Company Registration No. 05869828 (England and Wales)
MVG Industries UK Limited
Annual report and financial statements
for the year ended 31 December 2023
MVG Industries UK Limited
Company information
Directors
John Noonan
William McFadden
Per Iverson
Philippe Garreau
Company number
05869828
Registered office
Unit 400 Haydock Lane
Haydock Industrial Estate
St Helens
Merseyside
WA11 9TH
Independent auditor
Saffery LLP
Trinity
16 John Dalton Street
Manchester
M2 6HY
MVG Industries UK Limited
Contents
Page
Strategic report
1 - 4
Directors' report
5
Directors' responsibilities statement
6
Independent auditor's report
7 - 10
Statement of comprehensive income
11
Statement of financial position
12
Statement of changes in equity
13
Notes to the financial statements
14 - 28
MVG Industries UK Limited
Strategic report
For the year ended 31 December 2023
1
The directors present the strategic report for the year ended 31 December 2023.
Overview
The Directors of MVG Industries UK Ltd (MVG UK) have pleasure in presenting the strategic report for year ending 2023 results.
MVG's UK business is the design, manufacture, installation & testing of shielded facilities and shielded anechoic facilities. MVG UK is part of the Microwave Vision Group (MVG) of companies. Being part of MVG continues to provide benefits for MVG UK providing access to global markets and customers with marketing support which otherwise would be either very difficult or impossible for MVG UK to access alone. MVG's expertise in electromagnetic wave measurement tools and constant R&D to keep ahead of customers’ needs has been a
driving force in the company’s continued growth. The wireless market is constantly evolving and growing with increasingly sophisticated and diversified products. The rollout of 5G and IOT technology is aiding MVG's global expansion with continued growth of new space satellites, planes & drones, mobile phones, computers, tablets, GPS navigators, medical instruments or wireless home technology, autonomous and technically advanced
vehicles, etc. All of these depend heavily on the capabilities of wireless technology as they require antennas that are designed to convert electrical signals into radio signals. This is the heart of the market that MVG UK & MVG address, providing the tools and environment for these devices to be developed and tested.
Reciprocally MVG UK provide MVG with inhouse support for our products and services helping MVG to offer a comprehensive service to their customers.
Despite the return to a “new normal” following the end of the Coronavirus pandemic and its impacts, 2023 was yet another challenging year. Global disruption in the supply chains was still exacerbated by the continuing war initiated by Russia’s invasion of Ukraine in 2022 and the escalation in the Israeli–Palestinian conflict in October 2023. Continued high fuel costs, continued high inflation and high interest rates were also unhelpful for businesses to commit to capital expenditures. Nevertheless, MVG UK continue trading effectively minimising disruptions to a £987k weakening in turnover whist maintaining healthy profitability.
MVG Industries UK Limited
Strategic report (continued)
For the year ended 31 December 2023
2
Fair review of the Business
MVG UK Revenue for 2023 was slightly down at £12.1M (£13.1M in 2022) with PBT down £530k on 2022 at £1.5M. The order book was at £21.4M at the end of 2023 (including a large order from Turkish Aerospace), up £17.6M versus 2022.
MVG UK specifically addresses and manufactures the shielding aspect as part of providing the required environment, plus has the responsibility for the project management and delivery of the complete shielded anechoic chamber packages. In addition, MVG UK also addresses shielding only applications such as:
• Electro Magnetic Pulse Protection (EMPP) & Nuclear Electro Magnetic Pulse Protection (NEMP)
• Security, comms and data protection
• Health & safety protection
The market is broadly evenly split between Civil Telecommunications with consumer products and Aerospace/Defence. Both sectors have and continue to be buoyant and expanding.
Our continued growth reflects MVG & MVG UK strategic aligning with the demands of the marketplace and our flexibility to act quickly when required. For example, providing test systems and allied chamber products for new space exploration with Amazon, Facebook and Space X; also for supporting existing and reoccurring customers such as TUV, Nokia, Ericsson, Samsung, Apple, Lockheed Martin, Raytheon, UK defence customers, etc.
MVG UK head count remains steady with a low turnover of people providing stability and continuity whilst retaining expertise, skills and experience.
MVG Industries UK Limited
Strategic report (continued)
For the year ended 31 December 2023
3
Description of the principal risks and uncertainties
The directors confirm that we have carried out a robust assessment of the principal risks facing the company, including those that would threaten its business model, future performance, solvency or liquidity. The principal risks and uncertainties facing the business are related to Russia’s invasion of Ukraine and the ongoing global recovery from COVID-19 related issues.
Russia’s continued invasion of Ukraine has and continues to fuel significant global cost inflation and general market instabilities.
Other issues :
Brexit is no longer considered a significant risk for MVG UK, but is generally a negative aspect for business.
Liquidity risk:
Liquidity risk is the risk that an entity will encounter difficulties in meeting obligations associated with financial liabilities. The company aims to mitigate liquidity risk by managing the cash generation of its operations with a strong focus on cash collection and regular and detailed forecasting. The business has no material exposure to non-basic financial instruments.
Foreign currency risk:
The results of operations and financial position are measured using the functional currency of the primary economic environment in which the entity operates. Transactions are conducted in British Pounds, Euros and US Dollars. The company is exposed to exchange rate fluctuations and hence, currency rate changes are monitored to minimize the effect on results of operations. Going forwards Group will be putting more focus on reducing risk to FX movements.
Credit risk:
Credit risk is the risk that customers or counterparties will not be able to meet their obligations to the company. The company has policies aimed at minimising such losses and require that deferred payment terms are only granted to customers who demonstrate an appropriate payment history and satisfy credit worthiness procedures.
Price risk:
The companies orders are typically won on a fixed price bases with associated exposure to risk of margin erosion due to inflation over the period of order fulfilment. As inflation reduced in 2023 this risk also reduced. However, our policies of keeping our costs up to date with our validity periods short where possible, and fixing the prices for major purchases when we receive customer orders have all helped to manage this risk.
Opportunities
The line of sight of the marketplace and potential orders for the next few years looks good. The global demand for development & testing of wireless products has intensified. Movement & continued development of 5G will continue this trend. US defence spending (orders typically via MVG US company OATI) is expected to continue with OATI in negotiation for 3 further large Hercules projects with the design order being placed for one of these.
MVG has some significant customer opportunities that are expected to come to fruition in 2024 which will help increase and underpin MVG’s revenues for the next 3 to 5 years.
In 2023 we established a new post of Director Strategy & Business Development EMC and hired an experienced and well known person within the industry. With more strategic focus on business development for the EMC part of MVG we anticipate growth in 2024 and beyond.
MVG Industries UK Limited
Strategic report (continued)
For the year ended 31 December 2023
4
Analysis based on Key Performance Indicators
Financial results are the main KPI for the business as embodies buoyancy of the marketplace, MVG UK performance with orders, customer satisfaction via repeat business & minimal warranty claims and continued expansion in developing territories and securing new customers.
The high level of enquiries received during 2023 continued into 2024 with a continued potential value of over £58M, reflecting the continued strength of the marketplace and MVG UK access to it.
John Noonan
Director
29 August 2024
MVG Industries UK Limited
Directors' report
For the year ended 31 December 2023
5
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 design, manufacture, installation & testing of shielded facilities and shielded anechoic facilities.
Results and dividends
The results for the year are set out on page 11.
Ordinary dividends were paid amounting to £4,818,740. 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:
John Noonan
William McFadden
Per Iverson
Philippe Garreau
Financial instruments
The directors have assessed the risk of financial instruments in the strategic report contained on pages 1 - 3 in the financial statements.
Auditor
Saffery LLP have expressed their willingness to continue in office.
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.
On behalf of the board
John Noonan
Director
29 August 2024
MVG Industries UK Limited
Directors' responsibilities statement
For the year ended 31 December 2023
6
The directors are responsible for preparing the annual report and the financial statements in accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law).
Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period. In preparing these financial statements, the directors are required to:
select suitable accounting policies and then apply them consistently;
make judgements and accounting estimates that are reasonable and prudent;
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company’s transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
MVG Industries UK Limited
Independent auditor's report
To the members of MVG Industries UK Limited
7
Opinion
We have audited the financial statements of MVG Industries UK Limited (the 'company') for the year ended 31 December 2023 which comprise the statement of comprehensive income, 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 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).
In our opinion the financial statements:
give a true and fair view of the state of the company's affairs as at 31 December 2023 and of its profit for the year then ended;
have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
have been prepared in accordance with the requirements of the Companies Act 2006.
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
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.
MVG Industries UK Limited
Independent auditor's report (continued)
To the members of MVG Industries UK Limited
8
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.
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:
adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or
the financial statements are not in agreement with the accounting records and returns; or
certain disclosures of remuneration specified by law are not made; or
we have not received all the information and explanations we require for our audit.
Responsibilities of directors
As explained more fully in the directors' responsibilities statement, 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.
MVG Industries UK Limited
Independent auditor's report (continued)
To the members of MVG Industries 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 specific procedures for this engagement and the extent to which these are capable of detecting irregularities, including fraud are detailed below.
Identifying and assessing risks related to irregularities:
We assessed the susceptibility of the company’s financial statements to material misstatement and how fraud might occur, including through discussions with the directors, discussions within our audit team planning meeting, updating our record of internal controls and ensuring these controls operated as intended. We evaluated possible incentives and opportunities for fraudulent manipulation of the financial statements. We identified laws and regulations that are of significance in the context of the company by discussions with directors and by updating our understanding of the sector in which the company operates.
Laws and regulations of direct significance in the context of the company include The Companies Act 2006 and UK Tax legislation.
Audit response to risks identified
We considered the extent of compliance with these laws and regulations as part of our audit procedures on the related financial statement items including a review of financial statement disclosures. We reviewed the company's records of breaches of laws and regulations, minutes of meetings and correspondence with relevant authorities to identify potential material misstatements arising. We discussed the company's policies and procedures for compliance with laws and regulations with members of management responsible for compliance.
During the planning meeting with the audit team, the engagement partner drew attention to the key areas which might involve non-compliance with laws and regulations or fraud. We enquired of management whether they were aware of any instances of non-compliance with laws and regulations or knowledge of any actual, suspected or alleged fraud. We addressed the risk of fraud through management override of controls by testing the appropriateness of journal entries and identifying any significant transactions that were unusual or outside the normal course of business. We assessed whether judgements made in making accounting estimates gave rise to a possible indication of management bias. At the completion stage of the audit, the engagement partner’s review included ensuring that the team had approached their work with appropriate professional scepticism and thus the capacity to identify non-compliance with laws and regulations and fraud.
There are inherent limitations in the audit procedures described above and the further removed non-compliance with laws and regulations is from the events and transactions reflected in the financial statements, the less likely we would become aware of it. Also, the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery or intentional misrepresentations, or through collusion.
A further description of our responsibilities 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.
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.
MVG Industries UK Limited
Independent auditor's report (continued)
To the members of MVG Industries UK Limited
10
Simon Kite
Senior Statutory Auditor
For and on behalf of Saffery LLP
29 August 2024
Chartered Accountants
Statutory Auditors
Trinity
16 John Dalton Street
Manchester
M2 6HY
MVG Industries UK Limited
Statement of comprehensive income
For the year ended 31 December 2023
11
2023
2022
Notes
£
£
Turnover
3
12,121,886
13,108,949
Cost of sales
(6,961,968)
(8,930,386)
Gross profit
5,159,918
4,178,563
Administrative expenses
(3,521,232)
(2,153,589)
Exceptional item
4
(150,324)
Operating profit
5
1,488,362
2,024,974
Interest receivable and similar income
9
27,152
14,048
Interest payable and similar expenses
10
(6,811)
(791)
Profit before taxation
1,508,703
2,038,231
Tax on profit
11
(360,380)
(410,797)
Profit for the financial year
1,148,323
1,627,434
The income statement has been prepared on the basis that all operations are continuing operations.
MVG Industries UK Limited
Statement of financial position
As at 31 December 2023
12
2023
2022
Notes
£
£
£
£
Fixed assets
Goodwill
13
308,520
395,291
Tangible assets
14
221,032
164,648
529,552
559,939
Current assets
Stocks
15
277,777
372,167
Debtors
16
4,634,508
7,458,593
Cash at bank and in hand
4,470,890
2,819,670
9,383,175
10,650,430
Creditors: amounts falling due within one year
17
(6,892,806)
(4,548,311)
Net current assets
2,490,369
6,102,119
Total assets less current liabilities
3,019,921
6,662,058
Creditors: amounts falling due after more than one year
18
(12,303)
(13,125)
Provisions for liabilities
Provisions
20
145,971
116,904
Deferred tax liability
21
34,514
34,479
(180,485)
(151,383)
Net assets
2,827,133
6,497,550
Capital and reserves
Called up share capital
23
151,001
151,001
Share premium account
24
154,010
154,010
Profit and loss reserves
25
2,522,122
6,192,539
Total equity
2,827,133
6,497,550
The financial statements were approved by the board of directors and authorised for issue on 29 August 2024 and are signed on its behalf by:
John Noonan
Director
Company Registration No. 05869828
MVG Industries UK Limited
Statement of changes in equity
For the year ended 31 December 2023
13
Share capital
Share premium account
Profit and loss reserves
Total
Notes
£
£
£
£
Balance at 1 January 2022
151,001
154,010
4,565,105
4,870,116
Year ended 31 December 2022:
Profit and total comprehensive income for the year
-
-
1,627,434
1,627,434
Balance at 31 December 2022
151,001
154,010
6,192,539
6,497,550
Year ended 31 December 2023:
Profit and total comprehensive income for the year
-
-
1,148,323
1,148,323
Dividends
12
-
-
(4,818,740)
(4,818,740)
Balance at 31 December 2023
151,001
154,010
2,522,122
2,827,133
MVG Industries UK Limited
Notes to the financial statements
For the year ended 31 December 2023
14
1
Accounting policies
Company information
MVG Industries UK Limited is a private company limited by shares incorporated in England and Wales. The registered office is Unit 400 Haydock Lane, Haydock Industrial Estate, St Helens, Merseyside, WA11 9TH.
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. 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:
Section 7 ‘Statement of Cash Flows’: Presentation of a statement of cash flow and related notes and disclosures;
Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instrument Issues’: Interest income/expense and net gains/losses for each category of financial instrument; basis of determining fair values; details of collateral, loan defaults or breaches, details of hedges, hedging fair value changes recognised in profit or loss and in other comprehensive income;
Section 33 ‘Related Party Disclosures’: Compensation for key management personnel and transactions with wholly owned subsidiaries in the group.
The financial statements of the company are consolidated in the financial statements of Microwave Vision Group SAS. These consolidated financial statements are available from the group website https://investor.mvg-world.com/fr. The registered office is Microwave Vision SAS,13 rue du Zéphyr, Parc d'Activités de l'Océane, 91140 VILLEJUST, FRANCE.
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.
MVG Industries UK Limited
Notes to the financial statements (continued)
For the year ended 31 December 2023
1
Accounting policies (continued)
15
1.3
Turnover
Turnover is taken into account progressively and in accordance with UK applicable accounting standards relating to long term contracts.
Revenue is based on the estimated total turnover (contract value) and the degree of estimated progress (total costs realised at the year end date compared to the total cost forecast at the end of the contract) for each individual contract. Accrued revenue (unbilled work) or deferred revenue is the difference between the revenue as calculated above and the value which has been invoiced.
The amount of revenue recognised on contracts completed or in progression is shown on the turnover line. In cases where a contract loss is foreseen, this loss is recognised through a provision for estimated total contract loss net of loss on the progress already recorded.
1.4
Research and development expenditure
Research expenditure is written off against profits in the year in which it is incurred.
1.5
Intangible fixed assets - goodwill
Goodwill arising on the acquisition and then subsequent hive up of subsidiary trade and assets represents the excess of the fair value of the consideration over the fair value of the identifiable assets and liabilities acquired. It is initially recognised as an asset at cost and is subsequently measured at cost less accumulated amortisation and accumulated impairment losses. Goodwill is considered to have a finite useful life and is amortised on a systematic basis over its expected life, which is 20 years.
For the purposes of impairment testing, goodwill is allocated to the cash-generating units expected to benefit from the acquisition. Cash-generating units to which goodwill has been allocated are tested for impairment at least annually, or more frequently when there is an indication that the unit may be impaired. If the recoverable amount of the cash-generating unit is less than the carrying amount of the unit, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro-rata on the basis of the carrying amount of each asset in the unit.
1.6
Tangible fixed assets
Tangible fixed assets are initially measured at cost and subsequently measured at cost or valuation, net of depreciation and any impairment losses.
Depreciation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:
Leasehold improvements
Period of lease
Plant and equipment
7 years straight line
Fixtures and fittings
3-7 years straight line
Motor vehicles
3-5 years straight line
The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is credited or charged to profit or loss.
1.7
Impairment of fixed assets
At each reporting period end date, the company reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the company estimates the recoverable amount of the cash-generating unit to which the asset belongs.
MVG Industries UK Limited
Notes to the financial statements (continued)
For the year ended 31 December 2023
1
Accounting policies (continued)
16
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.
Recognised impairment losses are reversed if, and only if, the reasons for the impairment loss have ceased to apply. Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.
1.8
Stocks
Stocks are stated at the lower of cost and estimated selling price less costs to sell, which is equivalent to net realisable value.
At each reporting date, an assessment is made for impairment. Any excess of the carrying amount of stocks over its estimated selling price less costs to complete and sell is recognised as an impairment loss in profit or loss. Reversals of impairment losses are also recognised in profit or loss.
1.9
Cash and cash equivalents
Cash and cash equivalents are basic financial assets and include cash in hand, deposits held at call with banks, other short-term liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities.
1.10
Financial instruments
The company has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.
Financial instruments are recognised in the company's statement of financial position when the company becomes party to the contractual provisions of the instrument.
Financial assets and liabilities are offset, with the net amounts presented in the financial statements, when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.
Basic financial assets
Basic financial assets, which include debtors, 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.
MVG Industries UK Limited
Notes to the financial statements (continued)
For the year ended 31 December 2023
1
Accounting policies (continued)
17
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.
Classification of financial liabilities
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the company after deducting all of its liabilities.
Basic financial liabilities
Basic financial liabilities, including creditors, bank loans, loans from fellow group companies 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.
Derecognition of financial liabilities
Financial liabilities are derecognised when the company’s contractual obligations expire or are discharged or cancelled.
1.11
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.
1.12
Taxation
The tax expense represents the sum of the tax currently payable and deferred tax.
MVG Industries UK Limited
Notes to the financial statements (continued)
For the year ended 31 December 2023
1
Accounting policies (continued)
18
Current tax
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the income statement 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.
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. Where items recognised in other comprehensive income or equity are chargeable to or deductible for tax purposes, the resulting current or deferred tax expense or income is presented in the same component of comprehensive income or equity as the transaction or other event that resulted in the tax expense or income. 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.
1.13
Provisions
Provisions are recognised when the company has a legal or constructive present obligation as a result of a past event, it is probable that the company will be required to settle that obligation and a reliable estimate can be made of the amount of the obligation.
The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the reporting end date, taking into account the risks and uncertainties surrounding the obligation. Where the effect of the time value of money is material, the amount expected to be required to settle the obligation is recognised at present value. When a provision is measured at present value, the unwinding of the discount is recognised as a finance cost in profit or loss in the period in which it arises.
1.14
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.
1.15
Retirement benefits
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
MVG Industries UK Limited
Notes to the financial statements (continued)
For the year ended 31 December 2023
1
Accounting policies (continued)
19
1.16
Leases
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessees. All other leases are classified as operating leases.
Assets held under finance leases are recognised as assets at the lower of the assets fair value at the date of inception and the present value of the minimum lease payments. The related liability is included in the statement of financial position as a finance lease obligation. Lease payments are treated as consisting of capital and interest elements. The interest is charged to profit or loss so as to produce a constant periodic rate of interest on the remaining balance of the liability.
Rentals payable under operating leases, including any lease incentives received, are charged to profit or loss on a straight-line basis over the term of the relevant lease except where another more systematic basis is more representative of the time pattern in which economic benefits from the leases asset are consumed.
1.17
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.
2
Critical accounting judgements and key sources of estimation uncertainty
In the application of the company’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.
Key sources of estimation uncertainty
The estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are as follows.
Long term contract accounting
Revenue recognition on the long term contracts requires an estimate of the stage of completion of a contract, this is inherently judgemental. Stage of completion is measured by comparison of costs incurred against total anticipated costs on a contract. The senior management team regularly review the progress of all its major projects considering technical and operational issues, progress against plan and external factors such as foreign exchange movements. The senior management team use their significant experience to assess the financial implications of these factors on the projects in determining the percentage completion at the year end.
3
Turnover and other revenue
2023
2022
£
£
Turnover analysed by class of business
Rendering of services
12,121,886
13,108,949
MVG Industries UK Limited
Notes to the financial statements (continued)
For the year ended 31 December 2023
3
Turnover and other revenue (continued)
20
2023
2022
£
£
Turnover analysed by geographical market
United Kingdom
4,152,066
5,223,797
Europe
2,421,227
3,101,060
Rest of world
5,548,593
4,784,092
12,121,886
13,108,949
2023
2022
£
£
Other revenue
Interest income
27,152
14,048
4
Exceptional item
2023
2022
£
£
Expenditure
Contract termination costs
150,324
-
In February 2022 Russia invaded Ukraine and in response sanctions were imposed by the UK and EU on Russian companies trading with UK and EU entities in order to weaken Russia's economic base. At this time, MVG Industries UK Ltd were acting as a subcontractor on behalf of a group entity contract with a sanctioned Russian business. The contract has now been terminated and as such the revenue earnt from sales between MVG Industries UK Ltd and the group entity has been refunded. This has resulted in the recognition of an expense for the refunded revenue. This is an extraordinary event due to the sanctions imposed on the Russian business and would not take place in the ordinary course of business.
5
Operating profit
2023
2022
Operating profit for the year is stated after charging/(crediting):
£
£
Exchange losses/(gains)
326,172
(546,906)
Research and development costs
654
17,347
Depreciation of owned tangible fixed assets
112,735
69,188
Amortisation of intangible assets
86,771
86,771
Operating lease charges
166,119
166,143
6
Auditor's remuneration
2023
2022
Fees payable to the company's auditor and associates:
£
£
For audit services
Audit of the financial statements of the company
26,200
24,450
MVG Industries UK Limited
Notes to the financial statements (continued)
For the year ended 31 December 2023
21
7
Employees
The average monthly number of persons (including directors) employed by the company during the year was:
2023
2022
Number
Number
Directors
2
2
Administration
22
23
Production
32
29
Total
56
54
Their aggregate remuneration comprised:
2023
2022
£
£
Wages and salaries
2,408,074
2,222,265
Social security costs
253,053
241,534
Pension costs
58,554
48,491
2,719,681
2,512,290
8
Directors' remuneration
2023
2022
£
£
Remuneration for qualifying services
299,354
279,737
Company pension contributions to defined contribution schemes
6,420
3,867
305,774
283,604
The number of directors for whom retirement benefits are accruing under defined contribution schemes amounted to 2 (2022 - 2).
Remuneration disclosed above include the following amounts paid to the highest paid director:
2023
2022
£
£
Remuneration for qualifying services
172,619
161,152
Company pension contributions to defined contribution schemes
3,590
1,321
MVG Industries UK Limited
Notes to the financial statements (continued)
For the year ended 31 December 2023
22
9
Interest receivable and similar income
2023
2022
£
£
Interest income
Interest on bank deposits
27,152
14,048
10
Interest payable and similar expenses
2023
2022
£
£
Interest on bank overdrafts and loans
6,811
791
11
Taxation
2023
2022
£
£
Current tax
UK corporation tax on profits for the current period
374,681
409,619
Adjustments in respect of prior periods
(14,136)
(15,603)
Total current tax
360,545
394,016
Deferred tax
Origination and reversal of timing differences
(165)
16,781
Total tax charge
360,380
410,797
MVG Industries UK Limited
Notes to the financial statements (continued)
For the year ended 31 December 2023
11
Taxation (continued)
23
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
1,508,703
2,038,231
Expected tax charge based on the standard rate of corporation tax in the UK of 23.52% (2022: 19.00%)
354,847
387,264
Tax effect of expenses that are not deductible in determining taxable profit
1,627
7,515
Under/(over) provided in prior years
(14,136)
(15,603)
Fixed asset timing differences
20,143
14,840
Remeasurement of deferred tax for changes in tax rates
78
Deferred tax impact on current year
(165)
16,781
Foreign tax credits
534
Adjustments to tax charge in respect of previous periods
(1,269)
Adjustments to tax charge in respect of previous periods - deferred tax
(1,285)
Rounding difference
6
Taxation charge for the year
360,380
410,797
12
Dividends
2023
2022
£
£
Final paid
4,818,740
13
Intangible fixed assets
Goodwill
£
Cost
At 1 January 2023 and 31 December 2023
1,735,420
Amortisation and impairment
At 1 January 2023
1,340,129
Amortisation charged for the year
86,771
At 31 December 2023
1,426,900
Carrying amount
At 31 December 2023
308,520
At 31 December 2022
395,291
MVG Industries UK Limited
Notes to the financial statements (continued)
For the year ended 31 December 2023
24
14
Tangible fixed assets
Leasehold improvements
Plant and equipment
Fixtures and fittings
Motor vehicles
Total
£
£
£
£
£
Cost
At 1 January 2023
44,809
389,498
150,890
129,796
714,993
Additions
16,923
114,155
18,460
19,581
169,119
Disposals
(26,479)
(7,818)
(16,790)
(51,087)
At 31 December 2023
61,732
477,174
161,532
132,587
833,025
Depreciation and impairment
At 1 January 2023
28,147
315,669
131,297
75,232
550,345
Depreciation charged in the year
4,013
61,817
16,916
29,989
112,735
Eliminated in respect of disposals
(26,479)
(7,818)
(16,790)
(51,087)
At 31 December 2023
32,160
351,007
140,395
88,431
611,993
Carrying amount
At 31 December 2023
29,572
126,167
21,137
44,156
221,032
At 31 December 2022
16,662
73,829
19,593
54,564
164,648
Included within the net book value of motor vehicles is £8,662 (2022: £12,994) in respect of assets held under finance leases and similar hire purchase contracts. Depreciation for the period on these assets was £4,332 (2022: £4,332).
15
Stocks
2023
2022
£
£
Finished goods and goods for resale
277,777
372,167
16
Debtors
2023
2022
Amounts falling due within one year:
£
£
Trade debtors
2,798,301
932,494
Amounts owed by group undertakings
1,486,123
6,139,847
Other debtors
42,548
9,112
Prepayments and accrued income
307,536
377,140
4,634,508
7,458,593
MVG Industries UK Limited
Notes to the financial statements (continued)
For the year ended 31 December 2023
25
17
Creditors: amounts falling due within one year
2023
2022
Notes
£
£
Obligations under finance leases
19
7,439
9,598
Trade creditors
798,396
937,254
Amounts owed to group undertakings
1,401,017
1,970,081
Corporation tax
44,690
239,200
Other taxation and social security
70,227
80,930
Other creditors
27,603
16,354
Accruals and deferred income
4,543,434
1,294,894
6,892,806
4,548,311
18
Creditors: amounts falling due after more than one year
2023
2022
Notes
£
£
Obligations under finance leases
19
12,303
13,125
19
Finance lease obligations
2023
2022
Future minimum lease payments due under finance leases:
£
£
Within one year
7,439
9,598
In two to five years
12,303
13,125
19,742
22,723
Finance lease payments due relate to motor vehicles held in fixed assets.
20
Provisions for liabilities
2023
2022
£
£
Warranty provision
145,971
116,904
Movements on provisions:
Warranty provision
£
At 1 January 2023
116,904
Movement in the year
29,067
At 31 December 2023
145,971
MVG Industries UK Limited
Notes to the financial statements (continued)
For the year ended 31 December 2023
20
Provisions for liabilities (continued)
26
This provision relates to warranties provided in respect of contracts agreed with customers and vary in length between one and five years.
21
Deferred taxation
The following are the major deferred tax liabilities and assets recognised by the company and movements thereon:
Liabilities
Liabilities
2023
2022
Balances:
£
£
Accelerated capital allowances
46,606
35,680
Other short term timing differences
(12,092)
(1,201)
34,514
34,479
2023
Movements in the year:
£
Liability at 1 January 2023
34,479
Charge to profit or loss
35
Liability at 31 December 2023
34,514
Of the deferred tax liability set out above £16,676 is expected to reverse within 12 months and relates to accelerated capital allowances that are expected to mature within the same period.
22
Retirement benefit schemes
2023
2022
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
58,554
48,491
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.
Contributions totalling £17,065 (2022: £11,140) were payable to the fund as at 31 December 2023 and are included within creditors due less than one year.
23
Share capital
2023
2022
2023
2022
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Ordinary Shares of £1 each
151,001
151,001
151,001
151,001
MVG Industries UK Limited
Notes to the financial statements (continued)
For the year ended 31 December 2023
23
Share capital (continued)
27
All shares have equal voting rights and equal rights to participate in dividends and other distributions.
24
Share premium account
2023
2022
£
£
At the beginning and end of the year
154,010
154,010
Share premium represents the amounts received above the nominal value for shares issued less transactions costs.
25
Profit and loss reserves
2023
2022
£
£
At the beginning of the year
6,192,539
4,565,105
Profit for the year
1,148,323
1,627,434
Dividends declared and paid in the year
(4,818,740)
-
At the end of the year
2,522,122
6,192,539
26
Financial commitments, guarantees and contingent liabilities
HSBC Bank PLC holds a fixed charge over all present freehold and leasehold property and floating charge over all assets and undertaking both present and future dated 23 January 2015. This is in relation to the overdraft and trade guarantee facility provided by HSBC Bank PLC.
In relation to the above facility, HSBC Bank PLC provide a guarantee dated 20 June 2023 in favour of a customer. This secures a percentage of the contract value for a specific customer in the event MVG Industries UK Ltd do not fulfil the obligations on the contract.
A parental corporate guarantee was given by the parent company Microwave Vision SAS on 23 March 2023, in respect of any and all liabilities and facilities provided by HSBC Bank PLC to MVG Industries UK Ltd. This guarantee would serve as security over the facility provided and Microwave Vision SAS would guarantee the payment of the guaranteed liabilities.
MVG Industries UK Limited
Notes to the financial statements (continued)
For the year ended 31 December 2023
28
27
Operating lease commitments
Lessee
At the reporting end date the company had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:
2023
2022
£
£
Within one year
174,925
166,174
Between two and five years
56,367
193,869
In over five years
3,321
234,613
360,043
28
Ultimate controlling party
The ultimate parent company and the ultimate controlling party is considered to be Microwave Vision Group SAS a company incorporated in France by virtue of its 100% shareholding. This is the smallest and largest group in which the Company financial statements are consolidated. A copy of the consolidated financial statements are available from the MVG website at https://investor.mvg-world.com/fr. The registered office is Microwave Vision SA,13 rue du Zéphyr, Parc d'Activités de l'Océane, 91140 VILLEJUST, FRANCE.
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