The directors present the strategic report for the year ended 31 December 2023.
The sales for the year ended 31 December 2023 have decreased due to the delivery of two significant logistics projects in 2022, leaving only one significant project to be delivered in the year. The Airports sector showed revenue after two stagnant years and Customer Support continued to grow on the back of new modernisation projects.
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| 2023 |
| 2022 | ||||||||
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Logistics Systems |
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| 0.8 11.4 |
| - 52.5 | ||||||||
Customer Support Mineral & Mining |
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| 21.2 0.2
33.6 |
| 16.0 -
68.5 | ||||||||
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Airports
The company has witnessed significant re-evaluation of upgrade and investment plans, leading to an increased pipeline for potential baggage systems projects.
The company entered an early works contract to re-commence works on the baggage system in Terminal 4 at Heathrow Airport. During the pandemic in 2021, the contract to complete the baggage system in Terminal 4 was terminated early when the terminal was closed. The system was used for live baggage sortation when the terminal re-opened in June 2022. The works effectively look to complete the outstanding works of the original project. The early works will conclude early 2024 and the company expects to enter a main contract, in mid-2024, to complete the full scope of the baggage system in the terminal over a 20-month period.
The company also participated in a design / build / maintain tender for a new baggage system for Terminal 2 at Heathrow Airport. The customer confirmed in November 2023 that BEUMER Group UK Ltd was successful with the tender and the contract was executed in December 2023.
This is a significant award for the company at one of the world's busiest airports, involving the design, installation and commissioning of a new baggage system over a 4-year period. The contract also allows for an 'Operational and Maintenance' contract post-delivery of the system.
Revenue for Airports in 2023 reflects the early works completed on the Heathrow Terminal 4 project. From 2024 the revenues will show a significant increase because of these new contracts.
Logistics Systems Projects
The key success in the year was the on-time delivery of the largest logistics project, based in the Midlands. This project has endured the effects of the pandemic together with the supply chain material shortages and cost escalation challenges. The system went live in June 2023 and performed well in the first Christmas peak period. The company continues to work with the client to improve the performance of the system to achieve its optimum output capabilities.
The company entered 2023 with increased optimism on a promising pipeline of logistics projects that had been delayed from 2022. However, most projects in this pipeline continued to be delayed further into 2024 and beyond as lower capacity requirements forced logistics companies to re-evaluate their investment plans.
The company was involved in two major tenders in the latter part of 2023, with positive outcomes expected in early 2024 on one significant project in the UK for a despatch sorter system with an early engineering order on a Click & Collect cross belt sorter system for a major UK retailer.
The outlook for 2024 is encouraging where four existing customers have projects planned in the year and other logistic companies have provided information on potential projects.
Customer Support
The customer support business continues to develop and strengthen year on year, with increased revenue and margins in 2023.
The year has seen renewal of existing residential service contracts in the Logistics sector, the start of a 3-year residential service contract on the Midlands project delivered in June. In addition to the residential contract the company has also seen a significant increase in remote field service contracts as well as growth in the digitalisation offerings of the company in support of operational and maintenance activities and IT security. In line with the Airport sector re-evaluation of upgrade and investment plans there was significant new modernisation contracts in 2023.
The main challenges in the year have come from two key areas. Firstly, supply chain challenges, with lead time on spare parts across local and regional suppliers. Secondly, it was a challenging environment for the recruitment and retention of skilled labour with pressures relating to the cost of living which has pushed up wage demands.
Overall
A very strong performance in the Customer Support sector has driven the increased financial performance of the company in 2023. The Logistics sector has showed a steady performance with the delivery of the active projects and the Airport sector has improved with the early contract on the re-commencement of the baggage delivery project.
Administrative costs have increased on previous years with the company moving to a new head office in the Midlands, higher recruitment and relocation costs for key personnel and an increased headcount overall.
Principle Risk
The principal risks facing BEUMER Group UK centre around the full close out of the existing Logistics projects, the retention of staff and the start-up of the Airport projects in early 2024.
Although the large Midlands based logistics project was delivered on time, the improved performance of the system and full acceptance by the customer must be achieved in early 2024.
With the award of new contracts in the Airport sector, the company is focused on the start-up of these projects given the historical financial challenges of Airport projects in the past. The company has the full backing of its Group companies in delivering these new projects and the foundations for their successful delivery need to be laid in 2024.
Staff recruitment and retention has been challenging in the current economic environment, with salary demands and competition for skilled labour on the increase. The company is continuously monitoring the market to ensure that the compensation packages for employees are competitive and able to attract new employees.
Future Developments
The prospects for 2024 and beyond remain positive with the increased activity in the Airports sector and the promising pipeline on the CEP and Warehouse and Distribution areas. The company expects to receive two awards in 2024 which will further establish its capabilities on delivering such projects.
The Customer Support business continues to develop in multiple areas from the expansion of core services across the installed base and the further establishment of the newer digitalisation offerings. With the increased activities at the Airports and Logistics Systems we also see the opportunity to grow in baseline offerings with multiyear contract commitments.
The company is also looking to increase its Products business in the UK in the fields of palletising, packaging and bulk material handling, with the recruitment of a dedicated sales manager in late 2023. The focus will not only be on new product sales but also to provide dedicated support to the large installed base in the UK and IE to offer the customer options on modernisations and upgrades.
In the performance of their duties and in regard to promoting the success of the company for the benefit of its members, the Directors hold board meetings when appropriate, seek external professional advice when required, and have an open relationship with employees, customers and suppliers.
Directors and management are regularly engaged with employees through meetings and frequent small group discussions.
Meaningful engagement occurs with both suppliers and customers as follows:
- Regular strategic operating reviews with major suppliers are undertaken to discuss relationship priorities going forward.
- Market research discussions are frequently held with customers in order to ascertain their priority and focus areas as these evolve and develop.
On behalf of the board
The directors present their annual report and financial statements for the year ended 31 December 2023.
The results for the year are set out on page 10.
No ordinary dividends were paid. The directors do not recommend payment of a final dividend.
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
The company's current policy concerning the payment of trade creditors is to follow the CBI's Prompt Payers Code (copies are available from the CBI, Centre Point, 103 New Oxford Street, London WC1A 1DU).
The company's current policy concerning the payment of trade creditors is to:
settle the terms of payment with suppliers when agreeing the terms of each transaction;
ensure that suppliers are made aware of the terms of payment by inclusion of the relevant terms in contracts; and
pay in accordance with the company's contractual and other legal obligations.
Trade creditors of the company at the year end were equivalent to 26 day's purchases, based on the average daily amount invoiced by suppliers during the year.
The auditor, B M Howarth Ltd, is deemed to be reappointed under section 487(2) of the Companies Act 2006.
Here follows the data prepared for Streamlined Energy and Carbon reporting requirements.
We have followed the 2019 HM Government Environmental Reporting Guidelines. We have also used the GHG Reporting Protocol – Corporate Standard and have used the 2020 UK Government’s Conversion Factors for Company Reporting.
The chosen intensity measurement ratio is total gross emissions in metric tonnes CO2e per Revenue (£'000), the recommended ratio for the sector.
In December 2022, the company moved into larger offices in the Midlands, following a period where the property was fully refurbished and modernised. The modernisation included the installation of low energy LED panels throughout the property, controlled by motion sensors to avoid unnecessary energy use in the day. The company's energy efficiency was substantially improved with the installation of photovoltaic panels and six EV chargers were installed on the allocated parking bays.
2023 saw the company occupy these new offices for the full year. The electrical energy generated through the photovoltaic panels contributed to a 47% saving for the new head office and an overall 40% saving in the total electricity consumed by the company across its two dedicated UK offices.
Two company directors and two employees replaced their traditional fuel motor vehicles with electric motor vehicles. The company was also in the process of signing up to an employee salary sacrifice scheme to enable employees to take advantage of the tax benefits around the scheme in acquiring leased electric motor vehicles.
The mileage travelled by the company's employees was consistent to the prior year and this is expected to continue at the same level in the coming years.
The increase in the intensity ratio for 2023 has been heavily effected by the reduction in revenue for the year.
For 2024 the company is focused on replacing the aging motor vehicle fleet with either "Hybrid" motor vehicles or "Electric" motor vehicles. Employees will also be encouraged to take advantage of the salary sacrifice scheme introduced in late 2023.
The company is likely to move to larger offices in the London area in the latter part of the year and all options for further energy efficiencies will be explored prior to the move.
We have audited the financial statements of BEUMER Group UK Limited (the 'company') for the year ended 31 December 2023 which comprise the income statement, the statement of financial position, the statement of changes in equity and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 101 Reduced Disclosure Framework (United Kingdom Generally Accepted Accounting Practice).
Basis for opinion
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
Other information
The other information comprises the information included in the annual report other than the financial statements and our auditor's 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.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of our audit:
the information given in the strategic report and the directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
the strategic report and the directors' report have been prepared in accordance with applicable legal requirements.
The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below.
Based on our understanding of the company and the sector in which it operates, our audit work considers the risk of material misstatement on the financial statements as a result of non-compliance with laws and regulations, this includes fraud. These laws and regulations include, but are not limited to, those that relate to the form and content of the financial statements, such as the Company accounting policies, the financial reporting framework and the UK Companies Act 2006.
We evaluated management incentives and opportunities for manipulation of the financial statements and determined that the principal risks related to management bias in accounting estimates and understatement or overstatement of revenue. Our audit procedures included, but were not limited to:
Agreement of the financial statements disclosures to underlying supporting documentation;
Discussions with management, including consideration of known or suspected instances of non-compliance with laws and regulations and fraud;
Challenging assumptions, accounting estimates and judgements made by Directors;
Identifying and testing journal entries to ensure they are appropriate;
Sample testing of income and expenditure to ensure correct cut-off has been applied.;
Our audit procedures were designed to respond to risks of material misstatement in the financial statements, recognising that the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error.
There are inherent limitations in audit procedures, the further removed non compliance with laws and regulations is from the events and transactions reflected in the financial statements, the less likely we are to become aware of it.
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.
Use of our report
This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company’s members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company’s members as a body, for our audit work, for this report, or for the opinions we have formed.
The income statement has been prepared on the basis that all operations are continuing operations.
The financial statements are prepared in sterling, which is the functional currency of the company.
As permitted by FRS 101, the company has taken advantage of the disclosure exemptions available under that standard in relation to share based payments, financial instruments, capital management, presentation of a cash flow statement, presentation of comparative information in respect of certain assets, standards not yet effective, impairment of assets, business combinations, discontinued operations and related party transactions.
Where required, equivalent disclosures are given in the group accounts of the ultimate parent company.
The company has taken advantage of the exemption under section 400 of the Companies Act 2006 not to prepare consolidated accounts. The financial statements present information about the company as an individual entity and not about its group.
Contract Assets/ Liabilities
Amounts recoverable on long term contracts, which are included in receivables, are stated at the net sales value of the work done after provisions for contingencies and anticipated future losses on contracts, less amounts received as progress payments on account. Excess progress payments are included in payables as payments received on account.
Depreciation has been computed to write off the cost of tangible fixed assets over their expected useful lives using the following rates:
Fixed asset investments are stated at cost less provision for permanent diminution in value.
IFRS 13 establishes a single source of guidance for all fair value measurements. IFRS 13 does not change when an entity is required to use fair value, but rather provides guidance on how to measure fair value under IFRS when fair value is required or permitted. The company is exempt under FRS 101 from the disclosure requirements of IFRS 13. There was no impact on the company from the adoption of IFRS 13.
The company assesses whether a contract is, or contains, a lease within the scope of IFRS 16. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. Where a tangible asset is acquired through a lease, the company recognises a right-of-use asset and a lease liability at the lease commencement date. Right-of-use assets are included within property, plant and equipment.
The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date plus any initial direct costs and an estimate of the cost of obligations to dismantle, remove, refurbish or restore the underlying asset and the site on which it is located, less any lease incentives received.
The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term. The estimated useful lives of right-of-use assets are determined on the same basis as those of other property, plant and equipment. The right-of-use asset is periodically reduced by impairment losses, if any, and adjusted for certain remeasurements of the lease liability.
The lease liability is initially measured at the present value of the lease payments that are unpaid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the company's incremental borrowing rate.
The lease liability is measured at amortised cost using the effective interest method. It is remeasured when there is a change in: future lease payments arising from a change in an index or rate.
The company has elected not to recognise right-of-use assets and lease liabilities for short-term leases of machinery that have a lease term of 12 months or less, or for leases of low-value assets including IT equipment. The payments associated with these leases are recognised in profit or loss on a straight-line basis over the lease term.
The company's revenue all derives from it's principal activities undertaken in the United Kingdom.
The average monthly number of persons (including directors) employed by the company during the year was:
Their aggregate remuneration comprised:
The number of directors for whom retirement benefits are accruing under defined contribution schemes amounted to 3 (2022 - 3).
The unrecognised deferred tax asset comprises:
Property, plant and equipment includes right-of-use assets, as follows:
Beumer Ltd incorporated in England and Wales. Its principal activity is the provider of materials handing solutions and associated service and maintenance services. 100% of its issued share capital is held by Beumer Group UK Limited.
Beumer UK Material Handling Ltd incorporated in England and Wales. The company has remained dormant throughout the year. 100% of its issued share capital is held by Beumer Group UK Limited.
Lease liabilities are classified based on the amounts that are expected to be settled within the next 12 months and after more than 12 months from the reporting date, as follows:
The fair value of the company's lease obligations is approximately equal to their carrying amount.
The total costs charged to income in respect of defined contribution plans is £874,547 (2022 - £788,157).
The company has taken advantage of the exemption available in FRS101 not to disclose transactions with other wholly owned members of the group headed by Beumer Group GmbH & Co. KG.
BEUMER Group UK Limited is a private company limited by shares incorporated in England and Wales. The registered office is BEUMER House, L1/L2 Ivanhoe Business Park, Smisby Road, Ashby de la Zouch, Leicestershire, LE65 2AB. The company's principal activities and nature of its operations are disclosed in the directors' report.