TIDMASBE
RNS Number : 9465I
Associated British Engineering PLC
13 August 2019
The Company is pleased to announce the publication of the Annual
Report and Financial Statements for the period ended 31 March 2019
(the "Accounts") and that the Accounts will shortly be available to
view on http://www.abeplc.co.uk/results.html and for viewing at
https://www.morningstar.co.uk/uk/NSM
The Company will be requesting that the temporary suspension of
listing from the Official List is lifted.
Company Registration No. 00110663 (England and Wales)
ASSOCIATED BRITISH ENGINEERING PLC
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE PERIODED
31 MARCH 2019
ASSOCIATED BRITISH ENGINEERING PLC Company Registration No.
00110663 (England and Wales)
REPORT AND FINANCIAL STATEMENTS
FOR THE PERIODED 31 MARCH 2019
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 17
Consolidated income statement 25
Consolidated statement of comprehensive income 26
Group statement of financial position
27
Group statement of changes in equity
28
Group cash flow statement
29
Notes to the Group financial statements
30
Company statement of financial position
47
Company statement of changes in equity
48
Company cash flow statement
49
Notes to the Company financial statements
50
Statement of directors' responsibilities
56
Corporate governance report
57
Directors' remuneration report
63
Directors, registered office and advisers
66
The Directors' Report on pages 3 to 6 and the Directors'
Remuneration Report on pages 63 to 65 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 2019. Pages 1 to 10 and
56 to 66, 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
2019 2018
GBP'000 GBP'000
REVENUE 1,134 1,603
OPERATING LOSS (1,742) (525)
LOSS BEFORE TAXATION (1,810) (582)
NET (LIABILITIES)/ ASSETS (3,708) 976
BASIC LOSS PER 2.5p ORDINARY SHARE (84.5p) (20.6p)
EQUITY SHAREHOLDERS' FUNDS PER 2.5p ORDINARY (GBP1.81) GBP0.48
SHARE
ASSOCIATED BRITISH ENGINEERING PLC
CHAIRMEN'S STATEMENT
FOR THE PERIODED 31 MARCH 2019
The shareholders of Associated British Engineering Plc will be
disappointed to learn that the trading results for British Polar
Engines (BPE) (a wholly owned subsidiary of ABE) in the year ending
31 March 2019 again failed to meet its budget and despite cost
cutting and redundancies profits declined. Included however in
these results are provisions to write down the assets in BPE as at
31 March 2019 - see further comment below.
In late 2018 the board of BPE started discussions with the
Trustees of the Pension Fund to resolve the longer term costs to
the company of the Pension Fund. There was further disappointment
from BPE's pension fund actuarial valuations in 2019, which despite
years of additional contributions showed the funds deficit was
again on the increase. It was therefore decided to enter
discussions to close off the cost of the Pension Fund to BPE.
The Board of BPE, supported by the Board of your company,
entered into discussions with the Trustees of the Pension Fund, the
Pensions Regulator and the Pension Protection Fund. As part of
those discussions the Board of BPE decided that they should engage
FRP Advisory LLP to advise on negotiations with the Trustees and
the Pensions Regulator and consider the future of the operating
business of BPE including marketing it as for sale. This decision
was announced to the market on the 2 July 19 and we are in the
middle of that process.
Following your Boards discussions with its auditors it has been
decided to write down the assets of BPE as at 31 March 2019 to
reflect the likely future scenario. The accounts as presented this
year reflect these write downs and the increased impact of closing
the pension fund. It is still a possibility that a smaller and
leaner business emerges. In light of the matters described in the
preceding paragraphs, the going concern basis of preparation has
not been adopted and the assets have been reduced to their expected
recoverable amounts as described in the basis of preparation.
The result is a write down of the assets and an increase in the
liabilities especially to the pension fund. These adjustments to
the accounts mask the poor trading results and the significant
increase in the value of "assets held for resale" that are referred
to in note 15. The Board of Associated British Engineering Plc has
looked at a number of other businesses during the year and, with an
expected resolution of BPE and its Pension Fund, is looking forward
to a clearer future. The Board will of course keep shareholders as
fully informed of developments as far as practically possible.
The Board would like to thank all staff and employees for their
support and assistance during a difficult year.
Rupert Pearce Gould and Colin Weinberg
Chairmen
Date: 13 August 2019
ASSOCIATED BRITISH ENGINEERING PLC
DIRECTORS' REPORT
FOR THE PERIODED 31 MARCH 2019
The directors submit their report and audited accounts for the
year ended 31 March 2019.
RESULTS AND DIVIDS
The Group's loss after tax and exceptional items amounted to
GBP1,731,000 (2018: GBP422,000). The directors are unable to
recommend a dividend on the ordinary shares for the period (2018:
GBPnil per ordinary share).
DIRECTORS
The names of the directors who served during the period from 1
April 2018 to 31 March 2019 are:
Mr C Weinberg Director
Mr R Pearce Gould Director
Biographical details of the directors are set out on page
64.
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 R Pearce Gould
retires by rotation and, being eligible, offers himself for
re-election.
DIRECTORS' AND OFFICERS' LIABILITY INSURANCE
The group has, as permitted by s.234 and s.235 of the Companies
Act 2006, maintained insurance cover on behalf of the directors and
secretary indemnifying them against certain liabilities which may
be incurred by them in relation to the company.
SUBSTANTIAL HOLDINGS
As at 8 August 2019 and at 31 March 2019 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 19.10% of
issued ordinary shares.
Fiske Nominees Limited (FISKPOOL) FISKPOOL owns 15.40% of issued ordinary
shares.
R A Pearce Gould Mr Pearce Gould's direct holding is
12.89% of issued ordinary shares.
C Weinberg Mr Weinberg's direct holding is 8.17%
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 5.27% 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 3.68%
of issued shares.
Vidacos Nominees Limited (BBUCCC) BBUCCC owns 3.40% of issued ordinary
shares.
Winterflood Securities Limited Made up of multiple interested parties
(WINSCREP) of which 3.04% of issued ordinary shares
are owned.
ASSOCIATED BRITISH ENGINEERING PLC
DIRECTORS' REPORT (continued)
FOR THE PERIODED 31 MARCH 2019
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 1 April
2018 and 31 March 2019 were as follows:
Ordinary shares
of
2.5p 2.5p
2019 2018
No. No.
Mr C Weinberg 167,416 161,416
Mr R Pearce Gould 264,049 264,049
No share options or derivatives were held by any of the
directors at 31 March 2019 or 1 April 2018.
Since 31 March 2019 and up to and including 8 August 2019 there
have been no changes in the directors' interests in the share
capital of the Company.
FINANCIAL INTERESTS
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 20 to the
Group financial statements and the Strategic Report.
FINANCIAL INTERESTS - CAPITAL
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
========== ======== ========== =========
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 2019
GLOBAL GHG EMISSIONS DATA FOR THE PERIODED 31 MARCH 2019
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: 330 tonnes
(2018: 603 tonnes) of CO(2) emissions.
Transport: 3 tonnes of CO(2) emissions (2018: 7 tonnes).
The Group's chosen intensity measurement
Emissions reported above (181 tonnes of CO(2) e (2018: 181
tonnes)) normalised to per GBP'000 of turnover GBP1,134 (2018:
GBP1,603): 0.16 Tonnes of CO(2) e per GBP'000 turnover (2018:
0.11).
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 2018.
GOING CONCERN
The Directors have considered the preparation of the financial
statements of British Polar Engines Limited and, after discussions
with the Trustees of the Pension Fund and discussions as to how to
meet that liability and having taken advice, have come to the
conclusion that it is inappropriate to prepare them on a going
concern basis. Therefore the Directors have prepared the accounts
on a basis other than going concern. Further information regarding
going concern is disclosed in the accounting policies under the
basis of preparation.
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 2019
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 LLP
as auditor of the Company will be proposed at the 2019 AGM. The
confirmation has been recommended to the Board by its Audit
Committee and Haysmacintyre LLP have indicated their willingness to
remain in office.
By order of the Board
Colin Weinberg
For and on behalf of the Board of Directors
Date: 13 August 2019
ASSOCIATED BRITISH ENGINEERING PLC
STRATEGIC REPORT
FOR THE PERIODED 31 MARCH 2019
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, carried 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. As described elsewhere, the company is currently
marketing the business for sale. In the event that the business is
not substantially restructured within the group or sold, it is
anticipated that the company will cease to trade within 12 months
of the date of approval of these financial statements.
2. Akoris Trading Limited ("Akoris").
BPE's business model and strategy:
On 2 July 2019, we made an announcement to the stock exchange in
relation to the proposed future of BPE. We were in advanced
discussions prior to the year-end and, as a consequence of this
process, it was decided by the Board of BPE that they should engage
FRP Advisory LLP to advise on negotiations with the Trustees of the
Pension Fund and the Pensions Regular and consider the future of
the operating business of BPE including marketing the company for
sale. Our current principal strategy of the group is, therefore, to
satisfactorily resolve the process that has commenced to maximise
the benefit to our shareholders.
Until such time as these discussions are concluded, we will
continue to concentrate on our core business as follows:
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 2019
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 austerity in the oil sector.
The downturn that commenced in the second half of 2015 has
continued into 2019. The Board of both BPE and its parent company
are actively monitoring the level of sales in this difficult
economic environment.
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
57.
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
As previously stated under Business Model and Strategy above,
the Board are in discussions with the Pensions Regulator and FRP
Advisory LLP regarding the future of the subsidiary undertaking
BPE. The outcome of the discussions will be announced in due
course.
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 18 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 20 to the Group financial statements.
ASSOCIATED BRITISH ENGINEERING PLC
STRATEGIC REPORT (continued)
FOR THE PERIODED 31 MARCH 2019
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 2019, are disclosed in the corporate
governance report on page 57.
ASSOCIATED BRITISH ENGINEERING PLC
STRATEGIC REPORT (continued)
FOR THE PERIODED 31 MARCH 2019
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 people, made up of two male
part time executives and three senior managers, two male and one
female. We have a dedicated and loyal workforce, many of whom are
long serving employees.
Total no. of officers/employees Number of males Number of females
% %
Senior Management 5 80 20
-------------------------------- ---------------- ------------------
Whole Workforce 15 87 13
-------------------------------- ---------------- ------------------
By order of the Board
Colin Weinberg
For and on behalf of the Board of Directors
Date: 13 August 2019
INDEPENT AUDITOR'S REPORT TO THE MEMBERS OF
ASSOCIATED BRITISH ENGINEERING PLC
1. Our opinion on the financial statements
We have audited the financial statements of Associated British
Engineering plc (the "parent company") and its subsidiary companies
(the "Group") for the period ended 31 March 2019 which comprise of
the consolidated income statement, the consolidated statement of
comprehensive income, the consolidated 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, the consolidated
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 2019 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.
Conclusions relating to principal risks, going concern and
viability statement
Aside from the impact of the matters disclosed in the key audit
matter section, we have nothing to report in respect of the
following information in the annual report, in relation to which
the ISAs (UK) require us to report to you whether we have any
material to add or draw attention to:
-- the disclosures in the annual report set out on page 8 that
describe the principal risks and explain how they are being managed
or mitigated;
-- the directors' confirmation set out on page 61 in the annual
report 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;
-- whether the directors' statements relating to going concern
and their assessment of the prospects of the company required under
the Listing Rules in accordance with Listing Rule 9.8.6.R(3) is
materially inconsistent with our knowledge obtained in the audit;
or
-- the Directors' explanation on page 61 in the annual report 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.
INDEPENT AUDITOR'S REPORT TO THE MEMBERS OF
ASSOCIATED BRITISH ENGINEERING PLC
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 of the current period and include the most significant
assessed risks of material misstatement (whether or not due to
fraud) that we identified. These matters included 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.
The risk Our response to the risk:
Going concern At the planning stage we
identified As described in the accounting
that there was a risk that policies (see the disclosure
the going concern basis of on page 18 to the financial
preparation may not be statements) the Directors'
appropriate. have concluded that the
going concern basis of preparation
is no longer applicable.
We obtained a copy of the
Directors' going concern
assessment and evaluated
and challenged the appropriateness
of their conclusions. We
debated with the Audit Committee
the alternatives and considered
the current trading status
of the group and the expectations
for the coming months.
As a result of the decision
to adopt a basis other than
going concern the Directors'
have carried out an assessment
of the recoverable amount
of each of the assets of
the group and adjustments
have been made to the value
of these assets as appropriate.
We reviewed and challenged
management's estimates of
the recoverable values of
assets and are satisfied
with the conclusions drawn
by the Directors' in this
regard.
================================ ==============================================================
Key observations communicated to the Audit Committee
We draw attention to the disclosure set out on page 18 which
explains that the principal subsidiary, British Polar Engines
Limited, is expected to be reconstructed, sold or cease trading
within 12 months, and therefore we do not consider it to
be appropriate to adopt the going concern basis of preparation
in these financial statements. Accordingly, the financial
statements have been prepared on a basis other than going
concern as described on page 18. Our opinion is not modified
in respect of this matter.
================================================================================================
Carrying
value of As at the year-end the * We performed walk-through procedures to gain an
inventory valuation understanding of the Company's systems and controls
of inventory is GBP165,000 in relation to inventory.
(2018: GBP1,037,000).
There is a risk that * On a sample basis we agreed the unit price of a
inventory sample of inventory items to supporting documentation
is not valued in accordance and assessed whether inventory was being held at the
with relevant accounting lower of cost or net realisable value.
standards
or that the Company has not
adequately provided against * We gained an understanding of assumptions made by
low or slow-moving management in respect of any inventory provisions and
inventory, challenged the appropriateness of those assumptions.
* We reviewed the adequacy of disclosures in the
Company's financial statements.
================================ ==============================================================
Key observations communicated to the Audit Committee
The financial statements are prepared on a basis other than
going concern as described on page 18. Accordingly, management
reviewed the net realisable value of the inventory and recorded
adjustments to reduce inventory to its recoverable amount.
Management have estimated the recoverable amount of inventory
based on a review carried out by specialists (FRP Advisory
LLP). We have assessed and challenged the adequacy of the
work carried out by these specialists and are satisfied that
the estimates made in determining the recoverable amount
of the inventory are reasonable. We communicated no other
key observations to the Audit Committee.
================================================================================================
Measurement As at the year-end the
of the defined valuation * We obtained a copy of the valuation report carried
benefit pension of the defined benefit out by the Actuary and carried out an assessment of
liability obligation the Actuary including whether they were suitably
is GBP4,982,000 (2018: qualified to produce such a report.
GBP1,354,000).
The valuation of this * We assessed whether the valuation basis of the
liability defined benefit liability was appropriate
involves significant
estimation
techniques, accordingly there * We gained an understanding of all key assumptions
is a risk that the estimates made in relation to the scheme liabilities,
and assumptions made are not challenged the appropriateness of these assumptions
appropriate and that, and benchmarked these against available data.
consequently,
the value of the liability
is materially misstated. * We obtained an analysis of the scheme assets and, on
a sample basis, assessed the valuation of these
assets.
* We reviewed the disclosures made in the financial
statements in relation to the defined benefit
obligation and assessed whether these disclosures
were in accordance with the requirements of IAS 19.
================================
Key observations communicated to the Audit Committee
We challenged whether it was appropriate to continue to recognise
the defined benefit obligation on a technical basis. Management
subsequently instructed the Actuary to value the obligation
on a solvency (s. 143) basis. We subsequently assessed and
challenged the assumptions used by the Actuary on this basis.
================================================================================================
Revenue recognition Revenue for the year to 31
March 2019 is GBP1,134,000 * We performed walk-through procedures to gain an
(2018: GBP1,603,000). understanding of the Company's systems and controls
in relation to revenue.
There is a risk of material
misstatement either as a
result * On a sample basis we agreed a sample of parts sales
of fraud or error. to supporting documentation, confirmed the occurrence
Specifically, of those sales and confirmed that revenue was
we considered that there was correctly recognised.
a risk of incorrect cut-off
of revenue recognised during
the year. * On a sample basis we agreed a sample of services
sales to supporting documentation and ensured that
revenue was correctly recognised during the year.
* On a sample basis we carried out cut-off procedures
in respect of both the sale of parts and services and
ensured that correct revenue recognition had been
* We reviewed the disclosures, in particular in
relation to the disclosure requirements arising from
the adoption of IFRS 15, Revenue from Contracts with
Customers.
================================ ==============================================================
Key observations communicated to the Audit Committee
We communicated to the Audit Committee that we had gained
satisfactory assurance in relation to revenue recognised
during the year and that we were satisfied with the appropriateness
of the disclosures in relation to Revenue Recognition.
================================================================================================
INDEPENT AUDITOR'S REPORT TO THE MEMBERS OF
ASSOCIATED BRITISH ENGINEERING PLC
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.
The Group includes the listed parent Company (Associated British
Engineering plc) and 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 100% of the Group's revenue. The audit of the subsidiary
was carried out by the same engagement team that carried out the
audit of the parent and the Group. Accordingly, the audit of the
Group was completed by a single engagement team.
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 GBP23,000, 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 GBP1,150 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.
Other information
The other information comprises the information included in the
annual report as set out on pages 1 to 66 other than the financial
statements and our auditor's report thereon. The Directors' are
responsible for the other information.
Our opinion on the financial statements does not cover the other
information and, except to the extent otherwise explicitly stated
in this report, we do not express any form of assurance conclusion
thereon.
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 such material inconsistencies or apparent material
misstatements, we are required to determine whether there is a
material misstatement in 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 the other information we are required to report
on that fact. We have nothing to report in this regard.
In this context, we also have nothing to report in regard to our
responsibility to specifically address the following items in the
other information and to report as uncorrected material
misstatements of the other information where we conclude that those
items meet the following conditions:
-- Fair, balanced and understandable set out on page 61 - the
statement given by the Directors that they consider the annual
report and financial statements taken as a whole is fair, balanced
and understandable and provides the information necessary for
shareholders to assess the Company's performance, business model
and strategy, is materially inconsistent with our knowledge
obtained in the audit; or
-- Audit Committee reporting set out on pages 58 and 59- the
section describing the work of the audit committee does not
appropriately address matters communicated by us to the audit
committee; or
-- Directors' statement of compliance with the UK Corporate
Governance Code set out on page 57 - the parts of the Directors'
statement required under the Listing Rules relating to the
Company's compliance with the UK Corporate Governance Code
containing provisions specified for review by the auditor in
accordance with Listing Rule 9.8.10R(2) do not properly disclose a
departure from a relevant provision of the UK Corporate Governance
Code.
INDEPENT AUDITOR'S REPORT TO THE MEMBERS OF
ASSOCIATED BRITISH ENGINEERING PLC
Opinion on other matters prescribed by the Companies Act
2006
In our opinion:
-- 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
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the Company
and its environment obtained in the course of the audit, we have
not identified material misstatements in the Strategic Report or
Directors' Report.
We have nothing to report in respect of the following matters in
relation to which the Companies Act 2006 requires us to report to
you if, in our opinion:
-- adequate accounting records have not been kept, or returns
adequate for our audit have not been received from branches not
visited by us; or
-- the financial statements and the part of the Directors'
Remuneration Report to be audited are not in agreement with the
accounting records and returns; or
-- certain disclosures of Directors' remuneration specified by law are not made; or
-- we have not received all of the information and explanations we require for our audit.
Responsibilities of Directors
As explained more fully in the Directors' Responsibilities
Statement, the Directors are responsible for the preparation of the
financial statements and for being satisfied that they give a true
and fair view, and for such internal control as the directors
determine is necessary to enable the preparation of financial
statements that are free from material misstatement, whether due to
fraud or error.
In preparing the financial statements, the directors are
responsible for assessing the 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.
INDEPENT AUDITOR'S REPORT TO THE MEMBERS OF
ASSOCIATED BRITISH ENGINEERING PLC
Explanation as to what extent the audit was considered capable
of detecting irregularities, including fraud
The objectives of our audit, in respect to fraud are; to
identify and assess the risks of material misstatement of the
financial statements due to fraud; to obtain sufficient appropriate
audit evidence regarding the assessed risks of material
misstatement due to fraud, through designing and implementing
appropriate responses; and to respond appropriately to fraud or
suspected fraud identified during the audit. However, the primary
responsibility for the prevention and detection of fraud rests with
both those charged with governance of the entity and
management.
Our approach was as follows:
-- We obtained an understanding of the legal and regulatory
frameworks that are applicable to the Group and determined that the
most significant are the Companies Act 2006, the Listing Rules and
the UK Corporate Governance Code.
-- We understood how the Group is complying with those
frameworks through discussions with the Audit Committee and
management in combination with a review of the Group's documented
policies and procedures.
-- We assessed the susceptibility of the Group's financial
statements to material misstatement including how fraud might occur
by considering the key risks impacting the financial statements.
Given the activities of the Group, we consider management override
as being most likely to occur in the recognition of revenue, our
procedures in this regard are stated in the Key Audit Matter
above.
-- We have reviewed that the Group's control environment is
adequate for the size and operating model of such a listed
Company.
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 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 4 years, covering
the periods ending 3 April 2017, 31 March 2018 and 31 March
2019.
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 LLP
Statutory Auditor, Chartered Accountants
London
13 August 2019
ASSOCIATED BRITISH ENGINEERING PLC
GROUP AND PARENT COMPANY ACCOUNTING POLICIES
FOR THE PERIODED 31 MARCH 2019
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 of this annual
report.
The financial statements have been prepared on a basis other
than going concern.
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 1 April 2018 to 31 March
2019. The comparative figures are for the period 4 April 2017 to 31
March 2018.
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 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 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 2019
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.
As described in detail in the Chairmen's Statement during late
2018 the Board of Directors' commenced discussions with the
Trustees of the Pension Fund with the intention of resolving the
longer-term costs to the Group of the Pension Fund with the view to
closing off the cost of the Pension Fund to the Group. The Board of
Directors' therefore entered into detailed discussions with the
Trustees of the Pension Fund, the Pensions Regulator and the
Pension Protection Fund with the view to obtaining a resolution of
these matters.
The above discussions in relation to the proposed future of BPE
were in advanced discussions prior to the year-end and, as a
consequence of this process, it was decided by the Board of BPE
that they should engage FRP Advisory LLP to advise on negotiations
with the Trustees and the Pensions Regulator and consider the
future of the operating business of BPE including marketing the
Company for sale. An announcement was made to the market on the 2
July 2019 in respect of this process.
Consequently, the Directors have concluded that BPE is expected
to be reconstructed, sold or cease trading within a period of 12
months from the date that these financial statements will be
approved and, consequently have agreed that the going concern basis
of preparation is no longer applicable.
As such, these financial statements have been prepared on a
basis other than the going concern basis and, in accordance with
IAS 1 the Company has made an assessment of the carrying value of
its assets and adjustments have been made to reduce the carrying
value of these assets to their expected recoverable amounts.
The assessment of the recoverable amount of these assets is
considered to be a key accounting judgement and further details of
this judgement can be found disclosed in these financial
statements.
The resulting impairment charges in respect of the write down of
the assets to their recoverable amounts have been classified as
exceptional items. Further details of these exceptional items are
included in note 3 to the financial statements. All of the Groups
operations have been classified as discontinuing operations.
BASIS OF CONSOLIDATION
As set out in the Directors' report, the Directors have decided
to prepare the financial statements on a basis other than that of a
going concern. In adopting the basis other than going concern at
the year end, the following policies and procedures were
implemented:
-- At 31 March 2019 all BPE non-current assets are considered as
realisable, hence reclassified as current assets
-- All BPE assets have been disclosed at values at which they
are expected to be realised
-- All liabilities reflect the full amount at which they are
expected to materialise
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 2019.
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.
ASSOCIATED BRITISH ENGINEERING PLC
GROUP AND PARENT COMPANY ACCOUNTING POLICIES (continued)
FOR THE PERIODED 31 MARCH 2019
The consolidated financial statements consist of the results of
the following entities:
Entity Summary Description
Associated British Engineering Plc (ABE) Ultimate Holding
Company
British Polar Engines Ltd (BPE) Trading Company
Akoris Trading Ltd (AT) Trading Company
REVENUE RECOGNITION
The Group has adopted Revenue from Contracts with Customers
(IFRS 15) with an adoption date of 1 April 2018. The Group has
assessed the requirements of IFRS 15 and have determined that the
existing revenue recognition policy is in line with the
requirements of this new standard, as all revenue relates to
contracts held with customers. This adoption, therefore, did not
result in a change in the accounting policy outlined below:
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:
Going concern
The Directors anticipate that the trade of the Company's
principal subsidiary BPE is expected to be re-constructed, sold or
cease trading within 12 months from the date that these financial
statements will be approved and, consequently have agreed that the
going concern basis of preparation is no longer applicable. Further
details of the basis of preparation are set out on page 18.
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 21 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 and have now deemed the pension scheme to
be prepared under the solvency basis, which provides an estimate of
the cost of transferring all liabilities to an insurer. This basis
has been derived in line with the s.143 basis prescribed by the
Pension Protection Fund ("PPF") that was in force as at 1 April
2019.
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 GBP3,471,000 (2018: GBP54,000 loss) was recognised in the
Group accounts.
ASSOCIATED BRITISH ENGINEERING PLC
GROUP AND PARENT COMPANY ACCOUNTING POLICIES (continued)
FOR THE PERIODED 31 MARCH 2019
The assumptions underpinning the actuarial valuation are
disclosed further in note 18 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:
Recoverable amount of assets
Following the directors' decision to prepare the financial
statements on a basis other than going concern, inventories,
property, plant and equipment, trade and other receivables,
available for sale assets have been written down to their
recoverable amount. The directors appointed a specialist to value
the above items at their recoverable amounts. Additional
information is provided in the basis of preparation in the
accounting policies.
Inventories
In previous years, inventories were stated at the lower of cost
and net realisable value. Following the directors' decision to
prepare the financial statements on a basis other than going
concern, inventories have been written down to their recoverable
amount. The comparatives are prepared in accordance with the
accounting policies adopted in previous years.
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).
The inventory provision at the period end amounted to
GBP3,441,000 (2018: GBP2,621,000). The gross value of inventories
at the period end is GBP3,606,000 (2018: GBP3,659,000).
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.
INVENTORIES AND IMPAIRMENT OF INVENTORIES
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. However, following the
directors' decision to prepare the financial statements on a basis
other than going concern, inventories have been written down to
their recoverable amount.
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 2019 the Group has
provided GBP834,000 (2018: GBP609,000) against its trade
receivables.
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.
ASSOCIATED BRITISH ENGINEERING PLC
GROUP AND PARENT COMPANY ACCOUNTING POLICIES (continued)
FOR THE PERIODED 31 MARCH 2019
FOREIGN CURRENCIES
The functional and presentational currency of the parent company
and its subsidiaries is UK Pound 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
In previous years, plant and equipment are stated at cost less
depreciation and any impairment in value. The comparatives are
prepared in accordance with the accounting policies adopted in
previous years. 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
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.
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. Following the directors'
decision to prepare the financial statements on a basis other than
going concern, property, plant and equipment have been written down
to their recoverable amount.
Freehold property is held under the revaluation model and was
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 from 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.
ASSOCIATED BRITISH ENGINEERING PLC
GROUP AND PARENT COMPANY ACCOUNTING POLICIES (continued)
FOR THE PERIODED 31 MARCH 2019
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.
The directors have assessed the relevant estimates and
assumptions and have now deemed the pension scheme to be prepared
under the solvency basis, which provides an estimate of the cost of
transferring all liabilities to an insurer. This basis has been
derived in line with the s.143 basis prescribed by the Pension
Protection Fund ("PPF") that was in force as at 1 April 2019.
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 ASSETS
Financial assets are recognised initially at fair value,
normally being the transaction price. In the case of financial
assets not at fair value through profit or loss, directly
attributable transaction costs are also included. The subsequent
measurement of financial assets depends on their classification.
The group derecognises financial assets when the contractual rights
to the cash flows expire or the financial asset is transferred to a
third party. This includes the de-recognition of receivables for
which discounting arrangements are entered into.
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 20
and the various classifications of financial assets and liabilities
are identified and explained.
ASSOCIATED BRITISH ENGINEERING PLC
GROUP AND PARENT COMPANY ACCOUNTING POLICIES (continued)
FOR THE PERIODED 31 MARCH 2019
Trade and other receivables
In previous years, trade and other receivables were 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 provision for bad, doubtful debts and
overdue at the period-end was GBP834,000 (2018: GBP609,000).
However, following the directors' decision to prepare the financial
statements on a basis other than going concern, trade and other
receivables have been written down to their recoverable amount. The
comparatives are prepared in accordance with the accounting
policies adopted in previous years.
Cash and cash equivalents
Cash and cash equivalents comprise cash on hand, demand
deposits, and other short-term highly liquid investments that have
maturities of three months or less from inception, are readily
convertible to a known amount of cash and are subject to an
insignificant risk of changes in value.
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.
Non-current liabilities
Following the directors' decision to prepare the financial
statements on a basis other than going concern, all non-current
liabilities have been reclassified as current liabilities. The
comparatives are prepared in accordance with the accounting
policies adopted in previous years.
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.
However, during the current year this has subsequently changed
given that they are now held at a discount to the quoted market
price. The directors consider it appropriate to apply a discount
due to a lack of liquidity in the markets. 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.
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.
ASSOCIATED BRITISH ENGINEERING PLC
GROUP AND PARENT COMPANY ACCOUNTING POLICIES (continued)
FOR THE PERIODED 31 MARCH 2019
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 represent 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.
Revaluation reserve includes all gains and losses relating to
Property, Plant and Equipment
All transactions with owners of the parent are recorded
separately within equity.
ASSOCIATED BRITISH ENGINEERING PLC
CONSOLIDATED INCOME STATEMENT
FOR THE PERIODED 31 MARCH 2019
Note 2019 2018
GBP'000 GBP'000
REVENUE 1 1,134 1,603
Operating costs 2 (2,552) (2,128)
Exceptional items 3 (324) -
-------- --------
OPERATING LOSS 4 (1,742) (525)
Finance expense 7 (68) (57)
Finance income 7 - -
-------- --------
LOSS BEFORE TAXATION (1,810) (582)
Taxation 8 79 160
-------- --------
LOSS FOR THE PERIOD (1,731) (422)
======== ========
LOSS PER SHARE ON LOSS FOR THE PERIOD
ATTRIBUTABLE TO EQUITY HOLDERS OF THE
PARENT COMPANY
BASIC AND DILUTED 9 (84.5p) (20.6p)
======== ========
Loss for the period attributable to:
Owners of the Company (1,731) (422)
Non-controlling interests - -
-------- --------
(1,731) (422)
-------- --------
The accounting policies on pages 17 to 24 and the notes on pages
30 to 46 form part of these accounts.
ASSOCIATED BRITISH ENGINEERING PLC
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE PERIODED 31 MARCH 2019
Note 2019 2018
GBP'000 GBP'000
Loss for the period (1,731) (422)
-------- --------
Other comprehensive (loss)/income
Re-measurement of the net defined benefit
liability (*) 18 (3,471) (54)
Gain/ (Loss) on available for sale financial
asset (**) 568 (168)
(Deficit)/surplus on revaluation of property (50) 600
Other comprehensive (loss)/profit/ for
the period (2,953) 378
-------- --------
TOTAL COMPREHENSIVE (LOSS)/INCOME FOR THE
PERIOD (4,684) (44)
======== ========
Total comprehensive (loss)/income attributable
to:
Owners of the Company (4,684) (44)
Non-controlling interests - -
(4,684) (44)
======== ========
(*) = Items which will not subsequently be reclassified to the
Income Statement.
(**) = Items which may subsequently be reclassified to the
Income Statement.
The accounting policies on pages 17 to 24 and the notes on pages
30 to 46 form part of these accounts.
ASSOCIATED BRITISH ENGINEERING PLC Company Number: 00110663
GROUP STATEMENT OF FINANCIAL POSITION
AS AT 31 MARCH 2019
Note 2019 2018
GBP'000 GBP'000
ASSETS
Non-current assets
Property, plant and equipment 10 - 833
Available for sale financial assets 15 21 264
--------- --------
21 1,097
Current assets
Property, plant and equipment 10 534 -
Available for sale financial assets 15 714 -
Inventories 12 165 1,037
Trade and other receivables 13 125 518
Cash and cash equivalents 389 344
1,927 1,899
--------- --------
Total assets 1,948 2,996
========= ========
EQUITY AND LIABILITIES
Called up share capital 16 51 51
Deferred shares 16 2,594 2,594
Share premium account 5,370 5,370
Other reserves 11 11
Available for Sale reserve 805 (64)
Revaluation reserve 550 600
Retained earnings (13,089) (7,586)
--------- --------
Equity attributable to the Parent Company's
Equity shareholders (3,708) 976
--------- --------
Total equity (3,708) 976
--------- --------
LIABILITIES
Non-current liabilities
Retirement benefit obligations 18b - 1,354
Obligation under finance leases 19 - 13
- 1,367
--------- --------
Current liabilities
Trade and other payables 19 664 631
Obligations under finance leases 19 10 22
Retirement benefit obligations 18b 4,982 -
5,656 653
--------- --------
Total liabilities 5,656 2,020
Total equity and liabilities 2,032 2,996
========= ========
The financial statements were approved and authorised for issue
by the Board of Directors on 13 August 2019 and were signed below
on its behalf by:
C Weinberg
Director
The accounting policies on pages 17 to 24 and the notes on pages
30 to 46 form part of these accounts.
ASSOCIATED BRITISH ENGINEERING PLC
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE PERIODED 31 MARCH 2019
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
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) 600 (476) (44) (44)
-------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- --------------
Balance at
1 April 2018 51 5,370 2,594 11 (64) 600 (7,586) 976 976
-------------- -------------- --------------- -------------- -------------- -------------- --------------- --------------- ---------------
Loss for the
period - - - - - - (1,731) (1,731) (1,731)
Other
comprehensive
income
Actuarial loss
in defined
benefit plan
(*) - - - - - - (3,471) (3,471) (3,471)
Unrealised
gain on
Available
for Sale
financial
assets (**) - - - - 568 - - 568 568
Realised gain
on
Available for
Sale
Financial
assets - - - - 301 - (301) - -
Revaluation
Surplus on
revaluation
of freehold
property - - - - - (50) - (50) (50)
-------------- -------------- --------------- -------------- -------------- -------------- --------------- --------------- ---------------
Total
comprehensive
income for
the period - - - - 869 - (5,503) (4,684) (4,684)
-------------- -------------- --------------- -------------- -------------- -------------- --------------- --------------- ---------------
Balance at
31 March 2019 51 5,370 2,594 11 805 550 (13,089) (3,708) (3,708)
====== ====== ====== ====== ====== ====== ======= ======= ======
(*) = 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 17 to 24 and the notes on pages
30 to 46 form part of these accounts.
ASSOCIATED BRITISH ENGINEERING PLC
CONSOLIDATED CASH FLOW STATEMENT
FOR THE PERIODED 31 MARCH 2019
2019 2018
GBP'000 GBP'000
Cash flows from operating activities
Cash used in operations (80) (256)
Interest received - -
Interest paid (68) (57)
Taxation - 160
-------- --------
Net cash used in operating activities (148) (153)
-------- --------
Cash flows from investing activities
Proceeds from sale of equipment 24 2
Purchase of equipment (16) (14)
Sale proceeds from trading investments 210 -
Net cash used in investing activities 218 (12)
-------- --------
Cash flows from financing activities
New finance lease - 11
Repayment of finance leases (25) (37)
Net cash used in financing activities (25) (26)
-------- --------
Net decrease in cash and cash equivalents 45 (191)
Cash and cash equivalents at beginning of period 344 535
-------- --------
Cash and cash equivalents at end of period 389 344
======== ========
CASH FLOW FROM OPERATING ACTIVITIES
2019 2019
GBP'000 GBP'000
Loss before taxation (1,810) (582)
Adjustments for:
Depreciation 91 86
Interest income - -
Finance expense 68 57
Foreign exchange difference (11) 2
Pension scheme interest expense 38 36
Cash paid in excess of current service cost (204) (116)
Profit on disposal of equipment (6) (2)
Impairment of assets 156 -
Profit on disposal of AFS investments (108) -
Changes in working capital:
Decrease/(increase) in inventories 872 295
(Increase)/decrease in trade and other receivables 393 (5)
(Decrease)/increase in payables 33 (27)
(80) (256)
Cash used in operations (80) (256)
======== ========
The accounting policies on pages 17 to 24 and the notes on pages
30 to 46 form part of these accounts.
ASSOCIATED BRITISH ENGINEERING PLC
NOTES TO THE ACCOUNTS - GROUP
FOR THE PERIODED 31 MARCH 2019
1. SEGMENTAL REPORTING
The following table shows an analysis of the Group's external
sales by geographical market:
2019 2018
GBP'000 GBP'000
United Kingdom 627 936
Europe 240 138
Far East and Australasia 87 64
Africa 81 176
North and South America 87 201
Middle East 12 88
1,134 1,603
============ ============
The following table shows an analysis of the Group's external
sales from operations:
2019 2018
GBP'000 GBP'000
Revenue from the sale of goods 773 937
Revenue from the rendering of services 361 666
--------- ---------
1,134 1,603
========= =========
All of the above revenue arises from trading in diesel and
related engineering activities.
In the periods ended 31 March 2019 and 31 March 2018, 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 is a trade finance company.
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 2019
1. SEGMENTAL REPORTING (continued)
Associated
Period to 31 March 2019 British British Akoris
Engineering Polar Trading Consolidated
Plc Engines Limited
Limited
GBP'000 GBP'000 GBP'000 GBP'000
External sales - 1,134 - 1,134
------------- ---------- ---------- ---------------
Segment result (LBIT) (49) (1,687) (6) (1,742)
------------- ---------- ---------- ---------------
Net finance expenses (68)
Taxation 79
---------------
Loss after tax (1,731)
===============
Other information
Capital additions - 16 - 16
Balance sheet
Segment assets 86 1,843 19 1,948
============= ========== ========== ===============
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)/
PBIT (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
============= ========== ========== ===============
Included in the total Group revenue was GBP253,000 (2018:
GBP512,000) of sales which arose from two customers who contributed
to 10% or more of the total Group revenue for the period ended 31
March 2019 (2018: two customers). The geographical market from
which the revenue from the customers originate is principally the
United Kingdom.
All of the revenue recognised by the Group during the year arose
from contracts from customers as defined in IFRS 15.
2. OPERATING COSTS 2019 2018
GBP'000 GBP'000
Raw materials used 1,175 732
Staff costs (note 4) 616 667
Depreciation of property plant and equipment 91 86
Other expenses 670 643
-------- --------
2,552 2,128
======== ========
ASSOCIATED BRITISH ENGINEERING PLC
NOTES TO THE ACCOUNTS - GROUP (continued)
FOR THE PERIODED 31 MARCH 2019
3. EXCEPTIONAL ITEM 2019 2018
GBP'000 GBP'000
Exceptional item (324) -
Following the directors' decision to prepare the financial
statements on a basis other than going concern, impairments have
arisen to bring certain assets to their recoverable amounts and now
shown as an exceptional item above. The items which relate to the
impairment are tangible fixed assets (GBP156,000) and trade
receivables (GBP167,944).
4. OPERATING LOSS 2019 2018
GBP'000 GBP'000
Operating loss is stated after charging/(crediting)
Depreciation on owned assets 59 54
Depreciation on assets held under finance
leases 32 32
Fees payable to the Company's auditor for
the audit of the Company's annual accounts:
PLC audit costs 24 22
The audit of the Company's subsidiaries
pursuant to legislation 22 21
Operating lease rental on plant and machinery 25 42
Profit on disposal of property, plant &
equipment (6) (2)
======== ============
5. STAFF COSTS AND EMPLOYEES 2019 2018
GBP'000 GBP'000
Wages and salaries 332 499
Social security costs 34 52
Other pension costs 250 116
-------- ------------
616 667
======== ============
The average monthly number of persons employed
by the Group during the period was:
2019 2018
Number Number
By activity
Production 5 9
Administration 11 13
-------- ------------
16 22
======== ============
6. DIRECTORS' REMUNERATION
Directors received emoluments of GBP57,000 (2018: GBP57,000).
Further details can be found on page 64.
KEY MANAGEMENT COMPENSATION 2019 2018
GBP'000 GBP'000
Remuneration of Group directors 69 57
======== ========
The Group made no pension contributions in respect of Group
directors during the period ended 31 March 2019 or 31 March
2018.
ASSOCIATED BRITISH ENGINEERING PLC
NOTES TO THE ACCOUNTS - GROUP (continued)
FOR THE PERIODED 31 MARCH 2019
7. NET FINANCE EXPENSE 2019 2018
GBP'000 GBP'000
Interest on obligations under finance leases 30 21
-------- --------
Interest expenses for borrowings at amortised
cost 30 21
Net interest cost on defined benefit pension
scheme 38 36
-------- --------
68 57
-------- --------
Interest receivable on cash and - -
cash equivalents
-------- --------
68 57
-------- --------
8. TAXATION 2019 2018
GBP'000 GBP'000
The tax charge is set out below:
Current tax:
United Kingdom corporation tax at 19% (2018: - -
19%)
Research & Development tax credit 79 160
In respect of current period - -
-------- --------
Total current tax and tax on profit on ordinary
activities 79 160
======== ========
The tax assessed for the period is different from the standard
rate of corporation tax in the UK of 19% (2018: 19%). The
differences are explained as follows:
2019 2018
GBP'000 GBP'000
Loss on ordinary activities before tax (1,810) (422)
-------- --------
Loss on ordinary activities multiplied by
standard rate of Corporation tax in the UK
of 19% (2018: 19%) (344) (80)
Effects of:
Fixed asset differences (1) -
Expenses not deductible for tax purposes 11 9
Amounts (charged)/credited directly to equity - -
or otherwise transferred
Income not taxable - 2
Depreciation for the period in excess of capital
allowances 22 9
Adjustment to recognised deferred tax - -
Other tax adjustments 14 -
Surrender of group relief - (3)
Losses carried forward 298 63
Research & Development credit 79 160
Taxation credit in the consolidated income
statement 79 160
======== ========
The Group has trading losses of approximately GBP4.5 million
(2018: GBP3.6 million) and capital losses of GBP8.5 million (2018:
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 GBP765,000 (2018: GBP620,000) 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 2019
9. 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.
2019 2018
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 (1,731) 2,048,990 (84.5p) (422) 2,048,990 (20.6p)
======== =========== ============= ======== =========== =============
10. PROPERTY, PLANT AND EQUIPMENT Freehold
land and Plant
buildings and machinery Total
GBP'000 GBP'000 GBP'000
COST
At 4 April 2017 689 1,439 2,128
Additions - 16 16
Disposals - (7) (7)
----------- ---------------- --------
At 31 March 2018 689 1,448 2,137
----------- ---------------- --------
At 1 April 2018 689 1,448 2,137
Additions - 16 16
Disposals - (24) (24)
Impairment - - (50)
----------- ---------------- --------
At 31 March 2019 689 1,440 2,079
----------- ---------------- --------
ACCUMULATED DEPRECIATION
At 4 April 2017 689 1,136 1,825
Charge for period 21 65 86
Eliminated on disposals - (8) (8)
Eliminated on revaluation (600) - (600)
At 31 March 2018 110 1,193 1,303
----------- ---------------- --------
At 1 April 2018 110 1,193 1,303
Charge for period 34 57 91
Eliminated on disposals - (7) (7)
Eliminated on revaluation - - -
Impairment 50 158 158
----------- ---------------- --------
At 31 March 2019 194 1,401 1,545
----------- ---------------- --------
CARRYING AMOUNTS
At 31 March 2019 495 39 534
=========== ================ ========
At 31 March 2018 579 255 834
=========== ================ ========
At 3 April 2017 (as restated) - 303 303
=========== ================ ========
At 31 March 2019 assets held under finance leases included in
plant and machinery had a carrying value
of GBP9,188 (2018: GBP142,636).
ASSOCIATED BRITISH ENGINEERING PLC
NOTES TO THE ACCOUNTS - GROUP (continued)
FOR THE PERIODED 31 MARCH 2019
10. PROPERTY, PLANT AND EQUIPMENT (Continued)
In March 2019 the freehold property was valued at GBP550,000 by
GVA Grimley Limited, an external valuer. Subsequently FRP Advisory
LLP assessed that the recoverable amount of the freehold property
at 31 March 2019 was GBP495,000. Accordingly, the valuation of the
property has been valued at this amount.
11. CAPITAL COMMITMENTS
At 31 March 2019 the Group had capital commitments of GBPnil
(2018: GBPnil).
12. INVENTORIES 2019 2018
GBP'000 GBP'000
Raw materials 23 100
Work in progress 9 34
Finished goods 133 903
-------- --------
165 1,037
======== ========
The closing inventory balance of GBP165,000 (2018: GBP1,037,000)
is stated net of provisions of GBP3,441,000
(2018: GBP2,621,000). There was an increase in provision of
GBP820,000 (2018: GBP125,000 increase) in relation to slow moving
stock and due to the change in the basis of preparation of the
financial statements.
13. TRADE AND OTHER RECEIVABLES 2019 2018
GBP'000 GBP'000
Trade receivables 922 836
Allowance for doubtful debts (834) (609)
-------- --------
88 227
Prepayments and accrued income 37 291
-------- --------
125 518
======== ========
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 and impaired at the year-end. The
Group has recognised an allowance for doubtful debts against
these
items.
Ageing of trade receivables
2019 2018
GBP'000 GBP'000
0 - 30 days 79 699
31 - 60 days 18 97
61 - 90 days 15 2
91 - 120 days 810 38
Provision against past due and impaired amounts (834) (609)
-------- --------
88 227
======== ========
ASSOCIATED BRITISH ENGINEERING PLC
NOTES TO THE ACCOUNTS - GROUP (continued)
FOR THE PERIODED 31 MARCH 2019
13. TRADE AND OTHER RECEIVABLES (Continued)
Movement in the allowance for doubtful debts:
2019 2018
GBP'000 GBP'000
Balance at the beginning of the period 609 500
Increase in provision 225 109
Balance at the end of the period 834 609
======== ========
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 balances at the period-end which accounts for 31%
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.
14. AVAILABLE FOR SALE INVESTMENTS 2019 2018
GBP'000 GBP'000
Listed Securities 735 264
======== ========
GBP'000
Opening balance 264
Additions -
Revaluations 568
Disposals (97)
Closing balance 735
============
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 are valued based on active
markets' prices. In the prior year, the fair value of financial
instruments were reported under Level 1 in the fair value hierarchy
(2018: GBP264,000). However, during the current year this has
subsequently changed given that they are held at a discount to the
quoted market price (recoverable amount) following the decision by
the directors to prepare the financial statements on a basis other
than going concern. Included within the revaluation gain of
GBP569,000 is an impairment loss of GBP309,000 in relation to this.
This amount has been treated as a realised loss within the Group
Statement of Changes in Equity.
As described in the prior year financial statements the Group
held an investment in SalvaRx Group plc. During the year that
entity disposed of its interest in its subsidiary, SalvaRx Limited
to Portage Biotech Inc. Subsequently as part of a demerger, SalvaRx
Group plc transferred 12,600,000 shares in Portage Biotech Inc, to
the Group. Colin Weinberg resigned as a director of SalvaRx Group
plc on 8 January 2019
ASSOCIATED BRITISH ENGINEERING PLC
NOTES TO THE ACCOUNTS - GROUP (continued)
FOR THE PERIODED 31 MARCH 2019
15. CALLED UP SHARE CAPITAL 2019 2018
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
=== ===
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 31 March
2019 (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 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.
16. NON-CONTROLLING INTERESTS
At the period-end, the Group held 99.7% of Akoris Trading Limited's
Ordinary Share capital.
17. 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 contribution
personal pension plan which meets stakeholder requirements.
The directors have assessed the relevant estimates and
assumptions and have now deemed the pension scheme to be prepared
under the solvency basis, which provides an estimate of the cost of
transferring all liabilities to an insurer. This basis has been
derived in line with the s.143 basis prescribed by the Pension
Protection Fund ("PPF") that was in force as at 1 April 2019.
The defined benefit scheme exposes the Group to actuarial risks
such as
ASSOCIATED BRITISH ENGINEERING PLC
NOTES TO THE ACCOUNTS - GROUP (continued)
FOR THE PERIODED 31 MARCH 2019
17. RETIREMENT BENEFIT SCHEMES (Continued)
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.
The scheme consists of 1 active members, 26 deferred members and
57 pensioner members. The contribution to the scheme for the
forthcoming period is expected to be GBP118,000 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 +4.30 214
0.25% increase in inflation +1.90 95
Members assumed to live one period
longer +5.20 259
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% (2018: 32.1%) 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 Members 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.
ASSOCIATED BRITISH ENGINEERING PLC
NOTES TO THE ACCOUNTS - GROUP (continued)
FOR THE PERIODED 31 MARCH 2019
17. RETIREMENT BENEFIT SCHEMES (continued)
-- 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.
(a) Pension cost (recognised in Income Statement) 2019 2018
GBP'000 GBP'000
Operating charge
Current service cost 11 21
Past service cost 164 -
175 21
Other finance charges
Interest on net defined benefit obligation 38 36
-------- --------
Total pension cost recognised in the Income
Statement 213 57
======== ========
(b) Benefit liability 2019 2018 2017 2016 2015
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Present value of funded
obligations 11,066 7,742 8,446 8,295 8,424
Fair value of plan assets (6,084) (6,388) (7,066) (6,364) (6,532)
------------ -------- -------- -------- --------
Net liability 4,982 1,354 1,380 1,931 1,892
============ ======== ======== ======== ========
The major categories of plan assets
are as follows:
2019 2018
GBP'000 GBP'000
Equities (quoted) 2,251 2,308
Index-Linked Gilts 1,704 1,832
Corporate Bonds 1,095 1,162
Liability Driven Investment 669 640
Cash 365 446
Bank Balance - -
-------- ----------
6,084 6,388
======== ==========
ASSOCIATED BRITISH ENGINEERING PLC
NOTES TO THE ACCOUNTS - GROUP (continued)
FOR THE PERIODED 31 MARCH 2019
17. RETIREMENT BENEFIT SCHEMES (continued)
Plan assets
The weighted-average asset allocations at the period-end were
as follows: 2019 2018
Equities (quoted) 36.8% 36.1%
Bonds 45.8% 46.9%
LDI 11.0% 10.0%
Cash/other 6.4% 7.0%
Plan risks
The defined benefit plan typically exposes the Group to
actuarial risks, as stated on page 36, which are managed by the
Trustees of the defined benefit plan after consulting the
Board.
(c) Change in benefit obligation 2019 2018
GBP'000 GBP'000
Benefit obligation at beginning of the period 7,742 8,446
Current service cost 11 21
Interest cost 209 222
Actuarial gain/(loss) arising from changes
in financial assumptions 3,364 (396)
Contributions by plan participants 2 3
Past service cost 164 -
Benefits paid (426) (554)
-------- --------
Benefit obligations at end of the period 11,066 7,742
======== ========
(d) Change in plan assets 2019 2018
GBP'000 GBP'000
Fair value of plan assets at beginning of
the period 6,388 7,066
Expected return on plan assets 172 186
Actuarial (loss)/gains on plan assets arising
from changes in financial assumptions (64) (450)
Contributions made by employer 12 137
Contributions by plan participants 2 3
Benefits paid (426) (554)
Fair value of plan assets at end of the period 6,084 6,388
======================= ===================
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 1.36% (2018: 2.78% pa).
ASSOCIATED BRITISH ENGINEERING PLC
NOTES TO THE ACCOUNTS - GROUP (continued)
FOR THE PERIODED 31 MARCH 2019
17. RETIREMENT BENEFIT SCHEMES (continued)
--------------------------------------------------------------------------------------------------------------
(e) Principal actuarial assumptions 2019 2018
Inflation (CPI) 2.87 2.12
Rate of increase in pensionable salaries n/a 2.50
Pre-retirement discount rate 0.86 2.78
Post-retirement discount rate 1.36 2.78
LPI pension increases 3.07 2.12
Deferred pension revaluation - Pre
09 2.87 2.12
Deferred pension revaluation - Post
09 1.77 2.12
Male Mortality S2PMA CMI2016 S2NMA CMI
(using core 2017 with
parameters) 1% p.a. long-term
with 1.5% p.a. improvement
long-term improvement
Female Mortality S2PFA CMI2016 Female S2NFA
(using core CMI 2017 with
parameters) 1% p.a. long-term
with 1.25% improvement
p.a. long-term
improvement
Life expectancy from age 65 (periods):
Male currently aged 65 22.4 22.0
Female currently aged 65 24.1 24.0
Male currently aged 45 24.2 23.1
Female currently aged 45 25.6 25.2
The directors have assessed the relevant estimates and
assumptions and have now deemed the pension scheme to be prepared
under the solvency basis, which provides an estimate of the cost of
transferring all liabilities to an insurer. This basis has been
derived in line with the s.143 basis prescribed by the Pension
Protection Fund ("PPF") that was in force as at 1 April 2019.
(f) Expected future cash flows
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 2019 is approximately 18 years.
ASSOCIATED BRITISH ENGINEERING PLC
NOTES TO THE ACCOUNTS - GROUP (continued)
FOR THE PERIODED 31 MARCH 2019
18. PAYABLES 2019 2018
GBP'000 GBP'000
Current
Obligations under finance leases 10 22
Trade payables 163 237
Other taxation and social security 8 5
Other payables 43 43
Accruals 440 346
-------- --------
664 653
======== ========
The net finance lease obligations are due:
In one period or less 10 22
Between two and three periods - 13
-------- --------
10 35
======== ========
All current payables apart from obligations under finance leases
are expected to mature within a period of 6 months.
19. 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.
2019 2018
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 125 - 227 -
------------ ----------- ------------ -----------
Total current 125 - 227 -
Total 125 - 227 -
============ =========== ============ ===========
Financial liabilities:
Loans - - 13 -
------------ ----------- ------------ -----------
Total non- current - - 13 -
Trade and other payables 664 - 575 -
Loans 10 - 22 -
------------ ----------- ------------ -----------
Total current 674 - 597 -
Total 674 - 610 -
============ =========== ============ ===========
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 2019
19. 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 GBP3,892 (2018: GBP3,440).
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 19.
ASSOCIATED BRITISH ENGINEERING PLC
NOTES TO THE ACCOUNTS - GROUP (continued)
FOR THE PERIODED 31 MARCH 2019
19. 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 2019 and 2018 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 GBP225,000 (2018:
GBP109,000) has been included in the financial statements.
At the period end, 84.5% (2018: 9.6%) of current financial
assets are aged greater than 90 days. These amounted to GBP810,350
and, of this amount, GBP771,770 has been provided for (2018:
GBP612,000 and GBP574,000 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 - 714 - 714
========== ======== ======== ========
In the prior year, the fair value of financial instruments was
observed to be Level 1 (2018: GBP264,000). However, during the
current year this has subsequently changed given that they are now
held at a discount to the quoted market price. The directors
consider it appropriate to apply a discount due to a lack of
liquidity in the markets.
ASSOCIATED BRITISH ENGINEERING PLC
NOTES TO THE ACCOUNTS - GROUP (continued)
FOR THE PERIODED 31 MARCH 2019
20. DEFERRED TAXATION
The deferred taxation liability at 31 March 2019 was GBPNil
(2018: 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% (2018: 17%)) are set out
below:
Group 2019 2018
GBP'000 GBP'000
Arising from trading losses 765 620
Arising from capital losses 1,451 1,451
Arising from pension deficit 847 230
-------- --------
3,063 2,301
======== ========
21. CONTINGENT LIABILITIES
2019 2018
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 2019 or 31 March 2018.
22. COMMITMENTS UNDER OPERATING LEASES
At 31 March the Group had the following commitments under non-cancellable
operating leases:
Other
2019 2018
GBP'000 GBP'000
Within one period 1 11
Between two and five periods inclusive 3 -
------------ -----------
4 11
============ ===========
ASSOCIATED BRITISH ENGINEERING PLC
NOTES TO THE ACCOUNTS - GROUP (continued)
FOR THE PERIODED 31 MARCH 2019
23. SUBSIDIARIES
At 31 March 2019 the Company held share capital in the following
subsidiaries:
Company % Holding Activity Registered Country of
office Incorporation
British Polar Engines 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% Commodity, natural 10 Queen England &
Limited resource and Street Place, Wales
trade finance London, EC4R
1AG
Kelvin Diesels 100% Diesel Engines, 133 Helen Scotland
Limited acting as nominee Street, Govan,
for British Polar Glasgow,
Engines Limited G51 3HD
ASSOCIATED BRITISH ENGINEERING PLC Company Number: 00110663
COMPANY STATEMENT OF FINANCIAL POSITION
AS AT 31 MARCH 2019
31 March 31 March
2019 2018
Note GBP'000 GBP'000
ASSETS
Non-current assets
Property, plant and equipment 7 - -
Investments in subsidiaries 9 - -
Available for sale financial assets 10 21 96
--------- ---------
21 96
--------- ---------
Current assets
Trade and other receivables 5 -
Cash and cash equivalents 60 24
--------- ---------
65 24
--------- ---------
Total assets 86 120
========= =========
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 reserve 212 212
Available for sale reserve (57) (32)
Retained earnings (8,182) (8,172)
--------- ---------
Total equity (12) 23
--------- ---------
LIABILITIES
Current liabilities
Trade and other payables 11 98 97
Total liabilities 98 97
========= =========
Total equity and liabilities 86 120
========= =========
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 GBP25,605 (2018: loss
GBP21,000)
The financial statements were approved and authorised for issue
by the Board of Directors on 13 August 2019 and were signed below
on its behalf by:
C Weinberg
Director
The accounting policies on pages 17 and 24 and the notes on
pages 50 to 55 form part of these accounts.
ASSOCIATED BRITISH ENGINEERING PLC
COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE PERIODED 31 MARCH 2019
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 3
April 2017 51 5,370 2,594 212 41 (8,151) 117
-------------- -------------- --------------- -------------- -------------- --------------- --------------
Loss for the
period - - - - - (21) (21)
Other
comprehensive
income
Unrealised
loss 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
-------------- -------------- --------------- -------------- -------------- --------------- --------------
Loss for the
period - - - - - (26) (26)
Other
comprehensive
income
Unrealised
loss on
Available
for Sale
financial
assets
(**) - - - - (9) (9)
Realised gain
on Available
for Sale
financial
assets
(**) - - - - (16) 16 -
-------------- -------------- --------------- -------------- -------------- --------------- ---------------
Total
comprehensive
income
for the
period - - - - (25) (10) (35)
-------------- -------------- --------------- -------------- -------------- --------------- ---------------
Balance at 31
March 2019 51 5,370 2,594 212 (57) (8,182) (12)
====== ====== ====== ====== ====== ======= =======
(**) = Items which may subsequently be reclassified to the
Income Statement.
The accounting policies on pages 17 and 24 and the notes on
pages 50 to 55 form part of these accounts.
ASSOCIATED BRITISH ENGINEERING PLC
COMPANY CASH FLOW STATEMENT
FOR THE PERIODED 31 MARCH 2019
2019 2018
GBP'000 GBP'000
Cash flows from operating activities
Cash used in operations (55) (24)
Interest received 23 18
Net cash used in operating activities (32) (6)
-------- --------
Cash flows from investing activities - -
Sale proceeds from trading investments 68 (21)
Net cash derived from investing activities - -
-------- --------
Cash flows from financing activities - -
Net cash used in financing activities - -
-------- --------
Net increase/ (decrease) in cash and cash equivalents 36 (6)
Cash and cash equivalents at beginning of period 24 30
-------- --------
Cash and cash equivalents at end of period 60 24
======== ========
CASH FLOW FROM OPERATING ACTIVITIES
2019 2018
GBP'000 GBP'000
Loss before taxation (25) (21)
Adjustments for:
Interest income (23) (18)
(Profit) on disposal of Available for Sale investments (2) -
Changes in working capital:
(Increase)/decrease in trade and other receivables (5) -
Increase/(decrease) in trade and other payables - 15
Taxes paid - -
-------- --------
Cash used in operations (55) (24)
======== ========
The accounting policies on pages 17 and 24 and the notes on
pages 55 to 55 form part of these accounts.
ASSOCIATED BRITISH ENGINEERING PLC
NOTES TO THE ACCOUNTS - COMPANY
FOR THE PERIODED 31 MARCH 2019
OPERATING COSTS AND OPERATING LOSS
1. Operating loss is stated after charging 2019 2018
GBP'000 GBP'000
Fees payable to the Company's auditor for
the audit of the company's annual accounts 23 22
2. STAFF COSTS AND EMPLOYEES 2019 2018
GBP'000 GBP'000
Wages and salaries 54 48
54 48
======== ========
The average monthly number of persons employed by the Company
during the period was:
2019 2018
Number Number
By activity
Directors 2 2
Administration 1 1
3 3
======= =======
3. DIRECTORS' REMUNERATION 2019 2018
GBP'000 GBP'000
Remuneration in respect of directors was as
follows:
Remuneration 32 32
======== ========
4. KEY MANAGEMENT COMPENSATION 2019 2018
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 2019 or 31 March
2018.
5. INTEREST RECEIVED 2019 2018
GBP'000 GBP'000
Interest receivable on cash and cash equivalents (23) (18)
-------- --------
(23) (18)
======== ========
6. TAXATION
There is no taxation liability at 31 March
2019 (2018: GBPnil)
ASSOCIATED BRITISH ENGINEERING PLC
NOTES TO THE ACCOUNTS - COMPANY
FOR THE PERIODED 31 MARCH 2019
7. PROPERTY, PLANT AND EQUIPMENT
Computer
equipment Total
GBP'000 GBP'000
COST
At 3 April 2017 2 2
Additions - -
Disposals - -
------------ --------
At 31 March 2018 2 2
------------ --------
At 1 April 2018 2 2
Additions - -
Disposals - -
------------ --------
At 31 March 2019 2 2
------------ --------
ACCUMULATED DEPRECIATION
At 3 April 2017 2 2
Charge for period - -
Eliminated on disposals - -
------------ --------
At 31 March 2018 2 2
------------ --------
At 1 April 2018 2 2
Charge for period - -
Eliminated on disposals - -
------------ --------
At 31 March 2019 2 2
------------ --------
CARRYING AMOUNTS
At 31 March 2019 - -
============ ========
At 31 March 2018 - -
============ ========
At 3 April 2017 - -
============ ========
8. CAPITAL COMMITMENTS
At 31 March 2019 the Company has no capital commitments (2018:
GBPNil)
ASSOCIATED BRITISH ENGINEERING PLC
NOTES TO THE ACCOUNTS - COMPANY
FOR THE PERIODED 31 MARCH 2019
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 99.7% 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 2019 and 31
March 2018.
* Held indirectly via British Polar Engines Limited
10 AVAILABLE FOR SALE INVESTMENTS 2019 2018
GBP'000 GBP'000
Listed securities 21 96
======== ========
Available
For Sale
financial
assets
GBP
Opening balance 96
Net fair value loss (9)
Disposals (66)
Closing balance 21
-----------
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 2019
11 TRADE AND OTHER PAYABLES 2019 2018
GBP'000 GBP'000
Amounts falling due within one period
Trade and other payables 57 62
Accruals and deferred income 41 35
-------- --------
98 97
======== ========
12 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
2019 the Company has cash balances of GBP60,000 (2018: GBP24,000)
and no bank overdraft (2018: 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 GBP600 (2018: GBP240).
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 2019
12. 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 (2019) 21 - - 21
======== ======== ======== ========
Available for sale financial
assets
Quoted securities (2018) 96 - - 96
=== ===
13. DEFERRED TAXATION
2019 2018
GBP'000 GBP'000
Arising from trading losses 259 252
Arising from capital losses 1,408 1,408
-------- --------
1,667 1,660
======== ========
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 2019
14. CALLED UP SHARE CAPITAL 2019 2018
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.
15. CONTINGENT LIABILITIES
There were no contingent liabilities at 31 March 2019 or 31
March 2018.
16. 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: 13 August 2019
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 management, 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.
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 complied 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.
ASSOCIATED BRITISH ENGINEERING PLC
CORPORATE GOVERNANCE REPORT (continued)
(AS REFERRED TO IN THE DIRECTORS' REPORT)
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.
The Current Directors
Rupert Pearce Gould
Colin Weinberg
Short biographies of the directors appear on page 64 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
2019 financial statements and how they were addressed are outlined
below:
Going concern
The committee have considered the preparation of the financial
statements of BPE and, after discussions with the Trustees of the
Pension Fund and discussions as to how to meet that liability and
having taken advice, have come to the conclusion that it is
inappropriate to prepare them on a going concern basis. Therefore,
the Directors have prepared the accounts on a basis other than
going concern.
In light of the above, the Board of BPE, supported by the Board
of your company, entered into discussions with the Trustees of the
Pension Fund, the Pensions Regulator and the Pension Protection
Fund. As part of those discussions the Board of BPE decided that
they should engage FRP LLP to advise on negotiations with the
Trustees and the Pensions Regulator and consider the future of the
operating business of BPE including marketing it as for sale. This
decision was announced to the market on the 2 July 19 and we are in
the middle of that process.
ASSOCIATED BRITISH ENGINEERING PLC
CORPORATE GOVERNANCE REPORT (continued)
(AS REFERRED TO IN THE DIRECTORS' REPORT)
Audit Committee (continued)
Revenue Recognition and Management Override
The Committee have reviewed the systems and control processes in
place during the financial period to 31 March 2019 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.
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. Following the decision to prepare the
financial statements on a basis other than going concern,
inventories have been written down to their recoverable amounts, in
line with a report provided by a specialist. The Committee
considered the appropriateness of that report and concluded that
they were satisfied that those estimates were affair reflection of
the recoverable amount of the inventory.
Recoverability of receivables
The Committee have reviewed the policy for providing for
doubtful debts and believe them to be both robust and adequate.
Following the decision to prepare the financial statements on a
basis other than going concern, receivables have been written down
to their recoverable amounts, in line with a report provided by a
specialist.
The Committee considered the appropriateness of that report and
concluded that they were satisfied that those estimates were affair
reflection of the recoverable amount of receivables.
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 have now deemed the pension scheme to be
prepared under the solvency basis, which provides an estimate of
the cost of transferring all liabilities to an insurer. This basis
has been derived in line with the s.143 basis prescribed by the
Pension Protection Fund ("PPF") that was in force as at 1 April
2019.
Appointing the auditor
Safeguards on non-audit services
Haysmacintyre LLP 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.
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.
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.
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.
ASSOCIATED BRITISH ENGINEERING PLC
CORPORATE GOVERNANCE REPORT (continued)
(AS REFERRED TO IN THE DIRECTORS' REPORT)
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-period announcement. The
Chairmen are available to shareholders at any time to discuss
strategy and governance matters.
AUDIT AND INTERNAL CONTROL
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.
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.
- 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
ASSOCIATED BRITISH ENGINEERING PLC
CORPORATE GOVERNANCE REPORT (continued)
(AS REFERRED TO IN THE DIRECTORS' REPORT)
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 via a robust risk
assessment, 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.
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 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 as set out in
the basis of preparation in the account policies of these financial
statements, which have been prepared on a basis other than going
concern. After assessing the long term viability the Directors are
considering the short term strategies in relation to BPE. This is
set out in the strategic report and elsewhere in the financial
statements.
Beyond this, the longer term plan for the company is that once
these matters have been satisfactorily concluded, the company will
consider pursuing other potential opportunities that may become
available to it. Such opportunities are not yet quantifiable.
Therefore, the Directors do not consider it appropriate to consider
the long term viability until such time that the above matters have
been satisfactorily resolved. The Board believe that assessing the
longer-term viability of any company at this stage of the strategy
implementation is inevitably a challenge given the volatility in
markets.
Following this assessment, the Board have concluded, based on
the budgets produced and the financial position of the Group, that
there is uncertainty that the subsidiary BPE does not have adequate
resources to continue to operate and meet its liabilities as they
fall due.
In assessing the prospects of the Group, the directors noted
that such assessment is subject to a degree of uncertainty that can
be expected to increase looking out over time and, accordingly,
that future outcomes cannot be guaranteed or predicted with
certainty. The Board of ABE have secured sufficient funding for
continuation of the listed entity, which is only subject to ABE
being a listed entity.
The Directors have considered the preparation of the financial
statements and, after discussions with the Trustees of the Pension
Fund and discussions as to how to meet that liability and having
taken advice, have come to the conclusion that it is inappropriate
to prepare them on a going concern basis.
ASSOCIATED BRITISH ENGINEERING PLC
CORPORATE GOVERNANCE REPORT (continued)
(AS REFERRED TO IN THE DIRECTORS' REPORT)
GOING CONCERN
There have been changes to accounting policies in the period to
reflect the change in the preparation of the financial statements.
Furthermore, after making enquiries and considering this
uncertainty and the measures that can be taken to mitigate the
uncertainty, the Directors consider it inappropriate to prepare the
financial statements on a going concern basis. Therefore, the
Directors have prepared these financial statements on a basis other
than going concern (Please see the going concern statement on page
5).
On behalf of the Board
C Weinberg
Director
Date 13 August 2019
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 2019. 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 LLP, 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 directors each
receive a fee for their services, which is agreed by the
Remuneration Committee after reviewing comparable organisations and
appointments. None of the 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)
2019 2018
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 (2018: GBP27,000) 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 2019, as
in previous periods.
Statement of Voting at the Annual General Meeting (AGM)
The 2018 Remuneration Report was presented to the AGM in
September 2018 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 62 shows the Company's TSR performance
compared to the FTSE All Share index over the past ten 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 3.
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
56 to 64 form part of the Directors' report.
On behalf of the Board
C Weinberg
Director
Date 13 August 2019
ASSOCIATED BRITISH ENGINEERING PLC
DIRECTORS AND ADVISERS
The Board comprises two directors:
COLIN WEINBERG (70) 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 (68), 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 LLP 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 SFLESDFUSESA
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