Registered number: 12434702
FOR THE YEAR ENDED 31 DECEMBER 2024
HIGHLY MARELLI UK LIMITED
COMPANY INFORMATION
HIGHLY MARELLI UK LIMITED
CONTENTS
HIGHLY MARELLI UK LIMITED
GROUP STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2024
The Director presents his strategic report for the period ended 31 December 2024.
The principal activity of the company is the design, manufacture, process and assembly of heating and air conditioning (HVAC) units for the automotive industry. The Company operates from its main production facility and offices in Sunderland, Tyne & Wear along with an R&D design facility in Llanelli, Wales. The company also operates a small branch office covering R&D and Sales in Guyancourt, France. The US entity operates from its main production facility and offices in Shelbyville, Tennessee.
The Company was incorporated on 31 January 2020 as a subsidiary of Marelli Automotive Systems UK Limited. The Company was incorporated to acquire the heating, ventilation and air conditioning business of Marelli Automotive Systems UK Limited during the period ended 31 December 2020, prior to its disposal to Highly Marelli Shanghai on 31 January 2021, a joint venture owned 40% by Marelli Holdings Limited (a company incorporated in Japan) and 60% by Highly Shanghai (a company incorporated in China).
The Company commenced trading on 1 December 2020. These accounts reflect twelve months of operations for the new standalone business as a subsidiary of Marelli Automotive Systems UK Limited.
In the run up to the transfer of the HVAC business from Marelli Automotive Systems UK Limited and the commencement of trading activities of the company, major activity centred around the carve out of the standalone entity. This included sales and purchase contracts (including those of a service nature such as banking), an employee TUPE process, hiring additional employees and establishing long term and temporary service agreements with Marelli to cover a transitional period.
The Company commenced trading on 1 December 2020. These accounts reflect twelve months of operations for the new standalone business as a subsidiary of Marelli Automotive Systems UK Limited.
In the run up to the transfer of the HVAC business from Marelli Automotive Systems UK Limited and the commencement of trading activities of the company, major activity centred around the carve out of the standalone entity. This included sales and purchase contracts (including those of a service nature such as banking), an employee TUPE process, hiring additional employees and establishing long term and temporary service agreements with Marelli to cover a transitional period.
The principal risk for the company is the dependence upon one major customer, although this is mitigated by a long term contract agreement and further opportunities to expand to new customer business through the strategy of the joint venture.
The Company considers the individual company’s exposure to price risk, credit risk, liquidity risk and cash flow risk to be low given the support of the Highly Marelli Parent organisation and the Joint Venture owners. It also considers information relating to the company's financial risk management objectives and policies to be immaterial for the assessment of assets, liabilities, financial position and profit and loss of the company. The BREXIT transition period ended in December 2020, has brought with it, additional red tape and import costs in the supply chain used in the UK business.
The Company has been impacted in the twelve months of trading and the following financial period by continued difficulties within the automotive industry as a result of declining Sales demand within the EU. The company also has the added problem of operating as a standalone company with the teething problems that this can bring. However, the Director is confident that these issues can be overcome where opportunities are maximised and risks are mitigated where possible.
The Company considers the individual company’s exposure to price risk, credit risk, liquidity risk and cash flow risk to be low given the support of the Highly Marelli Parent organisation and the Joint Venture owners. It also considers information relating to the company's financial risk management objectives and policies to be immaterial for the assessment of assets, liabilities, financial position and profit and loss of the company. The BREXIT transition period ended in December 2020, has brought with it, additional red tape and import costs in the supply chain used in the UK business.
The Company has been impacted in the twelve months of trading and the following financial period by continued difficulties within the automotive industry as a result of declining Sales demand within the EU. The company also has the added problem of operating as a standalone company with the teething problems that this can bring. However, the Director is confident that these issues can be overcome where opportunities are maximised and risks are mitigated where possible.
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HIGHLY MARELLI UK LIMITED
GROUP STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2024
The principal KPI’s for 2024 relate to turnover, gross profit and operating profit, as disclosed in the financial statements.
The Company measures its performance with particular focus on a number of financial and non-financial KPI's, progress is assessed by comparing KPI’s with the company’s strategy, it’s budget for the year and historic performance.
Turnover has decreased in 2024 by 9% as Volumes of key customer sales decreased, the company has continued to experience lower than usual production levels as a result of continued difficulties within the automotive industry as a result of declining Sales demand within the EU. Cost increases in the raw material components and Inbound Freight has negatively impacted the gross profit for the period. Commercial discussions are on-going with our customers in relation to the high level of costs experienced. Operating profit has improved in 2024 despite the increase in raw material and freight costs.
Turnover per head and overall total headcount has improved in 2024 as the increase in volumes has enabled production efficiency improvements with a stable production environment.
Non-financial KPI’s include staff utilisation, attrition and diversity, the volume of accidents and reportable safety incidents.
The Company places great emphasis on the non-financial KPI’s that relate to health and safety including accident rates, reportable incidents, lost production time and hazard spotting.
The Company measures its performance with particular focus on a number of financial and non-financial KPI's, progress is assessed by comparing KPI’s with the company’s strategy, it’s budget for the year and historic performance.
Turnover has decreased in 2024 by 9% as Volumes of key customer sales decreased, the company has continued to experience lower than usual production levels as a result of continued difficulties within the automotive industry as a result of declining Sales demand within the EU. Cost increases in the raw material components and Inbound Freight has negatively impacted the gross profit for the period. Commercial discussions are on-going with our customers in relation to the high level of costs experienced. Operating profit has improved in 2024 despite the increase in raw material and freight costs.
Turnover per head and overall total headcount has improved in 2024 as the increase in volumes has enabled production efficiency improvements with a stable production environment.
Non-financial KPI’s include staff utilisation, attrition and diversity, the volume of accidents and reportable safety incidents.
The Company places great emphasis on the non-financial KPI’s that relate to health and safety including accident rates, reportable incidents, lost production time and hazard spotting.
The Director has a duty to act in good faith, in a way that is most likely to promote the success of the company for the benefit of its members as a whole, having regard to the likely consequences of decisions for the long term, the interests of the company's employees, the need to foster relationships with other key stakeholders, the impact on the community and the environment, maintaining a reputation for high standards of business conduct, and the need to act fairly as between members of the company.
Key decisions made by the Director during the financial period, concerned the successful carve out of the former Marelli HVAC business unit to become the standalone entity of Highly Marelli UK Limited (HMUK). As per the business review section, this has included sales and purchase contracts (including those of a service nature such as banking), an employee TUPE process, hiring additional employees and establishing long term and temporary service agreements with Marelli to cover a transitional period. HMUK has also moved into dedicated offices and workspace under a long term rental agreement with Marelli. Actions were taken to also move HMUK dedicated staff from the Nissan plant into the dedicated workspace to allow focus on automation of processes and operating to its own shift patterns.
Additionally, the Director has ensured that the company operates under the successful operating process of Marelli, ensuring established trading and supply routes are maintained and business continuity is not impacted by the joint venture carve out process. This being at the same time as beginning a process of operating under the strategic guidance of new ownership and managing the expectations that are emerging.
The Director has a unique understanding of the business being a former established senior leader within the Marelli group. The company also continues to leverage expertise from the wider group in order to achieve its objectives.
Key decisions made by the Director during the financial period, concerned the successful carve out of the former Marelli HVAC business unit to become the standalone entity of Highly Marelli UK Limited (HMUK). As per the business review section, this has included sales and purchase contracts (including those of a service nature such as banking), an employee TUPE process, hiring additional employees and establishing long term and temporary service agreements with Marelli to cover a transitional period. HMUK has also moved into dedicated offices and workspace under a long term rental agreement with Marelli. Actions were taken to also move HMUK dedicated staff from the Nissan plant into the dedicated workspace to allow focus on automation of processes and operating to its own shift patterns.
Additionally, the Director has ensured that the company operates under the successful operating process of Marelli, ensuring established trading and supply routes are maintained and business continuity is not impacted by the joint venture carve out process. This being at the same time as beginning a process of operating under the strategic guidance of new ownership and managing the expectations that are emerging.
The Director has a unique understanding of the business being a former established senior leader within the Marelli group. The company also continues to leverage expertise from the wider group in order to achieve its objectives.
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HIGHLY MARELLI UK LIMITED
GROUP STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2024
The Company successfully ran a TUPE process to transition the HVAC business unit employees of Marelli Automotive Systems UK Limited into the new organisation. Formal consultation took place with no major issues encountered. Ongoing consultation has taken place also since operating day 1. The senior management team communicate key issues affecting the company via a weekly communication brief and also a works council. Global monthly ‘Town Hall' meetings take place to cover the wider group. There are a full range of company policies and procedures available for employees to consult. Under the new joint venture arrangement, these are being developed to suit the needs of the new organisation.
Apart from the joint venture shareholding and the company employees, the company's main stakeholder is Nissan for which it has several commercial agreements across much of their range produced from the Sunderland and Shelbyville plants. The company will continue to supply parts to Nissan both directly and indirectly, including Nissan's recent model update to the highly successful Qashqai. The focus for the standalone entity is to maintain an established and excellent working relationship with the Nissan group.
As a company in a key supply chain area within the automotive sector, the Director ensures that the business acts ethically towards its customers, suppliers and employees. The move to a dedicated workspace and backing of new part owners has allowed the company to invest in equipment to operate more effectively and in accordance with the requirements of the Nissan site.
As a company in a key supply chain area within the automotive sector, the Director ensures that the business acts ethically towards its customers, suppliers and employees. The move to a dedicated workspace and backing of new part owners has allowed the company to invest in equipment to operate more effectively and in accordance with the requirements of the Nissan site.
The Company is aware of the importance in the community and the ability to hire staff locally providing opportunities to the local area. It fully supports local charities and community programmes by engaging in dedicated fund-raising activities to support these. The company is also committed to managing the wider impacts of its operations and protecting the environment and natural resources. Projects in the foreseeable include the installation of Solar panels and going fully paperless now that the business is stand-alone from Marelli and also driving a reduction in energy consumption by improving energy efficiency in key production processes. The company also participates in the Salary Sacrifice Cycle to Work scheme offering the opportunity to all employees.
The Company is committed to complying with all applicable regulations and requires every employee to undertake various training courses including code of conduct and ethics as issued by the parent company. A strong compliance culture is encouraged with annual reviews, the company has also invested in GDPR activities to educate and inform the workforce of this topic.
The Company regularly engages with its parent company to ensure Company plans are fully aligned with those of the group. This includes approval of annual budgets, medium term plans and new business opportunities.
Following the incorporation of the Company as a subsidiary of Marelli Automotive Systems UK Ltd, the Company engages extensively with the shareholders. This engagement has focussed on defining the strategic objectives of the company and it’s medium and long-term plans to deliver the desired outcomes. The relationship with the shareholders is governed by a framework document which sets out, amongst other things, the basis on which the performance of the company shall be monitored.
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HIGHLY MARELLI UK LIMITED
GROUP STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2024
The Company is exposed to a number of risks, a proactive approach is taken to identify and mitigate these risks where possible. Risks and their impacts are communicated with shareholders to reduce the impact on the company and recovery plans made with the customer where possible.
Economic conditions
The Company is affected by national and international economic factors outside of its control, including an economic slowdown, changes in the fiscal and monetary policies of Government, exchange rate fluctuations, commodity price fluctuations, inflation, interest rate increases and banking sector conditions.
Increases in the costs base for the company have are evident, to mitigate the risks the company operate strict procurement policies that emphasise value for money requirements and adjust commercial pricing to recover increasing costs as far as possible.
Market risk
Wars have significantly impacted demand from key commercial markets, including Automotive. Whilst initial signs of recovery have been noted, the reduced demand for Electric vehicles and also component shortages within the industry have caused further economic disruption and instability. To mitigate the risk, the company remains actively engaged with the impacted customers, has proactively sought new customers in existing markets and seeks to diversify its exposure by developing our presence further down the supply chain building on our technical expertise and utilising available capacity in injection moulding.
Exchange rate risk
Exchange rate risk is the risk that fluctuations in exchange rates could adversely impact the financial performance of the group or its ability to meet its obligations. The company’s policy is to manage its exposure to exchange rate fluctuations by selling and purchasing in the same currency where possible.
Economic conditions
The Company is affected by national and international economic factors outside of its control, including an economic slowdown, changes in the fiscal and monetary policies of Government, exchange rate fluctuations, commodity price fluctuations, inflation, interest rate increases and banking sector conditions.
Increases in the costs base for the company have are evident, to mitigate the risks the company operate strict procurement policies that emphasise value for money requirements and adjust commercial pricing to recover increasing costs as far as possible.
Market risk
Wars have significantly impacted demand from key commercial markets, including Automotive. Whilst initial signs of recovery have been noted, the reduced demand for Electric vehicles and also component shortages within the industry have caused further economic disruption and instability. To mitigate the risk, the company remains actively engaged with the impacted customers, has proactively sought new customers in existing markets and seeks to diversify its exposure by developing our presence further down the supply chain building on our technical expertise and utilising available capacity in injection moulding.
Exchange rate risk
Exchange rate risk is the risk that fluctuations in exchange rates could adversely impact the financial performance of the group or its ability to meet its obligations. The company’s policy is to manage its exposure to exchange rate fluctuations by selling and purchasing in the same currency where possible.
The Director considers that the primary focus of the business is still to focus on the relationship with its main customer, but also ensure that the Company intensifies its efforts to seek further opportunities and drive further efficiency improvements as the effects of global supply chain issues are reduced. The expectation is to continue to develop as a standalone entity and become less reliant on Marelli support. New business was awarded during 2023 which will start production in 2025, this will increase volume and revenue for Highly Marelli UK Limited.
On the 13th of July 2021, the Company changed its name from Marelli Cabin Comfort UK Limited to Highly Marelli UK Limited, along with the transfer of ownership. The company has since continued to experience lower than usual production volumes subsequent to the end of the financial period as a result of declining Sales demand within the EU.
On the 13th of July 2021, the Company changed its name from Marelli Cabin Comfort UK Limited to Highly Marelli UK Limited, along with the transfer of ownership. The company has since continued to experience lower than usual production volumes subsequent to the end of the financial period as a result of declining Sales demand within the EU.
This report was approved by the board and signed on its behalf.
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HIGHLY MARELLI UK 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 Directors' are responsible for preparing the Group Strategic Report, the Directors' Report and the consolidated 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 Group'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;
∙prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group 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 the Group 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 the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
The Director does not recommend the payment of a dividend in respect of the period ended 31 December 2024.
The directors who served during the year were:
Political donations
No contributions to political organisations were made during the year (2023: £nil).
As noted on page 4, the company experienced lower sales volume against budget as a result of the continued difficulties within the automotive industry as a result of declining Sales demand within the EU, which has had a significant impact on the short term profitability of the company. The director is confident that the level of demand will be restored by the end of 2025 once volumes return to expected levels.
On the 13th July 21, the company changed its name from Marelli Cabin Comfort UK Limited to Highly Marelli UK Limited, The company has since continued to experience lower than usual production volumes subsequent to the end of the financial period because of continued difficulties within the automotive industry as a result of declining Sales demand within the EU.
On the 13th July 21, the company changed its name from Marelli Cabin Comfort UK Limited to Highly Marelli UK Limited, The company has since continued to experience lower than usual production volumes subsequent to the end of the financial period because of continued difficulties within the automotive industry as a result of declining Sales demand within the EU.
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HIGHLY MARELLI UK LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2024
The Company was incorporated on 31 January 2020 and the company was dormant until 1 December 2020 when it acquired the heating, ventilation and air conditioning business of its parent company, Marelli Automotive Systems UK Limited. The shares in the Company were then transferred to Marelli Corporation on 1 December 2020 as part of a restructuring within the group.
The company has also impaired the value of its Climate Wind Tunnel in the year to £nil, following an assessment of the condition of the facility along with forecasts of future revenue generation.
The company has also impaired the value of its Climate Wind Tunnel in the year to £nil, following an assessment of the condition of the facility along with forecasts of future revenue generation.
The company is committed to a policy of research and development and continues to undertake investment in such activities in order to maintain and promote its position in the market for its products. The company also continues to benefit from the strong commitment of the Marelli worldwide group to research and development in order to improve product design, manufacturing processes, cost and quality.
The Company meets its day to day working capital requirements through funding from its parent company. The Company is therefore heavily dependent on the funding in place for the global group, a letter of support is currently available. Whilst this creates doubt on the Company’s ability to continue as a going concern, the director expects that the group will continue to provide this support for a period of one year from signing the financial statements. The Company therefore continues to adopt the going concern basis in preparing its financial statements.
Despite the losses for the financial year, the company holds a vital position in the group, since it’s incorporation it has experienced significant volume reductions and supply issues as previously mentioned. Once the expected level of volume returns, coupled with new business wins for future Nissan models, the Company will be a significant contributor for the future success of the group, and also for the region.
Despite the losses for the financial year, the company holds a vital position in the group, since it’s incorporation it has experienced significant volume reductions and supply issues as previously mentioned. Once the expected level of volume returns, coupled with new business wins for future Nissan models, the Company will be a significant contributor for the future success of the group, and also for the region.
Applications for employment by disabled persons are always fully considered, bearing in mind, the abilities of the applicant concerned. In the event of members of staff becoming disabled every effort will be made to ensure that their employment with the company continues and the appropriate training is arranged. It is the policy of the company that the training, career development and promotion of disabled persons should, as far as possible, be identical to that of other employees. During the period there were no disabled persons employed in the company.
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HIGHLY MARELLI UK LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2024
Details of the number of employees and related costs can be found in note 8 to the financial statements.
The Company's policy is to consult and discuss with employees, through employee meetings, on matters likely to affect employees’ interests. Information on matters of concern to employees is given through informal bulletins, reports and team briefings which seek to achieve a common awareness on the part of all employees of the financial and economic factors affecting the group’s performance.
The Company regards the occupational health and safety of all employees, contractors and visitors as a fundamental concern for all levels of management. It is therefore, the company’s primary objective to identify and eliminate, insofar as is reasonably possible, all occupational health and safety hazards.
The Company is committed to providing training that enables all staff to do their job effectively and develop their full potential as employees.
The Company is committed to providing equal treatment for all employees. All job applicants and employees whether temporary, permanent or agency workers will receive equal treatment regardless of race, colour, ethnic or national origins, religion, sex, marital status, age, sexual orientation or disability.
The Company's policy is to consult and discuss with employees, through employee meetings, on matters likely to affect employees’ interests. Information on matters of concern to employees is given through informal bulletins, reports and team briefings which seek to achieve a common awareness on the part of all employees of the financial and economic factors affecting the group’s performance.
The Company regards the occupational health and safety of all employees, contractors and visitors as a fundamental concern for all levels of management. It is therefore, the company’s primary objective to identify and eliminate, insofar as is reasonably possible, all occupational health and safety hazards.
The Company is committed to providing training that enables all staff to do their job effectively and develop their full potential as employees.
The Company is committed to providing equal treatment for all employees. All job applicants and employees whether temporary, permanent or agency workers will receive equal treatment regardless of race, colour, ethnic or national origins, religion, sex, marital status, age, sexual orientation or disability.
The company’s purchasing department works to guarantee that the suppliers process of selection, certification and evaluation are homogenous in all of the countries in which the company operates in. Working collaboratively with suppliers to build long-term, mutually beneficial relationships with trading partners who share our corporate philosophy of honesty, integrity, and ethical business practices. The company endeavours to enter into clear and fair contracts with its suppliers.
Ongoing communication with the company’s suppliers to develop deeper relationships with companies in the supply chains as well as develop strategic relationships with key suppliers. The company perceive our global supplier network as a major contribution to value creation, quality and innovation and also to our success. Our collaboration with our suppliers is based on a mutual understanding of product and production quality, security of supplies, competitive prices and innovation.
Ongoing communication with the company’s suppliers to develop deeper relationships with companies in the supply chains as well as develop strategic relationships with key suppliers. The company perceive our global supplier network as a major contribution to value creation, quality and innovation and also to our success. Our collaboration with our suppliers is based on a mutual understanding of product and production quality, security of supplies, competitive prices and innovation.
The company engages extensively with its customers to foster long-term relationships of value to both parties, fostering positive and open relationships with these customers and recognises the importance of the governance regime they have adopted in monitoring performance. This includes attending regular meetings with senior representatives of these customers and reviewing operational information on a regular basis.
The company also interacts with customers in a structured manner to gather feedback on performance in meeting their requirements on-time and on-quality. These relationships are led by our Sales Director and supported by key management personnel as and when required.
The company also interacts with customers in a structured manner to gather feedback on performance in meeting their requirements on-time and on-quality. These relationships are led by our Sales Director and supported by key management personnel as and when required.
The company recognises the importance of its environmental responsibilities and has clearly identified environmental issues as an integral part of its corporate business strategy for the design and manufacture of automotive systems and components.
The company will continue to take action to conserve resources through the use of recycled or recyclable material, the elimination or minimisation of waste at source, and the implementation of viable recycling opportunities. In addition, the company is fully committed to the prevention of pollution and to achieving continual improvement in overall environmental performance.
The company will continue to take action to conserve resources through the use of recycled or recyclable material, the elimination or minimisation of waste at source, and the implementation of viable recycling opportunities. In addition, the company is fully committed to the prevention of pollution and to achieving continual improvement in overall environmental performance.
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HIGHLY MARELLI UK LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2024
Introduction
The Energy and Carbon report is disclosed to provide an overview of its energy consumption and carbon emissions and the mechanisms put in place to manage and mitigate the impact thereof.
Methodologies Used
Figures reported for FY24 are based upon actual data captured from energy supplier invoices. No figures are provided for FY23 as the business operated within the Marelli facility under a long-term agreement during this period with fixed charges in place for energy consumption. Therefore, the energy and carbon information for electricity & gas is not practical to obtain.
Emissions Factors
These are calculated by using the UK Government Greenhouse Gas Conversion Factors for Company reporting.
Energy Use
Intensity Ratios
The company monitors the following emission intensity ratios:
To drive improvements in energy consumption and carbon emissions, a number of initiatives have been used in the period and will continue to be used in the future, including:
∙Continued introduction of LED lighting
∙Installation of Lighting timers and motion detection sensors
∙Awareness and training in energy efficiency
∙Replacement of a new, more efficient air compressor in the manufacturing facility
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HIGHLY MARELLI UK LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2024
As noted above, the Company has continued to experience lower than usual production levels subsequent to the end of the financial period as a result of continued difficulties within the automotive industry as a result of declining sales demand within the EU. The director is confident that volumes will improve during the year ending 31 December 2025.
Whilst the volume reduction has had a significant impact on the financial results of the company, with a continued reduction in both sales and profitability post period end, as mentioned, volumes are expected to improve during the year ending 31 December 2025 onwards, with significant expansion expected in future years following the award of significant business in recent years.
Whilst the volume reduction has had a significant impact on the financial results of the company, with a continued reduction in both sales and profitability post period end, as mentioned, volumes are expected to improve during the year ending 31 December 2025 onwards, with significant expansion expected in future years following the award of significant business in recent years.
Under section 487(2) of the Companies Act 2006, Armstrong Watson Audit Limited will be deemed to have been reappointed as auditor 28 days after these financial statements were sent to members or 28 days after the latest date prescribed for filing the accounts with the registrar, whichever is earlier.
This report was approved by the board and signed on its behalf.
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HIGHLY MARELLI UK LIMITED
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF HIGHLY MARELLI UK LIMITED
We have audited the financial statements of Highly Marelli UK Limited (the 'parent Company') and its subsidiaries (the 'Group') for the year ended 31 December 2024, which comprise the Consolidated Statement of Comprehensive Income, the Consolidated Statement of Financial Position, the Company Statement of Financial Position, the Consolidated Statement of Changes in Equity, the Company 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 Group 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 Group's or the parent 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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HIGHLY MARELLI UK LIMITED
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF HIGHLY MARELLI UK 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 Group 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 Group 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 Group and the parent Company and its environment obtained in the course of the audit, we have not identified material misstatements in the Group Strategic Report or the Directors' Report.
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HIGHLY MARELLI UK LIMITED
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF HIGHLY MARELLI UK 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 Group 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:
Our approach to identifying and assessing the risks of material misstatement in respect of irregularities, including fraud and non-compliance with laws and regulations, was as follows:
∙the engagement partner ensured that the engagement team collectively had the appropriate competence, capabilities and skills to identify or recognise non-compliance with applicable laws and regulations;
∙we identified the laws and regulations applicable to the company through discussions with directors and other management, and from our commercial knowledge and experience of the sector;
∙we focused on specific laws and regulations which we considered may have a direct material effect on the financial statements or the operations of the group, including the Companies Act 2006, and taxation legislation;
∙we assessed the extent of compliance with the laws and regulations identified above through making enquiries of management and inspecting legal correspondence; and
∙identified laws and regulations were communicated within the audit team regularly and the team remained alert to instances of non-compliance throughout the audit.
We assessed the susceptibility of the company's financial statements to material misstatement, including obtaining an understanding of how fraud might occur, by:
∙making enquiries of management as to where they considered there was susceptibility to fraud, their knowledge of actual, suspected and alleged fraud; and
∙considering the internal controls in place to mitigate risks of fraud and non-compliance with laws and regulations.
To address the risk of fraud through management bias and override of controls, we:
∙performed analytical procedures to identify any unusual or unexpected relationships:
∙tested journal entries to identify unusual transactions;
∙assessed whether judgements and assumptions made in determining the accounting estimates were indicative of potential bias; and
∙investigatedtherationalebehindsignificantorunusualtransactions.
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HIGHLY MARELLI UK LIMITED
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF HIGHLY MARELLI UK LIMITED (CONTINUED)
In response to the risk of irregularities and non-compliance with laws and regulations, we designed procedures which included, but were not limited to:
∙agreeing financial statement disclosures to underlying supporting documentation;
∙reading the minutes of meetings of those charged with governance;
∙reviewed correspondence and filings in relation to the parent company's Operator Licence; and
∙enquiring of management as to actual and potential litigation and claims.
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.
for and on behalf of
Chartered Accountants & Statutory Auditors
Newcastle upon Tyne
Page 13
HIGHLY MARELLI UK LIMITED
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2024
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HIGHLY MARELLI UK LIMITED
REGISTERED NUMBER: 12434702
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
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 20 to 42 form part of these financial statements.
Page 15
HIGHLY MARELLI UK LIMITED
REGISTERED NUMBER: 12434702
COMPANY STATEMENT OF FINANCIAL POSITION
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 20 to 42 form part of these financial statements.
Page 16
HIGHLY MARELLI UK LIMITED
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2024
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2023
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HIGHLY MARELLI UK LIMITED
COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2024
Page 18
HIGHLY MARELLI UK LIMITED
COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2023
Page 19
HIGHLY MARELLI UK LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
The Company undertakes the design, manufacture, and sale of Heating Ventilation and Air Conditioning products for the automotive industry.
The Company is a private limited company, incorporated in the United Kingdom and its registered office address is Highly Marelli UK Limited Units 2 And 3 Stephenson Road, Stephenson Industrial Estate, Washington, Tyne And Wear, United Kingdom, NE37 3HR.
The Company is a private limited company, incorporated in the United Kingdom and its registered office address is Highly Marelli UK Limited Units 2 And 3 Stephenson Road, Stephenson Industrial Estate, Washington, Tyne And Wear, United Kingdom, NE37 3HR.
The financial statements of the company have been prepared in compliance with United Kingdom Accounting Standards, including Financial Reporting Standard 102, “The Financial Reporting Standard applicable in the United Kingdom and the Republic of Ireland” (‘FRS 102") and the Companies Act 2006.
3.Accounting policies
The principal accounting policies applied in the preparation of these financial statements are set out below. These policies have been consistently applied to all the periods presented, unless otherwise stated.
The financial statements are prepared under the historical cost convention, on a going concern basis, and in accordance with applicable accounting standards. The financial statements are prepared in sterling, which is the functional currency of the company and rounded to the nearest £'000.
The preparation of financial statements in conformity with FRS102 requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the company's accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements are disclosed in note 4.
The preparation of financial statements in conformity with FRS102 requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the company's accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements are disclosed in note 4.
The Parent 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 requirements of Section 11 Financial Instruments paragraphs 11.42, 11.44 to 11.45, 11.47, 11.48(a)(iii), 11.48(a)(iv), 11.48(b) and 11.48(c);
∙the requirements of Section 12 Other Financial Instruments paragraphs 12.26 to 12.27, 12.29(a), 12.29(b) and 12.29A;
∙the requirements of Section 26 Share-based Payment paragraphs 26.18(b), 26.19 to 26.21 and 26.23;
∙the requirements of Section 33 Related Party Disclosures paragraph 33.7.
This information is included in the consolidated financial statements of Marelli Holdings Co Limited as at 31 March 2025 and these financial statements may be obtained from www.marellimotori.com.
Page 20
HIGHLY MARELLI UK LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
3.Accounting policies (continued)
The consolidated financial statements present the results of the Company and its own subsidiaries ("the Group") as if they form a single entity. Intercompany transactions and balances between group companies are therefore eliminated in full.
The consolidated financial statements incorporate the results of business combinations using the purchase method. In the Statement of Financial Position, the acquiree's identifiable assets, liabilities and contingent liabilities are initially recognised at their fair values at the acquisition date. The results of acquired operations are included in the Consolidated Statement of Comprehensive Income from the date on which control is obtained. They are deconsolidated from the date control ceases.
In accordance with the transitional exemption available in FRS 102, the Group has chosen not to retrospectively apply the standard to business combinations that occurred before the date of transition to FRS 102, being 01 January 2022.
The consolidated financial statements incorporate the results of business combinations using the purchase method. In the Statement of Financial Position, the acquiree's identifiable assets, liabilities and contingent liabilities are initially recognised at their fair values at the acquisition date. The results of acquired operations are included in the Consolidated Statement of Comprehensive Income from the date on which control is obtained. They are deconsolidated from the date control ceases.
In accordance with the transitional exemption available in FRS 102, the Group has chosen not to retrospectively apply the standard to business combinations that occurred before the date of transition to FRS 102, being 01 January 2022.
The Company had net liabilities of £27,711k at the year end, and net current liabilities of £30,198k following a loss in the year of £8,688k. The Group had net liabilities of £82,120k at the year end, and net current liabilities of £91,259k following a loss in the year of £13,783k.
The Company meets its day-to-day working capital requirements through funding from its parent company. A letter of support has been obtained from its parent company, and the director is satisfied that its parent is able and willing to continue to provide the necessary support to enable the company to continue as a going concern. This support includes amounts owed to fellow group undertakings which would not be called in were this to endanger the company's ability to continue as a going concern, and also the provision of further funds where required.
The Company meets its day-to-day working capital requirements through funding from its parent company. A letter of support has been obtained from its parent company, and the director is satisfied that its parent is able and willing to continue to provide the necessary support to enable the company to continue as a going concern. This support includes amounts owed to fellow group undertakings which would not be called in were this to endanger the company's ability to continue as a going concern, and also the provision of further funds where required.
a) Functional and presentation currency
The Company's functional and presentation currency is the pound sterling.
b) Transactions and balances
Transactions denominated in foreign currencies are translated into sterling at the actual exchange rates at the date of the transaction. Assets and liabilities in foreign currencies have been translated into sterling at rates of exchange ruling at the end of the financial period. Any gain or loss arising from a change in exchange rates subsequent to the date of the transaction is taken to the profit and loss account.
The Company's functional and presentation currency is the pound sterling.
b) Transactions and balances
Transactions denominated in foreign currencies are translated into sterling at the actual exchange rates at the date of the transaction. Assets and liabilities in foreign currencies have been translated into sterling at rates of exchange ruling at the end of the financial period. Any gain or loss arising from a change in exchange rates subsequent to the date of the transaction is taken to the profit and loss account.
Page 21
HIGHLY MARELLI UK LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
3.Accounting policies (continued)
The company bases its estimate of discounts, taking into consideration each specific customer, the type of transaction and the specific contractual arrangements in place.
The company recognises revenue when (a) the significant risks and rewards of ownership have been transferred to the buyer; (b) the company retains no continuing involvement or control over the goods; (c) the amount of revenue can be measured reliably; (d) it is probable that future economic benefits will flow to the company.
Tooling contracts
Turnover is recognised on tooling contracts when the tools have been completed and accepted by the customer, this is deemed to be when the company obtains the right to consideration. Profit on tooling contracts is recognised when the final outcome of the contract can be assessed with reasonable certainty, which is also normally deemed to be when the tools are complete and accepted by the customer.
Tooling contract balances included in inventories comprise costs incurred on tooling contracts, net of amounts transferred to cost of sales, after deducting foreseeable losses and related payments on account. Costs include all direct material and labour costs incurred in bringing a contract to its state of completion at the period end. Provisions for estimated losses on contracts are made in the period in which such losses are foreseen. The amount by which provisions for foreseeable losses exceed costs incurred, after transfer to cost of sales are included with provisions for liabilities and charges.
Leasing agreements which transfer to the Company substantially all the benefits and risks of ownership of an asset are treated as if the asset had been purchased outright. The assets are included in fixed assets and the capital element of the leasing commitments is shown as obligations under finance leases. The lease rentals are treated as consisting of capital and interest elements. The capital element is applied to reduce the outstanding obligations and the interest element is charged against profit in proportion to the reducing capital element outstanding. Assets held under finance leases are depreciated over the shorter of the lease terms and the useful lives of equivalent owned assets.
Ordinary shares are classified as equity.
Page 22
HIGHLY MARELLI UK LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
3.Accounting policies (continued)
The Company operates a defined contribution plan for its employees. A defined contribution plan is a pension plan under which the company pays fixed contributions into a separate entity. Once the contributions have been paid the company has no further payment obligations. The contributions are recognised as an expense when they are due. Amounts not paid are shown in accruals in the balance sheet. The assets of the plan are held separately from the company in independently administered funds.
The Company also provides a range of other benefits to employees, including a salary sacrifice scheme, paid holiday arrangements and a number of other short term benefits.
The Company also provides a range of other benefits to employees, including a salary sacrifice scheme, paid holiday arrangements and a number of other short term benefits.
Current or deferred taxation assets and liabilities are not discounted:
a) Current tax
Current tax is the amount of income tax payable in respect of the taxable profit for the period or prior periods. Tax is calculated on the basis of tax rates and laws that have been enacted or substantively enacted by the period end.
Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.
b) Deferred tax
Deferred tax arises from timing differences that are differences between taxable profits and total
comprehensive income as stated in the financial statements. These timing differences arise from the
inclusion of income and expenses in tax assessments in periods different from those in which they are recognised in financial statements.
Deferred tax is recognised on all timing differences at the reporting date except for certain exceptions. Unrelieved tax losses and other deferred tax assets are only recognised when it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits.
Deferred tax is measured using tax rates and laws that have been enacted or substantively enacted by the period end and that are expected to apply to the reversal of the timing difference.
Page 23
HIGHLY MARELLI UK LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
3.Accounting policies (continued)
Goodwill represents the difference between the consideration payable for the purchase of the trade and assets and liabilities of the business and the fair value of the underlying assets and liabilities acquired. The fair values used by the company in the valuation were based on a professional third party consultant valuation at the date of the acquisition, Goodwill is typically amortised to the profit and loss account over a period of 10 years, representing the estimated useful economic life of the assets acquired. However, in 2020 the goodwill value was fully amortised following an impairment review.
Management undertake an annual review of development costs. Where it meets the following criteria and the entity can demonstrate as such, it is capitalised as an intangible asset on the balance sheet:
- The technical feasibility of completing the intangible asset so that it will be available for use of sale
- Its intention to complete the intangible asset to use or sell it
- Its ability to use or sell the intangible asset
- How the intangible asset will generate probable future economic benefits.
- The technical feasibility of completing the intangible asset so that it will be available for use of sale
- Its intention to complete the intangible asset to use or sell it
- Its ability to use or sell the intangible asset
- How the intangible asset will generate probable future economic benefits.
Tangible assets are stated at cost or valuation less accumulated depreciation and accumulated impairment losses. Cost includes the original purchase price, costs directly attributable to bringing the asset to its working condition for its intended use, dismantling and restoration costs and borrowing costs capitalised. The fixed assets acquired as part of the acquisition of the company's trade are stated at the values assigned to the assets as part of the fair value exercise performed as part of the legal transfer.
a) Plant and machinery and fixtures, fittings, tools and equipment
Plant and machinery and fixtures, fittings, tools and equipment are stated at cost or valuation less accumulated depreciation and accumulated impairment losses.
a) Plant and machinery and fixtures, fittings, tools and equipment
Plant and machinery and fixtures, fittings, tools and equipment are stated at cost or valuation less accumulated depreciation and accumulated impairment losses.
Page 24
HIGHLY MARELLI UK LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
3.Accounting policies (continued)
b) Depreciation and residual values
Depreciation on tangible fixed assets is calculated so as to write off the cost, or valuation, on a straight line basis over the expected useful economic lives of the assets. The principal annual rates used for this purpose are:
Depreciation on tangible fixed assets is calculated so as to write off the cost, or valuation, on a straight line basis over the expected useful economic lives of the assets. The principal annual rates used for this purpose are:
The assets’ residual values and useful lives are reviewed, and adjusted, if appropriate, at the end of each reporting period. The effect of any change is accounted for prospectively.
c) Subsequent additions and major components
Subsequent costs, including major inspections, are included in the assets carrying amount or recognised as a separate asset, as appropriate, only when it is probable that economic benefits associated with the item will flow to the company and the cost can be measured reliably.
The carrying amount of any replaced component is derecognised. Major components are treated as a separate asset where they have significantly different patterns of consumption of economic benefits and are depreciated separately over its useful life.
Repairs, maintenance and minor inspection costs are expensed as incurred.
d) Assets not yet in use
Assets in the course of construction are stated at cost. These assets are not depreciated until they are available for use.
e) De-recognition
Tangible assets are de-recognised on disposal or when no future economic benefits are expected. On disposal, the difference between the net disposal proceeds and the carrying amount is recognised in profit or loss and included in ‘Other operating (losses)/gains’.
f) Impairment of fixed assets
Impairment is calculated as the difference between the carrying value (being the depreciated cost) of fixed assets and their recoverable value. Recoverable value is the higher of the net realisable value and the value in use of the assets. Value in use represents the present value of expected future cash flows discounted on a pre-tax basis. If incurred, impairment is recognised in the profit and loss account.
c) Subsequent additions and major components
Subsequent costs, including major inspections, are included in the assets carrying amount or recognised as a separate asset, as appropriate, only when it is probable that economic benefits associated with the item will flow to the company and the cost can be measured reliably.
The carrying amount of any replaced component is derecognised. Major components are treated as a separate asset where they have significantly different patterns of consumption of economic benefits and are depreciated separately over its useful life.
Repairs, maintenance and minor inspection costs are expensed as incurred.
d) Assets not yet in use
Assets in the course of construction are stated at cost. These assets are not depreciated until they are available for use.
e) De-recognition
Tangible assets are de-recognised on disposal or when no future economic benefits are expected. On disposal, the difference between the net disposal proceeds and the carrying amount is recognised in profit or loss and included in ‘Other operating (losses)/gains’.
f) Impairment of fixed assets
Impairment is calculated as the difference between the carrying value (being the depreciated cost) of fixed assets and their recoverable value. Recoverable value is the higher of the net realisable value and the value in use of the assets. Value in use represents the present value of expected future cash flows discounted on a pre-tax basis. If incurred, impairment is recognised in the profit and loss account.
Page 25
HIGHLY MARELLI UK LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
3.Accounting policies (continued)
Inventory on consignment and their related obligations are recognised in current assets and current liabilities respectively on acceptance of the consignment inventory when the risks and rewards of ownership pass to the company.
At the end of each reporting period inventories are assessed for impairment. If an item of inventory is impaired, the identified inventory is reduced to its selling price less costs to complete and sell and an impairment charge is recognised in the profit and loss account. Where a reversal of the impairment is recognised the impairment charge is reversed, to the original impairment loss, and is recognised as a credit in the profit and loss account.
Page 26
HIGHLY MARELLI UK LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
3.Accounting policies (continued)
Provisions are recognised when the company has a present legal or constructive obligation as a result of past events; it is probable that an outflow of resources will be required to settle the obligation; and the amount of the obligation can be estimated reliably.
Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the class of obligations as a whole. A provision is recognised even if the likelihood of an outflow with respect to any other item included in the same class of obligations may be small.
In particular:
Provisions are measured at the present value of the expenditure expected to be required to settle the obligation using a pre-tax rate that reflects current markets assessments of the time value of money and the risks specific to the obligation. The increase in the provision due to the passage of time is recognised as a finance cost.
b) Contingencies
Contingent liabilities are not recognised. Contingent liabilities arise as a result of past events when (i) it is not probable that there will be an outflow of resources of that the amount cannot be reliably measured at the reporting date or (i) when the existence will be confirmed by the occurrence or non-occurrence of uncertain future events not wholly within the company’s control. Contingent liabilities are disclosed in the financial statements unless the probability of an outflow of resources is remote.
Contingent assets are not recognised unless certain. Contingent assets are disclosed in the financial statements when an inflow of economic benefits is probable.
Provisions are measured as the best estimate of the amount required to settle the obligation, taking into account the related risks and uncertainties.
Page 27
HIGHLY MARELLI UK LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
3.Accounting policies (continued)
The company has chosen to adopt sections 11 and 12 of FRS 102 in respect of financial statements.
a) Financial assets
Basic financial assets, including trade and other receivables, cash and bank balances, amounts owed by group undertakings and investments in commercial paper, are initially recognised at transaction price, unless the arrangement constitutes a financing transactions, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest.
Such assets are subsequently carried at amortised cost using the effective interest method.
At the end of each reporting period, financial assets measured at amortised cost are assessed for objective evidence of impairment. If an asset is impaired the impairment loss in 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.
Financial assets are derecognised when (a) the contractual rights to the cash flows from the asset expire or are settled, or (b) substantially all the risks and rewards of the ownership of the asset are transferred to another party or (c) control of the asset has been transferred to another party who has the practical ability to unilaterally sell the asset to an unrelated third party without imposing additional restrictions.
b) Financial liabilities
Basic financial liabilities, including trade and other payables, bank loans and loans from fellow group companies 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 receipts discounted at a market rate of interest.
Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.
Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Accounts 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 payables are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.
Financial liabilities are derecognised when the liability is extinguished, that is when the contractual obligation is discharged, cancelled or expires.
c) Offsetting
Financial assets and liabilities are offset and 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.
a) Financial assets
Basic financial assets, including trade and other receivables, cash and bank balances, amounts owed by group undertakings and investments in commercial paper, are initially recognised at transaction price, unless the arrangement constitutes a financing transactions, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest.
Such assets are subsequently carried at amortised cost using the effective interest method.
At the end of each reporting period, financial assets measured at amortised cost are assessed for objective evidence of impairment. If an asset is impaired the impairment loss in 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.
Financial assets are derecognised when (a) the contractual rights to the cash flows from the asset expire or are settled, or (b) substantially all the risks and rewards of the ownership of the asset are transferred to another party or (c) control of the asset has been transferred to another party who has the practical ability to unilaterally sell the asset to an unrelated third party without imposing additional restrictions.
b) Financial liabilities
Basic financial liabilities, including trade and other payables, bank loans and loans from fellow group companies 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 receipts discounted at a market rate of interest.
Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.
Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Accounts 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 payables are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.
Financial liabilities are derecognised when the liability is extinguished, that is when the contractual obligation is discharged, cancelled or expires.
c) Offsetting
Financial assets and liabilities are offset and 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.
Page 28
HIGHLY MARELLI UK LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
Critical accounting estimates and assumptions
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 assets and liabilities within the next financial period are outlined below:
Provision for warranties for products
Provision is made for the estimated liability arising on all known warranty claims. Provision is also made, using past experience, for potential warranty claims on all sales up to the balance sheet date.
Inventory provisions
When calculating the inventory provision, management considers the nature and condition of the inventory, as well as applying assumptions around anticipated saleability of finished goods and future usage of raw materials. Provisions for inventory are updated each period by management and updated for changes in the economic environment in which the company operates.
Impairment of investments in subsidiaries
Due to losses incurred by the company's subsidiary both during the year and after the year end, the investment in that subsidiary has been impaired to nil.
Accounting for fixed asset additions acquired under a long term lease
The Company acquired a leasehold asset in exchange for consideration taking the form of a long term loan payable to the company's parent. The Director has assessed that the useful life of this asset is substantially covered by the term of the lease, being 20 years, and have therefore accounted for the asset as a finance lease.
Page 29
HIGHLY MARELLI UK LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
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HIGHLY MARELLI UK LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
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HIGHLY MARELLI UK LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
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HIGHLY MARELLI UK LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
10.Taxation income (continued)
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HIGHLY MARELLI UK LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
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HIGHLY MARELLI UK LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
11.Intangible assets (continued)
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HIGHLY MARELLI UK LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
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HIGHLY MARELLI UK LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
12.Tangible fixed assets (continued)
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HIGHLY MARELLI UK LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
12.Tangible fixed assets (continued)
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HIGHLY MARELLI UK LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
Page 39
HIGHLY MARELLI UK LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
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HIGHLY MARELLI UK LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
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HIGHLY MARELLI UK LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
Share premium account
The immediate parent undertaking at 31 December 2024 was Marelli Holdings Co Limited.
In the opinion of the director there is no ultimate controlling party.
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