REGISTERED NUMBER: |
NOVANTA TECHNOLOGIES UK LIMITED |
STRATEGIC REPORT, REPORT OF THE DIRECTORS AND |
FINANCIAL STATEMENTS |
FOR THE YEAR ENDED 31 DECEMBER 2023 |
REGISTERED NUMBER: |
NOVANTA TECHNOLOGIES UK LIMITED |
STRATEGIC REPORT, REPORT OF THE DIRECTORS AND |
FINANCIAL STATEMENTS |
FOR THE YEAR ENDED 31 DECEMBER 2023 |
NOVANTA TECHNOLOGIES UK LIMITED (REGISTERED NUMBER: 01041317) |
CONTENTS OF THE FINANCIAL STATEMENTS |
FOR THE YEAR ENDED 31 DECEMBER 2023 |
Page |
Company Information | 1 |
Strategic Report | 2 |
Report of the Directors | 3 |
Report of the Independent Auditors | 5 |
Income Statement | 9 |
Other Comprehensive Income | 10 |
Statement of Financial Position | 11 |
Statement of Changes in Equity | 12 |
Notes to the Financial Statements | 13 |
NOVANTA TECHNOLOGIES UK LIMITED |
COMPANY INFORMATION |
FOR THE YEAR ENDED 31 DECEMBER 2023 |
DIRECTORS: |
REGISTERED OFFICE: |
REGISTERED NUMBER: |
AUDITORS: |
Chartered Accountants and |
Statutory Auditors |
Clarke Nicklin House |
Brooks Drive |
Cheadle Royal Business Park |
Cheadle |
Cheshire |
SK8 3TD |
BANKERS: |
165 High Street |
Southampton |
Hampshire |
SO14 2NZ |
NOVANTA TECHNOLOGIES UK LIMITED (REGISTERED NUMBER: 01041317) |
STRATEGIC REPORT |
FOR THE YEAR ENDED 31 DECEMBER 2023 |
The directors present their strategic report for the year ended 31 December 2023. |
REVIEW OF BUSINESS AND FUTURE DEVELOPMENTS |
In the Income Statement revenue reduced to £19.8m (2022: £32.2m). Following the restructuring of the Spindles the remaining element of the manufacturing transferred to China and together with the Taunton site move being completed Gross Profit increased to 42.0% (2022: 41.7%). The impact of the reduced revenue resulted in operating profit reducing to 7.5% (2022: 20.9%). |
The company received dividends of £18.4m in 2023 (2022: £35.0m) from its UK, China and Japan subsidiaries. |
The Statement of Financial Position shows that the company has net assets of £124.4m at 31 December 2023 (2022: £128.3m) and has net cash of £2.0m (2021: £4.2m). |
Novanta Technologies UK Limited will continue with the strategy to support its sales to OEM customers of air bearing spindles and beryllium mirrors and structures. |
The key performance indicators are sales, profit and net assets as set out above. |
PRINCIPAL RISKS AND UNCERTAINTIES |
The principal risks and uncertainties of the company relate to competition. The company manages competitive trading risk by continually investing in research and development to provide industry leading products to customers, and by maintaining strong relationships with customers. |
FINANCIAL RISK MANAGEMENT |
Information on financial risk management is scheduled in note 22 to the financial statements. |
ON BEHALF OF THE BOARD: |
NOVANTA TECHNOLOGIES UK LIMITED (REGISTERED NUMBER: 01041317) |
REPORT OF THE DIRECTORS |
FOR THE YEAR ENDED 31 DECEMBER 2023 |
The directors present their report with the financial statements of the company for the year ended 31 December 2023. |
PRINCIPAL ACTIVITY |
The principal activity of the company in the year under review was that of the manufacture and distribution of air bearing spindles and related products and the manufacture from beryllium of mirrors and other products. |
DIVIDENDS |
The total distribution of dividends for the year ended 31 December 2023 will be £23,450,000. |
RESEARCH AND DEVELOPMENT |
The company continues to invest in research and development to further its product range, which amounted to £2.1m for the year (2022: £1.87m) and is pursuing a spindle development programme and also developing the use of Beryllium based optical mirrors that will utilise the expertise at its Taunton, UK location. The directors regard R&D investment as necessary for success in the medium to long term future. |
EVENTS SINCE THE END OF THE YEAR |
Information relating to events since the end of the year is given in the notes to the financial statements. |
DIRECTORS |
The directors shown below have held office during the whole of the period from 1 January 2023 to the date of this report. |
Other changes in directors holding office are as follows: |
DIRECTORS' LIABILITIES |
Novanta Inc., the ultimate parent company, indemnified one or more directors of the company against liability in respect of proceedings brought by third parties, subject to the conditions set out in the Companies Act 2006. Such qualifying third party indemnity provision was in force during the year and remains in place to the date of this report. |
CREDITOR PAYMENT POLICY AND PRACTICE |
It is the company's policy that payments to suppliers are made in accordance with those terms and conditions agreed between the company and its suppliers, provided that all trading terms and conditions have been complied with. |
As at 31 December 2023, the company had an average of 27 (2022: 67) days purchases outstanding in trade creditors.This shows a reduction from 2022 levels and is driven by the cessation of manufacturing at Poole and effectively the Beryllium supplier being the significant supplier on credit terms. |
GOING CONCERN |
Information on going concern is included in note 2 to the financial statements. |
ENVIRONMENT, HEALTH & SAFETY |
The company recognises the importance of its environmental responsibilities and designs and implements policies to reduce any damage that might be caused by the company's activities. There are various initiatives designed to minimise the company's impact on the environment. |
The company recognises the importance and implications of the Health & Safety at Work Act 1974, the Environmental Protection Legislation, and all new Health & Safety legislation especially that being promulgated through EU Directives. |
NOVANTA TECHNOLOGIES UK LIMITED (REGISTERED NUMBER: 01041317) |
REPORT OF THE DIRECTORS |
FOR THE YEAR ENDED 31 DECEMBER 2023 |
DISABLED EMPLOYEES |
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 being disabled every effort is made to ensure that their employment with 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 operates policies to keep employees informed on matters relevant to them as employees through regular meetings and newsletters. These meetings include updates on the financial position of the company and the group to ensure awareness of the achievement of financial goals. Employee representatives are consulted regularly on a wide range of matters affecting their interest. |
STATEMENT OF DIRECTORS' RESPONSIBILITIES |
The directors are responsible for preparing the Strategic Report, the Report of the Directors 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. |
STATEMENT AS TO DISCLOSURE OF INFORMATION TO AUDITORS |
So far as the directors are aware, there is no relevant audit information (as defined by Section 418 of the Companies Act 2006) of which the company's auditors are unaware, and each director has taken all the steps that he ought to have taken as a director in order to make himself aware of any relevant audit information and to establish that the company's auditors are aware of that information. |
AUDITORS |
The auditors, Clarke Nicklin LLP, will be proposed for re-appointment at the forthcoming Annual General Meeting. |
ON BEHALF OF THE BOARD: |
REPORT OF THE INDEPENDENT AUDITORS TO THE MEMBERS OF |
NOVANTA TECHNOLOGIES UK LIMITED |
Opinion |
We have audited the financial statements of Novanta Technologies UK Limited (the 'company') for the year ended 31 December 2023 which comprise the Income Statement, Other Comprehensive Income, Statement of Financial Position, Statement of Changes in Equity and Notes to the Financial Statements, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 'The Financial Reporting Standard applicable in the UK and Republic of Ireland' (United Kingdom Generally Accepted Accounting Practice). |
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. |
Basis for opinion |
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditors' 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. |
Other information |
The directors are responsible for the other information. The other information comprises the information in the Strategic Report and the Report of the Directors, but does not include the financial statements and our Report of the Auditors thereon. |
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. |
In connection with our audit of the financial statements, 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 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 the audit: |
- | the information given in the Strategic Report and the Report of the Directors for the financial year for which the financial statements are prepared is consistent with the financial statements; and |
- | the Strategic Report and the Report of the Directors have been prepared in accordance with applicable legal requirements. |
REPORT OF THE INDEPENDENT AUDITORS TO THE MEMBERS OF |
NOVANTA TECHNOLOGIES UK LIMITED |
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 Report of the Directors. |
We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion: |
- | adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or |
- | the financial statements are not in agreement with the accounting records and returns; or |
- | certain disclosures of directors' remuneration specified by law are not made; or |
- | we have not received all the information and explanations we require for our audit. |
Responsibilities of directors |
As explained more fully in the Statement of Directors' Responsibilities set out on page four, 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 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. |
REPORT OF THE INDEPENDENT AUDITORS TO THE MEMBERS OF |
NOVANTA TECHNOLOGIES UK LIMITED |
Auditors' 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 a Report of the Auditors 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. |
The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below: |
Procedures to identify risks: |
- | enquiring of management concerning the company's procedures relating to: identifying, evaluating and complying with laws and regulations and whether they were aware of any instances of noncompliance; detecting and responding to the risks of fraud and whether they have knowledge of any actual, suspected or alleged fraud; |
- | discussing among the engagement team regarding how and where fraud might occur in the financial statements and any potential indicators of fraud. As part of this discussion, we identified potential for fraud in the following areas: timing of recognition of sales and purchases and their related stock movements, posting of unusual journals; and |
- | obtaining an understanding of the legal and regulatory frameworks that the company operates in, focusing on those laws and regulations that had a direct effect on the financial statements or that had a fundamental effect on the operations of the company. The key laws and regulations we considered in this context included UK Companies Act, employment law, health and safety, pensions legislation and tax legislation. |
The procedures to respond to risks identified included: |
- | reviewing the financial statement disclosures and testing to supporting documentation to assess compliance with relevant laws and regulations discussed above; |
- | enquiring of management, concerning actual and potential litigation and claims; |
- | performing analytical procedures to identify any unusual or unexpected relationships that may indicate risks of material misstatement due to fraud; |
- | reviewing correspondence with HMRC; |
- | testing the timing and matching of income and expense transactions relating to stock movements either side of the year end; and |
- | in addressing the risk of fraud through management override of controls, testing the appropriateness of journal entries and other adjustments; assessing whether the judgements made in making accounting estimates are indicative of a potential bias; and evaluating the business rationale of any significant transactions that are unusual or outside the normal course of business. |
We also communicated relevant identified laws and regulations and potential fraud risks to all engagement team members, and remained alert to any indications of fraud or non-compliance with laws and regulations throughout the audit. |
There are inherent limitations in the audit procedures described above. We are less likely to become aware of instances of non-compliance with laws and regulation that are not closely related to events and transactions reflected in the financial statements. The risk of not detecting a material misstatement due to fraud is higher than the risk of not detection one resulting from an error, as fraud may involve deliberate concealment, by for example, forgery or intentional misrepresentation, or through collusion. |
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website at www.frc.org.uk/auditorsresponsibilities. This description forms part of our Report of the Auditors. |
REPORT OF THE INDEPENDENT AUDITORS TO THE MEMBERS OF |
NOVANTA TECHNOLOGIES UK LIMITED |
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 a Report of the Auditors and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's members as a body, for our audit work, for this report, or for the opinions we have formed. |
for and on behalf of |
Chartered Accountants and |
Statutory Auditors |
Clarke Nicklin House |
Brooks Drive |
Cheadle Royal Business Park |
Cheadle |
Cheshire |
SK8 3TD |
NOVANTA TECHNOLOGIES UK LIMITED (REGISTERED NUMBER: 01041317) |
INCOME STATEMENT |
FOR THE YEAR ENDED 31 DECEMBER 2023 |
2023 | 2022 |
Notes | £'000 | £'000 | £'000 | £'000 |
TURNOVER | 3 |
Cost of sales |
GROSS PROFIT |
Administrative expenses |
(1,925 | ) | 4,630 |
Other operating income |
OPERATING PROFIT | 5 |
Income from shares in group undertakings |
Interest receivable and similar income |
18,651 | 35,785 |
PROFIT BEFORE TAXATION |
Tax on profit | 6 |
PROFIT FOR THE FINANCIAL YEAR |
NOVANTA TECHNOLOGIES UK LIMITED (REGISTERED NUMBER: 01041317) |
OTHER COMPREHENSIVE INCOME |
FOR THE YEAR ENDED 31 DECEMBER 2023 |
2023 | 2022 |
Notes | £'000 | £'000 |
PROFIT FOR THE YEAR |
OTHER COMPREHENSIVE INCOME |
Actuarial gain/(loss) on defined benefit |
pension plan | ( |
) | ( |
) |
Past service costs |
Income tax relating to components of |
other comprehensive income |
Income tax relating to components of other comprehensive income |
OTHER COMPREHENSIVE INCOME FOR THE YEAR, NET OF INCOME TAX |
( |
) |
( |
) |
TOTAL COMPREHENSIVE INCOME FOR THE YEAR |
NOVANTA TECHNOLOGIES UK LIMITED (REGISTERED NUMBER: 01041317) |
STATEMENT OF FINANCIAL POSITION |
31 DECEMBER 2023 |
2023 | 2022 |
Notes | £'000 | £'000 | £'000 | £'000 |
FIXED ASSETS |
Intangible assets | 8 |
Tangible assets | 9 |
Investments | 10 |
CURRENT ASSETS |
Stocks | 11 |
Debtors | 12 |
Cash at bank |
CREDITORS |
Amounts falling due within one year | 13 |
NET CURRENT ASSETS |
TOTAL ASSETS LESS CURRENT LIABILITIES |
PROVISIONS FOR LIABILITIES | 15 | ( |
) | ( |
) |
PENSION ASSET | 18 |
NET ASSETS |
CAPITAL AND RESERVES |
Called up share capital | 16 |
Share premium | 17 |
Other reserves | 17 |
Retained earnings | 17 |
SHAREHOLDERS' FUNDS |
The financial statements were approved by the Board of Directors and authorised for issue on |
NOVANTA TECHNOLOGIES UK LIMITED (REGISTERED NUMBER: 01041317) |
STATEMENT OF CHANGES IN EQUITY |
FOR THE YEAR ENDED 31 DECEMBER 2023 |
Called up |
share | Retained | Share | Other | Total |
capital | earnings | premium | reserves | equity |
£'000 | £'000 | £'000 | £'000 | £'000 |
Balance at 1 January 2022 |
Changes in equity |
Dividends | - | ( |
) | - | - | ( |
) |
Total comprehensive income | - | - |
Balance at 31 December 2022 |
Changes in equity |
Dividends | - | ( |
) | - | - | ( |
) |
Total comprehensive income | - | - |
Balance at 31 December 2023 |
NOVANTA TECHNOLOGIES UK LIMITED (REGISTERED NUMBER: 01041317) |
NOTES TO THE FINANCIAL STATEMENTS |
FOR THE YEAR ENDED 31 DECEMBER 2023 |
1. | STATUTORY INFORMATION |
Novanta Technologies UK Limited ("the Company") is a limited company incorporated in the United Kingdom and registered in England and Wales under the Companies Act 2006. The address of its principal place of business is Holton Road, Holton Heath, Poole, Dorset, BH16 6LN. |
2. | ACCOUNTING POLICIES |
Basis of preparing the financial statements |
The presentation currency of the financial statements is Sterling (£). |
Financial Reporting Standard 102 - reduced disclosure exemptions |
The company has taken advantage of the following disclosure exemptions in preparing these financial statements, as permitted by FRS 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland": |
• | the requirements of Section 7 Statement of Cash Flows; |
• | the requirement of paragraph 3.17(d); |
• | the requirements of paragraphs 26.18(b), 26.19 to 26.21 and 26.23; |
• | the requirement of paragraph 33.7. |
Preparation of consolidated financial statements |
The financial statements contain information about Novanta Technologies UK Limited as an individual company and do not contain consolidated financial information as the parent of a group. The company is exempt under Section 401 of the Companies Act 2006 from the requirements to prepare consolidated financial statements as it and its subsidiary undertaking are included by full consolidation in the consolidated financial statements of its parent, Novanta Inc., 125 Middlesex Turnpike, Bedford, MA 01730, USA. |
Going concern |
The financial statements have been prepared on a going concern basis as the directors believe that the company will be able to continue to meet its liabilities as they fall due for the foreseeable future. In drawing this conclusion, management have considered the following: |
The outlook for the next 12 months is for a steady volume of beryllium mirrors and machined parts sales. The air bearing spindle market has multi-year cyclic demand profile and the business has considered that the demand will recover in the next financial year following on from lower revenue levels in 2023. The beginning of this upturn has been noticeable in H1 2024. |
The forecast has been prepared on prudent volume assumptions and any remaining economic implications of the COVID-19 pandemic. The turnover levels have been considered against levels of recent years to ensure they are reasonable and the product margins in the review are considered by the directors to be conservative and therefore the forecasts are considered achievable. The directors expect the company to show growth in 2024. |
NOVANTA TECHNOLOGIES UK LIMITED (REGISTERED NUMBER: 01041317) |
NOTES TO THE FINANCIAL STATEMENTS - continued |
FOR THE YEAR ENDED 31 DECEMBER 2023 |
2. | ACCOUNTING POLICIES - continued |
Significant judgements and estimates |
Preparation of the financial statements requires management to make significant judgements and estimates. The items in the financial statements where these judgements and estimates have been made include: |
Amortisation and depreciation of assets |
The company amortises and depreciates its intangible and tangible assets over their estimated useful lives. The estimation of the useful lives of assets is based on historic performance as well as expectations about future use and therefore requires estimates and assumptions to be applied by the directors. The actual lives of these assets can vary depending on a variety of factors, including technological innovation, product life cycles and maintenance programmes. |
Warranty provisions |
A warranty provision is made, based on the directors' estimate of the future cost of rectifying known problems on all products sold by the company. The majority of the provision is expected to be utilised in the next 12 months. |
Dilapidations provision |
A dilapidations provision is made, based on the directors' estimate of the obligation to return a property to its original condition upon expiry of a lease. |
Stock provisioning |
When calculating the inventory provision, management considers the nature and condition of the inventory, as well as applying assumptions around anticipated saleability of finished goods and future usage of raw materials. See note 12 for the net carrying amount of the inventory and associated provision. |
Impairment of debtors |
The company makes an estimate of the recoverable value of trade and other debtors. When assessing impairment of trade and other debtors, management considers factors including the current credit rating of the debtor, the ageing profile of debtors and historical experience. See note 13 for the net carrying amount of the debtors and associated impairment provision. |
Defined benefit pension scheme |
The company has an obligation to pay pension benefits to certain former employees of the JK Lasers business. The cost of these benefits and the present value of the obligation depend on a number of factors, including life expectancy, rate of inflation, asset valuations and the discount rate on corporate bonds. Management estimates these factors in determining the net pension obligation in the balance sheet. The assumptions reflect historical experience and current trends. See note 19 for the disclosures relating to the defined benefit pension scheme. |
NOVANTA TECHNOLOGIES UK LIMITED (REGISTERED NUMBER: 01041317) |
NOTES TO THE FINANCIAL STATEMENTS - continued |
FOR THE YEAR ENDED 31 DECEMBER 2023 |
2. | ACCOUNTING POLICIES - continued |
Turnover |
Turnover is measured at the fair value of the consideration received or receivable, net of discounts and value added tax. |
The majority of the company's products are sold on an ex works basis and the revenue is recognised on despatch. The remaining revenue is recognised when title to the goods is transferred to customers, and is normally upon delivery of the product to the customer. |
The company recognises turnover when (a) the significant risks and rewards of ownership have been transferred to the buyer, (b) the company retains no continuing involvement or control over the goods, (c) the amount of turnover can be measured reliably, (d) it is probable that future economic benefits will flow to the entity. |
Royalty income |
The company earns royalties from other manufacturers in relation to the sale of products designed by the company. Royalty income is recognised on an accruals basis in accordance with the substance of the relevant agreement. |
Income from shares in group companies |
Income from shares in group undertakings represents dividend income in investment in subsidiaries and associates. |
Share based payments |
Full details of the share schemes in which employees of the company can participate are contained in the financial statements of the ultimate parent company Novanta Inc. Details on how to obtain copies of these financial statements are set out in note 19. These schemes relate to shares in the ultimate parent company Novanta Inc. |
The company records the expense associated with share-based compensation awards to employees based on the fair value of awards as of the grant date. For stock-based compensation awards that vest over time, such expenses are recognised in the income statement rateably over the vesting period of the award, net of estimated forfeitures. The stock-based compensation charge is recorded within administrative expenses and invoiced by Novanta Inc. Prior to 2019, no invoice was raised and a corresponding credit was made to reserves as a capital contribution. |
Intangible assets |
Intangible assets are initially measured at cost. After initial recognition, intangible assets are measured at cost less any accumulated amortisation and any accumulated impairment losses. |
NOVANTA TECHNOLOGIES UK LIMITED (REGISTERED NUMBER: 01041317) |
NOTES TO THE FINANCIAL STATEMENTS - continued |
FOR THE YEAR ENDED 31 DECEMBER 2023 |
2. | ACCOUNTING POLICIES - continued |
Tangible fixed assets |
Freehold property | - |
Short leasehold | - |
Plant and machinery | - |
Fixtures and fittings | - |
Computer equipment | - |
Impairment of assets |
At each reporting date fixed assets are reviewed to determine whether there is any indication that those assets have suffered an impairment loss. If there is an indication of possible impairment, the recoverable amount of any affected asset is estimated and compared with its carrying amount. If estimated recoverable amount is lower, the carrying amount is reduced to its estimated recoverable amount, and an impairment loss is recognised immediately in the income statement. |
If an impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised estimate of its recoverable amount, but not in excess of the amount that would have been determined had no impairment loss been recognised for the asset in the prior years. A reversal of an impairment loss is recognised immediately in the income statement. |
Investments in subsidiaries |
Investments in subsidiaries and associates are accounted for at cost less impairment except as described in note 10. |
Stocks |
Stocks are stated at the lower of cost and estimated selling price less costs to complete and sell. Stocks are recognised as an expense in the period in which the related revenue is recognised. |
Cost is valued at standard. The cost of purchased items is the purchase price. The cost of manufactured finished goods and work in progress includes raw materials, direct labour and other direct costs and related production overheads (based on normal operating capacity). |
At the end of each reporting period, stocks are assessed for impairment. If an item of inventory is impaired, the identified inventory is reduced to its selling price less costs to complete and sell and an impairment charge is recognised in the income statement. Where a reversal of the impairment is recognised, the impairment charge is reversed, up to the original impairment loss, and is recognised as a credit in the income statement. |
NOVANTA TECHNOLOGIES UK LIMITED (REGISTERED NUMBER: 01041317) |
NOTES TO THE FINANCIAL STATEMENTS - continued |
FOR THE YEAR ENDED 31 DECEMBER 2023 |
2. | ACCOUNTING POLICIES - continued |
Financial instruments |
The company has chosen to adopt Sections 11 and 12 of FRS 102 in respect of financial instruments. The company only enters into basic financial instrument transactions that result in the recognition of financial assets and liabilities, including amounts owed by and to group undertakings. |
Financial assets |
Basic financial assets, including trade debtors, cash and bank balances and amounts owed by group undertakings, are initially recognised at transaction price, unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at the market rate of interest. |
Such assets are subsequently carried at amortised cost using the effective interest method. |
At the end of each reporting period, financial assets measured at amortised cost are assessed for objective evidence of impairment. 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 the income statement. |
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 the income statement. |
Financial assets are derecognised when (a) the contractual rights to the cash flows from the asset expire or are settled, or (b) substantially all the risks and rewards of the ownership of the asset are transferred to another party, or (c) control of the asset has been transferred to another party who has the practical ability to unilaterally sell the asset to an unrelated third party without imposing additional restrictions. |
Financial liabilities |
Basic financial liabilities, including trade creditors and amounts owed to group undertakings, 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. |
Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Trade creditors are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. |
Financial liabilities are derecognised when the liability is extinguished, that is when the contractual obligation is discharged, cancelled or expires. |
NOVANTA TECHNOLOGIES UK LIMITED (REGISTERED NUMBER: 01041317) |
NOTES TO THE FINANCIAL STATEMENTS - continued |
FOR THE YEAR ENDED 31 DECEMBER 2023 |
2. | ACCOUNTING POLICIES - continued |
Taxation |
Taxation expense for the period comprises current and deferred tax recognised in the reporting period. Tax is recognised in the income statement, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case tax is also recognised in other comprehensive income or directly in equity respectively. |
Current or deferred taxation assets and liabilities are not discounted. |
Current tax is the amount of income tax payable in respect of the taxable profit for the year or prior years. Tax is calculated on the basis of tax rates and laws that have been enacted or substantively enacted by the period end. |
Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities. |
Deferred tax |
Deferred tax arises from timing differences that are differences between taxable profits reported in the tax return and total comprehensive income as stated in the financial statements. These timing differences arise from the inclusion of income and expenses in tax assessments in periods different from those in which they are recognised in the financial statements. |
Deferred tax is recognised on all timing differences at the reporting date except for certain exceptions. Unrelieved tax losses and other deferred tax assets are only recognised when it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. |
Deferred tax is measured using tax rates and laws that have been enacted or substantively enacted by the period end and that are expected to apply to the reversal of timing difference. |
Research and development |
Expenditure on research and development is written off in the year in which it is incurred. |
Foreign currencies |
Foreign currency transactions are translated into the functional currency using the spot exchange rates at the dates of the transactions. |
At each period end, foreign currency monetary items are translated using the closing rate. Non-monetary items measured at historical cost are translated using the exchange rate at the date of the transaction and non-monetary items measured at fair value are measured using the exchange rate when fair value was determined. |
Foreign exchange gains and losses resulting from the settlement of transactions and from the translation at period-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the income statement except when deferred in other comprehensive income as qualifying cash flow hedges. |
Operating leasing rentals |
Rentals payable under operating leases are charged to the income statement on a straight line basis over the lease term. |
NOVANTA TECHNOLOGIES UK LIMITED (REGISTERED NUMBER: 01041317) |
NOTES TO THE FINANCIAL STATEMENTS - continued |
FOR THE YEAR ENDED 31 DECEMBER 2023 |
2. | ACCOUNTING POLICIES - continued |
Pension costs and other post-retirement benefits |
The company provides a range of benefits to employees, the main from which are defined benefit and defined contribution pension plans. |
Defined contribution pension plan |
The company operates a defined contribution pension plan for its employees. A defined contribution plan is a pension plan under which the company pays fixed contributions into a separate entity. Once the contributions have been paid the company has no further payment obligations. The contributions are recognised as an expense when they are due. Amounts not paid are shown in accruals in the balance sheet. The assets of the plan are held separately from the company in independently administered funds. |
Defined benefit pension plan |
The company operates a defined benefit pension plan for certain former employees of JK Lasers business. A defined benefit plan defines the pension benefit that the participant will receive on retirement, usually dependant upon several factors including age, length of service and remuneration. A defined benefit plan is a pension plan this is not a defined contribution plan. |
The liability recognised in the balance sheet in respect of the defined benefit plan is the present value of the defined benefit obligation at the end of the reporting date less the fair value of the plan assets at the reporting date. |
The defined benefit obligation is calculated using the projected unit credit method. Annually the company engages independent actuaries to calculate the obligation. The present value is determined by discounting the estimated future payments using market yields on high quality corporate bonds that are denominated in sterling and that have terms approximating the estimated period of the future payments ('discount rate'). |
The fair value of plan assets is measured in accordance with FRS 102 fair value hierarchy and in accordance with the company's policy for similarly held assets. This includes the use of appropriate valuation techniques. |
Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are charged or credited to other comprehensive income. Those amounts together with the return on plan assets, less amounts included in net interest, are disclosed as 'Remeasurement of net defined benefit liability'. |
Provisions for liabilities |
Provisions are recognised when the company has a present obligation (legal or constructive) as a result of a past event, it is probable that the company will be required to settle the 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 end of the reporting period, taking into account the risks and uncertainties surrounding the obligation. The company recognises provisions for the expected costs of maintenance under warranties, which are charged against profits when products have been invoiced. |
NOVANTA TECHNOLOGIES UK LIMITED (REGISTERED NUMBER: 01041317) |
NOTES TO THE FINANCIAL STATEMENTS - continued |
FOR THE YEAR ENDED 31 DECEMBER 2023 |
3. | TURNOVER |
The turnover and profit before taxation are attributable to the one principal activity of the company. |
An analysis of turnover by geographical market is given below: |
2023 | 2022 |
£'000 | £'000 |
United Kingdom and Europe | 10,171 | 12,707 |
North America | 7,182 | 9,423 |
Other | 2,490 | 10,059 |
Turnover comprises the value of sales (excluding VAT and trade discounts) of goods and services in the normal course of business. |
4. | EMPLOYEES AND DIRECTORS |
2023 | 2022 |
£'000 | £'000 |
Wages and salaries |
Social security costs |
Other pension costs |
The average number of employees during the year was as follows: |
2023 | 2022 |
Production | 60 | 93 |
Sales | 3 | 5 |
Administration | 27 | 8 |
Research and development | 22 | 18 |
Redundancy costs, included above amounted to of £276,082 (2022: £242,915). |
2023 | 2022 |
£ | £ |
Directors' remuneration |
NOVANTA TECHNOLOGIES UK LIMITED (REGISTERED NUMBER: 01041317) |
NOTES TO THE FINANCIAL STATEMENTS - continued |
FOR THE YEAR ENDED 31 DECEMBER 2023 |
5. | OPERATING PROFIT |
The operating profit is stated after charging/(crediting): |
2023 | 2022 |
£'000 | £'000 |
Other operating leases |
Depreciation - owned assets |
Profit on disposal of fixed assets | ( |
) | ( |
) |
Computer software amortisation |
Auditors' remuneration: Audit services |
Foreign currency differences |
Royalty income | ( |
) | ( |
) |
Operating lease rentals |
Impairment of stock | ( |
) |
Impairment of trade debtors |
6. | TAXATION |
Analysis of the tax charge |
The tax charge on the profit for the year was as follows: |
2023 | 2022 |
£'000 | £'000 |
Current tax: |
UK corporation tax |
Prior year adjustments | (157 | ) | (163 | ) |
Foreign tax suffered | 36 | - |
Total current tax | ( |
) |
Deferred tax: |
Origination and reversal of |
timing differences | 598 | 1,033 |
Prior year adjustments | (119 | ) | - |
Total deferred tax |
Tax on profit |
NOVANTA TECHNOLOGIES UK LIMITED (REGISTERED NUMBER: 01041317) |
NOTES TO THE FINANCIAL STATEMENTS - continued |
FOR THE YEAR ENDED 31 DECEMBER 2023 |
6. | TAXATION - continued |
Reconciliation of total tax charge included in profit and loss |
The tax assessed for the year is lower than the standard rate of corporation tax in the UK. The difference is explained below: |
2023 | 2022 |
£'000 | £'000 |
Profit before tax |
Profit multiplied by the standard rate of corporation tax in the UK of |
Effects of: |
Expenses not deductible for tax purposes |
Income not taxable for tax purposes | ( |
) | ( |
) |
Capital allowances in excess of depreciation | ( |
) | ( |
) |
Adjustments to tax charge in respect of previous periods | ( |
) | ( |
) |
Patent Box deduction | (141 | ) | (362 | ) |
Change in deferred tax rate | 35 | (182 | ) |
Deferred tax (charged)/credited direct to STRIA | - | 421 |
Group relief surrendered | 286 | - |
Foreign tax credits | 36 | - |
Total tax charge | 357 | 1,063 |
Tax effects relating to effects of other comprehensive income |
2023 |
Gross | Tax | Net |
£'000 | £'000 | £'000 |
Actuarial gain/(loss) on defined benefit |
pension plan | ( |
) | - | (250 | ) |
Past service costs |
Income tax relating to components of |
other comprehensive income | - | 63 |
(187 | ) | - | (187 | ) |
2022 |
Gross | Tax | Net |
£'000 | £'000 | £'000 |
Actuarial gain/(loss) on defined benefit |
pension plan | ( |
) | - | (1,684 | ) |
Past service costs |
Income tax relating to components of |
other comprehensive income | - | 421 |
(1,263 | ) | - | (1,263 | ) |
NOVANTA TECHNOLOGIES UK LIMITED (REGISTERED NUMBER: 01041317) |
NOTES TO THE FINANCIAL STATEMENTS - continued |
FOR THE YEAR ENDED 31 DECEMBER 2023 |
7. | DIVIDENDS |
2023 | 2022 |
£'000 | £'000 |
Ordinary shares of £1 each |
Interim |
8. | INTANGIBLE FIXED ASSETS |
Computer |
software |
£'000 |
COST |
At 1 January 2023 |
Disposals | ( |
) |
At 31 December 2023 |
AMORTISATION |
At 1 January 2023 |
Amortisation for year |
Eliminated on disposal | ( |
) |
At 31 December 2023 |
NET BOOK VALUE |
At 31 December 2023 |
At 31 December 2022 |
9. | TANGIBLE FIXED ASSETS |
Freehold | Short | Plant and |
property | leasehold | machinery |
£'000 | £'000 | £'000 |
COST |
At 1 January 2023 |
Additions |
Disposals | ( |
) |
At 31 December 2023 |
DEPRECIATION |
At 1 January 2023 |
Charge for year |
Eliminated on disposal | ( |
) |
At 31 December 2023 |
NET BOOK VALUE |
At 31 December 2023 |
At 31 December 2022 |
NOVANTA TECHNOLOGIES UK LIMITED (REGISTERED NUMBER: 01041317) |
NOTES TO THE FINANCIAL STATEMENTS - continued |
FOR THE YEAR ENDED 31 DECEMBER 2023 |
9. | TANGIBLE FIXED ASSETS - continued |
Fixtures |
and | Computer |
fittings | equipment | Totals |
£'000 | £'000 | £'000 |
COST |
At 1 January 2023 |
Additions |
Disposals | ( |
) | ( |
) | ( |
) |
At 31 December 2023 |
DEPRECIATION |
At 1 January 2023 |
Charge for year |
Eliminated on disposal | ( |
) | ( |
) | ( |
) |
At 31 December 2023 |
NET BOOK VALUE |
At 31 December 2023 |
At 31 December 2022 |
10. | FIXED ASSET INVESTMENTS |
2023 | 2022 |
£'000 | £'000 |
Shares in group undertakings |
Other investments not loans |
Additional information is as follows: |
Shares in |
group |
undertaking |
£'000 |
COST |
At 1 January 2023 |
and 31 December 2023 |
NET BOOK VALUE |
At 31 December 2023 |
At 31 December 2022 |
Investments (neither listed nor unlisted) were as follows: |
2023 | 2022 |
£'000 | £'000 |
Capital contribution | 2,830 | 2,830 |
NOVANTA TECHNOLOGIES UK LIMITED (REGISTERED NUMBER: 01041317) |
NOTES TO THE FINANCIAL STATEMENTS - continued |
FOR THE YEAR ENDED 31 DECEMBER 2023 |
10. | FIXED ASSET INVESTMENTS - continued |
The company has direct or indirect interests in the ordinary share capital of the following entities: |
Subsidiary | Percentage held | Place of incorporation |
Laser Quantum Limited | 100.0% | United Kingdom |
Novanta Technologies (Suzhou) Co., Ltd | 100.0% | China |
Novanta Japan Corporation | 100.0% | Japan |
Zettlex (UK) Limited | 100.0% | United Kingdom |
11. | STOCKS |
2023 | 2022 |
£'000 | £'000 |
Raw materials |
Work-in-progress |
Finished goods |
The directors of the company believe there is no material difference between the balance sheet value and replacement cost of stock. For these purposes, replacement cost is based on latest invoice price at the balance sheet date. |
Stock is stated after provisions for impairment of £2,410,386 (2022: £444,958). Stock provision in 2023 includes a rework provision of £2,200,086 for stock which had to be reprocessed. |
12. | DEBTORS: AMOUNTS FALLING DUE WITHIN ONE YEAR |
2023 | 2022 |
£'000 | £'000 |
Trade debtors |
Amounts owed by group undertakings |
Other debtors |
Corporation tax |
VAT |
Prepayments |
Trade debtors are stated after provisions for impairment of £81,663 (2022: £40,802). |
13. | CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR |
2023 | 2022 |
£'000 | £'000 |
Trade creditors |
Amounts owed to group undertakings |
Social security and other taxes |
VAT | 16 | - |
Other creditors |
Accruals and deferred income |
NOVANTA TECHNOLOGIES UK LIMITED (REGISTERED NUMBER: 01041317) |
NOTES TO THE FINANCIAL STATEMENTS - continued |
FOR THE YEAR ENDED 31 DECEMBER 2023 |
14. | LEASING AGREEMENTS |
Minimum lease payments under non-cancellable operating leases fall due as follows: |
2023 | 2022 |
£'000 | £'000 |
Within one year |
Between one and five years |
In more than five years |
15. | PROVISIONS FOR LIABILITIES |
2023 | 2022 |
£'000 | £'000 |
Deferred tax |
Accelerated capital allowances |
Other timing differences | 608 | 362 |
1,617 | 1,201 |
Other provisions |
Warranty provision | - | 19 |
Dilapidations provision | 320 | 509 |
Lease provisions | 1,223 | 1,420 |
Aggregate amounts | 3,160 | 3,149 |
Deferred | Other |
tax | provisions |
£'000 | £'000 |
Balance at 1 January 2023 |
Charge/(credit) to Income Statement during year | ( |
) |
Charge/(credit) to Other |
Comprehensive Income | (63 | ) | - |
Balance at 31 December 2023 |
16. | CALLED UP SHARE CAPITAL |
Allotted, issued and fully paid: |
Number: | Class: | Nominal | 2023 | 2022 |
value: | £'000 | £'000 |
Ordinary | £1 | 9,125 | 9,125 |
Called up share capital - represents the nominal value of shares that have been issued. |
NOVANTA TECHNOLOGIES UK LIMITED (REGISTERED NUMBER: 01041317) |
NOTES TO THE FINANCIAL STATEMENTS - continued |
FOR THE YEAR ENDED 31 DECEMBER 2023 |
17. | RESERVES |
Retained | Share | Other |
earnings | premium | reserves | Totals |
£'000 | £'000 | £'000 | £'000 |
At 1 January 2023 | 119,136 |
Profit for the year |
Dividends | ( |
) | ( |
) |
Actuarial gain/(loss) | (250 | ) | - | - | (250 | ) |
Deferred tax in respect of |
defined benefit pension |
scheme | 63 | - | - | 63 |
At 31 December 2023 | 115,277 |
Share premium account - includes any premiums received on issue of share capital. Any transaction costs associated with the issuing of shares are deducted from share premium. |
Other reserves - represents contributions made by the parent. |
Profit and loss account - includes all current and prior year retained profits and losses. |
Dividends |
A dividend of £2.5697 per ordinary share (2022: £4.0568) totalling £23,450,000 (2022: £37,020,000) was paid during the year. |
18. | EMPLOYEE BENEFIT OBLIGATIONS |
The company operates a defined benefit pension scheme, the GSI Group Limited UK Pension Scheme, which is closed to new entrants. |
The scheme closed to future accrual with effect from 3 June 2003. Pension benefits for deferred members are based on the member's final pensionable salary and service at the date accrual ceased (or date of leaving if earlier). |
The company expects to pay £224,638 to the scheme during the year ending 31 December 2024. This includes £2,000 in respect of the PPF Levy. |
A new money purchase scheme was introduced on 1 April 1997. The scheme is controlled by Scottish Equitable and is administered by Oval Group. |
The Poole employees are members of a money purchase scheme controlled by Phoenix Life and administered by Origen Financial Services. |
The amount charged to the income statement in the year in respect of the money purchase schemes was £272,398 (2022: £272,419). At the balance sheet date prepaid contributions amounted to £nil (2022: nil). |
A full valuation of the defined benefit scheme was carried out at 31 December 2023 by First Actuarial LLP using the projected unit valuation method. |
NOVANTA TECHNOLOGIES UK LIMITED (REGISTERED NUMBER: 01041317) |
NOTES TO THE FINANCIAL STATEMENTS - continued |
FOR THE YEAR ENDED 31 DECEMBER 2023 |
18. | EMPLOYEE BENEFIT OBLIGATIONS - continued |
The amounts recognised in the balance sheet are as follows: |
Defined benefit |
pension plans |
2023 | 2022 |
£'000 | £'000 |
Present value of funded obligations | ( |
) | ( |
) |
Fair value of plan assets |
2,432 | 1,667 |
Present value of unfunded obligations |
Surplus |
Net asset |
The amounts recognised in profit or loss are as follows: |
Defined benefit |
pension plans |
2023 | 2022 |
£'000 | £'000 |
Current service cost |
Interest cost | (954 | ) | (543 | ) |
Past service cost |
Expected return on assets |
205 | 498 |
Actual return on plan assets | ( |
) |
Changes in the present value of the defined benefit obligation are as follows: |
Defined benefit |
pension plans |
2023 | 2022 |
£'000 | £'000 |
Opening defined benefit obligation |
Interest cost |
Actuarial losses/(gains) | ( |
) |
Benefits paid | ( |
) | ( |
) |
NOVANTA TECHNOLOGIES UK LIMITED (REGISTERED NUMBER: 01041317) |
NOTES TO THE FINANCIAL STATEMENTS - continued |
FOR THE YEAR ENDED 31 DECEMBER 2023 |
18. | EMPLOYEE BENEFIT OBLIGATIONS - continued |
Changes in the fair value of scheme assets are as follows: |
Defined benefit |
pension plans |
2023 | 2022 |
£'000 | £'000 |
Opening fair value of scheme assets |
Contributions by employer |
Expected return | 1,159 | 1,041 |
Actuarial gains/(losses) | ( |
) |
Benefits paid | (1,011 | ) | (966 | ) |
The amounts recognised in other comprehensive income are as follows: |
Defined benefit |
pension plans |
2023 | 2022 |
£'000 | £'000 |
Actuarial gains/(losses) | ( |
) | ( |
) |
(250 | ) | (1,684 | ) |
The major categories of scheme assets as a percentage of total scheme assets are as follows: |
Defined benefit |
pension plans |
2023 | 2022 |
Equities | 7% | 8% |
Bonds & Gilts | 74% | 72% |
Cash | 1% | 4% |
Other | 18% | 16% |
100% | 100% |
Principal actuarial assumptions at the balance sheet date (expressed as weighted averages): |
2023 | 2022 |
Discount rate |
Rate of increase in pensions in payment |
Inflation assumption - pre retirement |
Inflation assumption - post retirement |
Expected rate of return on scheme assets | 5.29% | 3.20% |
NOVANTA TECHNOLOGIES UK LIMITED (REGISTERED NUMBER: 01041317) |
NOTES TO THE FINANCIAL STATEMENTS - continued |
FOR THE YEAR ENDED 31 DECEMBER 2023 |
19. | ULTIMATE PARENT COMPANY |
Novanta Inc. (incorporated in Canada ) is regarded by the directors as being the company's ultimate parent company. |
The largest and smallest group in which the results of the company are consolidated is Novanta Inc. The consolidated financial statements of Novanta Inc. can be found at www.sec.gov or by writing to Novanta Inc., 125 Middlesex Turnpike, Bedford, MA 01730, USA. |
20. | POST BALANCE SHEET EVENTS |
On 1 January 2024, the balances and trade assets of Laser Quantum Limited, a subsidiary of Novanta Technologies UK Limited, have been transferred into Novanta Technologies UK Limited. |
21. | PRINCIPAL RISKS AND UNCERTAINTIES |
The principal risks and uncertainties of the company relate to competition. The company manages competitive trading risk by continually investing in research and development to provide industry leading products to customers, and by maintaining strong relationships with customers. |
22. | FINANCIAL RISK MANAGEMENT |
The company's operations expose it to a variety of financial risks that include credit risk, foreign exchange rate risk, pricing risk, liquidity risk and defined benefit pension scheme deficit risks. |
Credit risk |
Credit risk is managed by agreeing payment terms in advance. Appropriate credit control procedures are followed at all operations where credit risk is perceived. |
Foreign exchange rate risk |
The company's transactions are in sterling and other currencies, and therefore the company is exposed to the movement in foreign exchange rates. The company tries to match currency exposures by purchasing in foreign currency. |
Pricing risk |
Pricing pressure is a constant risk which the company attempts to mitigate by continuous improvements in efficiency, capital investments to generate lower costs and seeking the best prices from its supply chain. |
Liquidity risk |
The company addresses liquidity by careful cash flow forecasting, strong credit control and negotiating appropriate terms with its supply chain. |
Interest rate risk |
The company has no borrowings from outside the group and therefore does not have a significant exposure to interest rate fluctuations. |
Defined benefit pension scheme deficit risk |
The defined benefit pension scheme is subject to risks in relation to changes in inflation and in the fair value of investments and the returns from those investments. An investment strategy has been developed by the pension trustee in order to mitigate such risks. |