Company registration number". 496082 Charity registration number,. 206391 THE SCOTT BADER COMMONWEALTH LIMITED FINANCIAL STATEMENTS For the year ended 31 DECEMBER 2023
THE SCOTT BADER COMMONWEALTH LIMrrED COMPANY fNFORMATION For th¢ y¢ar ended 31 December 2023 Company registration number: Charity registered number: 496082 206391 Registered otTicc: Wollaston Hall Wollaston Wellingborough Northamptonshire NN29 7RL Board of Trustees: Agne Bengtsson Benjarnin Penney David Black Gillian Shapiro HaTry Manning Juliette Delprat Paul Smith Richard Tapp Company Secretary.. Hayley Sutherland Solicitors HCR Hewitsons Lanca5teT House Nunn Mills Road, Northampton, Northamptonshire NNI 5GE Shoosmiths The Lakes Northampton NN4 7SH Bankers Unity Trust Bank PIC 4 Brindley Place, Brunswick Street Birn)ingham BI 2JF CAF Bank Limit¢d 25 Kings Hill Av¢nu¢ Kings Hill West Malling Kent ME194JQ Scottish Widows PO Box 883 Leeds LS19TY
THE SCOTT BADER COMMONWEALTH LIMITED COMPANY tNFORMATION For th¢ year ended 31 DeCernb 2023 Auditor RSM UK Audit LLP Rivennead House 7 Lewis Court Grove Park Leicester Leicestershire LE19 ISD
THE SCOTT BADER COMMONWEALTH LIMITED CONTETrrrs For th¢ ycar ¢nd¢d 31 Deccmbcr 2023 PAGE Report of the Trustees 2-21 Trustees, responsibilities stat¢ment 24 Indepelldent auditor's report 25-27 Group and Charity Statements of funcial activiti¢s 28 Group and Charity balance sheets 29 Gmup statement of cash flows 30 Notes to the financial statem¢nts 31-65 Page I
REPORT OF THE TRUSTEES (INCORPORATING THE STRATEGIC REPORT) TO THE MEMBERS OF THE SCOTh BADER COMMONWEALTH LIMITED For the year ¢nd¢d 31 D¢cetnber 2023 Th¢ Trnstees who are also the Directors of the charity Present their Amiual Report and th¢ Group and Charity Accounts of The Scott Bader Commonwealth Limited (the Charity), for th¢ year ended 31 December 2023. The annual report serv¢s the purpose of both a Trustees, report, and a directors. report and a strategic r¢port under Company Law. The fmancial statetnents comply with the Charities Act 2011, th¢ Companies Act 2006, the Memorandum and Articles of Association. and Accounting and Reporting by Charities: Statement of Recomm¢nded Practice applicable to Charities preparing their accounts in accordance with the Financial Reporting Standard applAcable in th¢ UK and Republic of Ireland (FRS 102) (January 2019). STRUCTURE, GOVERNANCE and MANAGEMENT Scott Bader Company Limited (SBCL) was founded in the 1920s by Ernest Bader as a chernicals business. In 1951, Ernest Bader and others transferred the ownership of ihe shares in SBCL to Scott Bader Commonwealth Limited (SBCW), which is a company limited by guarantee, a registered charity arAd a membership organisation, The holding of the shares of SBCL is now knowll as a programme related investm¢nt. The r¢ason b¢hind thAS transfer was to create a company whose well- being is ¢ntrusted to those who work in it, with democratic involvement. When colleagues join SBCL they are Associate Members of the Commonwealth and following the successful completion of a year's service they are invited to apply to b¢come a full Con]monwealth Member. This means that they become a member, holding in Common with other m¢mbers, the shares of SBCL. SBCW is unique in Ihal it lias no external shareholders, and instead. Ihe wealth is held in common by Commonwealth Members. Il's iinportant lo understand the relationship between SBCW and SBCL and its subsAdiari¢s when reading Ihese accounts. Everyone who works for the ¢on)pany is responsible for ensurlng that il contiiiues to exist in the long terni for Cent and future generations. While prolitability is important to ensurc that SBCL can Continue to Dperale, adlierence to the Guiding Principles and liow that profit is acliieved is paramount. Additionally, the Scott Bader Constitution wlii¢li is a coinbination of the Articles of Association of SBC W, SBCL and the Global Menibers Board Includes a provision to ensure that the Con)pany is not run solely for the benefit of its colleagues. An amount equal to the amoiint payable as Group Staff Botius or l 0/0 of th¢ Scoti Bader Group Staff Salary Cost. whichev¢r is greater, shall be paid by way of donntion or otherwise to SBCW for charitable purposes. The Objects of SBL W are.. (a) The promotion of ethical Principles in industy with a view to ensuring the discharg¢ by persons engaged in industy of their social obligations for the w¢lfare of th¢ conllnunities within which they operate. and (b} th¢ promolion of "sustainable development" foT the ben¢fit of ihe public by the preservation, conservation and the pmtection of the environment and the prudent use of natural resources and the promotion of sustainable means of achieving economic growth and regeneration and for the purposes of this sub-clause "sustainable development" shall mean development that meets the needs of ihe pres¢nt without compromising the abilities of future generations to meet their own n¢eds. The den]ocralic governance structtu¢ enables the achievement of the abov¢ objectiv¢s in two ways.. Commonw¢alth Members can stand for election to the governance groups lisled below and 2. By providing grants to charities and other not-for-profit organisations locally, nationally, and internationally. Governance SBCW is governed by the Commonwealth Board ('CWB'). It coinpriseb of three internally elected Trustees and five extenially appointed CTuardian Trustees (Guardian8 of the C.onstilulion who have special i'()ling riglits). The Con)pany Meinber (Paul Sn)ith - SBCW Trustee). who is also Ilie Chair of the SBCL Board, is also pari of Ihe CWB. Tlie CWB is responsible for safeguarding tlie Core values and Guiding Priiiciples of SBCW Group. It ensures tliat tlie business is conducted iii liiie 'It}I these pi'inciples and proinotes ihe long-lenn sustainable success of SBCL. Additionally.. the CWB ensures that the Cliarity is run in accordance iviil) Charity Idw. The CWB does not gei involved iii the dlly-to-day rui]ning of tli¢ biisiness but is consiilted on topics such as future business strategies, 8CqUlSltion.8, lind the distribulion of profits. The C.WB also monitors the deelopin¢ljt of industrial democracy vithin the SBCL group to ensure it is.. Governed effectively and operates in accordance with Éhe Guiding Principles Page 2
REPORT OF THE TRUSTEES (INcORPO1L4TG THE STRATEGIC REPORT) TO THE MEMBERS OF THE sco BADER COMMONWEALTH LIMITED For the year end¢d 31 December 2023 that th¢ members are actively involved in the success of the business and that the community is strong and healthy and Supports SBCW in fulfilling the charitable objectives. The Board of Directors of SBCL is Tesponsible for directing the affairs of SBCL in line with its values, using a clear strdt¢gy. strong stewardship, and effective Controlg, to mcei ihe expectations and interests of its shareholdeTS and key stakcholders. The SBCL Board conslsts of 9 Dircctors, 3 Executive Directors of SBCL (including the SBCL CEO, Keviii Matihews)" 3 Non-lxecutive Directors" and 3 MLniber Directors, The CEO, Kcvin Matthews, Clio, Neil Miller and th¢ wider Group LeaderslLiP Team have responsibility for th¢ management of the SBCL GTOUP. The Global Members, Board (GMB) - This is the inlernational democratic body that represents all Commonwealth Members. comprised of12-14 elected iepresentatives, the Chair of SBCL and its own full time Cbair. The purpose of the GMB is to lead our international and industrial democracy, give voice to thc SBCW Membership and hold the Subsidiary Boards to account for the development and cxcculion of their Strategies according to the Guiding Principles. The GMB aims to be a divers¢ and inclusive body thai fairly represents the inlcicsts of all SBCW Members. Each of these goveii)aThce group5 has its i'cspcelive role to play as d¢fincd in their articles or associai¢d rules. Each sl)aie inforniation to support the strategic dircction of Ihe business. Jn addition. the (ruardiaii l-rustees attend the SBCL and GMB Ineelings as observers, which endble% them to monitor, on behalf of thc CWB. Ihat the business is managed in accordance wilh the Guiding Principles as Sel out in the Conslitulion. This 15 a inajor contn'buting factor to Scott Bader achieving its charitable obJ¢ctiv¢s. Details of the Trustees who served Ihroughoul ilje y¢ar and to the date th¢se accounts are approved are in¢lud¢d below- Andrew Bell (resigned 30 November 2023) Agne Bengtsson Benjamin Penney (appointed l April 2023) David Black David Harris (resigned 6 October 2023) GAIIAan Shapiro {appoinled l May 2023) Hansi Mam]ing (resigmed 31 December 2023) Harry Manning (appointed 12 February 2024) Jessica Clark (reSIged 31 March 2023) Juliette Delprai (appointed 7 October 2023) Paul Smith RichaTd Tapp Robert Gibson (resi)ed 31 March 2023) Mana sement The Conmionwealth Office is responsible for ihe day-to-day activities of SBCW and will take external advice when required. Additionally, there is a Charity Sub_committee that decides which charilies lo support and authorises the payment of grants. This Sub-connnittee is required to rcport to the CWB on a quart¢rly basis regarding the decisions iak¢n. Other sub-committees arc fornied on a necds basis to deal with issues that may arise. Method of recruitment and a ointment or election of Trustees The External Guardian Trustee5 arc seleLled by a Joint Nomiv]alion Committee (JNC), which is comprised of menibe froni tlle CWB, GMB, and SBCL Board. One of tl)e Guardian Trustees is nominated by the Badcr tamily. If thc Radcr faniily is unabl¢ or unwilling to noniinate ils Tn]stee, the curTcnt t-dT]iily noniinee i+hall remain in post by invitation of the CWB. All candidates are providcd with an explanation of the aivlls and objectives of the role and the time co71n1trnCn1 involved in b¢ing a Guardian I'rusl¢¢. The JNC is responsible for identifying and noniinating candidates to fill the Guardian Trustee role. Appointments and rernovals ar¢ made by rcsolutions of both the SBCL Board and th¢ CWB and are subject to approval by the GMB. Upon appointment, they are ronfirnied as a Comnioiiwealth Member. In relation to Int¢rnally Elected Trustees. Domination5 for thes¢ positions are sought from the SBCW membership and vacancies ar¢ filled by election administered by the Commonwealth Office. Each Internally Elected Director shall serve for a tern) of three years and, at the end of such teTm, shall be eligibl¢ for re-election for one tsrther terni of three yeaTS. Eacb Guardian Trust¢e shall serve for & lern] of thr¢¢ years and. at th¢ end of sucb ternL shall be eligibl¢ foT re-nomination for two further ternis of three years. Page 3
REPORT OF THE TRUSTEES (tNCORTrORATJNG THE STRATEGIC REPORT) TO THE MEMBERS OF THE sco BADER COMMONWEALTH LIMITED For the year end¢d 31 December 2023 Policies and roeedures ado ted for the induclion and trainin of Trustees All Trustees, (appointed or elected) are PTovided with a handbook which contains inforn]ation relating lo their duties as a charity Trustee, charity policies, financial reports, previous meeting minutes, and the articles of association for SBCW, SBCL and the rules of the GMB. In addition to this a specifie induction plan is designed to meet the needs of the individual to give them a more detailed understanding of how the Charity operat¢S" the busirtesses and strategy of SBCL and bow the 80vernance w4)rks. Periodi¢ fornial training on the responsibilities of being a Trustee is provided and was previously provided by the Employee Ownership Association in January 2022. Trustees are also encouraged to identify any specific training needs tbey require. Arran ements for settin 2nd remuneratfion of keTr mana ement rsonnel Although the three intemally Elected Directrjrs are employed by SBCL, or one of its subsidiaries, non¢ of the Trustees receive any remuneration for their Work for as a Tntee of the Charity. Key management personnel remuneration is set by the SBCL r¢muneration committ¢e, for colleagues employed by SBCL only and is paid in line with best practice. An external Executive Salary B¢nchmark Review, conducted by Willis Towers Watson was completed prior to the 2022 Salary review. Members, liabilit The liability of the SBCW Members 15 ITmited. Every SBCW Memb¢r undertakes to contribute to the ass¢ts of SBCW in the event of the same being wound up during the time that they are a member, or within one year afterwards, for payinent of the debts and liabilities of SBCW contracted before the time when they ceased to be a member, and of the costs. charges and expenses of winding up th¢ same, and for the adjuslment of the rights of the contributories among themselves, such amount as may be required not exceeding five pence. Trustees, indemnitie5 Th¢ Trnstees {who are the directors of The Scott Bader Commonwealth Limited} ar¢ insured against the costs of successfully d¢fcnding any actions brought for negligence in the perfornjanre of their duties as DirectoIs. Public benefit To check that the charities w¢ support meet the public ben¢fit requirement, the Trustees decided it would be prndent to includ¢ a section within th¢ onlin¢ application fonn i¢questing applicants to provid¢ a short SUMM of how ihey mext this requirement, To ensure ongoing awareness of the Charity Commission's guidance on public benefit all Trnstees are provided with infornlation about this in their handbook. Having regard to this guidance the Trustees consider Public Benefit al two levels l) in relation to the shareholding in SBCL and 2} the activities of the Charity. ement with em liers customers and others in a business relationshi with the charht Ernest Bader established Scott Bader Commonwealth Limiled to be a foree for good in society. We are driven to make a difference and Create social impact, using lh¢ skills and resources wlthin the group to support where help is needed. We support our communities via a number of ways as highlighted throughout this report with the ambition to improve ih¢ lives of thos¢ most vulneTable and enabling our colleagues th¢ opportunity to make a difference locally. Our Core values remain at the heart of the Group to ensure we work co-operatively and collaboratively with our colleagues and customers to deliver excellence, and to conduct ourselves in a fair. honest and ethical way. SBCW is mindful of its broader commitrnents to stakeholders. Internally this includes consulting with colleagues on significant decisions, the employment of di5abl¢d persons, offering equal opportunities to all, as w¢ll as ensuring we work co-operatively and collaboratively. Externally this commitment covers broadeT corporate responsibility, the conduct of business with honesty, integrity, and fairness at all times, and also our impact on the environrnent. Page 4
REPORT OF THE TRUSTEES (INCORPORATING THE STRATEGIC REPORT) TO THE MEMBERS OF THE SCOTT BADER COMMONWEALTH LIMITED For the year ended 31 December 2023 Industrial d¢mocratlC Practice is a major pan of colleague engagem¢nt, and all those who work in the Company ar¢ consulted on decisions that may affect their interests in accordance with Scott Bad¢r's Constitution. It is the policy of Scott Bader that colleague participation in decision njaking is implemented at all levels. Related rties Connected Charities and co4> eration with other or anisations Related Parties- Scott Bader Conllnonm'ealth Limited mainlains transparent and ethical relationships with Telated parties. Thesc may include charities, subsidiaries, asso¢iates, Joint ventures. and other entities connected to their operatlons. Connected Charities.. Scott Bader Commonwealth Limited's unique ovJncTship slructure. where all shares are held by a charitable trusl (the Cornmonwealth), inh¢rently aligns with charilablc objectives. The company activcly collaborates with connected charities, supporting c2us¢s related to education, soLial welfare, and conununity dcvelopTn¥nl. Th¢ir contributions extend beyond profit-making, emphasising a broadcr societal impact. Cooperation with Other OrganisatlOll5- Scott Bader Coinmonwealth Limited Tecognises the power of collaboration. They actively engage with other organisations, both within and outside their industry. Whether through resear¢h partnerships, knowledge sharing, or joint initiatives, Scott Bader seeks to create synergies that benefit all stakeholders. Their cooperative spirit contributes to innovation, sustainability. and positive change. In summary, Scott Bader Commonwealth Limited's approach lo related parties, connected charities, and cooperation ¢xemplifies their conimitment to ethical business practices and societal well-being. Environmental Care SBCW Group meets the definition of a 'larg¢' consolidated group and Ih¢r¢fore should apply the Compani¢s (Directors, RqK)rt} and Limited Liability Partnerships (Energy and Carbon Report) Regulations 2018 ("the 2018 Regulations"). However, as a stand-alone Company, SBCW does not meet the relevant criteria &s it falls below the 40.OOOkWb threshold. As the SBCL Group qualify at a group level, the infomtiOn disclosed b¢low is for SBCL Group only. In 2020, we established a bas¢lin¢ year for our Scope l and Scop¢ 2 carf)on footprin¢ making a commitment to rethice this by 600/0 over a 5-year period and tsrg¢ting nel-zero by 2028. Our EESG Board Committee has worked toward targets and goals for the business to drive this change and to re-focus ow efforts. We have built awareness in suslainability tIoUghoUt the business by rolling out biodiversity footprint training and carbon literacy training for board members and members of the EESG Board Conllnittee. We have driven change in our sustainability goals at our logistics hubs and crealed an internal team to assess and begin work on LcPD for our products. We now purchasc grcen energy for our six operating njanufacturing sites, with a seventh site being opened lowaTd the end of 2023 which will be included in tUre green energy purchases" the managcment of the green energy will also movc to encompass scope l emissions, with a soluts.on for biogas Purchasing being considered for EU sites initially. 2023 SRCL C.RC)UP ENERGI. CON'SUNIPI"ION LOC.-KTION' 13ASLI D IARIKET B.ISTr;I) Non-Renewablo {GJ) 177,510 130,861 Renewablc (GJ) 4.157 38,426 Total (GJ) 181,667 Page 5
REPORT OF THE TRUSTEES {INCORPOIL4TtNG THE STRATEGIC REPORT) TO THE MEMBERS OF THE SCOTT BADER COMMONWEALTH LIMITED For the Ye ¢nded 31 December 2023 GREENHOUSE GAS ENIISSIONS SBCL GROLIP Scope l {TeCO•e) 7,436 7,436 Scope 2 {TeC02e} 3,640 504 Seope l and Seope 2 (TeC02e) 11,076 7,940 II%,TEISITY FACTOR SBCL CR()LIP MJ/Te of prodllet 1,454 Energ) Intensits. GJlfull emplo!'eL' 218 MJI£OOO's reenue 663 kgC02elTe uf product 63.6 Carbon Intensitv {market based) TeC02elfull time emplovee kgCOel£OVU's rej'enue 29.0 2022 SBCI. C,ROUP LOCATIO VIARkEI' B.4SED BIISED 177,842 128,628 3,683 41,230 ENERGI, CONSU141PTIO Non-Renewable {GJ) Renem'able (GJ) Total (GJ) GREEIIHOUSL GAS EIIIISSIONS Seope l (Tecoie) Scope 2 (TeCO?e} Scop¢ l and Scope 2 (TeCO?e) INTENSITY bACTOR iJrre of product GJlfull time emploiee MJI£OOO's rci'enue kgC02elTe of product TeC02eifull tinie employee kgCn2el£OUU's rt'Tr'eiiue 181,525 SBCI. C-ROIIP 7.166 7,166 3,839 577 11,005 7,743 SBCL C'ROLIP 1.438 225 Entr, IntensitF' 595 Carboii Intensit (market based) 61 io 25 Diversi and inelusion Diversity, inclusion and mutual respect was added to ow Guiding Principles during the rec¢nt Constitution review where Scott Bader aims to provid¢ an inclusive, div¢rse and mutually respectfijl Culture and ¢nvironment wher¢ everyone is tr¢ated equally and given equal opportunities regardless of their race, age, gender, sexuality, disability, culture or individual differences through all stages of th¢ colleague lifecy¢le from recruilment, through onboarding, training and development. To help achieve and monitor this, the business gained certification to ISO 30415 in 2023. As part of this process a Diversity & InclU.lOn CouDoiI has been forni¢d, made up of colleagues from around the group to help define, review sjnd continually improve our policies, practices and behaviours ID this field going forward. A Diversity & Inclusion Policy and Framewoik has been shared with all thc governance groups. which hav¢ all approved and committed to fully support our iTnplem¢ntation of a fully divcrse and inclusive environmcni for all. Page 6
REPORT OF THE TRUSTEES (INCORPORATING THE STRATEGIC REPORD TO THE MEMBERS OF THE SCOTT BADER COMMONWEALTH LIMITED For the year ended 31 December 2023 Social & Governance Committte Em Iovee Envlronmen EESG Committee The EESG Committee is supported by an executive EESG Steering group with membership drawn from across the global Scott Bader Group, including representation from both Global Members Board (GMB) & The Scott Bader Conllnonwealth LimiteQ to work closely with the EES(y Board Committee. infornl the Conllnittee's work alld to support execution against its objectives. During the year, th¢ EESG Steering wup hcld six meetings and the Board EESG Committee held one fornlal meeting. The EESG Steering Team has fornied four working groups. that each address either Employee. Environment. Social & Governance issue& The WOTking groups have identified measures for a focused number of stralegic objectives and are working closing with a Sponsoring senior exccutive. It is anti¢ipated that attainment of thc5c strctching but achievable EESG tatgets over the next 2-3 years will enable the organisation to move forward and ultimately meet the 2036 vision. En a ement with em lo includin disabled ersons Industrial d¢mocratic practice is a majorpart of Colleague engagemenL and all those who work within the SBCL Group are consulted on decisions that may affect their interests in accordancc with Scott Bader's Constitution. It is the policy of Scott Badcr that colleaguc participation in d¢cision making is implcm¢nt¢d at all levels. Recognising that access to appropriate infonnation is a PTcrcquisite to effective participation and consultation. the Group's monthly fjnancial results and full year forecasts are shared with Commonwealth members and colleagues. The GTOUP Leadership Team deliver a monthly briefing highlighting key perfornTrnce or business challenges to members. In addition, a quarterly webinar has be¢n introduced that allows all colleagues to attend to receive aD update on company performance and to ask questions. Membership of The Scott Bader Commonwealth is open to all who work on a pernianent basis within th¢ Group and who make a commitment to work according to the values expr¢ss¢d in the Constitution. Members also have th¢ right to elect three of their number, including the Chair of the Global Members Board. to serve for three years as members of the Board of Directors of SBCL. It is the Group's policy to offer equal opporNnities to disabled persons applying for vacancies, having regard to their aptitudes and abiliti¢s in relation to the posts for which they apply. As far as possible, arrangements are made to ¢onlinue the employment of those colleagues who have become disabled persons during their employment within the Group. In all instances, consideration will be given to arranging training facilities, or providing special aids, wherc necessary. It is the Group's policy to provide disabled persons with the same oppothnities tor training. career developmenl and promotion that are available to all colleagues, having consideration to their aptitudes and abilities. Scott Bad¢r r¢mains committcd to offcring equal opportunities to all and secured an ISO accreditation in Diversity and tnclusion in 2023. When a vacancy arises. it is the Group's policy to consider all applications, in determining the best fit for the role. This Tequires an assessmeni based on skills, knowledgi., experience and aliwnenl to the core values. Involvement of CoJDmonwealth Members The Matched Funding Seheme In 2023, the Matched Funding Scheme provided by SBCL and administered by the Commonwealth Officc rcached approximately £15k. OveT 22 charities received double the amount they would have received due to SBCL matching the amounts raised £1 for £1. This nrkS a slighl decrease cQTllpdd to 2022 where £19.5k was raised. It's worth noting ihat more companies outside of the UK are now participaling in this scheme. There are plans to promote this scheme globally to encourage more colleagues to participate. Volunteering - SBCL supports its local communities, through a volunteering scheme. All colleagues are grdnted an additional day's paid leave to voluntcer for a not for profitlcharitable organisation. The scheme enables colleagues to build relationships and connect with their local communities in support of its wider social purpose. In 2023, our HR Oracle platfonn recorded 536 volunteering hour5. Additionally, 546 hours were record¢d for colleagues who continued to support a local charity based within K¢q) House in their own time, which is led by th¢ Commonwealth Page 7
REPORT OF THE TRUSTF.ES (NCORPOL4TING THE STRATEGIC REPORT) TO THE MEMBERS OF THE sco BADER COMMONWEALTH LIMITED For the year ended 31 December 2023 Offic¢. This marks an increase of over 700/0 compared ts) the prcvious year. We plan to contiDuc this upward trend so that 900/0 of all Colleagues aT¢ using their volunteering days for 2024. Volunteering Hours 2000 1500 l(K)O 500 2017 2018 2019 2020 2021 2022 2023 Some of the a¢tivities undertaken by our colleagues are shown below. Ecology: Rexycling activities (UK) Litter picking (UK) Business.. Attending careers events al Schools and Colleges providing Careers advice and guidance (UK) Supporting individuals with CV and interview skills (UK) Humanity". Sewing knitt¢d blankets together to be delivered to local care homes (UK) Took part in Ial running event to raise awareness and funds for cancer treatment (Croatia) The Trustees are of the opinion that the self-governing Tepresentative structure of Scott Bader is of public benefit because wherever it operates colleagu¢s know that the company must: Contribute to the stability and economic growth locally, nationally, and internationally. b. Take steps to minimise the effects of the business OD the environment. Support its local con]munities via charitable giving and volunteering. d. Be an exemplar of an alfrmative way to run a business. STRATEGIC REPORT Objectives, Strategies and Activities of SBCW (the Charity) As mentioned above the objects of the Charity are: i) The promolion of ethical principles in industy with a view to ensuring the discharge by persons engaged in industry of their social obligations for the welfare of the communities within which th¢y operate. 2) The promotion of sustainable development for the ben¢fit of the public by the preservation, conservation and the protection of the environment by the prudenl us¢ of natural resources and th¢ promotion of sustainable means of achieving economic growth and regeneration. Achievements and Performance a ainst the Ob'ectSves set- Grant-makin The Scott Bader Commonwealth Limited (SBCW) receives its income through a donation of profils from the individuals employed by the Scoli Bader Group. This income is used to make grants to charitable organisations around the world whose puqioses are in line with the Charitable objects. The Trustees annually approve the grant-giving policy and budget. The SBCW'S main source of income is by payment of a donation from SBCL. There is a provision in the Articl¢s of Association of SBCL lo ensure that there is a minimum amoiint paid lo the Charity each year (staff bonus or 10/0 of the annual staff salary cost of the Scott Bader Group, which¢ver is greater). This would not be considered a major risk to SBCW Page 8
REPORT OF THE TRUSTEES (tNCORPORATING THE STRATEGIC REPORT) TO THE MEMBERS OF THE scorr BADER COMMONWEALTH LIMITED For th¢ year ended 31 December 2023 unless the perforn]anc¢ of the Company becomes so pr¢cariou5 that payment of th¢ donation rnigbl threaten the very existence of the Scott Badu Group. The Charity Committee oversees the grant-giving on behalf of the Comtnonwealth Board (CWB). The Ci)mmittee meets every three months to select the charities lo support and ihe fLmding amount for each charity. The Committee reports its decisions to the CWB quarterly. Charities can learn about funding opportunities from SBCW through networking, referrals from previous recipients, and Inforntion on the Scott Badcr website. SBCW does not generally fvnd r¢quests thal support animals. individuals in need, travcl and &dvcnlure schemes. art projects, sports clubs, general appeals. or building Construction in the UK. Prospcrtive applicants must Submit their funding applications through a grant managen]ent tool called OPTIMY. This tool helps simplify and streamline the grant-making press. In 2023. SBCW had four application cycles for its grants and received about 290 applications during the year. siinilar lo about 300 in 2022. After assessing the applications, SBCW IDade graT]ts totalling £32 Ik in 2023 compared to £382k in 2022. SBCW aims to ensure that grants are used effectively and for the iiiteiided charitable purposes. We keep formal reporting requirements simple and proportionate aiid share the infomiation received with the Charity Conimittee. We also n)eet with grantees and potential grant¢es occasionally lo strengihen nctworkiiig aT]d to help the Charity learn niore about the specific subject areas or reflect on its oivn praclice and priorities. SBCW is also a member of rhe Association of Charitable Foundations {ACF) and National CouY)¢il for Voluntary Oyganisalions INCVO). Both organisations provide training courses and helpful inforniation on good practice. At 31 December 2023, SBCW l)ad nel assets of £1,925k (2022= £1.937k). Tlie grant PTograninie areas run during 2023 are sunimarised below. A breakdown of the ainount spenl under each of these programme areas is provided in note 9. Glocal Funds A budget is set for all the companies in the Scott Bader Group. The allocation is currently detern)ined as a set figuTe per site with an additional sum proportionate to the number of Commonwealth Members at each location. Each location can detennine how they wish to utilisc th¢ir allocation provided il cothplies WAth the Charity Policy and is approved by the Charity Committee of the Commonwealth Board. To help prospective applicants, we guide them to apply for funding for projects that enable them lo support social and environtnental issues important to where they are Sktualed. Some locations choose to run a Nomination Scheme whereby each Commonwealth Member has an allocation to nominate to a charity (OT charities) of their choice. The areas of intervention can vary for this but tend to cover ihe following Youth Well-bcing, Disability, Education, Disadvantage, and Health. The CeDtenarn, Fund Thi5 fund was launched in 2022 and was in cclcbration of the Company's l Ooth anniversary in 2021. l-hi% fund was lo support lour large conimiinity-based PToj¢¢ls with £25.000 each. The projects submitted had to meet thc following criteria. To help people to help themselves and give them a sense of dignity and self-respect. To respond to the needs of people who are most undetpiivilegedldisadvantaged and Enabled us to support local communilies to whom we have a special responsibility as a neighbour and employer. The review pmcess for this fund was completed in 2022 and six projects were selected for our members to vote on their preferred four Projects. The voting process took place in QI of 2023 and the four successful charities that were awarded the grants were.. Th¢ Mud House Cbtldren's Foundation- This project was to improve th¢ health, welfare, and education ¢hanc¢s of Maasai chilthen and their families in Northern Tanzania by building a bore hole and water well. Page 9
REPORT OF THE TRUSTEES (INcoRPORATG THE STIL4TEGIC REPORT) TO THE MEMBERS OF THE scorr BADER COMMONWEALTH LIMITED For the year ended 31 D¢c¢mber 2023 Hands Off Foundation - Based in Melbourne, Australia. This project was to provid¢ 'eW slart in life" care packs to supporl disadvantaged individuals with a new life. Careers Worldwide- This project was to address the social, mental, physical, and economic necds of the fan]ily ¢arers across India, Nepal, and Banglad¢sh. Carers Worldwide will establish a sustainable income-g¢neratlDg training and support programme for unpaid family carers in the Bagalkot District of Indi8. Karen Hilltyibes Trust - This project was lo transforni the community health of two marginalised and isolated Karen villagcs. in Northern Thailand by improving water and sanitation systems which will r¢thice discase. water pov¢rty, and protect human dignity. Godric Bader Fund A budget is set annually. This fund is used to SUPPOrt charities chosen by the Bader family. Three charities received grants, totslling £8,000 in 2023 and £7,500 in 2022. Resear¢b Grants & Other donations Research grants and other donations w¢re provided to th¢ following: Employee Ownership Association - To provide the evidence that EO organisations make a difference compared to other t)Tres of business ownership. DEC Turkey- Syria Earthquake Appea] Northamptonshire Community Foundation - Corporate Giving Network and tbe sponsorship of the annual awards eveDillg. A breakdown of thc 2023 ant ex nditure 15 detailed bclojv. Grant Expenditure £'ooo 2023 196 loo £?000 2022 322 Glocal Fund Centena Fund Communil , Hardshi Godric Bader Fund Presidents Fund Research & Other Grants Fund 37 17 321 15 382 Breakdown of Ex nditllre b , fund Grant Giving 2023 £8,000, 3% Glocal Fund Centenary Fund £17.450, 5% £100,000. 31'_ Godric Bader Fund £195.719, 61% Research Grants & other Donation5 Page 10
REPORT OF THE TRUSTEES (INCORPORATING THE STRATEGIC REPORT) TO THE MEMBERS OF THE SCOTT BADER COMMONWEALTH LIMITED For the year ended 3 l Dec¢mb¢T 2023 Th¢ grants awarded supported projects within three specific areas of int¢rv¢nlion. Environmental, Poverty aDd Education. A breakdown of these intervention areas and the amount spent is detailed below. £17,450, 5°A Areas of Intervention £8,OL)0, 2% £8,200, 3°A Education £19,385, 6% £93.881, 29% Environment Poverty £8,300, 3Y. . Nomirbation Scheme £165,952, 52% Godric Bader Fund The Trustees still believe that allocating the charity's income in the way described above continues to enable the charity to support a diverse range of activities with a relatively sniall amount of money. However, this is dependent on the profitability ot thc company. but mechanisn)s exist to ensure that the charlty's income will increase in line with increased profitability. Achievements and Performance SBCL Grou The Principal activity of the SBCL Group wbich sits bcncath the Charity continued to be that of the pr(Kluction and distribution of chcmicals and related products. Fundraisin The charity relies on surpluses generated by wholly owmed trading subxidiary companies to be able to carry out grant- Tnaking to meet the charitable objectives and does not undertake any fundraising activities with the public. No professional fundraisers have been engaged and no fi]nd raising has been undcrtaken on behalf of the Charity. No complaints havc bccn re¢¢ived in relation to fundraising activities. Investment oli and erformance The charity has an asset in the fonn of a property known as K¢¢p House, 124 High Street, Wollaston NN29 7RJ. This is a Grade II listed stone-built fannhouse and is situated on the Wollaston site. The refurbishment of the propety was completed in February 2020 and 1] occupancy of this building by local charities was achieved. By providing this facility the SBCW is meeting its objectiv¢ of ¢nabling these chariti¢s to Continue the excellent work they do in the local community- It is also intended that the building will be 5elf-fiJnding on finalisation of the asset plan. To support this, the Trnstees agreed in 2023 to allocate £20k to K¢¢p House to be used towards the asset plan to cover futtwe renovations. In 2023, Keep House generated £34k in income, compared to £36k in 2022. This slight decrease was due to a vacant room becoming available during the year. The income generaled from Keep House is used for the general Tefurbishment of the building and to source and progTess local projcct and partnership opportunities. An open mark¢t appraisal in November 2021. by an independent valueT with a rccognised and relevant professional qualification, gave a value of £495k for this propety and the Trustees do noi believe Ihal there has been a material change in value since the valuation. Another valuation is due to be completed during the Summer of2024. As the main investment of the chI1ty is the SBCL group, its peTfoTmanre is monitored on a regular basis as reported under the financial review section bclow. Financial Revie The majority of the Group relates to the SBCL Group and this is considcrcd on the following pages. The charity's (SBCW) income is limited to the donation from SBCL and r¢ntal incorne and the expenditure of the charity been consldered on page 9. Pagell
REPORT OF THE TRUSTEES (INCORPORATING THE STRATEGIC REPORT) TO THE MEMBERS OF THE SCOTT BADER COMMONWEALTH LIMITED For the y¢ar ended 31 December 2023 Financial Revieiv of SBCL Groll Whilst the CWB does not get involved in the day-l04ay management of SBCL it receives updates at every Commonweaiih Board meeting from the CEO Kevin Matthews, and the CFO Neil Miller on the perforn]anoe of the group. In addition, m¢mbers of the Group Leadership are invited to attend a CNVB m¢eting on an annual basis to provid¢ an updat¢ on their business ar¢as. During 2023, the CWB met with Julie ThoTburn, the Group HR Director, Neil Miller, Group Chi¢f Financial Officer. Kevin Matthews, Group Chief Executive Officer. Andrew Cottrell. Group Operations DirectOT and Mike Findlay-wilson, Group Chief Inforn]ation OffJc¢r. The Commonwealth Board is also infonned of any key issues from the Company Member of the Board. Having discussed and reviewed the business perforn]ance for 2023, the Trustees noted the following: Annual sales volumes increased by 0.90/0 to I Iok tonnes (2022: 109k tonnes), despit¢ this, SBCL Group turnover decreas¢d by £30.7m (-10. I % ) to £273m. This reduction was driven by raw material price decreases from the record high prices in mid-2022 that flowed through into lower sales prices. We have seen raw material prices drop consistently since Q3 2022, initially &s supply chains norn]alised after the disruption of the Russian invasion of Ukraine, and more rpxently as the global economy slowed in H2 2023. Th¢ SBCL Group made good progress on the strategic focus of improving product mix towards high¢r margin, sp¢ciality products, leading to an increas¢ in margin of £4.8m to £77.6m (2022. £72.8m) and th¢ margin as a 0/0 of revenue to 28.4% (+4.4ppt" 2022: 24.00/0 Other Operating costs have increased by £0.5m from £15.5m to £16.Om retlecting th¢ growth into the Americas and Asia regions, as well as the continued investment in the business to build out operational and commeTcial capabilities as the foundation for future growth. Stsff costs increased on the year by £5.3m (12.90/0) to £46.2m from £40.9m, as a result of 8.7 0/0 net headcount additions of 67 to 834 (2022: 767) and average salary intlation of 3.96 %. Operating Profit pre-staff bonuses of £2.5m (2022.. £nil) grew to £3.7m (2022: £2. Im). Profit Before Tax ('PBT'} was £0.7m (2022: £2.3m) (note 14). Offsetting the positive momentum on margin and good cost Control, the drivers of the reduction in Operating Profit and PBT were. the half y¢aT paym¢nt of a Profit P¢rfom]anc¢ Plan ('PPP') bonus to employees of £2.5m in total which was £nil ID 2022, an increase in foreign exchange costs predominantly coming from the revaluation of non-trading intercompany loans of £1.3m (2022: £0.9m) and the increase in interest costs of £1.4m (2022.. £0.3m) due to the increase in the base rate of interest in 2023 vs 2022 and full year's use of the SBCL Group's debt facilities. Balance sheet 2023 saw a positive cashflow from operating activities of £l1.7m (2022.. outflow of £1.4m). This was derived from Operating Profit and an improvement in working capital including th¢ new non-recourse d¢bt factoring facility in Franc¢. In 2023, the SBCL Group continued its objective to invest the majority of the operating cashflow into the business to support the delivery of the strategic priorities with regards to geographic growth, efficiency and innovatAOn. Overall in the year. there was a £l.Im decrease in net cash on opening of £0.2m to net debt at the y¢ar-end of £0,9m driven by the ongoing strategic investment programme in capita] expenditure £12.1 m (2022.. £13.3m) as w¢ll as cash outflows of £1.5m (2022: £0.3m) in servicing the SBCL Group's debt facilities. The SBCL Group continued to invest in line with strategy with the highlights being the completion of the green field manufacturing 51te in Mocksville in the USA and the new R&D laboratory and office in our Amiens site in Franc¢. Further capitsl investment went into new IT systems including the rollout of our M3 ERP system into Australia, as well as ¢onlinued investment into the maintenance programme to ensure asset integrity. The outlook for 2024 s¢¢s the continued focus on r¢ducing working capital and tight cash management while continuing ts) invest th¢ cashflow from operations in supporting the stralegic growth prioritics. Page 12
REPORT OF THE TRUSTEES (INCORPORATING THE STRATEGIC REPORT) TO THE MEMBERS OF THE SCOTT BADER COMMONWEALTH LIMITED For the year ended 31 D¢¢¢mb¢r 2023 The SBCL Group's Revolving Capitsl Facility (RCF) with NatW¢st was extended to a 5-y¢ar t¢rn] and increased to USD20m in March 2023 providing the Group with significant additional funds for Working capital should it be needed. The SBCL Group had in excess of £32m in receivables and £35m in inventories at the balance sheet date, which were free of security for fmancing and available to raise working capital facilities if n¢ede(L Th¢ SBCL Group recognised goodwill additions of £2.9m r¢presenting the fair valu¢ movement of the contingent consideration associated with rhe 2022 acquisition of Scott Bader India with a corresponding liability Tecognised in creditors gr¢ater than l year which would fall payable in 2025 subject to perforn]ance conditions being met. The lax charge on Profit Before Tax was £0.9m (2022: £0.2m). The effective tax rate (ETR) for 2023 (excluding adjuslments for prior year) was 64.90/0 (2022: 7.40/0). Main drivers of the increased ETR were the combination of adverse pennanent differences and a decrease in PBT for the year and the partial de-re¢ognition of defeLTed tax assets in respect of tax losses arislng in the UK. Deferred tax assets of £4.Om weTe recognised in th¢ period, reflecting the expected utilisation of brought foNTard losses on the basis that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxabl¢ profits, in line wilh updated forecasts. Ke . PerformAnce Indicators In 2023, th¢ TTUStees introduced a set of non-financial rnetrics to assess members, engagement levels and ¢valuate SBCL'S adherence to the Guiding Principles. Our focus is on gathering data for areas that remain unexplored as w¢ progres5 through 2024. Additionally, specific KPIS have been established to monitor the financial perforn]ance of the SBCL group duritig 2024. These metrics will be diligently tracked and reported to the Con]monwealth Board (CWB) on a quarteTly basis: Cash.. Tracking the available cash reseTves. Financial performydnce against budget and prior year (PY).. Comparing actual financial results with plann¢d budgets and previous year's perforniance. Working capital: Evaluating th¢ company's Iiquldity and operational efficiency. Capital expenditure: (Capex) spending and CAPEXldq)re¢iation ratio.. Assessing investhient in fixed assets relative to depreciation. These KPIS serve as essential benchrnarks, for SBCW to monitor the perforn]ance of SBCL'S slrategic decisions and ensuring transparency in its financial and operational health. Cash Cumtly the Charlty holds a modest amount in deposit accounts, which are reviewed annually to ensure best return. Finaneial Controls The Financial Controls Policy, which includes the delegalion of authority and segregation of duties, is reviewed annually to ensure that it is up-to-date and effective. The review process involves a thorough examination of the procedures and systems in place to ensure that they are robust and followed diligently by all parties concerned. The Trustees Consider that the procedures and systems in place ar¢ effective in nmintaining th¢ inteIty of the fmancial controls and ensuring compliance with th¢ relevant Tegulaiions. Flnaneial and risk mana ement ob ectives and Ileles The Trustees have developed a more Tobust approach to managing the risks to which the charity is exposed to ensure that appropriate controls are in place to provide reasonable assurance against the risks identified. The Trustees undertake a quarterly revlew of the risk register, which assigns the management of the risks to specific individuals and recommends actions to be taken, wh¢r¢ necessary, to nllage their lik¢lihood or impact. Risks are added to the register as they aris¢ and are reported and discussed at the quarterly board meetings. The SBCL Group uses various financial instrun)ents including loans, Cash, and items such as trade debtors and trade creditors, that arise directly from its operations. The main PUTpose of these financial instruments is to raise finance for the SBCL Gr(yUP'S operations and working capital requir¢m¢nts. The exist¢n¢¢ of these fanCIal instruments exposes th¢ SBCL Page 13
REPORT OF THE TRUSTEES (tNCORPORATfNG THE STRATEGIC REPORT) TO THE MEMBERS OF THE SCOTT BADER COMMONWEALTH LIMITED For the year ended 31 December 2023 Group to a number of financial risks. The n]ain risks ar¢. currency risk, re¢¢ivables recoverability and liquidity and cash flow. Currencv risk Th¢ SBCL Group is an international ch¢mical Company. In the international ch¢mical business, many of the raw materials used by the SBCL Group are priced in US Dollars or Euros, as are many sales made outsid¢ of the UK, Consequently, the SBCL Group is exposed to exchange rates. The SBCL Group does not make extensive use of hedging in5trum¢nts or derivative% as tbere is a nara1 balance of purchases and sales across the various cuffencies. Customer pricing inay be adapted to deal with step changes in exchange rates as needed. The currency risk is closely monitored, and appropriate actions taken when needed. Trade and other receivables All op¢rating companies have credit policies, that are approved at ihe appropriate l¢vel using the delegation of authority matrix and monitor their cr¢dit exposure on an ongoing basis. Trade Y¢ceivabl¢s are stat¢d net of allowances for doubtful receivables, estimated by lo¢al manag¢menl based on prior experience of customers and assessment of their Quent economic environment and in line with group policy. Due lo the geographical spread of the operating companies, the credit risk varies from Site to site and 15 influenced by th¢ nornial ¢redii praclices of that country as well as the prevailiDg macro- economic climate of each geographic iegion and where appropriate the SBCL Group uses debt fa¢toring facilities. and cash flow The SBCL Group monitors its borrowings and future cashflows weekly and aims to ensure that there is always available headroom in all entities to meet all obligations as they become due. The SBCL Group extended its USD Sl Om revolving credit facility with NatW¢st in March 2023 to $20m although dtd not draw down further on the facility in the year. As at 31 December 2023, tbe SBCL Group had headroom which the Directors considered to be adequate for Cu1 business demands. Prinel al risks and uncertainties The SBCW'S key risks are summarised below.. Risk l Uncertalnt Miti l. There is a risk to the charity to continue opeTating due to lack of funding, therefore unable to achieve Charitable objectiv¢s & constitutional requirements Ther¢ is a fonnula in place to donate a minimum of 10/0 of th¢ Oup'S salary cost or 5 /0 of Ihe eligible PBT (whichever is the greater). However, SBCL shoujd budget for minimum payment required to be paid to the Charity, Financial inforniatloD Is reported oll a quarterly basis to the Commonwealth Board on the perforniance of SBCL so it would be reported if the operating company is al Tlsk. Ther¢ is a sewnd income stream generat¢d from Keep House and there is a view to explore other similar projects in other global locations as well as other income options such as endowments. 2. There is a risk of a skills gap for Trustees on the Commonwealth Board resulting in the non-cotnpliance with Charity and Company Law. All Board Memb¢TS are provided with the relevant Guidance from the Charity Con]mission on their duli¢s and responsibilities, A skills analysis has been introduced and we refer to this when recruiting new Guardian Trustees. In addition, induction folders are provided upon appointment, which includes a copy of the Constitution, financial reports, minutes, agendas and policies and yearly training is also provided for the Trustees. 3. Th¢re is a potential risk of loss of fimds for the Charity, leading to reputatlODal risk The following Internal controls in place to mitigate against this. Detailed quarterly reports are prepared comparing expenditUTe vs budget. All cheques/bank transfers are authorised by two people, one of which needs to be a Trustee. Bank accounts are reconciled monthly. Page 14
REPORT OF THE TRUSTEES (TNCORPORATING THE STRATEGIC REPORT) TO THE MEMBERS OF THE SCOTT BADER COMMONWEALTH LIMtTED For th¢ year ended 31 December 2023 Policies are reviewed on a yearly basis by the Charity CorLllnittee, prior to submission to tbe full Commonwealth Board for approval. 4. There is a risk of potential miscommunications and (cyber security) risk of interception of shared sensitive business inforntiOn. All sensitive data is stored and shared via Diligent Boards which is a board managemcnt sofvare and is part of the Diligent Governance Cluud. 5. There is a risk of under occupancy of Keep House I not achieving objectives to utilisc the Keep House space, using SBCW cash to fund the building & utility costs This is monitorcd regularly at the ongoing Keep Housc commitiee meetings. Keep House is currently 800/0 occupied. The SBCL'S key risks are summarised b¢low: Siralcgic RAsks.' Strategic risks are riskts, botli internal and external. associated 'it11 the busincs5 iiiodcl. coryoia¢¢ strategy and long-tenii planning Risk l Uncertaint iti ation Year-on- ear chan e Geo litical uncertain macroeconomic chanive and As a result of tensions in the Middle East, Business Continuity Planning ha5 been conducted in the conlext of supply to and from the Dubai site through the Straits of Hormuz. Our r¢gional ptesen¢e was fi]rther expanded with the completion of the new manufacturing facility in North Carolina, USA. This further balances the Group's geographical Presence. The business continues to work on its Tasury policy to rther Improve the r¢sili¢nce of the business in the event of raw material price increases. Further development of ability to nlanufacttwe key products al multiple sites and contract nianufilcturing partners to improve resilience and business continuity planning, No change overall. The continued g¢opolitical instsbility and the war in Ukraine has continued to d¢monstrate the interconnectedness and fragility of global supply chains. As the situation around Ukraine bas stabilised and improved this has been replaced by issues in the Middle East and we expect the landscape to remain volatile for some time to come. Th¢r¢ is a risk that external geopolitical and macroeconomic factors lead to severe supply chain disrnption, Ioss of revenue, talent and strategic control as well as potential closures of sites. Intellectual Pro ertv mana ment Key miligations that have been implemented or are work in progress include.. Appoinlment of an external patcnt agcncy to support the developn]eTht5 of a moic active patcnt strategy. Improved cybereThime resilien¢e to prevent theft of intellectual property. Increasing use of legal contracts with appropriate clauses to protect intellectual property, Audil of the Group's major elements of intellectual property and an active development of a repository of key elements of intellectual ro New Risk. The expansion of the business into more speCity markets with in¢r¢asing differentiation built on intellectyal property represents an increasing risk for th¢ group There is a risk that as th¢ business grows into new areas, engages in new markets and generates new t¢chnology that without proper ¢ontrols key intellethal propety could be lost. In adth'tion. with an ageing workforc¢ critical knowhow could b¢ lost from the organisation. Page15
REPORT OF THE TRUSTEES (INColoRATNG THE STRATEGIC REPORT) TO THE MEMBERS OF THE sco BADER COMMONWEALTH LIMITED For the year ended 31 December 2023 ment Pro ¢ct mana In addition to th¢ mitigations report¢d last y¢ar th¢ following actions have been implem¢nted. FurtheT improvement of the major PTojecl approval process and governance oversight with the forniation of a Capital Projects Committee. Fornialised integration processes have be¢n strengthened as a result of post inv¢stment reviews of completed projects. -> No change overall. There is a risk that the significant number and scale of the projects being undertaken to deliver the strategic plan will l¢ad to delivery failure and project overruns The continued number of major projects and the level of investment and complexity continues to represent a significanl risk. Operational Risks.. Operatioiial risks are risks derived from Scott Bader's core business practices. which rely on systems. equipnjent and processes Risk / Uneertaint Year-on-vear ehan chain mana ement In addition to the mitigations highlight¢d last year- Initiatives continue to improve Group wid¢ S&OP system. Th¢ formation of regional supply chain stnjctures with a greaier oversight of supply chain perfonnance connecting supply points into one network. Upgrading of Group operation technical resource to accelerate the development of dual site manufactUriD for ke oducls. Fornial Health & Safety strategy, framework and refreshed policies in place with clear KPIS and audils. Launch of life saving rul¢s Investment in Health & Safety re50ur¢ing (appointment of Group Occupational Health Manager). Improvements al site levels to ensure closing off of HSE actions. Increase in number of saf¢ty opportunities r¢ported across the Group. Significant number of the Groups assets now have an updated HAZOP (hazard and operability Study) with mitigations No change overall. There is a risk that ineffective management of our supply chain causes production delays l¢ading lo revenue losses, increased likelihood for non-supply fines and potential loss of customers. The Group sees opportLmities for productivity improvements through an effectiv¢ supply chain management system. Health & Saf¢ No change. There is a risk that poor safety perforn]ance lead5 to serious injury, loss of life, ternporary or pern)anent site closure- with potential for exposur¢ to significant penalties. This r¢mains a high ongoing risk for the Group and one that continu¢s to receive ongoing investment and monitoring by management including improved prncesses and a refresh of the hazard evaluation programm¢. Securit and resilience of lant ocess control s stems No significant initiatives in 2023 pending investments into new assets. Upgraded syslems and procedures to counter cybercrime. Cloud based disaster recovery syslem. Aligned ownership across different facets of the risk across dedicated functions (Operations and IT) and Amproved standardisalion of process¢s" No change. This remains a high ongoing risk foT the Group. Completion of the global PCS assessment that was started in 2021 with a clear strategy now established. This area is expected to receive increased investment by management. There is a risk that we do not identify andlor address IT Tesilience and security risks related to plant process ontrol systems and locally procured software leading to tempordry or pernianent site closure, loss of revenue and intemiption to our supply chain. Page 16
REPORT OF THE TRUSTEES (INCORPORATING THE STRATEGIC REPORT) TO THE MEMBERS OF THE scorr BADER COMMONWEALTH LIMITED For the year ended 31 December 2023 C ber and inforn]ation securi Continued improvement and updating of our IT systems, including inv¢stment in cloud- based disa5teT r0Very and clear investment plans to mitigate potential for obsolescence Ongoing assessment of data105s prevention enablers and tooling Ongoing pcnetration testing exercises to ensure the cffcctiveness of existing IT controls Continued investm¢nt to irnplement state of the art IT systems and firewall security, active penetration testing, data loss prevention tools and data govcrnrtince framework. It is reco11$ed thai IT failure could impact the ability to manufacture and supply pmducts and rnitigation plans are being developcd. There is a risk that Scott Bader fails to mainlain the confjdentiality. integrity and availability of information and key tsysterns le&ding to a loss of customcr. p¢rsonnel or onf1denlial dath and resulting in disrnption lo our busines5, reputational damage and significant fmes. in&illLi411 riskb: I1n1cial Tisks &tre ii¥>ks ¥45bvLialed with an oi'ganistition dbilily to I'lilbe capildl. illitintdill (ILLCSb lo ci4)itdl and delivei. profitable growth Risk l Uncertaintv 'ti ation Year-on-vear chan e Volatili of demand and mark¢t uncertainiv We aim lo embed our produrt I service into the client product cycle to provide a diff¢r¢ntiated offering. Proactively manag¢ raw materials lo optimise the balance b¢tw¢¢n price and security of supply with souwing from a broad and diverse supplier base. Improve supply chain connectivity to ensure we respond rapidly to a slowdown or acceleration in mark¢t demand, Financial perfonnance closely monitored against operating plans with variances investigated. Clear focus on casll generation Contingency and cost reduction plans im lernented in an economic downturn. Significant improvemeDt in Ticasury nction and cash pooling to enable liquidity support between entities. Continued close supervision of cash management activiti¢s and forecasting. Active Project to impTove foreign exchange management. tIncreased risk. The maTket slowdown resulting from high leve15 of interest rat¢s impacted business perfonnance in the second half of the year which also resulted in in¢Teased levels of working capital. There is a risk that a slowdown or a¢¢¢l¢ration in demand lead5 to increasing raw material pricing, decreasing raw material availability and results in competition which can 3mpact sales, Capacity utilisation, profii&bility, and cash generation. uidit forei CULTenc mana ement and ex 5ures No change: The impact of a significant increasc in capital spending in 2023 and the challcnging business cnvironment continucs to have a n]aterial impacl on liquidily which Tequires more active rnanagement. The foTcign ¢xchange risk is increased due to fluctuation of the sterlAng vis-a-vis other currencies in markets where we incur a significant proportion of our profits. There is a risk that the current levels of WOTking capital, aT)ticipated capital investment and strong acqui51tion pipeline significantly impact liquidity levels across the Group. There is a risk that Group's financial re8ults are Tnatcrially impacted by advcrsc currency movements leading to volatility in the reported profits and asset values. Page 17
REPORT OF THE TRUSTEES (INCoRoRATlNG THE STRATEGIC REPORT) TO THE MEMBERS OF THE SCOTT BADER COMMONIVEALTH LIMITED For the year ¢nded 31 December 2023 People risks: Thes¢ are risks associalcd with an organisation's strntcgy and rclatioiiship '1th its people. including talcnt attraction and r¢t¢ntion, bel)aviour and culture, industrial relations and learning ajid developmcnl Risk l Uncertainti, Mlti Year-on- ear chan Attraction and retention of talent Scott Bader offers competitive compensation and benefits packages, and we have recently carried out a salary benchmarking ¢xercise Regular perforn]an¢¢ reviews and appraisals Development of an employe¢ value proposition has been an active project through 2023 No Change.. Recruitment and retention continued to be challenging in 2023 for certain skills due to the historically low levels of unemployment and the shortage of skills in certain regions There is a risk that Scott Bader fails to attract, develop and retain high quality talent and capabilities required to deliv¢r the firn]'s strategy and commercial ambitions. Succe55ion lannin Succession plans and retention strategies are in place for Group leadership and other key positions Ongoing tsl¢nt reviews and su¢¢ession planning programm¢s Talent management programme continue including overseas secondment to build experience No Change: There is a risk that unplanned departures and ov¢rreliance on key individuals leads to knowledge, customer and supplier relationships and competitive advantage are lost or cornpromised. The leadership ompetency framework was reinforced as part of the 2023 annual appraisal. The new organisational structure irnplemented at the end of 2023 is also design¢d to provide opportunities for building experience in bridging roles. Regulatory & Conipliance risks: Regulatory und compliance ri4ks are risks associated w'ith coi]Ipliance to laws and regulations, industry t4tandaTd5, contrdct requirement+ and internal policie sk l Uncertaln Miti Year-on-i'ear chan Chan in re environment lato Experienced legal counsel, company secretary, tax manager and head of product regulatory affairs are furth¢r supported by external legal and professional advisors Risk, compliance, and governance report is reviewed by the Board, Audit Committee, and Intemal Audit at each meeting Ongoing support from third paty advisors to enbance the Govemance, Risk and Complianc¢ Frameworks and to supplement our internal knowl¢dge of regulatory change Established delegation of authority between Group leadership and local leadership teams in owning local risks and complying with local laws Ongoing monitoring of sanctions and reporting around high risk countries No Change,. This area remains a high ongoing risk for the Group as the Group expands globally, national regulations tighten and a global ¢xpansion of data protection laws. It continues to receive ongoing investment and monitoring by management. Th¢re is a risk of failing to comply with key laws and regulalions across the different Tegulatory environments in which we operale leading to major regulalory enforcement action. litigation or other claims arising from products andlor historical or ongoing op¢rations. Reserves Ilc Reserves are held to provide financial protection for Scott Bader Commonwealth Limited (SBCW) as a going concern, to protect its operations from being adversely affected by unanticipated events, Unanticipated events are identified in the Page 18
REPORT OF IIIE TRUSTEES {INCORPORATiNG THE STL4TEGIC REPORT) TO THE MEMBERS OF THE scorr BADER COMMONWEALTH LIMITED For th¢ year ended 31 Decemb¢r 2023 SBCW risk registcr. However, given that the primary source of income is from the donation received from Scott Bad¢r Compgmy Limited (SBCL) this does create a risk for SBCW. Tbe Trustees reviewed the Charity's Reserves Policy in April 2024 and agreed that reserves will be held for the following purposes.. Ullrestri¢ted Funds - The TrL)Stees have agreed to r¢tain £180k in a range ¢quivalent to approximately three to six months, forward expenditure. These aTe to b¢ hcld to protect SBCW against income fluctuations . D¢signated Funds- The Trust¢¢s have agreed to retain a dcsignated fund equal in valuc to th¢ valuation uplift Im Kccp House. At the Ye end, this fund ioLqlled £487k (2022: £487k). The TTUStees consider this appToach to be reasonable in the light of the nced for the money to be readily available for expenditure against the budget and in the unlikely event that no donation 15 received from SBCL, grants will only be award¢d to charities upon rcccipt of funds from SBCL. At 31 Deccmbcr 2023, the Charity held tolal funds of £1,925k (2022: £1,937k) including unrestricted funds (frcc rCSv¢S) of £1,438k (2022.. £1,450k). There are earniarked funds set aside to meet essential spending. £180k is set asidc to protect SBCW'S operations from being adveTsely atTected by unanlicipated events. £566.5k is budgeted tu be spent throughout 2024, and £72.5k is held for future Tenovations on Keep House. The balance remaining will be held and Used in the unlikely event that no donation is received from SBCL. The group reserves held at 3l December 2023 were £108,847k (2022.. £114,IW3k). These are held to provide working capiial for the group. Conflicts of Interest SBCW has a set of processes to manage conflicts of interest. Th¢se include maintaining a complet¢ and up-to-date register of interests, which is used for the day-to-day management and governancc of the Charity. The T¢gist¢r contains infonnation about the interests of all parties involved with tbe Charity, th¢ inforniation on the register is us¢d to idenlify and manage potential contlicts of interest that may arise in ihe course of the Charity'5 operations. These procedures ensure that the Charity's interests are protected and that any potential conflicts of interest are identified and managed appropriately. Section 172 (1) Statement Understsnding the issues Ihat are important to our stakeholders is essential and integral to the way in which we develop and execule our business strategy. It is also criiical to our long-terni success. Oura roach to Section 172 The Scott Bader Constitution sets out the Governance Principles expected of the Group and SBCL Board and demonstrates how th¢ Group and SBCL Board should n]ake decisions for th¢ long-terni success of the Group and its stakeholders. noting thc values and behaviours that must underpin the operation of a successful and thriving bu%incsy. Although ihe original Con8titution pre-dates this section of the Companies Act. its continuing principles are closely aligned with thc QCA (Quoted Companies Alliance) Governance Code and confonn to the requirements of Section 172 of the Companies Act 2006. Our Section 172 statement describes the ways in which the Group and SBCL Board has carried out its responsibility to promote the suC$S of the Group, recognising that the key decision5 it Jnak¢s today will affeci long-ternl perfomianc¢. The statement considers paragraphs (a) to (Q of Section 172(1) and includes dctails on how the Group and SBCL Board has considered and ¢ngaged with stakeholdcrs. When making decisions, the Group and SBCL Board considers the needs of our different stakeholder groups as well as the likely consequence5 that any action taken might have for Scott Bader's reputation. Stakeholder engagement is at the Core of how Swtt Bader operales and infonn strategic discussions. including any implications for th¢ r¢silience of OUT busine8S and the potential impact on our community and enviTonm¢nt. It is tbe SBCL Chair's responsibility to ensure that the Group and SBCL Board considers Section 172 when making its decisions. This process includes the SBCL Board and its Committ¢es considerlng tlle interests of OUT ¢mployees. We primarily engage with employees through the M¢mber Directors, Global Members Board (,MB") and Th¢ Commonwealth Board. Page 19
REPORT OF THE TRUSTEES (cORPORAT[NG THE STIL4TEGIC REPORT) TO THE MEMBERS OF THE SCOTT BADER COMMONWE4LTH LIMITED For ibe y¢ar ended 31 December 2023 Throughout the year. the SBCL Board received reports from management about their ¢ngagement with customers. We recognise that it is not always possible to provide a positive out¢orne for all stak¢holders and that sometimes the SBCL Board must make d¢¢isions based on competing priorities. The SBCL Board regularly assesses th¢ outcomes of its decisions and is available to talk to stakeholders when needed. This engagementhelps the SBCL Board betteT understand what matters most to our stakeholders and supports discussion on relevant issues. It also helps the SBCL Board choose the Course of action that best leads to high standards of business conduct and success for Scott Bader in the long terni. Stakeholder en ement in 2023 Stakeholder groups How the SBCL Board engaged In 2023 Customers The SBCL Executive Committee provided ¢uslomer related intelliget)ce and feedback, including from a customer survey. Given that sorne areas of our busines5 have seen weakened demand, the SBCL Board kept up to date with operational issue5, including plant capacity and shift planning to match production to demand and reduce costs. We work with customers worldwide, providing the products they need to address technical and sustainability challenges in their own manufacturing processes. The SBCL Board approved a refreshed strategy that fo¢u5es on getting Closer to our custom¢rs and on growing in attractive end markets. SBCL ensured that colleagu¢s were properly consider¢d &s part of the SBCL reorganisation in line with the strategy refresh. The SBCL Board supported the application for D&l ISO certification. Employees The SBCL Board r¢ceived and considered two reports on follow-up actions from the results of the Best Companies employee survey. Our succ¢ss relies on the talent of our employees. We wani them to f¢el part of a culture that valu¢s diversity and inclusion, faArn¢S5 and transparency. Suppliers The SBCL Board received r¢ports on manag¢nient's work to ensure the Group's supply Chain complied with the new sanction regime put in place as a result of Russia's war in Ukraine. European energy security and cost was a key topic for the SBCL Board throughout 2023. Management kept the SBCL Board inforn]ed on how it was engaging with utility suppliers and sit¢ hosts as it worked lo reduce o erational risks. The Member DirectQTS are encouraged to be the voice of the shareholders (colleagues) at the SBCL Board and contribute to the SBCL Board on that basis. Our suppliers deliver the raw materials and services we need to make our products. We look for ways to work in partnership with suppliers to create a morc sustainable supply chain. Shoreholders The Chair, CEO and CFO provide the Group Board with updates from their meetings with the GMB and Commonwealth Board at Company Board meetings. As an Employee Owned business, with a d¢fined C.onstitution, we have a responsibility to deliver value for our shareholders (also referred to as colleagues), GMB Chair shares feedback and thoughts with the SBCL Board as a standing item on the SBCL Board a In canying out its duties, the SBCL Board Continued to ensure it understands, and considers, the issues that matter most to these stakeholder groups, particularly when making material decisions. Page 20
REPORT OF THE TRUSTEES (INCORPORATfNG THE STRATEGIC REPORT) TO THE MEMBERS OF THE SCOTT BADER COMMONWEALTH LIMITED For the year ended 31 December 2023 After two years of on-line meetings as a result of Covid 19 restrictions, w¢ w¢re pleased to return to holding an open Annual General Meeting in July 2023 and continued io make th¢ AGM accessible to all through the use of Zoom VAdeo. We kept in place the Option t.or shareholders (colleagues) to submit questions in advancc of the meeting, however, which we introdu¢ed during the pandemic. We also have regular correspondence with shareholders (colleagues), through meetings with the CotnTnonwealth Board and the GMB and by responding to suggestions and queries. In addition, our CEO mel with a number of the site employee councils when visiting the Group's manufacturing locations. Princi I decisions in 2023 This was another busy year foT the SBCL Board, and one in which several key decisions were taken. Below we set out two examples of principal decisions the SBCL Board took in 2023 and how it ¢on8idered Section 172 matters in the process. Approving a refreshed strolegy In 2023, thc SBCL Board approved a refreshed stralegy, with a focus on markets and innovation with tbe continuing thread of sustainability. It was presented to the Con]monwealth Board and the GMB in October and has been 5ubscqucndy cornmunicatcd to colleagu¢s and other stakcholdcrs. How the SBCL Board made ILY decision As the SBCL Board r¢fl¢cted on the potential strategic options. it considered all stakehold¢r groups - for example, th¢ impact on employees currently engaged in non-core products ofpuT5ing a focus on either commodity or spe¢iality chemicals and on the value potential for shareholders (collea8ues). The SBCL Board considered that strategic alignment to end Markets would enable the Company to better serve its StomerS for the long tem) and to focus Its innovation and capital allocation - and so deliver greater business value and community for shareholders (colleagues). We also reflected on the potential disruption of a business reorganisation. We concluded that this was a necessary slep to align everyone in the business with the new strategy and that it would prnvide greater opportunities for employee development. Refihancing At the start of 2023, the SBCL Board asked management to update business plans and forecasts and to review the banking facilitie5 in the light of those plans. How the SBCL Booyd made Rls decision The management team put fonvard to the SBCL Board for approval: A programn]e of working capitsl, capital exp¢nditure and cost reduction and Refinancing the SBCL Group with additional facilities including increasing its RCF with Natwest Jnd implen)cnts"ng invoice factoring with Soclété Générale ID Francc. The SBCL Board reviewed and considered MageMent'S updaled business forecasts and budgets and agreed that management should refinance to ensure that the business had appropriate medium-teTm facilities, with sufficient headroom, to enable the business to operate through a period of p)tentially challenging econDTnic headwinds. The refinancing was completed in Mar¢b 2023. These were complex decisions for the SBCL Board, balancing the interests of shareholders (colleagues} and other stakeholders. Our Guiding Principles (as set out in the Constitution) focused us in protecting value in the business aT)d provjding a robust financial structure that aligned with the strategic needs of the business. Future Plans A revicw of th¢ Constittition was carried out during 2020121. The changes proposed were forn]ally acc¢pt¢d by the c.ommonwealth Members at tlie AGM in May 2022 and are still being impleinented. This exercise lias enabled lis to ¢merge stronger and witl) renewed confidence and vigour. It was agreed at the same tinie that a two-year review of this would also happen. This is st&rting in 2024, any signifi¢ant amendments will be shared with the niernbers tor theiT appToval. Page 21
REPORT OF THE TRUSTEES (tNCORPOIL4TING THE STRATEGIC REPORD TO THE MEMBERS OF THE sco BADER COMMONWEALTH LIMITED For the year end¢d 31 December 2023 As a result of this revi¢w of thc Constitution the Trustees have identified that improvements were r¢quired in the way th¢ board itself operates and il identified that improvements were required in the following areas. Charity we will bolster and reconfigure charitable activities in order to deliver our charitable aims and responsibilities. Funding ratios for charitable donations will remain as present and we wish to widen ihe meaning of charitable giving including encouraging and re-energising the volunteering undertaken by colleagues. We aim to replicate globally the Keep House model at Wollaston. This will provide local opportunities for good practice and outreach around selected locations around the group. In addition, Ihere are plans for the future lo in)pleineni a Social Return on liiveslllieiil (SROI) framework. This will help us to measure and coinmunicate the social value and Impact of our grant-giving aclivilies. SROI is a principles- bas¢d approach that involves identifying, iiieasuring, and valuiiig th¢ outcoines that matter to our stakeholders. By using SROI, we hope lo iinprove our accountability, transparency,. and learning. Income - Presently, the Commonwcalth Office engages in annual budget negotiations wilh the Group Board: who approve it. In a proactiv¢ niove to safeguard fulure funding, we are exploring moditications to the tinancing structure t-or the Coi))monwealih Office and its deniocratic endeavours. In 2023: d dedicated PTojecl teani devised a fijnding strategy aimed at enipowering the C0111monwealth and Global Members. Board with enhanced control and fin(Incial segregation. This strategic plan received approval in Q4 2023 and is scheduled for implementation in 2024 Engagement- We have implemented a refresh¢d way in whA¢h colleagues learn about the features and responsibilities of democracy in Scott Bader. This includes both the induction, orientation, and 'onboarding' for new recruits along with the ongoing refreshment necessary to k¢q) everyone committ¢d and ¢ngaged. We will continue to improve and monitor this development throughout 2024. SBCL will focus on building upon and integrating the recent investments in the USA and India. The impact of Brexit has been felt a¢ross the business with increased work required to ensure ongoing compliance. These additional administrative requirements continue to be a cost for SBCL, however the impact of this has been limited through proactive planning. SBCL continues to experi¢nce raw material supply shortages due to disrupted supply chains. the response has included expanding the range of suppliers, incr¢asing stock levels where nc¢ded and increasing production flexibility. SBCL remains in a strong financial position, with a number of opportunities offering strong potential for growth. The Group Leadership Team is f(Kused on the key projects that will unlock this growth and deliver the changes required to achieve 2036 vision. The future plans for SBCL are: Future Developments 2024 starts with a certain degree of un¢ertainty and it is clear thai high interest rates are reducing inflation and causing an economic slow-down, compounded by conflicts and geopolitical tensions around the world, that may last through the first half of 2024. As the World readjusts and interest rates stabilise and then perhaps start to fall, we niay see markets pick-up in the second half. At the same lime, we continue to have some exciting opportunities to deliver on key ¢lem¢nts of the Group strategy such as India, North America and more effi¢i¢nt ulilisation of our Europ¢an assei base. The transition from a product focus to a market focus as we en*r 2024 will allow us to d¢velop innovative and sustainable solutions for our customers through a deepened understanding of the customer needs of both today and tomorrow. To ensure that we can best meet the needs of both our global and lo¢al customers, we implemented a regional operating structure into the two key r¢gions of Europe & Africa and Asia & Americas. This structure will support delivery of our strategi¢ vision by creating increas¢d responsibility and autonomy to execute at an operational level within the regions. These plans will h¢lp th¢ continued success of the business and thus provide stability for ¢haritable purposes and for the people that work at Scott Bader. Page 22
REPORT OF THE TRUSTEES (INCORPOIL4TING THE STRATEGIC REPORT) TO THE MEMBERS OF THE SCOTT BADER COMMONWEALTH LIMITED For the year ended 31 December 2023 Going Concern When assessing the going concern principle for ihe Cofflmonwealth, considerations of the Trustees include, but are not limited to the following in relation to SBCL. the Financial position of the SBCL Group as at 31 December 2023, th¢ most rent cash position, thc projc¢ted cashflows and the availability and headroom of the fllthncing facilities across the group. including the availability of facilities secured in March 2023. The perforn]ance of the SBCL Group in the year to date is below last year as a result of supressed economic activity impacting Scott Bader's customers. Despite this, the SBCL GTOUP ¢onlinues lo trade profitably and have a number of opportunities for grOtth. The SBCL Group obiained a waiver from its lending partn¢r for one of the two covenant tests required to be met quarterly for which it was nol in complianrK. During this challenging period. the Group Leadership Team {GLT) has generaled forecasts to December 2025 under a variety of scenarios, including the application of prudent, worst case assumptions. On the basis of these forecasts, the TnteeS remain confident that the GTOUP will be sufficienily well capitalised for the foreseeable future. Having considered the financial foT¢ca$ts, the Trustees are confident that the SBCL Group, and th¢r¢fore the Commonw¢alth Group, remains a going concern, and that the results within this do¢um¢nt r¢present a true and fair view of the position of the Group. The accounts are prepared on the going concern basis. Auditor RSM UK Audit LLP have indlcated their willingn¢ss to continue in office and a resolution concerning their re-appointmcnl will be proposed at the Annual General Meeting. Statement as to disclosurc of inforniAtion trj auditors In so far as thc Truslees are aware.. There is no relevant audit information of which the charitable company's auditor is unaware" and The Tste¢S have tsken all steps that thcy ought have taken to make themsclves awarc of any Telant audit infornlation and to establish that the auditor is aware of that inf0mtiOn. The Report of the Trustees is approved by order of the board of Trustees and the Strategic Rq)ort (included therein} is approved by the board of Trustees in their capacity as the directors at a meeting on 3 May 2024 and signed . behalf by: Richard Tapp Trustee P<iuI Smith Truslee Page 23
TRUSTEES, RESPONSIBJLITIES STATEMENr For the year ended 31 Decetllber 2023 Trustees, res onsibilities statement The Trust¢¢s who are also th¢ directors of the Scott Bad¢r Commonwealth Limited (for the purpose of company law) are responsible for preparing th¢ Report of the Trnstees including the Strategic Report and the Director's Report and th¢ financial statenients in accordanc¢ witl) applicable law and United Kingdom Accounting Standards, including Financial ReportAng Standard 102.. The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Gen¢rally Accepted Accounting Practi¢e). The Trust¢es' powers and responsibilities are defined in the Articles of Association of SBCW in furtherance of which SBCW has and may exercise the power to ex¢rcAse oversight of the Scott Bader GTOUP to ensure appropriate gov¢rnance risk and compliance Processes are in place to ensure the long-terni success of the busin¢ss. Under company and charity law the Trnstees must not approve the financial staten]ents unless they are satisfied that they give a true and fair view of the stale of affairs of the group and the charitable company and of the incoming resources and application of resources, including the income and expenditure, of the group and the charitable company for thal period. In preparing those financial statements, the Tte¢S are required to.. sel¢ct suitable accounting policies and then apply th¢m consistently. observe the methods and principles in th¢ Charities Statement of R¢comm¢nded Practice (SORP). make judgements and a¢wunting ¢stimates that are r¢asonabl¢ and prud¢nt' state whether applicable UK accounting standards have been followed, subject to any material departures disclosed and explained in the financial statements; and prepare the financial ststem¢nts on the going con¢ern basis unless it is inappropriat¢ lo presum¢ that the group and the charitable company will continue in business. The Trustees are responsible for keeping adequate accounting records that are sufficient to show and explain the group's and the charitable company's transacttons and disclose with reasonable accuracy at any time the financial position of th¢ group and the charitable Company and enable them to ensure that the financial stat¢ments comply with the Companies Act 2006. They ar¢ also responsibl¢ for saf¢guarding the ass¢t5 of the group and the charitable Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. The Trustees are r¢sponsibl¢ for th¢ maintenance and int¢grity of the corporate and fman¢ial infornialion included on th¢ charitable company's website. Legislation in the United Kingdom gov¢rning Ihe preparation and dissemination of financial statements may differ from legislation in oth¢r jurisdictions. Page 24
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF THE SCOTT BADER COMMONWEALTH LIMITED inion We have audit¢d th¢ financial statements of The Scott Bader Commonwealth Limited (the 'parent charitable company'} and its subsidiaries (the 'group') for the year ended 31 December 2023 which comprise the Group and Charity statements of Financial Activities {in¢oTporating an income and expenditur¢ account), Group and Charity Balance Sheets, Group Statement of Cash Flows and notes to the financial ststements, including significant accounting policies. The fmancial Teporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including FRS 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland" (United Kingdom Generally Accepted Accounting Practice). In our opinion tb¢ financial statements.. give a true and fair view ofthe state of the group's and the parent ¢haritsble company's affairs as at 31 December 2023 and of th¢ group's incoming resources and application of resources, including its income and expenditure, for the year then ended. have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Pra¢tice' and have been prepared in accordance with the requirements of the Con)panies Act 2006. Basis for o inion We conducted our audit in accordance with International StsndariLs on Auditing (UK) (ISAS (UK)) and applicable law. OUT responsibilities under those standards are fither described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the group and parent charitable company in accordance with the ethical requir¢m¢nts that are relevant lo our audit of the financial statements in the UK. including th¢ 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 pmvide a basis for our opinion. Conclusions re174tin to oin coneern In auditing the fitwcial statements, we have concluded that the Trnstees, use of the going concern basis of accounting in the preparation of the fll]ancial statements is appropriate. Based on the work we have perfornied. we have not identifled any material uno¢rtainties relating to events or Conditions that, individually or collectively. may cast significant doubt on the group's or parent charitsble company's ability to continue as a going concern for a period of at least Iwelve months from when the financial statements are authorised for issue. Our responsibilities and the responsibilities of the Trustees with respect to going concem are described in the relevant sections of this report. Other information The other inforniation comprises the inforn]ation included in the Report of the Trustees other than the financial statements and our auditor's report thereon. The Trustees are responsible for the other infornlation contained within the Report of the Tnle¢s. Our opinion on the financial statements does not cover the other inforn]ation and, except to the extent otherwise explicidy stated in our report, wc do not express any forni of assurance conclusion thereon. OurTesponsibility is to read the other infom]ation and, in doing so, consider whether the other inforn]ation is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit or otberwise appears to be materially misstated. If we identify such material incon51Sten¢ies or apparent mat¢rial misstatements, we are rquired to detennine whether this gives rise to a material misslatement in th¢ finan¢ial ststements themselves. If, based on the work we have perfornied, we conclud¢ that there is a material misstatement of this other inforniatlOD, we are required to report that fact. We have nothing to report in this regard. iniotts on other matters rescribed b , the Com anles Act 2006 In our opinion, based on th¢ work undertaken in the ¢ours¢ of tbe audit: the inforniation given in the Report of th¢ Trustees, which includes the Directors, R¢port and the SITategi¢ Report pr¢pared for the purposes of company law. for the financial year for which th¢ fanCIal ststements are prepared is consistent with the financial statements" and Page 25
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF THE SCOTT BADER COMMONWEALTH LIMITED the DirectOTS' Report and the Strategic Report included within the Rqiort of ilie Trustees have been prepared in accordance with applicable legal requirements. Matters on whieh Ive are re uired to re ort bi. exce tion In the light of the knowledge and understanding of th¢ group and the parent charitable company and their environm¢nt obtained in the course of the audit, we have not identified material misstatements in the Directors, Report or the Strategic Report included within the Report of the Trustees. We hav¢ nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion.. adequate accounting records have not been kept by the parent charitable company, or returns adequate for our audit have not been received from branches not visited by us; or the par¢nt charilable company financial statements ar¢ not in agreement with the accounting records and returns. or certain disclosures of Trustees. remuneration specified by law are not made. or we have not receiv¢d all the inforniation and explanations we require for our audit. rf)nsfibilities of trustees As explained more llY in the Statement of Tnle¢s, Responsibilities set out on page 24, Ihe TnteeS (who are also the directors of the ¢haritable company for the purposes of Company law) are responsible for the pr¢paration of the fii)ancial sta(em¢nts Jnd for being satisfied that th¢y give a tru¢ and fair view, and for such internal control as the Trustees detemiin¢ is n¢¢essary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or ernr. In preparing the financial statements, the Trustees are responsible for assessing the group's and parent charitable ¢ompany's ability to continue as a going conc¢rn, disclosing, as applicable, matters r¢lated to going concern and using the going concern basis of accounting unless the Trustees either intend to liquidate the group or parent charitable company or to ceas¢ operations, or have no realistic alternative but to do so. Auditor's res onsibilities for the audit of the finanefial ststements Our obj¢ctiv¢s are to obtain reasonable assurance about wh¢ther th¢ financial statements as a whole are fre¢ from material misstatement, whether due to fraud or error, and lo issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guaranlee thal an audit conducted in accordance with ISAS (UK) will always det¢ct a material misstatement when il ¢xists. Misstatements can aris¢ froin fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to infiuence the economic decisions of users taken on the basis of these fanCial staten]ents. The extent to which the audit was ¢on5idered ca able of d¢t¢etin Irre larAtfies includin fraud Irregulariti¢s are instances of non-compliance with laws and regulations. The objectives of OUT audit are to obtain sutyicient appropriate audit evidence regarding compliance with laws and regulations that hav¢ a direcl effect on th¢ determination of material amounts and disclosures in the financial statements. to perfonn audit procedures to help identify instsnces of non-compliance with other laws and regulations that may have a material ¢ffect on the financial statements. and to respond approprial¢ly to id¢ntified or suspected non-¢omplianc¢ with laws and regulations id¢ntified during the audit. In relation to fraud, the objeclives of our audil are to identify and assess the risk of material misstatement of the financial statements due to fraud, to obtain sufficient appropriate audit evidence regarding the assessed risks of material misslatement due to fraud through designing and implementing appropriate responses and to respond appropriately io fraud or suspected fraud identified during tlie audit. However, it is the primary responsibility of managemenl with the oversight of those charged with governance, to ensur¢ that the entity's operations are conducted in accordance with the provisions of laws and regulations and for the prev¢ntion and detection of fraud. In identifying and assessing risks of material misstst¢ment in r¢spect of Iegular1tie5, including fraud, the group audit engagement team and component auditors: Pag¢ 26
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF THE SCOTT BADER COMMONWEALTH LIMITED obtained an understanding of the nature of Ihe sector, including the legal and regulatory framework that the group and parent Charitable company operate in and how ihe group and parent charitable company are complying with th¢ legal and regulatory framework. inquired of managemenL and those charged with governance, about their own identification and assessment of tb¢ risks of irregularities, including any known actual, suspected or all¢g¢d instances of fraud. discussed matters about non-compliance with laws and regulations and how fraud might occur including assessment of how and where the financial stafrments may be susceptible to fraud, As a result of these procedures we consider the most significant laws and regulations that have a direct impact on th¢ financial stat¢m¢nts are FRS 102, Charities SORP {FRS 102). Companies Act 2006, Chariti¢s Act 2011, the parent charitable con]pany's governing document and tax l¢gislation. We perfornied audit pro¢¢dur¢s lo detect non- compliances which may have a nLaterial impact on the financial statements which included ieviewing the financial statements including tbe Trustees, Report, remaining alert to new or unusual transaction5 which May not be in accordance with the governing documents, inspecting CO¢Spondence with local tax authorities and evaluating advic¢ received from internal and external advisors. The most significant laws and regulations that have an indirect impact on the financial statements are those in relation to h¢alth and safety and environmental compliance. We perforn)ed audit Procedures to inquire of manag¢m¢nt and those charged with governance wheth¢r ihe group is in compliance with these laws and regulations and inspecled correspondence with licensing or T¢gulatory authorities. The group audit engagement team identified the risk of management override of controls and revenue Tecognition as the areas where the f)nancial statements were most susceptible to material misstatement due to fraud. Auditprocedures perfornied included but were not limited to testing manual journal ¢ntries and other adjustments and evaluating the business rationale in relation to significant, unusual transactions and transactions entered into outside the norn1 course of business, revieiv of accounting poh'cies in relation to revenue recognition and sample testing revenue. All relevant laws and regulations identified al a Group l¢v¢l and areas susceptible to fraud that could bave a material effect on the con501idated financial statements were communicated to component auditors. Any iiistances of non- compliance with laws and regLdations idenlified and communicated by a component auditor were Considered in our group audit approach. A rtI)er description of our responsibiliti¢s for the audit of the financial ststements is provided on the Financia] Reporting Council's website at hitp://www.frc.org.uk/auditorsre$ponsibilities. This description forn part of our auditor's report. Use of our re This Teport is made solely to the charitable 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 ihal we might state to the charitable company's members those matters we are required to state to them in an auditor's report and for no other pwyose. To the fullest extent perniitted by law, w¢ do not accept OT assume r¢sponsibility to anyone other than the charitable company and Ihe charitable company's members as a body, for our audit work, for this report, or for th¢ opinions we have fornied. GARETH JONES (Senior Statutory Auditor) For and on behalf of RSM UK Audit LLP, Statutory Auditor Chartered Accountants Riverniead House 7 Lewis Court Grove Park Leicester Leicestershire LE19 ISD 7 May 2024 Page 27
THE SCOTT BADER COMMONWEALTH LIMITED GROUP AND CHARITY STATEMENTS OF FINANCIAL ACTIVITIES (incorporaling an incom¢ and expenditure account) For the year ended 31 December 2023 Group Charity 2023 Unrestricted £?000 2023 Unrestricted £'ooo 2022 Unreqtricted £'ooo 2022 Unrestricted £'ooo Notes Income from: Donations Other trading a¢tivities'. Commer¢ial trading operations 316 305 273,301 273,301 1353 274554 304,520 304,520 363 304,883 316 305 42 347 Investment income Total income 367 Expenditure on; Raising funds.. Commercial trading operations Charitable activities (273,702) (335) (302,469) (387) (379) (444) Tot21 expenditure (274,037) (302,856) 379 (4441 Net in¢omel(expenditure) excluding joint venture income Share of net income from joint venreS Nel ineome/(expendlture) before tax for the financial year Tax payable 517 2,027 (12) (97) 15 221 197 738 (875) 2,224 (237) (12) (97) 10 Net (expenditure)lincome 137 1,987 (12 (97) Attributable to the owner Attributable to Non-controlling Interest Net (expeDdilure)/ fineome (168) 1,966 21 1,987 (13D (12) (97) Other reeognised gaiDs / {losses): Actuarial loss on defined benefit pension Change in valu¢ of hedging instrum¢nt Currency translation differences Deferred tax on other recognised gains and losses Net movemenl in funds 23 (4,061} () 0,054) 17 (13) {2,050) 90 4.692 io (5,246 772 (12 97 Attributabl¢ to the owner Atlributable to the NCI Net Movement In funds (5,277) 31 5,246 (793) 21 (772 12 (97 Total fiinds brought forward Total funds carried forward 25 25 114093 108,847 114.865 114,093 1,937 1,92S 2,034 1,937 *Unrestricted funds include designated funds and movement on thcse funds can be seen in note 25. The a¢¢ompanying accounting policies and notcs fonn an int¢gral part of thesc financial statements. Page 28
THE SCOTT BADER COMMONWEALTH LIMITED GROUP AND CHARITY BALANCE SHEETS At 31 December 2023 Group 2023 £'ooo Charlty 2023 £'ooo Notes 2022 £'ooo 2022 £'ooo Fixed assets InL2ngible fixed assets Tangible tixed assets Investment property Investments in subsidiaries Interests in joint ventures 12 13 15 14 14115 10,139 62,91M 495 7.768 58.143 495 495 495 392 73,930 414 66,820 495 495 Current asset8 Stocks Debtors Debtors greater than one year Cash at bank and in hand 16 17 18 35,675 44,649 2,058 16,866 99,248 38,279 51,398 2,499 21,611 113,787 316 1,089 1,163 1,479 405 1,494 Current liabilities Creditors: aTnounts falling due within one year 19 58,618 65,129 49 52 Net current assets 40,630 48,658 1,430 1,442 Total assets less current liabilities 114,560 115,478 1,925 1,937 Creditors: amounts falling due after more than one year Provisions 20 22 3,531 6,472 10,003 1.372 7,521 8,893 Net assets excluding pension asset 104557 106.585 1.925 1,937 Pension asset 23 4,290 7,508 Net assets 108,847 114,093 1,925 1,937 Reserves: Gelleral reserve funds Unrestricted income funds 25 108277 113.554 1,438 1,450 Designated funds Fair Value Reserve 25 487 487 487 487 Total charity funds Non-controlling interest Non- Controlling interest 108,764 114.041 1,925 1,937 25 83 52 108,847 114,093 1,925 1,937 The financial ststements on pages 28 to 65 were approved by the board of their behalf by rustees on 3 May 2024 and signed on Richard Tapp Trustee Paul Smith Trustee Company number: 496082 Thc accompanying accounting policies and not¢s fonn an integral part of these financial statements. Page 29
THE SCOTT BADER COMMONWEALTH LIMITED GROUP STATEMENT OF CASH FLOWS For th¢ year ended 31 December 2023 Notes 2023 2022 £'ooo £'oo £'ooo £'ooo Net cash provided byl{u5ed ID) operatiDg activities Taxalion re¢eivedl{paid) Net cash generated from/{u5ed) Rn operAtiDg g¢tivities 26 12,404 696 13,100 {1.224) 3.105) (4.329) Cash llows from investing activities Purchas¢ ot tangible assets Purchase of intangible asscts Procecds from disposals of tangiblc assets Dividcnds r¢¢eivcd from jomt ventures Rental incom¢ received Inter¢st received (12,072) {925} 322 222 34 376 (13,297) {8,092) 105 368 36 50 Net cash used in investing activities (12,043) (20,830) Cash flows from financing aetivitie5 Repayment of bank loans New bank loans Interest paid Net cash (used In)Igenerated from finanefing aetlvities (417) 7.802 328 1,455 (1,872) 7,474 Net deerease in cash and cash equivalents Effect of exchange rates on cash and cash equivalents Cash and cash equivalents al the beginning of the year Cash and cash equivalent5 at the end of the ycar (815) (409) 10,243 9,019 (17,685) 1,916 26,012 10.243 Cash and cash equivalents consist of- Cash at bank and in hand Bank overdrafts Cash and Cash equivalents at the end of the year 16,866 7,847) 9,019 21,611 11,3681 10,243 The accompanying accounting policies and notes form an int¢gral part of these fmancial statenlents. Within cash and cash equivalents there is a balance of £464k (2022: £459k) that is held in an escrow account. This escrow ac¢ount has been established in agre¢menl with tbe d¢fined ben¢fit pension scheme and th¢ group have been making agreed payments into ihe account. Further inforn]ation is included in note 23. Page 30
THE SCOTT BADER COMMOIYWEALTH LIMITED NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 De¢ember 2023 STATEMENT OF COMPLIANCE The Scott Bader Conllnonwealth Limited is a PTivate company, limited by guarantee, incorporated in England and Wales and domiciled in England. The company number is 496082 and the registered office is WolltOn Hdll. Wollaston, Wellillgborough, Northamptonshire, NN29 7RL. The financial statements have been prepared in compliance with Accounting and Reporting by Charlties: Slat¢m¢nt of RecomTnendcd Practice applicable to chariti¢s preparing their accounts in accordance with the Financial Reporting Standard applicabl¢ in the UK and Republic of Ireland (FRS 102) - (Charitics SORP IFRS 102)), the Financial Reporting Standard applicabl¢ in the UK and Republic of Ireland (FRS 102) and the Companies Act 2006. Principal activities are noted in the Report of the Trustees. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Thc principal accounting policies applicd in the preparation of these consolidated and separate financial stalements are set out below. These policies have bccn consislently applied to all th¢ years presente unless othcTWiSC Statcd. Basis of preparation These fall¢la1 statements ar¢ prepared on a going concern basis, under thr hi5tori¢al ¢ost convention, as modified by the measurement of certain financial assets and liabilities MsUred at fair valuc. The charitable company constitutes a public benefit entity as defmed by FRSIO2. The preparation of fmancial statements requires the use of certain critical accounting estimates. It also requires management to exercis¢ ils judgement in the process of applying the Group and Company accounting policies. The areas involving a higheT degree of judgement or complexity, or areas where assumptions and estimate5 are Significant to the financial statements are disclosed in note 3. Reduced disclosures In accordance WAth FRS 102, the ChaTity has taken advantage of the exemptions fron] the following disclosure requirements: StIOn 7 'Statement of Cash Flows, _ Presentation of a Stat¢ment of Cash Flow and related not¢s and disclosures. Going Concern When assessing the going concern principle for the Commonwealih, considerations of the Trustees include. but are nol limited to the following in relation to SBCL. the Financial position of the SBCL Group as at 31 Dccembcr 2023, the most rec¢nt cash position, the projected cashflow5 and the availability and headrnom of the financing facilities across the group, including the availability of facilitics secured in March 2023. The perforn]ance of the SBCL Group in the year to date is below last year as a result of supressea economic activity impacting Scott Bader's customers. Despite this. the SBCL Group is forecast to trade profitably and have a numb¢r of opportunitics for growth. The SBCL Group obtained a waiver from its lending partner for one of the two cov¢nanl lests required to b¢ mct quarterly for which it was not in compliance. During this challenging period. the Group Leadership Team (GLT) has generated forecasls to December 2025 undeT a variety of scenarios, including the application of prudent, worst case assumptions. On the basis of these forecastb, the Trustees remain confident that the Group will be sufficiently well capitalised for the foreseeable future. Having considered the financial foi¢¢asts. the TTUStees are confid¢nt that the SBCL Group. and therefore the Con]monwealth Group, remains a going concern. and that the results within this docurnent reprcscnt a true and fair view of th¢ position of the Group. The accounts are prepaT¢d on the going concern basis. Pag¢ 31
THE SCOTT BADER COMMONWEALTH LIMITED NOTES TO THE FtNANCIAL STATEMENTS For ihe year ended 31 December 2023 ACCOUNTING POLICIES {CONTINUED) Group financial statements and basis of consolidation These financial statements consolidate the results ofthe Charity and all its subsidiary undertakings made up to 31 December. A subsidiary is an entity controlled by the Group. Control is the power to govern the fmancial and operating policies of an entity so as to obtain benefits froTn its activities. Entities in which the group holds all int¢rest and which arc jointly controlled by the group and one or mor¢ other venturers under a contractual arrangemcnt are treated as joint VelltUs. In the group financial statements. joint ventures are accoun*d for using the equity mcthod. Where a subsidiary has different accounting policies to the Group, adjustments are made to those subsidiary financial statements to apply thc Group's accounting policies when preparing the consolid2ted fm3ncial statem¢nts. All intra-Group transactions, balances, incomc and expenses are eliminatcd on consolidation. Adjustments are madc to eliminate the profit or loss arising on transactions with associates to the extent of the Group's interest in the entity. Foreign currency (i) Functional and PT¢sentation currency The Group financial slatements are PTesented in pound sterling and rounded to thousands. The Charity's functional and presentation currency is the pound sterling. (li) Transactions and balances Foreign cUencY transactions are translated into the functional cUencY using the spot exchange rates at the dales of the trdnsactions. At each period end, foreign currency monetary jt¢ms are translated using the closing rate. Non-monetary items measured at historical cost are translated using the ex¢hang¢ rate at th¢ date of th¢ transaction and non-monetary items m¢asured at fair valu¢ are measured using the ¢xchaDge rate when fair valu¢ was determined. Foreign exchange gains and losses resulting from the settlement of transa¢lions and from the translation at period<nd exchange Tates of monetary &8s¢ts and liabililies denominated in forei currencies are recognised in the stalement of financial activities. (iii) Translation The trading r¢sult5 of Group undertakings are translated into sterling at the average exchange rates for the year. The assets and Ilabilities of overseas Lmdertakings, including goodwill and fair valu¢ adjustm¢nts arising on acquisition, are Iranslated at the exchange rate5 ruling at the year end. Exchange adjustments arising from the retranslation of opening net asseL$ and from the trdnslation of the profits or losses at averdge rates are included in oiher recognised gain5 and losses. Income recognition Income rccognition includcs incom¢ recognis¢d in thc Group'5 trading activities. Income is mcasured at the fair value of the consid¢ration received or receivabl¢ and represents the amount receivable for goods supplied or scrvtces rend¢red, net of returns, discounts and rebates allowed by thc GTOUP and value added taxes. The Group recognises income when (a) the significant risks and rewards of ownership have been transferred lo the buyer. (b) the Group retains no continuing involvement or control over ihe goods. (c) the amount of income can be measured reliably. (d) it is probable that future economi¢ b¢nefits will flow to the entily. (i) Sale of goods The risks and rewards of owneTship of goods are deemed to have been transferred when the goods are shipped to, or picked up by the customer. (li) Interest incotne Interest income is recognis¢d using the effective interest rate method. (iii) Rental income Rental income is recognised on a slraight line basis over the life of the rental period. Page 32
THE SCOTT BADER COMMONWEALTH LIMITED NOTES TO THE FINANCIAL STATEMEKrs For the year ended 31 December 2023 ACCOUNTING POLICIES (CONTINUED) Income recognition (Continued) (iv) Donalion income Donation income including donations. gifts and granls that provide ¢(Jre fvnding or of a g¢neral nature are Tecognised where there is entitl¢m¢nt, receipt IS Probable and the amount can be measured with suffici¢nt reliability. Employee benefits The Group provides a range of benefits to employees, including annual bonus arrangements. paid holiday arrangements and defined benefit and defined contribution pension plans. (i) Short terni benefits Short tenn benefits, including holiday pay and other similar non-monetary benefits, are recognised as an ¢xpense in the period in which the service is receiv¢d. (li) Defmed contribution pension plans The Group operates a number of country-specific defined Contribution plans for its employees. A defjned contribution plan is a pension plan under which the GTOUP pays fixed contributions into a separate entity. Once the contributions have been paid, the Group has no fiuther payment obligations. The contributions are recognised as an expense when they are due. Amounts not paid are shown in accruals in the balance she¢t. The assets of the plan are held sq)arately from the Group i independently admini8t¢r¢d funds. (iii) Defined benefit pension plan The Group operates a defined benefit plan for certain UK employees. This scheme was closed to future accTual from I April 2006. A defmed benefit plan defines th¢ p¢nsion benefit that the employee will receiv¢ on Tetirement, usually dependent upon several factors including age, length of service and remuneration. A defined b¢n¢fit plan is a pension plan that is not a defjned contribution plan. The asset recognised in the balance sheet in respect of the defined benefit plan is the fair value of the plan assets at the reportlDg date less the present value of Ihe defined benefit obligation at the reporting date. The defm¢d benefit obligation is calculat¢d using the projected unit credit method. Am]ually the GTOUP engages independent actharics to calculate the obligation. The present value is detern]ined by discounting the e5tirnated future payments using market yields on high quality ¢orporate bonds that are denominated in sterling and that have terms approximating the estinwted period of the future payments ('discount rate,). The fair value of plan assets is measured in accordance with the FRS 102 fair value hierarchy and in accordance with the Group's policy for similarly held assets. This includes the use of appropria* valuation techniques. The retirement benefit obligation recognised represents the deficil or surplus in the defined benefit plans. Any SUTpIus resuliing from this calculation is limited to the present value of any economic benefits available in the forn) of refunds from the plan or reductions in tllre contributions from the plan. Actuarial gains and losses arising from exp¢rien¢e adjustments and Changes in actuarial assumptions are charged or cr¢dited lo other r¢¢ognised gains and losses. Th¢se amounts together with the return on plan assets, less amounts included in nct interest. are disclosed as 'Actuarial (lossygain on d¢fmed benefit pension.. The cost of the defined benefit plan, recognised in profit or loss as employee costs, except where included in Ihe cost of an asseL comprises: (a) Ihe increase ill pension benefit liability aTising from employee service during the period,. and (b) the cost of plan introductions, benefil Changes, curtailrnents and settlements. The net interest cost is calculated by applying the discount rate to the net balance of the defmed benefit obligation and the fair value of plan assets. This cost is recognised in profil or loss as 'Interest payable and similar charges,. (iv) Other r¢tir¢m¢nt benefits Scott Bader France is required by French law to provide a lump sum to employees on retirement, based on length of service with the employer. The provision is calculated according to French government assumptions of life expectancy and a standard discount rate. The provision is applied to those employees with less than 15 years until retirement because it is assumed that some employees will leave before reaching retirement age. Pag¢ 33
THE SCOTT BADER COMMONWEALTH LIMITED NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 December 2023 ACCOUNTING POLICIES (CONTINUED) (v) Anllual bonus plan The Group operates a number of annual bonus plans for employees. An expense is recognised in the profit and loss account when the Group has a legal or constnjctive obligation to make payments under the plans as a result of past events and a reliable estimate of the obligation can be made. Taxation Taxation expense for the period comprises cuent and deferred tax recognised in the reporting period. Tax is recognised in the statemenl of financial activities, except to the extent that it relates to items in other recogni5ed gains and losses. In this case, tax is also included in other recognised gains and losses. Current or deferred taxation assets and liabiIities are not discounted. (i) cuellt tax Cuffent tax is the amount of incon]¢ tax payabl¢ in respect of th¢ tsxable profit for the year or prior y¢ars. Tax is calculated on the basis of tax rates and laws that have been ¢nacted or substantively enacted by the period end. (ii) Def¢ed tan Deferred tax arises from timing differences that are differences between taxabl¢ profits and total net income as stated in the financial statements. These timing differences aTise fron] th¢ inclusion of in¢ome and expenses in tsx assessments in periods different from those in which they are recognised in financial statements. Deferred tax is recognised on all timing differences ai the reportlng date. Unrelieved tax losses and other d¢ferred tax assets are only recognised when it is probable that they will be recovered against the reversal of defeed tax liabilities or other ture taxable profits. Deferred tax is measured using tax rates and laws that have b¢en enacted 01 substantively enacted by the period end and that are ¢xpect¢d to apply to the rev¢rsal of the timing differenc¢. (tii) Deferred tax in business combinations Deferred tax is recognised on differences between the value of assets (other than goodwill) and liabilities recognised in a business combination accounted for using the purchase method and the amounts that can be deducted or assessed for tax, considering the manner in which the carrying amount of the &8set or liability is expected to be recovered or settled. The deferred tax recognised is adjust¢d against goodwill or negative goodwill. (iv) Offsetting deferred tax assets and liabilities Deferr¢d tax assets and liabiliti¢s are offset where there is a legally enforc¢able right to offset current tax assets and liabilities and where the deferred tax balances relate to the same taxation authority. Buslness eombinatlons and goodwlll Business combinations are accounted for by applying the purchase method. The cost of a business combinalion is the fair value of the consideration given, liabilities incurr¢d or assumed and of equity instrum¢nts issu¢d plus th¢ costs directly attributabl¢ to thc business combination. Wh¢r¢ control is achieved in stag¢s the cost is thc consideration at the date of each transaction. On acquisition of a business. fair valu¢s are attributed to the identifiable assets, liabilities and contingent liabilities unless the fair valu¢ cannot be measured reliably, in which case the value is IncoOrated in goodwill. Where the fair value of contingent liabilities cannot b¢ reliably measured they ar¢ disclosed on the satne basi5 as other contingent liabililies. Goodwill recognised represents the exc¢ss of the tair value and directly attributable costs of the purchase consideration over the fair values to the Group's interest in the identifiable net assets, liabilities and contingent liabililies acquired. On acquisition, goodwill is allocated to ¢ash-generdting units ('CGU's') that are expected to benefit from the combination. Goodwill is amortised over its expe¢t¢d useful life. Where the Group is unable to make a r¢liabl¢ estimate of useful life, goodwill is amortised up to a period of O to 10 years. Goodwill is assessed for impairn)¢nt when there are indicators of impainnent and any impairn]¢nt is charged to the statem¢nt of financial activities. Page 34
THE SCOTT BADER COMMONWEALTH LIMITED NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 December 2023 ACCOUNTING POLICIES (CONTINUED) Intangible assets Intangible assets are stated at cost or fair value at acquisition date less accumulated amortisation and a¢¢umulated impairnient losses. Amortisation is calculated, using the straighi-line method, to allocate the depreciabjc amount of the assets to their residual values ovw th¢ir estimated useful lives. of up to 10 years, in line with the Directors. assessment of the beneficial period. Goodwill Technology Custotller Lists O- Ioyears O- Ioyears O- 10 years Tanglble red asset5 and depreciation Tangible assets are stated at C05t less accumulated depreciation and ac¢umulated impairnient losses. Deprecialion is calculated, using th¢ straight-line method, to ajlocate the depreciable amounl of th¢ assets to their residual values over their estimated usefijl lives. (i) Land & buildings Land and buildings are stated at cost (or d¢¢m¢d cost for land and buildings held at valuation at the date of transition to FRS 102) l¢ss accumulated depreciation and accumulated impaimient losses. Leasehold properties are amortised in equal instalments over the lesser of the unexpired tenn of the relevant lease or fifty years, except that prerniums paid OT receivable on the acquisition of le&8ehold properties applicable to rental benefils are wrAtten off over the period to the f]TSt open market rent review. (li) Plant and ma¢hinery and fixtures. fittings, tools and equipment Plant and nlacbinery and fixtures, fjttings, tools and equipment are stated at cost less accumulated depreciation and accumulated impairnient losses. (iii) Depreciation and r¢sidual values Freehold land is not depreciated. Depreciation on other assets is calculated. using the straight-line method, to allocate th¢ depreciable amount to their residual values over their estimated useful lives. as follows". Freehold buildings 50 years Short leasehold land and buildings over the lease period Plant and equipm¢nt 3-20 years Motor vehicles 4-5 years Assets in th¢ course of construction ar¢ stated at cost. These assets are not d¢preciated until they are available for use. Impgirment of fixed assets An assessment is made at each reporting date of whether there are indicalions that a fixed asset may be impaired or that an impairn)ent loss previously recognised has fully or partially revers¢d. If such indications exist, the Group estimates the re¢ov¢r&ble amount of the asset or. for goodwill, the recoverable amount of the cash-generating unit to which th¢ goodwill belongs. Shortfalls between the carying value of fixed assets and their recoverable amounts, being the higher of fair value less costs to sell and value-in-use, are recognised &s impairnient losses. Impairn)ents of revalued assets are treated as a revalualion loss. All other impairnient losses are recognised in profit or loss. Any impairnjent loss recognised for goodwill is not reversed. For fixed assets other than goodwill, recognised impairnjent losses are reversed if, and only if, the reasons for the impairn)ent loss have ceased to apply. Reversals of impairnient losses are recognised in profit or Ioss OT, for revalued assets, as a revaluation gain. On reversal of an impairn]ent loss, the depreciation or amortisation is adjusted to allo¢ate the asset's revised carrying amount {l¢ss any residual value) over its remaining use1 life, Leased asset5 Al inception, the Group a55esses agreements that transfer the right to use assets. The assessment considers whether the arrangement is, or contains, a lease based on the substance of the arrangement. Page 35
THE SCOTT BADER COMMONWEALTH LIMITED NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 December 2023 ACCOUNTING POLICIES (CONTINUED) Leased assets {continued) (i} Finance l¢ased assets Leases of assets that transfer substantially all the risks and rewards incidental to ownership are classifjed as finance leases. Finance leas¢s are capitalised at comn]en¢ement of the lease as assets at the fair value of the leas¢d asset or, if lower, the present value of the minimujn lease payments calculated using the inter¢st rat¢ implicit in the leas¢. Where the implicit rale cannot be deternjined the Group's incremental borrowing rate is used. Incrementsl direct costs incurred in negotiating and arranging the lease, are included in the cost of the asset. Assets are depreciated over the shorter of the lease tern] and the estimated useful life of th¢ asset. Assets are &ssessed for impaimient ai each reporting date. (i) Finance leased assets (continued) The capitsl element of leas¢ obligations is recorded as a liability on inception of the arrangcment. Lease payments are apportioned between capital repayment and finance cliarg¢. using th¢ effective interest rate method, to produce a constanl rat¢ of charge on th¢ balance of the capital repayments Outstanding. {ii) Operating leased assets Leases that do not transfer all the risks and rewards of ownership are classified as operating l¢ases. Payments under operating leases are charged to the profit and loss account on a straight-line basis over the period of the lease. (iii) Lease incentives Incentlves Teceived to enter into a finance lease reduce the fair value of the asset and are included in the calculation of present value of minimum lease payments. Inc¢ntives rec¢ived to enter into an operating lease are crediied to th¢ profit and loss account, to r¢duce the l¢ase expense, on a straight-line basis over the peTiod of the leas¢. The Group ha5 taken advantag¢ of the ex¢rnption in respect of lease incentives on leases in existenc¢ on the date of transition to FRS 102 (l January 20 14) and conlinues to eredit such lease incentives to the stat¢ment of financial activities over the period to the first review date on whicb the rent is adjusted to market rates. Ini'estments Charity investment in subsidiaries and joint ventures are held at cost less accumulated impairn]ent losses. Group investments in joint ventures are stated in the group balance sheeÉ at the group's sbaTe of their net assets. The group's share of profits less losses of joint ventures is included in the group siateinent of financial activities. Stocks Stocks ar¢ stat¢d at the lower of ¢051 and estimated selling price less costs to sell. Stocks are recognised as an ¢xpense in the period in which the r¢lated revenue is r¢cognAsed. Cost is detennined on the first-in, first-out {FIFO) melhod. Cost includes the purchase price, including taxes and duties and transport and handling directly attributable to bringing the stock to its present location and condition. The cost of nllufactured finish¢d goods includes design costs, raw materials. direct labour and othw direct costs and related production ovejfieads (based on norn]al operating capacity). At the ¢nd of each Teporting period, stock is assessed for impairnienL If an item of stock is impaired. the identifi¢d stock is r¢duced to its selling price less ¢osts to complete and sell and an impainnent charge is recognised in the statement of financial activities. Where a reversal of the impairnient is required tlie impairnient charge is reversed, up to the original impalrment loss, and is recognised as a credit in the statemet)t of financial activittes. Page 36
THE SCOTT BADER COMMONWEALTH LIMITED NOTES TO THE FINANCIAL STATEMENrs For the year ended 31 Decernber 2023 ACCOUNTING POLICIES (CONTINUED) Casb and easb equlvalents Cash and cash equivalents includes cash in hand deposits held at call with banks, other short-tern) highly liquid Investments with original maturities of three months or less and bank overdrafts. Provisions contingencie$ (i) Provisions Provisions are recognised when the Gn>up 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 sett]e 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 Tequired in settlemenl is delemJin¢d by considering the class of obligations as a whole. A provision is recognised even if the likelihood of an outflow with respect to any one item included in the same class of obligations might be small. Provisions ar¢ m¢a5ur¢d at the present value of th¢ expenditures expected to be requircd to s¢ttl¢ the objigation using a pre- tax rafe that reflects cwr¢nt market assessments of the time value of money and the risk8 specific to Ihe obligation. The increase in the provision due to passage of time is r¢cognised as a fmance cost. (li) Conlingencies Contingent liabilities are not recognised, except those acquired in a business combination. Contingent liabilities arise as a result of past events.when it is not probabl¢ that there will be an outflow of resources OT that the amount cannot be reliably measur¢d at the reporting date. or when the existence will be confinned by the occurrence or non-occurrence of uncertain future events not wholly within the Group's control. Contingent liabilities are disclosed in the financial statements unless the likelihood of an outt]ow of resources is remote. Contingent assets are not recognised. Contingent assets are dIlOSed in the fmancial statsments when an iDAow of economic benefits is probabl¢. Flnanefial Instruments The Group chosen to adopt Sections I l and 12 of FRS 102 in respect of financial instruments. (i) Financial ass¢ts Basic financial assets, including trade and other debtors, amounts owed by group undertakings, cash and bank balances and listed investments are initially recogni5ed at transaction price, unless the arrangement constitutes a financing transaction, where the trnnsaclion is measured at the presenl 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 ¢a¢h reporting period, financial ass¢ts measured at amortised cost are assessed for objective evidence of impairnient. If an asset is impaired, the impairn)ent loss is the difference between the carrying amount and the present valu¢ of the estimated cash flows discounted at ihe asset's Original effective interest rate. The impairnient loss is TognISed in profit or Ios8. Financial assets are derecognised when {a) th¢ contractual rights to the cash flows from the asset expire or are settled, or (b) substantially all the risks and rewards of the owmership of the asset are transferred to another party or (C) despit¢ having retained some significant risks and rewards of own¢rship. 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. (li) Financial liabilities Basic financial liabilities, including trade and other creditors, bank loans, amounts owed to group undertakings, are initially recognised at transaction price, unless the arrangement constitutes a financing transaction, where the debt inslrnment is measured at the present value of the future receipts discounted at a market rate of interest. Debt instnllnents are subsequently ¢WTied at amortised cosl, using th¢ ¢ff¢ctive interest Tate method. Page 37
THE SCOTT BADER COMMONWEALTH LIMITED NOTES TO THE FtNANCIAL STATEMENTS For the year ended 31 December 2023 ACCOUNTING POLICIES (CONTINUED) (li) Financial liabilities (continued) Bills of exchange are recognised at face value and recorded at amortis¢d cost until the date of maturity and the payment against it is realised. Trade cr¢ditors are obligations to pay for goods or servic¢s that have been acquired in the ordinary cours¢ of business from suppliers. Accounts payabl¢ are classified as Current liabilities if payment is due within one year OT less. If not, tliey are presented as n0n-¢uent liabilities. Trade creditors are recognised initially at transaction price and subsequently measur¢d at amortised cost using the effective interest method. Derivatives, including interest rate swaps and foThvard forei exchange contracts, are not basic fmancial instruments. Derivatives are initially Tecognised at fair value on the date a derivative contract is entered into and are subsequently re- measured at their fair value. Changes in the fair value of derivatives are recognised in profit or loss in finance costs or finance income as appropriate, unless they are included in a hedging arrangement, in which case th¢y flow through Other Comprehensive Income. Financial liabilities are derecognised when the liability is extinguished, that is when the contradual obligation is discharged, Cancelled, or expires. Research and development ¢ost8 Expenditure on research and development is written off as incued. Fund accounting General funds are unreslricted n8 which ar¢ available for use at the dis¢r¢tion of the Trnste¢s in furtherance of the general objectives of tbe Charity and which have not b¢en designated for oiher purposes. Designated funds comprise unrestricted funds that have been set aside by the Trustees for particulaT purposes. If applicable, the aim and use of each designated fund is set out in the notes to ihe financial slaternents. All funds are general except for the fair value res¢rve which 15 a designated fund. Expenditure Expenditure is recognised when a liability is incurred. Contractual arrangements are recognised as goods or services are supplied. Other payments are recognised when a conslrnctive obligation arises that results in the payment being unavoidable. Costs of raising funds ar¢ those costs incurr¢d in commercial trading activities. Charitable activities include expenditur¢ associated with th¢ Commonwealth. Governance costs include those incurred in the governance of the Charity and its assets and are primarily associated with constitutional and statutory requirements. Charitable donations and grants are account¢d for in ibe year of payment or when approv¢d and the recipient has been inforn]ed in TItIllg thal th¢ donation is to be made unconditionally, albeit that payment may be in a following accounting period. Wbere it has b¢¢n agr¢ed to mak¢ such unconditional donation5 or grants to charity in future years, thi5 is included in the accounts as a liability. Investment property Investment properties are initially re¢ognised at cost which includes purchase cost and any directly attributable expendIre. Investment properties are Carried at taiT value with Changes in fair value being recognised in the statement of financial activities. The cumulative fair value movemenl is presented in a Fair Value Reserve (designated fund). Page 38
THE SCOTT BADER COMMONWEALTH LIMITED NOTES TO THE FtNANCIAL STATEMETrtrs For the year ended 31 December 2023 CRITICAL ACCOUNTING JUDGEMENTS AND ESTIMATION UNCERTAINTY Estimates and judg¢ments are continually evaluated and are based on historical experience and other factors, including expectations of events that are believed to be reasonable under the ¢ircumstances. Critical accounting estimates and assumptions The Group makes estimates and assumptions concerning the future. Th¢ resulting accounting c5timates will. by definition, seldoTn cqual the related actual rcsults. The eslimates and assumptions that have a significant risk of causing a material adjustrnenl to thc canying amounts nf asscts and liabilities within the next financial year are addrcssed below. (i) Impairment of debtors (note 17) The Group makes an cstimale of the recoverable value of trade and other dcbtors. When assessing impaiTment of tradc and other debtOTS, management considers factors including the current crcdit rating of the debtor, the ageing profile of debiors and historical experience. {ii) Provisions (note 22) Provisions are recognised when the (iroup has a present legal or constructive obligation as a result of past events. it is probable that an oufflow of resources will be required to settle the obligation. and the amount of the obligation can be estimated reliably. These provisions require management's best estimate of the costs that will be incurred based on legislativ¢ and contractual r¢quirements. In addition, the timing of the cash flows and the discount ratrs used to establish nei present value of the obligations require management's judgement. (iii) Defined benefit pension scheme (note 23) The Group has obligations to pay pension benefits lo certain employees. The cost of these benefits and the present value of the obligation depend on a number of factors, including. life expectancy, salary increases, asset valuations and the discount rat¢ on Corporate bonds. Management estimales these factors in detern]ining the net pension obligation in the balance sheet. The assumptions fleet historical experience and current trends. (iv) Accruals for customer claims (note 19) Accruals are made for customer claims to the extent that they are expected to b¢ payable based upon th¢ historical pattern of customer claims and any known urtinsured product liability. (v) ContiT)gent consideration (note 12) The bToup fair values contingent considciation based on latest available inf0mtion as detailed in not¢ 12. AIYALYSIS OF TOTAL INCOME Group 2023 £'ooo Charity 2023 £'ooo 2022 £'ooo 2022 £'ooo External tUTnovcr of Scott Bader Company Limit¢d and its subsidiarics Investment iDCQTnc Donation from Scolt Bader Company Limited 273,301 304,520 1253 363 51 316 367 42 305 347 274,554 304,883 External turnover of Scott Bader Company Lirnited and its subsidiari¢s by geographical mark¢t is analysed below., 2023 2022 £'ooo £'ooo 41,896 51,706 JOO,468 135,202 130.937 117,612 273,301 304,520 UK and Eire Continental Europe Rest of World Page 39
THE SCOTT BADER COMMONWEALTH LIMITED NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 December 2023 INVESTMENT INCOME Group Charity 2023 £'ooo 2023 £'ooo 2022 £'ooo 2(122 £'i)00 Rentsl income llltercst receivabl¢ and similar income 34 1,219 1253 34 17 51 36 356 363 42 ANALYSIS OF TOTAL EXPENDITURE GTOUP 2022 £'ooo Charity 2023 2022 £'ooo £'ooo 2023 £'ooo Raising funds.. stsff costs (including related costs) {not¢ I l ) Other trading costs Totsl expenditure on cornmercial trading op¢rations 46.171 227,531 273,702 40,885 261,584 302.469 Charitable activities (note 9) Total expenditt]Te 335 274,037 387 302,856 379 379 NET INCOMEI(EXPENDITURE) Group 2023 Charity 2023 2022 2022 Net incom¢l(expenditure) is stated afier charging / (crediting) the following items- Research and d¢velopment DeprlatIOn and amortisation N¢t inter¢st on DB Pension Scheme Loss on disposal of tangible assets Impairn]ent of trade debtors Impairn]ent of slocks Operating l¢ase charg¢s Foreign exch&nge loss Auditor's remuneration: Fees payable to the Charity's auditors: for the audit of the Charity's financial statements for the audit of the Chlty,5 subsidiaries Other non-audit fees £•ooo £'ooo £'ooo £'ooo 3,354 6,621 (383) 4,376 5,959 (306) 33 185 722 2,753 510 {99) (154) 1,706 1,172 23 373 150 22 274 79 23 22 The audit fees of the Charity itself are paid by Scott Bader CompaDy Limited. INTEREST PAYABLE AND SIMILAR CHARGES Group 2023 £'ooo 2022 £'ooo Interest expense on bank loans and overdtafts Interest expense on other loans Total interest payable and similar ¢haTges 1,370 85 1.455 307 21 328 Page 40
THE SCOTT BADER COMMONWEALTH LIMED NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 DecembeT 2023 EXPENDITURE ON CHARITABLE ACTIVITIES The Scott Bader Commonwealth Limited has a policy of making grants to organisations and not individuals. Infonnation about the charitable donations (grants) made by The Scott Bader Commonwealth Lirnited is given below. As advised earlier in the report, fidS are made available to all ihe companies in ihe Scott Bader Group Iproportionate to the number of people employed at each location). Via small Charity committees (if they choose) they Ihen submit applications via the grant management tool OPTIMY, which was introduced to simplify and streamline the grant making process. The Trustees are aware that some locations prefer to support the same charities year on year, but consider it is acceptable to forni long tern) relationships witb the chariiies that they CODsider are looking after the welfare of those less fortunate in the Communities where they operate. Commonwealth Community Hr4rdship Fund 2023 £?000 None In the prior year. th¢ charity made 9 grants to charitable institutions totalling £37k under the Commonwealth Community Hardship Fund. UK Fund (Glocal Fund) Charity Name 2023 £'ooo 14.9 UK Nomination Scheme Small donations to support small local charities with their fiJnd- raising aclivities Acorn Early Years Foundation (Ed) Action for Childr¢n (P) Independent Provider of Special Education Advice {IPSEA) (Ed) Charnwood 20..20 (Love for Life) (Ed) Sal's Shoes (P) Spencer Contact (P) Th¢ Lewis Foundation (P) The Lowdown (Ed) The Running Charity (P) We Mind & Kelly Matters (Ed) 67.4 In the PTior year, the chaTity made 25 grants to charitable institutions totslling £120k under the UK Fund. Jreland (Gloeal Fund) Charlty Name 2023 £9000 Barnardo's (Ed) Extern Ireland (Ed) 4J In the prior year, the chaTity made one grant to a chalitable institution in Ireland totalling £lk. Page 41
THE SCOTT BADER COMMONWEALTH LIMITED NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 December 2023 EXPENDITURE ON CHARITABLE ACTIVITIES (CONTINUED) FraD¢e (Glocal Fund) Charity Name 2023 £'ooo Small donations La Bonne Casse (P} Federation Somme Secours Populaire (P) CRE2ADO (Ed) L¢8 Terrasses Des Bords De Somme (En) UDAF (P) SOUC (Ed) In tbe prior year, the charity made I I grants lo charitabl¢ institutions in France tolalliDg £46k. Croatia {Glocal Fund) Charity Name 2023 £yooo Mali Zmaj (P) Centar Za Rehabilitaciju Stanci¢ (Ed) MS Pilates (Ed) 19.0 In the prior year, the charity made 6 grants to charitable institutions in Croatia tolalling £31k. South Afrlca (Gloeal Fund) Charlty Nan)e 2023 £'ooo Africall Wanderers Football Club Academy {Ed) Han]marsd&le Cato Ridge Developtnent Association (P) Hammarsdale Athletics Club (P} Inqophamlando SeTvice Center foT the Ag¢d (P) Lulama TTUSt (En) Okhule Edu-care Centr¢ (Ed) Sakhisizwe Creche and Pre-school (Ed) Bongimpilo Creche and Pre-school (Ed) Thingo Youth Developmcnt Centre (P) Tholulwazi Creche and Pr¢-School (Ed) 15.0 In the prior year, th¢ charity made 12 grants to charitablc institutions in South Africa tolalling £28k. Dubai (Glocal Fund) Charity Name 2023 £'ooo MAAN Education & Hcalth Devclopmenl Organisation (Ed) Royal Commonw¢alth Society for th¢ Blind (Ed) Ruchika Social Service Organisation (P) SOS Children's Village Philippines (Ed) The Rainbow Centre Sri Lanka (Ed) Trnst for lh¢ Rehabilitalion tor the Paralysed (Ed) Marhaishi Karve Stree Shikshan Samstha (Ed) 22.7 In the prior year, the charity made I I grants to charitable institutions in Dubai totalling £39k. Page 42
THE SCOTT BADER COMMONWEALTH LIMITED NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 December 2023 EXPENDITURE ON CHAIUTABLE ACTIVITIES (CONTINUED) Germany {Glocal Fund) Charity Name 2023 £?000 Art7E Ohne Grenzen (P) In the prior year, the charity made one granl to a charitable institution in Gernuny totalling £3k. China (Gloeal Fund) Charity Name 2023 £'ooo Shanghai Charity Foundation (Ed) In the prior year, the charity made on¢ grant to a charitable institution in China totallillg £7k. USA {Gloeal Fund) Charlty Name 2023 £'oo Nomination Scheme Small donations In the prior yeaT, the charity mad¢ two grants to charitablc institutions in USA totalling £1 Ik. Spaln (Glocal Fund) Charity Name 2023 £'ooo Fundacio Privada Catalana Corntal (Ed) In the prior year. the charity made one grant to a charitsble institution in Spain totalling £4k. Czech Republi¢ (Glocal Fund) Charity Name 2023 £'ooo Cz¢ch Blind United (Ed) Hclppes Centnlm (Ed) Nadace Jedlickova Ustavu (P) In the prior year, th¢ charity made three grants to charitable institutions in Czech Republic totalling £5k. Pag¢ 43
THE SCOTT BADER COMMONWEALTH LIMITED NOTES TO THE FtNANCIAL STATEMENTS For the yeaT ended 31 December 2023 EXPENDITURE ON CHARITABLE ACTIVITIES (CONTINUED} Canada (Gloeal Fund) Charity Name 2023 £?000 Centre d'ecoute et d¢ Prevention Suicide Drnmmond (Ed) Comptoir Alimentare Drummond (P) Fondation Rene Verrier (P) La Tablee Populaire IP) In th¢ prior year, the charity made six grants to charitable institutions in Canada totalling £14k. Australia (Glocal Fund) Charity Name 2023 £'ooo Zero2Hero (Ed) In the prior year, the charity made two grants to charitable institutions in Australia totalling £5k. Japan (Glocal Fund) Charity Name 2023 £'ooo Non¢ In the prior year, the charity made on¢ granls to a charitable institution in Japan totalling £3k. Sweden {Glocal Fund) Charity Name 21123 £'ooo BarncancerFonden (Ed) Nene Valley Care Trust {Ed) In the Prior year, the charity made two grants to charitable institutions in Sweden totslling £5k. Illdia (Glo¢al Fund) Charhty Name 2023 £91)00 Frank Water (En) In the prior year, the charity made no granls to charitsble institionS ID India. Page 44
THE SCOTT BADER COMMONWEALTH LIMITED NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 December 2023 EXPENDITURE ON CHARITABLE ACTIVITIES (CONTINUED) Italy (Glocal Fund) Charity Name 2023 £'ooo Children ID Crisis Italy (Ed) In the prior year, the charity made no grants to charitable institutions in Italy. PrIdent'S Fund Charity Name 2023 £'ooo None In the prior year, the charity made 10 grants to Charitable institutions totalling £8k under the President's Fund. Research Grants Charity Name 2023 £'ooo EOA Knowledge Programme 11.8 In the PTior year, the charity made 2 research grants to charitable institutions iotalling £15k. Centenary Fund Charity NAme 2023 £'ooo Carers Worldwide (P) Hands Off foundation (P} The Karen Hilltribes Trust (P) The Mud House Children's Foundation (P) 25.0 25.0 25.0 25.0 ioo.o In the prior year, the Charity made no grants lo Charitable institutions under the Centenary Fund. Godric Bader Fund Charity Name 2023 £'ooo Quaker United Nations Office (QUNO) Other small grants In the prior year, the charity made no grants to charitable institutions under the Godric Bader Fund. Pag¢ 45
THE SCOTT BADER COMMONWEALTH LIMITED NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 December 2023 EXPENDITURE ON CHARITABLE ACTIVITIES (CONTINUED) Other grants Charity Name 2023 £'ooo DEC Turkey-syria Earthquak¢ Appc81 Northamptonshire Communiiy Foundalion In the prior year, the charity made no other grants to charitable institutions. 2023 £'ooo 2022 £'ooo Total direct charitable expenditure (grants payable) 321 382 Support Costs: GoveTnance costs 14 Total charltable expenditure (Group) 335 387 Add: Group cost recharges 57 Total Charitable expenditure (Charily only) 379 Page 46
THE SCOTT BADER COMMONWLiLTH LIMITED NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 December 2023 10. TAXATION The Commonwealth is registered as a Charity and as such is exempt from Corporation Tax. However tax is payable by Scott Bader Company Lirnited and its. subsidiaries. The below notes relate specifically to the SBCL Group tax position. a) Tax expense included in profit or lo$$ 2023 £'ooo 2022 £'ooo Current tax: - UK Corporation tax on profits for the year Foreign co4)oration tax on profits for the year - Adjustment in respect of prior periods Group and total current tax Deferred tax: Change in tax rate Origination and reversal of timing differences Adjustment in respect of prior periods Group and total deferred tax 206 1,749 346 2JOI (i) 483 (1,413) (931) {136) (1,334) 44 (1,426) (81} (229) 1,478 1,168 Group current tax Group deferred tax Group tax on profit on ordinary activities 2,301 (1,426) 875 (931) 1,168 237 b) Tax expense included in other comprehensive income 2023 2022 £'ooo D¢feed tax: Change in tax rate Origination and reversal of timing differences Total tax credit included in oth¢r Comprehensive income 61 955 603 1.910 2,513 1,015 Page 47
THE SCOTT BADER COMMONWEALTH LIMrrED NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 December 2023 10. TAXATION {CONTINUED) (c) Recon¢iliatioD of tax charge The tax assessed for the year is higher (2022.. low¢r) than the standard rate of ¢OryratIon tax in the UK at a blended rate of 23.50/0 (19% from l January 2023 to 31 March 2023 and 25 / from l Apil 2023) {2022.. 190/0). The differences ar¢ ¢xplain¢d below: 2023 £'ooo 2022 £'ooo Total nel incorne before tsx for the financial year 738 2,224 Profit on ordinary activities al standard rale of corporation taxation in the UK: 23.50/tr (2022.. 19/) Effects of: Foreign subsidiary profits within zero tax rate regime Other adjustments in respect of foreign tax rates Expensesl(income) not d¢ductibl¢ for tax purposes Unrecognised defeed tax Witholding tax suffered Re-measuremenl of def¢ed lax (change in tax rats) Adjustment in respect of prior periods Group tax on profit on ordinary a¢tivitie5 173 423 (704) (179) 317 976 38 (136) 390 875 (215) 49 (275) 271 (81) 65 237 Th¢ Effectiv¢ Tax Rat¢ (ETR) of the Group (excluding adjustmenls in respect of prior periods) increased by 57.50/0 to 64.9 /0 (2022: 7.40/0). Due to the d¢creas¢ in the SBCL PBT for the year to £749k (2022.. £2,322k), profit mix and local tax rates have a much larg¢r impact on ETR. The impact of profits for Scott Bader Middle East being within a z¢ro tax regime was a d¢crease in ETR by 94.ofj/o (2022: 9.311/0). Th¢ impact of other local tax rat¢s outside of the UK on ETR was a decrease in ETR of 23.90/0 {2022: an increas¢ of 2.10/0). Other faclors driving the ETR for the year were UK capital allowances super deductions (reducing ETR by 7.10/0), ¢xpenses not deductible for tax purposes (increasing ETR by 50.80/0). non-recognition of deferred tax assets and the reduction of defeed tax assets recognised only on consolidation (increasing ETR by 130.3th/o) and the impact of changes in tax rates on deferred tax balances (reducing ETR by 18.2 /•). Change in Corporatlon Tax rate The UK Corporatioii Tax rate incr¢ased from 190/0 to 250/0 on l April 2023. This tax Tate was enacted on 10 June 2021 and has been reflected in the opening UK deferred tax balances as at l January 2023. A blended rat¢ of 23.50/. has been applied to rnovements in the year. Page 48
THE sco BADER COMMONWEALTH LIMITED NOTES TO THE FtNANCIAL STATEMENTS For the year ended 31 December 2023 11. ANALYSIS OF STAFF COSTS The charity employs 3 employees (2022: 2}. £4 Ik of staff costs were recharged to SBCW from SBCL in the yeaT (2022: £46k). The following are disclosures for the Group. 2023 £'ooo 34,027 3,323 1,729 4,537 2,374 181 46,171 2022 £'ooo 31,561 401 1.706 4,782 1,915 520 40,885 Wages and salaries Staff bonuses Other staff benefits Social security costs Pension costs- current service cost Redundancy costs Expenses reimbursed to the Trustees in ihe year were £3.8k (2022: £4. Ik), relating to travel and subsistence for 5 Trustees (2022.. 5). In accordance wilh nornial commercial practice, the Group has purchased insurance to prolect Truste¢s and otTicers from claims arising from negligent acts, eOrS or omissions occurring whilst on Charity business. It is not possible to quantify the cost of this insurance as it is part of a combined policy. The Trustees of the Charity do not receive remuneration in their role as Trustees of the Charity. Employee elected Trustees (Benjamin Penney, David B1k and Juliette Delprat} receive remuneration for their op¢rational roles in the SBCL Group that they are employed, with th¢ amount received noted below for their period as TStee. 2023 £'ooo 186 io 2022 £'ooo 134 Basi¢ Salary Pension contributions and other benefits Bonuses 26 205 160 The remun¢ration of key management personn¢l of the Group was £2,157k (2022: £1,963k). This includes Truste¢s' remuneration noted above. Key managemenl personnel are defined by iheir involvement within the day-to4ay decision making of the Group strategy and comprise of the Group Leadership Team (GLT) and Regional Business Leaders. There are no Trustees to whom retirement benefits are accruing. Pag¢ 49
THE SCOTT BADER COMMONWEALTH LIMITED NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 December 2023 11. ANALYSIS OF STAFF COSTS (CONTINUED) The number of employees whose total employee benefits {ex¢luding employer pension costs) exceeded £60,000 during the year for the charitable group was.. 2023 Number 44 29 13 20 2022 Number 33 22 17 14 £60.001 _ £70.000 £70,001 _ £80,000 £80,001- £90.000 £90,001- £100,000 £ioo.ooi - £1 10,000 £110,001- £120,000 £120,001- £130,000 £130,001- £140.0 £140,001 - £150,0(x) £150,001- £160.0(M) £160,001- £170,0(M) £170,001- £180,000 £180,001- £190.000 £190.001- £200,000 £200,001- £210,000 £250.001- £260,000 £270,001- £280,000 £330,001- £340,000 £370,001- £380,000 io 149 iio The average number of persons employed during the period by geographical area was as follows: 2023 Nllmber 334 221 279 834 2022 Number 328 UK and Eire Continental Europe Rest of World 219 220 767 The average number of persons employed by the Group by activity was &s follows.. 2023 Number 141 52 524 117 834 2022 Number 109 53 453 152 767 Administration R¢search & Dcv¢lopmcnt Manufacturing & Distribution Sales & Marketing Page 50
THE SCOTT BADER COMMONWEALTH LIMITED NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 December 2023 12. INTANGIBLE FIXED ASSETS Group Goodwill Customer Ilst$ £'ooo 1,308 Technology Group Total £'ooo £*ooo £'ooo Cost at l January 2023 Additions Difference on exchange Cost at 31 December 2023 1,752 2,928 (127) 4.553 7.382 925 (514) 7,793 10,442 3,853 {770} 13,525 (129) 1.179 Accumulated Amortisation at l January 2023 Charge for the year Difference on exchange At 31 Deeember 2023 1,415 88 86) 1,417 97 243 14 1,162 623 {170) 1,615 2,674 954 (242) 3J86 354 1¥4et book value at 31 Deeember 2023 Net book value at 31 Decemb¢r 2022 3,136 337 825 1,211 6,178 6,220 10,139 7,768 Assets in the course of conslrnction and on which amortisation has y¢1 to commence are included in the cost of Technology to the value of £2,753k (2022: £1,906k). Amortisation has been included within expenditure on conllnercial trading operations. Goodwill additions represent the fair value movement of the contingent consideration associated with Ibe 2022 acquisition of Scott Bader India. The fair value of the contingent consideration is based upon the likelihood of a rolling 12-month targ¢t being hit within a 3 y¢ar window from the date of acquisition. The Group assesses, based upon the historical year to date performance and forecasts, th¢ likelihood of the tsrget being m¢t is and has adjusted the fair value accordingly. For the year ¢nded 31 December 2023, an incremental £2,928k has b¢¢n re¢ognised with a corresponding liability recognised in creditois greater than one year which would fall payable in 2025 subject to perforniance conditions b¢ing met. Page51
THE SCOTT BADER COMMONWEALTH LIMITED NOTES TO THE FINANCIAL STATEMENTS For the y¢ar ended 31 December 2023 13. TANGIBLE FIXED ASSETS Land and Buildings Short leasehold £'ooo Group Plant and equipment £'ooo Motor vehicles £'ooo Freehold £'ooo Total £'ooo Cost or valuatlon: At l January 2023 Additions Disposals ReclassifAcation Difference on exchange At 31 December 2023 41,658 1,492 (52) 237 (907) 42,428 5,635 59 (248) 101,286 9,909 (510) (242) 1,029 109.414 494 612 (41) 149,073 12,072 (851} (284) 5,167 537 528 157,537 Accumulated Depreclation: At l January 2023 Charge for the year Disposals Difference on exchange At 31 December 2023 19,936 1,115 3,328 ioi (234) 67,406 4,388 {210) 260 63 (85) 70 308 90,930 5,667 1529) 530) 20,521 95 70,509 94,633 Net book value At 31 December 2023 At 31 December 2022 21907 72 2,307 220 234 Assets in the course of construction and on which depr¢ciation has yet to commence are included in the cosl of Plant & Equipmenl to the value of £17,1 I Ik (2022= £12,OIOk). Fre¢hold land of £5,092k (2022: £5,347k) is noi deprcciated. 14. SUBSIDIARY UNDERTAKINGS The Conllnonwealth is thc registered holder of the whole of the share capital of Scott Bader Company Limited's 100,000 shares of 50p each. Of the8¢, the Commonwealth holds l 0.000 shares on behalf of the Guardian Trustees who have additional responsibilities to their role as Charity Trustees as set oul in the Report of the Trustees. These 10,000 shares are referr¢d lo in the Articl¢s of The Scott Bader Commonwealth Limited as Guardian Tntee Shares. Special voting rights in relation to these shares are exercised under Articles 27 and 68 of the Articles of Association of The Scott Bader Cornmonwealth Limited. These relate to any resolution to alter the Articles of Association of either The Scott Bader Commonwealth Limited or Scott Bader Company Limited or to dispos¢ of or dir¢ct the disposal of any shares in Scott Bader Cotnpany Lin]ifrd. The shares wer¢ given to the Commonwealth in 1951 and 1963 by Ern¢st Bader and his family in order to place Scott Bader Company Limited in cornrnon ownership where it would be directed and managed nol only for the benefit of those working in the Company but also for the wider community and for futtwe generations. Under Article 14 of the Scott Bader Commonwealth Limited articles, th¢ SBCW Board shall have no power to dispose of any Shares in SBCL or any other Subsidiary OT to exercise or direct ih¢ exercise of the votes or carry out any other responsibilities attached to any such Shares. The SBCW Members and the Guardian Trustees shall exercise such powers and any such other responsibilities in accordanc¢ with these Articlcs. In September 2023, the Group signed an agreement to purchase the remaining shares of our joint venture in Brazil, Nova Scott, from AT)derpol, This will give the gn)up full contnil over a manufacturing and distribution base in South America to continue its geographic expansion and to be abl¢ to serve our global customers and penetrat¢ our chos¢n markets in Brazil and across the South American contineDt. This transaction is expected to Complete in Q2 2024. Page 52
THE scorr BADER COMMONWEALTH LIMITED NOTES TO THE FINANCIAL STATEMENTS For tb¢ year ended 31 Dec¢rnber 2023 14. sUBsIDRy UNDERTAKtNCS {CONTINUED) Subsidiary undertakings The Ciroup holds IOOO/D of the issued shares of all subsidiaries in the below table and, except where noted, the8e are held by SBCL. None of the subsidiaries are listed on a recognised stock exchange and all have been included in the Lonsolidation. Company Country of incoryoration and princlp81 country of opertlon Great Britain Company Reg15tr4tion Number Nthre of Business Reglstered Offitt Scott Bader Company Lirnited Scott Bader UK Limited 00189141 Corporatc Head office Woll8Ston Hall, Wollaston, WelliDgboiough, Northants. NN29 7RL Wollaston Hall. Wollaston, Wcllingborough, Nortlk)nts. NN29 7RL 65 Rue Sully. 81)000 Amiens Great Britain 4562724 Manufacturer of resins Scott Bader SAS Franc¢ 631720 497 Manufacturer of S¢ott Bader Middle East Ltd (Incorporated in Jersey) United Arab Emirates Statcs of Jersey.. Registration No.: 55367 JAFZA.. Registration No.: 173909 80008643 Manufacture of resins One The Esplanade, St Heli¢r. J¢TS¢y* 3QA, Channel Islands Scott Bad¢r d.o.o. Croatia Manufa¢ture of T¢sins Manuf#¢tur¢ of resins Radnicka cesta 173 i, IOCKIO Zagreb Scott Bader (Pty) Ltdl South Africa 1993 000 466 07 l Lubex Road, PO Box 1539, Hillcr¢st 3650, Hammar8dale. Kwazulu Natal, South Africa Scott Bader ATC Inc. Canada 1168859909 Manufa¢tur¢r of adhesiv¢s 2400, Canadien Street #303. Drummondville (Qc), J2C 7W3, CaDada BOX 202, 31123 Fa]kenberg Scott Bad¢r Scandinavia ABI Sweden 556399-5322 DiStntOr of resins Scott Bader Eastern Euro Scott Bader tberica SL1 Cze¢h Republic 250 45 580 Distributor of resins Distsibutor of resins Evropska 2588133a, Dejvice. 160 00 Praba Spain ESB 62948450. Tomv 349491Folio 0202 Avda. Corts Calalanes. 8, 08173 Sant Cugat del Va11¢5-Bar¢¢lona Scott Badci InL USA 2310546 Distributor of rcsin5 RegistCTcd Ag¢nt Solutions. Jnc., 9E. LoDckernian StreeL Suitc 311. Dov, DE 19901 Scott Bader (Shanghai) TTading Com Ltd 91310(K)0664387 9063 China Distributor of resins Room2402, Hitch Plaza 488 Wuning Road (South) Shanghai China 3020001128001 S¢ott Bader Japan Japan Distributor of resins Nisso Bldg#l 8, Export Office#708. 3-7-18, Shin-yokohama, Kohoku-ku. Yokoharna. Kaagawa, Japan Synthetic Resins Limiled 00282663 Intenncdiate holding com Great Britain Wollaston Hall. Wollaston, Wellingborough, Northa))is, NN29 7RL 03793984 Intennediate holding com an InternJ¢diat¢ holding Boldhelp Lirnited Great Btitsin Wollaston Hall, Wollaston. WellingboTough, Northants. NN29 7RL S¢ott Bader Brdzil Limited 08549866 Wollaston Hall. Wollaston. Wellingborough, Northants, NN29 7RL Great Britain Page 53
THE SCOTT BADER COMMONWEALTH LIMITED NOIES TO THE FINANCIAL STATEMENTS For the y¢ar ended 31 December 2023 14. SUBSIDIARY UNDERTAKINGS (CONTINUED) Company Registration Number Country of ineorporatio And prinelpll country of ratloD Nature of Busines$ Compally Regl$tered Offlce 2310544 Iniem)¢diate holding company Corporate Trustee Registered Agent Solutions, Inc., 9E. Loockennan Street, Suite 31 I, Dover, DE 19901 Scott Bader North America In USA Scott Bader Community Fund Tnlee Limit¢d 01282834 Wollaston Hall. Wollaston. Wcllingborough, Northants, NN29 7RL 7d Dunboyiic Industrial Est. Dunboync. C.'o. Meatli, Ireland P.0. Box 1124 Bibra Lake, Western Australia 6965 Australia 307. Flo(Jr-3 Plot-267 A to Z Industrial Estate Ganpatrao Kadam Marg Lower Par¢1 Mumbai, Mumbai City, Maharashlra, 400013, India 307. Floor-3 Plol-267 A to Z Industrial Estat¢ Ganpatrao Kadam Marg Lower Parel Mumbai, Mumbai Cily. Maharashtra, 400013. India 600 North Bridge Road 323-01 ParkN'icw Squar¢ 188788 Gr¢at Britain 694646 Di8tributoT of resins Scott Bader trcland Ltd Ir¢land 640312170 Scott Bader Australia Pty Ltdl Distributor of resins Australia U24290MH2022 PTC383674 Scott Bader Private Limit¢d Distributor of resins India U24100MH2022 PTC388973 Scott Bad¢r Manufacturing Private Limited Manufacturer of resins India 202209091H IntcrtTJedi&te holding i>mpany Sloii Badcr AsiaPac Iloldco Ptc.Ltd. Singapore rc held by Synthetic Resin5 Limited. Z held by Boldh¢lp Limite - held by Scott Bader North America Inc, I held by Scott Bader Commonwealth Limited The group holds 800/0 of the issu¢d shares of the subsidiary in the below tabl¢. held by SBCL. This subsidiary is not listed on a r¢wgnised stock exchange. Coutstry of incorporatlon and princlpxl ¢ountry of ration Great Britain Company Regis¢ration 'umb¢r Ngture of Business Company RegisteTed orrice Polymer Mim¢tics Limited 12598928 Res¢ar¢b Wollaston Hall, Wollaston. Wellingborough, Northants, NN29 7RL The Group's domant companies have not been listed in th¢ above tsble. Page 54
THE SCOTT BADER COMMONWEALTH LIMJTED NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 D¢ccmber 2023 14. SUBSIDIARY VNDERTAKINGS (CONTINUED) Joint Ventures Company Country of In¢oryoratlon Jnd printip*l eountry of operation Re¥ist¢rnd Offl¢e NOVaOtt Especialidades Quimicas Ttda (JV) Brazil Rodovia Gobernador Mario Covas. no 600. sala 48. Lote Tabajar& Serra do Anil, CEP 29.147-030, City of CaTi&ciswES. Brazil Satyen Scott Bader LLP {JV) previously Satyen Scott Bader Privat¢ Limited India 307, A-Z tndustrial Premise8 G K Mar8, Lower Parel Mumbai Mumbai City MH 401 3 IN J shares held by Scott Bader Brazil Limited All joint ventures manufacture and distribule compounded polyester resins and are 500/0 owned by the group. except where noted above these shares arc h¢ld directly by SBCL. Subsidiar ' results A summary olthe results of the SBCL Group is shown below: 2023 £'ooo 2022 £'ooo Turnover Oth¢r operating income Direct and indirect ov¢rheads 273J44 461 (272,563) 303.976 597 (302,476) Group opeiatAng profit Share of operating profit in joint ventures Total operating profit: group and share of joint ventures tnterest receivable and similar income Interest payable and similar charges Profit before taxation on ordinary activities Taxation on profit on ordinary activities 1.242 221 1,463 741 1,455 749 (875) 2,097 197 2,294 356 (328) 2,322 (237) (Loss)Iprofit for tbe fmancial year (126) 2.085 A summary of the financial position of the SBCL Group is shown below: 2023 £'ooo 2022 £'ooo Fixed assets Current assets Current liabilities Long t¢nn liabilities Provisions for liabilities Pension asset Net assets 73,435 98,131 {58,931) (3,531) (6,472) 4,290 106 922 66,325 113.382 (66,165) (1,372) (7,521) 7.508 112,157 Capital and r¢serYes 106,922 112,157 Page 55
THE SCOTT BADER COMMONWEALTH LIMrrED NOTES TO THE FINANCIAL STATEMEwrs For the year ended 31 December 2023 15. INVESTMENTS Group Joint Ventures Group and Charlty Investment Property 2023 £?000 2023 £'ooo 2022 £'ooo 2022 £'ooo Balance at l January Share of profits retained Dividend received Difference on foreign exrhange Balance at 31 December 414 591 221 197 (222) (368} (6) 414 495 495 392 495 495 Investment property historical cost: The investment property is owned by the charity: 2023 £'ooo 2022 £'ooo Cost at l January and at 31 Dec¢mber The investment prop¢ty was valued by an indep¢ndent valuer with a recognised and relevant Professional qualification and with recent experience in the lo¢ation and category of the investment property b¢ing valued, Hanvoods Charter¢d Surv¢yors & Estate Agents, in November 2021, on the basis of open market value. The valuation was arrived ai by reference to the estimated amount for which the assel would be expected to exchang¢ between two independent parties on an arn]s-l¢ngth basis using available market evideT]ce and local market knowledge. The Trustees believe that this valuation represents ihe open market value at 31 December 2023. An independent valuation is planned to be perfonned in the year ended 31 December 2024. 16. GROUP STOCKS 2023 £'ooo 2022 £'ooo Raw materials and consumables Finished goods and goods for resale 15,651 18,267 20,024 20,012 35,675 38,279 There is no material difference between the balance sheet value of stock and its replacen]ent Cost. 17. DEBTORS Group 2023 £'ooo Charity 2023 £'ooo 2022 £'ooo 2022 £'IK)O Trade debtors Amounts owed by gTOUP undertakings Corporation tax recoverable D¢feed tax asset Other tsxation recoverable Other debtors Prepayments and accrued income 32,014 42,572 316 1,089 217 2,207 817 1,827 7.567 44,649 3,096 712 535 1,342 3,141 51,398 316 Trade debiors are stated after PTovisions for irnpairn]ent of £305k (2022: £483k), Recorded within other debtors is derivative financial instrum¢nt with thc value of £IOlk (2022.. £32k). Movement in the year wa5 loss of £13k (2022.. gain of £90k). Note 24 provides additional detail. Page 56
THE sco BADER COMMONWEALTH LtMITED NOTES TO THE FINANCIAL STATEMENrs For the year ended 31 December 2023 18. DEBTORS GREATER TIIAN ONE YEAR Croup 2023 £'ooo Charity 2023 £'ooo 2022 £'ooo 2022 £'ooo Dcferred tax asset 2,058 2,058 2,499 2,499 19. CREDITORS: AMOiJNTS FALLING DUE WITHIN ONE YEAR Group 2023 £'ooo Charfity 2023 £'ooo 2022 £'ooo 2022 £'ooo Bank loans and overdiafts Trade creditors Amounts ow¢d to group undertakings Bills of exchange payable Corporation tax Other taxation and Social security Other creditors Accruals and deferred income 16,028 34,234 19,633 37.081 49 52 51 269 2,770 1,674 3,651 65,129 162 2,140 1,674 49 52 20. CREDITORS: AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR Group 2023 2022 £'ooo iAbans Within one to two years Within two to five years 326 277 471 901 603 1,372 Contingent consideratlon Within two to five years 2,928 1,372 Page 57
THE SCOTT BADER COMMONWEALTH LIMITED NOTES TO THE FINANCIAL STATEMENTS For th¢ year ended 31 December 2023 21. LOANS AND OTHER BORROWINGS Loans repayable, included within creditors, ar¢ analysed as follows: Group 2023 £'ooo 2022 £'ooo Due Ivithin one year or on demand Bank loans and overdrafts Due After more than one year Bank loans and overdrafts 16,028 19,633 603 1,372 Total borrowings 16,631 21,005 Mathrity of fjnaneial liabillties: ID one year or less, or on demand In niore than on¢ year, but not mor¢ than two y¢ars In more than two years, but not more than five yeaTS 16,028 326 277 19,633 471 901 16,631 21,005 £7,855k (2022: £9,449k) of GTOUP borrowings are secured by fixed and floaling charges ov¢r the Group's assets. Th¢ Group's liabilities relating to Bank loans and overdrafts consisting of drawn amounts under a revolving credit facility £7,855k (2022.. £8,264k), overdraft balances arising under cash pooling £2,565k (2022- £6,172k) and utilisation of a UK- based invoice factoring facility £5,282k (2022: £5,196k). These facilities operate in various currencies and are subject to interest rates based on the Tel¢vant base rate, with margins ranging from 1.25 % to 3,000/0 and loans of £326k (2022.. £471k) (note 20). Other Group bank loan$ Other bank loans include loans from three French banks which are denominated in Euros and are all repayable by quarterly instalments with the final payments being due in July 2026. The initial total value of loans taken out in 2014 was E4.OOOk and as at 31 December 2023 the outstanding amount wa5 E988k (£857k). They are all 5e¢ured by a charge over the Group's trading subsidiary in France. These loans have variable rates and during 2023 they ranged from 0.771J/o to 5.250/0 (2022: 1.160/0 to 2.94% )- They are included within the above bank loans across maturity buckels. The Charity previously provided a loan of £552k to the Group. The loan was unsecured, carried a variable interest rate of 1.25•/0 above SONIA per annum and was payable in 5 instalments with the final payment made in August 2023. The ternls of the loan were documented in accordance with the advice of the Commonwealth's solicitors. Pag¢ 58
THE SCOTT BADER COMMONWEALTH LIMITED NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 December 2023 22. GROUP PROVISIONS FOR LIABILITIES Group Leaving Retirement Environmental Provisions Benefits £'ooo £'ooo £'ooo 1,443 2,353 1,735 (4) 257 332 331 113 2,828 Deferred £'(x)o £'ooo 7,521 256 858 2,163 At l January 2023 Foreign exchange imp&¢t Amounts charged to the profit and loss account An]ounls used during the year At 31 December 2023 (58) 60 1,620 253 (1,990) 253 1,771 The provision for deferred tsxation is disclosed as a Debtor falling due in 2 to 5 years (Nofr 18) £2,058k (2022: £2.499k) and Debtor falling due in undeT l year (Note 17) £2,207k (2022- £712k} and a provision for liabilities and charges of£253k (2022- £1,990k). The net deferred tax as disclosed in notes 17. 18 and 22 Consists of the following aSSet{lIabIlIt1eS). 2023 £'ooo 2022 £'ooo Excess of capital allowances over depreciation Short tern) timing differences Post-employment benefits Losses (3,091) 1,164 (1,072) 7,011 4,012 (1.606) 698 (1,877) 4,006 1,221 Environmental: The environmental provision w&8 originally established in Scott Bader Company Limit¢d as a future paym¢nt for th¢ r¢quir¢d restitution of land when the relevant subsidiary companies vacate the premises CuentlY occupied. The Provision is expected to be ulilised over l O years although there is no intention to leave any of the affected sites. The provision was estimated using the reports as provided by an independent third-party specialist. Leaving provisions: The leaving provision is estsblished in Scott Bader Mid(lle East as a payment based on local requirements when employees leave the business. The provision is expected lo be utilised as current employees leave the business between 2024 and 2049. Retlrement benefits: a) £1,038k (2022: £1,145k) relates to 'quasi pension, commitments given to fornier employees. The provision is expected to be utilised over the expected lives of the fornier employees and their spouses betweell 2024 and 2041. b) £582k (2022: £590k) relates to French statutory retirement benefits payable to France based employees of the Group. The provision is expected to be ulilised between 2024 and 2038, Pag¢ 59
THE SCOTT BADER COMMONWEALTH LIMITED NOTES TO THE FINANCIAL STATEMENTS For th¢ year ended 3 l De¢¢mber 2023 23. GROUP POST EMPLOYMENT BEIYEFITS (a) Defined benefit scheme For UK employees Scott Bader UK operates a defined benefit scheme with assets held in a separately administered nd. The scheme Provides retirement benefits on the basis of members, fmal salary. The plan is administered by an independent Trustee, who is responsible for ensuring that the plan is sufficienily funded to meet ¢llellt and future obligations. The plan was closed to new entrants in 2006. The date of the most re¢¢nt actuarial valuation as ai 31 December 2022 revealed a funding shortfall of £2,823k {31 December 2019.. shortfall of £4,1 O Ik). If the Scheme is in deficit on a Tecl]nical Provisions basis calculated by tbe Scheme Actuary in accordance with the Scheme's Statement of Funding Principles, further contribulions are expected into the Scheme through 2024 to a level of £460k p.a. (£38,333.33 per month). Contributions: Potential £460k pa in respect of l January 2023 to 31 December 2028 The proceeds of the Escrow accounl whi¢h amount¢d to £464k as at 30 Decemb¢r 2023, have been paid into th¢ Scheme by 31 March 2024 The 31 Decemb¢r 2019 actuarial valuation figures have been updated to the balance sheet in OTder to assess the additional disclosure5 required under section 28 of FRS102 as at 31 December 2023. This update was done by an independent qualified actuary, using the following major assumptions: 2023 n/a 2022 Rates of increase in salaries Rate of increase in 50/D LPI pensions in payment Rate of increase in 50/0 LPI p¢n5ions with 3.50/0 underpin in paym¢nt Rate of increase in pensions in defern]ent Discount rate Inflation assumption 3.200/0 3.900/0 2.20 /0 4.500/0 3.201/b o 2.200/0 Assumed life expectancies on retirement at age 60.. 2023 Years 26.0 28.8 26.6 29.6 2022 Years 26.4 29.1 27.0 29.8 Retiring today Males Females Mal¢s Females Retiring in 10 year5 Page 60
THE SCOTT BADER COMMONWEALTH LIMITED NOTES TO THE FINANCIAL STATEMENTS For tbe year ended 31 December 2023 23. GROUP POST EMPLOYMENT BENEFITS (CONTINUED) Reconciliation of scheme assets and liabilities= Assets £'ooo Liabilities £'ooo Total £'ooo At l January 2023 Remeasurement gains l (losses) Experience (losses) on liabilities - Changes to demographic assumptions - Actuarial loss - Retum on plan assets excluding interest income Net remeasurement gains 96,398 88,890 7,508 (1,992) 2,259 (4,539) (1,992) 2,259 (4,539) 211 211 4,272 4,061 Benefits paid Employer contributions Interest incomel(expense) At 31 December 2023 (6,135) 460 4,585 95,519 6,135 460 383 4,290 4.202) (91,229) The actual return on plan assets was £4.796k. 2023 £'ooo 2022 £'ooo The fair values of the plan &qsets were.. Equities Gilts and LDI funds Coq)orat¢ Bonds Cash & net current assets 5,936 67,180 18,007 4,396 95,519 5.136 61,489 24,377 5,396 96,398 (b) Defined contribution schemes Following the closur¢ of tbe defined benefit scheme in the UK to new entrants, all employees, in countries where the stste pension provision is not considered sutYi¢ient, hav¢ the opportunity to benefit from a defined contribution scheme provide by their local employer. Outstanding contributions includ¢d in editOrS as at 31 D¢c¢mb¢T 2023 W¢Te £203k (2022; £197k). Group The amount recognised a5 an expense for these defined contribution schemes was. 2023 £000 2022 £000 CurrerAt period contributions 1,707 1,913 Page 61
THE SCOTT BADER COMMONWEALTH LIMITED NOTES TO THE FINANCIAL STATEMENTS For th¢ year ended 31 December 2023 24. FINANCIAL INSTRUMEwrs Group 2023 £000 Notes 2022 £000 Finaneial assets measured at fair value through profit or loss: DeTivative fanCIal instrlllnents 17&19 ioi 32 Group: Derivat5ve fiDancial Instruments - Interest rate swaps The Group has entered into two interest rate swaps to re1ve interest at EURIBOR and pay interest at a fixed 1.4611.49010. The two swaps are based on a principal amount of 3,500k EUR, equal to loalls held with two French banks, and they mature in 202612027 on the sarn¢ date as the bank loans to which they relate. The instrnment$ are used to hedge ih¢ Group's exposure to interest rate movements on the two bank loans. The fair value of the interest rate swaps is £19k (2022.. £32k). Cash flows on both th¢ loan and the interest rate swaps are paid quarterly until 202612027. During the financial year, a hedging loss of £13k (2022.. gain of £90k) was recognised in other Comprehensive income for changes in the fair value of the interest rate swap. Fonvard Forelgn Exehange contract In October 2023, SBCL entered into foreign exchange contract non4leliverabl¢ forward INDF) was taken out in with a settl¢ment date of F¢bNary 2024 to purchas¢ foreign CULTen¢y. The transaction did not meet the criteria for hedge accountlTI8. The fair value is £82k and £82k was recognised as a fair value gain through the statement of funcial activities. 25. ANALYSIS OF MOVEMENT IN FUNDS GROUP Fafir Value Reserve Unrestrieted Non- (Designated income Controlling Fund) fllnds Interest £000 £000 £000 Total £000 At l January 2022 Income Exp¢nditure Share of net income from joint ventures Tax payable Gainsl(losses) At l January 2023 Income Expenditure Shar¢ of net income from joint ventures Tax payable Gainsl(losses) At 31 December 2023 487 114,347 304,883 (302,856) 176 (237) (2,759 113,554 274,554 (274,037) 31 114.865 304,883 (302,856) 197 {237) 21 487 52 114,093 274,554 (274,037) 190 (875) 5,109 108 277 31 221 (875) 5.109) 108,847 487 83 Falr Value Reserve (Designated Fund) The Fair Value Reserve is a designated nd relating lo the fair value movements on the investment property meaning that the fund cannot be distributed unless the properties are sold or the Directors are first assured that the investment property maintains at least its previous markel value. Page 62
THE SCOTT BADER COMMONWEALTH LIMITED NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 December 2023 25. ANALYSIS OF MOVEMENT IN FUNDS (CONTINUED) CHATy F21r Value Reserve (Designated fund) Unrestrlcted Ineome funds £000 1,547 347 {444 1,450 367 379 1,438 NOD- Controlling interest £000 Total £000 2,034 347 At l January 2022 Income Expenditure At l January 2023 Income Exp¢ndtlure At 31 December 2023 487 487 1.937 367 (379) 1,925 487 GROUP For the year ended 31 December 2023 Fair Value Reserve (Designated fund) £000 Unrestricted ncome fund$ £000 10,139 62,904 400 40,547 (3,531) (6.472) 4,290 108 277 Non- Controlllng interest £000 Total £000 10.139 62.904 887 40.630 (3,531) (6,472) 4,290 J08,847 Intsngible fixed assets Tangible fixed assets Investments Net current assets Long tern) liabilities Provisions Pension Set 487 83 487 83 CHARITY For th¢ year ended 31 December 2023 Fair Value Reserve IDesignated fund) £000 487 Unrestrleted Ineome funds £000 Non- Controlllng interest £000 Total £00 495 1,430 1,925 Investments Net currenl assets 1,430 1,438 487 GROUP For the year ended 31 December 2022 Fair Value Reserve (Designated fund) £000 Unrestricted income funds £000 7.768 58,143 422 48,606 (1,372) (7.521) 7,508 113554 Non- Controlling interesl £Doo Total £000 Intangible fixed assets Tangible fixed assets Investments Net current assets Long temi liabililies Provisions Pension asset 7,768 58,143 909 48.658 (1,372) (7.521) 7,508 114.093 487 52 487 52 Page 63
THE SCOTT BADER COMMONWEALTH LIMITED NOTES TO THE FINANCJAL STATEMEINTS For the y¢ar ended 31 Decemb¢r 2023 25. ANALYSIS OF MOVEMENT IN FUNDS (CONTINUED) CHATy For the year ended 31 December 2022 Fair Value Reserve (Designated fund) £000 487 Unrestricted income funds £000 Non- Controlllng interest £000 Total £000 495 1,442 1,937 Investments Net current assets 1,442 1,450 487 26. NOTES TO THE STATEMENT OF CASH FLOWS a) Reconciliation of net (expenditure)lincome to net cash provided by/(used in) operating activities 2023 £'ooo 2022 £'ooo Net (expenditure)lincome for the reportlng period (as per the statement of financial activities) (137) 1,987 Adjustments for: Interest payable Interest receivable Rental income received Taxation Share of operating profit in joinl ventLwes Profit on disposal of fixed assets Depreciation and amortisation Exchange diff¢rence Contributions to UK defined benefit pension scheme Decreas¢/(increas¢} in stocks Decrease in debtors Decrease in creditors Increase in provisions Net cash provided bvl(used in) operatin2 actlvities 1,455 (760) (34) 875 (221) {8) 6,621 {536) (460) 2,604 6,093 (3,332) 244 12 404 328 {356) (36) 237 (197) (33) 5,962 1,355 (460) (5,381) 1,836 (6,554) 88 b) Analysis of ¢h2nges in net debl Atl January 2023 Exchange ratc movemcnt At31 Dccember 2023 Cash flow8 Non4ash flows Croup £'ooo £'ooo £'ooo £'ooo £'ooo Cash and cash equivalents: Cash Overdrdft 21,611 11.368) 10,243 (4,745) 3,521 (1,224) 16,866 7,847 9,019 Borrowlngs: Borrowings - repayable within one year Borrowings - repayable after one year (8,265) 1.372 {9,637) 444 (769) 769 409 (8,181) 603 (8,784) 409 409 Net funds 235 Page 64
THE scorr BADER COMMONWEALTH LIMITED NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 December 2023 27. GROUP CONTINGENT LIABILITIES Group: Pension Sch¢m¢ Funding: Scott Bader Company Limited enter into a guarantee in March 2007 with Scott Bader Pension Sch¢m¢ Trusl¢¢s Limited whereby the Company guaranl¢¢d that th¢ Scott Bader UK Limited pension scheme would be 1050/0 nd¢d on an Sl 79 valuation should th¢ principal employer, Scott Bad¢r UK Limited. fail to fulf11 its agreed obligations to the Pension Trustees. 28. GROUP CAPITAL AND OTHER COMMITMENTS Group 2023 £?000 Group 2022 £'ooo ) Contraets for future eapital expenditure not provided in the financial statements- Property, plant and equipment No expenditure has been incurred although contracts have been placed 1,238 522 b) future minimurn lease payment5 under non-cancellable operating leases for each of the following periods: Group 2023 £'ooo Group 2022 £'ooo Not lat¢r than one year Later than onc y¢ar and not later than fiv¢ years Lat¢r than fiv¢ y¢ars 1,566 3,501 1,270 6,337 1,711 2,779 1,757 6.247 The Charity has no capital or operating lease committnents at 31 December 2023 (2022., Nil). 29. RELATED PARTIES Group The Group received dividends from Satyen Scott Bader LLP of £222k (2022.. £nil}, one of the Group's joint ventures during the year. At the yeaT-end, £Nil (2022= £nil) was outstanding. The Group re¢¢iv¢d dividends from Novascott Espe¢ialidad¢s Quimicas Ttda of £nil (2022.. £368k), one of the Group's joint v¢ntur¢s, during the y¢aT. At the y¢ar-¢nd. £Nil (2022: £nil} was outstanding. Revenue in relation to the share of profil in joint ventures of £22 Ik (2022: £ l97k) has been recognised in the slatement of financial activities of the Group. The Group has provided a capital contribution to Polyrner Mimetics Litnited of £l,857k (2022: £1,343k). Charlty The Commonwealth received a donation from SBCL in the amount of £316k (2022: £305k). In addition, the Commonwealth relmbued SBCL. at cost. for management services provided in the year of £41k (2022: £46k). The net yearwend balance of money owed by Scott Bader Company Limited to The Scott Bader Commonwealth Limited was £275k (2022: £1,037k). During the year, a loan of £552k from Scott Bader Commonwealth to SBCL was fully repaid. 30. LEGAL STATUS OF THE SCOTT BADER COMMONWEALTH LIMITED The Scott Bader Commonwealth Limited is a company limited by gLwalltee without shares and a registered Charity. The liability of each member in the event of winding up is limited to 5p. 31. POST BALANCE SHEET EVENTS On Wethiesday 13 September 2023, the SBCL Group signed a Quota Purchase and Sale Agreement and Other Covenants (QPA) to effectively &cquire l OOO/o control of its Brazilian Joint Venture Nova Scott and associated manufacturing assets from the JV partner Anderpol and its direct subsidiaries. This acquisition is subject to certain regulatory approvals for manufacturing and marketing licenses being ITansfeTred to Nova Scott which are anticipated to take 120 working days from the signing of the QPA. It is therefore likely that the deal will close in the second quarter of 2024. 11 is anticipated that the acquisition will be accounted for using the Purchase Method. Page 65