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Registered number:
FOR THE YEAR ENDED 31 DECEMBER 2024
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HANKOOK TYRE U.K. LIMITED
COMPANY INFORMATION
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HANKOOK TYRE U.K. LIMITED
CONTENTS
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HANKOOK TYRE U.K. LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2024
The principal activity of the Company during the year was to import, distribute and sell tyres in the UK.
Hankook tyres are imported from the Hankook Group company factories in South Korea, China, Indonesia and Hungary. The tyres are sold principally into the replacement market and this year the value of the sales was £173 million (2023: £169 million) (before rebates), representing 94.1% (2023: 92.1%) of total company turnover. The remaining 5.9% (2023: 7.9%) is represented by original equipment supplies to vehicle manufacturers. The result of the Company shows a pre tax loss of £1.015 million (2023: a pre-tax loss £0.966 million) for the year and sales (net of rebates) of £157.8 million (2023: £164.7 million).
The demand within the UK tyre market remained the same as 2023 in general. However, demand within Europool registered manufacturers decreased in 2024 by 3% vs 2023, mainly due to increase in the volume of non-Europool registered imported tyres to the UK market. Shipping cost from far eastern countries like China has reduced, and the volume of imported tyres increased by double digits vs 2023. Continuous increase in the general cost of living and energy costs have continued to make consumers, including fleets re-evaluate their purchase habits and they are buying lower tier brands of tyre despite potential performance differences.
Market competition is getting stronger as channels continue to consolidate with business acquisitions by larger groups and some looking for exit strategies, while some businesses also look for more control, or different channels of distribution. In the car tyre market, the demand for all season tyre products continued to replace the demand for winter tyre products. The demand for all season tyre products in 2024 has increased by 18% vs 2023. There’s also consistent growth in SUV and 4X4 tyre products sales as the volume of SUV and 4X4 has been growing over the last several years. The demand for Van tyre products is quite consistent as the need for last mile distribution grows. Recovery and growth in Hankook’s flagship product brands, Hankook & Laufenn resulted in Hankook gaining market share overall and maintaining sales revenue and achieving an acceptable growth. Hankook has lost market share in the truck/bus sector, mainly due to strong competition in free sales market even though Hankook has built strong partnerships with fleet management solution companies to win more business with HGV fleet companies. Hankook has been able to increase a strong footprint in the UK market to serve the needs of our dealer network, and to support its fleet businesses.
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HANKOOK TYRE U.K. LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2024
The management of the business and the execution of the Company's strategy are subject to a number of risks.
Risks are formally reviewed by the Board and appropriate processes are put into place to monitor and mitigate them. If more than one event occurs, it is possible that the overall effect of such events would compound the possible adverse effects on the Company. The key business risks affecting the company are set out below: Competition The Company operates in a highly competitive market positioned around price and quality. In order to mitigate this risk, our sales team put more effort on customer development, particularly focusing on tyre retailers in the market. By increasing the number of customers and regional coverage, the risk to Hankook will be minimised as it is spread more evenly, and dependence on a smaller number of wholesale customers is mitigated. Regular market price surveys are performed to ensure Hankook position their product as 'reasonably priced' within the market. Furthermore, market research is undertaken to identify if the customers' needs are being met. Credit risks It is important to ensure that all the Company's debts are collected in full. If the economic situation were to worsen Hankook's bad debt risk exposure will increase. To mitigate potential credit risk, the company's trade debts are fully insured by 3rd party insurers. Supply chain and Logistics Throughout 2024, the Company has been able to maintain the correct level and mix of stock without any issue. However, as the supply to OE customers (original equipment tyres to vehicle manufacturers) continues to increase and the imbalance of supply and demand continues to be expected due to seasonality of EU countries, Hankook needs to ensure continuity of supply to the customers in the UK throughout the whole year 2025 as well. Research and development Hankook maintains a substantial investment in the development of new and improved products achieving enhanced performance characteristics, giving consideration to environmental issues and meeting evolving legislative requirements. Hankook also continues to invest in the development of tyres specific for use on electric vehicles as they continue to become more prevalent in the marketplace. As new and more advanced products are developed, they are introduced into the UK, thereby ensuring that the latest and very best tyres are always available for our customers.
Due to the straightforward nature of the business the directors do not consider that there are any financial key performance indicators other than can be derived from the Profit and Loss Account.
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HANKOOK TYRE U.K. LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2024
The Company's objective is to achieve sustainable rates of growth through a combination of sales growth and a closer connection with customers.
The key elements to the Company's strategy for growth over the coming years include: - Continue to build a broad range of quality products and re-treaded commercial tyre sales in the UK; - Capitalising strong original equipment presence for replacement market; - Expanding the customer base to enhance regional coverage; - Launching new products in line with market demand; and - Additional marketing activities to increase brand value and awareness in the UK. Continue to build a broad range of quality product and re-treaded commercial tyre sales in the UK: In order to adapt to changing customer needs, Hankook will expand the range of All Season tyres, and specialist truck tyres for specific market requirements, for example: X Fit Van 4S on all season Van tyres, Smart Work tread on heavy duty off-road tyres, and tyres with a higher load rating. Hankook has also re-launched Laufenn Truck Tyre range in 2023. This will enable growth of market share in the UK while customer demand will be more focused on quality products. The customer's need for quality products shall only increase in the future and will be further enhanced by the introduction of stricter tyre labelling legislation. Furthermore, due to environmental issues in the UK, there is a demand for companies to produce re-treaded commercial tyres. The company introduced the “Alphatread” brand re-treaded tyres for the UK market in June 2013. This has brought more choice to our customers for new and re-treaded tyres. Hankook will continue to manufacture, promote and update this product as an environmentally friendly tyre, prolonging the life of new tyres. Capitalizing strong OE presence for replacement market (* OE – original equipment): Hankook continues to invest in the development and expansion of its OE customers (original equipment tyres to vehicle manufacturers), this will help enable Hankook to continue to increase market share as some consumers purchase like for like tyre replacements. Hankook is one of key suppliers to premium car manufacturers in Europe – Porsche, Mercedes, BMW, Audi, Tesla, et cetera. Expanding the customer base to enhance regional coverage: Our primary activity is to focus on increasing the fulfilment rate from the Daventry warehouse to the customer and improving customer satisfaction in terms of supplying tyre volumes quickly. This will then increase warehouse sales this year. Our key measure of success is the expansion of regional coverage. We are continuing to supply our products to Kwik Fit, the UK’s largest retailer of tyres, giving us national coverage. We will look to continue to expand our portfolio of customers concentrating on quality regional retailers and small retailers where there may still be coverage missing. Even though we now deal with the UK’s largest retailer of tyres, we will continue to invest in our relationship with Kwik Fit to maintain a presence in this retailer and look to increase our penetration in Car fleet sales and the Car dealer network to support the investment in original equipment fitments. Launching new products in line with market demand: Hankook launched several new products in 2024 and in 2025: Summer UHP & EV specific tyres in car tyres, and Smart Flex AL51 & DL51, the new truck tyres. As EV demand in the car market has increased dramatically, EV specific all season products, iON Flexclimate, and EV specific the highest level of low rolling resistant products, iON GT and Hankook’s advanced technology will ensure we are leaders in this emerging market. The new commercial vehicle tyres will bring more opportunities to gain direct fleet businesses for the future. Additional marketing activities to increase brand value and awareness in the UK for 2024: Since 2022 Hankook has participated in the Road Transport Expo. Hankook also has sponsored key events like the NTDA Awards and Commercial Motor Awards for a long time. Hankook implemented a few successful retail promotions throughout 2024 to increase exposure of image of Hankook to consumers. Hankook also continues to invest in online, and digital marketing and aim to build closer relationships with its retailers to offer them unique marketing propositions tailored specifically to their individual requirements. Since 2023, as an “Official
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HANKOOK TYRE U.K. LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2024
Partner” and the sole tyre supplier to the Formula-e series, which is the highest level of electric vehicle powered racing in the world, Hankook was recognised and awarded for its contribution for the best fan experience. Starting with the 2025 season, Hankook will also exclusively supply rally tyres for all WRC classes over the next 3 years. These exposures will bring awareness and brand recognition of Hankook’s technologies and products on a global scale and therefore increasing brand value. Hankook Tyre UK will continue to leverage this opportunity to maximise exposure in the local market through 2025.
Future outlook This year was another difficult year for the whole industry due to a volatile global economy, but in SUV/4X4/Van and All Season segments the market demand remains consistent and still shows signs of growth in the UK. In the commercial sector, service network development and fleet management solutions are becoming crucial to maintain business volumes and ensure sustainable growth. During 2024, overall market demand stayed static, and at the same time Hankook has foreseen that competition would become stronger. However, while focusing on consistent strategy and direction to defend existing sales volumes we aim to develop opportunities in new sales channels, with new customers to continue to strengthen Hankook’s position in the market. Hankook foresees that OE demand will be stagnant as new car registration in 2025 is expected to stay the same as 2024 based on SMMT forecast. We aim to maintain our existing customer base and develop regional customers to ensure a better UK coverage which will enable us to grow in the market and strengthen our market position.
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HANKOOK TYRE U.K. LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2024
As required by Section 172 of the Companies Act, a director of a company must act in good faith in a way which promotes the success of the Company for the benefit of the shareholders.
In doing so, each director has regard, amongst other matters, to the following: The likely consequences of any decision in the long term The directors understand the business and the markets in which it operates. With their considerable industry experience, they are well equipped to understand the consequences of any strategic long-term decisions. The interests of the Company's employees The directors recognise that its employees are fundamental to the business and the delivery of the Company's goals and ambitions. The success of the company depends upon attracting, retaining and motivating our employees. The directors strive towards providing a positive and safe environment with opportunities for staff to grow and develop. The need to foster the Company's business relationships with suppliers, customers and others Our company operates within the automotive and tyre industry in the UK and Ireland markets and therefore supplying good quality products and services to customers is key to our ongoing success. Maintaining strong mutually beneficial relationships with customers is also key in delivery of our strategy and as such we continually assess the priorities of our customers by engaging with them. To ensure the quality of service in the whole process of supply chain satisfies customers, we monitor our third party suppliers regularly, supporting locally situated businesses where possible ensuring payment practices are adhered to. The impact of the Company's operations on the community and environment Our company, locally and on a global level, is proud of its contribution to not only in its local communities and its contribution to local charitable causes, but also its overall low impact on the environment. The Company's reputation for high standards of business conduct The Company continually aims to meet the highest standards in relation to its reputation and business conduct. All standards need to be maintained throughout the business in order to retain our reputation within the market in which we operate. Need to act fairly between members of the Company The Company will always act fairly between members of the group. The directors consider which course of action best enables delivery of the groups strategy with regards to the long term, taking into consideration the impact on its stakeholders.
This report was approved by the board and signed on its behalf.
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HANKOOK TYRE U.K. LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 DECEMBER 2024
The directors present their report and the financial statements for the year ended 31 December 2024.
The loss for the year, after taxation, amounted to £1,014,903 (2023 - loss £966,547).
No dividend has been recommended.
The directors who served during the year were:
The directors have assessed the financial position of the Company, including its trading forecasts, cash position and funding requirements and concluded that the Company is reliant on the ongoing financial and operational support of the Parent Company. The Company has received confirmed ongoing financial and operational support (including the continued supply of product) from its ultimate parent undertaking, Hankook Tire & Technology Co., Ltd for a period of two years from the 26 May 2025. The Directors therefore have a reasonable expectation that the Company will be able to continue in operational existence for the foreseeable future and no material uncertainty has been identified. The Company therefore continues to adopt the going concern basis of accounting in preparing the financial statements.
The auditor, MHA, previously traded through the legal entity MacIntyre Hudson LLP. In response to regulatory changes, MacIntyre Hudson LLP ceased to hold an audit registration with the engagement transitioning to MHA Audit Services LLP.
MHA will be proposed for reappointment in accordance with section 485 of the Companies Act 2006.
The Company’s future developments are set out in the Group strategy and future outlook section of the Strategic Report in accordance with s414C(11) of the Companies Act 2006 as the directors consider this to be a strategic importance to the Company.
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HANKOOK TYRE U.K. LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2024
There have been no significant events affecting the Company since the year end.
Streamlined Energy & Carbon Reporting
We are conscious of our duty to use resources responsibly and to minimise any environmental impacts of our business activities.
UK energy usage in the year was as follows:
UK Scope 1 and 2 greenhouse gas emissions were as follows:
Intensity Ratio
The figures above represent Hankook Tyres UK Limited energy use and associated GHG emissions from electricity and gas for the 2024 reporting year arising from activities. We have followed the 2024/25 UK Government environmental reporting guidelines along with the 2024 UK Government GHG Conversion Factors. We have also used the GHG Protocol Value Chain (Scope 2) Standard, but we are not as yet able to report on all categories that may be relevant. The figures relate to the required elements of each scope 2 category rather than the optional elements. We have used 2024 UK Government’s Conversion Factors for Company Reporting.
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HANKOOK TYRE U.K. LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2024
Energy efficiency improvements
Lighting
LED lighting has been installed throughout our office and warehouse which are furthermore operated on motion sensors to reduce running costs and improve energy efficiencies.
Temperature Control
Our heating and climate control system has been reviewed and serviced to be more efficient alongside a new energy saving boiler being installed.
Equipment
When purchasing new capital equipment consideration is given to the energy efficiency of the equipment. In addition, the company is looking to convert the company car fleet from diesel to hybrid vehicles.
The directors are responsible for preparing the Strategic Report, the Directors' Report and the financial statements in accordance with applicable law and regulations.
In preparing these financial statements, the directors are required to:
∙select suitable accounting policies for the Company's financial statements and then apply them consistently;
∙make judgements and accounting estimates that are reasonable and prudent;
∙state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements; and
∙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 to enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
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HANKOOK TYRE U.K. LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2024
This report was approved by the board and signed on its behalf.
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HANKOOK TYRE U.K. LIMITED
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF HANKOOK TYRE U.K. LIMITED
We have audited the financial statements of Hankook Tyre U.K. Limited (the 'Company') for the year ended 31 December 2024, which comprise the Profit and Loss Account, the Balance Sheet, the Statement of Changes in Equity and the related notes, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland' (United Kingdom Generally Accepted Accounting Practice).
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the 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 United Kingdom, including the Financial Reporting Council's Ethical Standard and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the Company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
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HANKOOK TYRE U.K. LIMITED
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF HANKOOK TYRE U.K. LIMITED (CONTINUED)
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.
In our opinion, based on the work undertaken in the course of the 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.
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.
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HANKOOK TYRE U.K. LIMITED
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF HANKOOK TYRE U.K. LIMITED (CONTINUED)
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an 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.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:
∙Enquiry of management and those charged with governance around actual, potential or suspected litigation, claims, non-compliance with applicable laws and regulations and fraud;
∙Enquiry of entity staff in tax and compliance functions to identify any instances of non-compliance with laws and regulations;
∙Performing audit work over the risk of management override, including testing of journal entries and other adjustments for appropriateness, evaluating the business rationale of significant transactions outside the normal course of business and reviewing accounting estimates for bias;
∙Reviewing of financial statements disclosures and testing to supporting documentation to assess compliance with applicable laws and regulations; and
∙Discussions amongst engagement team in relation to how and where fraud might occur in the financial statements and any potential indicators of fraud.
Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading to a material misstatement in the financial statements or non-compliance with regulation. This risk increases the more that compliance with a law or regulation is removed from the events and transactions reflected in the financial statements, as we will be less likely to become aware of instances of non-compliance. The risk is also greater regarding irregularities occurring due to fraud rather than error, as fraud involves intentional concealment, forgery, collusion, omission or misrepresentation.
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 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.
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HANKOOK TYRE U.K. LIMITED
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF HANKOOK TYRE U.K. LIMITED (CONTINUED)
for and on behalf of MHA, Statutory Auditors
Leicester, United Kingdom
30 May 2025
MHA is the trading name of MHA Audit Services LLP, a limited liability partnership in England and Wales (registered number OC455542).
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HANKOOK TYRE U.K. LIMITED
PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 31 DECEMBER 2024
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HANKOOK TYRE U.K. LIMITED
REGISTERED NUMBER: 02813126
BALANCE SHEET
AS AT 31 DECEMBER 2024
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HANKOOK TYRE U.K. LIMITED
REGISTERED NUMBER: 02813126
BALANCE SHEET (CONTINUED)
AS AT 31 DECEMBER 2024
The financial statements were approved and authorised for issue by the board and were signed on its behalf by:
The notes on pages 18 to 36 form part of these financial statements.
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HANKOOK TYRE U.K. LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2024
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HANKOOK TYRE U.K. LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
Hankook Tyre U.K. Limited is a private company limited by shares incorporated and registered in England. Registered number is 02813126. It's registered address is Hankook House, Parsons Road, Drayton Fields Industrial Estate, Daventry, NN11 8UG.
2.Accounting policies
The financial statements have been prepared under the historical cost convention unless otherwise specified within these accounting policies and in accordance with Financial Reporting Standard 102, the Financial Reporting Standard applicable in the UK and the Republic of Ireland and the Companies Act 2006.
The preparation of financial statements in compliance with FRS 102 requires the use of certain critical accounting estimates. It also requires management to exercise judgement in applying the Company's accounting policies (see note 3).
The Company has taken advantage of the following disclosure exemptions in preparing these financial statements, as permitted by the FRS 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland":
∙the requirements of Section 7 Statement of Cash Flows;
∙the requirements of Section 3 Financial Statement Presentation paragraph 3.17(d);
∙the requirement of Section 33 Related Party Disclosures paragraph 33.7.
This information is included in the consolidated financial statements of Hankook Tire and Technology Co., Ltd as at 31 December 2024 and these financial statements may be obtained from 133 Teheran-Ro (Yeoksam-Dong), Gangnam-Ku, Seoul, Korea.
Going concern The directors have assessed the financial position of the Company, including its trading forecasts, cash position and funding requirements and concluded that the Company is reliant on the ongoing financial and operational support of the Parent Company. The Company has received confirmed ongoing financial and operational support (including the continued supply of product) from its ultimate parent undertaking, Hankook Tire & Technology Co., Ltd for a period of two years from the 26 May 2025. The Directors therefore have a reasonable expectation that the Company will be able to continue in operational existence for the foreseeable future and no material uncertainty has been identified. The Company therefore continues to adopt the going concern basis of accounting in preparing the financial statements.
The following principal accounting policies have been applied:
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HANKOOK TYRE U.K. LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
2.Accounting policies (continued)
Functional and presentation currency
Transactions and balances
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HANKOOK TYRE U.K. LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
2.Accounting policies (continued)
Page 20
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HANKOOK TYRE U.K. LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
2.Accounting policies (continued)
Page 21
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HANKOOK TYRE U.K. LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
2.Accounting policies (continued)
At each reporting date the Company assesses whether there is any indication of impairment. If such indication exists, the recoverable amount of the asset is determined which is the higher of its fair value less costs to sell and its value in use. An impairment loss is recognised where the carrying amount exceeds the recoverable amount.
The Company adds to the carrying amount of an item of fixed assets the cost of replacing part of such an item when that cost is incurred, if the replacement part is expected to provide incremental future benefits to the Company. The carrying amount of the replaced part is derecognised. Repairs and maintenance are charged to profit or loss during the period in which they are incurred.
Depreciation is charged so as to allocate the cost of assets less their residual value over their estimated useful lives, using the straight-line method.
Depreciation is provided on the following basis:
The assets' residual values, useful lives and depreciation methods are reviewed, and adjusted prospectively if appropriate, or if there is an indication of a significant change since the last reporting date.
Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised in the Profit and Loss Account.
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HANKOOK TYRE U.K. LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
2.Accounting policies (continued)
Provisions are measured as the best estimate of the amount required to settle the obligation, taking into account the related risks and uncertainties.
The Company has elected to apply the provisions of Section 11 “Basic Financial Instruments” of FRS 102 to all of its financial instruments.
The Company has elected to apply the recognition and measurement provisions of IFRS 9 Financial Instruments (as adopted by the UK Endorsement Board) with the disclosure requirements of Sections 11 and 12 and the other presentation requirements of FRS 102.
Financial instruments are recognised in the Company's Balance Sheet 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 trade and other debtors, cash and bank balances, are initially measured at their transaction price (adjusted for transaction costs except in the initial measurement of financial assets that are subsequently measured at fair value through profit and loss) and are subsequently carried at their amortised cost using the effective interest method, less any provision for impairment, 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.
Discounting is omitted where the effect of discounting is immaterial. The Company's cash and cash equivalents, trade and most other debtors due with the operating cycle fall into this category of financial instruments.
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HANKOOK TYRE U.K. LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
2.Accounting policies (continued)
Other financial assets
Other financial assets, which includes investments in equity instruments which are not classified as subsidiaries, associates or joint ventures, are initially measured at fair value, which is normally the recognised transaction price. Such assets are subsequently measured at fair value with the changes in fair value being recognised in the profit or loss. Where other financial assets are not publicly traded, hence their fair value cannot be measured reliably, they are measured at cost less impairment.
Impairment of financial assets
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 Profit and Loss Account.
Financial assets are impaired when events, subsequent to their initial recognition, indicate the estimated future cash flows derived from the financial asset(s) have been adversely impacted. The impairment loss will be the difference between the current carrying amount and the present value of the future cash flows at the asset(s) original effective interest rate.
If there is a favourable change in relation to the events surrounding the impairment loss then the impairment can be reviewed for possible reversal. The reversal will not cause the current carrying amount to exceed the original carrying amount had the impairment not been recognised. The impairment reversal is recognised in the Profit and Loss Account.
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 the deduction of all its liabilities.
Basic financial liabilities, which include trade and other creditors, bank loans and other loans are initially measured at their transaction price (adjusting for transaction costs except in the initial measurement of financial liabilities that are subsequently measured at fair value through profit and loss). When this constitutes a financing transaction, whereby the debt instrument is measured at the present value of the future payments discounted at a market rate of interest, discounting is omitted where the effect of discounting is immaterial.
Debt instruments are subsequently carried at their amortised cost using the effective interest rate method.
Trade creditors are obligations to pay for goods and services that have been acquired in the ordinary course of business from suppliers. Trade creditors are classified as current liabilities if the payment is due within one year. If not, they represent non-current liabilities. Trade creditors are initially recognised at their transaction price and subsequently are measured at amortised cost using the effective interest method. Discounting is omitted where the effect of discounting is immaterial.
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HANKOOK TYRE U.K. LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
2.Accounting policies (continued)
Other financial instruments
Derivatives, including forward exchange contracts, futures contracts and interest rate swaps, are not classified as basic financial instruments. These are initially recognised at fair value on the date the derivative contract is entered into, with costs being charged to the profit or loss. They are subsequently measured at fair value with changes in the Profit and Loss Account.
Debt instruments that do not meet the conditions as set out in FRS 102 paragraph 11.9 are subsequently measured at fair value through the profit or loss. This recognition and measurement would also apply to financial instruments where the performance is evaluated on a fair value basis as with a documented risk management or investment strategy.
Derecognition of financial instruments
Derecognition of financial assets
Financial assets are derecognised when their contractual right to future cash flow expire, or are settled, or when the Company transfers the asset and substantially all the risks and rewards of ownership to another party. If significant risks and rewards of ownership are retained after the transfer to another party, then the Company will continue to recognise the value of the portion of the risks and rewards retained.
Derecognition of financial liabilities
Financial liabilities are derecognised when the Company's contractual obligations expire or are discharged or cancelled.
When an inflow of economic benefits is probable (more likely than not) but not virtually certain, the Company will disclose a description of the nature of the contingent assets at the end of the reporting period, and, when practicable, an estimate of their financial effect.
When the flow of future economic benefits to the Company is virtually certain, then the related asset is not a contingent asset, and its recognition is appropriate.
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HANKOOK TYRE U.K. LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
The Company makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of the assets and liabilities within the next financial year are addressed below. (i) Useful economic lives of tangible assets The annual depreciation charge for tangible assets is sensitive to changes in the estimates useful economic lives and residual values of the assets. The useful economic lives and residual values are reassessed annually. They are amended when necessary to reflect current estimates, based on technological advancement, future investments, economic utilisation and the physical condition of assets. (ii) Impairment of assets The Company makes an estimate of the recoverable value of trade and other debtors. When assessing the 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. (iii) Revenue recognition and Rebate accrual The Company has commercial rebate agreements in place with certain customers based on volumes and other incentives. Management use judgement to determine the amount of the expense in the year. The Company recognises an accrual in relation to rebates due to customers at the year end. These are dependant on the level of trade with those customers during the year.
Analysis of turnover by country of destination:
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HANKOOK TYRE U.K. LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
Page 27
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HANKOOK TYRE U.K. LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
Page 28
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HANKOOK TYRE U.K. LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
Page 29
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HANKOOK TYRE U.K. LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
Page 30
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HANKOOK TYRE U.K. LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
11.Taxation (continued)
There are no factors to note that may affect future tax charges.
BEPS 2.0 Pillar Two Legislation Hankook Tyre U.K. Limited is part of a group that operates in a number of jurisdictions. The effective tax rate for the financial year 2024 was 0% (2023: 0%) as a result of Capital allowances and trading losses utilised. For periods which commenced on or after 1 January 2024, new tax legislation applied to ensure the effective tax rate of the UK companies within the group was at least 15%, subject to various complex calculations. This is in line with the minimum taxation rules announced by the G7 and progressed by the OECD Inclusive Framework on Base Erosion and Profit Shifting. These rules have been implemented in the UK via the Domestic Top Up Tax legislation during the year. Historically Hankook Tyre U.K. Limited’s effective rate has been below 15% but the Company has assessed its exposure to Domestic Top Up Tax to be immaterial. In addition, Hankook Tyre U.K. Limited is taking advantage of the temporary deferred tax exemption within the “International Tax Reform — Pillar Two Model Rules (Amendments to IAS 12)” in relation to the current year and retrospectively in accordance with IAS 8. This means the Company does not recognise deferred tax assets and liabilities related to OECD pillar two income taxes and does not disclose information about them.
Page 31
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HANKOOK TYRE U.K. LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
Page 32
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HANKOOK TYRE U.K. LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
Page 33
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HANKOOK TYRE U.K. LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
Page 34
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HANKOOK TYRE U.K. LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
Page 35
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HANKOOK TYRE U.K. LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
The parent company, ultimate controlling party and largest and smallest group for which group accounts are prepared, is
Page 36
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