Company registration number 10505662 (England and Wales)
OCTRIC SEMICONDUCTORS LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 30 SEPTEMBER 2024
OCTRIC SEMICONDUCTORS LIMITED
COMPANY INFORMATION
Directors
I Croston
A Fairweather
(Appointed 27 September 2024)
B Holtom
(Appointed 15 November 2024)
K Jones
(Appointed 15 November 2024)
G Love
(Appointed 13 December 2024)
C Pheasey
(Appointed 15 November 2024)
Company number
10505662
Registered office
3rd Floor
1 Ashley Road
Altrincham
Cheshire
United Kingdom
WA14 2DT
Auditor
Azets Audit Services
Bulman House
Regent Centre
Gosforth
Newcastle upon Tyne
NE3 3LS
OCTRIC SEMICONDUCTORS LIMITED
CONTENTS
Page
Strategic report
1 - 4
Directors' report
5 - 6
Directors' responsibilities statement
7
Independent auditor's report
8 - 10
Income statement
11
Statement of comprehensive income
12
Statement of financial position
13
Statement of changes in equity
14
Statement of cash flows
15
Notes to the financial statements
16 - 31
OCTRIC SEMICONDUCTORS LIMITED
STRATEGIC REPORT
FOR THE PERIOD ENDED 30 SEPTEMBER 2024
- 1 -
The directors present the strategic report for the Period ended 30 September 2024.
The directors aim to present a balanced and comprehensive review of the development and performance of the company during the period, and of its position at the period end. The review is consistent with the size and the non-complex nature of the company and is written in the context of the risks and uncertainties faced.
On 27 September 2024, Octric Semiconductors Limited (“Octric”) was acquired through a 100% purchase of Ordinary shares and became wholly owned by the Secretary of State for Defence of Great Britain and Northern Ireland.
The previous ultimate parent company, Coherent Incorporated, a U.S., NASDAQ listed company and global leader in engineered materials and optoelectronic components, no longer participates in any aspect of the business, and a new Board of directors has been appointed, including a Shareholder Representative Non-Executive Director.
The company has for some time manufactured and supplied semiconductor product and services and continues to develop technologies and production capabilities to bring commercial and defence product lines to market.
Review of the business
The company has been engaged in producing chips from compound semiconductor substrates. Historically, these chips have been fabricated for either electrical or optical applications such as 3D sensing (e.g. face detection), optical communications (in fibre optic transmission systems) and high-speed electronics (mobile communications etc), as well as increasingly for defence applications such as semiconductors fitted within defence radar equipment, for example. With the growing complexity of consumer electronics such as smartphones and tablets and the advance of new technologies like electric vehicles and 5G mobile infrastructure, as well as defence, aerospace and satellite applications, the market for compound semiconductor-based devices continues to grow in both defence and commercial sectors. Octric continues to use the manufacturing capability of its freehold site to capture this growing market.
During the previous financial year end to June 2023, Octric continued to deliver on commercial outlet contracts, turning its focus towards supplies to defence markets. Octric’s importance to semiconductor capability particularly for UK defence was underlined by its acquisition on 27 September 2024 by the Secretary of State for Defence of Great Britain and Northern Ireland. This was marked with a change of business name from II-VI Compound Semiconductors Limited.
Under its new ownership, the business has established a new Board, with Graham Love, previously the NED Chair of the Royal Mint, being appointed to Chair the Octric Board from December 2024. A new investment plan has been approved by the Board and the business is now poised to establish a far-reaching growth platform capable of serving both defence and commercial sectors in selected areas across the expanding market.
Funding for this expansion platform is supported initially by a working capital facility on arm’s length terms, commencing in November 2024, and subsequently through plans for equity-based funding by the shareholder to meet operating and capital investment needs as they arise to execute an approved long-term business plan.
The business has an objective to move into profitability and cash positive flows once it has established sufficient momentum within its long-term plan via investment in Octric’s manufacturing and site capability to widen and upgrade its market product and services offering.
Net assets at the period end of 30 September 2024 were £28.1m
OCTRIC SEMICONDUCTORS LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE PERIOD ENDED 30 SEPTEMBER 2024
- 2 -
Principal risks and uncertainties
Health and Safety Risk
The directors view their top priority and risk, to be the effective safeguarding the health, safety and welfare of persons at work; to aim to protect others against risks to health and safety arising from work activities, and apply procedures, protocols and criteria to underpin this philosophy. Risk exists wherever there is not total control of a situation, and so the business seeks to apply best practice, frameworks and procedures to minimise these risks in the workplace. The Board commences each operational meeting reviewing HSE matters and latest KPIs. At the time of this report, Octric was reporting over 550 days free of Lost Time Incidents.
HR and Skills Gap Risk
Immediately on the new acquisition the newly appointed Board set about assessing the risk of skills gaps in the workforce and management. Management is now rolling out a plan to mitigate risks of gaps in skills, experience and cover throughout the employment structure, while strengthening the organisation for growth. This resulted in an immediate restructuring involving some rationalisation plus over thirty new skilled roles identified for creation or filling in the workforce. The special skill base that differentiates Octric and works as a long-term barrier to entry is robust and is being reinforced.
The new Board is now established and is applying strong best practice for corporate governance, management control, and personal skills and career development for employees.
Liquidity and Going Concern Risk
Liquidity risk arises mainly from the company's management of working capital cash flows and their funding availability. Liquidity risk of the company encountering difficulty in meeting its financial obligations as they fall due, runs in parallel with Going Concern risk. Management mitigates these risks with regular weekly updates of its cash flow forecast, MI and accounts reporting, weekly governance and reporting meeting with UKGI (UK Government Investments Ltd, who are supporting MOD with Shareholder Governance) and the MOD (Ministry of Defence) senior representatives, and monthly Board meetings, monitoring and reporting on risks, opportunities and countermeasures and actions arising therefrom.
Structurally, the company operates a Working Capital Facility from the shareholder at arm’s length rates and terms. The Facility is supplemented by both short-term and long-term commitments from the shareholder to fund and support business investment and maintenance funding requirements. These funding sources enable management to anticipate and meet foreseeable debts adequately as they fall due.
The planning of equity injection commitments is arranged through regular reporting to, and engagement with, the shareholder, in order to plan for significant capital expenditure project investments throughout the year and longer-term, as well as meeting daily and weekly funding requirements within the working capital cycle.
As lender and shareholder, the business owner is in a strong and uncontended position to provide stability and funding to the ongoing business on an agreed basis.
As part of managing this risk, the business is committed to:
a) regular reporting to the Board and shareholder to monitor financial performance and
b) flag risks with proposed countermeasures on an ongoing basis, and
c) with due reference to government financial guidance, frameworks and principles where appropriate.
Revenue Growth risk
The business is building its customer base and pipelines in both defence and commercial markets. The time related risk to compete effectively in markets is being countered by:
a) senior executive recruitment including Business Development.
b) continued sector knowledge enhancement and networking.
c) intensive investment in new technological and operational equipment to expand capability.
d) investment in specialist skills and a workforce in which Octric excels in quality and reliability.
OCTRIC SEMICONDUCTORS LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE PERIOD ENDED 30 SEPTEMBER 2024
- 3 -
Principal Risks and Uncertainties (continued)
Security Risk
The company’s market position serving defence and government sectors as well as other private commercial markets, means that security and confidentiality is paramount to company operations and communications. The directors are not aware of any material breaches of security in the period.
Strict government frameworks are applied accordingly to the running the business, site and systems, including enhanced cybersecurity controls. The company strives to continually improve its security and cybersecurity controls to protect its employees, supply chain, site, and all those who interact with the business. Regular security reviews take place at all levels from floor to Board level throughout the site and across daily business, with the aim to continuously improve.
Credit risk
Credit risk is the risk of financial loss to the company if a customer or counterparty to a financial instrument fails to meet its contractual obligations. The company’s credit risk arises from credit sales. Terms are negotiated at arm’s length, and limits applied to each customer subject to management approval.
Interest rate risk
The company’s only lending facility is from the shareholder, and is repayable by 31 March 2028 and based on SONIA market rates plus an agreed margin. Interest rate repayments are calculated and reported monthly with the lender, with regular repayments made.
Foreign exchange risk
Foreign exchange risk arises when the company enters into transactions denominated in a currency other than its functional currency. The main area being import supplies predominantly from the USA, and smaller volumes in Euros and Japanese Yen. Import exchange risk is not considered material to date, with payments made on a spot conversion basis and terms nearly always within 60 days. If larger exposure arises or for a longer period, then management will consider whether hedging plans are considered appropriate and make suitable proposals to the Board.
Key performance indicators
| 15 months to 30 September 2024 | 12 months to 30 June 2023 |
| | |
| | |
| | |
| | |
| | |
Revenue and Gross Profit KPI’s are the overriding business driver to maximise contribution to overheads and capital investment.
Due to the long-term strategic importance and research and development emphasis of the company's activities, additional KPI’s are maintained internally, but of less significance at this stage of the company’s re-development.
Our HSE KPI’s are essential to day-to-day running of the business, among them measuring lost-time incidents, accident frequency rates and near misses. At the time of this report, the business had gone over 550 days since its last lost time incident.
All areas of the business have their own KPI’s linked to their functional and business objectives. These include HR KPI’s of Employee Turnover % and Absence %, Cost KPI’s for Operating overheads costs against budget, and Quality and Efficiency KPI’s for yield and scrap rates.
OCTRIC SEMICONDUCTORS LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE PERIOD ENDED 30 SEPTEMBER 2024
- 4 -
Development and performance
As a business, the company continues to review how best to serve and grow its established markets and explore complementary outlets, products, and services. The company is developing a new line of semiconductor product and services over the medium-term to complement its pre-existing product and service capability offering, forming a stronger and wider platform for future growth.
Through strengthened management, governance and innovation, the business is well-placed to build on its excellent reputation and specialist fields and continually review related opportunities to serve its target markets.
Future developments
Since acquisition, Octric has commenced a path for rebuilding and regrowth over a long-term plan. The plan commences with major reinvestment in semiconductor equipment, core to Octric’s defence and commercial applications, and investment in new semiconductor technology to form a parallel and synergistic platform for growth.
The rebuild and growth plan into expanded areas of semiconductor technology is expected to involve significant non-recurring revenue expenditure as well as capital expenditure over the next several years.
The whole new investment reflects both the reality of converting an internal manufacturing business unit of a multinational company into a rounded stand-alone company and the need to address pre-acquisition investment levels. This investment is viewed by the board as acquisition related non-recurring expenditure. Also, given significant changes to product output and the investment levels needed to re-capitalise facilities, technology and capabilities, the business today is best viewed as a new company in an early startup phase, where it is anticipated that there may be startup losses against normalised activities until the new business strategy is delivered and output reaches the projected volumes and customer base that the business is targeting over the mid-term and long-term.
In such a skilled and niche area, the barriers to entry are great, and the establishment of quality and reliability in its field has been earned over decades of specialisation. Octric is now embarked on a new phase of development to build and grow on the hard-earned reputation built by the business thus far, offering sovereign supply security to UK defence.
The newly appointed Board and new frameworks of governance are being established in conjunction with applying best practice within strict UK government guidelines. At the same time the business has the freedom to operate privately and commercially across markets and sectors, providing a special and valued blend of best practice, security, reliability and governance, particularly important in this specialist field.
Business Development opportunities are now being actively pursued and sought to grow the business with an ambitious but careful and long-sighted strategic approach. The directors believe the company’s new structure and shareholder support is particularly fitting and beneficial to suit the specialist and long-term funding needs and support of the business.
K Jones
Director
24 June 2025
OCTRIC SEMICONDUCTORS LIMITED
DIRECTORS' REPORT
FOR THE PERIOD ENDED 30 SEPTEMBER 2024
- 5 -
The directors present their annual report and financial statements for the Period ended 30 September 2024.
Principal activities
The principal activity of the company continued to be that of manufacturing electronic components.
Change of name
On the 27th September 2024, the company changed its name from II-VI Compound Semiconductors Limited to Octric Semiconductors Limited.
Results and dividends
The results for the Period are set out on page 11.
No ordinary dividends were paid. The directors do not recommend payment of a final dividend.
Directors
The directors who held office during the Period and up to the date of signature of the financial statements were as follows:
I Croston
A Fairweather
(Appointed 27 September 2024)
B Holtom
(Appointed 15 November 2024)
K Jones
(Appointed 15 November 2024)
G Love
(Appointed 13 December 2024)
C Pheasey
(Appointed 15 November 2024)
W Bashaw II
(Resigned 6 September 2024)
S Loten
(Resigned 27 September 2024)
T Mcdermott
(Resigned 14 March 2024)
G Rowles
(Resigned 27 September 2024)
Financial instruments
Financial risk management objectives and policies
The company has an established, structured approach to risk management. The company's activities expose it to a variety of financial risks, including the effects of credit, liquidity, cash flow, foreign exchange and interest rate risks. The company has adopted risk management policies that seek to mitigate these risks in a cost effective manner. See further disclosures within the Strategic Report regarding risks to the company.
Future developments
See disclosures within the Strategic Report regarding future developments of the company.
Auditor
Azets Audit Services were appointed on 3 December 2024 as auditor of the company following the resignation of Duncan & Toplis Audit Limited. The auditor, Azets Audit Services, is deemed to be reappointed under section 487(2) of the Companies Act 2006.
OCTRIC SEMICONDUCTORS LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE PERIOD ENDED 30 SEPTEMBER 2024
- 6 -
Statement of disclosure to auditor
So far as each person who was a director at the date of approving this report is aware, there is no relevant audit information of which the company’s auditor is unaware. Additionally, the directors individually have taken all the necessary steps that they ought to have taken as directors in order to make themselves aware of all relevant audit information and to establish that the company’s auditor is aware of that information.
On behalf of the Board
K Jones
Director
24 June 2025
OCTRIC SEMICONDUCTORS LIMITED
DIRECTORS' RESPONSIBILITIES STATEMENT
FOR THE PERIOD ENDED 30 SEPTEMBER 2024
- 7 -
The directors are responsible for preparing the annual report and the financial statements in accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period. In preparing these financial statements, the directors are required to:
select suitable accounting policies and then apply them consistently;
make judgements and accounting estimates that are reasonable and prudent;
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company’s transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
OCTRIC SEMICONDUCTORS LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF OCTRIC SEMICONDUCTORS LIMITED
- 8 -
We have audited the financial statements of Octric Semiconductors Limited (the 'company') for the Period ended 30 September 2024 which comprise the income statement, the statement of comprehensive income, the statement of financial position, the statement of changes in equity, the statement of cash flows and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).
In our opinion, except for the prior year matter of possible effects on the corresponding (prior year) figures of the matter described in the basis for qualified opinion section of our report, the financial statements:
give a true and fair view of the state of the company's affairs as at 30 September 2024 and of its loss for the Period 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 qualified opinion
In 2022, the company recognised trade creditors with a value of £7,693,384 in the Statement of Financial Position. Due to issues arising with a change in accounting software it was not possible to run backdated supplier listings and thus it was not possible to reconcile a sample of key supplier accounts to statements. Consequently it was not possilble to determine whether any adjustment to the trade creditors balance at 30 June 2022 was necessary or whether there was any consequential effect on the cost of sales for the year ended 2023. The audit opinion on the financial statements for the year ended 30 June 2023 was modified accordingly. As a consequence of this, our audit opinion on the current period's financial statements is also modified because of the possible effect of this matter on the comparability of the current period's figures and the corresponding figures.
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
The other information comprises the information included in the annual report other than the financial statements and our auditor's report thereon. The directors are responsible for the other information contained within the annual report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
OCTRIC SEMICONDUCTORS LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF OCTRIC SEMICONDUCTORS LIMITED
- 9 -
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of our audit:
the information given in the strategic report and the directors' report for the financial Period for which the financial statements are prepared is consistent with the financial statements; and
the strategic report and the directors' report have been prepared in accordance with applicable legal requirements.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identified material misstatements in the strategic report or the directors' report.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:
adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or
the financial statements are not in agreement with the accounting records and returns; or
certain disclosures of 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 directors' responsibilities statement, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the directors are responsible for assessing the company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.
Auditor's responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
A further description of our responsibilities is available on the Financial Reporting Council’s website at: https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.
Extent to which the audit was considered capable of detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above and on the Financial Reporting Council’s website, to detect material misstatements in respect of irregularities, including fraud.
We obtain and update our understanding of the entity, its activities, its control environment, and likely future developments, including in relation to the legal and regulatory framework applicable and how the entity is complying with that framework. Based on this understanding, we identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. This includes consideration of the risk of acts by the entity that were contrary to applicable laws and regulations, including fraud.
We identified the following applicable laws and regulations as those most likely to have a material impact on the financial statements: Health and Safety; Environmental regulations; Compliance with ISO accreditations; employment law (including the Working Time Directive); and compliance with UK Companies Act.
OCTRIC SEMICONDUCTORS LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF OCTRIC SEMICONDUCTORS LIMITED
- 10 -
In response to the risk of irregularities and non-compliance with laws and regulations, including fraud, we designed procedures which included:
Enquiry of management and those charged with governance around actual and potential litigation and claims as well as actual, suspected and alleged fraud;
Reviewing minutes of meetings of those charged with governance;
Assessing the extent of compliance with the laws and regulations considered to have a direct material effect on the financial statements or the operations of the company through enquiry and inspection;
Reviewing financial statement disclosures and testing to supporting documentation to assess compliance with applicable laws and regulations;
Performing audit work over the risk of management bias and override of controls, 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 indicators of potential bias.
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 of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
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.
Claire Hinshaw ACCA
Senior Statutory Auditor
For and on behalf of Azets Audit Services
25 June 2025
Chartered Accountants
Statutory Auditor
Bulman House
Regent Centre
Gosforth
Newcastle upon Tyne
NE3 3LS
OCTRIC SEMICONDUCTORS LIMITED
INCOME STATEMENT
FOR THE PERIOD ENDED 30 SEPTEMBER 2024
- 11 -
Period
Year
ended
ended
30 September
30 June
2024
2023
Notes
£
£
Turnover
3
32,145,796
104,529,554
Cost of sales
(15,901,903)
(82,376,249)
Gross profit
16,243,893
22,153,305
Distribution costs
(96,532)
(236,089)
Administrative expenses
(23,510,126)
(13,476,585)
Other operating income
8,176,896
Exceptional material costs
4
(2,508,467)
Restructuring and redundancy
4
2,651,400
(3,881,678)
Other exceptional items
4
(551,150)
(5,192,526)
Operating (loss)/profit
5
(5,262,515)
5,034,856
Interest receivable and similar income
8
679,645
351,446
Interest payable and similar expenses
9
(427,962)
(686,141)
(Loss)/profit before taxation
(5,010,832)
4,700,161
Tax on (loss)/profit
10
390,379
(588,059)
(Loss)/profit for the financial Period
(4,620,453)
4,112,102
OCTRIC SEMICONDUCTORS LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE PERIOD ENDED 30 SEPTEMBER 2024
- 12 -
Period
Year
ended
ended
30 September
30 June
2024
2023
£
£
(Loss)/profit for the Period
(4,620,453)
4,112,102
Other comprehensive income
Revaluation of tangible fixed assets
(2,788,020)
(50,129,743)
Tax relating to other comprehensive income
697,005
12,532,000
Other comprehensive income for the Period
(2,091,015)
(37,597,743)
Total comprehensive income for the Period
(6,711,468)
(33,485,641)
OCTRIC SEMICONDUCTORS LIMITED
STATEMENT OF FINANCIAL POSITION
AS AT
30 SEPTEMBER 2024
30 September 2024
- 13 -
30 September 2024
30 June 2023
Notes
£
£
£
£
Fixed assets
Intangible assets
11
81,865
175,763
Tangible assets
12
30,021,614
35,702,590
30,103,479
35,878,353
Current assets
Stocks
13
1,720,873
3,158,590
Debtors
14
5,376,746
16,991,241
Cash at bank and in hand
678,952
12,113,566
7,776,571
32,263,397
Creditors: amounts falling due within one year
15
(3,199,196)
(23,731,452)
Net current assets
4,577,375
8,531,945
Total assets less current liabilities
34,680,854
44,410,298
Provisions for liabilities
Provisions
16
647,209
3,881,678
Deferred tax liability
17
5,971,775
6,395,127
(6,618,984)
(10,276,805)
Net assets
28,061,870
34,133,493
Capital and reserves
Called up share capital
19
28,129,084
28,129,083
Share premium account
20
639,844
Revaluation reserve
20
11,624,550
13,715,565
Other reserves
20
9,376,011
Profit and loss reserves
20
(12,331,608)
(17,087,166)
Total equity
28,061,870
34,133,493
The financial statements were approved by the board of directors and authorised for issue on 24 June 2025 and are signed on its behalf by:
K Jones
Director
Company Registration No. 10505662
OCTRIC SEMICONDUCTORS LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE PERIOD ENDED 30 SEPTEMBER 2024
- 14 -
Share capital
Share premium account
Revaluation reserve
Capital contribution reserve
Profit and loss reserves
Total
Notes
£
£
£
£
£
£
Balance at 1 July 2022
28,129,083
51,313,308
9,376,011
(21,199,268)
67,619,134
Year ended 30 June 2023:
Profit for the year
-
-
-
-
4,112,102
4,112,102
Other comprehensive income:
Revaluation of tangible fixed assets
-
-
(50,129,743)
-
-
(50,129,743)
Tax relating to other comprehensive income
-
-
12,532,000
-
12,532,000
Total comprehensive income for the year
-
-
(37,597,743)
-
4,112,102
(33,485,641)
Balance at 30 June 2023
28,129,083
13,715,565
9,376,011
(17,087,166)
34,133,493
Period ended 30 September 2024:
Loss for the period
-
-
-
-
(4,620,453)
(4,620,453)
Other comprehensive income:
Revaluation of tangible fixed assets
-
-
(2,788,020)
-
-
(2,788,020)
Tax relating to other comprehensive income
-
-
697,005
-
697,005
Total comprehensive income for the period
-
-
(2,091,015)
-
(4,620,453)
(6,711,468)
Issue of share capital
19
1
639,844
-
-
-
639,845
Other movements
-
-
-
(9,376,011)
9,376,011
-
Balance at 30 September 2024
28,129,084
639,844
11,624,550
-
(12,331,608)
28,061,870
OCTRIC SEMICONDUCTORS LIMITED
STATEMENT OF CASH FLOWS
FOR THE PERIOD ENDED 30 SEPTEMBER 2024
- 15 -
Period Ended 30 September 2024
Year Ended 30 June 2023
Notes
£
£
£
£
Cash flows from operating activities
Cash (absorbed by)/generated from operations
23
(10,750,955)
17,420,829
Interest paid
(427,962)
(686,141)
Income taxes (paid)/refunded
(815,375)
122,083
Net cash (outflow)/inflow from operating activities
(11,994,292)
16,856,771
Investing activities
Purchase of intangible assets
(156,599)
Purchase of tangible fixed assets
(119,967)
(6,018,527)
Interest received
679,645
351,446
Net cash generated from/(used in) investing activities
559,678
(5,823,680)
Net (decrease)/increase in cash and cash equivalents
(11,434,614)
11,033,091
Cash and cash equivalents at beginning of Period
12,113,566
1,080,475
Cash and cash equivalents at end of Period
678,952
12,113,566
OCTRIC SEMICONDUCTORS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 30 SEPTEMBER 2024
- 16 -
1
Accounting policies
Company information
Octric Semiconductors Limited is a private company limited by shares incorporated in England and Wales. The registered office is 3rd Floor, 1 Ashley Road, Altrincham, Cheshire, United Kingdom, WA14 2DT.
1.1
Reporting period
The financial statements include an extended reporting period of 15 months from 1 July 2023 to 30 September 2024. This extension was to bring the reporting period end in line with the acquisition of the company by the Secretary of State for Defence of Great Britain and Northern Ireland, therefore, comparative amounts presented in the financial statements are not entirely comparable.
1.2
Accounting convention
These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006.
The financial statements are prepared in sterling, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £.
The financial statements have been prepared under the historical cost convention, modified to include the revaluation of freehold properties and certain financial instruments at fair value. The principal accounting policies adopted are set out below.
The company has taken advantage of the exemption available under paragraph 33.1A of FRS 102 and does not disclose related party transactions with members of the same group that are wholly owned.
1.3
Going concern
During the 15 months to 30 September 2024, the company was acquired by the Secretary of State for Defence of Great Britain and Northern Ireland from the U.S-based Coherent group of companies. true
The new shareholder has committed an initial £15m working capital facility to the business in November 2024. The long-term business plan projections and funding requirements, extended as far out as to March 2036, have been submitted since acquisition to the shareholders, and are materially comparable in funding requirement to the shareholders’ pre-acquisition projections.
The shareholder has supplied confirmation of its originally approved long-term funding commitment to the business, for the benefit of Going Concern Assessment. The shareholder has also confirmed the funding mechanism of periodic equity injections to support ongoing capital investment in the business and to fund net outflows and meet foreseeable liabilities and commitments as they fall due.
This has been essential assurance of ongoing business funding after the loss of the business major customer and income stream in the previous accounting period ended 30 June 2023, and with the running down of current defence order pipelines in the current accounting period. This will enable the business to continue to run and make product on an ongoing business to maintain medium-term capability and allow time to regrow the order pipeline.
The financial statements have been prepared on the going concern basis which assumes that the company will continue in operational existence for at least the next 12 months from the issue of these financial statements. The directors believe that this basis is appropriate because the company's ultimate shareholder (the Secretary of State for Defence of Great Britain and Northern Ireland), has committed to provide financial support.
OCTRIC SEMICONDUCTORS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 30 SEPTEMBER 2024
1
Accounting policies
(Continued)
- 17 -
1.4
Turnover
Turnover is recognised at the fair value of the consideration received or receivable for goods and services provided in the normal course of business, and is shown net of VAT and other sales related taxes. The fair value of consideration takes into account trade discounts, settlement discounts and volume rebates.
Revenue from the sale of goods is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer (usually on dispatch of the goods), the amount of revenue can be measured reliably, it is probable that the economic benefits associated with the transaction will flow to the entity and the costs incurred or to be incurred in respect of the transaction can be measured reliably.
Revenue from contracts for the provision of professional services is recognised when the services are provided.
1.5
Intangible fixed assets other than goodwill
Intangible assets acquired separately from a business are recognised at cost and are subsequently measured at cost less accumulated amortisation and accumulated impairment losses.
Intangible assets acquired on business combinations are recognised separately from goodwill at the acquisition date where it is probable that the expected future economic benefits that are attributable to the asset will flow to the entity and the fair value of the asset can be measured reliably; the intangible asset arises from contractual or other legal rights; and the intangible asset is separable from the entity.
Amortisation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:
Software
3 years straight line
1.6
Tangible fixed assets
With the exception of freehold land and buildings, Tangible fixed assets are initially measured at cost and subsequently measured at cost or valuation, net of depreciation and any impairment losses.
Depreciation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:
Freehold land and buildings
Not provided
Plant and equipment
33% / 10% straight line
Computers
33% / 10% straight line
The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is credited or charged to profit or loss.
Properties whose fair value can be measured reliably are held under the revaluation model and are carried at a revalued amount, being their fair value at the date of valuation less any subsequent accumulated depreciation and subsequent accumulated impairment losses. The fair value of the land and buildings is usually considered to be their market value.
Revaluation gains and losses are recognised in other comprehensive income and accumulated in equity, except to the extent that a revaluation gain reverses a revaluation loss previously recognised in profit or loss or a revaluation loss exceeds the accumulated revaluation gains recognised in equity; such gains and losses are recognised in profit or loss.
OCTRIC SEMICONDUCTORS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 30 SEPTEMBER 2024
1
Accounting policies
(Continued)
- 18 -
1.7
Impairment of fixed assets
At each reporting period end date, the company reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the company estimates the recoverable amount of the cash-generating unit to which the asset belongs.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.
Recognised impairment losses are reversed if, and only if, the reasons for the impairment loss have ceased to apply. Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.
1.8
Stocks
Stocks are stated at the lower of cost and estimated selling price less costs to complete and sell. Cost comprises direct materials and, where applicable, direct labour costs and those overheads that have been incurred in bringing the stocks to their present location and condition.
At each reporting date, an assessment is made for impairment. Any excess of the carrying amount of stocks over its estimated selling price less costs to complete and sell is recognised as an impairment loss in profit or loss. Reversals of impairment losses are also recognised in profit or loss.
1.9
Cash and cash equivalents
Cash and cash equivalents are basic financial assets and include cash in hand, deposits held at call with banks, other short-term liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities.
1.10
Financial instruments
The company has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.
Financial instruments are recognised in the company's statement of financial position when the company becomes party to the contractual provisions of the instrument.
Financial assets and liabilities are offset, with the net amounts presented in the financial statements, when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.
OCTRIC SEMICONDUCTORS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 30 SEPTEMBER 2024
1
Accounting policies
(Continued)
- 19 -
Basic financial assets
Basic financial assets, which include debtors and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised.
Impairment of financial assets
Financial assets, other than those held at fair value through profit and loss, are assessed for indicators of impairment at each reporting end date.
Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected. If an asset is impaired, the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset’s original effective interest rate. The impairment loss is recognised in profit or loss.
If there is a decrease in the impairment loss arising from an event occurring after the impairment was recognised, the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been, had the impairment not previously been recognised. The impairment reversal is recognised in profit or loss.
Derecognition of financial assets
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the company transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.
Classification of financial liabilities
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the company after deducting all of its liabilities.
Basic financial liabilities
Basic financial liabilities, including creditors, bank loans, loans from fellow group companies and preference shares that are classified as debt, are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future payments discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.
Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.
Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Amounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.
Derecognition of financial liabilities
Financial liabilities are derecognised when the company’s contractual obligations expire or are discharged or cancelled.
OCTRIC SEMICONDUCTORS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 30 SEPTEMBER 2024
1
Accounting policies
(Continued)
- 20 -
1.11
Equity instruments
Equity instruments issued by the company are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the company.
1.12
Taxation
The tax expense represents the sum of the tax currently payable and deferred tax.
Current tax
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the income statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The company’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.
Deferred tax
Deferred tax liabilities are generally recognised for all timing differences and deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Such assets and liabilities are not recognised if the timing difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.
The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the income statement, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset when the company has a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.
1.13
Provisions
Provisions are recognised when the company has a legal or constructive present obligation as a result of a past event, it is probable that the company will be required to settle that obligation and a reliable estimate can be made of the amount of the obligation.
The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the reporting end date, taking into account the risks and uncertainties surrounding the obligation. Where the effect of the time value of money is material, the amount expected to be required to settle the obligation is recognised at present value. When a provision is measured at present value, the unwinding of the discount is recognised as a finance cost in profit or loss in the period in which it arises.
1.14
Employee benefits
The costs of short-term employee benefits are recognised as a liability and an expense, unless those costs are required to be recognised as part of the cost of stock or fixed assets.
The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received.
Termination benefits are recognised immediately as an expense when the company is demonstrably committed to terminate the employment of an employee or to provide termination benefits.
1.15
Retirement benefits
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
OCTRIC SEMICONDUCTORS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 30 SEPTEMBER 2024
1
Accounting policies
(Continued)
- 21 -
1.16
Leases
Rentals payable under operating leases, including any lease incentives received, are charged to profit or loss on a straight line basis over the term of the relevant lease except where another more systematic basis is more representative of the time pattern in which economic benefits from the leases asset are consumed.
1.17
Foreign exchange
Transactions in currencies other than pounds sterling are recorded at the rates of exchange prevailing at the dates of the transactions. At each reporting end date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the reporting end date. Gains and losses arising on translation in the period are included in profit or loss.
1.18
Expenditure on research and development is written off in the year in which it is incurred.
2
Judgements and key sources of estimation uncertainty
In the application of the company’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.
Critical judgements
The following judgements (apart from those involving estimates) have had the most significant effect on amounts recognised in the financial statements.
Useful economic lives of tangible assets
The annual depreciation charge for tangible assets is sensitive to changes in the estimated useful economic lives and residual values of the assets. The useful economic lives and residual values are re-assessed annually. They are amended when necessary to reflect current estimates based on technological advancement, future investments, economic utilisation and the physical condition of the assets.
OCTRIC SEMICONDUCTORS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 30 SEPTEMBER 2024
2
Judgements and key sources of estimation uncertainty
(Continued)
- 22 -
Key sources of estimation uncertainty
The estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are as follows.
Stock provision
The company manufactures semi-conductor products and is subject to changing consumer demands and economic trends. As a result, it is necessary to consider the recoverability of the cost of stock and the associated provisioning required. When calculating the stock provision, management consider the nature and condition of the stock, as well as applying assumptions around anticipated saleability of finished goods and future usage of raw materials.
Revaluation of land and buildings
The freehold building is stated at fair value based on a professional valuation performed by BDO LLP as at the reported date of 12 April 2024 and was commissioned by the Ministry of Defence prior to acquisition of the company. The allocation of value to buildings is based on the BDO assessment of average rental market values and average rental yields at this time. The remaining land value is based on the BDO report of market value assessments of related land values at the time of the report firstly with planning permission and then discounted for being without planning permission for new developments.
3
Turnover and other revenue
2024
2023
£
£
Turnover analysed by class of business
Product sales
23,421,165
97,113,573
Contract sales
4,975,931
1,847,107
Reclaimed material sales
3,748,700
5,568,874
32,145,796
104,529,554
2024
2023
£
£
Turnover analysed by geographical market
United Kingdom
29,409,232
8,291,843
Europe
1,351,351
300,129
Rest of the world
1,385,213
95,937,582
32,145,796
104,529,554
2024
2023
£
£
Other revenue
Interest income
679,645
351,446
Contract termination fees
-
8,176,896
OCTRIC SEMICONDUCTORS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 30 SEPTEMBER 2024
- 23 -
4
Exceptional items
2024
2023
£
£
Expenditure
Exceptional material costs
-
2,508,467
Restructuring and redundancy
(2,651,400)
3,881,678
Impairment losses
-
5,192,526
Irrecoverable VAT
551,150
-
(2,100,250)
11,582,671
In line with the requirements of FRS 102, other provisions had been made for restructuring and redundancies as the company was demonstrably committed at the prior year reporting date. A detailed formal plan had been created and a constructive obligation generated by communication to employees. At the prior year reporting date the company was without realistic possibility of withdrawal from this plan. At the reporting date any restructuring and redundancy costs have been incurred or are known as a result of the change in ownership. As a result any remaining provisions have been reversed to the income statement within exceptional costs.
Irrecoverable VAT relates to VAT where the expected outcome of recovery is remote.
5
Operating (loss)/profit
2024
2023
Operating (loss)/profit for the period is stated after charging:
£
£
Exchange losses
1,922,210
3,267,356
Fees payable to the company's auditor for the audit of the company's financial statements
33,500
27,345
Depreciation of owned tangible fixed assets
2,644,374
2,166,807
Loss on disposal of tangible fixed assets
368,549
638,744
Amortisation of intangible assets
93,898
205,045
Operating lease charges
367,805
342,999
6
Employees
The average monthly number of persons (including directors) employed by the company during the Period was:
2024
2023
Number
Number
Management
11
11
Manufacturing
109
214
Facilities
17
25
Sales and administration
4
7
Total
141
257
OCTRIC SEMICONDUCTORS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 30 SEPTEMBER 2024
6
Employees
(Continued)
- 24 -
Their aggregate remuneration comprised:
2024
2023
£
£
Wages and salaries
8,120,112
15,544,808
Social security costs
1,289,452
1,966,325
Pension costs
479,485
649,962
9,889,049
18,161,095
7
Directors' remuneration
2024
2023
£
£
Remuneration for qualifying services
350,828
191,860
Company pension contributions to defined contribution schemes
49,117
9,691
399,945
201,551
The number of directors for whom retirement benefits are accruing under defined contribution schemes amounted to 1 (2023 - 1).
Remuneration disclosed above include the following amounts paid to the highest paid director:
2024
2023
£
£
Remuneration for qualifying services
350,828
191,860
Company pension contributions to defined contribution schemes
49,117
9,691
The remaining directors in the period were remunerated by the Coherent Group for their services during the period.
8
Interest receivable and similar income
2024
2023
£
£
Interest income
Interest on bank deposits
525,069
351,446
Interest receivable from group companies
154,576
Total income
679,645
351,446
OCTRIC SEMICONDUCTORS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 30 SEPTEMBER 2024
8
Interest receivable and similar income
(Continued)
- 25 -
2024
2023
Investment income includes the following:
£
£
Interest on financial assets not measured at fair value through profit or loss
679,645
351,446
9
Interest payable and similar expenses
2024
2023
£
£
Interest on financial liabilities measured at amortised cost:
Interest payable to group undertakings
412,768
686,141
Other finance costs:
Other interest
15,194
427,962
686,141
10
Taxation
2024
2023
£
£
Current tax
UK corporation tax on profits for the current period
664,032
Adjustments in respect of prior periods
(664,032)
Total current tax
(664,032)
664,032
Deferred tax
Origination and reversal of timing differences
279,780
(75,973)
Adjustment in respect of prior periods
(6,127)
Total deferred tax
273,653
(75,973)
Total tax (credit)/charge
(390,379)
588,059
OCTRIC SEMICONDUCTORS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 30 SEPTEMBER 2024
10
Taxation
(Continued)
- 26 -
The actual (credit)/charge for the Period can be reconciled to the expected (credit)/charge for the Period based on the profit or loss and the standard rate of tax as follows:
2024
2023
£
£
(Loss)/profit before taxation
(5,010,832)
4,700,161
Expected tax (credit)/charge based on the standard rate of corporation tax in the UK of 25.00% (2023: 25.00%)
(1,252,708)
1,175,040
Tax effect of expenses that are not deductible in determining taxable profit
66,143
980,577
Tax effect of income not taxable in determining taxable profit
(13,766)
Tax effect of utilisation of tax losses not previously recognised
994,568
(970,420)
Change in unrecognised deferred tax assets
471,777
Adjustments in respect of prior years
(670,159)
Permanent capital allowances in excess of depreciation
(437,447)
Profits to March 2023 taxed at 19%
(145,925)
Taxation (credit)/charge for the period
(390,379)
588,059
In addition to the amount (credited)/charged to the income statement, the following amounts relating to tax have been recognised directly in other comprehensive income:
2024
2023
£
£
Deferred tax arising on:
Revaluation of property
(697,005)
(12,532,000)
Deferred taxation on revaluation gains/losses is taken to a separate non-distributable reserve through other comprehensive income. The rate of deferred taxation provisions on revalued property is 25% in line with government legislation on future corporation tax rates at the reporting date.
OCTRIC SEMICONDUCTORS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 30 SEPTEMBER 2024
- 27 -
11
Intangible fixed assets
Software
£
Cost
At 1 July 2023 and 30 September 2024
225,353
Amortisation and impairment
At 1 July 2023
49,590
Amortisation charged for the Period
93,898
At 30 September 2024
143,488
Carrying amount
At 30 September 2024
81,865
At 30 June 2023
175,763
12
Tangible fixed assets
Freehold land and buildings
Plant and equipment
Computers
Total
£
£
£
£
Cost or valuation
At 1 July 2023
19,788,020
24,976,054
476,810
45,240,884
Additions
119,259
708
119,967
Disposals
(131,744)
(131,744)
Revaluation
(2,788,020)
(2,788,020)
Transfers
(236,805)
(236,805)
At 30 September 2024
17,000,000
24,726,764
477,518
42,204,282
Depreciation and impairment
At 1 July 2023
9,363,058
175,236
9,538,294
Depreciation charged in the Period
2,472,671
171,703
2,644,374
At 30 September 2024
11,835,729
346,939
12,182,668
Carrying amount
At 30 September 2024
17,000,000
12,891,035
130,579
30,021,614
At 30 June 2023
19,788,020
15,612,996
301,574
35,702,590
Land and buildings with a carrying amount of £17,000,000 were revalued at April 2024 by BDO LLP, independent valuers not connected with the company on the basis of market value. The valuation conforms to International Valuation Standards and was based on recent market transactions on arm's length terms for similar properties.
The following assets are carried at valuation. If the assets were measured using the cost model, the carrying amounts would be as follows:
OCTRIC SEMICONDUCTORS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 30 SEPTEMBER 2024
12
Tangible fixed assets
(Continued)
- 28 -
Freehold land & buildings
2024
2023
£
£
Cost
1,512,455
1,512,455
13
Stocks
2024
2023
£
£
Raw materials and consumables
1,106,206
1,991,827
Work in progress
614,263
1,116,601
Finished goods and goods for resale
404
50,162
1,720,873
3,158,590
Stocks are stated after provision for impairment of £867,500 (2023: £306,474)
14
Debtors
2024
2023
Amounts falling due within one year:
£
£
Trade debtors
3,005,373
3,317,936
Corporation tax recoverable
815,375
Amounts owed by group undertakings
2,672,088
Other debtors
1,128,931
9,799,799
Prepayments and accrued income
427,067
1,201,418
5,376,746
16,991,241
15
Creditors: amounts falling due within one year
2024
2023
£
£
Trade creditors
2,197,045
2,463,067
Amounts owed to group undertakings
18,845,550
Corporation tax
664,032
Other taxation and social security
454,333
294,617
Other creditors
62,097
73,749
Accruals and deferred income
485,721
1,390,437
3,199,196
23,731,452
OCTRIC SEMICONDUCTORS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 30 SEPTEMBER 2024
- 29 -
16
Provisions for liabilities
2024
2023
£
£
Restructuring and redundancy
647,209
3,881,678
Movements on provisions:
Restructuring and redundancy
£
At 1 July 2023
3,881,678
Additional provisions in the year
647,209
Reversal of provision
(3,407,196)
Utilisation of provision
(474,482)
At 30 September 2024
647,209
17
Deferred taxation
The following are the major deferred tax liabilities and assets recognised by the company and movements thereon:
Liabilities
Liabilities
2024
2023
Balances:
£
£
Accelerated capital allowances
2,280,098
1,835,127
Revaluations
3,862,812
4,560,000
Short term timing differences
(171,135)
-
5,971,775
6,395,127
2024
Movements in the Period:
£
Liability at 1 July 2023
6,395,127
Charge to profit or loss
273,653
Credit to other comprehensive income
(697,005)
Liability at 30 September 2024
5,971,775
OCTRIC SEMICONDUCTORS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 30 SEPTEMBER 2024
- 30 -
18
Retirement benefit schemes
2024
2023
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
479,485
649,962
The company operates a defined contribution pension scheme for all qualifying employees. The assets of the scheme are held separately from those of the company in an independently administered fund.
Contributions totalling £61,386 (2023: £73,547) are outstanding at the period end and included within creditors.
19
Share capital
2024
2023
2024
2023
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Ordinary shares of £1 each
28,129,084
28,129,083
28,129,084
28,129,083
On the 27 September 2024 one ordinary £1 share was issued for £639,845. The consideration was settled by the shareholder's settlement of a liability due to the exiting shareholder. The share was issued at a premium of £639,844.
20
Reserves
Revaluation reserve
The aggregate surplus on re-measurement of freehold land and buildings, net of associated deferred tax, is transferred to a separate non-distributable revaluation reserve in order to assist with the identification of profits available for distribution.
Capital contribution reserve
The capital contribution reserve was generated when the company was acquired by the II-VI group of companies in the year ended 30 June 2018. Capital contributions from group companies are non-repayable. As a result of the sale of the company to the Secretary of State for Defence of Great Britain and Northern Ireland this reserve has been released into profit and loss reserves.
21
Operating lease commitments
Lessee
At the reporting end date the company had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:
2024
2023
£
£
Within one year
90,900
97,256
Between two and five years
22,725
90,900
119,981
OCTRIC SEMICONDUCTORS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 30 SEPTEMBER 2024
- 31 -
22
Ultimate controlling party
The controlling party of the company is the Secretary of State for Defence of Great Britain and Northern Ireland.
23
Cash (absorbed by)/generated from operations
2024
2023
£
£
(Loss)/profit for the Period after tax
(4,620,453)
4,112,102
Adjustments for:
Taxation (credited)/charged
(390,379)
588,059
Finance costs
427,962
686,141
Investment income
(679,645)
(351,446)
Loss on disposal of tangible fixed assets
368,549
638,744
Amortisation and impairment of intangible assets
93,898
205,045
Depreciation and impairment of tangible fixed assets
2,644,374
2,166,807
Impairment of tangible assets
-
5,192,526
Irrecoverable VAT
551,150
-
(Decrease)/increase in provisions
(3,234,469)
3,881,678
Movements in working capital:
Decrease in stocks
1,437,717
5,164,355
Decrease in debtors
11,878,720
5,843,106
Decrease in creditors
(19,228,379)
(10,706,288)
Cash (absorbed by)/generated from operations
(10,750,955)
17,420,829
24
Analysis of changes in net funds
1 July 2023
Cash flows
30 September 2024
£
£
£
Cash at bank and in hand
12,113,566
(11,434,614)
678,952
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