Global tariff, which means that for most goods imported by Shimadzu UK, there are no tariffs. There is little risk through tariffs therefore as a consequence of Brexit. Smooth operation of the borders due to increase customs interaction continues to be a risk as the operation of Shimadzu UK requires the import of goods. This can be mitigated in part by an increased holding of material in the UK. The final risk is the possibility of increased political division with the EU due to the operation of the Northern Irish Protocol. Should relations worsen substantially, the EU may choose to impose trade- related measures on the UK and this might also impair either the wider UK economy or the border operation.
Qualifying third party indemnity provisions
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During the year ended 31 March 2023 and at the date of this report, the company has made an indemnity for the benefit of the statutory directors which is a qualifying indemnity provision for the purposes of Section 234 of the Companies Act 2006.
Matters covered in the Group Strategic Report
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Where necessary, disclosures relating to future developments have been made in the company Strategic Report and have not been repeated here in accordance with Section 414C of the Companies Act 2006.
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DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
Disclosure of information to auditor
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Each of the persons who are directors at the time when this Directors' Report is approved has confirmed that:
∙so far as the director is aware, there is no relevant audit information of which the Company's auditor is unaware, and
∙the director has taken all the steps that ought to have been taken as a director in order to be aware of any relevant audit information and to establish that the Company's auditor is aware of that information.
Post balance sheet events
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There were no events subsequent to the financial year end which affected the state of affairs of the Company as at 31 March 2023.
The auditors', CLA Evelyn Partners Limited, was appointed following the year end and will be proposed for reappointment in accordance with section 485 of the Companies Act 2006.
This report was approved by the board and signed on its behalf.
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DIRECTORS' RESPONSIBILITIES STATEMENT
FOR THE YEAR ENDED 31 MARCH 2023
The directors are responsible for preparing the Strategic Report, the Directors' Report and the audited financial statements in accordance with applicable law and regulations.
Company law requires the directors to prepare audited financial statements for each financial year. Under that law the directors have elected to prepare the audited financial statements in accordance with applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice), including Financial Reporting Standard 101 ‘Reduced Disclosure Framework’. Under company law the directors must not approve the audited 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 audited financial statements, the directors are required to:
∙select suitable accounting policies and then apply them consistently;
∙make judgments and accounting estimates that are reasonable and prudent;
∙state whether applicable United Kingdom Accounting Standards, comprising FRS 101 have been followed, subject to any material departures disclosed and explained in the financial statements; and
∙prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Company and to enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
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INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF SHIMADZU UK LIMITED
Opinion
We have audited the financial statements of Shimadzu UK Limited (the ‘company’) for the year ended 31 March 2023 which comprise Statement of Comprehensive Income, Statement of Financial Position, Statement of Changes in Equity and the notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including FRS 101 “Reduced Disclosure Framework” (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 March 2023 and of its profit for the year then ended;
∙have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
∙have been prepared in accordance with the requirements of the Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the financial statements section of our report. We are independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors’ use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the Company’s ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
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INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF SHIMADZU UK LIMITED (CONTINUED)
Other information
The other information comprises the information included in the annual report and financial statements, other than the financial statements and our auditor’s report thereon. The directors are responsible for the other information contained within the annual report and financial statements. 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. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
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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.
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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 indentified material mistatement in the Strategic Report or the Directors' Report.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:
∙adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or
∙the financial statements are not in agreement with the accounting records and returns; or
∙certain disclosures of directors’ remuneration specified by law are not made; or
∙we have not received all the information and explanations we require for our audit.
Responsibilities of directors
As explained more fully in the Directors’ Responsibilities Statement set out on page 7, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.
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INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF SHIMADZU UK LIMITED (CONTINUED)
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
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 obtained a general understanding of the Company’s legal and regulatory framework through enquiry of management concerning: their understanding of relevant laws and regulations; the entity’s policies and procedures regarding compliance and how they identify, evaluate and account for litigation claims. We also drew on our existing understanding of the Company’s industry and regulation.
We understand that the Company complies with the framework through:
∙The directors’ close involvement in the day-to-day running of the business, meaning that any litigation or claims would come to their attention directly; and
∙Outsourcing accounts preparation and tax compliance to external experts.
In the context of the audit, we considered those laws and regulations which determine the form and content of the financial statements, which are central to the company’s ability to conduct its business and where there is a risk that failure to comply could result in material penalties.
We identified the following laws and regulations as being of significance in the context of the Company:
∙The Companies Act 2006 and FRS 101 in respect of the preparation and presentation of the financial statements.
The senior statutory auditor led a discussion with senior members of the engagement team regarding the susceptibility of the entity’s financial statements to material misstatement, including how fraud might occur. The areas identified in this discussion were:
∙the risk of the manipulation of the financial statements through manual journals; and
∙the risk of incorrect recognition of revenue.
These areas were communicated to the other members of the engagement team not present at the discussion.
The procedures we carried out to gain evidence in the above areas included:
∙Testing of revenue transactions to underlying documentation; and
∙Testing of manual journal entries, selected based on specific risk criteria to ensure they had a proper business purpose.
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council’s website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.
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INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF SHIMADZU UK LIMITED (CONTINUED)
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 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.
Benjamin Stapleton (Senior Statutory Auditor)
for and on behalf of
CLA Evelyn Partners Limited
Chartered Accountants
Statutory Auditor
14th Floor
103 Colmore Row
Birmingham
B3 3AG
12 October 2023
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STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 MARCH 2023
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Interest receivable and similar income
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Interest payable and similar expenses
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Profit for the financial year
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Revenue and operating profit are all derived from continuing operations.
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There was no other comprehensive income for 2023 (2022 - £Nil).
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The notes on pages 16 to 34 form part of these financial statements.
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SHIMADZU UK LIMITED
REGISTERED NUMBER:05342169
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STATEMENT OF FINANCIAL POSITION
AS AT 31 MARCH 2023
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Trade and other receivables
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Total assets less current liabilities
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SHIMADZU UK LIMITED
REGISTERED NUMBER:05342169
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STATEMENT OF FINANCIAL POSITION (CONTINUED)
AS AT 31 MARCH 2023
The financial statements were approved and authorised for issue by the board and were signed on its behalf by:
The notes on pages 16 to 34 form part of these financial statements.
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STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 MARCH 2023
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Comprehensive income for the year
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Comprehensive income for the year
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
Shimadzu UK Limited is a private company, limited by shares, domiciled and incorporated in England and Wales (registered number: 05342169). The registered office address is Unit A, Mill Court, Featherstone Road, Wolverton Mill South, Milton Keynes, Buckinghamshire MK12 5RE.
The nature of the Company's operations and its principal activities are set out in the Strategic Report.
These financial statements are presented in pounds sterling because that is the currency of the primary economic environment in which the Company operates.
2.Accounting policies
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Basis of preparation of financial statements
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The financial statements have been prepared under the historical cost convention unless otherwise specified within these accounting policies and in accordance with Financial Reporting Standard 101 'Reduced Disclosure Framework' and the Companies Act 2006.
The preparation of financial statements in compliance with FRS 101 requires the use of certain critical accounting estimates. It also requires management to exercise judgment in applying the Company's accounting policies (see note 3).
The following principal accounting policies have been applied:
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Financial Reporting Standard 101 - reduced disclosure exemptions
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The Company has taken advantage of the following disclosure exemptions under FRS 101:
∙the requirements of IFRS 7 Financial Instruments: Disclosures
∙the requirements of paragraph 52, the second sentence of paragraph 89, and paragraphs 90, 91 and 93 of IFRS 16 Leases. The requirements of paragraph 58 of IFRS 16, provided that the disclosure of details in indebtedness relating to amounts payable after 5 years required by company law is presented separately for lease liabilities and other liabilities, and in total
∙the requirement in paragraph 38 of IAS 1 'Presentation of Financial Statements' to present comparative information in respect of:
- paragraph 79(a)(iv) of IAS 1;
- paragraph 73(e) of IAS 16 Property, Plant and Equipment;
∙the requirements of paragraphs 10(d), 10(f), 16, 38A, 38B, 38C, 38D, 40A, 40B, 40C, 40D, 111 and 134-136 of IAS 1 Presentation of Financial Statements
∙the requirements of IAS 7 Statement of Cash Flows
∙the requirements of paragraph 17 and 18A of IAS 24 Related Party Disclosures
∙the requirements in IAS 24 Related Party Disclosures to disclose related party transactions entered into between two or more members of a group, provided that any subsidiary which is a party to the transaction is wholly owned by such a member
This information is included in the consolidated financial statements of Shimadzu Corporation as at 31 March 2023 and these financial statements may be obtained from Shimadzu Corporation's website.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
2.Accounting policies (continued)
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Impact of new international reporting standards, amendments and interpretations
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The following new and amended Standards and Interpretations effective for the financial year beginning 1 April 2022 have not been adopted.
These standards have no material impact on the disclosures or on the amounts reported in these financial statements.
∙Conceptual Framework for Financial Reporting - Amendments to IFRS 3
∙IAS 16 Property, Plant and Equipment - Proceeds before Intended Use
∙Amendments to IAS 37 Provisions, Contingent Liabilities and Contingent Assets, Onerous Contracts – Cost of Fulfilling a Contract
∙Annual Improvements to IFRS Accounting Standards 2018-2020 Cycle
°IFRS 1 First-time Adoption of International Financial Reporting Standards
°IFRS 9 Financial Instruments Fees in the ’10 per cent’ test for derecognition of financial liabilities
°IFRS 16 Leases
°IAS 41 Agriculture
The directors have made an assessment which concluded that it is appropriate to prepare these accounts on a going concern basis. This assessment included a review of cashflow forecasts which cover a period of at least 12 months from the date of approval of these accounts. The review also included consideration of a plausible worst case scenario, including a potential deterioration in trading, and in such a scenario the directors expected the company to continue to have access to sufficient cash to continue to trade and meet all liabilities as they fall due for payment.
The company remains profitable and has no external loans. The company is party to a cash pooling arrangement operated by the parent group and at 31 March 2023 the company was owed approximately £4.5m by the parent group under this arrangement as set out in note 14. The directors expect to have ready access to cash via this longstanding group arrangement and in the unlikely situation that the agreement was terminated the company would recover the above significant cash balance.
Transactions in foreign currencies are recorded at the rate of exchange at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are reported at the rates of exchange prevailing at that date. Translation differences arising are dealt with in the Statement of Comprehensive Income.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
2.Accounting policies (continued)
The Company recognises revenue from the following major sources:
∙Sale of goods and equipment; and
∙Rendering of services.
Revenue is measured based on the consideration to which the Company expects to be entitled in a contract with a customer and excludes amounts collected on behalf of third parties. The Company recognises revenue when it transfers control of a product or service to a customer.
Sale of goods and equipment
The Company sells analytical instruments and material testing machines directly to customers through its own sales representatives. For sales of equipment, revenue is recognised when the control of the goods has been transferred, being at the point of installation.
Rendering of services
Revenue from a contract to provide services is recognised by reference to the stage of completion of the contact.
Included in the transaction price for the sale of equipment is an after-sales service. This service relates to maintenance work that may be required to be carried out on the equipment for a year period after sale. This period can then be extended if the customer requires additional years of maintenance services. The renewal of services after the year period will be for the price at which these are sold by the Company to all of its customers as at the date of renewal regardless of the existence of a renewal option. Consequently, the option to extend the renewal period does not provide customers with any advantage when they enter into the initial contract and therefore no revenue has been deferred relating to this renewal option.
The maintenance service is considered to be a distinct service as it is both regularly supplied by the Company to other customers on a stand-alone basis and is available for customers from other providers in the market. A portion of the transaction price is therefore allocated to the maintenance services based on the stand-alone selling price of those services. Discounts are not considered as they are only given in rare circumstances and are never material.
Revenue relating to the maintenance services is recognised over time. The transaction price allocated to these services is recognised as a contract liability at the time of the initial sales transaction and is released on a straight-line basis over the period of services (i.e. a year when the services are purchased together with the underlying equipment).
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
2.Accounting policies (continued)
The Company as lessee
The Company assesses whether a contract is or contains a lease, at inception of the contract. The Company recognises a right-of-use asset and a corresponding lease liability with respect to all lease arrangements in which it is the lessee, except for short-term leases (defined as leases with a lease term of 12 months or less) and leases of low value assets (such as tablets and personal computers, small items of office furniture and telephones). For these leases, the Company recognises the lease payments as an operating expense on a straight-line basis over the term of the lease unless another systematic basis is more representative of the time pattern in which economic benefits from the leased assets are consumed.
The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted by using the rate implicit in the lease. If this rate cannot be readily determined, the Company uses its incremental borrowing rate.
Lease payments included in the measurement of the lease liability comprise:
∙Fixed lease payments (including in-substance fixed payments), less any lease incentives receivable;
∙Variable lease payments that depend on an index or rate, initially measured using the index or rate at the commencement date;
∙The amount expected to be payable by the lessee under residual value guarantees;
∙The exercise price of purchase options, if the lessee is reasonably certain to exercise the options; and
∙Payments of penalties for terminating the lease, if the lease term reflects the exercise of an option to terminate the lease.
The lease liability is presented as a separate line in the Statement of Financial Position.
The lease liability is subsequently measured by increasing the carrying amount to reflect interest on the lease liability (using the effective interest method) and by reducing the carrying amount to reflect the lease payments made.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
2.Accounting policies (continued)
The Company remeasures the lease liability (and makes a corresponding adjustment to the related right-of-use asset) whenever:
∙The lease term has changed or there is a significant event or change in circumstances resulting in a change in the assessment of exercise of a purchase option, in which case the lease liability is remeasured by discounting the revised lease payments using a revised discount rate.
∙The lease payments change due to changes in an index or rate or a change in expected payment under a guaranteed residual value, in which cases the lease liability is remeasured by discounting the revised lease payments using an unchanged discount rate (unless the lease payments change is due to a change in a floating interest rate, in which case a revised discount rate is used).
∙A lease contract is modified and the lease modification is not accounted for as a separate lease, in which case the lease liability is remeasured based on the lease term of the modified lease by discounting the revised lease payments using a revised discount rate at the effective date of the modification.
The right-of-use assets comprise the initial measurement of the corresponding lease liability, lease payments made at or before the commencement day, less any lease incentives received and any initial direct costs. They are subsequently measured at cost less accumulated depreciation and impairment losses.
Whenever the Company incurs an obligation for costs to dismantle and remove a leased asset, restore the site on which it is located or restore the underlying asset to the condition required by the terms and conditions of the lease, a provision is recognised and measured under IAS 37. To the extent that the costs relate to a right-of-use asset, the costs are included in the related right-of-use asset, unless those costs are incurred to produce inventories.
Right-of-use assets are depreciated over the shorter period of lease term and useful life of the right-of-use asset. If a lease transfers ownership of the underlying asset or the cost of the right-of-use asset reflects that the Company expects to exercise a purchase option, the related right-of-use asset is depreciated over the useful life of the underlying asset. The depreciation starts at the commencement date of the lease,
The Company applies IAS 36 to determine whether a right-of-use asset is impaired and accounts for any identified impairment loss as described in the "Tangible fixed assets' policy.
Variable rents that do not depend on an index or rate are not included in the measurement the lease liability and the right-of-use asset. The related payments are recognised as an expense in the period in which the event or condition that triggers those payments occurs and are included in the line "Other operating expenses' in the Statement of Comprehensive Income (see note 5).
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
2.Accounting policies (continued)
As a practical expedient, IFRS 16 permits a lessee not to separate non-lease components, and instead account for any lease and associated non-lease components as a single arrangement. The Company has not used this practical expedient. For a contract that contains a lease component and one or more additional lease or non-lease components, the Company allocates the consideration in the contract to each lease component on the basis of the relative stand-alone price of the lease component and the aggregate stand-alone price of the non-lease components.
Interest income is recognised in the Statement of Comprehensive Income using the effective interest method.
Finance costs are charged to the Statement of Comprehensive Income over the term of the debt using the effective interest method so that the amount charged is at a constant rate on the carrying amount. Issue costs are initially recognised as a reduction in the proceeds of the associated capital instrument.
Tangible fixed assets are stated at cost less accumulated depreciation and any recognised impairment loss.
Depreciation is charged so as to allocate the cost of assets less their residual value over their estimated useful lives, using the straight-line method.
Depreciation is provided on the following basis:
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Short-term leasehold property
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The estimated useful lives, residual values and depreciation method are reviewed at the end of each reporting period, with the effect of any changes in estimate accounted for on a prospective basis.
An item of tangible fixed assets is derecognised upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. The gain or loss arising on the disposal or scrappage of an asset is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognised in the Statement of Comprehenisve Income.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
2.Accounting policies (continued)
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Impairment of tangible assets
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At each statement of financial position date, the Company reviews the carrying amounts of its tangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated to determine the extent of the impairment loss (if any). Where the asset does not generate cash flows that are independent from other assets, the group estimates the recoverable amount of the cash-generating unit to which the asset belongs. When a reasonable and consistent basis of allocation can be identified, corporate assets are also allocated to individual cash-generating units, or otherwise they are allocated to the smallest group of cash-generating units for which a reasonable and consistent allocation basis can be identified.
Recoverable amount is the higher of fair value less costs of disposal and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in the Statement of Comprehensive Income, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.
Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in the Statement of Comprehensive Income, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.
Stocks are stated at the lower of cost and net realisable value. Cost comprises direct materials and, where applicable, direct labour costs and those overheads that have been incurred in bringing the inventories to their present location and condition. Cost is calculated using the weighted average method. Net realisable value represents the estimated selling price less all estimated costs of completion and costs to be incurred in marketing, selling and distribution.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
2.Accounting policies (continued)
Defined contribution pension plan
The Company operates a defined contribution plan for its employees. A defined contribution plan is a pension plan under which the Company pays fixed contributions into a separate entity. Once the contributions have been paid the Company has no further payment obligations.
The contributions are recognised as an expense in the Statement of Comprehensive Income when they fall due. Amounts not paid are shown in accruals as a liability in the Statement of Financial Position. The assets of the plan are held separately from the Company in independently administered funds.
Financial assets and financial liabilities are recognised in the Company's Statement of Financial Position when the Company becomes a party to the contractual provisions of the instrument.
Financial assets and financial liabilities are measured initially at fair value, except for trade receivables that do not have a significant financing component which are measured at transaction price. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through the Statement of Comprehensive Income) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through the Statement of Comprehensive Income are recognised immediately in the Statement of Comprehensive Income.
Trade and other receivables
Trade and other receivables are recognised initially at fair value through the Statement of Comprehensive Income (FVTPL) and subsequently measured at amortised cost, less provision for impairment. A provision for impairment of trade and other receivables is recognised if there are considered to be expected credit losses. The amount of expected credit losses is updated at each reporting date to reflect changes in credit risk since initial recognition of the financial asset. Losses arising from impairment are recognised in the income statement within administration expenses.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
2.Accounting policies (continued)
The tax expense represents the sum of the tax currently payable and deferred tax.
Current tax
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the statement of comprehensive income because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Company's liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the statement of financial position date.
Deferred tax
Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the Statement of Financial Position liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised.
The carrying amount of deferred tax assets is reviewed at each statement of financial position date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.
Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised based on tax laws and rates that have been enacted or substantively enacted at the statement of financial position date.
The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Company expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Company intends to settle its current tax assets and liabilities on a net basis.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
2.Accounting policies (continued)
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Provision for liabilities
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Provisions are made where an event has taken place that gives the Company a legal or constructive obligation that probably requires settlement by a transfer of economic benefit, and a reliable estimate can be made of the amount of the obligation.
Provisions are charged as an expense to profit or loss in the year that the Company becomes aware of the obligation, and are measured at the best estimate at the reporting date of the expenditure required to settle the obligation, taking into account relevant risks and uncertainties.
When payments are eventually made, they are charged to the provision carried in the Statement of Financial Position.
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Judgments in applying accounting policies and key sources of estimation uncertainty
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In the application of the Company's accounting policies, which are described in note 2, the directors are required to make judgements, estimates and assumptions about the carrying amounts 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 if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.
Critical judgements in applying the Company's accounting policies
The directors do not consider there to be any critical judgements in the application of the Company's accounting policies. The directors do not consiuder there to be any key sources of estimation uncertainty in the application of the Company's accounting policies.
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An analysis of revenue by class of business is as follows:
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All revenue arose within the United Kingdom.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
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The operating profit is stated after charging:
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Depreciation of tangible fixed assets
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Depreciation of right-of-use assets
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Cost of stocks recognised as an expense
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Write-down of stocks to net realisable value
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During the year, the Company obtained the following services from the Company's auditor:
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Fees payable to the Company's auditor for the audit of the Company's financial statements
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Other service fees relating to taxation
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Preparation of statutory accounts
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
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Staff costs, including directors' remuneration, were as follows:
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Cost of defined contribution scheme
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The Company operates defined contribution retirement benefit schemes for all qualifying employees. The assets of the schemes are held separately from those of the Company.
The total cost charged to the Statement of Comprehensive Income as disclosed above are contributions payable to these schemes by the Company at rates specified in the rules of the plans. As at 31 March 2023, contributions of £53,443 (2022 - £41,947) due in respect of the current reporting period had not been paid over to the schemes and are included in accruals.
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The average monthly number of employees, including the directors, during the year was as follows:
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Company contributions to defined contribution pension schemes
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The number of directors who had accruing money purchase pension schemes for the year was 1 (2022 - 1).
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
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Interest receivable and similar income
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Interest payable and similar expenses
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Interest payable on leases
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Interest payable on overdue taxation
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Current tax on profits for the year
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Adjustments in respect of previous periods
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Origination and reversal of timing differences
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
11.Taxation (continued)
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Factors affecting tax charge for the year
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The tax assessed for the year is lower than (2022 - lower than) the standard rate of corporation tax in the UK of 19% (2022 - 19%). The differences are explained below:
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Profit on ordinary activities before tax
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Profit on ordinary activities multiplied by standard rate of corporation tax in the UK of 19% (2022 - 19%)
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Expenses not deductible for tax purposes, other than goodwill amortisation and impairment
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Adjustments to tax charge in respect of prior periods
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Total tax charge for the year
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Factors that may affect future tax charges
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Finance Act 2021 includes legislation to increase the main rate of corporation tax from 19% to 25% from 1 April 2023. The full anticipated effect of these changes is reflected in the above deferred tax balances.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
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Short-term leasehold property improvements
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Finished goods and goods for resale
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There is not a material difference between the cost held here and the replacement cost.
Inventories are stated after provisions for impairment of £Nil (2022 - £Nil).
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
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Trade and other receivables
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Due after more than one year
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Amounts owed by group undertakings
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Prepayments and accrued income
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Included within trade receivables is £22,777 (2022 - £Nil) which falls due after more than one year.
Amounts owed by parent company are interest bearing, unsecured and repayable on demand.
Trade debtors are stated after provisions for impairment of £63,245 (2022 - £Nil).
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
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Contract liabilities
Amounts due within one year:
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Arising from service contracts (i)
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Amounts due after more than one year:
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Arising from service contracts (i)
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Total contract liabilities
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(i) A contract liability arises in respect of the Company's service contracts as these provide customers with services to machinery in the future and is therefore a separate performance obligation. A contract liability is recognised for revenue relating to the service contracts at the time of the initial contract is taken up by the customer.
The following table shows how much of the revenue recognised in the current reporting period relates to brought forward contract liabilities.
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Arising from service contracts
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Amounts due within one year:
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Amounts due after more than one year:
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The movement in lease liabilities is as a result of cash payments of £341,043 and the interest expense as disclosed in note 10.
There are no short term or low value leases within the current financial period for which exemptions have been taken.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
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Credited to the Statement of Comprehensive Income
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Deferred tax asset at end of year
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The deferred tax asset is made up as follows:
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Accelerated capital allowances
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Temporary trading differences
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Authorised, allotted, called up and fully paid
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696,278 Ordinary shares of £1 each
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The Company has one class of ordinary shares which carry no right to fixed income.
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Profit and loss account
This reserve relates to the cumulative retained earnings less amounts distributed to shareholders.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
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At 31 March 2023 the Company had future minimum lease payments due under non-cancellable leases for each of the following periods:
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Land and buildings IFRS16
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Later than 1 year and not later than 5 years
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Later than 1 year and not later than 5 years
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"Land and buildings IFRS 16" includes all lease commitments associated with the rental of office, warehouse, and retail property. "Other IFRS 16" includes obligations associated with leases for cars.
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Related party transactions
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The Company has taken advantage of the exemption IAS 24 to not disclose transactions with wholly owned group entities.
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The immediate parent undertaking is Shimadzu Europa GmbH, a company registered in Germany.
The ultimate parent undertaking is Shimadzu Corporation, a company incorporated in Japan.
The largest and smallest group of undertakings for which group accounts for the year ending 31 March 2023 have been drawn up, is that headed by Shimadzu Corporation. The registered office address of the parent is 1, Nishinokyo-Kuwabaracho, Nakagyo-ku, Kyoto 604-8511, Japan. Copies of the group accounts are available from Shimadzu Corporation's website.
The directors do not consider there to be an ultimate controlling party.
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