TIDMASBE
RNS Number : 2334W
Associated British Engineering PLC
30 July 2018
Company Registration No. 00110663 (England and Wales)
ASSOCIATED BRITISH ENGINEERING PLC
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE PERIODED
31 March 2018
ASSOCIATED BRITISH ENGINEERING PLC Company Registration No.
00110663 (England and Wales)
REPORT AND FINANCIAL STATEMENTS
FOR THE PERIODED 31 MARCH 2018
CONTENTS Page
Financial highlights 1
Chairmen's statement 2
Directors' report 3
Strategic report 7
Report of the independent auditor - Group 11
Group accounting policies 16
Consolidated income statement 23
Consolidated statement of comprehensive income 24
Group statement of financial position 25
Group statement of changes in equity 26
Group cash flow statement 27
Notes to the Group financial statements 28
Company statement of financial position 44
Company statement of changes in equity 45
Company cash flow statement 46
Notes to the Company financial statements 47
Statement of directors' responsibilities 53
Corporate governance report 54
Directors' remuneration report 60
Directors, registered office and advisers 63
The Directors' Report on pages 3 to 6 and the Directors'
Remuneration Report on pages 60 to 62 have each been drawn up in
accordance with the requirements of English law and liability in
respect thereof is also governed by English law. In particular, the
responsibility of the directors for these reports is owed solely to
Associated British Engineering plc.
The directors submit to the members their Report and Accounts
for the Group for the period ended 31 March 2018. Pages 1 to 10 and
53 to 62, including the Financial Highlights, Chairmen's Statement,
Directors' Report, Strategic Report, Corporate Governance Report,
Directors' Remuneration Report and the Directors, Registered Office
and Advisers page form part of the Report of the Directors.
ASSOCIATED BRITISH ENGINEERING PLC
FINANCIAL HIGHLIGHTS
2018 2017
GBP'000 GBP'000
REVENUE 1,603 1,043
OPERATING LOSS (525) (906)
LOSS BEFORE TAXATION (582) (962)
NET ASSETS 976 1,020
BASIC LOSS PER 2.5p ORDINARY SHARE (20.6p) (46.8p)
EQUITY SHAREHOLDERS' FUNDS PER 2.5p ORDINARY GBP0.48 GBP0.50
SHARE
ASSOCIATED BRITISH ENGINEERING PLC
CHAIRMEN'S STATEMENT
FOR THE PERIODED 31 MARCH 2018
The changes we spoke about in 2017 have continued and as yet our
business servicing the oil sector in the North Sea has not
recovered and returned to previous levels. The loss for the period
has decreased from GBP960,000 to GBP422,000 and some of this loss
has been caused by the continued development of the new series of
diesel engines that we have now started to sell. The disputes we
spoke of in our last statement remain unresolved and continue to
take up management time.
British Polar Engines Ltd (BPE), our principal subsidiary,
continues to strive for new service and spares customers to
compensate for the downturn in activity in the North Sea. BPE
remains confident that over time they will be able to replace and
exceed the lost sales and return the company to profitability.
While we have to reluctantly acknowledge that this may take some
time we remain confident that our products are competitive in price
and value terms. BPE continues to address staffing issues, which
are a necessary component of the changes required. BPE's managing
director Bill Girdwood was taken ill last year and was absent for
many critical months finally resigning in January this year. Rupert
Pearce Gould, the Chairman of BPE, and the other senior staff are
covering the gap, whilst the BPE Board is actively seeking further
strengthening of the management team.
The Board continues to keep central costs under tight control.
However at the operating level BPE has continued to recruit new
staff to replace the retiring staff and re-structure middle
management for the changed environment using the downturn to take
on qualified staff. We have also continued to look at our sales
processes and related KPI's with a view to improving sales
efficiency. In summary we are building a base for the future and we
are beginning to notice some positive responses in our established
markets.
As we have often commentated we continue to suffer from the
vagaries of pension valuations in BPE. The number of active members
continues to decline and the match between liability and bond
markets is difficult to achieve; this means that we still
experience swings in the net valuation. The net result is that the
IAS 19 Pension Valuation still moves around and if the GBP Sterling
falls we may find a positive movement and vice a versa. In the
current period the pension deficit for BPE has decreased from
GBP1,380,000 to GBP1,354,000 as at 31 March 2018. Shareholders will
appreciate that the calculations surrounding these figures result
from a combination of facts and assumptions which are set out in
much more detail in the notes to these accounts. Following the end
of the year the directors of BPE agreed with the trustees of the
pension fund that in order to conserve cash within the business
they would agree to the suspension of the deficit repayment
agreement for the year ending March 2019. This agreement also
includes the company compensating the pension fund in respect to
its contribution to the pension protection Fund. This agreement
will be reviewed at the end of the accounting period March 2019.
The directors of BPE and the trustees of the pension fund are also
actively looking at ways to reduce the running costs of the pension
fund that is now disproportionate to the number of members the fund
has.
In addition to the organic opportunities, we remain open to the
thought of a suitable corporate transaction to expand the Group;
but accept that this may be difficult to find in current markets.
Our other investments continue to show an increase over costs and
generate useful increases in value from our latent resources.
As a small group we are reliant on the dedication of all our
staff who despite the reduced activity are working well and looking
hard at each and every opportunity. The Board thanks them all for
their effort and commitment.
Rupert Pearce Gould and Colin Weinberg
Chairmen
Date: 30 July 2018
ASSOCIATED BRITISH ENGINEERING PLC
DIRECTORS' REPORT
FOR THE PERIODED 31 MARCH 2018
The directors submit their report and audited accounts for the
period ended 31 March 2018.
RESULTS AND DIVIDS
The Group's loss after tax amounted to GBP422,000 (2017:
GBP960,000). The directors are unable to recommend a dividend on
the ordinary shares for the period (2017: GBPnil per ordinary
share).
DIRECTORS
The names of the directors who served during the period from 4
April 2017 to 31 March 2018 are:
Mr C Weinberg Director
Mr R Pearce Gould Director
Biographical details of the directors are set out on page
63.
With regard to the appointment and replacement of directors, the
Company is governed by its Articles of Association, the Corporate
Governance Code, the Companies Act 2006 and related
legislation.
In accordance with the Articles of Association Mr C Weinberg
retires by rotation and, being eligible, offers himself for
re-election.
SUBSTANTIAL HOLDINGS
As at 30 July 2018 and at 31 March 2018 the Company had been
notified of the following substantial interests, in excess of 3%,
in the issued ordinary share capital of the Company:
Shareholders Notes
W B Nominees Limited W B Nominees Limited owns 23.82% of
issued ordinary shares.
Fiske Nominees Limited (FISKPOOL) FISKPOOL owns 14.33% of issued ordinary
shares.
R A Pearce Gould Mr Pearce Gould's direct holding is
7.61% of issued ordinary shares.
C Weinberg Mr Weinberg's direct holding is 7.88%
of issued ordinary shares.
Rulegale Nominees Limited JAMSCLT owns 5.28% of which Mr R A
(JAMSCLT) Pearce Gould's has all of the issued
ordinary shares.
Hargreaves Lansdown (Nominees) HLNOM owns 4.98% of issued ordinary
Limited (HLNOM) shares.
Lynchwood Nominees Limited DMOD owns 4.20% of issued ordinary
(DMOD) shares.
Barclayshare Nominees Ltd Barclayshare Nominees Ltd owns 3.67%
of issued shares.
Vidacos Nominees Limited (BBUCCC) BBUCCC owns 3.40% of issued ordinary
shares.
HSBC Global Custody Nominee Made up of multiple interested parties
UK Limited (941346) of which 3.06% of issued ordinary shares
are owned.
ASSOCIATED BRITISH ENGINEERING PLC
DIRECTORS' REPORT (continued)
FOR THE PERIODED 31 MARCH 2018
BENEFICIAL INTERESTS IN SIGNIFICANT CONTRACTS
None of the directors had a material interest in any contract of
significance to which the Company or any of its subsidiaries was
party during the period.
BENEFICIAL INTERESTS IN THE SHARE CAPITAL OF THE COMPANY
The beneficial interests of the directors, who served during the
period, their spouses and dependents in the share capital of the
Company according to the register kept by the Company as at 3 April
2017 and 31 March 2018 were as follows:
Ordinary shares
of
2.5p 2.5p
2018 2017
No. No.
Mr C Weinberg 161,416 161,416
Mr R Pearce Gould 264,049 261,549
No share options or derivatives were held by any of the
directors at 31 March 2018 or 3 April 2017.
Since 31 March 2018 and up to and including 28 July 2018 there
have been no changes in the directors' interests in the share
capital of the Company.
The Group uses various financial instruments and these include
cash, equity investments and various others, such as trade
receivables and trade payables which arise directly from its
operations. The main purpose of these financial instruments is to
raise finance for the Group's operations.
Further details of the policies adopted by the Group in respect
of the financial risk management are included within note 18 to the
Group financial statements and the Strategic Report.
The structure of the Group's and Company's capital, at nominal
value, is as follows:
No. in Nominal Total % of
issue Value Value Capital
GBP GBP GBP
Ordinary shares 2,048,990 0.025 51,255 1.9
Deferred shares 1,313,427 1.975 2,594,018 98.1
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DISABLED PERSONS
It is the Group's policy to give sympathetic consideration to
the recruitment, continuing employment, training, career
development and promotion of disabled persons.
EMPLOYEES
The Group recognises the importance of employees to the success
of the business and ensures that they are fully informed of events
that directly affect them and their working environment.
ASSOCIATED BRITISH ENGINEERING PLC
DIRECTORS' REPORT (continued)
FOR THE PERIODED 31 MARCH 2018
GLOBAL GHG EMISSIONS DATA FOR THE PERIODED 31 March 2018
In compliance with the Climate Change Act (2008) each business
division in the group has reported scope 1 and 2 emissions to
provide a consolidated total of each source of greenhouse gas
emissions for the period ended and these were as follows:
Combustion of fuel and operation of facilities: 603 tonnes
(2017: 159 tonnes) of CO(2) emissions.
Transport: 7 tonnes of CO(2) emissions (2017: 22 tonnes).
The Group's chosen intensity measurement
Emissions reported above (181 tonnes of CO(2) e (2017: 181
tonnes)) normalised to per GBP'000 of turnover GBP1,603 (2017:
GBP1,144): 0.11 Tonnes of CO(2) e per GBP'000 turnover (2017:
0.16).
Methodology
We have reported on all of the emission sources required under
the Companies Act 2006 (Strategic Report and Directors' Report)
Regulations 2016. These sources fall within activities included in
our consolidated financial statements. We do not have
responsibility for any emission sources that are not included in
our consolidated financial statements. We have used the GHG
Protocol Corporate Accounting and Reporting Standard (revised
edition), to gather data to fulfil our requirements, and emission
factors from the UK Government's GHG Conversion Factors for Company
Reporting 2017.
GOING CONCERN
After making appropriate enquiries, the directors have a
reasonable expectation that the company and the group will have
adequate resources to continue in operational existence for the
foreseeable future. The directors consider the Group's business
activities, together with the factors likely to affect its future
development; performance and position are set out in the Chairmen's
statement on page 2. The financial position of the Group, at 31
March 2018 showed that the Group recorded a loss of GBP422,000 and
had cash and cash equivalents of GBP344,000.
In order to manage its working capital, the Group continues to
be reliant upon its continuing ability to manage the timing of
settlement both of its current liabilities and future liabilities
as they arise. There is also a need for fundraises or loans in the
immediate to short term, while sales plans and projections come
into effect, especially in relation to revenues generated from new
product and service lines. The Board has prepared forecasts to
reflect the revenues expected to be generated by the Group. The
Group is fully focused on ensuring that sales plans are followed to
ensure that the business becomes profitable in the near future.
The Directors have concluded that the need to generate funds
from a combination of further fundraising, disposing of investments
and from trading activities to satisfy the settlement of its
on-going and future liabilities represents a material uncertainty,
which may cast significant doubt upon the Group's and the Company's
ability to continue as a going concern. Nevertheless after making
enquiries and considering this uncertainty and the measures that
can be taken to mitigate the uncertainty, the Directors have a
reasonable expectation that the Group and the Company will have
adequate resources to continue in existence for the foreseeable
future. For these reasons they continue to adopt the going concern
basis in preparing the annual report and accounts. The financial
statements do not include any adjustments that would result if the
Group and Company was unable to continue as a going concern.
AUDITOR AND DISCLOSURE OF INFORMATION TO THE AUDITOR
So far as the Directors are aware, there is no relevant audit
information that has not been brought to the attention of the
Company's auditor. Each Director has taken all reasonable steps to
make himself aware of any relevant audit information and to
establish that such information was provided to the auditor.
ASSOCIATED BRITISH ENGINEERING PLC
DIRECTORS' REPORT (continued)
FOR THE PERIODED 31 MARCH 2018
This confirmation is given and should be interpreted in
accordance with the provisions of section 418 of the Companies Act
2006.
A resolution to confirm the reappointment of haysmacintyre as
auditor of the Company will be proposed at the 2018 AGM. The
confirmation has been recommended to the Board by its Audit
Committee and haysmacintyre have indicated their willingness to
remain in office.
By order of the Board
For and on behalf of
Woodberry Secretarial Limited
Date: 30 July 2018
ASSOCIATED BRITISH ENGINEERING PLC
STRATEGIC REPORT
FOR THE PERIODED 31 MARCH 2018
BUSINESS REVIEW
A review of the business and of events during the period is
contained in the Chairmen's Statement on page 2 which forms part of
the Strategic Report.
BUSINESS MODEL AND STRATEGY
The Associated British Engineering Group consists of the
following two subsidiaries:
1. British Polar Engines Limited ("BPE"), a wholly owned
subsidiary, carries out Associated British Engineering's core
operating activity of the manufacturing and supplying diesel
engines and spare parts for diesel engines together with associated
repair work.
2. Akoris Trading Limited ("Akoris"), a subsidiary of BPE,
supplied a surplus generator set in the period.
BPE's business model and strategy:
Our sales team deal with the sale of diesel engines and related
products and the distribution of spare parts worldwide. The team
are well versed on our wide range of products and maintain a high
level of technical knowledge. We sell and provide replacement parts
for diesel engines principally in two key ranges and for generator
sets.
We also sell generator sets and maintain these together with
optimising use of our extensive range of engineering facilities in
Glasgow.
We provide a worldwide service to our customers offering repair
and maintenance work both on site and in house. We carry out major
engine overhauls, upgrade and retrofits, as well as routine engine
maintenance and service work for generator sets. Our engineers are
highly experienced and able to provide technical support/assistance
on site.
Our business model to achieve our strategic objectives is:
1. To meet the highest standards of customer service in some of
the most demanding industrial sectors.
2. To continue the training and development of our workforce. We
are currently looking at succession planning and new product
development.
3. To unify standards and procedures. With the high levels of
quality, safety and efficiency procedures adhered to within the
company and as required by the shipping and offshore industry, we
continue to adjust and raise our operating standards investing in
new production equipment when justified.
4. To maintain a strong governance framework. The senior
management team operate, within a tight framework of controls,
monitored and directed by our two executive directors under
direction of the Board.
ASSOCIATED BRITISH ENGINEERING PLC
STRATEGIC REPORT (continued)
FOR THE PERIODED 31 MARCH 2018
PRINCIPAL RISKS AND UNCERTAINTIES FACING THE BUSINESS
The Group's main operating business is its subsidiary BPE.
Business activity in the sector in which BPE primarily operates
has in recent periods been affected by the fall in the price of
oil. This demonstrates that this business remains sensitive to
economic downturn with orders being delayed and deferred. The
downturn that commenced in the second half of 2015 has continued
into 2018 although the group saw an increase in its turnover
compared to 2017. The Board of both BPE and its parent company are
actively monitoring the level of sales in this difficult economic
environment. We are also anticipating fresh trading opportunities
which should improve turnover in 2019.
The group operates in a market and an industry which by their
nature are subject to a number of inherent risks. We attempt to
control these risks by adopting appropriate strategies and
maintaining strong systems of internal control. These strategies
however cannot attempt to eliminate all risk, but control the risks
that we believe are appropriate to take to generate acceptable
shareholder returns. Details of the group's risk management
processes are given in the Corporate Governance report on page
54.
We have considered below the current risk factors that are
considered by the Board to be material. However in a changing
world, new risks may appear or immaterial risks may become more
important, and the directors will develop appropriate
strategies.
Market conditions
The Group's sales are predominantly UK, Europe, North America
and North Africa based so it is exposed to any slowdown in the
global economy. However the distribution of its customers across
the economic sectors helps reduce the impact of slowdown in any one
sector. Regular financial information helps the Board assess
current trends. An assessment of the market and competitor activity
is discussed at board meetings. This includes an assessment of our
routes to market as challenges to our structure and operations
emerge and assessment of our pricing strategies as competitive
pressures increase. The Board are actively widening the
geographical sales area.
Reputational risk
Over many periods the Group has built up a reputation for
integrity and is aware that this can be easily damaged with the
consequential cost to its core brands. To mitigate this risk,
policies are in place which cover standards of behaviour and good
governance.
Defined Benefit pension scheme funding
The Group is required by law to maintain a minimum funding level
in relation to its obligations to provide pensions to members of
the pension scheme. This level of funding is dependent on a series
of external factors, such as investment performance, life
expectancy and gilt yields. Significant changes in these areas can
also have a significant effect on the funding levels. The
sensitivity of the funding level to these factors are disclosed in
note 16 in the notes to the accounts.
Cyclical nature of the business
The trading outlook for the Group remains unpredictable due to
exposure to both volatile pricing and periodic cyclical swings such
as those experienced over the last three periods with the decline
in the offshore oil production in Scotland. A review of the record
of the trading results over the last decade amply demonstrates this
with both revenue and operating profit increasing and declining
with the oil sector. The Group's income stream fluctuates
throughout the period as a result of the nature and size of the
orders and order flows. It is therefore difficult to forecast
trading and profitability to any great degree.
The Group continues to refocus its business model and to enhance
its production and repair business through additional training and
recruitment of its workforce. During this period of transition
there is quite naturally an increase in financial risks. The Board
are conscious of these risks and continues to work to mitigate them
as far as possible.
Further consideration of risks and uncertainties in respect of
financial instruments that face the Group and Company is contained
in note 18 to the Group financial statements.
ASSOCIATED BRITISH ENGINEERING PLC
STRATEGIC REPORT (continued)
FOR THE PERIODED 31 MARCH 2018
United Kingdom's exit from the European Union ("Brexit")
The specific impact of Brexit on our principal risk has been
considered by the Board. Whilst we remain vigilant, we do not
believe that Brexit will have a significant impact on the
underlying trading performance of the Group going forward.
KEY PERFORMANCE INDICATORS
The Group uses various indicators to monitor its progress.
Sales, service and production are continually monitored against set
monthly budgets to compare and improve upon gross profit and
operating profit margins. Budgets are set on a monthly and annual
basis but the directors have not enhanced the disclosures in this
regard as one key transaction stalling could have a significant
impact on the feasibility of the budget meaning that such
disclosures are not considered useful to users of the accounts.
The Group reviews the Pension Fund liability, the key
assumptions underpinning the actuarial valuation and the minimum
funding requirement on a regular basis. The key assumptions
underpinning the actuarial valuation are reviewed and compared with
industry norms; there was a significant change to the mortality
tables used by the actuary, this is in line with the standard
actuarial tables.
There is nothing to report on environmental, employee, social
and community matters or essential contractual or other
arrangements.
Our employees
It is the policy of the group to train and develop employees to
ensure they are equipped to undertake the tasks for which they are
employed, and to provide the opportunity for career development
equally and without discrimination. Training and development is
provided and is available to all levels and categories of
staff.
While we do not have a specific human rights policy, we have a
strong commitment to upholding the principles of human rights
across our business.
CORPORATE GOVERNANCE
Details of corporate governance, which is part of this report
for the period to 31 March 2018, are disclosed in the corporate
governance report on page 54.
ASSOCIATED BRITISH ENGINEERING PLC
STRATEGIC REPORT (continued)
FOR THE PERIODED 31 MARCH 2018
CORPORATE SOCIAL RESPONSIBILITY
The Group is committed to the protection of the environment and
the development of processes which ensure that any adverse impact
on the environment arising from its trading activities is minimised
by encouraging reduction in waste, awareness of recycling, and
encouraging employees to pay regard to environmental issues.
Employees
The Group's ability to achieve its commercial objectives and to
service the needs of its customers in a profitable and competitive
manner depends on the contribution of its employees. Employees are
encouraged to develop their contribution to the business wherever
they happen to work. The Group regularly keeps employees up to date
with financial and other information.
The Group currently employs twenty-four people, made up of two
male part time executives and one male full time executive director
and three senior managers, two male and one female. We have a
dedicated and loyal workforce, many of whom are long serving
employees. Over the next few periods it is our intention to
introduce new members of staff to ensure continuity and the passing
on of knowledge for the future.
Total no. of officers/employees Number of males Number of females
% %
Senior Management 3 100 0
-------------------------------- ---------------- ------------------
Whole Workforce 22 86 14
-------------------------------- ---------------- ------------------
By order of the Board
For and on behalf of
Woodberry Secretarial Limited
Date: 30 July 2018
INDEPENT AUDITOR'S REPORT TO THE MEMBERS OF
ASSOCIATED BRITISH ENGINEERING PLC
1. Our opinion on the financial statements
We have audited the consolidated financial statements of
Associated British Engineering plc (the "parent company") and its
subsidiary companies (the "Group") for the period ended 31 March
2018 which comprise of the consolidated income statement and
consolidated statement of comprehensive income, group statement of
financial position, the consolidated statement of cash flows, the
consolidated statement of changes in equity, the company balance
sheet, the company statement of changes in equity, company
statement of cash flows and the notes to the financial statements,
including a summary of significant accounting policies. The
financial reporting framework that has been applied in their
preparation is applicable law and International Financial Reporting
Standards (IFRSs) as adopted by the European Union and, as applied
in accordance with the provisions of the Companies Act 2006.
In our opinion:
-- the financial statements give a true and fair view of the
state of the Group's and the parent company's affairs as at 31
March 2018 and of the Group's loss for the period then ended;
-- the Group financial statements have been properly prepared in
accordance with International Financial Reporting Standards as
adopted by the European Union;
-- the parent company financial statements have been properly
prepared in accordance with IFRSs as adopted by the European Union
and as applied in accordance with the provisions of the Companies
Act 2006; and
-- the financial statements have been prepared in accordance
with the requirements of the Companies Act 2006 and, as regards the
Group financial statements, Article 4 of the IAS Regulation.
Basis for opinion
We conducted our audit in accordance with International
Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our
responsibilities under those standards are further described in the
Auditor's responsibilities for the audit of the financial
statements section of our report. We are independent of the Group
and the parent company in accordance with the ethical requirements
that are relevant to our audit of the financial statements in the
UK, including the FRC's Ethical Standard as applied to listed
public interest entities, and we have fulfilled our other ethical
responsibilities in accordance with these requirements. We believe
that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our opinion.
Material uncertainty in relation to going concern
We draw attention to page 17 in the financial statements
concerning the group's and the parent company's ability to continue
as a going concern. In forming our opinion on the financial
statements, which is not modified, we have considered the adequacy
of the disclosure made on page 17 to the financial statements
concerning the Group's ability to continue as a going concern. At
31 March 2018, the Group recorded a loss after tax of GBP422,000
and had a cash and cash equivalents of GBP344,000. This condition,
along with the other matters explained on page 17 to the financial
statements, indicates the existence of a material uncertainty which
may cast significant doubt about the group's ability to continue as
a going concern. The financial statements do not include the
adjustments that would result if the group was unable to continue
as a going concern.
Conclusions relating to principal risks, going concern and
viability statement
As required by the Listing Rules we have reviewed the Directors'
statement regarding the appropriateness of the going concern basis
of accounting and the Directors' statement on the longer-term
viability of the Group contained on page 58. We draw your attention
to the material uncertainty in relation to going concern section
above.
We have nothing else material to add or draw attention to in
relation to:
-- the Directors' confirmation on page 8 that they have carried
out a robust assessment of the principal risks facing the Group,
including those that would threaten its business model, future
performance, solvency or liquidity;
-- the disclosures on page 8 that describe those risks and
explain how they are being managed or mitigated;
-- the Directors' statement on page 5 of the financial
statements about whether they considered it appropriate to adopt
the going concern basis of accounting in preparing them and their
identification of any material uncertainties to the Group's ability
to continue to do so over a period of at least twelve months from
the date of approval of the financial statements;
INDEPENT AUDITOR'S REPORT TO THE MEMBERS OF
ASSOCIATED BRITISH ENGINEERING PLC
-- the Directors' explanation on page 58 as to how they have
assessed the prospects of the Group, over what period they have
done so and why they consider that period to be appropriate, and
their statement as to whether they have a reasonable expectation
that the Group will be able to continue in operation and meet its
liabilities as they fall due over the period of their assessment,
including any related disclosures drawing attention to any
necessary qualifications or assumptions.
2. Key audit matters: Our assessment of risks of material misstatement
Key audit matters are those matters that, in our professional
judgement, were of most significance in the audit of the financial
statements and include the most significant assessed risks of
material misstatement (whether or not due to fraud) identified by
us, including those which had the greatest effect on: the overall
audit strategy; the allocation of resources in the audit; and
directing the efforts of the engagement team. These matters were
addressed in the context of our audit of the financial statements
as a whole, and in forming our opinion thereon, and we do not
provide a separate opinion on those matters. In arriving at our
audit opinion above, the key audit matters were as follows:
The risk Our response included the
following audit procedures
Carrying
value of * The inventory held at the period-end covers a wide * Inspecting the ageing of inventory, the accuracy of
inventory range of parts and the demand for these and the which was tested, to identify any slow moving
ability of the Group to sell this inventory in the inventory lines, and critically assessing whether
future may be adversely affected by many factors appropriate provisions had been established for slow
including changes in customer preferences, competitor moving and obsolete items.
activity including pricing and the introduction of
new parts and technology.
* Comparing most recent prices achieved on sales across
the range of product lines to test whether these
* The Group is required to apply a methodology to exceeded the book value of inventory at period end.
calculate an inventory provision that is appropriate
to the specific business and nature of parts held in
inventory.
* Comparing the methodology and assumptions used by the
Group in calculating the inventory provisions to
those used in the prior years and, as part of this,
* The level of judgement involved in determining considering whether we would expect a change to the
whether a provision should be recognised and how it methodology and assumptions based on any changes to
should be measured, coupled with the fact that the current markets that the Group serves, noting the
provision movements impact earnings, results in demand factors highlighted opposite.
inventory provisions being one of the key judgmental
areas that our audit is concentrated on.
* Considering the adequacy of the Group's disclosures
(see note 11) in relation to inventory.
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Measurement Our audit work included,
of the defined * There is a risk relating to judgements made by but was not restricted to,
benefit management in valuing the defined benefit pension reviewing the appropriateness
pension plan including the use of key model input assumptions of the IAS 19 valuation
liability such as discount rates, mortality assumptions and methodology and determining
inflation levels. These variables can have a material whether the key assumptions
impact in calculating the quantum of the retirement are reasonable. This included
benefit liability. reviewing available yield
curves and inflation data
to recalculate a reasonable
range for key assumptions.
* Management utilise the services of third party
actuarial advisers to determine their key We challenged management
assumptions. to understand the sensitivity
of changes in assumptions.
Additionally, we benchmarked
key assumptions against
other pension actuarial
valuations for any outliers
in the data used.
Details of the defined benefit
pension scheme are disclosed
in note 16 to the group
financial statements.
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INDEPENT AUDITOR'S REPORT TO THE MEMBERS OF
ASSOCIATED BRITISH ENGINEERING PLC
2. Key audit matters: Our assessment of risks of material misstatement
(continued)
=========================================================================================================================================================
Revenue
recognition * The calculation of the bad debt provision requires a * Testing the adequacy of the provisions for bad debt
and significant level of judgment as the Group sells recorded against trade receivable balances by taking
recoverability products to a wide customer base located across into account the ageing of receivables at period end
of trade numerous countries each with different macroeconomic and cash received after period end, as well as the
receivables environments. This spread of customers worldwide controls over its calculation.
requires significant judgement to assess the
financial health of each.
* Assessing the historical accuracy of provisions for
bad debt recorded by examining the utilization or
* The recoverability of trade receivables is dependent release of previously recorded provisions.
on the credit worthiness of customers and their
ability to settle the amounts due.
* Considering the adequacy of the Group's disclosures
(see note 12) in relation to provisions for risks
concerning recoverability of trade receivables.
======================================================================== ==============================================================
Going concern
* At 31March 2018 the Group had cash and cash We obtained management's
equivalents of GBP344,000 (2017: GBP535,000) and cash flow forecast which
incurred an operating loss of GBP525,000 (2017: supports their use of the
GBP906,000). going concern basis of accounting.
We tested the integrity
of this model, including
mathematical accuracy, and
* The Strategic Report on page 8 identifies the Group's reviewed key assumptions
principal risks and uncertainties. Judgement is such as forecast sales revenue
required by the directors in assessing whether any and operating costs for
material uncertainties exist which cast significant consistency. We also considered
doubt as to the Group's ability to meet its the historical accuracy
liabilities and whether the mitigating actions of management's forecasting.
identified by management are achievable.
We critically challenged
management on the assumptions
used in the forecasts and
* Judgement is also required in assessing whether the of certain other downside
disclosures provided in the financial statements sensitivities. These include
adequately describe the risks and underlying deterioration in oil prices
assumptions. and the impact on diesel
engine repairs forecasts
and reductions in forecasted
sale of engines.
* This is a risk due to the Group's continuing
operating losses and reducing cash resources.
======================================================================== ==============================================================
Our application of materiality
We apply the concept of materiality both in planning and
performing our audit, and in evaluating the effect of misstatements
on our audit and on the financial statements. For the purposes of
determining whether the financial statements are free from material
misstatement we define materiality as the magnitude of misstatement
that makes it probable that the economic decisions of a reasonably
knowledgeable person, relying on the financial statements, would be
changed or influenced.
We determined materiality for the Group to be GBP32,000, which
is 2% of revenue. Revenue is used as the benchmark for materiality
as it is considered the critical performance measure of the Group.
We use a different level of materiality, performance materiality,
to drive the extent of our testing and this was set at 75% of
financial statement materiality for the audit of the group
financial statements.
We agreed with the Audit Committee that we would report to the
Committee all audit differences in excess of GBP1,600 as well as
differences below that threshold that, in our view, warranted
reporting on qualitative grounds. We also report to the Audit
Committee on disclosure matters that we identified when assessing
the overall presentation of the financial statements.
An overview of the scope of our audit
We tailored the scope of our audit to ensure that we performed
enough work to be able to give an opinion on the financial
statements as a whole, taking into account the structure of the
Group, the accounting processes and controls, and the industry in
which the Group operates.
INDEPENT AUDITOR'S REPORT TO THE MEMBERS OF
ASSOCIATED BRITISH ENGINEERING PLC
The Group includes the listed parent Company (Associated British
Engineering plc), the main trading entity (British Polar Engines
Limited). The Group's accounting process is structured around a
finance team in Glasgow, maintaining their own accounting records
and controls.
The main trading entity is the focus of our audit as this
comprises 99% of the Group's revenue and 75% of the Group's net
assets. All material items in this entity, and therefore the
financial statements, are audited by a single engagement team. In
addition to the audit work conducted at Glasgow, the engagement
team also visited the warehouse, primarily to provide evidence over
the period-end inventory balance.
At the parent entity level we also tested the consolidation
process and carried out analytical procedures to confirm our
conclusion that there were no significant risks of material
misstatement.
Opinion on other matters prescribed by the Companies Act
2006
In our opinion:
-- the part of the Directors' Remuneration report to be audited
has been properly prepared in accordance with the Companies Act
2006;
-- the information given in the Strategic Report and the
Directors' Report for the financial year for which the financial
statements are prepared is consistent with the financial
statements;
-- the Strategic Report and the Directors' Report have been
prepared in accordance with applicable legal requirements; and
-- the information given in the Corporate Governance Statement
set out on pages 54 to 59 in respect of internal control and risk
management systems in relation to financial reporting processes and
about share capital structures is consistent with the financial
statements.
Matters on which we are required to report by exception
Adequacy of explanations received and accounting records
Under the Companies Act 2006 we are required to report to you
if, in our opinion:
-- we have not received all the information and explanations we require for our audit; or
-- adequate accounting records have not been kept by the parent
company, or returns adequate for our audit have not been received
from branches not visited by us; or
-- the parent company financial statements are not in agreement
with the accounting records and returns.
We have nothing to report in respect of these matters.
Directors' remuneration
Under the Companies Act 2006 we are also required to report if
in our opinion certain disclosures of Directors' remuneration have
not been made or the part of the Directors' Remuneration report to
be audited is not in agreement with the accounting records and
returns. We have nothing to report arising from these matters.
Corporate Governance Statement
Under the Listing Rules we are also required to review the part
of the Corporate Governance Statement relating to the company's
compliance with certain provisions of the UK Corporate Governance
Code. We have nothing to report arising from our review.
Reporting on other information
The other information comprises all of the information in the
Annual Report other than the financial statements and our auditors'
report thereon. The directors are responsible for the other
information. Our opinion on the financial statements does not cover
the other information and, accordingly, we do not express an audit
opinion or, except to the extent otherwise explicitly stated in
this report, any form of assurance thereon.
INDEPENT AUDITOR'S REPORT TO THE MEMBERS OF
ASSOCIATED BRITISH ENGINEERING PLC
In connection with our audit of the financial statements, our
responsibility is to read the other information and, in doing so,
consider whether the other information is materially inconsistent
with the financial statements or our knowledge obtained in the
audit, or otherwise appears to be materially misstated. If we
identify an apparent material inconsistency or material
misstatement, we are required to perform procedures to conclude
whether there is a material misstatement of the financial
statements or a material misstatement of the other information. If,
based on the work we have performed, we conclude that there is a
material misstatement of this other information, we are required to
report that fact. We have nothing to report based on these
responsibilities.
With respect to the Strategic Report and Directors' Report, we
also considered whether the disclosures required by the UK
Companies Act 2006 have been included.
Based on the responsibilities described above and our work
undertaken in the course of the audit, the Companies Act 2006,
(CA06), ISAs (UK) and the Listing Rules of the Financial Conduct
Authority (FCA) require us also to report certain opinions and
matters as described below (required by ISAs (UK) unless otherwise
stated)
Responsibilities of Directors
As explained more fully in the Directors' Responsibilities
Statement, the Directors are responsible for the preparation of the
financial statements and for being satisfied that they give a true
and fair view, and for such internal control as the directors
determine is necessary to enable the preparation of financial
statements that are free from material misstatement, whether due to
fraud or error.
In preparing the financial statements, the directors are
responsible for assessing the Group's and the parent company's
ability to continue as a going concern, disclosing, as applicable,
matters related to going concern and using going concern basis of
accounting unless the directors either intend to liquidate the
group or the parent company or to cease operations, or have no
realistic alternative to do so.
Auditor's responsibilities for the audit of the financial
statements
Our objectives are to obtain reasonable assurance about whether
the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an
auditor's report that includes our opinion. Reasonable assurance is
a high level assurance, but not a guarantee that an audit conducted
in accordance with ISAs (UK) will always detect material
misstatement when it exists.
Misstatements can arise from fraud or error and are considered
material if, individually or in aggregate, they can reasonably be
expected to influence the economic decisions of users taken on the
basis of these financial statements.
A further description of our responsibilities for the audit of
the financial statements is located on the Financial Reporting
Council's website at: www.frc.org.uk/auditorsresponsibilities. This
description forms part of our auditor's report.
Other matters which we are required to address
Following recommendations of the audit committee, we were
appointed by the audit committee to audit the financial statements
for the year ending 31 March 2016 and subsequent financial periods.
The period of total uninterrupted engagement is 3 years, covering
the periods ending 31 March 2016, 3 April 2017 and 31 March
2018.
The non-audit services prohibited by the FRC's Ethical Standard
were not provided to the group or the parent company and we remain
independent of the group and the parent company in conducting our
audit.
Our audit opinion is consistent with the additional report to
the Audit Committee.
Use of our report
This report is made solely to the parent company's members, as a
body, in accordance with Chapter 3 of Part 16 of the Companies Act
2006. Our audit work has been undertaken so that we might state to
the parent company's members those matters we are required to state
to them in an auditor's report and for no other purpose. To the
fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the parent company and the
parent company's members as a body, for our audit work, for this
report, or for the opinions we have formed.
David Cox
Senior Statutory Auditor
for and on behalf of haysmacintyre
Statutory Auditor, Chartered Accountants
London
30 July 2018
ASSOCIATED BRITISH ENGINEERING PLC
GROUP AND PARENT COMPANY ACCOUNTING POLICIES
FOR THE PERIODED 31 MARCH 2018
BASIS OF PREPARATION
The Company is a public limited company incorporated in the
United Kingdom under the Companies Act 2006. The address of the
registered office is given on the final page 63 of this annual
report.
These Group consolidated accounts and the company accounts have
been prepared in accordance with International Financial Reporting
Standards (IFRS) and IFRIC interpretations endorsed by the European
Union (EU) and with those parts of the Companies Act 2006
applicable to companies reporting under IFRS.
The Company's ordinary shares are traded on the London Stock
Exchange (LSE) under the ticker (ASBE).
These financial statements are presented in pound sterling
because that is the currency of the primary economic environment in
which the Group operates and all values are rounded to the nearest
thousand pounds (GBP'000) except where otherwise indicated.
The Company's accounting reference date is 31 March. These
financial statements are for the period 4 April 2017 to 31 March
2018. The comparative figures are for the period 1 April 2016 to 3
April 2017.
NEWLY ISSUED ACCOUNTING STANDARDS
At the date of authorisation of these financial statements, the
following Standards and Interpretations which have not been applied
in these financial statements were in issue but not yet
effective:
-- IFRS 9 in respect of Financial Instruments which will be
effective for the accounting periods beginning on or after 1
January 2018.
-- IFRS 15 in respect of Revenue from Contracts with Customers
which will be effective for accounting periods beginning on or
after 1 January 2018
-- IFRS 16 in respect of Leases which will be effective for
accounting periods beginning on or after 1 January 2019.
The directors anticipate that the adoption of the above
Standards and Interpretations in future periods will have no
material impact on the financial statements of the Group, except as
follows:
-- IFRS 9 Simplifies financial instrument classifications and
hedge accounting rules as well as amending the impairment
requirement for loans.
-- IFRS 15 is effective for annual periods beginning on or after
1 January 2018 and replaces all existing revenue requirements in
IFRS. The core principle is that revenue will be recognised at an
amount reflecting the consideration to which the Company expects to
be entitled in exchange for transferring goods and services to a
customer. It may have an impact on revenue recognition and related
disclosures.
-- IFRS 16 is effective for annual periods beginning on or after
1 January 2019 and it removes the current distinction between an
operating and finance lease, introducing consistent requirements
for all leases similar to the current finance lease accounting. The
lease value for leased premises as well as other smaller trade
related operating leases will be brought onto the Statement of
Financial Position at the fair value of the future minimum lease
payments.
Beyond the information above, it is not practicable to provide a
reasonable estimate as to the effect of these standards until a
detailed review has been completed.
ASSOCIATED BRITISH ENGINEERING PLC
GROUP AND PARENT COMPANY ACCOUNTING POLICIES (continued)
FOR THE PERIODED 31 MARCH 2018
GOING CONCERN
The Group's business activities, together with the factors
likely to affect its future development, performance and position
are set out in the Chairmen's statement on page 2. The financial
position of the Group, its cash flows and liquidity position are
described in the financial statements.
The Group continues to be reliant upon its continuing ability to
manage the timing of settlement both of its current liabilities and
future liabilities as they arise. There is also a need for
successful on-going equity fundraising and / or loans in the
immediate to short term thereafter, while sales plans and
projections come into effect, especially in relation to revenues
generated from new product and service lines. The Board has
prepared forecasts to reflect the revenues expected to be generated
by the Group. The Group is fully focused on ensuring that sales
plans are followed to ensure that the business becomes profitable
in the near future.
The Directors have concluded that the need to generate future
funds from further fundraising, disposing of investments and from
trading activities to satisfy the settlement of its on-going and
future liabilities represents a material uncertainty, which may
cast significant doubt upon the Group's and the Company's ability
to continue as a going concern. Nevertheless, after making
enquiries and considering this uncertainty and the measures that
can be taken to mitigate the uncertainty, the Directors have a
reasonable expectation that the Group and the Company will have
adequate resources to continue in existence for the foreseeable
future. For these reasons they continue to adopt the going concern
basis in preparing the annual report and accounts. The financial
statements do not include any adjustments that would result if the
Group and Company was unable to continue as a going concern.
BASIS OF CONSOLIDATION
The consolidated accounts include the Company and all its
subsidiary undertakings (from the date of acquisition or to the
date of disposal where applicable). Intra group sales and profits
are eliminated on consolidation. The accounts of all subsidiary
undertakings are made up to 31 March.
A subsidiary is an entity controlled, either directly or
indirectly, by the Company, where control is the power to govern
the financial and operating policies of the entity so as to obtain
benefit from its activities. The acquisition method of accounting
is used to account for the acquisition of subsidiaries by the
Group. The cost of an acquisition is measured as the fair value of
the assets given, equity instruments issued, and liabilities
incurred or assumed at the date of exchange. Acquisition costs are
expensed in the consolidated income statement in the period in
which they are incurred.
The consolidated financial statements consist of the results of
the following entities:
Entity Summary Description
Associated British Engineering Plc Ultimate Holding Company
British Polar Engines Ltd Trading Company
Akoris Trading Ltd Trading Company
ASSOCIATED BRITISH ENGINEERING PLC
GROUP AND PARENT COMPANY ACCOUNTING POLICIES (continued)
FOR THE PERIODED 31 MARCH 2018
REVENUE RECOGNITION
Revenue is measured at the fair value of the consideration
receivable by the Group for goods supplied and services provided,
excluding value added tax and trade discounts. Revenue from the
sale of spare parts is recognised when the goods are dispatched or,
if under a bill and hold arrangement, when they are available for
despatch to a specific customer. Revenue from the sale of engines
is recognised in accordance with the performance of contractual
terms and specifically when the engines have been satisfactorily
tested in accordance with contractual terms. Revenue from servicing
and repair work is recognised when the work is completed.
ACCOUNTING ESTIMATES AND JUDGEMENTS
Management are required, in accordance with IFRS, to exercise
judgement and to make estimates and assumptions regarding the
application of accounting policies and the resulting effect on
reported amounts of assets, liabilities, income and expenses. These
estimates and assumptions are based on historical experience and a
review of current conditions prevailing at the time, but actual
results may differ from these estimates. Any such revision is
recognised in the financial statements in the period in which the
change in circumstance is detected.
ACCOUNTING JUDGEMENTS
The key areas where management have exercised judgement in the
period, and the thought processes undertaken, are as follows:
Deferred tax
Judgement is applied by management in determining the extent to
which the recovery of carried forward tax losses is probable for
the purpose of meeting the criteria for recognition as deferred tax
assets. Note 19 sets out information on carried forward tax losses
for which a deferred tax asset has not been recognised.
Pension scheme
The directors are in regular contact with the Trustees of the
pension scheme in connection with three keys areas where judgement
is exercised; the assumptions underpinning the actuarial valuation,
continued negotiations regarding the pension scheme and in relation
to the payment plan. The directors then assess the relevant
estimates and assumptions made to ensure that statutory obligations
are met.
In evaluating the assumptions underpinning the actuarial
valuation the directors have sought the professional advice of a
firm of actuaries who prepare the valuation according to industry
standards and norms. During the period under review an actuarial
loss of GBP54,000 (2017: GBP495,000 gain) was recognised in the
Group accounts.
The assumptions underpinning the actuarial valuation are
disclosed further in note 16 to the Group financial statements.
ACCOUNTING ESTIMATES
The key accounting estimates having an impact on carrying
amounts of assets and liabilities in the reporting period are as
follows:
Inventories
Inventories are stated at the lower of cost (including an
appropriate proportion of attributable supplier rebates and
discounts) and net realisable value.
Net realisable value is the estimated selling price in the
ordinary course of business, less applicable variable selling
expenses. Provision is made for obsolete or slow-moving inventories
where appropriate.
Inventories held by the Group consist of raw material (mainly
components), work in progress (manufactured engines and parts) and
finished goods (both purchased and manufactured engines and parts).
A specific provision is made, on a 100% basis, for all stock lines
that are obsolete or slow moving for periods in excess of four
periods. A general provision is made of 5%, 12.5%, 25% and 50% over
all stock lines that have not moved for one, two, three and four
years respectively.
ASSOCIATED BRITISH ENGINEERING PLC
GROUP AND PARENT COMPANY ACCOUNTING POLICIES (continued)
FOR THE PERIODED 31 MARCH 2018
The inventory provision at the period end amounted to
GBP2,621,000 (2017: GBP2,496,000). The gross value of inventories
at the period end is GBP3,659,000 (2017: GBP3,828,000).
The directors review their assumptions and accounting estimates,
along with the accounting policies adopted in preparing these
financial statements, on a regular basis and recognise any change
in the period in which circumstances vary.
Provisions for doubtful debts
At the balance sheet date, each subsidiary evaluates the
recoverability of trade receivables and records provisions for
doubtful or disputed debts based on experience including
comparisons of the relative age of accounts and consideration of
the history. The actual level of debt collected may differ from the
estimated levels of recovery and could impact future operating
results positively or negatively. As at 31 March 2018 the Group has
provided GBP609,000 (2017: GBP500,000) against its current trade
receivables.
INVENTORIES AND IMPAIRMENT OF INVENTORIES
Inventories of raw materials, work in progress and finished
goods are valued at the lower of cost and net realisable value.
Work in progress and finished goods include an appropriate
allocation of overheads.
Cost is on a first in, first out basis. Net realisable value is
the estimated selling price in the normal course of business, less
estimated costs of completion and provision is made for obsolete,
slow moving and defective inventories.
LEASED ASSETS
Leases of property and plant and equipment, where the Group has
substantially all the risks and rewards of ownership, are
classified as finance leases. Assets held under finance leases are
capitalised at lease inception at the lower of the asset's fair
value and the present value of the minimum lease payments.
Obligations related to finance leases, net of finance charges in
respect of future periods, are included as appropriate within
borrowings. The interest element of the finance cost is charged to
the income statement over the life of the lease so as to produce a
constant periodic rate of interest on the remaining balance of the
liability for each period. The property, plant or equipment is
depreciated on the same basis as owned plant and equipment or over
the life of the lease, if shorter.
Leases where the lessor retains substantially all the risks and
rewards of ownership are classified as operating leases. Operating
lease rentals (net of any related lease incentives) are charged
against profit on a straight-line basis over the period of the
lease.
FOREIGN CURRENCIES
The functional and presentational currency of the parent company
and its subsidiaries is UK Pounds Sterling, rounded to the nearest
thousand. Transactions in currencies other than the functional
currency are translated at the rate ruling at the date of the
transaction. At each balance sheet date, monetary assets and
liabilities denominated in foreign currencies are translated at the
rate of exchange ruling at the balance sheet date. Any gains or
losses arising from the transactions are taken to the income
statement.
PROPERTY, PLANT AND EQUIPMENT
Plant and equipment are stated at cost less depreciation and any
impairment in value. Freehold property is held under a revaluation
model as outlined below. Depreciation is calculated to write down
the cost of all property, plant and equipment less its residual
value by annual instalments over their expected useful lives on the
following bases:
Freehold buildings 5 per cent straight line
Plant and machinery 7 1/2 - 331/3 per cent straight line
These useful lives and residual values are reviewed in each
financial period.
Assets held under finance leases are depreciated over their
expected useful lives on the same basis as owned assets or where
shorter, over the term of the relevant lease. The gain or loss
arising on the disposal or retirement of an asset is determined as
the difference between the sales proceeds and the carrying amount
of the asset and is recognised as income.
ASSOCIATED BRITISH ENGINEERING PLC
GROUP AND PARENT COMPANY ACCOUNTING POLICIES (continued)
FOR THE PERIODED 31 MARCH 2018
The carrying values of plant and machinery are reviewed for
impairment when events or changes in circumstances indicate the
carrying value may not be recoverable. If any such indication
exists, and where the carrying values exceed the estimated
recoverable amount, the assets or cash generating units are written
down to their recoverable amounts.
In the prior year, Freehold property was held under a cost
model. Following a revaluation in the year, properties whose fair
value can be measured reliably are held under the revaluation model
and are carried at a revalued amount, being their fair value at the
date of valuation less any subsequent accumulated depreciation and
subsequent accumulated impairment losses. The fair value of the
land and buildings is usually considered to be their market value.
This changed form a cost model to a revaluation model is a change
in accounting policy.
Revaluation gains and losses are recognised in other
comprehensive income and accumulated in equity, except to the
extent that a revaluation gain reverses a revaluation loss
previously recognised in the Income Statement or a revaluation loss
exceeds the accumulated revaluation gains recognised in equity;
such gains and losses are recognised in the Income Statement.
TAXATION
The tax expense represents the sum of the tax currently payable
and deferred tax.
Current tax payable is based on the taxable profit or loss for
the period. Taxable profit differs from net profit as reported in
the income statement because it excludes items of income or expense
that are taxable or deductible in other periods and it further
excludes items that are never taxable or deductible. The Group's
liability for current tax is calculated using tax rates that have
been enacted or substantively enacted by the balance sheet
date.
Deferred tax is provided in full, using the liability method, on
temporary differences arising between the tax bases of assets and
liabilities and their carrying amounts in the consolidated
financial statements. The deferred tax is not accounted for if it
arises from initial recognition of an asset or liability in a
transaction, other than a business combination, that at the time of
the transaction affects neither accounting nor taxable profit nor
loss. Deferred tax is determined using tax rates (and laws) that
have been enacted or substantially enacted by the balance sheet
date and are expected to apply when the related deferred tax asset
is realised, or the deferred tax liability is settled.
Deferred tax is provided on temporary differences arising on
investments in subsidiaries, except where the timing of reversal of
the temporary differences is controlled by the Group and it is
probable that the temporary difference will not reverse in the
foreseeable future.
Deferred tax assets are recognised to the extent that it is
probable that future taxable profit will be available against which
the temporary differences can be utilised.
RETIREMENT BENEFIT COSTS
For defined benefit retirement schemes, the cost of providing
benefits is determined using the Projected Unit Credit Method, with
actuarial valuations being carried out at each balance sheet date.
Actuarial gains and losses are recognised in full in the period in
which they occur. They are recognised outside profit or loss and
presented in the Group statement of comprehensive income.
Past service cost is recognised immediately to the extent that
the benefits are already vested, and otherwise is amortised on a
straight-line basis over the average period until the benefits
become vested.
The retirement benefit obligation recognised in the balance
sheet represents the present value of the defined benefit
obligation as adjusted for unrecognised past service cost, and as
reduced by the fair value of scheme assets. Any asset resulting
from this calculation is limited to cumulative unrecognised past
service cost, plus the present value of available refunds and
reductions in future contributions to the plan.
Actuarial gains and losses, which represent differences between
the expected and actuarial returns on the plan assets and the
effect of changes in actuarial assumptions, are recognised in the
statement of other comprehensive income in the period in which they
occur.
Pension payments to the Group's defined contribution schemes are
charged to the income statement as they arise.
ASSOCIATED BRITISH ENGINEERING PLC
GROUP AND PARENT COMPANY ACCOUNTING POLICIES (continued)
FOR THE PERIODED 31 MARCH 2018
CASH AND CASH EQUIVALENTS
Cash and cash equivalents in the Statement of Financial Position
comprise cash at bank and in hand and short term deposits with a
maturity of three months or less which are subject to an
insignificant risk of changes in value.
FINANCIAL INSTRUMENTS
Financial liabilities and equity instruments are classified
according to the substance of the contractual arrangements entered
into.
Where the contractual obligations of financial instruments
(including share capital) are equivalent to a similar debt
instrument, those financial instruments are classed as financial
liabilities. Financial liabilities are presented as such in the
balance sheet. Finance costs and gains or losses relating to
financial liabilities are included in the income statement. Finance
costs are calculated so as to produce a constant rate of charge on
the outstanding liability.
Where none of the contractual terms of share capital meet the
definition of a financial liability then this is classed as an
equity instrument. Dividends and distributions relating to equity
instruments are debited direct to equity.
Further analysis of the Group's financial instruments, and the
relevant exposure to risks and uncertainties, is stated in note 18
and the various classifications of financial assets and liabilities
are identified and explained.
Trade and other receivables
Trade and other receivables are originally recognised at fair
value, net of transaction costs. Subsequent measurement is at
amortised cost using the effective interest rate method. A
provision against trade receivables is made when there is objective
evidence that the Group will not be able to collect all amounts due
to it in accordance with the original terms of those receivables.
The total of bad, doubtful debts and overdue at the period-end was
GBP609,000 (2017: GBP500,000). Trade receivables and cash and cash
equivalents are classified as loans and receivables.
Trade and other payables
Trade and other payables are originally recognised at fair
value, net of transaction costs. Subsequent measurement is at
amortised cost using the effective interest rate method.
Investments in securities
Investments are recognised and derecognised on a trade date
where a purchase or sale of an investment is under a contract whose
terms require delivery of the investment within the timeframe
established by the market concerned, and are initially measured at
fair value, with all transaction costs being written off to the
income statement as incurred.
Investments are classified as available for sale and are
measured at subsequent reporting dates at fair value. Gains and
losses arising from changes in fair value of available for sale
financial assets are included in other comprehensive income for the
period. When the asset is disposed of or deemed to be impaired, the
cumulative gain or loss is reclassified from equity reserve to
income statement.
IMPAIRMENT OF PROPERTY, PLANT AND EQUIPMENT
At each balance sheet date the Group reviews the carrying
amounts of its property, plant and equipment to determine whether
there is any indication that those assets have suffered an
impairment loss. If any such indication exists, the recoverable
amount of the asset is estimated in order to determine the extent
of the impairment loss (if any). Where the asset does not generate
cash flows that are independent from other assets, the Group
estimates the recoverable amount of the cash-generating unit to
which the asset belongs.
ASSOCIATED BRITISH ENGINEERING PLC
GROUP AND PARENT COMPANY ACCOUNTING POLICIES (continued)
FOR THE PERIODED 31 MARCH 2018
Recoverable amount is the higher of fair value less costs to
sell and value in use. In assessing value in use the estimated
future cash flows are discounted to their present value using a
pre-tax discount rate that reflects current market assessments of
the time value of money and the risks specific to the asset for
which the estimates of future cash flows have not been adjusted. If
the recoverable amount of an asset (or cash-generating unit) is
estimated to be less than its carrying amount, the carrying amount
of the asset (cash-generating unit) is reduced to its recoverable
amount. An impairment loss is recognised as an expense immediately,
unless the relevant asset is carried at a revalued amount, in which
case the impairment loss is treated as a revaluation decrease.
Where an impairment loss subsequently reverses, the carrying
amount of the asset (cash-generating unit) is increased to the
revised estimate of its recoverable amount, but so that the
increased carrying amount does not exceed the carrying amount that
would have been determined had no impairment loss been recognised
for the asset (cash-generating unit) in prior periods.
SEGMENTAL REPORTING
The standard requires financial information to be disclosed in
the financial statements in the same format in which it is
disclosed to the chief operating decision-maker. The chief
decision-maker has been identified as the Board, at which level
strategic decisions are made.
EQUITY AND RESERVES
Share capital represents the nominal value of shares that have
been issued except for the preference shares classified as
debt.
Deferred shares represents shares arising from the sub-division
of ordinary shares of GBP2.
Share premium includes any premiums received on issue of share
capital. Any transaction costs associated with the issuing of
shares are deducted from share premium, net of any related income
tax benefits.
Retained earnings include all current and prior period retained
profits and losses.
Available for sale reserve includes all gains and losses
relating to Available for Sale financial assets.
Other reserves relate to movements not classified in any of the
reserves detailed above.
All transactions with owners of the parent are recorded
separately within equity.
ASSOCIATED BRITISH ENGINEERING PLC
CONSOLIDATED INCOME STATEMENT
FOR THE PERIODED 31 MARCH 2018
Note 2018 2017
GBP'000 GBP'000
REVENUE 1 1,603 1,043
Operating costs 2 (2,128) (1,949)
-------- --------
OPERATING LOSS 3 (525) (906)
Finance expense 6 (57) (75)
Finance income 6 - 19
-------- --------
LOSS BEFORE TAXATION (582) (962)
Taxation 7 160 2
-------- --------
LOSS FOR THE PERIOD (422) (960)
======== ========
LOSS PER SHARE ON LOSS FOR THE PERIOD
ATTRIBUTABLE TO EQUITY HOLDERS OF THE
PARENT COMPANY
BASIC AND DILUTED 8 (20.6p) (46.8p)
======== ========
Loss for the period attributable to:
Owners of the Company (422) (960)
Non-controlling interests - -
-------- --------
(422) (960)
-------- --------
All activities are classified as continuing.
The accounting policies on pages 16 to 22 and the notes on pages
28 to 43 form part of these accounts.
ASSOCIATED BRITISH ENGINEERING PLC
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE PERIODED 31 MARCH 2018
Note 2018 2017
GBP'000 GBP'000
Loss for the period (422) (960)
-------- --------
Other comprehensive income
Re-measurement of the net defined benefit
liability (*) 16 (54) 495
Loss on available for sale financial asset
(**) (168) -
Surplus on revaluation of property 600 -
Other comprehensive loss for the period 378 (465)
-------- --------
TOTAL COMPREHENSIVE (LOSS)/INCOME FOR THE
PERIOD (44) (465)
======== ========
Total comprehensive (loss)/income attributable
to:
Owners of the Company (44) (465)
Non-controlling interests - -
(44) (465)
======== ========
(*) = Items which will not subsequently be reclassified to the
Income Statement.
(**) = Items which may subsequently be reclassified to the
Income Statement.
All activities are classified as continuing.
The accounting policies on pages 16 to 22 and the notes on pages
28 to 43 form part of these accounts.
ASSOCIATED BRITISH ENGINEERING PLC Company Number: 00110663
GROUP STATEMENT OF FINANCIAL POSITION
AS AT 31 MARCH 2018
Note 2018 2017
GBP'000 GBP'000
ASSETS
Non-current assets
Property, plant and equipment 9 833 303
Available for sale financial assets 13 264 433
-------- --------
1,097 736
Current assets
Inventories 11 1,037 1,332
Trade and other receivables 12 518 514
Cash and cash equivalents 344 535
-------- --------
1,899 2,381
-------- --------
Total assets 2,996 3,117
======== ========
EQUITY AND LIABILITIES
Called up share capital 14 51 51
Deferred shares 14 2,594 2,594
Share premium account 5,370 5,370
Other reserves 11 11
Available for Sale reserve (64) 104
Revaluation reserve 600 -
Retained earnings (7,586) (7,110)
-------- --------
Equity attributable to the Parent Company's
Equity shareholders 976 1,020
-------- --------
Total equity 976 1,020
-------- --------
LIABILITIES
Non-current liabilities
Retirement benefit obligations 16b 1,354 1,380
Obligation under finance leases 17 13 25
1,367 1,405
-------- --------
Current liabilities
Trade and other payables 17 631 633
Obligations under finance leases 17 22 59
-------- --------
653 692
-------- --------
Total liabilities 2,020 2,097
Total equity and liabilities 2,996 3,117
======== ========
The financial statements were approved and authorised for issue
by the Board of Directors on 30 July 2018 and were signed below on
its behalf by:
C Weinberg
Director
The accounting policies on pages 16 to 22 and the notes on pages
28 to 43 form part of these accounts.
ASSOCIATED BRITISH ENGINEERING PLC
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE PERIODED 31 MARCH 2018
Attributa-ble
Share Share Deferred Other Available Revaluation Retained to owners
capital premium shares reserve for Sale reserve earnings of the Total
reserve parent
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance at
1 April 2016 51 5,370 2,594 11 104 - (6,645) 1,485 1,485
Loss for the
period - - - - - - (960) (960) (960)
Other
comprehensive
income
Actuarial gain
in defined
benefit plan
(*) - - - - - - 495 495 495
Unrealised
gain on - - - - - - - - -
Available
for Sale
financial
assets (**)
-------------- -------------- --------------- -------------- -------------- -------------- --------------- --------------- ---------------
Total
comprehensive
income for
the period - - - - - - (465) (465) (465)
-------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- --------------
Balance at
3 April 2017 51 5,370 2,594 11 104 - (7,110) 1,020 1,020
-------------- -------------- --------------- -------------- -------------- -------------- --------------- --------------- ---------------
Loss for the
period - - - - - - (422) (422) (422)
Other
comprehensive
income
Actuarial loss
in defined
benefit plan
(*) - - - - - - (54) (54) (54)
Unrealised
loss on
Available
for Sale
financial
assets (**) - - - - (168) - - (168) (168)
Revaluation
Surplus on
revaluation
of freehold
property - - - - - 600 - 600 600
Total
comprehensive
income for
the period - - - - (168) - (476) (644) (644)
-------------- -------------- --------------- -------------- -------------- -------------- --------------- --------------- ---------------
Balance at
31 March 2018 51 5,370 2,594 11 (64) 600 (7,586) 976 976
====== ====== ====== ====== ====== ====== ======= ======= ======
(*) = Items which will not be subsequently be reclassified to the Income Statement.
(**) = Items which may subsequently be reclassified to the
Income Statement.
The accounting policies on pages 16 to 22 and the notes on pages
28 to 43 form part of these accounts.
ASSOCIATED BRITISH ENGINEERING PLC
CONSOLIDATED CASH FLOW STATEMENT
FOR THE PERIODED 31 MARCH 2018
2018 2017
GBP'000 GBP'000
Cash flows from operating activities
Cash used in operations (256) (896)
Interest received - 19
Interest paid (57) (75)
Taxation 160
-------- --------
Net cash used in operating activities (153) (952)
-------- --------
Cash flows from investing activities
Proceeds from sale of equipment 2 -
Purchase of equipment (14) (26)
Net cash used in investing activities (12) (26)
-------- --------
Cash flows from financing activities
New finance lease 11 -
Repayment of finance leases (37) (64)
Net cash used in financing activities (26) (64)
-------- --------
Net decrease in cash and cash equivalents (191) (1,042)
Cash and cash equivalents at beginning of period 535 1,577
-------- --------
Cash and cash equivalents at end of period 344 535
======== ========
CASH FLOW FROM OPERATING ACTIVITIES
2018 2017
GBP'000 GBP'000
Loss before taxation (582) (962)
Adjustments for:
Depreciation 86 58
Interest income - (19)
Finance expense 57 75
Foreign exchange difference 2 -
Pension scheme interest expense 36 67
Cash paid in excess of current service cost (116) (123)
Profit on disposal of equipment (2) -
Changes in working capital:
Decrease/(increase) in inventories 295 (374)
(Increase)/decrease in trade and other receivables (5) 280
(Decrease)/increase in payables (27) 102
(256) (896)
Cash used in operations (256) (896)
======== ========
The accounting policies on pages 16 to 22 and the notes on pages
28 to 43 form part of these accounts.
ASSOCIATED BRITISH ENGINEERING PLC
NOTES TO THE ACCOUNTS - GROUP
FOR THE PERIODED 31 MARCH 2018
1. SEGMENTAL REPORTING
The following table shows an analysis of the Group's external
sales by geographical market:
2018 2017
GBP'000 GBP'000
United Kingdom 936 425
Europe 138 186
Far East and Australasia 64 166
Africa 176 82
North and South America 201 168
Middle East 88 16
1,603 1,043
============ ============
The following table shows an analysis of the Group's external
sales from continuing operations:
2018 2017
GBP'000 GBP'000
Revenue from the sale of goods 937 757
Revenue from the rendering of services 666 286
--------- ---------
1,603 1,043
========= =========
All of the above revenue arises from trading in diesel and
related engineering activities.
In the periods ended 31 March 2018 and 3 April 2017, save for
dollar bank accounts and overseas debtors, all of the assets held
by the Group were located in the United Kingdom and all capital
expenditure was incurred within the United Kingdom.
Operating segments
The following segment information has been prepared in
accordance with IFRS 8, "Operating Segments", which defines
requirements for the disclosure of financial information of an
entity's operating segments.
The Board consider the Group on an individual company basis.
Reports by individual companies are used by the chief
decision-maker in the Group. Significant operating segments are
Associated British Engineering Plc, British Polar Engines Limited
and Akoris Trading Limited
The Group's operations are located in the United Kingdom. Any
transactions between business units are on normal commercial terms
and conditions.
British Polar Engines Limited's activities consist of the
manufacture and supply of diesel engines and spare parts for diesel
engines together with associated repair work.
Akoris Trading Limited supplied a surplus generator set in the
period.
Associated British Engineering Plc is the Group's holding
company.
ASSOCIATED BRITISH ENGINEERING PLC
NOTES TO THE ACCOUNTS - GROUP (continued)
FOR THE PERIODED 31 MARCH 2018
1. SEGMENTAL REPORTING (continued)
Associated
Period to 31 March 2018 British British Akoris
Engineering Polar Trading Consolidated
Plc Engines Limited
Limited
GBP'000 GBP'000 GBP'000 GBP'000
External sales - 1,583 20 1,603
------------- ---------- ---------- ---------------
Segment result (LBIT) (159) (359) (7) (525)
------------- ---------- ---------- ---------------
Net finance expenses (57)
Taxation 160
---------------
Loss after tax (422)
===============
Other information
Capital additions - 16 - 16
Balance sheet
Segment assets 121 2,859 16 2,996
============= ========== ========== ===============
Associated
Period to 3 April 2017 British British Akoris
Engineering Polar Trading Consolidated
Plc Engines Limited
Limited
GBP'000 GBP'000 GBP'000 GBP'000
External sales - 1,043 - 1,043
------------- ---------- ---------- ---------------
Segment result (LBIT/ PBIT) (148) (751) (7) (906)
------------- ---------- ---------- ---------------
Net finance expenses (56)
Taxation 2
---------------
Loss after tax (960)
===============
Other information
Capital additions - 66 - 66
Balance sheet
Segment assets 199 2,887 31 3,117
============= ========== ========== ===============
Included in the total Group revenue was GBP512,000 (2017:
GBP158,000) of sales which arose from two customers who contributed
to 10% or more of the total Group revenue for the period ended 31
March 2018 (2017: one customer). The geographical market from which
the revenue from the customers originate is principally the United
Kingdom.
ASSOCIATED BRITISH ENGINEERING PLC
NOTES TO THE ACCOUNTS - GROUP (continued)
FOR THE PERIODED 31 MARCH 2018
2. OPERATING COSTS 2018 2017
GBP'000 GBP'000
Raw materials used 732 858
Staff costs (note 4) 667 944
Depreciation of property plant and equipment 86 58
Other expenses 643 89
-------- --------
2,128 1,949
======== ========
3. OPERATING LOSS 2018 2017
GBP'000 GBP'000
Operating loss is stated after charging/(crediting)
Depreciation on owned assets 54 23
Depreciation on assets held under finance
leases 32 35
Fees payable to the Company's auditor for
the audit of the Company's annual accounts:
PLC audit costs 22 21
The audit of the Company's subsidiaries pursuant
to legislation 21 20
Operating lease rental on plant and machinery 42 42
Profit on disposal of property, plant & equipment (2) -
======== ========
4. STAFF COSTS AND EMPLOYEES 2018 2017
GBP'000 GBP'000
Wages and salaries 499 753
Social security costs 52 68
Other pension costs 116 123
-------- --------
667 944
======== ========
The average monthly number of persons employed by
the Group during the period was:
2018 2017
Number Number
By activity
Production 9 11
Administration 13 16
-------- --------
22 27
======== ========
5. DIRECTORS' REMUNERATION
Directors received emoluments of GBP57,000 (2017: GBP46,000).
Further details can be found on page 60.
KEY MANAGEMENT COMPENSATION 2018 2017
GBP'000 GBP'000
Remuneration of Group directors 57 46
======== ========
The Group made no pension contributions in respect of Group
directors during the period ended 31 March 2018 or 3 April
2017.
ASSOCIATED BRITISH ENGINEERING PLC
NOTES TO THE ACCOUNTS - GROUP (continued)
FOR THE PERIODED 31 MARCH 2018
6. NET FINANCE EXPENSE 2018 2017
GBP'000 GBP'000
Interest on obligations under finance leases 21 8
-------- --------
Interest expenses for borrowings at amortised
cost 21 8
Net interest cost on defined benefit pension
scheme 36 67
-------- --------
57 75
-------- --------
Interest receivable on cash and
cash equivalents - (19)
-------- --------
57 (56)
-------- --------
7. TAXATION 2018 2017
GBP'000 GBP'000
The tax charge is set out below:
Current tax:
United Kingdom corporation tax at 19% (2017: - -
20%)
Research & Development tax credit 160 -
Deferred tax:
In respect of current period - 2
-------- --------
Total current tax and tax on profit on ordinary
activities 160 2
======== ========
The tax assessed for the period is different from the standard
rate of corporation tax in the UK of 19% (2017: 20%). The
differences are explained as follows:
2018 2017
GBP'000 GBP'000
Loss on ordinary activities before tax (422) (962)
-------- --------
Loss on ordinary activities multiplied by
standard rate of Corporation tax in the UK
of 19% (2017: 20%) (80) (192)
Effects of:
Fixed asset differences 11
Expenses not deductible for tax purposes 9 10
Amounts (charged)/credited directly to equity
or otherwise transferred - 98
Income not taxable 2 (5)
Depreciation for the period in excess of capital
allowances 9 (5)
Adjustment to recognised deferred tax - 100
Deferred tax not recognised - (15)
Surrender of group relief (3) -
Losses carried forward 63 -
Research & Development credit 160 -
Taxation credit in the consolidated income
statement 160 2
======== ========
The Group has trading losses of approximately GBP3.6 million
(2017: GBP3.1 million) and capital losses of GBP8.5 million (2017:
GBP8.5 million). These are available to set against future taxable
profits, taxation liabilities and capital gains respectively. The
trading losses are available to be used against future profits
arising from the same trade within the Group. These amounts are
subject to agreement with Her Majesty's Revenue and Customs.
Deferred tax assets have not been recognised in the Group accounts.
As the timing and extent of taxable profits are uncertain, a
deferred tax asset of GBP620,000 (2017: GBP528,000) arising on the
trading losses has not been recognised in the financial
statements.
ASSOCIATED BRITISH ENGINEERING PLC
NOTES TO THE ACCOUNTS - GROUP (continued)
FOR THE PERIODED 31 MARCH 2018
8. LOSS PER SHARE
The calculation of loss per ordinary share is based on the loss
attributable to ordinary shareholders divided by the weighted
average number of shares in issue during the period.
2018 2017
Weighted Weighted
Average Per shares Average Per shares
number amount number amount
Loss of shares pence Loss of shares pence
GBP'000 GBP'000
Basic and diluted
loss per share (422) 2,048,990 (20.6p) (960) 2,048,990 (46.8p)
======== =========== ============= ======== =========== =============
9. PROPERTY, PLANT AND EQUIPMENT Freehold
land and Plant
buildings and machinery Total
GBP'000 GBP'000 GBP'000
COST
At 1 April 2016 689 1,415 2,104
Additions - 66 66
Disposals - (42) (42)
----------- ---------------- --------
At 3 April 2017 689 1,439 2,128
----------- ---------------- --------
At 4 April 2017 689 1,439 2,128
Additions - 16 16
Disposals - (7) (7)
----------- ---------------- --------
At 31 March 2018 689 1,448 2,137
----------- ---------------- --------
ACCUMULATED DEPRECIATION
At 1 April 2016 689 1,119 1,808
Charge for period - 58 58
Eliminated on disposals - (42) (42)
At 3 April 2017 689 1,136 1,825
----------- ---------------- --------
At 4 April 2017 (as restated) 689 1,136 1,825
Charge for period 21 65 86
Eliminated on disposals - (7) (7)
Eliminated on revaluation (600) - (600)
----------- ---------------- --------
At 31 March 2018 110 1,193 1,303
----------- ---------------- --------
CARRYING AMOUNTS
At 31 March 2018 579 254 833
=========== ================ ========
At 3 April 2017 (As restated) - 303 303
=========== ================ ========
At 31 March 2016 - 296 296
=========== ================ ========
At 31 March 2018 assets held under finance leases included in
plant and machinery had a carrying value
of GBP142,636 (2017: GBP199,000).
ASSOCIATED BRITISH ENGINEERING PLC
NOTES TO THE ACCOUNTS - GROUP (continued)
FOR THE PERIODED 31 MARCH 2018
9. PROPERTY, PLANT AND EQUIPMENT (Continued)
In March 2017 the freehold property was valued at GBP600,000 by
GVA Grimley Limited, an external valuer. As a result of this, the
freehold property was revalued to GBP600,000 at 1 April 2017. The
directors, therefore, consider a value of GBP578,750 (2017: GBPNil)
after depreciation to be a prudent estimate of the value of the
property at the balance sheet date.
10. CAPITAL COMMITMENTS
At 31 March 2018 the Group had capital commitments of GBPNil
(2017: GBPNil).
11. INVENTORIES 2018 2017
GBP'000 GBP'000
Raw materials 100 119
Work in progress 34 61
Finished goods 903 1,152
-------- --------
1,037 1,332
======== ========
The closing inventory balance of GBP1,037,000 (2017:
GBP1,332,000) is stated net of provisions of GBP2,621,000
(2017: GBP2,496,000). There was an increase in provision of
GBP125,000 (2017: GBP85,000 increase) in relation to slow moving
stock.
12. TRADE AND OTHER RECEIVABLES 2018 2017
GBP'000 GBP'000
Trade receivables 836 788
Allowance for doubtful debts (609) (500)
-------- --------
227 288
Prepayments and accrued income 291 226
-------- --------
518 514
======== ========
Trade receivables disclosed above are classified as loans and
receivables and are measured at amortised cost.
The average credit period offered on sales of goods varies from
30 days to 90 days. The Group has recognised an allowance for
doubtful debts based on estimated irrecoverable amounts determined
by the history and by reference to the counterparty and an analysis
of the counterparty's current financial position.
Trade receivables disclosed above include amounts (see below for
aged analysis) which are past due at the period- end but against
which the Group has not recognised an allowance for doubtful
receivables.
Ageing of past due but not impaired receivables
2018 2017
GBP'000 GBP'000
31 - 60 days 97 18
61 - 90 days 2 9
91 - 120 days 38 227
-------- --------
137 254
======== ========
ASSOCIATED BRITISH ENGINEERING PLC
NOTES TO THE ACCOUNTS - GROUP (continued)
FOR THE PERIODED 31 MARCH 2018
12. TRADE AND OTHER RECEIVABLES (Continued)
Movement in the allowance for doubtful debts:
2018 2017
GBP'000 GBP'000
Balance at the beginning of the period 500 396
Increase in provision 109 104
Balance at the end of the period 609 500
======== ========
In determining the recoverability of a trade receivable the
Group considers, inter alia, any change in the credit quality of
the trade receivable from the date credit was initially granted up
to the reporting date.
The Group has a concentration of credit risk with exposure to
two large debtor balance at the period-end which accounts for 96%
of the balance due between 61 -120 days. Management considers that
all the above financial assets that are not provided for, impaired
or past due are of good credit quality.
13. AVAILABLE FOR SALE INVESTMENTS 2018 2017
GBP'000 GBP'000
Listed Securities 264 433
======== ========
Available For
Sale
financial assets
GBP'000
Opening balance 433
Additions -
Net fair value loss (168)
Disposals -
-----------
Closing balance 264
===========
Gains or losses on available for sale investments are presented
within other comprehensive income.
IFRS 13 requires that the fair value reflects "exit price" and
is valued in line with the relevant "unit of account" and the fair
value of the equity investments held is calculated by reference to
the quoted market price at the period end.
Available for sale investments, which are valued based on active
markets' prices, are reported under Level 1 in the fair value
hierarchy.
14. CALLED UP SHARE CAPITAL 2018 2017
GBP'000 GBP'000
Nominal value:
Allotted and fully paid:
2,048,990 ordinary shares of GBP0.025 each 51 51
1,313,427 deferred shares of GBP1.975 each 2,594 2,594
-------- --------
2,645 2,645
======== ========
Carrying value:
Equity shares:
2,048,990 ordinary shares of GBP0.025
each 51 51
======== ========
ASSOCIATED BRITISH ENGINEERING PLC
NOTES TO THE ACCOUNTS - GROUP (continued)
FOR THE PERIODED 31 MARCH 2018
14. CALLED UP SHARE CAPITAL (Continued)
The structure of the Group and Company's capital is as
follows:
Ordinary Ordinary Deferred Deferred Share
Shares Shares Shares Shares Premium
No. GBP'000 No. GBP'000 GBP'000
Balance at 4 April
2017 (GBP0.025/GBP1.9752
shares) 2,048,990 51 1,313,427 2,594 5,370
========== ========= ========== ========= ========
Further to the Extraordinary General Meeting held on 1 September
1999 the ordinary shares have 200 votes per share.
The deferred shares do not have voting rights and do not carry
any entitlement to attend general meetings of the Company; they are
not admitted to any Stock Exchange and carry a right to participate
in any return of capital once an amount of GBP100 has been paid in
respect of each new ordinary share.
Capital management
The Group manages its capital to ensure that entities in the
Group will be able to continue as going concerns while maximising
the return to stakeholders through the optimisation of the debt and
equity balance. The Group's overall strategy remains unchanged from
2017.
The capital structure of the Group consists of cash and bank
balances and equity of the Group, comprising called up share
capital, deferred shares, share premium account, other reserves and
retained earnings.
The Group is not subject to any externally imposed capital
requirements.
15. NON-CONTROLLING INTERESTS
At the period-end, the Group held 99.7% of Akoris Trading Limited's
Ordinary Share capital.
16. RETIREMENT BENEFIT SCHEMES
The Group operated a defined benefit pension scheme, holding the
assets in a separate trustee administered fund ("the ABE Pension
Fund"). The required contributions were assessed with the advice of
an independent qualified actuary using the projected unit credit
method. The Group also operates a designated defined benefit Group
personal pension plan which meets stakeholder requirements.
The scheme exposes the Group to actuarial risks such as:
Interest rate risk:
Any decrease in bond rates will increase the scheme's
liability.
Investment risk:
If the return on scheme assets is below the discount rate used
to calculate the present value of the scheme liability it may lead
to a scheme deficit.
Longevity risk:
Any increase in life expectancy of the scheme's members will
increase the scheme's liability as the present value of the
scheme's liability is calculated by reference to the best estimate
of the mortality rate of the scheme's members.
ASSOCIATED BRITISH ENGINEERING PLC
NOTES TO THE ACCOUNTS - GROUP (continued)
FOR THE PERIODED 31 MARCH 2018
16. RETIREMENT BENEFIT SCHEMES (Continued)
The scheme consists of 2 active members, 26 deferred members and
57 pensioner members. The contribution to the scheme for the
forthcoming period is expected to be GBP132,000 including the
contribution to the deficit. The value placed on the benefit
obligation is particularly sensitive to changes in some of the key
assumptions. Two of the most critical are:
-- The real (i.e. net of inflation) and nominal rates of interest used; and
-- Changes in future mortality rates
Assumption Change in the Change in
Defined Benefit the Defined
Obligation Benefit Obligation
% (GBP'000)
0.25% p.a. reduction in discount rate +3.60 49
0.25% increase in inflation +1.50 20
Members assumed to live one period
longer +4.10 56
In the period ended 31 March 2009, the Company came to an
agreement with the Trustees of the scheme and a resolution was
approved whereby the Group is no longer liable for its previously
recognised retirement obligations for the ABE section of the fund.
The elimination of the ABE section resulted in an elimination of
GBP3,047,000 of the opening obligation which was reflected through
the Statement of Comprehensive Income. The remaining obligation
relates to the BPE section of the scheme and is summarised on the
following page.
Contributions by employer in respect of future accrual of
benefits, death in service benefits and expenses:
32.1% (2017: 27.5%) of pensionable salaries less member
contributions, payable monthly by the 19(th) of the calendar month
after that to which they relate. Such amounts will be paid by the
employer within a period of them being paid by the scheme.
Insurance premiums for death in service benefits, management and
administration expenses are payable in addition as and when they
are due.
Contributions by employer in respect of the shortfall in funding
following the triennial review:
With reference to the recovery plan agreed with the Trustees in
conjunction with the valuation as at 1 April 2015, the employer
will make the following contributions over the period from 1 April
2015 to 31 March 2030 (these contributions have been temporarily
suspended for all Trustees other than employees):
-- From 1 April 2015 until 1 August 2015 contributions of
GBP17,000 per month has been paid in accordance with the previous
recovery plan.
-- From 1 August 2015, GBP10,000 per month are payable by the
19(th) of the calendar month after that to which they relate.
-- An additional lump sum relating to the profits of the
employer in respect of all accounting periods as from 1 April 2015
is payable in the financial period following the generation of the
profits calculated on the following basis:-
-- a) for all trading profits (before interest and taxation, and
excluding those generated from external investments) in excess of
GBP250k and below GBP1,050k an additional payment of 20% of such
profits;
-- b) for all trading profits (before interest and taxation, and
excluding those generated from external investments) in excess of
GBP1,050k an additional payment of 10% of such profits;
-- Profit-share contributions will only be payable if there is a
gross pension deficit recorded in the Employer's Annual Report and
Accounts for the financial period in which the profits are
generated;
-- Funding shortfall contributions (including profit-share
contributions) will cease in the event that a funding surplus is
certified by the Scheme Actuary.
The company came to an agreement with the Trustees of the scheme
on 25 July 2018, whereby the Trustees are prepared to support the
Group during its financial year to 31 March 2019 and have therefore
agreed that the current monthly deficit contributions will be
suspended with a view to these commencing again after 31 July 2019.
The Scheme expenses and the cost of future benefit accrual will
continue to be met by the Group.
Additionally, the PPF levy payment due to be paid by the Group
in September 2018 will be met directly out of the Pension Fund
assets, subject to the Group repaying this and other past payments
of the Levy already made by the Pension fund in addition to the
deficit contributions.
ASSOCIATED BRITISH ENGINEERING PLC
NOTES TO THE ACCOUNTS - GROUP (continued)
FOR THE PERIODED 31 MARCH 2018
16. RETIREMENT BENEFIT SCHEMES (continued)
(a) Pension cost (recognised in Income Statement) 2018 2017
GBP'000 GBP'000
Operating charge
Current service cost 21 14
-------- --------
Other finance charges
Interest on net defined benefit obligation 36 67
-------- --------
Total pension cost recognised in the Income
Statement 57 81
======== ========
(b) Benefit liability 2018 2017 2016 2015 2014
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Present value of funded
obligations 7,742 8,446 8,295 8,424 7,101
Fair value of plan assets (6,388) (7,066) (6,364) (6,532) (5,687)
------------ ---------- -------- -------- --------
Net liability 1,354 1,380 1,931 1,892 1,414
============ ========== ======== ======== ========
The major categories of plan assets
are as follows:
2018 2017
GBP'000 GBP'000
Equities (quoted) 2,308 1,704
Index-Linked Gilts 1,832 2,338
Corporate Bonds 1,162 1,947
Liability Driven Investment 640 -
Cash 446 736
Bank Balance - 341
-------- ----------
6,388 7,066
======== ==========
Plan assets
The weighted-average asset allocations at the 2018 2017
period-end were as follows:
Equities (quoted) 36.1% 24.1%
Bonds 46.9% 60.6%
LDI 10.0% -
Cash/other 7.0% 15.3%
Plan risks
The defined benefit plan typically exposes the Group to
actuarial risks, as stated on page 35, which are managed by a joint
working group, comprising the Trustees of the defined benefit plan
and the Board.
(c) Change in benefit obligation 2018 2017
GBP'000 GBP'000
Benefit obligation at beginning of the period 8,446 8,295
Current service cost 21 14
Interest cost 222 291
Actuarial gain/(loss) arising from changes
in financial assumptions (396) 124
Contributions by plan participants 3 3
Benefits paid (554) (281)
-------- --------
Benefit obligations at end of the period 7,742 8,446
======== ========
ASSOCIATED BRITISH ENGINEERING PLC
NOTES TO THE ACCOUNTS - GROUP (continued)
FOR THE PERIODED 31 MARCH 2018
16. RETIREMENT BENEFIT SCHEMES (continued)
(d) Change in plan assets 2018 2017
GBP'000 GBP'000
Fair value of plan assets at beginning of
the period 7,066 6,364
Expected return on plan assets 186 224
Actuarial (loss)/gains on plan assets arising
from changes in financial assumptions (450) 619
Contributions made by employer 137 137
Contributions by plan participants 3 3
Benefits paid (554) (281)
Fair value of plan assets at end of the period 6,388 7,066
======================= ===================
The expected long term return on cash is determined by reference
to current and expected long-term bank base rates. The expected
return on bonds is determined by reference to United Kingdom long
dated gilt and bond yields at the balance sheet date. The expected
rate of return on equities have been determined by setting an appropriate
risk premium above gilt/bond yields having regard to market conditions
at the balance sheet date. The expected rates have then all been
reduced to reflect the level of anticipated future expenses.
The expected long term rate of return under IAS 19 (revised in 2011)
is the same as the discount rate of 2.78% (2017: 2.71% pa).
(e) Principal actuarial assumptions 2018 2017
Inflation (CPI) 2.12 2.10
Rate of increase in pensionable salaries 2.50 2.50
Discount rate 2.78 2.71
Pension in payment increases 2.12 2.10
Revaluation rate for deferred pensioners 2.12 2.10
Male Mortality S2NMA CMI 2017 S2NMA CMI
with 1% P.a. 2016 with
long-term improvement 1% P.a. long-term
improvement
Female Mortality Female S2NFA Female S2NFA
CMI 2017 with CMI 2016 with
1% P.a. long-term 1% P.a. long-term
improvement improvement
Life expectancy from age 65 (periods):
Male currently aged 65 22.0 22.1
Female currently aged 65 24.0 24.1
Male currently aged 45 23.1 23.2
Female currently aged 45 25.2 25.3
(f) Expected future cash flows
The Group's expected contribution to its defined benefit plans
in 2018 is expected to be GBP132,000 (2017: GBP140,000). The Group
does not expect any material changes to the annual cash
contributions over the next three periods given the funding
position of the scheme. The defined benefit obligations are based
on the current value of expected benefit payment cash flows to
members over the next several decades.
The overall weighted average duration of scheme liabilities as
at 31 March 2018 is approximately 17 years.
ASSOCIATED BRITISH ENGINEERING PLC
NOTES TO THE ACCOUNTS - GROUP (continued)
FOR THE PERIODED 31 MARCH 2018
17. PAYABLES 2018 2017
GBP'000 GBP'000
Current
Obligations under finance leases 22 59
Trade payables 237 351
Other taxation and social security 5 14
Other payables 43 45
Accruals 346 223
-------- --------
653 692
======== ========
The net finance lease obligations are due:
In one period or less 22 59
Between two and three periods 13 25
-------- --------
35 84
======== ========
All current payables apart from obligations under finance leases
are expected to mature within a period of 6 months.
18. FINANCIAL INSTRUMENTS
The fair value of financial assets and liabilities, together
with the carrying amounts shown in the Group balance sheet, are as
follows.
No financial assets or liabilities have been reclassified during
the period.
2018 2017
Loans and Fair value Loans and Fair value
Receivables Profit or receivables Profit
loss or loss
GBP'000 GBP'000 GBP'000 GBP'000
Financial assets:
Trade and other receivables 227 - 288 -
------------- ----------- ------------ -----------
Total current 227 - 288 -
Total 227 - 288 -
============= =========== ============ ===========
Financial liabilities:
Loans 13 - 25 -
------------- ----------- ------------ -----------
Total non- current 13 - 25 -
Trade and other payables 575 - 633 -
Loans 22 - 59 -
------------- ----------- ------------ -----------
Total current 597 - 692 -
Total 610 - 717 -
============= =========== ============ ===========
Trade and other receivables exclude the value of any prepayments
or accrued income. Trade and other payables exclude the value of
deferred income. All financial assets and liabilities have a
carrying value that approximates to fair value. For trade and other
receivables, allowances are made within the book value for credit
risk.
ASSOCIATED BRITISH ENGINEERING PLC
NOTES TO THE ACCOUNTS - GROUP (continued)
FOR THE PERIODED 31 MARCH 2018
18. FINANCIAL INSTRUMENTS (continued)
RISKS
The main risks arising from the Group's financial instruments
are market risk, liquidity risk and credit risk. Market risk
includes price commodity risk, foreign exchange risk and interest
rate risk. The Group has limited exposure to foreign exchange risk
and also has no loans, therefore limited exposure to interest rate
risk.
Cash and cash equivalents held at floating rates expose the
entity to cash flow risk. Interest rate risk is limited to the cash
and cash equivalents.
Based on the balance sheet value of cash and cash equivalents, a
1% change in interest base rates would lead to an increase or
decrease in income and equity of GBP3,440 (2017: GBP5,000).
The Board reviews and agrees policies for managing each of the
above risks and they are summarised below and in the accounting
policies to the Group financial statements. These policies have
been consistently applied throughout the period.
COMMODITY PRICE RISK
The Group is dependent upon some of its suppliers to effectively
operate a stock holding and call off management system, which is
utilised to mitigate holding costs. There is the potential to leave
the Group exposed to 'stock out' or shortages but the Group manages
this closely and does not envisage this going forward.
When prices are advantageous a strategic decision may be taken
to increase a stock levels in core parts which mitigates the issue
of price commodity risk. There are a number of suppliers used, each
with various contractual terms, and therefore the Board do not
consider this a significant risk.
LIQUIDITY RISK
The Group's liquidity is dependent on the cash balances
available and it is the Group's policy to place surplus cash on
deposit to ensure it has an appropriate rate of return. The Board
reviews an annual 12 month financial projection as well as
information regarding cash balances. The maturity profile of the
Group's finance lease liabilities is set out in note 17.
ASSOCIATED BRITISH ENGINEERING PLC
NOTES TO THE ACCOUNTS - GROUP (continued)
FOR THE PERIODED 31 MARCH 2018
18. FINANCIAL INSTRUMENTS (continued)
CREDIT RISK
The Group's principal financial assets are cash deposits,
available for sale financial assets and trade and other
receivables. The credit risk associated with the cash is limited as
the counterparties have high credit ratings assigned by
international credit-rating agencies. The principal credit risk
arises therefore from its trade and other receivables and available
for sale financial assets.
In order to manage credit risk the directors of the subsidiary
company set limits for customers based on a combination of payment
history, third party credit references and knowledge of the
customers. Credit limits are reviewed by the subsidiary's directors
on a regular basis in conjunction with debt ageing and experience.
In 2018 and 2017 there were a limited number of concentrations of
credit risk. The Group's top five customers comprised less than 1%
of the period end trade receivables. The Board consider their
strong customer relations to be a strength rather than a risk as
they are the preferred suppliers to these customers.
Where appropriate, the subsidiary company requests payment or
part-payment in advance of shipment. In connection with the trade
receivables, there is a risk of warranty claims, which the
subsidiary company tries to minimise. The carrying value of the
trade receivables represents the maximum credit risk exposure and
therefore sensitivity analysis has not been performed.
Collection procedures in relation to receivables are initiated
once the credit terms are exceeded and trade receivables both due
and not yet due are reviewed on a line by line basis, with adequate
provision being made against period end balances where appropriate.
During the period an additional provision of GBP109,000 (2017:
GBP104,000) has been included in the financial statements.
At the period end, 9.6% (2017: 10%) of current financial assets
are aged greater than 90 days. These amounted to GBP612,000 and, of
this amount, GBP574,000 has been provided for (2017: GBP702,000 and
GBP472,000 respectively).
FAIR VALUE OF FINANCIAL INSTRUMENTS
The following table provides an analysis of financial
instruments that are measured subsequent to initial recognition at
fair value into Levels 1 to 3 based on the degree to which the fair
value is observable:
-- Level 1 fair value measurements are those derived from quoted
prices in active markets for identical assets or liabilities;
-- Level 2 fair value measurements are those derived from inputs
other than quoted prices included within Level 1 that are
observable for the asset or liability, either directly (i.e. as
prices) or indirectly (i.e. derived from prices); and
-- Level 3 fair value measurements are those derived from
valuation techniques that include inputs for the asset or liability
that are not based on observable market data (unobservable
inputs).
Level Level Level Total
1 2 3
GBP'000 GBP'000 GBP'000 GBP'000
Available for sale financial
assets
Quoted securities 264 - - 264
======== ======== ======== ========
ASSOCIATED BRITISH ENGINEERING PLC
NOTES TO THE ACCOUNTS - GROUP (continued)
FOR THE PERIODED 31 MARCH 2018
19. DEFERRED TAXATION
The deferred taxation liability at 31 March 2018 was GBPNil
(2017: GBPNil).
No provision has been made for the potential deferred tax assets
on the trading losses carried forward as they are not sufficiently
certain to crystallise in the foreseeable future, with future
pension obligations deemed to exceed the potential future cash
inflows. This assumption will be revisited on an annual basis or as
and when circumstances change. The amounts not recognised (all of
which have been calculated at 17% (2017: 17 %)) are set out
below:
Group 2018 2017
GBP'000 GBP'000
Arising from trading losses 620 528
Arising from capital losses 1,451 1,451
Arising from pension deficit 230 328
-------- --------
2,301 2,307
======== ========
20. CONTINGENT LIABILITIES
2018 2017
GBP'000 GBP'000
a) Banker's indemnities 30 30
======== ========
The indemnities relate to provision of services such as letters
of credit or international guarantees by
the bank.
b) There were no other contingent liabilities at 31 March 2018 or 3 April 2017.
21. COMMITMENTS UNDER OPERATING LEASES
At 31 March the Group had the following commitments under non-cancellable
operating leases:
Other
2018 2017
GBP'000 GBP'000
Within one period 11 10
Between two and five periods inclusive - 10
------------ -----------
11 20
============ ===========
ASSOCIATED BRITISH ENGINEERING PLC
NOTES TO THE ACCOUNTS - GROUP (continued)
FOR THE PERIODED 31 MARCH 2018
22. SUBSIDIARIES
At 31 March 2018 the Company held share capital in the following
subsidiaries:
Company % Holding Activity Registered Country of
office Incorporation
British Polar Engines 100% (2017:100%) Manufacture and 133 Helen Scotland
Limited supply of diesel Street, Govan,
engines, associated Glasgow,
servicing and G51 3HD
sale of spare
parts
Akoris Trading 99.7% (2017: Commodity, natural 10 Queen England &
Limited 99.7%) resource and Street Place, Wales
trade finance London, EC4R
1AG
Kelvin Diesels 100% (2017: Diesel Engines, 133 Helen Scotland
Limited 100%) acting as nominee Street, Govan,
for British Polar Glasgow,
Engines Limited G51 3HD
23. RELATED PARTY TRANSACTIONS
At 31 March 2018, British Polar Engines held shares in SalvaRx
Group Plc.
Colin Weinberg, a director of the Company held 0.12% holding in
SalvaRx Group Plc at 31 March 2018 (0.1% at 3 April 2017).
In addition, C Weinberg also held share options, as at 31 March
2018.
ASSOCIATED BRITISH ENGINEERING PLC Company Number: 00110663
COMPANY STATEMENT OF FINANCIAL POSITION
AS AT 31 MARCH 2018
31 March 3 April
2018 2017
Note GBP'000 GBP'000
ASSETS
Non-current assets
Property, plant and equipment 7 - -
Investments in subsidiaries 9 - -
Available for sale financial assets 10 96 169
--------- --------
96 169
--------- --------
Current assets
Trade and other receivables 11 - -
Cash and cash equivalents 24 30
--------- --------
24 30
--------- --------
T Total assets 120 199
========= ========
EQUITY AND LIABILITIES
Called up share capital 15 51 51
Deferred shares 15 2,594 2,594
Share premium account 5,370 5,370
Other reserve 212 212
Available for sale reserve (32) 41
Retained earnings (8,172) (8,151)
--------- --------
Total equity 23 117
--------- --------
LIABILITIES
Current liabilities
Trade and other payables 12 97 82
Total liabilities 97 82
========= ========
Total equity and liabilities 120 199
========= ========
Under section 408 of the Companies Act 2006, the company is
exempt from the requirements to present its own Income statement.
The loss after tax for the period was GBP21,000 (2017: loss
GBP7,000)
The financial statements were approved and authorised for issue
by the Board of Directors on 30 July 2018 and were signed below on
its behalf by:
C Weinberg
Director
The accounting policies on pages 16 and 22 and the notes on
pages 47 to 52 form part of these accounts.
ASSOCIATED BRITISH ENGINEERING PLC
COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE PERIODED 31 MARCH 2018
Available Total
Share Share Deferred Other for Retained
capital premium shares reserve Sale earnings
Financial
Assets
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP000
Balance at 1
April 2016 51 5,370 2,594 212 7 (8,144) 90
-------------- -------------- --------------- -------------- -------------- --------------- --------------
Loss for the
period - - - - - (7) (7)
Other
comprehensive
income
Unrealised
gain on
Available
for Sale
financial
assets
(**) - - - - 34 - 34
-------------- -------------- --------------- -------------- -------------- --------------- ---------------
Total
comprehensive
income
for the
period - - - - 34 (7) 27
-------------- -------------- --------------- -------------- -------------- --------------- ---------------
Balance at 3
April 2017 51 5,370 2,594 212 41 (8,151) 117
-------------- -------------- --------------- -------------- -------------- --------------- --------------
Loss for the
period - - - - - (21) (21)
Other
comprehensive
income
Unrealised
gain on
Available
for Sale
financial
assets
(**) - - - - (73) - (73)
-------------- -------------- --------------- -------------- -------------- --------------- ---------------
Total
comprehensive
income
for the
period - - - - (73) (21) (94)
-------------- -------------- --------------- -------------- -------------- --------------- ---------------
Balance at 31
March 2018 51 5,370 2,594 212 (32) (8,172) 23
====== ====== ====== ====== ====== ======= =======
(**) = Items which may subsequently be reclassified to the
Income Statement.
The accounting policies on pages 16 and 22 and the notes on
pages 47 to 52 form part of these accounts.
ASSOCIATED BRITISH ENGINEERING PLC
COMPANY CASH FLOW STATEMENT
FOR THE PERIODED 31 MARCH 2018
2018 2017
GBP'000 GBP'000
Cash flows from operating activities
Cash used in operations (24) (16)
Interest received 18 18
Net cash used in operating activities (6) 2
-------- --------
Cash flows from investing activities - -
Net cash derived from investing activities - -
-------- --------
Cash flows from financing activities - -
Net cash used in financing activities - -
-------- --------
Net decrease in cash and cash equivalents (6) 2
Cash and cash equivalents at beginning of period 30 28
-------- --------
Cash and cash equivalents at end of period 24 30
======== ========
CASH FLOW FROM OPERATING ACTIVITIES
2018 2017
GBP'000 GBP'000
Loss before taxation (21) (8)
Adjustments for:
Interest income (18) (18)
Changes in working capital:
(Increase)/decrease in trade and other receivables - 3
Increase/(decrease) in payables 15 7
Taxes paid - -
-------- --------
Cash used in operations (24) (16)
======== ========
The accounting policies on pages 16 and 22 and the notes on
pages 47 to 52 form part of these accounts.
ASSOCIATED BRITISH ENGINEERING PLC
NOTES TO THE ACCOUNTS - COMPANY
FOR THE PERIODED 31 MARCH 2018
OPERATING COSTS AND OPERATING LOSS
1. Operating loss is stated after charging 2018 2017
GBP'000 GBP'000
Fees payable to the Company's auditor for
the audit of the company's annual accounts 22 21
2. STAFF COSTS AND EMPLOYEES 2018 2017
GBP'000 GBP'000
Wages and salaries 48 48
48 48
======== ========
The average monthly number of persons employed by the Company
during the period was:
2018 2017
Number Number
By activity
Directors 2 2
Administration 1 1
3 3
======= =======
3. DIRECTORS' REMUNERATION 2018 2017
GBP'000 GBP'000
Remuneration in respect of directors was as
follows:
Remuneration 32 32
======== ========
4. KEY MANAGEMENT COMPENSATION 2018 2017
GBP'000 GBP'000
Remuneration of Company directors 32 32
======== ========
The Company made no pension contributions in respect of Company
directors during the period ended 31 March 2018 or 3 April
2017.
5. INTEREST RECEIVED 2018 2017
GBP'000 GBP'000
Interest receivable on cash and cash equivalents (18) (18)
-------- --------
(18) (18)
======== ========
6. TAXATION
There is no taxation liability at 31 March
2018 (2017: GBPnil)
ASSOCIATED BRITISH ENGINEERING PLC
NOTES TO THE ACCOUNTS - COMPANY
FOR THE PERIODED 31 MARCH 2018
7. PROPERTY, PLANT AND EQUIPMENT
Computer
equipment Total
GBP'000 GBP'000
COST
At 1 April 2016 2 2
Additions - -
Disposals - -
------------ --------
At 3 April 2017 2 2
------------ --------
At 4 April 2017 2 2
Additions - -
Disposals - -
------------ --------
At 31 March 2018 2 2
------------ --------
ACCUMULATED DEPRECIATION
At 1 April 2016 2 2
Charge for period - -
Eliminated on disposals - -
------------ --------
At 3 April 2017 2 2
------------ --------
At 4 April 2017 2 2
Charge for period - -
Eliminated on disposals - -
------------ --------
At 31 March 2018 2 2
------------ --------
CARRYING AMOUNTS
At 31 March 2018 - -
============ ========
At 3 April 2017 - -
============ ========
At 31 March 2016 - -
============ ========
8. CAPITAL COMMITMENTS
At 31 March 2018 the Company has no capital commitments (2017:
GBPNil)
ASSOCIATED BRITISH ENGINEERING PLC
NOTES TO THE ACCOUNTS - COMPANY
FOR THE PERIODED 31 MARCH 2018
9. INVESTMENTS IN SUBSIDIARIES
Company % Holding Activity Registered Country of
office Incorporation
British Polar Engines 100% Manufacture 133 Helen Scotland
Limited and supply Street, Govan,
of diesel Glasgow,
engines, G51 3HD
associated
servicing
and sale
of spare
parts
Akoris Trading Limited Commodity, 10 Queen England &
* natural resource Street Place, Wales
and trade London, EC4R
finance 1AG
Kelvin Diesels Limited 100% Diesel Engines, 133 Helen Scotland
acting as Street, Govan,
nominee for Glasgow,
British Polar G51 3HD
Engines Limited
The investment in British Polar Engines Limited and Akoris
Trading Limited was fully provided against at 31 March 2018 and 3
April 2017.
* Held indirectly via British Polar Engines Limited
10 AVAILABLE FOR SALE INVESTMENTS 2018 2017
GBP'000 GBP'000
Listed securities 96 169
======== ========
Available
For Sale
financial
assets
GBP
Opening balance 169
Net fair value gain (73)
Closing balance 96
===========
Gains or losses on available for sale investments are presented
within other comprehensive income.
IFRS 13 requires that the fair value reflects "exit price" and
is valued in line with the relevant "unit of account" and the fair
value of the equity investments held is calculated by reference to
the quoted market price at the period end.
Available for sale investments, which are valued based on active
markets' prices, are reported under Level 1 in the fair value
hierarchy.
ASSOCIATED BRITISH ENGINEERING PLC
NOTES TO THE ACCOUNTS - COMPANY
FOR THE PERIODED 31 MARCH 2018
11 TRADE AND OTHER RECEIVABLES 2018 2017
GBP'000 GBP'000
Trade and other receivables - 2
Prepayments and accrued income - 1
---------- --------
- 3
========== ========
12 TRADE AND OTHER PAYABLES 2018 2017
GBP'000 GBP'000
Amounts falling due within one period
Trade and other payables 62 48
Accruals and deferred income 35 34
-------- --------
97 82
======== ========
13. FINANCIAL INSTRUMENTS
The fair values of cash and cash equivalents, available for sale
financial assets, receivables and
payables are assumed to approximate to their carrying values.
The Company's financial instruments comprise cash and various
items, such as trade and other receivables, available for sale
financial assets and trade and other payables that arise directly
from its operations. The main purpose of these financial
instruments is to finance the Company's operations. At 31 March
2018 the Company has cash balances of GBP24,000 (2017: GBP30,000)
and no bank overdraft (2017: GBPNil).
RISKS
The main risks arising from the Company's financial instruments
are market risk, liquidity risk and credit risk. Market risk
includes foreign exchange risk and interest rate risk. The Company
has limited exposure to foreign exchange risk and also has no
loans, therefore limited exposure to interest rate risk.
Cash and cash equivalents held at floating rates expose the
entity to cash flow risk. Interest rate risk is limited to the cash
and cash equivalents.
Based on the balance sheet value of cash and cash equivalents, a
1% change in interest base rates would lead to an increase or
decrease in income and equity of GBP240 (2017: GBP300).
The Board reviews and agrees policies for managing each of the
above risks and they are summarised overleaf and in the accounting
policies to the Company financial statements. These policies have
been consistently applied throughout the period.
LIQUIDITY RISK
The Company's liquidity is dependent on the cash balances
available and it is the Company's policy to place surplus cash on
deposit to ensure as high a rate of return as possible. The Board
reviews an annual 12 month financial projection as well as
information regarding cash balances on a monthly basis.
ASSOCIATED BRITISH ENGINEERING PLC
NOTES TO THE ACCOUNTS - COMPANY
FOR THE PERIODED 31 MARCH 2018
13. FINANCIAL INSTRUMENTS (continued)
CREDIT RISK
The Company's principal financial assets are cash deposits,
available for sale financial assets and trade and other
receivables. The credit risk associated with the cash is limited as
the counterparties have high credit ratings assigned by
international credit-rating agencies. The credit risk arising from
its trade and other receivables is negligible.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The following table provides an analysis of financial
instruments that are measured subsequent to initial recognition at
fair value into Levels 1 to 3 based on the degree to which the fair
value is observable:
-- Level 1 fair value measurements are those derived from quoted
prices in active markets for identical assets or liabilities;
-- Level 2 fair value measurements are those derived from inputs
other than quoted prices included within Level 1 that are
observable for the asset or liability, either directly (i.e. as
prices) or indirectly (i.e. derived from prices); and
-- Level 3 fair value measurements are those derived from
valuation techniques that include inputs for the asset or liability
that are not based on observable market data (unobservable
inputs).
Level Level Level Total
1 2 3
GBP'000 GBP'000 GBP'000 GBP'000
Available for sale financial
assets
Quoted securities 96 - - 96
======== ======== ======== ========
14. DEFERRED TAXATION
2018 2017
GBP'000 GBP'000
Arising from trading losses 252 254
Arising from capital losses 1,408 1,408
-------- --------
1,660 1,662
======== ========
The trading losses are available to be used against future
profits.
Deferred tax assets on the trading losses have not been provided
in the financial statements as they are not sufficiently certain to
crystallise in the foreseeable future. The amounts not recognised
are set out above.
ASSOCIATED BRITISH ENGINEERING PLC
NOTES TO THE ACCOUNTS - COMPANY
FOR THE PERIODED 31 MARCH 2018
15. CALLED UP SHARE CAPITAL 2018 2017
GBP'000 GBP'000
Nominal value:
Allotted and fully paid:
2,048,990 ordinary shares of GBP0.025 each 51 51
1,313,427 deferred shares of GBP1.975 each
share premium 2,594 2,594
-------- --------
2,645 2,645
======== ========
Carrying value:
Equity shares:
2,048,990 ordinary shares of GBP0.025 each 51 51
======== ========
Further to the Extraordinary General Meeting held on 1 September
1999 the ordinary shares have 200 votes per share.
The deferred shares do not have voting rights and do not carry
any entitlement to attend general meetings of the Company; they are
not admitted to any Stock Exchange and carry a right to participate
in any return of capital once an amount of GBP100 has been paid in
respect of each new ordinary share.
16. CONTINGENT LIABILITIES
There were no contingent liabilities at 31 March 2018 or 3 April
2017.
17. RELATED PARTY TRANSACTIONS
The Company has taken advantage of the exemption with regard to
disclosing transactions with wholly-owned subsidiaries, on the
grounds that the results of the subsidiaries are included in the
publicly available consolidated financial statements of Associated
British Engineering Plc.
ASSOCIATED BRITISH ENGINEERING PLC
STATEMENT OF DIRECTORS' RESPONSIBILITIES
STATEMENT OF DIRECTORS' RESPONSIBILITIES
The directors are responsible for preparing the Strategic
Report, the Directors' Report, the Remuneration Report and the
financial statements in accordance with applicable law and
regulations.
Company law requires the directors to prepare financial
statements for each financial period. Under that law the directors
are required to prepare financial statements in accordance with
International Financial Reporting Standards, as adopted by the
European Union (IFRSs) and have also been chosen to prepare the
parent company financial statements under IFRS as adopted by the
European Union. Under Company Law the directors must not approve
the financial statements unless they are satisfied that they give a
true and fair view of the state of affairs of the Group and Company
and profit or loss of the Group for that period. In preparing these
financial statements, the directors are required to:
-- select suitable accounting policies and then apply them consistently
-- make judgements and accounting estimates that are reasonable and prudent
-- state whether applicable accounting standards, IFRS as
adopted by the European Union have been followed, subject to any
material departures disclosed and explained in the financial
statements
-- prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the Company will
continue in business
-- prepare a directors' reports, strategic report and directors'
remuneration report which comply with the requirements of the
Companies Act 2006.
The directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Group's and
Company's transactions and disclose with reasonable accuracy at any
time the financial position of the Company and the Group and enable
them to ensure that the financial statements and the directors
remuneration report comply with the Companies Act 2006 and Article
4 of the IAS Regulations. They are also responsible for
safeguarding the assets of the Company and the Group and hence for
taking reasonable steps for the prevention and detection of fraud
and other irregularities.
The directors confirm that:
-- so far as each director is aware, there is no relevant audit
information of which the Group's auditor is unaware; and
-- the directors have taken all steps that they ought to have
taken to make themselves aware of any relevant audit information
and to establish that the auditor is aware of that information.
-- the directors are responsible for preparing the annual report
in accordance with applicable law and regulations. The directors
consider the annual report and the financial statements, taken as a
whole, provides the information necessary to assess the company's
performance, business model and strategy and is fair, balanced and
understandable
WEBSITE PUBLICATION
The directors are responsible for the maintenance and integrity
of the corporate and financial information included on the
Company's website. Legislation in the United Kingdom governing the
preparation and dissemination of financial statements may differ
from legislation in other jurisdictions.
DIRECTORS' RESPONSIBILITIES PURSUANT TO DTR4
To the best of their knowledge, the directors confirm:
-- the financial statements, prepared in accordance with the
applicable set of accounting standards, give a true and fair view
of the assets, liabilities, financial position of the Group and
Company and profit or loss of the Group; and
-- the annual report, including the Strategic Report includes a
fair review of the development and performance of the business and
the position of the Group and Company, together with a description
of the principal risks and uncertainties faced.
C Weinberg
Director
Date: 30 July 2018
ASSOCIATED BRITISH ENGINEERING PLC
CORPORATE GOVERNANCE REPORT
(AS REFERRED TO IN THE DIRECTORS' REPORT)
In accordance with the requirements of the Listing Rules of the
Financial Conduct Authority, set out below are details of the
Company's corporate governance arrangements, including a statement
as to how the Company applies the main principles of the UK
Corporate Governance Code ("the Code"), together with a statement
regarding its compliance with specific provisions. The Code is
publicly available on the Financial Reporting Council's website
www.frc.org.uk. Whilst welcoming the principles contained within
the Code, the Board considers that it should be recognised that
what may be appropriate for a large Company may not necessarily be
so appropriate for a smaller company and the Company's current
circumstances. As a result, the Company has been in compliance
throughout the period with the provisions set out in the UK
Corporate Governance Code with the following exceptions:-
-- The division of responsibilities between the roles of
chairman and chief executive have not been clearly established, set
out in writing and agreed by the Board. This is contrary to
provision A.2.1. This has not been put in place because there is no
chief executive on the Board but the appointment of joint-chairmen
provides checks and balances;
-- The Company does not have a Nomination Committee, this is
contrary to provisions B2.1-B2.2 and B2.4. This has not been
considered necessary due to the size and nature of the Board which
consists of two part time executive directors;
-- The non-executive director of the Company has not been
appointed for specific terms as required by provision B2.3. This
has not been considered necessary as the sole incumbent resigned
and a new non-executive director has not been appointed;
-- There is no formal training programme for new directors on
joining the Board. This is contrary to provision B4.2. This has not
been considered necessary to date but will be actively considered
by the Board for new appointments;
-- The Board has not undertaken a formal and rigorous annual
evaluation of its own performance and the individual directors.
This is contrary to provision B.6.1. When a new non-executive
director is appointed this will be implemented.
-- The Board has not appointed independent non-executive
directors as required by B1.2, C.3.1, A4 and D2.1. The Board is
actively pursuing suitable candidates for the position(s).
Board of Directors
The Board comprises two part time executive directors, as
detailed in the Directors' Report.
The Board of Directors is responsible for formulating strategy
and monitoring financial performance. The directors are in frequent
contact throughout the period with the Group's business, meet as
required and also attend formal Board meetings. The strategies
proposed by management of the company and its subsidiaries are
fully discussed, critically examined against the best and long term
interests of not only the shareholders, but also customers,
employees, suppliers and various communities and environments
within which the Company operates. During the period, all serving
directors were in attendance at Board meetings.
The Board retains full responsibility for the direction and
control of the Group and has a formal schedule of matters in
respect of which decisions are reserved to it, covering key areas
including strategy formulation, acquisitions or disposals, approval
of the budget for the subsidiary, financial results, board
appointments and proposals for dividend payments.
The Board has full and timely access to relevant information
throughout the Group.
ASSOCIATED BRITISH ENGINEERING PLC
CORPORATE GOVERNANCE REPORT (continued)
(AS REFERRED TO IN THE DIRECTORS' REPORT)
All directors have access to the advice and services of the
Company Secretary, who is responsible to the Board for ensuring
that Board procedures are compiled with. There is also formal
agreed procedure for directors in the furtherance of their duties
to take independent professional advice as necessary at the Group's
expense.
The business address of each of the directors is 9 High Street,
Little Eversden, Cambridge CB23 1HE.
The Board is supported by a senior management team which
includes the following individuals:
Stewart Davis (68), non-executive director of BPE and former
managing director. Stewart has worked for BPE for 51 periods and
was its sales director from 1985 to 2007.
Bill Girdwood (42) he joined BPE in October 2015 from another
engineering company and was managing director with a special focus
on sales and new products. It is regrettable that Bill Girdwood was
taken ill shortly before the end of the financial period and
remains on sick leave. Bill Girdwood resigned as a director of BPE
on 25 January 2018. Other Board members and management are
assisting in covering his role on an interim basis.
The Current Directors
Rupert Pearce Gould
Colin Weinberg
Short biographies of the directors appear on page 63 and show
considerable and varied experience in the business world and the
City.
Under the Company's Articles of Association, new directors and
at least one third of the directors retire from office each period.
The retiring director is eligible for re-election.
At the period end, there were no independent non-executive
directors. The directors continue to search for a suitable
candidate for the role and intend to appoint a non- executive
director in the near future.
Nominations Committee
The appointment of directors will be discussed by the full Board
until such time as there are two non-executive directors to form an
effective committee. Potential new non-executive directors are
proposed by all the members of the Board and major shareholders;
the Board considers these in the light of the Company's business
requirements and the need to have a balanced Board. The Board will
then implement an appropriate review committee.
Audit Committee
The Company's audit committee comprises the full Board. The
audit committee meets at least twice a year to monitor the
financial reporting process, including its annual and interim
accounts; the effectiveness of the Company's internal controls and
risk management systems; statutory audit of the annual accounts;
and to review and monitor the independence of the statutory auditor
and provision of additional services to the Company.
There is no internal audit function. Due to the size of the
finance function and the close involvement of directors, the Board
and the Audit Committee do not consider there to be a need for a
separate internal audit function.
As part of this process, the performance of the Group's major
division is considered, with key judgements, estimates and
accounting policies being approved by the subsidiary Board ahead of
recommendation to the Group board. The primary areas of financial
reporting judgement considered by the Committee in relation to the
2018 financial statements and how they were addressed are outlined
below:
Revenue Recognition and Management Override
The Committee have reviewed the systems and control processes in
place during the financial period to 31 March 2018 and concluded
that, given the resources available, appropriate procedures are in
place. There is sufficient level of supervisory oversight in place
to ensure that revenue is not materially misstated and the risk of
management override has been reduced.
ASSOCIATED BRITISH ENGINEERING PLC
CORPORATE GOVERNANCE REPORT (continued)
(AS REFERRED TO IN THE DIRECTORS' REPORT)
Audit Committee (continued)
Inventory valuation
The Committee have reviewed the policy of valuing inventory and
of providing for obsolete and slow-moving inventory lines. This is
in line with their expectations and with the policies implemented
by similar organisations.
Recoverability of receivables
The Committee have reviewed the policy for providing for
doubtful debts and believe them to be both robust and adequate.
Assessing external audit effectiveness
The Audit Committee reviews audit quality every period using
feedback from the Auditors and Senior Management Team. The
effectiveness and quality of the audit process is considered by
focussing on the scope of the audit and auditor independence in
order to ensure that the quality of the audit process is not
compromised and remains effective.
Pensions
The Committee continued to monitor the Company's pension
arrangements, in particular the liability in respect of the defined
benefit plans, which are sensitive to assumptions made in respect
of discount rates and inflation. The Committee reviewed the
actuarial assumptions used and compared them with those used by
other companies, and considered them to be reasonable.
Going concern
The committee considered the use of the going concern basis, due
to the continued losses being incurred. The audit committee has
considered and approves of the changes in the company's policy of
reducing the forecast period of the business insofar as it has
exempted management from producing three-period projections. This
will be reviewed annually.
Appointing the auditor and safeguards on non-audit services
haysmacintyre do not provide any prohibited non-audit services.
In accordance with section 485 of the Companies Act 2006, a
resolution proposing that they be re-appointed will be put at a
General Meeting.
The committee has overseen the preparation of the viability
statement and has conducted a robust examination of the risks
identified, the resulting actions that may be required and the
project outcomes.
Remuneration
The Company's remuneration committee comprises Rupert Pearce
Gould and Colin Weinberg. The remuneration committee is to meet at
least twice a period and has as its remit the determination and
review of, amongst others, the remuneration of directors including
company directors together with any incentive plans adopted, or to
be adopted, by the Company and the Group.
Communication with Shareholders
The Board believes it is important to respond adequately to the
queries of both private and institutional shareholders.
The Chairman's Statement in the Annual Report contains a
business review. An interim business review is also provided with
the half-periodly announcement. The Chairmen are available to
shareholders at any time to discuss strategy and governance
matters.
The Board seeks to ensure that its report and accounts and other
financial statements provide a clear assessment of the Group's
business. All shareholders have the opportunity to ask questions
and express their views at the Company's Annual General Meeting, at
which all directors are available to take questions.
ASSOCIATED BRITISH ENGINEERING PLC
CORPORATE GOVERNANCE REPORT (continued)
(AS REFERRED TO IN THE DIRECTORS' REPORT)
AUDIT AND INTERNAL CONTROL
The directors are responsible for the Group's system of internal
control and reviewing its effectiveness and the processes in place
for risk management.
These controls can only ever provide reasonable but not absolute
assurance that assets are safeguarded against material misstatement
or loss, that proper accounting records are maintained, and that
the information used internally, or for publication, is accurate
and reliable. The key procedures, which exist to provide external
control, are as follows:
- a regular review is undertaken to assess the risks facing the
trading subsidiary and to enhance the systems which manage the risk
identified. Management establishes control procedures for each of
the risks identified and reports whether the key controls have
operated effectively
- agreement of Group short term financial objectives and business plans
- review by the Board of monthly Group Financial Statements and
monitoring of results against budget. The executive directors
attend regular Board meetings of the subsidiary(ies)
- Board control over treasury, taxation, legal, insurance and personnel issues
- The acquisition or disposal of a business may not be completed
without the approval of the Board.
- The operational responsibility for preparing the consolidated
accounts is delegated to a third party service provider with the
Board retaining responsibility for overall content, presentation
and final review of the consolidated accounts.
These controls can only ever provide reasonable but not absolute
assurance that assets are safeguarded against material misstatement
or loss, that proper accounting records are maintained, and that
the information used internally, or for publication, is accurate
and reliable. The key procedures, which exist to provide external
control, are as follows:
- clearly defined organisation structures with segregation of
duties wherever practicable. Operating and financial
responsibilities for the subsidiary Companies are delegated to the
subsidiaries Board and there are limits which apply to capital
expenditure and significant contracts.
- a regular review is undertaken to assess the risks facing the
trading subsidiaries and to enhance the systems which manage the
risk identified. Management establishes control procedures for each
of the risks identified and reports whether the key controls have
operated effectively agreement of Group short term financial
objectives and business plans.
- review by the Board of monthly Group Financial Statements and
monitoring of results against budget. The executive directors
attend regular Board meetings of the subsidiaries
- Board control over treasury, taxation, legal, insurance and personnel issues
- The acquisition or disposal of a business may not be completed
without the approval of the Board.
- The operational responsibility for preparing the consolidated
accounts is delegated to a third party service provider with the
Board retaining responsibility for overall content, presentation
and final review of the consolidated accounts.
Risk Management
The Board confirms that there is an ongoing process for
identifying, evaluating and managing significant business risks
faced by the Group, including those risks relating to social,
environmental and ethical matters. This process was in place
throughout the period under review and up to the date of approval
of this report. The Audit Committee has kept under review the
effectiveness of the system of internal control and has reported
regularly to the Board.
Through these mechanisms, Group performance is continually
monitored, risks identified in a timely manner, their financial
implication assessed, control procedure re-evaluated and corrective
actions agreed and where possible implemented.
The Board believes that it is not currently appropriate for the
Group to maintain an internal audit function due to the size of the
Group and the manner in which the Group operates.
ASSOCIATED BRITISH ENGINEERING PLC
CORPORATE GOVERNANCE REPORT (continued)
(AS REFERRED TO IN THE DIRECTORS' REPORT)
Risk Management (continued)
The Board consider the independence and objectivity of the
external auditor on an annual basis, with particular regard to
non-audit services. The split between audit and non-audit fees for
the period and information on the nature of the non-audit fees
appear in note 3 to the financial statements. There were no
prohibited non-audit fees incurred from the auditor during the
period. The Board also receive an annual confirmation of
independence from the auditors.
Fair, Balanced and Understandable
We consistently seek to improve the process of compiling the
Annual Report to give the Board more time to assess whether it was
fair, balanced and understandable, as required by the Code. The
Board considered whether the Annual Report contained the necessary
information for shareholders to assess the Group's performance,
business model and strategy. The tone was reviewed to ensure a
balanced approach and, with the support of the Audit Committee, the
Board made sure the narrative at the front end of the report was
consistent with the financial statements.
VIABILITY STATEMENT
In accordance with provision C2.2 of the UK Corporate Governance
Code, published by the Financial Reporting Council ("FRC") in
September 2015, the directors have assessed the viability of the
Group over the immediate and foreseeable future (up to two periods
from the date of the accounts) and in consideration of its sales
and marketing projections. This assessment has been made taking
account of the current position of the Group, the present immediate
plan, the corporate planning process, a budget for the operating
company and the Group's principle risks associated with the current
plan.
The provision C2.2 of the UK Corporate Governance Code and
Appendix B of the FRC Guidance state that the period covered for
longer term viability statement should be significantly longer than
12 months from approval of the financial statements. The Board
believe that a two-period period is appropriate for the Group as
within two periods the company will be over the issues connected
with the introduction of the new series Kelvin engine to the
product line. This together with a prospective rise orders in the
reviving British Polar engines spares market. In order to manage
its working capital and address any cash shortfall, during this
two-period period the Group may need to realise some of its
investments and/or need to raise funds. Assessing the longer-term
viability of any company at this early stage of the strategy
implementation is inevitably a challenge given the volatility in
markets. The Board are determined to continually revise its plans
and amend them should that prove necessary and anticipated sales
not materialise.
The budgets where applicable include an assessment of live
business opportunities of which the Board are aware at the time of
writing this report.
Following this assessment, the Board have concluded, based on
the budgets produced and the financial position of the Group, that
there is reasonable expectation that the Group have adequate
resources and will continue to operate and meeting is liabilities
as they fall due.
In doing so, it is recognised that such future assessments are
subject to a level of uncertainty that increases with time and,
therefore, future outcomes cannot be guaranteed or predicted with
certainty. The Directors have made the following key assumptions in
connection with this assessment:
- there is no significant unexpected sale attrition and
projected engine and parts sales are not significantly lower than
anticipated;
- the Group is able to execute its sales growth strategy and
deliver forecast margin improvements.
ASSOCIATED BRITISH ENGINEERING PLC
CORPORATE GOVERNANCE REPORT (continued)
(AS REFERRED TO IN THE DIRECTORS' REPORT)
GOING CONCERN
The financial statements have been prepared on the going concern
basis and based on our plans for the next two periods (Please see
Viability statement above and the going concern statement on page
5). There have been no changes to accounting policies in the
period. The most notable accounting event has been the extended
losses that have resulted from a further decline in turnover from
last period. The Board is implementing its strategy for addressing
this and for developing fresh sales areas to utilise the company's
expertise in its core business. This plan also remains subject to
the recovery plan agreed with the Trustees of our pension fund,
which is set out in Contributions by employer in respect of the
shortfall in funding following the triennial review on page 36.
Based on the Group's budgets, cash forecasts which assume a
combination of disposal of investments and a need for fundraises or
loans in the immediate to short term, the Board considers that the
Group has sufficient resources to meet all necessary outgoings and
to enable it to continue in operational existence for the
foreseeable future.
On behalf of the Board
C Weinberg
Director
Date 30 July 2018
ASSOCIATED BRITISH ENGINEERING PLC
DIRECTORS' REMUNERATION REPORT
Introduction
This report is submitted in accordance with Schedule 8 of the
Large and Medium sized Companies (accounts and Reports) (Amendment)
Regulations 2014 in respect of the period ended 31 March 2018. The
reporting requirements entail two sections to be included, a Policy
Report and an Annual Remuneration Report which are presented
below.
The Company's auditor, haysmacintyre, is required to give its
opinion on certain information included in this report, this
comprises of the Directors Remuneration - single figure table on
page 61 and the information on directors shareholdings which is
contained in the directors report on page 4 and also forms part of
this directors' remuneration report. Their report on these and
other matters is set out on pages 3 to 6.
Consideration by the Directors of Matters Relating to Directors'
Remuneration
The Company's Remuneration Committee considers Directors'
remuneration and has not sought advice or services from any person
in respect of its consideration of Directors' remuneration during
the period although the Directors expect from time to time to
review the fees against those paid to boards of directors of
comparable organisations and appointments. The Company does not
have a Chief Executive Officer, Senior Management or any full time
employees and relies on senior management in each subsidiary.
DIRECTORS' REMUNERATION POLICY REPORT
The roles of the directors are as follows:-
Joint Chairman and Deputy Chairman - Rupert Pearce Gould (part
time executive - operational)
Joint Chairman and Deputy Chairman - Colin Weinberg (part time
executive - finance)
The Company's policy is for the Directors to be remunerated in
the form of fees, payable monthly in arrears. The non-executive
directors each receive a fee for their services, which is agreed by
the Remuneration Committee after reviewing comparable organisations
and appointments. None of the non-executive directors receive a
pension or other benefit from the Company, nor do they participate
in any bonus or incentive schemes or share option schemes.
The fees are not specifically related to the Directors'
performance, either individually or collectively. The Board is also
entitled to be repaid all reasonable travelling subsistence and
other expenses incurred by them respectively whilst conducting
their duties as Directors, however no other remuneration or
compensation was paid or payable by the company during the period
to any of the current Directors. There will be no payment for loss
of office unless approved by a separate shareholder resolution.
Major decisions on Remuneration
The Company's policy is that the fees payable to each director
should reflect the time spent by the directors on the Company's
affairs and the responsibilities borne by each of the directors.
They should be sufficient to attract candidates of high calibre to
be recruited. The policy is for the Chairmen of the Board to be
paid higher fees than the other directors in recognition of the
more onerous role. The Remuneration policy is to review the
director's fee rates from time to time, benchmarking the fees
against comparable organisations and appointments, although such
review will not necessarily result in any change. Due to the nature
of the Company, there are no full time employees and therefore the
requirement to consider the percentage change in remuneration of
all employees when determining the Directors' remuneration is not
considered to be relevant.
The directors have agreements with the company that may be
terminated on one period's notice. In accordance with the Articles
of Association each director retires from office at the third
annual general meeting after the annual general meeting at which he
was last elected. A retiring director is eligible for
re-election.
ASSOCIATED BRITISH ENGINEERING PLC
DIRECTORS' REMUNERATION REPORT (Continued)
A Director may resign by notice in writing to the Board at any
time giving one month's notice. None of the Directors are entitled
to compensation payable upon early termination of their
arrangements other than in respect of any unexpired notice
period.
In accordance with the reporting requirements of Large and
Medium sized Companies (accounts and Reports) (Amendment)
Regulations 2014, an Ordinary resolution for the approval of the
remuneration policy of the Company to remain in force for a
three-period period, was put to the members of the Annual General
Meeting and was effective from that date.
DIRECTORS' REMUNERATION - SINGLE FIGURE TABLE (AUDITED)
2018 2017
Total Total
GBP'000 GBP'000
Mr R Pearce Gould 10 10
Mr C Weinberg 20 20
30 30
======== ========
The amounts above all relate to directors' fees and represent
the total remuneration of the company's directors but excludes fees
of GBP27,000 for consultancy fees (2017: GBP16,000) paid by a
subsidiary to Cambridge Management Consultants Limited, a company
related to Mr Pearce Gould.
This section of the report is subject to approval by a simple
majority of shareholders at the AGM in or around September 2018, as
in previous periods.
Statement of Voting at the Annual General Meeting (AGM)
The 2017 Remuneration Report was presented to the AGM in
September 2017 and received shareholder approval following a vote
on a show of hands. 0.55% of the votes cast on the proxy forms were
against the Report and no votes were withheld. The proxy forms
returned contained no explanation for the votes against the
resolution.
Total Shareholder Return (TSR)
Source: Yahoo UK finance
ASSOCIATED BRITISH ENGINEERING PLC
DIRECTORS' REMUNERATION REPORT
The graph on page 61 shows the Company's TSR performance
compared to the FTSE All Share index over the past five periods.
TSR is defined as share price growth plus reinvested dividends.
This provides a basis for comparison with a relevant equity index
but should be treated with caution in view of the small market in
the Company's shares.
A statement of directors' shareholdings and interest is reported
in the directors' report on page 4.
Company Performance
The Board is responsible for the Company's business strategy and
performance.
The Statement of Directors' responsibilities, Corporate
Governance report and the Directors' Remuneration report on pages
53 to 62 form part of the Directors' report.
On behalf of the Board
C Weinberg
Director
Date 30 July 2018
ASSOCIATED BRITISH ENGINEERING PLC
DIRECTORS AND ADVISERS
The Board comprises two directors:
COLIN WEINBERG (68) became a non-executive director on 10
November 2003. He was a member of the London Stock Exchange from
1980 to 1987 and was admitted to fellowship of the Securities
Institute in 1995. He was previously a non-executive director of
Peckham Building Society.
RUPERT PEARCE GOULD (65), was appointed as non-executive
director on 18 September 2016. Rupert has a degree in engineering
and has served as an executive director and chairman in both the
public and private sector. He has been chairman of BPE since 2000
and was previously a director of the company for 2 periods until
2002.
SECRETARY & REGISTERED OFFICE BANKERS
Woodberry Secretarial Limited The Royal Bank of Scotland plc
Winnington House 2 Woodberry Grove 5th Floor
North Finchley Tay House
London 300 Bath Street
N12 0DR Glasgow
Registered No.110663 G2 4RS
Tel No: 020 8492 6363
AUDITOR CORPORATE ADVISERS
haysmacintyre Beaumont Cornish Limited
10 Queen Street Place 2nd Floor
London Bowman House
EC4R 1AG 29 Wilson Street
Tel No: 020 7969 5500 London
EC2M 2SJ
REGISTRARS SOLICITORS
Computershare Investor Services Fladgate LLP
plc
The Pavilions 16 Great Queen Street
Bridgwater Road London
Bristol WC2B 5DG
BS13 8AE
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
FR LLFEADAIIVIT
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