Registered number:
FOR THE YEAR ENDED 31 DECEMBER 2023
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INVERTEK DRIVES LIMITED
COMPANY INFORMATION
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INVERTEK DRIVES LIMITED
CONTENTS
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INVERTEK DRIVES LIMITED
GROUP STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2023
The Directors of Invertek Drives are pleased to announce the following highlights for the financial year ended 31 December 2023:
As a result of very strong sales growth of 27% (which is on top of exceptionally strong prior year growth of 45%), and of further increases in the UK production efficiency and capacity, the Group yielded a pre-tax profit of £15.7m (16% of turnover). Due to a market adjustment and customer correction to stockholding levels, the Group’s order book, having been at unsuitably high levels throughout much of 2022 and 2023, finally returned by the year end to a more normal level representing the standard and desired customer lead time of 4 weeks. We continue to invest in our manufacturing and warehouse capacity, increasing it in line with current sales growth. During 2023 construction work began on a 2,750sq metre extension to our manufacturing and warehouse facilities which will increase output capacity by 60-70%. This is expected to be complete in Q2 2024. We are also on track for the construction of a dedicated standalone Innovation Centre and HQ within the next 12-24 months, which will enhance and optimise our R&D capability, including software technology to support our business growth and help us to attract and retain highly competitive engineering talent. Innovation remains at the heart of our business, serving as a key driver for future growth. This year, we proudly launched the new Optidrive Elevation Core VFD at Interlift, a major international elevator exposition held in Augsburg, Germany. The launch garnered significant international media attention and endorsements from leading industry figures and senior media editors. The VFD is due for release in Q2 2024, eventually replacing our current Optidrive Elevator VFD. Once again our Field Failure Rate was further reduced to our lowest ever, helping to increase our reputation for manufacturing reliable products and remaining a positive reason for our customer base to choose us. The Directors would like to place on record their thanks and appreciation to our dedicated workforce and acknowledge that this would not be possible without their valued support.
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INVERTEK DRIVES LIMITED
GROUP STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
Marketing Communications Activity
2023 saw Invertek Drives celebrate its 25th anniversary with a Welsh themed event in June incorporating the official opening of our world-class Application & Training Centre. In attendance were customers and sales partners from around the world, along with VIPs such as The Japanese Ambassador to the UK, His Excellency Mr Hajime Hayashi, and the then UK Foreign Secretary, the Right Honourable James Cleverly MP. We attended 6 trade shows throughout the year including countries such as Germany, Italy, Brazil and the USA. These shows continue to promote our excellent range of products to the market as well as continuing to grow our brand awareness globally. A key marketing campaign was focused on the Refrigeration sector where we continue to have an excellent product offering with products such as the E3, Eco and specifically the Coolvert drive. Variable speed compressor control in applications such as heat pumps is proving more and more popular with the demand for greater energy efficiencies. We continue to promote our products in this particular sector using social media, video content, application success stories, PR and focused trade shows. We increased our media and communications activity during the year, focused on developing increased media coverage, particularly in vertical markets, such as elevators, pumping, refrigeration, and ventilation. We also placed greater emphasis on our brand reputation and public affairs activity. Q4 of 2023 saw the launch of our next generation elevator product called Elevator Core. The official unveiling to the public took place at the Interlift trade show in Augsburg, Germany. The lead up to the trade show consisted of a multi-channel marketing campaign to generate interest and intrigue in this new drive. We were named Manufacturer of the Year 2023 at the Made in Wales Awards in Cardiff in November and have been shortlisted for the UK Manufacturer of the Year 2024.
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INVERTEK DRIVES LIMITED
GROUP STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
The risks facing the Group are constantly monitored and assessed. The Group’s business activities, financial condition and trading results could be affected by any or all of the following risks and uncertainties:
General business conditions and the economy The Directors are of the opinion that the principal risks facing the Group relate to the wider global economic conditions which influence raw material cost, pricing and the demand for products. A continuing short-term deterioration in economic conditions should not have a significant adverse impact on the business, but a continued downturn over a period of years would result in weaker profits in this area. The Group seeks to manage these risks by maintaining appropriate market segments, product range, supplier base and production systems. Supply of components The supply of components remained a challenge in the first half of 2023, with the largest financial impact coming from a shortage of power modules. However, by the second half of the year, this constraint eased, and no significant shortages of any components are present as we enter 2024. Information systems The Group is reliant upon several business systems which, if disrupted for any length of time due to damage or interruption from loss of power, failure of telecommunications, sabotage or vandalism could have an adverse effect on the efficiency running of the Group’s business. The board has put in place a number of contingency plans to manage the impact of such system failures, including during 2023 the installation of a secondary server in separate premises to the first. Innovation and development The VFD industry is extremely competitive and there is a risk that failure to keep up to date with latest technology and processes could result in the Group becoming uncompetitive, hence the Group continues to invest in research and development and product innovation. Competition The Group completes in the variable frequency drives market with other manufacturers and distributors on a global basis. The Group manages these risks through its emphasis on innovation, the quality of its products and customer service combined with a competitive pricing policy.
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INVERTEK DRIVES LIMITED
GROUP STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
Dependence on key members of management and staff
The Group is reliant on key members of the management team and specialist trained personnel in several areas. The loss of a number of key staff would have a material adverse effect on the business. Furthermore, should the Group fail to recruit and retain key staff this would impact on the future financial condition of the Group. Efforts have come to fruition during the year to identify the senior management personnel across the Company departments, to reduce reliance on the Directors. Regulatory compliance The Group is subject to regulatory compliance risk which could arise from a failure to comply with relevant law, regulation or codes of practice. Failure to comply would result in fines, cessation of some business activities or a public reprimand. The Group manages this risk through close monitoring of regulatory compliance. Health and safety In common with all manufacturing businesses the factory environment exposes the Group to health and safety risk. The Directors take the health and safety of its employees and any third party on its sites very seriously and are mindful of health and safety regulatory compliance. Consequently they have in place stringent policies and procedures which are appropriate communicated and monitored by a designated Health and Safety Officer. The Directors are pleased with the Group’s excellent health and safety record. Financial risk management The Group’s operations expose is to a variety of financial risks that include the effects of pricing risk, credit risk, currency risk, liquidity risk and interest rate risk. The Group has in place a risk management program that seeks to limit any adverse effects on the financial performance of the Group by monitoring levels of debt finance and the related finance costs. Pricing risk The Group operates in competitive markets and as such it monitors and manages its costs and continually reviews its pricing strategy which allows it to quote competitive prices. Credit risk The Group operates procedures that require appropriate credit checks on potential customers before sales are made. Credit insurance is taken out on all debtors, where available, and credit limits are set in accordance with that insurance. The amount of exposure to any uninsured individual counterparty is also subject to an appropriate limit, which is reassessed on an ongoing basis. Currency risk The Group’s principal currency exposures are to the Euro, US Dollar and Yuan. In particular the Group generates a substantial part of its profits from the Eurozone, and as such is exposed to the economic uncertainty of its member states. The Group continues to monitor potential exposures and risks, and consider effective risk management solutions. Balance sheet Euro translation exposure is currently hedged by maintaining a proportion of the Group’s debt in Euro. It is the Group’s policy not to hedge the translation of overseas earnings into Sterling.
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INVERTEK DRIVES LIMITED
GROUP STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
Liquidity risk
Liquidity risk relates to the Group’s having sufficient financing and borrowing to pay for the goods and services required to operate. The Group is financed by HSBC through term loans, stocking loans and overdraft facilities. The Group is also dependent on trade credit from suppliers. The Group actively maintains a mixture of long term and short term debt finance that is designed to ensure that it has sufficient available funds for operations and any planned expansions. Interest rate risk All of the Group’s borrowing facilities are linked to Euribor, Finance House Base Rate and Bank Base Rate. No financial instruments are used to hedge exposure to interest rate risk. The Group continues to review on a quarterly bases the appropriateness of interest rate hedging in the light of current and anticipated Money Market movements.
Certain financial key performance indicators have been provided in the Business review section of this report. Broadly, the balance sheet of the business remains strong and profits have increased over the period. The statement of comprehensive income, statement of financial position, statement of cash flows and associated notes (as detailed on the following pages) adequately show the development, performance and position of the Group over the course of the year.
The Group uses a suite of non-financial KPIs to monitor and measure success on a weekly basis which cover the whole business operating spectrum reflecting the changing needs of the business.
The Group has a policy to protect the environment wherever we operate or source materials. In addition, other non-financial areas of the business such as customer service, staff productivity and wellbeing indicators considered key to the business are also monitored using KPIs.
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INVERTEK DRIVES LIMITED
GROUP STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
Section 172(1) statement and Statements on engagement with employees, suppliers, customers and others
This Section acts as the Group’s Section 172(1) statement. In accordance with the Large and Medium sized Companies and Groups (Accounts and Reports) Regulations 2008 (as amended by the Companies (Miscellaneous Reporting) Regulations 2018), this section also constitutes the Group’s statements on engagement with, and having due regard to the interest of our employees, suppliers, customers and other key stakeholders. The Directors consider, both individually and together, that they have acted in the way they consider, in good faith, would be most likely to promote the success of the Group for the benefit of its members as a whole in the decisions taken during the year ended 31 December 2023. Decision-making at the Board All matters which are reserved for decision by the Directors are presented at Board meetings. Directors are briefed on any potential impacts and risks for our customers, employees and other stakeholders including our suppliers, the community and the environment and how they are to be managed. The Directors take these factors into account before making a final decision which together they believe is in the best interests of the Group. Stakeholders Our key stakeholders are our employees, who are the heart of our purposes and work in service of our customers. We are focused on responding to the needs of, and building long-term relationships with, our customers. Other key stakeholders are the producers and suppliers from whom we purchase goods and services, and the communities in which we operate. Employees Our team members are key to our success. We aim to be a responsible employer in our approach to the pay and benefits our team members receive, and the health, safety and well-being of our team members is one of our primary considerations in the way we do business. We seek to communicate fully with employees so that they understand and support the Group’s objectives and goals and how they can assist in the delivery of this, and to enable us to retain, develop and acquire the talent required to continue to grow and remain successful. Employees are informed of matters affecting them and the overall development of the Group, with communication being made through a new Intranet introduced in 2023 as well as as formal and informal meetings, or through information bulletins which seek to achieve a common awareness on the part of all employees of the financial and economic factors affecting the Group’s performance. The formal appraisal system in place is a two-way system which encourages employees to discuss business operations and invites their views and comments. Training and career development are actively encouraged and are available to all employees based on their ability and the requirements of the Group. The Group maintains a policy of equal opportunities and is committed to ensuring that all individuals are treated fairly, with respect and are valued. Policies for recruitment, selection, training, development and promotion are designed to ensure that no job applicant or employee receives less favourable treatment on the grounds of race, colour, nationality, ethnic or national origin, religion, political beliefs, sex or marital status.
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INVERTEK DRIVES LIMITED
GROUP STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
Customers and suppliers
Engagement with suppliers and customers is key to our success. We work closely with our supply chain and take the appropriate action, when necessary, to prevent involvement in modern slavery, corruption, bribery and breaches of competition law. The Board recognises the importance of building strong relationships with suppliers. Our suppliers provide products and services that helps us to execute our strategy. We source from across the world and have internal and external suppliers in many countries with whom we work collaboratively to build strong relationships. We have critical suppliers with which our procurement team is regularly in touch, seeking regular updates on their situation and any potential supply impacts. Supply chain risk from various factors including global conflict and COVID-19 now encompasses the global supply chain and impacts both products and services. Our critical suppliers have been able to deliver products and services to the extent that our broad infrastructure and operations have not been drastically affected. We recognise that developing a strong understanding of customers’ needs and putting this into our product development, our business and strategy is critical. Meeting the needs of customers takes many forms. This has included, for instance, providing drive solutions to help customers to significantly reduce energy costs and improve operating efficiency. Modern Slavery responsibilities We recognise that our biggest exposure to Modern Slavery is in our product supply chain. We believe that we are a low risk employer, but that there is always room for improvement and education. Our aim is to eliminate, as far as is possible, the risk of modern slavery within the supply chain and to trade both ethically and with integrity throughout our entire business, and we are committed to ensuring that there is no modern slavery or human trafficking in our supply chains or in any part of our business. Corporate Social Responsibility Invertek Drives is committed to conducting its business responsibly and sustainably, recognising our impact on the environment and the wider community. We injected more than £20 million directly into the local economy during the year through payroll and supply chains. We are proud to have achieved ISO 26000, underscoring our dedication to ethical practices across all areas of operation. This year, we continued to focus on reducing our environmental footprint through eco-design principles and energy-efficient product development, including the introduction of additional PV technology that will help us achieve Net Positive and Zero on some days, reducing our reliance on mains grid electricity. Additionally, we actively support local communities through charitable partnerships and fundraising. We believe that responsible business practices contribute not only to long-term success but also to building a more positive and sustainable future. Long-term sustainability We aim to make sufficient profits to sustain the Group’s commercial vitality. This is balanced against the needs of our customers, employees and other stakeholders and the community to ensure we are conducting all our business relationships with integrity. The long-term sustainability of the Group is at the forefront of decision-making, particularly in response to the challenging conditions caused by the COVID-19 pandemic and its continued potential for significant adverse impact on the global economy.
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INVERTEK DRIVES LIMITED
GROUP STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
Community and environment
The Directors recognise that engagement with local communities, local government, regulators and others is important to our physical presence and to foster positive relationships with them. We have increased our Public Affairs activity and we use a variety of mechanisms to engage with these stakeholders, including face-to-face meetings, conferences, facility tours and hosting groups for workshops and educational sessions. We use the media and social media to also engage with local and regional audiences. Updates on these mechanisms and initiatives for engagement are then used to inform decision making, where relevant. The Group takes all reasonable steps to minimise any detrimental impact that its operations may have on the environment. Directors routinely assess the impact of the Group’s operations on the community and environment and wider social responsibilities, and in particular how we comply with environmental legislation and pursue waste-saving opportunities and react promptly to local community concerns. It is now the Company’s policy that all new company cars must be fully electric, and free on-site charging is offered for all employee electric cars, whether company-owned or privately-owned. The majority of the electricity required for this is generated from the Company’s Solar PV equipment. Financial stakeholders The Group seeks to make information available to financial stakeholders, including our relationship bank, as part of information provided about and by the Group. Business conduct As the Board of Directors, our intention is to behave responsibly and ensure that the management operate the business in a responsible manner, operating within the high standards of business conduct and governance. We seek to conduct all business relationships with integrity and courtesy, and scrupulously to honour every business agreement.
This report was approved by the board and signed on its behalf.
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INVERTEK DRIVES LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 DECEMBER 2023
The Directors present their report and the financial statements for the year ended 31 December 2023.
The Directors are responsible for preparing the Group strategic report, the Directors' report and the consolidated 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 applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice), including Financial Reporting Standard 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland'. Under company law the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Company and the Group and of the profit or loss of the Group for that period.
In preparing these financial statements, the Directors are required to:
∙select suitable accounting policies for the Group's financial statements and then apply them consistently;
∙make judgments and accounting estimates that are reasonable and prudent;
∙state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements;
∙prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group 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 the Group 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 the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
The profit for the year, after taxation, amounted to £13,500,285 (2022 - £7,612,484).
No dividends have been paid during the year (2022: £nil).
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INVERTEK DRIVES LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
The Directors who served during the year were:
The strategy of the Group is to maintain recent growth and margin levels. Overall 2023 has been a fantastic period and the Group’s projections suggest that 2024 will be a year of consolidation with results broadly in line with 2023, before sharp growth resumes in 2025, aided by the substantial ongoing £10m investment in the UK manufacturing and distribution centre.
The Group is actively engaged in research and development activities through continuous new product development. The development of a new and dedicated Innovation Centre through 20204/2025 will support this.
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INVERTEK DRIVES LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
The reporting period that this submission covers is 1 January 2023 to 31 December 2023.
Reporting Methodology
We have followed the HM Government Environmental Reporting Guidelines: including streamlined energy and reporting guidance March 2019. We have used data collected specifically for the purpose of SECR reporting. We have used the 2023 UK Conversion Factors for Company Reporting. Organisational Boundary We have used the financial control approach, but as our organisation is a single entity, there are no other businesses to consider. Operational Scopes We have measured our Scope 1 and Scope 2 emissions and also included scope 3 emissions related to hire car/vehicle usage and employee usage of their own vehicles, where they reclaim fuel costs, together with voluntary reporting of air miles flown and associated emissions. We have also reported on the renewable energy generated and consumed on site. As per 2022, we have expanded our voluntary emissions reporting to include data associated with kilometres (km) travelled on commercial flights associated with business travel.
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INVERTEK DRIVES LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
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INVERTEK DRIVES LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
Intensity Ratio
The intensity ratio chosen was tCO2e per drive produced, as per previous reporting periods. For this reporting period a total of 375,834 drives were produced, an increase of 3,791 (1%) on the 2022 production level of 372,043 drives. As a result, the intensity metric for the period equated to 0.0003958 tCO2e (or 0.3958 kgCO2e) per drive produced in 2023. This intensity metric was initially chosen as it was deemed to be the best metric which could be utilised over time in order to reflect changes in our energy consumption, but also reflect changes in production volume. This metric is broadly comparable with the recognised intensity metric of tCO2e per total tonnes of production for the manufacturing industry sector. For the previous year, the equivalent metric equated to 0.0005552 tCO2e. As a result, 2023’s intensity metric reflects a 0.0001594 tCO2e (0.1594 kgCO2e) or 29% improvement year on year, which is commendable and supports the original decision to adopt this intensity metric. This is even more noteworthy on account that this improvement was achieved against the backdrop of a year-on-year improvement in 2022 of 21%. Energy Efficiency Actions As an BS EN 14001 registered company, we place environmental management at the heart of our business operations and operate an Environmental Policy. Whilst the Environmental Team meets to review the effectiveness of the Environmental Management System at six monthly intervals, an annual Environmental Management Review acts as the director attended forum to both review past performance and set new annual targets including electricity, water and gas consumption and company vehicle emissions. In 2023 we had intended to re-align our reporting to enable measurement and validation of energy efficiency measures implemented to be recorded in our SECR report; however, due to other operational priorities taking precedence, we have been forced to further delay this until 2024. In 2023 the first phase of a major investment to implement a further 175 kWp on-site solar Pv generation capacity was completed and made operational by end of July, resulting in 51,707 kWh of on-site electricity generation and consumption by year end. As a result of this level of on-site generated electricity consumption, we were able to displace 10.7 tCO2e of GHG emissions that would have arisen with imported electricity. As overall imported electricity consumption increased in 2023, there was a corresponding rise in resultant CO2e emissions. Conversely the reduction in gas consumption at the site, predominantly attributed to periods of non-production during the year, supplemented by heating degree day reduction in 2023, resulted in a dramatic fall in Scope 1 emissions associated with combustion of gas. By the end of November 2023 a further 184.5 kWp of solar Pv capacity was installed, however not yet commissioned. This is expected to be commissioned in early 2024 with the majority of additional generation being consumed on site. The total potential capacity of solar Pv approved by Scottish Power Energy Networks (SPEN) for grid connection at the site amounts to 570 kWp. A further 184.5 kWp expansion of solar Pv generation capacity on site during 2024 has been submitted for Capex approval. On the basis that this additional capacity is added, the total site capacity will reach 544 kWp against the 570 kWp limit prescribed. Redevelopment of Unit 3, as part of which of upgrading to insulation levels was completed in November 2023. Verification of reductions in gas consumption resulting from the improvement in thermal performance will be undertaken in 2024. Expansion to the production and warehouse building progressed significantly in 2023 and is on track to complete in February 2024 and production to commense shortly thereafter.
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INVERTEK DRIVES LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
By the end of 2023, all bar two company cars have been migrated to electric vehicles (EVs), with the remaining two petrol hybrids. A petrol on site van has also been replaced with an electric van. Offsite EV charging increased year on year. This is reflected in an increase in offsite/public charging network EV charging to 16,860 kWh 13,041 kWh (13,041 kWh in 2022), an increase of 29% year on year. In contrast, during 202 combined petrol and diesel kWh equivalent usage reduced to 101,591 kWh from 118,426 kWh in 2022, a decrease of 14%. The continued migration of company vehicles to electric (EV) variants is reflected in a 8.54 tCO2e reduction in transport fuel combustion emissions compared to 2022.
Whilst during 2023 the site underwent redevelopment to Unit 3 and additional production/warehouse construction, including the expansion of on-site electricity generation via solar Pv to circa 360 kWp, for 2024 there are a range of additional initiatives targeted to combat GHG emissions; namely: - Implementation of additional 184.5 kWp on site solar Pv electricity generation capacity with the majority of generation to be consumed on site - Implementation of plastic compactors within production, warehouse and service centre is expected to dramatically reduce waste volumes at the site - Supply chain procurement 3 year project continues (Year 2) – under a project being led by purchasing, the aim is to source more parts required in our manufacturing process from Europe rather than China. This will reduce air/sea miles associated with goods travelling from China and pallets are more likely to be euro pallets which we can reuse for the dispatch of finished goods - The building extension on Production and Warehouse due to complete in Q1 of 2024, will reduce the requirement for van travel to the Service Centre
Disclosure of principal risks and uncertainties, financial risk management policies, and engagement with employees, suppliers, customers and others are included in the Strategic Report.
There have been no significant events affecting the Group since the year end.
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INVERTEK DRIVES LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
The auditors, WR Partners, 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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INVERTEK DRIVES LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF INVERTEK DRIVES LIMITED
We have audited the financial statements of Invertek Drives Limited (the 'parent Company') and its subsidiaries (the 'Group') for the year ended 31 December 2023, which comprise the Group Statement of comprehensive income, the Group and Company Statements of financial position, the Group Statement of cash flows, the Group and Company Statement of changes in equity and the related notes, 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).
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditors' responsibilities for the audit of the financial statements section of our report. We are independent of the Group in accordance with the ethical requirements that are relevant to our audit of the financial statements in the United Kingdom, including the Financial Reporting Council'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.
In auditing the financial statements, we have concluded that the Directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the Group's or the parent Company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the Directors with respect to going concern are described in the relevant sections of this report.
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INVERTEK DRIVES LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF INVERTEK DRIVES LIMITED (CONTINUED)
The other information comprises the information included in the Annual Report other than the financial statements and our Auditors' report thereon. The Directors are responsible for the other information contained within the Annual Report. 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.
In our opinion, based on the work undertaken in the course of the audit:
∙the information given in the Group strategic report and the Directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
∙the Group strategic report and the Directors' report have been prepared in accordance with applicable legal requirements.
In the light of the knowledge and understanding of the Group and the parent Company and its environment obtained in the course of the audit, we have not identified material misstatements in the Group strategic report or the Directors' report.
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INVERTEK DRIVES LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF INVERTEK DRIVES LIMITED (CONTINUED)
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 Group 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:
The audit team obtained an understanding of the legal and regulatory frameworks that are applicable to the Company and the Group and determined that the most significant are those that relate to the reporting framework (FRS102 and the Companies Act 2006), the relevant tax compliance regulations, employment law, Health and Safety Regulations and the EU General Data Protection Regulation (GDPR). We understood how the Company and the Group are complying with these frameworks by making enquiries of management and those responsible for legal and compliance procedures. We also reviewed board minutes to identify any recorded instances of irregularity or non compliance that might have a material impact on the financial statements. We assessed the susceptibility of the Company and Group's financial statements to material misstatement, including how fraud might occur by meeting with key management to understand where they considered there was susceptibility to fraud. Based on our understanding our procedures involved enquiries of management and those charged with governance, manual journal entry testing, cashbook reviews for large and unusual items and the challenge of significant accounting estimates used in preparing the financial statements.
Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading to a material misstatement in the financial statements or non-compliance with regulation. This risk increases the more that compliance with a law or regulation is removed from the events and transactions reflected in the financial statements, as we will be less likely to become aware of instances of non-compliance. The risk is also greater regarding irregularities occurring due to fraud rather than error, as fraud involves intentional concealment, forgery, collusion, omission or misrepresentation.
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INVERTEK DRIVES LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF INVERTEK DRIVES LIMITED (CONTINUED)
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.
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.
for and on behalf of
Chartered Accountants
Statutory Auditors
Hafren House
10 St Giles Business Park
Powys
SY16 3AJ
Date:
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INVERTEK DRIVES LIMITED
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2023
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INVERTEK DRIVES LIMITED
REGISTERED NUMBER: 03504834
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2023
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INVERTEK DRIVES LIMITED
REGISTERED NUMBER: 03504834
CONSOLIDATED STATEMENT OF FINANCIAL POSITION (CONTINUED)
AS AT 31 DECEMBER 2023
The financial statements were approved and authorised for issue by the board and were signed on its behalf by:
The notes on pages 29 to 53 form part of these financial statements.
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INVERTEK DRIVES LIMITED
REGISTERED NUMBER: 03504834
COMPANY STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2023
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INVERTEK DRIVES LIMITED
REGISTERED NUMBER: 03504834
COMPANY STATEMENT OF FINANCIAL POSITION (CONTINUED)
AS AT 31 DECEMBER 2023
The financial statements were approved and authorised for issue by the board and were signed on its behalf by:
The notes on pages 29 to 53 form part of these financial statements.
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INVERTEK DRIVES LIMITED
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2023
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INVERTEK DRIVES LIMITED
COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2023
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INVERTEK DRIVES LIMITED
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2023
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INVERTEK DRIVES LIMITED
CONSOLIDATED STATEMENT OF CASH FLOWS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
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INVERTEK DRIVES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
Invertek Drives Limited ('the Company) and its subsidiaries (together 'the Group') design, manufacture and market electronic variable speed drives for electronic motor control in the UK, Europe and Asia.
The Company is a private company limited by shares and is incorporated in England and Wales. The address of its registered office is noted on the company information page.
2.Accounting policies
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 102, the Financial Reporting Standard applicable in the UK and the Republic of Ireland and the Companies Act 2006.
The preparation of financial statements in compliance with FRS 102 requires the use of certain critical accounting estimates. It also requires Group management to exercise judgment in applying the Group's accounting policies (see note 3).
The Company has taken advantage of the exemption allowed under section 408 of the Companies Act 2006 and has not presented its own Statement of comprehensive income in these financial statements.
The following principal accounting policies have been applied:
The consolidated financial statements present the results of the Company and its own subsidiaries ("the Group") as if they form a single entity. Intercompany transactions and balances between group companies are therefore eliminated in full.
The consolidated financial statements incorporate the results of business combinations using the purchase method. In the Balance sheet, the acquiree's identifiable assets, liabilities and contingent liabilities are initially recognised at their fair values at the acquisition date. The results of acquired operations are included in the Consolidated statement of comprehensive income from the date on which control is obtained. They are deconsolidated from the date control ceases. An associate is an entity, being neither a subsidiary nor a joint venture, in which the group holds a long-term interest and where the group has significant influence. The group considers that it has significant influence where it has the power to participate in the financial and operating decisions of the associate. The financial results of the associates are accounted for using the equity method of accounting.
After making enquires, the Directors have a reasonable expectation that the Company and the Group have adequate resources to continue in operational existence for the foreseeable future. The Company and Group therefore continues to adopt the going concern basis in preparing its financial statements.
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INVERTEK DRIVES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
2.Accounting policies (continued)
Functional and presentation currency
Transactions and balances
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INVERTEK DRIVES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
2.Accounting policies (continued)
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INVERTEK DRIVES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
2.Accounting policies (continued)
If it is not possible to distinguish between the research phase and the development phase of an internal project, the expenditure is treated as if it were all incurred in the research phase only.
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INVERTEK DRIVES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
2.Accounting policies (continued)
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INVERTEK DRIVES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
2.Accounting policies (continued)
Goodwill
Other intangible assets
At each reporting date the company assesses whether there is any indication of impairment. If such indication exists, the recoverable amount of the asset is determined which is the higher of its fair value less costs to sell and its value in use. An impairment loss is recognised where the carrying amount exceeds the recoverable amount.
All intangible assets are considered to have a finite useful life. If a reliable estimate of the useful life cannot be made, the useful life shall not exceed ten years.
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INVERTEK DRIVES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
2.Accounting policies (continued)
Land is not depreciated. Depreciation on other assets 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:
The assets' residual values, useful lives and depreciation methods are reviewed, and adjusted prospectively if appropriate, or if there is an indication of a significant change since the last reporting date.
Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised in profit or loss.
In the consolidated accounts, interests in associated undertakings are accounted for using the equity method of accounting. Under this method an equity investment is initially recognised at the transaction price (including transaction costs) and is subsequently adjusted to reflect the investors share of the profit or loss, other comprehensive income and equity of the associate. The Consolidated statement of comprehensive income includes the Group's share of the operating results, interest, pre-tax results and attributable taxation of such undertakings applying accounting policies consistent with those of the Group. In the Consolidated statement of financial position, the interests in associated undertakings are shown as the Group's share of the identifiable net assets, including any unamortised premium paid on acquisition. Any premium on acquisition is dealt with in accordance with the goodwill policy.
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INVERTEK DRIVES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
2.Accounting policies (continued)
Provisions are charged as an expense to profit or loss in the year that the Group 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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INVERTEK DRIVES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
2.Accounting policies (continued)
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INVERTEK DRIVES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. In the opinion of the Directors there are no estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities within the next financial year.
The whole of the turnover is attributable to the sale of variable speed drives for electronic motor control.
Analysis of turnover by country of destination:
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INVERTEK DRIVES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
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INVERTEK DRIVES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
Page 40
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INVERTEK DRIVES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
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INVERTEK DRIVES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
11.Taxation (continued)
There were no factors that may affect future tax charges.
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INVERTEK DRIVES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
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INVERTEK DRIVES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
12.Intangible assets (continued)
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INVERTEK DRIVES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
Page 45
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INVERTEK DRIVES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
Page 46
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INVERTEK DRIVES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
Page 47
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INVERTEK DRIVES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
Page 48
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INVERTEK DRIVES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
Page 49
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INVERTEK DRIVES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
Page 50
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INVERTEK DRIVES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
21.Deferred taxation (continued)
Share premium account
Profit and loss account
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INVERTEK DRIVES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
The Company operates a defined contributions pension scheme. The assets of the scheme are held separately from those of the Company in an independently administered fund. The pension cost charge represents contributions payable by the Company to the fund and amounted to £283,310 (2022: £216,506). At the year end contributions totaling £5,325 (2022: £58,853) were payable and are included in other creditors.
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INVERTEK DRIVES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
Invertek Drives Limited is under the control of Sumitomo Heavy Industries Limited, who own 100% of the share capital in the Company.
Page 53
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