Company Registration No. 02935536 (England and Wales)
FORMEL D (UK) LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
FORMEL D (UK) LIMITED
COMPANY INFORMATION
Directors
Dr T Klukas
Mr T J Revillard
Company number
02935536
Registered office
38 Cygnet Court
Timothy's Bridge Road
Stratford upon Avon
CV37 9NW
Auditor
Lopian Gross Barnett & Co
1st Floor Cloister House
New Bailey Street
Salford
M35FS
Business address
38 Cygnet Court
Timothy's Bridge Road
Stratford upon Avon
CV37 9NW
FORMEL D (UK) LIMITED
CONTENTS
Page
Strategic report
1 - 3
Directors' report
4 - 5
Directors' responsibilities statement
6
Independent auditor's report to the members of Formel D (UK) Limited
7 - 9
Profit and loss account
10
Statement of comprehensive income
11
Balance sheet
12
Statement of changes in equity
13
Notes to the financial statements
14 - 24
FORMEL D (UK) LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2023
- 1 -

The members present their report and the audited financial statements for the year ended 31 December 2023.

Review of the business

The principal activities of the company during the year continued to be that of supply of technical expertise and documentation, quality & parts management and rework & retrofit services to the motor industry.

 

Formel D UK has been working really hard since COVID and has managed to keep much of its customer base from previous years, maintaining previous contract (as per JLR contract), although the changes in turnover and net profit from 2021 to 2022 show the first year of recovery. Furthermore, the results in turnover and net profit for 2023 has become one of the best years for our company, with a better EBITDA over 280% improvement compared with 2022, due all the reorganizations at each department (operational and non-operational), all diversification strategy, cost, payroll contracts from 80 hours warranty to zero hours contract and countermeasures taken during 2023. Because of the topics mentioned, there have been further additions to the client portfolio, which bode well for the future growth in the UK, once business returns to normality.

 

All the measurements will keep the organization in a strong position for more expansion over the coming years as we aim to continue to target a range of new business opportunities, with new services and attracting new customers.

 

Plans were made to develop new business within the Tier 1 organizations based within the UK, and also those based overseas delivering to UK based manufacturing organizations.

 

Additionally there is a focus to move into other clients, other industries, who are not manufacturers of traditional ‘Automotive’ ICE vehicles (Internal Combustion Engine), and start to also focus on other areas outside of the regular ICE automotive business. Again, although hampered by all macro and micro economic effects, the initial successes have identified new opportunities for the future.

 

We are also endeavouring to expand our regional support focusing in other areas of the UK where we have not traditionally been located such as Northern Ireland, South Wales and North Yorkshire to mention a few. Initial successes in these new regions towards the end of 2023 is building confidence for further expansion. In that sense, we are building a sales team based in those areas to be close to our customers and extend our portfolio.

 

Further plans are still focused on developing further sectors of the Formel D global service portfolio. This includes placing additional focus on product development and aftersales services, along with the ongoing expansion of our production support services portfolio.

FORMEL D (UK) LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 2 -
Principal risks and uncertainties

Clearly the risks to the UK business is not anymore the topic related with Brexit as a major concern for the manufacturing industry within the UK, particularly the Automotive sector. The sector is experiencing overall growth, with January 2024 seeing an 8.2% increase in new car registrations compared to January 2023. It is quite notable that electric vehicles (EVs) are driving this growth. Battery Electric Vehicles (BEVs) saw a 21% year-on-year increase in registrations, and Plug-in Hybrid Electric Vehicles (PHEVs) increased by 31.1% and the expectations that the Country is targeting is the Zero Emission Vehicle (ZEV) mandate, which requires manufacturers to sell a certain percentage of ZEVs in 2024.

 

Certainly from a vehicle manufacturing and parts provision perspective there is clearly an ongoing requirement for the services provided by Formel D. To this end we will continue to strive to retain and expand existing client business through ongoing and additional service offerings and also to generate new clients utilizing our references throughout the UK and globally.

 

A possible issue that we could confront during 2024 is that BEV growth has slowed compared to previous years, potentially due to the high cost of these vehicles and limited government support. In addition, the concern about the wider UK economy and its potential impact on consumer spending, potentially leading to weakened demand for new cars. Overall, the UK automotive sector in 2024 shows signs of growth, particularly in the EV segment. However, concerns remain regarding economic factors, potential slowdowns in EV growth, and ongoing adjustments within the industry. Currently our major real risk could be a knock on effect to the Tier 1 and OEM customers of Formel D. It is important to mention that chip shortage remains a concern for the UK automation industry. While the situation is slowly improving, companies are still facing challenges due to ongoing supply chain disruptions and limited domestic chip production.

 

Formel D (UK) Ltd is fully committed to continuing to offer our customers the highest possible standards of service and support. Helping our customers and partners take advantage of our services in times of huge transformation is core to our business.

 

We have crossed an unprecedented period

with COVID-19 pandemic impacted all areas of our business, society and community for 2 years, the impact of chip shortages and the war in Ukraine. However, Our first priority has been to working with our customers, partners and our own organization throughout the UK to keep our teams safe and secure, and able to function throughout these difficult times.

 

Our dedication remains unwavering as we persist in implementing new measures to safeguard the well-being of our employees, clients, and partners. We are committed to ensuring everyone's safety and security until such measures are no longer necessary. Our efforts will not cease; we will continue to support our client base diligently, ready to provide exceptional service whenever and wherever needed.

 

The enduring partnerships forged over the years, coupled with patience and empathy, are guiding us through these challenging times. Formel D remains steadfast in meeting all requirements. With a skilled and adaptable UK team, we are poised for the anticipated business recovery expected to reach a semblance of normalcy by mid-2024. This recovery will be fueled by both the expansion of our existing operations and the pursuit of new business opportunities.

Key performance indicators

KPIs are widely used by the business to aid strategic and tactical decision making. A volatile economic climate makes the accuracy, interpretation and use of KPIs even more critical to the successful running of the business.

FORMEL D (UK) LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 3 -

On behalf of the board

Dr T Klukas
Director
26 March 2024
FORMEL D (UK) LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 DECEMBER 2023
- 4 -

The directors present their annual report and financial statements for the year ended 31 December 2023.

Principal activities
The principal activity of the company continued to be that of supply of technical expertise and documentation, retrofit and rework services to the motor industry.
Results and dividends

The results for the year are set out on page 10.

Ordinary dividends were paid amounting to £1,300,000. The directors do not recommend payment of a further dividend.

Directors

The directors who held office during the year and up to the date of signature of the financial statements were as follows:

Mr N Davies
(Resigned 5 January 2023)
Dr T Klukas
Mr T J Revillard
Disabled persons

Applications for employment by disabled persons are always fully considered, bearing in mind the aptitudes of the applicant concerned. In the event of members of staff becoming disabled, every effort is made to ensure that their employment within the company continues and that the appropriate training is arranged. It is the policy of the company that the training, career development and promotion of disabled persons should, as far as possible, be identical to that of other employees.

Employee involvement

The company's policy is to consult and discuss with employees, through meetings, matters likely to affect employees' interests.

Information about matters of concern to employees is given through information bulletins and reports which seek to achieve a common awareness on the part of all employees of the financial and economic factors affecting the company's performance.

Auditor

Lopian Gross Barnett & Co were appointed as auditor to the company and in accordance with section 485 of the Companies Act 2006.

Statement of disclosure to auditor

So far as each person who was a director at the date of approving this report is aware, there is no relevant audit information of which the company’s auditor is unaware. Additionally, the directors individually have taken all the necessary steps that they ought to have taken as directors in order to make themselves aware of all relevant audit information and to establish that the company’s auditor is aware of that information.

Medium-sized companies exemption

This report has been prepared in accordance with the provisions applicable to companies entitled to the medium-sized companies exemption.

FORMEL D (UK) LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 5 -
On behalf of the board
Dr T Klukas
Mr T J Revillard
Director
Director
26 March 2024
FORMEL D (UK) LIMITED
STATEMENT OF DIRECTORS' RESPONSIBILITIES IN RESPECT OF THE STRATEGIC REPORT, THE DIRECTORS' REPORT AND THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
- 6 -

The directors are responsible for preparing the Strategic Report, the Directors’ Report and the financial statements in accordance with applicable law and regulations.

Company law requires the directors to prepare financial statements for each financial year. Under that law they have elected to prepare the financial statements in accordance with UK accounting standards and applicable law (UK Generally Accepted Accounting Practice), including FRS 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 of the profit or loss of the company for that period. In preparing these financial statements, the directors are required to:

The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company’s transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are responsible for such internal control as they determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error, and have general responsibility for taking such steps as are reasonably open to them to safeguard the assets of the company and to prevent and detect fraud and other irregularities.

 

 

 

FORMEL D (UK) LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF FORMEL D (UK) LIMITED
- 7 -
Opinion

We have audited the financial statements of Formel D (UK) Limited (“the company”) for the year ended 31 December 2023 which comprise the Profit and Loss account, Statement of Comprehensive Income, Balance Sheet, Statement of changes in Equity and related notes, including the accounting policies in note 1.

In our opinion the financial statements:

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (“ISAs (UK)”) and applicable law. Our responsibilities are described below. We have fulfilled our ethical responsibilities under, and are independent of the company in accordance with, UK ethical requirements including the FRC Ethical Standard. We believe that the audit evidence we have obtained is a sufficient and appropriate basis for our opinion.

Going Concern

In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.

 

Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.

 

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

Other information

The directors are responsible for the other information, which comprises the strategic report and the directors’ report. Our opinion on the financial statements does not cover the other information and, accordingly, we do not express an audit opinion or, except as explicitly stated below, any form of assurance conclusion thereon.

Our responsibility is to read the other information and, in doing so, consider whether, based on our financial statements audit work, the information therein is materially misstated or inconsistent with the financial statements or our audit knowledge. Based solely on that work:

 

Opinions on other matters prescribed by the Companies Act 2006

In our opinion, based on the work undertaken in the course of our audit:

FORMEL D (UK) LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF FORMEL D (UK) LIMITED
- 8 -
Matters on which we are required to report by exception

In the light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identified material misstatements in the strategic report or the directors' report.

 

We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:

Responsibilities of directors

As explained more fully in the directors' responsibilities statement, 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.

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.

FORMEL D (UK) LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF FORMEL D (UK) LIMITED
- 9 -

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.

 

 

 

 

 

 

 

 

 

Due to the inherent limitations of an audit, there is an unavoidable risk that we may not have detected some material misstatements in the financial statements, even though we have properly planned and performed our audit in accordance with auditing standards. For example, as with any audit, there remained a higher risk of non-detection of irregularities, as these may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal controls. We are not responsible for preventing fraud or non-compliance with laws and regulations and cannot be expected to detect all fraud and non-compliance with laws and regulations.

A further description of our responsibilities is available on the Financial Reporting Council’s website at: https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.

The purpose of our audit work and to whom we owe our responsibilities

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.

Jonathan Brodie FCA
Senior Statutory Auditor
For and on behalf of Lopian Gross Barnett & Co
12 April 2024
Chartered Accountants
Statutory Auditor
1st Floor Cloister House
New Bailey Street
Salford
M35FS
FORMEL D (UK) LIMITED
PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 31 DECEMBER 2023
- 10 -
2023
2022
Notes
£
£
Turnover
3
12,170,002
15,329,118
Cost of sales
(9,498,139)
(12,934,183)
Gross profit
2,671,863
2,394,935
Administrative expenses
(1,916,615)
(2,321,536)
Other operating income
19,008
28,511
Profit before taxation
774,256
101,910
Tax on profit
7
(184,649)
(15,223)
Profit for the financial year
589,607
86,687

The profit and loss account has been prepared on the basis that all operations are continuing operations.

The accompanying notes form an integral part of financial statements.
FORMEL D (UK) LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2023
- 11 -
2023
2022
£
£
Profit for the year
589,607
86,687
Other comprehensive income
-
-
Total comprehensive income for the year
589,607
86,687
FORMEL D (UK) LIMITED
BALANCE SHEET
AS AT 31 DECEMBER 2023
31 December 2023
- 12 -
2023
2022
Notes
£
£
£
£
Fixed assets
Intangible assets
9
9,360
29,305
Tangible assets
10
48,530
58,777
57,890
88,082
Current assets
Debtors
11
4,051,780
5,314,862
Cash at bank and in hand
1,995,287
2,309,672
6,047,067
7,624,534
Creditors: amounts falling due within one year
12
(2,700,314)
(3,597,580)
Net current assets
3,346,753
4,026,954
Total assets less current liabilities
3,404,643
4,115,036
Capital and reserves
Called up share capital
14
19,176
19,176
Profit and loss reserves
3,385,467
4,095,860
Shareholders' funds
3,404,643
4,115,036
The accompanying notes form an integral part of financial statements.
The financial statements were approved by the board of directors and authorised for issue on 26 March 2024 and are signed on its behalf by:
Dr T Klukas
Mr T J Revillard
Director
Director
Company Registration No. 02935536
FORMEL D (UK) LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2023
- 13 -
Share capital
Profit and loss reserves
Total
Notes
£
£
£
Balance at 1 January 2022
19,176
4,009,173
4,028,349
Year ended 31 December 2022:
Profit and total comprehensive income
-
86,687
86,687
Balance at 31 December 2022
19,176
4,095,860
4,115,036
Year ended 31 December 2023:
Profit and total comprehensive income
-
589,607
589,607
Dividends
8
-
(1,300,000)
(1,300,000)
Balance at 31 December 2023
19,176
3,385,467
3,404,643
FORMEL D (UK) LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
- 14 -
1
Accounting policies
Company information

Formel D (UK) Limited is a private company limited by shares incorporated in England and Wales. The registered office is 38 Cygnet Court, Timothy's Bridge Road, Stratford upon Avon, CV37 9NW. The registered number is 02935536.

1.1
Accounting convention

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

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

The financial statements have been prepared under the historical cost convention, modified to include the revaluation of freehold properties and to include investment properties and certain financial instruments at fair value. The principal accounting policies adopted are set out below.

 

This company is a qualifying entity for the purposes of FRS 102, being a member of a group where the parent of that group prepares publicly available consolidated financial statements, including this company, which are intended to give a true and fair view of the assets, liabilities, financial position and profit or loss of the group. The company has therefore taken advantage of exemptions from the following disclosure requirements:

 

 

The financial statements of the company are consolidated in the financial statements of Formel D GmbH. These consolidated financial statements are available from its registered office, Schanzenstraße 6-20, Gebäude 2.08, DE-51063 Cologne

1.2
Going concern

Atruet the time of approving the financial statements, the directors have a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future. Thus the directors continue to adopt the going concern basis of accounting in preparing the financial statements.

1.3
Turnover

Turnover is recognised at the fair value of the consideration received or receivable for goods and services provided in the normal course of business, and is shown net of VAT and other sales related taxes. The fair value of consideration takes into account trade discounts, settlement discounts and volume rebates.

 

When cash inflows are deferred and represent a financing arrangement, the fair value of the consideration is the present value of the future receipts. The difference between the fair value of the consideration and the nominal amount received is recognised as interest income.

Revenue from contracts for the provision of professional services is recognised by reference to the stage of completion when the stage of completion, costs incurred and costs to complete can be estimated reliably. The stage of completion is calculated by comparing costs incurred, mainly in relation to contractual hourly staff rates and materials, as a proportion of total costs. Where the outcome cannot be estimated reliably, revenue is recognised only to the extent of the expenses recognised that it is probable will be recovered.

FORMEL D (UK) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 15 -
1.4
Intangible fixed assets other than goodwill

Intangible assets acquired separately from a business are recognised at cost and are subsequently measured at cost less accumulated amortisation and accumulated impairment losses.

 

Intangible assets acquired on business combinations are recognised separately from goodwill at the acquisition date where it is probable that the expected future economic benefits that are attributable to the asset will flow to the entity and the fair value of the asset can be measured reliably; the intangible asset arises from contractual or other legal rights; and the intangible asset is separable from the entity.

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

Class
Amortisation method
Patents
44% straight-line
1.5
Tangible fixed assets

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

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

Class
Depreciation method
Plant and machinery
8%-33% straight-line
1.6
Impairment of financial assets

Financial assets, other than those held at fair value through profit and loss, are assessed for indicators of impairment at each reporting end date.

 

Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected. If an asset is impaired, the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset’s original effective interest rate. The impairment loss is recognised in profit or loss.

 

If there is a decrease in the impairment loss arising from an event occurring after the impairment was recognised, the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been, had the impairment not previously been recognised. The impairment reversal is recognised in profit or loss.

FORMEL D (UK) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 16 -
1.7
Financial instruments
Basic financial assets

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

Other financial assets

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

Impairment of financial assets

Financial assets, other than those held at fair value through profit and loss, are assessed for indicators of impairment at each reporting end date.

 

Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected. If an asset is impaired, the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset’s original effective interest rate. The impairment loss is recognised in profit or loss.

 

If there is a decrease in the impairment loss arising from an event occurring after the impairment was recognised, the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been, had the impairment not previously been recognised. The impairment reversal is recognised in profit or loss.

Derecognition of financial assets

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

Basic financial liabilities

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

 

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

 

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

FORMEL D (UK) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 17 -
Other financial liabilities

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

 

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

Derecognition of financial liabilities

Financial liabilities are derecognised when the company’s contractual obligations expire or are discharged or cancelled.

1.8
Equity instruments

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

1.9
Derivatives

Derivatives are initially recognised at fair value at the date a derivative contract is entered into and are subsequently remeasured to fair value at each reporting end date. The resulting gain or loss is recognised in profit or loss immediately unless the derivative is designated and effective as a hedging instrument, in which event the timing of the recognition in profit or loss depends on the nature of the hedge relationship.

 

A derivative with a positive fair value is recognised as a financial asset, whereas a derivative with a negative fair value is recognised as a financial liability.

1.10
Taxation

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 profit and loss account 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 reporting end date.

FORMEL D (UK) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 18 -
Deferred tax

Deferred tax liabilities are generally recognised for all timing differences and deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Such assets and liabilities are not recognised if the timing difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.

 

The carrying amount of deferred tax assets is reviewed at each reporting end 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. Deferred tax is charged or credited in the profit and loss account, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset when the company has a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.

1.11
Employee benefits

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

 

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

 

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

 

1.12
Retirement benefits

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

1.13
Leases

Rental income from operating leases is recognised on a straight line basis over the term of the relevant lease. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised on a straight line basis over the lease term.

1.14
Foreign exchange

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

FORMEL D (UK) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 19 -
2
Judgements and key sources of estimation uncertainty

In the application of the company’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates. Significant estimates are those that have a significant risk of resulting in a material adjustment to the carrying amount of assets and liabilities within the next year.

 

Significant estimates

 

Impairment of bad debts: FRS 102 requires the trade receivables to be assessed for impairment at each balance sheet date, and an impairment provision is required if the expected cash flow is less than the carrying amount. The directors follow a detailed seven step process regarding the recoverability of debtors and raise provisions as and when necessary. However, the directors acknowledge that there is a degree of estimation uncertainty in that whilst a customer may insist they will pay outstanding balances, this may not be sufficient assurance that the balance will be recovered.

 

Stage of completion of ongoing projects: FRS 102 requires revenue for services ongoing at the end of the reporting period to be recognised according to the stage of completion of the project. This requires the use of estimates to assess the percentage of completion of ongoing projects. The directors follow detailed procedures in order to calculate the value of those projects which are not complete, however uncertainty can arise since the stage of project completion is not always clear so judgements have to be made.

 

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.

3
Turnover

An analysis of the company's turnover is as follows:

2023
2022
£
£
Turnover analysed by class of business
Supply of technical expertise and services to the motor industry
12,170,002
15,329,118
2023
2022
£
£
Turnover analysed by geographical market
UK
7,111,573
10,580,776
Rest of the world
5,058,429
4,748,342
12,170,002
15,329,118
FORMEL D (UK) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 20 -
4
Operating profit
2023
2022
Operating profit for the year is stated after charging:
£
£
Exchange losses
12,705
17,531
Fees payable to the company's auditor for the audit of the company's financial statements
27,113
47,500
Depreciation of owned tangible fixed assets
19,860
14,509
Loss on disposal of tangible fixed assets
7,728
-
Amortisation of intangible assets
11,124
10,770
5
Employees

The average monthly number of persons (including directors) employed by the company during the year was:

2023
2022
Number
Number
Administration
306
289

Their aggregate remuneration comprised:

2023
2022
£
£
Wages and salaries
5,266,557
5,242,880
Social security costs
463,151
473,122
Pension costs
93,595
110,845
5,823,303
5,826,847
6
Directors' remuneration
2023
2022
£
£
Remuneration for qualifying services
87,975
130,246
7
Taxation
2023
2022
£
£
Current tax
UK corporation tax on profits for the current period
184,649
15,223
FORMEL D (UK) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
7
Taxation
(Continued)
- 21 -

The actual charge for the year can be reconciled to the expected charge for the year based on the profit or loss and the standard rate of tax as follows:

2023
2022
£
£
Profit before taxation
774,256
101,910
Expected tax charge based on the standard rate of corporation tax in the UK of 23.50% (2022: 19.00%)
181,950
19,363
Tax effect of expenses that are not deductible in determining taxable profit
2,050
381
Permanent capital allowances in excess of depreciation
(1,965)
-
0
Depreciation on assets not qualifying for tax allowances
-
0
2,757
Amortisation on assets not qualifying for tax allowances
2,614
2,046
Net capital allowances
-
0
(9,324)
Taxation charge for the year
184,649
15,223
8
Dividends
2023
2022
£
£
Final paid
1,300,000
-
0
9
Intangible fixed assets
Intangible fixed assets
£
Cost
At 1 January 2023
60,770
Disposals
(10,585)
At 31 December 2023
50,185
Amortisation and impairment
At 1 January 2023
31,465
Amortisation charged for the year
11,124
Disposals
(1,764)
At 31 December 2023
40,825
Carrying amount
At 31 December 2023
9,360
At 31 December 2022
29,305
FORMEL D (UK) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 22 -
10
Tangible fixed assets
Plant and machinery
£
Cost
At 1 January 2023
605,047
Additions
15,720
Disposals
(6,272)
At 31 December 2023
614,495
Depreciation and impairment
At 1 January 2023
546,270
Depreciation charged in the year
19,860
Eliminated in respect of disposals
(165)
At 31 December 2023
565,965
Carrying amount
At 31 December 2023
48,530
At 31 December 2022
58,777
11
Debtors
2023
2022
Amounts falling due within one year:
£
£
Trade debtors
2,966,654
3,953,158
Corporation tax recoverable
63,789
63,789
Amounts owed by group undertakings
4,374
79,145
Other debtors
17,531
101,392
Prepayments and accrued income
999,432
1,117,378
4,051,780
5,314,862
12
Creditors: amounts falling due within one year
2023
2022
£
£
Trade creditors
994,385
764,177
Amounts owed to group undertakings
128,221
788,362
Corporation tax
184,649
15,223
Other taxation and social security
642,653
819,512
Other creditors
55,495
28,524
Accruals and deferred income
694,911
1,181,782
2,700,314
3,597,580

There is a fixed and floating charge over all the assets of the company.

FORMEL D (UK) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 23 -
13
Retirement benefit schemes
2023
2022
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
93,595
110,845

The company operates a defined contribution pension scheme for all qualifying employees. The assets of the scheme are held separately from those of the company in an independently administered fund.

14
Share capital
2023
2022
2023
2022
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Ordinary shares of £1 each
19,176
19,176
19,176
19,176
15
Events after the reporting date

There were no events after the reporting period date which require disclosure at the balance sheet date.

16
Related party transactions
2023
2022
Transactions with related parties
£
£
Entities with control, joint control or significant influence over the company
752,093
569,020
Other related parties
328,783
384,734

The following amounts were outstanding at the reporting end date:

2023
2022
Amounts due to related parties
£
£
Entities with control, joint control or significant influence over the company
86,488
654,306
Other related parties
41,732
128,558

The following amounts were outstanding at the reporting end date:

2023
2022
Amounts due from related parties
£
£
Other related parties
4,374
79,145
Other information

During the year there were no other related party transactions that require disclosure.

FORMEL D (UK) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 24 -
17
Ultimate controlling party

The ultimate controlling party is Formel D GmbH, who were incorporated in Germany, by virtue of its 100% (2022: 100%) shareholding in Formel D (UK) Limited.

 

Key management personnel are employed and remunerated by the ultimate controlling party. There are no amounts to disclose in relation to key management personnel compensation.

 

 

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