TIDMASBE
RNS Number : 3684U
Associated British Engineering PLC
28 July 2015
Company Number: 00110663
ASSOCIATED BRITISH ENGINEERING PLC
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED
31 MARCH 2015
ASSOCIATED BRITISH ENGINEERING PLC
REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2015
CONTENTS Page
Financial highlights 1
Chairman's statement 2
Directors' report 3
Strategic report 6
Report of the independent auditor - Group 10
Group accounting policies 13
Group income statement 20
Group statement of comprehensive income 21
Group balance sheet 22
Group statement of changes in equity 23
Group cash flow statement 24
Notes to the Group financial statements 25
Report of the independent auditor - Company 42
Principal accounting policies - Company 43
Company balance sheet 45
Notes to the company financial statements 46
Statement of directors' responsibilities 50
Corporate governance report 51
Directors' remuneration report 56
Directors, registered office and advisers 59
The Directors' Report on pages 3 to 5 and the Directors'
Remuneration Report on pages 56 to 58 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 year ended 31 March 2015. Pages 1 to 9 and 50
to 59, including the Financial Highlights, Chairman'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
2015 2014
GBP'000 GBP'000
REVENUE 2,626 2,667
OPERATING LOSS (131) (308)
LOSS BEFORE TAXATION (179) (328)
NET ASSETS 2,181 2,858
BASIC LOSS PER 2.5p ORDINARY SHARE (7.5p) (4p)
EQUITY SHAREHOLDERS' FUNDS PER 2.5p ORDINARY GBP1.06 GBP1.39
SHARE
ASSOCIATED BRITISH ENGINEERING PLC
CHAIRMAN'S STATEMENT
FOR THE YEAR ENDED 31 MARCH 2015
The Group's operating loss fell from GBP308,000 in the previous
year to a loss of GBP131,000 in the year to 31 March 2015. This
performance was largely due to a fall in costs at the Group's main
operating subsidiary, British Polar Engines Limited ("BPE"), and
its subsidiary Akoris Trading Limited ("Akoris") which fell by some
GBP0.2m in the year to 31 March 2015. Although Akoris started
trading in the year the overheads were too high and it was decided
to curtail its activities. The BPE business turnover remains
volatile and subject to the vagaries of the offshore oil drilling
market and world demand generally.
As stated in our various announcements' to the market during the
year the offshore oil market has experienced a sharp downturn in
activity and reduction in profits; however BPE continues to
actively seek out new markets and we remain confident that sales
should improve .
The IAS 19 Pension Valuation has resulted in the pension deficit
for BPE increasing from GBP1,414,000 to GBP1,892,000 at 31 March
2015. Shareholders will appreciate that the calculations
surrounding these figures result from a combination of facts and
assumptions which are set out in details in the notes to these
accounts.
In January this year your Board resolved to invest a portion of
the company's surplus cash assets in 3Legs Resources Plc, an AIM
listed company listed on the London Stock Exchange. On the 9th of
June 2015 3Legs announced that Jim Mellon and Greg Bailey two
well-respected investors in the bioscience sector had invested
GBP500,000 in 3Legs and joined the Board.
As stated in the opening paragraph BPE's subsidiary Akoris has
reduced operations and costs are now minimal. The future for Akoris
remains under review.
The Board continues to keep central costs at a low level and
seeks to identify a suitable corporate transaction to take the
Group forward.
As a small group we are reliant on the dedication of our staff
and the Board thanks them all for their effort and commitment.
Rupert Pearce Gould and Colin Weinberg
Chairmen
28 July 2015
ASSOCIATED BRITISH ENGINEERING PLC
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 MARCH 2015
The directors submit their report and audited accounts for the
year ended 31 March 2015.
RESULTS AND DIVIDENDS
The Group's loss after tax amounted to GBP185,000. The directors
are unable to recommend a dividend on the ordinary shares for the
year (2014: nil per ordinary share).
AVAILABLE FOR SALE FINANCIAL ASSETS
After extensive discussion the Board decided to deploy a portion
of the group's liquid assets into special situations to be found in
the stock market in order to achieve a meaningful return on its
cash. In furtherance of this policy the group made an investment in
an Aim listed company 3Legs Resources and one of your directors
joined the Board of that company.
DIRECTORS
The names of the directors who served during the year from 1
April 2014 to 31 March 2015 are:
Mr D A H Brown Chairman (Resigned 18 September 2014)
Sir David Thomson Bt. Chairman (Appointed 18 September,
vacated office 11 December 2014)
Mr S J Cockburn Non-Executive Director
Mr C Weinberg Director
Mr A R Beaumont Non-Executive Director (vacated office
Mr R Pearce Gould 11 December 2014)
Director (Appointed 18 September
2014)
Biographical details of the directors are set out on page
59.
In accordance with the Articles of Association Mr S J Cockburn
retires by rotation and, being eligible, offers himself for
re-election.
SUBSTANTIAL HOLDINGS
As at 30 June 2015 and at 31 March 2015 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 Includes C Weinberg's beneficial
interest
R A Pearce Gould Part of Mr Pearce Gould's holding
for his pension fund is held
in Rulegale Nominees Limited
- see below
Fiske Nominees Limited Of which I A W Tyler has 3.2%
(FISKPOOL) of issued ordinary shares which
is part of Mr S Cockburn non-beneficial
interest
Rulegale Nominees Limited Of which R A Pearce Gould's
pension fund has 5.2% of issued
ordinary shares; this holding
is included above under Mr Pearce
Gould's overall beneficial holding
Fitel Nominees Limited
(DMOD)
BNY (OCS) Nominees Limited Of which all is The Investment
Company PLC
Hargreaves Lansdown (Nominees) Of which D Newlands has 4.1%
Limited of issued ordinary shares
ASSOCIATED BRITISH ENGINEERING PLC
DIRECTORS' REPORT (continued)
FOR THE YEAR ENDED 31 MARCH 2015
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 year.
BENEFICIAL INTERESTS IN THE SHARE CAPITAL OF THE COMPANY
The beneficial interests of the directors, serving at the end of
the year, their spouses and children in the share capital of the
Company according to the register kept by the Company as at 1 April
2014 and 31 March 2015 were as follows:
Ordinary shares
of
2.5p 2.5p
2015 2014
No. No.
Mr S J Cockburn 72,237 72,237
Mr C Weinberg 161,416 161,416
Mr R Pearce Gould 261,549 253,049
At the relevant dates Mr S J Cockburn had a non-beneficial
interest in 80,859 (2014: 80,859) ordinary shares.
At 31 March 2014 and 2015 Sir David Thomson Bt. and Mr S J
Cockburn were both directors of The Investment Company PLC that
held 100,000 ordinary shares.
At 31 March 2015 David Brown had a 12.4% (2014: 12.4%) interest
in the shares of Akoris Trading Limited
No share options were held by any of the directors at 31 March
2015 or 31 March 2014.
Since 31 March 2015 and up to and including 31 May 2015 there
have been no changes in the directors' interests in the share
capital of the Company.
The Group uses various financial instruments and these include
cash, equity investments, loan stock 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.
The structure of the Group's and Company's capital, at nominal
value, is as follows:
No. in issue Nominal Total % of
Value Value Capital
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
========= ====== ========== ======
Further details of the policies adopted by the Group in respect
of the financial risk management are included within note 19 to the
Group financial statements, and the Strategic Report.
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.
ASSOCIATED BRITISH ENGINEERING PLC
DIRECTORS' REPORT (continued)
FOR THE YEAR ENDED 31 MARCH 2015
GLOBAL GHG EMISSIONS DATA FOR THE YEAR ENDED 31 MARCH 2015
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 year ended and these were as follows:
Combustion of fuel and operation of facilities: 156 tonnes
(2014: 155 tonnes) of CO(2) e
Transport: 35 tonnes of CO(2) e (2014: 32 tonnes)
The Group's chosen intensity measurement
Emissions reported above (191 tonnes of CO(2) e (2014: 187
tonnes)) normalised to per GBP'000 of turnover (GBP2,626 (2014:
GBP2,667)): 0.07 (2014: 0.07).
Methodology
We have reported on all of the emission sources required under
the Companies Act 2006 (Strategic Report and Directors' Report)
Regulations 2014. 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 2015.
GOING CONCERN
After making appropriate enquiries, the directors have a
reasonable expectation that the company and the group have adequate
resources to continue in operational existence for the foreseeable
future. The directors confirm that the business is a going concern
and that their assessment of the going concern position has been
prepared in accordance with Going Concern and Liquidity Risk:
Guidance for Directors of UK Companies 2009, published by the
Financial Reporting Council in October 2009. Further details
regarding the going concern status of the Group is stated on page
13.
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.
A resolution to confirm the reappointment of Grant Thornton UK
LLP as auditor of the Company will be proposed at the 2015 AGM. The
confirmation has been recommended to the Board by its Audit
Committee and Grant Thornton UK LLP have indicated their
willingness to remain in office.
By order of the Board
For and on behalf of haysmacintyre Company Secretaries
Limited
Company Secretary
28 July 2015
ASSOCIATED BRITISH ENGINEERING PLC
STRATEGIC REPORT
FOR THE YEAR ENDED 31 MARCH 2015
BUSINESS REVIEW
A review of the business and of events during the year is
contained in the Chairman'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 trading subsidiaries:
1. British Polar Engines Limited ("BPE"), a wholly owned
subsidiary, carries out Associated British Engineering's core
operating activity of the manufacturing and supplying diesel
engines and spare parts for diesel engines together with associated
repair work.
2. Akoris Trading Limited ("Akoris"), a subsidiary of BPE, which
continued to develop its business in natural resource and
commodities trading generated GBP304,000 in revenue during the
year.
BPE's business model and strategy (by division):
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.
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 market, 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.
Akoris business model and strategy
We are now reviewing the future direction of Akoris and see
whether there are opportunities to develop a profitable business in
natural resource trading, finance and investment finance and
commodity services. Akoris strategy is to grow organically and
generate revenues whilst ensuring that liquidity position is
impacted and generating a positive cash flow.
ASSOCIATED BRITISH ENGINEERING PLC
STRATEGIC REPORT (continued)
FOR THE YEAR ENDED 31 MARCH 2015
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 years been buoyed by sales to the oil services
business. The past year has demonstrated that this business remains
sensitive to economic downturn as orders being delayed and
deferred. The downturn experienced in the second half of 2014 has
continued into 2015. The Board of both BPE and its parent company
are actively addressing this situation. A new joint managing
director has been employed in Scotland and while further
developments are only at initial stages there are signs and more
importantly orders entering the pipeline. We are also anticipating
fresh trading opportunities overseas which should improve turnover
in 2015.
Akoris a subsidiary of BPE continued to look for opportunities
in specialised smelting products.
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 do not attempt to eliminate 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
51.
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 as
these risks appear.
Market conditions
The group's sales are predominantly UK, Europe and North Africa
based so it is exposed to any slowdown in the UK and the European
economy. However the distribution of its customers across the UK
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 meeting. 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 years the group has built up a reputation for
integrity and is aware that this can be easily damaged with the
consequential cost to the ABE brand. To mitigate this risk,
policies are in place which cover standards of behaviour and good
governance.
Defined Benefit pension scheme funding
The group is required by law to maintain a minimum funding level
in relation to its obligations to provide pensions to members of
the pension scheme. This level of funding is dependent on a series
of external factors, such as investment performance, life
expectancy and gilt yields. Significant changes in these areas can
also have a significant effect on the funding levels. The
sensitivity of the funding level to these factors are disclosed in
note 17 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 in 2014 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 year 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 is now refocusing its business model and aims 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
to above that normally acceptable. 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 19 to the Group financial statements.
ASSOCIATED BRITISH ENGINEERING PLC
STRATEGIC REPORT (continued)
FOR THE YEAR ENDED 31 MARCH 2015
Further consideration of risks and uncertainties in respect of
financial instruments that face the Group and Company is contained
in note 19 to the Group financial statements.
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.
Click on, or paste the following link into your web browser, to
view the associated PDF document.
http://www.rns-pdf.londonstockexchange.com/rns/3684U_1-2015-7-28.pdf
The Group reviews the Pension Fund liability, the key
assumptions underpinning the actuarial valuation and the minimum
funding requirement on a continual basis. The key assumptions
underpinning the actuarial valuation are reviewed and compared with
industry norms; there were no notable variances from the prior
year.
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 year to 31 March 2015, are disclosed in the corporate
governance report.
ASSOCIATED BRITISH ENGINEERING PLC
STRATEGIC REPORT (continued)
FOR THE YEAR ENDED 31 MARCH 2015
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 their 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 thirty-five people, made up of two
male non-executive directors, two male part time executives and two
male full time executive directors and three senior managers, two
male and one female. We have a dedicated and loyal workforce, many
of whom are long serving employees. Over the next few years it is
our intention to introduce new members of staff to ensure
continuity and the passing on of knowledge for the future.
Total no. of officers/employees Number of males Number of females
% %
------------------- -------------------------------- ---------------- ------------------
Senior Management 9 89 11
------------------- -------------------------------- ---------------- ------------------
Whole Workforce 26 88 12
------------------- -------------------------------- ---------------- ------------------
By order of the Board
For and on behalf of haysmacintyre Company Secretaries
Limited
Company Secretary
28 July 2015
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF
ASSOCIATED BRITISH ENGINEERING PLC
Our opinion on the financial statements is unmodified
In our opinion the group financial statements:
-- give a true and fair view of the state of the group's affairs
as at 31 March 2015 and of its loss for the year then ended;
-- have been properly prepared in accordance with International
Financial Reporting Standards (IFRSs) as adopted by the European
Union; and
-- have been prepared in accordance with the requirements of the
Companies Act 2006 and Article 4 of the IAS Regulation.
Other matter
We have reported separately on the financial statements of
Associated British Engineering plc for the year and on the
information in the Directors' Remuneration Report that is described
as having been audited.
Who we are reporting to
This report is made solely to the company's members, as a body,
in accordance with Chapter 3 of Part 16 of the Companies Act 2006.
Our audit work has been undertaken so that we might state to the
company's members those matters we are required to state to them in
an auditor's report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility to
anyone other than the company and the company's members as a body,
for our audit work, for this report, or for the opinions we have
formed.
What we have audited
Associated British Engineering plc's financial statements
comprise the group accounting policies, the group income statement,
the group statement of comprehensive income, the group balance
sheet, the group statement of changes in equity, the group cash
flow statement and the related notes.
The financial reporting framework that has been applied in their
preparation is applicable law and IFRSs as adopted by the European
Union.
Our assessment of risk
In arriving at our opinions set out in this report, we highlight
the following risks that are, in our judgement, likely to be most
important to users' understanding of our audit.
Measurement of the defined benefit pension liability
The risk: The company has a significant defined benefit pension
scheme, which has a deficit of GBP1,892,000 at the year end. The
pension scheme is accounted for in accordance with International
Accounting Standard (IAS) 19 'Employee Benefits'. The process to
measure the pension liability, including the determination of the
appropriate timing of recognition, involves significant judgement
as the valuation is subject to complex actuarial assumptions. We
therefore identified the defined benefit pension scheme as an area
requiring particular audit attention.
Our response: Our audit work included, but was not restricted
to, reviewing the appropriateness of the IAS 19 valuation
methodology with the aid of our actuarial specialists; agreeing
underlying data sent to actuaries and agreeing asset values to
underlying investment manager statements. We also involved our
actuarial specialists to independently challenge management's
assumptions and hold discussions with the company's actuary.
The group's pension assumptions are set out in detail, together
with related IAS 19 disclosures, in the group accounting policies
and note 17 to the group financial statements. The Audit Committee
identified the pension liability as a primary area of financial
reporting judgement in its report on page 53, where the Committee
also describes how it addressed this area.
Recognition of revenue
The risk: Revenue for British Polar Engines Limited represents
88% of total group revenue. In accordance with IAS 18 'Revenue',
revenue should only be recognised when the risks and rewards of
ownership have been transferred to the customer and control is
relinquished by the supplier. The process to measure the amount of
revenue to recognise in the financial statements, including
determining the appropriate timing of recognition, involves
significant management judgement. We have therefore identified
revenue recognition as a significant risk requiring special audit
consideration.
Our response: Our audit work included, but was not restricted
to, a review of the group's revenue recognition policy; obtaining
an understanding of the controls over the process, including
challenging management's judgment regarding timing and
recoverability of revenue; and for a sample of transactions
ensuring that revenue has been recognised in accordance with the
stated policy.
The group's accounting policy on the recognition of revenue are
included in the group accounting policies and the components of
that revenue are included in note 1 to the group financial
statements. The Audit Committee identified revenue recognition as a
primary area of financial reporting judgement in its report on page
52, where the Committee also describes how it addressed this
area.
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF ASSOCIATED
BRITISH ENGINEERING PLC
Inventory valuation and existence
The risk: British Polar Engines Limited holds a significant
amount of inventory which is used for the manufacture and supply of
diesel engines and spare parts, as well as associated repair works.
Inventory may be held for long periods of time before utilisation
making it vulnerable to obsolescence or theft. This could result in
an overstatement of the value of inventory if the historical cost
is higher than the net realisable value. Furthermore, the
assessment and application of inventory provisions are subject to
significant management judgement. We have therefore identified
inventory existence and valuation as an area requiring particular
audit attention.
Our response: Our audit work included, but was not restricted
to, the attendance of the inventory count at the year end and the
assessment of the adequacy of controls over the existence of
inventory. We also tested a sample of stock items to ensure they
were held at the lower of cost and net realisable value, and
evaluated management judgement with regards to the application of
provisions to inventory lines.
The group's accounting policies in respect of inventory are in
included in the group accounting policies and disclosures are
included in note 12 to the group financial statements.
Management override of financial control
The risk: Under International Standards on Auditing (ISAs) (UK
and Ireland), we are required to consider the risk of management
override of financial controls and due to the unpredictable nature
of this risk we are required to assess it as a significant risk
requiring special audit consideration.
Our response: Our audit work included, but was not restricted
to, specific procedures relating to this risk that are required by
ISA (UK and Ireland) 240 ' The Auditors Responsibilities relating
to Fraud in an Audit of Financial Statements'. This included tests
of journal entries, which comprised extraction and testing of items
considered to be unusual, plus verification of the reports used for
this testing. In addition our testing included the evaluation of
judgements and assumptions in management's estimates and tests of
significant transactions outside the normal course of business.
In particular, our work on the defined benefit pension scheme
and inventory provisions addressed key aspects of ISA (UK and
Ireland) 240. The Audit Committee identified management override as
a primary area of financial reporting judgement in its report on
page 52, where the Committee also describes how it addressed this
area.
Our application of materiality and an overview of the scope of
our audit
Materiality
We define materiality as the magnitude of misstatement in the
financial statements that makes it probable that the economic
decisions of a reasonably knowledgeable person would be changed or
influenced. We determined materiality for the audit of the group
financial statements as a whole to be GBP27,000, which is
approximately 1% of revenue. This benchmark is considered the most
appropriate because revenue is considered to be a key driver of the
Group's business. We use a different level of materiality,
performance materiality, to drive the extent of our testing and
this was set at 60% of financial statement materiality for the
audit of the group financial statements. We also determine a lower
level of specific materiality for certain areas such as directors'
remuneration and related party transactions.
We determined the threshold at which we will communicate
misstatements to the audit committee to be GBP1,400. In addition we
will communicate misstatements below that threshold that, in our
view, warrant reporting on qualitative grounds.
Overview of the scope of our audit
We conducted our audit in accordance with International
Standards on Auditing (UK and Ireland). Our responsibilities under
those standards are further described in the 'Responsibilities for
the financial statements and the audit' section of our report. We
believe that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our opinion.
We are independent of the group in accordance with the Auditing
Practices Board's Ethical Standards for Auditors, and we have
fulfilled our other ethical responsibilities in accordance with
those Ethical Standards.
The group consists of the parent company, Associated British
Engineering plc, and its two trading subsidiary undertakings,
British Polar Engines Limited and Akoris Trading Limited. In
establishing the overall approach to the group audit, we determined
the work that needed to be performed on the operating businesses by
us, as the group engagement team. Our audit scope included a full
audit of the group financial statements of the parent company,
Associated British Engineering plc, and of the financial
information British Polar Engines Limited. In respect of Akoris
Trading Limited we undertook procedures targeted to the areas of
risk which may have a material impact on the group financial
statements. For the financial information of the individual
subsidiary undertakings, we set our materiality based on
a proportion of group materiality appropriate to the relative
scales of each of the operating businesses.
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF ASSOCIATED
BRITISH ENGINEERING PLC
We undertook planned site visits to evaluate controls over key
financial systems identified as part of our risk assessment,
reviewed the accounts production and consolidation processes and
addressed critical accounting matters. We attended the year end
stock count of British Polar Engines Limited, the main operating
location of the group, in order to evaluate and test the controls
over inventories. We undertook substantive testing on significant
transactions, balances and disclosures, the extent of which was
based on various factors such as our overall assessment of the
control environment, the effectiveness of controls over individual
systems and the management of specific risks.
Our audit approach included the use of the work of management's
and auditor's experts to assist with the audit. We reviewed the
actuarial report obtained from the group's actuary on the valuation
of the defined benefit pension scheme in order to ascertain the net
liabilities of the scheme at the year end. Our actuarial
specialists undertook a review of the assumptions and conclusions
formed in this report. We have evaluated the adequacy of the work
of these experts in respect of our audit.
Other reporting required by regulations
Our opinion on other matters prescribed by the Companies Act
2006 is unmodified
In our opinion:
-- the information given in the Strategic Report and Directors'
Report for the financial year for which the financial statements
are prepared is consistent with the financial statements:; and
-- the information given in the Corporate Governance Statement
set out pages 51 to 55 with respect to internal control and risk
management systems in relation to financial reporting processes and
about share capital structures is consistent with the financial
statements
Matters on which we are required to report by exception
We have nothing to report in respect of the following:
Under the ISAs (UK and Ireland), we are required to report to
you if, in our opinion, information in the annual report is:
-- materially inconsistent with the information in the audited financial statements; or
-- apparently materially incorrect based on, or materially
inconsistent with, our knowledge of the group acquired in the
course of performing our audit; or
-- otherwise misleading.
In particular, we are required to report to you if:
-- we have identified any inconsistencies between our knowledge
acquired during the audit and the directors' statement that they
consider the annual report is fair, balanced and understandable;
or
-- the annual report does not appropriately disclose those
matters that were communicated to the audit committee which we
consider should have been disclosed.
Under the Companies Act 2006 we are required to report to you
if, in our opinion:
-- certain disclosures of directors' remuneration specified by
law are not made; or
-- we have not received all the information and explanations we require for our audit; or
-- a Corporate Governance Statement has not been prepared by the company.
Under the Listing Rules, we are required to review:
-- the directors' statement, on page 54, in relation to going
concern; and
-- the part of the Corporate Governance Statement relating to
the company's compliance with the ten provisions of the UK
Corporate Governance Code specified for our review.
Responsibilities for the financial statements and the audit
What an audit of financial statements involves:
A description of the scope of an audit of financial statements
is provided on the Financial Reporting Council's website at
www.frc.org.uk/auditscopeukprivate.
What the directors are responsible for:
As explained more fully in the Directors' Responsibilities
Statement set out on page 50, the directors are responsible for the
preparation of the financial statements and for being satisfied
that they give a true and fair view.
What we are responsible for:
Our responsibility is to audit and express an opinion on the
financial statements in accordance with applicable law and
International Standards on Auditing (UK and Ireland). Those
standards require us to comply with the Auditing Practices Board's
Ethical Standards for Auditors.
Nicholas Watson
Senior Statutory Auditor
for and on behalf of Grant Thornton UK LLP
Statutory Auditor, Chartered Accountants
Oxford
28 July 2015
ASSOCIATED BRITISH ENGINEERING PLC
GROUP ACCOUNTING POLICIES
FOR THE YEAR ENDED 31 MARCH 2015
BASIS OF PREPARATION
The Company is incorporated in the United Kingdom under the
Companies Act 2006.
These consolidated 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 has elected to prepare its parent company accounts
in accordance with UK Generally Accepted Accounting Practice
(GAAP). These are presented on pages 45 to 49.
NEWLY ISSUED ACCOUNTING STANDARDS
At the date of authorisation of these financial statements, the
following Standards and Interpretations which have not been applied
in these financial statements were in issue but not yet
effective:
-- IFRS 9 in respect of Financial Instruments which will be
effective for the accounting periods beginning on or after 1
January 2018.
-- IFRS 14 in respect of Regulatory Deferral Accounts which will
be effective for accounting periods beginning on or after 1 January
2016.
-- IFRS 15 in respect of Revenue from Contracts with Customers
which will be effective for accounting periods beginning on or
after 1 January 2017.
Annual improvements to IFRS's which will be effective for
accounting periods beginning on or after 1 January 2016 as
follows:
-- IFRS 5 - Changes in methods of disposal
-- IFRS 7 - Servicing contracts
-- IFRS 7 - Applicability of the amendments to IFRS 7 to
condensed interim financial statements
-- IAS 19 - Discount rate: Regional market issue
-- IAS 34 - Disclosure of information "elsewhere in the interim financial report"
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.
GOING CONCERN
The financial statements have been prepared on the going concern
basis. There have been no changes to accounting policies in the
year. The most notable accounting event has been the increase in
the pension scheme deficit based on this year's actuarial forecast
and referred to in the Chairman's Statement. With reference to the
recovery plan agreed with the Trustees in conjunction with the
valuation of the pension scheme as at 1 April 2014, the Group will
make the following contributions over the period from 1 April 2014
to 31 March 2030:
-- From 1 April 2014 until 1 August 2014 contributions of
GBP17,000 per month have been paid in accordance with the previous
recovery plan.
-- From 1 August 2014, GBP10,000 per month will be payable by
the 19(th) of the calendar month after that to which they
relate.
-- An additional lump sum of relating to the profits of the
employer in respect of all accounting periods from 1 April 2014 is
payable in the financial year 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
GBP1050k 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 year 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
Based on the Group's budgets and cash forecasts, the Board
considers that the Group has sufficient resources to meet all
necessary outgoings and to enable it to continue in operational
existence for the foreseeable future.
ASSOCIATED BRITISH ENGINEERING PLC
GROUP ACCOUNTING POLICIES (continued)
FOR THE YEAR ENDED 31 MARCH 2015
BASIS OF CONSOLIDATION
The consolidated accounts include the company and all its
subsidiary undertakings (from the date of acquisition or to the
date of disposal where applicable). Intra group sales and profits
are eliminated on consolidation. The accounts of all subsidiary
undertakings are made up to 31 March.
A subsidiary is an entity controlled, either directly or
indirectly, by the company, where control is the power to govern
the financial and operating policies of the entity so as to obtain
benefit from its activities. The acquisition method of accounting
is used to account for the acquisition of subsidiaries by the
group. The cost of an acquisition is measured as the fair value of
the assets given, equity instruments issued and liabilities
incurred or assumed at the date of exchange. Acquisition costs are
expenses in the period in which they are incurred.
BUSINESS COMBINATIONS
Acquisitions of businesses are accounted for using the
acquisition method. The consideration transferred in a business
combination is measured at fair value, which is calculated as the
sum of the acquisition-date fair values of the assets transferred
by the Group, liabilities incurred by the Group to the former
owners of the acquiree and the equity interests issued by the Group
in exchange for control of the acquiree.
At the acquisition date, the identifiable assets acquired and
the liabilities assumed are recognised at their fair value, except
that:
-- deferred tax assets or liabilities, and assets or liabilities
related to employee benefit arrangements are recognised and
measured in accordance with IAS 12 and IAS 19 respectively;
-- liabilities or equity instruments related to share-based
payment arrangements of the acquiree or share-based payment
arrangements of the Group entered into to replace share-based
payment arrangements of the acquiree are measured in accordance
with IFRS 2 Share-based Payment at the acquisition date; and
-- assets that are classified as held for sale in accordance
with IFRS 5 Non-current Assets Held for Sale and Discontinued
Operations are measured in accordance with the Standard.
Changes in the Group's interests in subsidiaries that do not
result in a loss of control are accounted for as equity
transactions.
The carrying amount of the Group's interests and the
non-controlling interests are adjusted to reflect the changes in
their relative interests in the subsidiaries. Any difference
between the amount by which the non-controlling interests are
adjusted and the fair value of the consideration paid or received
is recognised directly in equity and attributed to the owners of
the Company.
Goodwill is measured as the excess of the sum of the
consideration transferred, the amount of any non-controlling
interests in the acquiree, and the fair value of the acquirer's
previously held equity interest in the acquiree (if any) over the
net of the acquisition-date amounts of the identifiable assets
acquired and the liabilities assumed. If, after reassessment, the
net of the acquisition-date amounts of the identifiable assets
acquired and liabilities assumed exceeds the sum of the
consideration transferred, the amount of any non-controlling
interests in the acquiree and the fair value of the acquirer's
previously held interest in the acquiree (if any), the excess is
recognised immediately in profit or loss as a bargain purchase
gain.
Non-controlling interests that are present ownership interests
and entitle their holders to a proportionate share of the entity's
net assets in the event of liquidation may be initially measured
either at fair value or at the non-controlling interests'
proportionate share of the recognised amounts of the acquiree's
identifiable net assets. The choice of measurement basis is made on
a transaction-by-transaction basis.
REVENUE RECOGNITION
Revenue is measured at the fair value of the consideration
receivable by the Group for goods supplied and services provided,
excluding value added tax and trade discounts. Revenue from the
sale of spare parts is recognised when the goods are dispatched or,
if under a bill and hold arrangement, when they are available for
despatch to a specific customer. Revenue from the sale of engines
is recognised in accordance with the performance of contractual
terms and specifically when the engines have been satisfactorily
tested in accordance with contractual terms. Revenue from servicing
and repair work is recognised when the work is completed.
ACCOUNTING ESTIMATES AND JUDGEMENTS
Management are required, in accordance with IFRS, to exercise
judgement and to make estimates and assumptions regarding the
application of accounting policies and the resulting effect on
reported amounts of assets, liabilities, income and expenses. These
estimates and assumptions are based on historical experience and a
review of current conditions prevailing at the time but actual
results may differ from these estimates. Any such revision is
recognised in the financial statements in the period in which the
change in circumstance is detected.
ASSOCIATED BRITISH ENGINEERING PLC
GROUP ACCOUNTING POLICIES (continued)
FOR THE YEAR ENDED 31 MARCH 2015
Accounting Judgements
The key areas where management have exercised judgement in the
year, and the thought processes undertaken, are as follows:
Deferred tax
Judgement is applied by management in determining the extent to
which the recovery of carried forward tax losses is probable for
the purpose of meeting the criteria for recognition as deferred tax
assets. Note 20 sets out information on carried forward tax losses
for which a deferred tax asset has not been recognised.
Pension Scheme
The directors are in regular contact with the Trustees of the
pension scheme in connection with three keys areas where judgement
is exercised; the assumptions underpinning the actuarial valuation,
continued negotiations regarding the pension scheme and in relation
to the payment plan. The directors then assess the relevant
estimates and assumptions made to ensure that statutory obligations
are met.
In evaluating the assumptions underpinning the actuarial
valuation the directors have sought the professional advice of a
firm of actuaries who prepare the valuation according to industry
standards and norms. During the year under review an actuarial loss
of GBP566,000 (2014: GBP580,000) was recognised in the Group
accounts.
The assumptions underpinning the actuarial valuation are
disclosed further in note 17 to the Group financial statements.
Available for Sale Financial Assets
During the year the Group has acquired a 19.9% stake in 3 Legs
Resources PLC as disclosed in note 14. The directors have judged
that this holding does not give the group 'significant influence'
over 3 Legs Resources PLC, and so this investment has not been
accounted for as an associate in these financial statements.
Accounting Estimates
The key accounting estimate having an impact on carrying amounts
of assets and liabilities in the reporting period is as
follows:
Inventories
Inventories are stated at the lower of cost (including an
appropriate proportion of attributable supplier rebates and
discounts) and net realisable value.
Net realisable value is the estimated selling price in the
ordinary course of business, less applicable variable selling
expenses. Provision is made for obsolete or slow moving inventories
where appropriate.
Inventories held by the Group consist of raw material (mainly
components), work in progress (manufactured engine parts) and
finished goods (both purchased and manufactured engine parts). A
specific provision is made, on a 100% basis, for all stock lines
that are obsolete or slow moving for periods in excess of four
years. A general provision is made of 5%, 12.5%, 25% and 50% over
all stock lines that have not moved for one, two, three and four
years respectively.
The inventory provision at the year end amounted to GBP2,430,000
(2014: GBP2,219,000). The gross value of inventories at the year
end is GBP3,369,000 (2014: GBP3,371,000).
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.
Provision for doubtful debts
At the balance sheet date, each subsidiary evaluates the
collectability of trade receivables and records provisions for
doubtful debts based on experience including comparisons of the
relative age of accounts and consideration of actual write-off
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 2015 the Group has
provided GBP86,000 (2014:GBP79,000) against its current trade
receivables.
ASSOCIATED BRITISH ENGINEERING PLC
GROUP ACCOUNTING POLICIES (continued)
FOR THE YEAR ENDED 31 MARCH 2015
INVENTORIES AND IMPAIRMENT OF INVENTORIES
Inventories of raw materials, work in progress and finished
goods are valued at the lower of cost and net realisable value.
Work in progress and finished goods include an appropriate
allocation of overheads.
Cost is on a first in, first out basis. Net realisable value is
the estimated selling price in the normal course of business, less
estimated costs of completion and provision is made for obsolete,
slow moving and defective inventories.
LEASED ASSETS
Leases of property and plant and equipment, where the Group has
substantially all the risks and rewards of ownership, are
classified as finance leases. Assets held under finance leases are
capitalised at lease inception at the lower of the asset's fair
value and the present value of the minimum lease payments.
Obligations related to finance leases, net of finance charges in
respect of future periods, are included as appropriate within
borrowings. The interest element of the finance cost is charged to
the income statement over the life of the lease so as to produce a
constant periodic rate of interest on the remaining balance of the
liability for each period. The property, plant or equipment is
depreciated on the same basis as owned plant and equipment or over
the life of the lease, if shorter.
Leases where the lessor retains substantially all the risks and
rewards of ownership are classified as operating leases. Operating
lease rentals (net of any related lease incentives) are charged
against profit on a straight line basis over the period of the
lease.
FOREIGN CURRENCIES
The functional and presentational currency of the parent company
and its subsidiaries is UK Pounds Sterling, rounded to the nearest
thousands. 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
Property, plant and equipment are stated at cost less
depreciation and any impairment in value. Freehold land is not
depreciated. Depreciation is calculated to write down the cost of
all property, plant and equipment less its residual value by annual
instalments over their expected useful lives on the following
bases:
Freehold buildings 5 per cent straight line
Plant and machinery 7 1/2 - 331/3 per cent straight line
These useful lives and residual values are reviewed in each
financial period.
Assets held under finance leases are depreciated over their
expected useful lives on the same basis as owned assets or where
shorter, over the term of the relevant lease. The gain or loss
arising on the disposal or retirement of an asset is determined as
the difference between the sales proceeds and the carrying amount
of the asset and is recognised as income.
The carrying values of property, 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.
TAXATION
The tax expense represents the sum of the tax currently payable
and deferred tax.
The tax currently payable is based on taxable profit for the
year. Taxable profit differs from net profit as reported in the
income statement because it excludes items of income or expense
that are taxable or deductible in other years and it further
excludes items that are never taxable or deductible. The Group's
liability for current tax is calculated using tax rates that have
been enacted or substantively enacted by the balance sheet
date.
ASSOCIATED BRITISH ENGINEERING PLC
GROUP ACCOUNTING POLICIES (continued)
FOR THE YEAR ENDED 31 MARCH 2015
TAXATION (continued)
Deferred tax is provided in full, using the liability method, on
temporary differences arising between the tax bases of assets and
liabilities and their carrying amounts in the consolidated
financial statements. The deferred tax is not accounted for if it
arises from initial recognition of an asset or liability in a
transaction, other than a business combination, that at the time of
the transaction affects neither accounting nor taxable profit nor
loss. Deferred tax is determined using tax rates (and laws) that
have been enacted or substantially enacted by the balance sheet
date and are expected to apply when the related deferred tax asset
is realised or the deferred tax liability is settled.
Deferred tax is provided on temporary differences arising on
investments in subsidiaries, except where the timing of reversal of
the temporary differences is controlled by the Group and it is
probable that the temporary difference will not reverse in the
foreseeable future.
Deferred tax assets are recognised to the extent that it is
probable that future taxable profit will be available against which
the temporary differences can be utilised.
RETIREMENT BENEFIT COSTS
For defined benefit retirement schemes, the cost of providing
benefits is determined using the Projected Unit Credit Method, with
actuarial valuations being carried out at each balance sheet date.
Actuarial gains and losses are recognised in full in the period in
which they occur. They are recognised outside profit or loss and
presented in the Group statement of comprehensive income.
Past service cost is recognised immediately to the extent that
the benefits are already vested, and otherwise is amortised on a
straight-line basis over the average period until the benefits
become vested.
The retirement benefit obligation recognised in the balance
sheet represents the present value of the defined benefit
obligation as adjusted for unrecognised past service cost, and as
reduced by the fair value of scheme assets. Any asset resulting
from this calculation is limited to cumulative unrecognised past
service cost, plus the present value of available refunds and
reductions in future contributions to the plan.
Actuarial gains and losses, which represent differences between
the expected and actuarial returns on the plan assets and the
effect of changes in actuarial assumptions, are recognised in the
statement of other comprehensive income in the period in which they
occur.
Pension payments to the group's defined contribution schemes are
charged to the income statement as they arise.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents in the balance sheet comprise cash at
bank and in hand and short term deposits with a maturity of three
months or less which are subject to an insignificant risk of
changes in value.
FINANCIAL INSTRUMENTS
Financial liabilities and equity instruments are classified
according to the substance of the contractual arrangements entered
into.
Where the contractual obligations of financial instruments
(including share capital) are equivalent to a similar debt
instrument, those financial instruments are classed as financial
liabilities. Financial liabilities are presented as such in the
balance sheet. Finance costs and gains or losses relating to
financial liabilities are included in the income statement. Finance
costs are calculated so as to produce a constant rate of charge on
the outstanding liability.
Where none of the contractual terms of share capital meet the
definition of a financial liability then this is classed as an
equity instrument. Dividends and distributions relating to equity
instruments are debited direct to equity.
ASSOCIATED BRITISH ENGINEERING PLC
GROUP ACCOUNTING POLICIES (continued)
FOR THE YEAR ENDED 31 MARCH 2015
FINANCIAL INSTRUMENTS (Continued)
Further analysis of the Group's financial instruments, and the
relevant exposure to risks and uncertainties, is stated in note 19
below and the various classifications of financial assets and
liabilities are identified and explained.
Trade and other receivables
Trade and other receivables are originally recognised at fair
value, net of transaction costs. Subsequent measurement is at
amortised cost using the effective interest rate method. A
provision against trade receivables is made when there is objective
evidence that the Group will not be able to collect all amounts due
to it in accordance with the original terms of those receivables.
The total of bad and doubtful debts at the year-end was GBP86,000
(2014: GBP79,000). Trade receivables and cash and cash equivalents
are classified as loans and receivables.
Trade and other payables
Trade and other payables are originally recognised at fair
value, net of transaction costs. Subsequent measurement is at
amortised cost using the effective interest rate method.
Investments in securities
Investments are recognised and derecognised on a trade date
where a purchase or sale of an investment is under a contract whose
terms require delivery of the investment within the timeframe
established by the market concerned, and are initially measured at
fair value, with all transaction costs being written off to the
income statement as incurred.
Investments are classified as available for sale and are
measured at subsequent reporting dates at fair value. Gains and
losses arising from changes in fair value of available for sale
financial assets are included in other comprehensive income for the
period. When the asset is disposed of or deemed to be impaired, the
cumulative gain or loss is reclassified from equity reserve to
profit or loss.
Reclassification of financial assets held for trading to
available for sale financial assets
The investments in securities were previously classified as held
for trading in the financial statements. The directors have
considered the nature of the investment portfolio in the context of
IAS 39 and have determined that it is more appropriate to classify
the investment portfolio as assets available for sale rather than
held for trading. Therefore the financial assets of GBP129,000 as
at 31 March 2014 have been reclassified on the balance sheet as
available for sale.
As a consequence of this change future gains and losses on the
investment portfolio will pass through other comprehensive income
rather than the profit and loss and be recorded in an Available for
Sale Reserve. In the year to 31 March 2015, an unrealised gain of
GBP75,000 has been recognised within other comprehensive income, of
which an GBP84,000 gain relates to the investment addition in the
year, and a GBP10,000 loss relates to the investments previously
classified as held for trading. The impact of this change on the
prior year results was GBP39,000 which is not considered to be
material and so no restatement of the prior year profit and loss
account and statement of comprehensive income has been made. In the
year ended 31 March 2015 GBP14,000 has been transferred from
retained earnings to a separate Available for Sale reserve to
reflect this change. This change has no impact on reported net
assets.
IMPAIRMENT OF PROPERTY, PLANT AND EQUIPMENT
At each balance sheet date the Group reviews the carrying
amounts of its property, plant and equipment to determine whether
there is any indication that those assets have suffered an
impairment loss. If any such indication exists, the recoverable
amount of the asset is estimated in order to determine the extent
of the impairment loss (if any). Where the asset does not generate
cash flows that are independent from other assets, the Group
estimates the recoverable amount of the cash-generating unit to
which the asset belongs.
ASSOCIATED BRITISH ENGINEERING PLC
GROUP ACCOUNTING POLICIES (continued)
FOR THE YEAR ENDED 31 MARCH 2015
IMPAIRMENT OF PROPERTY, PLANT AND EQUIPMENT (continued)
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 years.
SEGMENTAL REPORTING
The standard requires financial information to be disclosed in
the financial statements in the same format in which it is
disclosed to the chief operating decision-maker. The chief
decision-maker has been identified as the Board, at which level
strategic decisions are made.
EQUITY AND RESERVES
Share capital represents the nominal value of shares that have
been issued except for the preference shares classified as
debt.
Deferred shares represents shares arising from the sub-division
of ordinary shares of GBP2.
Share premium includes any premiums received on issue of share
capital. Any transaction costs associated with the issuing of
shares are deducted from share premium, net of any related income
tax benefits.
Retained earnings include all current and prior period retained
profits and losses.
Available for sale reserve includes all gains and losses
relating to Available for Sale financial assets.
Other reserves relate to movements not classified in any of the
reserves detailed above.
All transactions with owners of the parent are recorded
separately within equity.
ASSOCIATED BRITISH ENGINEERING PLC
GROUP INCOME STATEMENT
FOR THE YEAR ENDED 31 MARCH 2015
Note 2015 2014
GBP'000 GBP'000
REVENUE 1 2,626 2,667
Operating costs 2 (2,757) (2,975)
------------- -------------
OPERATING LOSS (131) (308)
Finance expense 7 (70) (45)
Finance income 7 22 25
------------- -------------
LOSS BEFORE TAXATION (179) (328)
Taxation 8 (6) 12
------------- -------------
LOSS FOR THE YEAR (185) (316)
====== ======
EARNINGS PER SHARE ON LOSS FOR THE YEAR
ATTRIBUTABLE TO EQUITY HOLDERS OF THE
PARENT COMPANY
BASIC AND DILUTED 9 (7.5p) (4p)
====== ======
Loss for the year attributable to:
Owners of the Company (153) (99)
Non-controlling interests (32) (217)
------------ ------------
(185) (316)
------------ ------------
All activities are classified as continuing.
Note:
Investments in securities previously classified as held for
trading were reclassified as available for sale financial assets.
As a consequence of this change, gains and losses on the investment
portfolio in the company as from April 2014 will pass through other
comprehensive income rather than the income statement and be
recorded in the Available for Sale Reserve. In the year to 31 March
2015, an unrealised gain of GBP75,000 has been recognised within
other comprehensive income, of which an GBP84,000 gain relates to
the investment addition in the year, and a GBP10,000 loss relates
to the investments previously classified as held for trading. The
impact of this change on the prior year results was GBP39,000
(increased loss) that would be in other comprehensive income and
not in income statement; which is not considered to be material and
so no restatement of the prior year income statement and statement
of comprehensive income has been made.
The accounting policies on pages 13 to 19 and the notes on pages
25 to 41 form part of these accounts.
ASSOCIATED BRITISH ENGINEERING PLC
GROUP STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 MARCH 2015
Note 2015 2014
GBP'000 GBP'000
Loss for the year (185) (316)
------------ ------------
Other comprehensive income
Re-measurement of the net defined benefit
liability (*) 17 (566) (580)
Gain on available for sale financial asset 74 -
(**)
Reclassification of realised gain/loss on 1 -
available for sale financial assets (**)
----------- -----------
Other comprehensive income for the year (491) (580)
------------ ------------
TOTAL COMPREHENSIVE LOSS FOR THE YEAR (676) (896)
====== ======
Total comprehensive loss attributable to:
Owners of the Company (644) (679)
Non-controlling interests (32) (217)
------------ ------------
(676) (896)
====== ======
(*) = Items which will not subsequently be reclassified to the
Income Statement.
(**) = Items which may subsequently be reclassified to the
Income Statement.
All activities are classified as continuing.
The accounting policies on pages 13 to 19 and the notes on pages
25 to 41 form part of these accounts.
ASSOCIATED BRITISH ENGINEERING PLC Company Number: 00110663
GROUP BALANCE SHEET
31 MARCH 2015
Restated
2015 2014
Note GBP'000 GBP'000
ASSETS
Non-current assets
Property, plant and equipment 10 321 364
Available for sale financial assets 14 417 129
------------- -------------
738 493
Current assets
Inventories 12 939 1,052
Trade and other receivables 13 603 527
Cash and cash equivalents 2,606 2,992
------------- -------------
4,148 4,571
------------- -------------
Total assets 4,886 5,064
====== ======
EQUITY AND LIABILITIES
Called up share capital 15 51 51
Deferred shares 15 2,594 2,594
Share premium account 5,370 5,370
Other components of equity 11 11
Available for Sale financial assets 89 -
Retained earnings (5,927) (5,227)
-------------- --------------
Equity attributable to the Company's Equity
shareholders 2,188 2,799
Non-controlling interests (6) 59
-------------- --------------
Total equity 2,182 2,858
------------- -------------
LIABILITIES
Non-current liabilities
Retirement benefit obligation 17b 1,892 1,414
Obligation under finance leases 18 107 172
Deferred tax liabilities 20 8 2
------------- -------------
2,007 1,588
------------- -------------
Current liabilities
Trade and other payables 18 632 553
Obligations under finance leases 18 65 65
------------- -------------
697 618
------------- -------------
Total liabilities 2,704 2,206
------------- -------------
Total equity and liabilities 4,886 5,064
====== ======
The financial statements were approved and authorised for issue
by the Board of Directors on 28 July 2015
and were signed below on its behalf by:
C Weinberg
Director
The accounting policies on pages 13 to 19 and the notes on pages
25 to 41 form part of these accounts.
ASSOCIATED BRITISH ENGINEERING PLC
GROUP STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 MARCH 2015
Available Attributa-ble Non-controll-ing
Share Share Deferred Other for Sale Retained to owners interest
capital premium shares reserve Financial earnings of the Total
Assets parent
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance at
1 April 2013 51 5,370 2,594 11 - (4,548) 3,478 276 3,754
Loss for the
year - - - - - (99) (99) (217) (316)
Other
comprehensive
income
Actuarial loss
in defined
benefit plan
(*) - - - - - (580) (580) - (580)
-------------- -------------- ---------------- -------------- -------------- --------------- --------------- --------------- ---------------
Total
comprehensive
income for
the year - - - - - (679) (679) (217) (896)
-------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- --------------
Balance at
31 March 2014 51 5,370 2,594 11 - (5,227) 2,799 59 2,858
-------------- -------------- --------------- -------------- -------------- --------------- --------------- --------------- ---------------
Loss for the
year - - - - - (153) (153) (32) (185)
Other
comprehensive
income
Actuarial loss
in defined
benefit plan
(*) - - - - - (566) (566) - (566)
Unrealised
gain on
Available
For Sale
financial
assets (**) - - - - 74 - 74 - 74
Reclassification
of realised
gain/loss on
Available For
Sale financial
assets (**) - - - - 1 - 1 - 1
Transfer from
retained
earnings
to Available
for Sale
financial
assets - - - - 14 (14) - - -
Transactions
with owners
Purchase of
shares from
non-controlling
interest - - - - - 33 33 (33) -
-------------- -------------- --------------- -------------- -------------- --------------- --------------- --------------- ---------------
Total
comprehensive
income for
the year - - - - 89 (700) (611) (65) (676)
-------------- -------------- --------------- -------------- -------------- --------------- --------------- --------------- ---------------
Balance at
31 March 2015 51 5,370 2,594 11 89 (5,927) 2,188 (6) 2,182
====== ====== ====== ====== ====== ======= ======= ======= ======
(*) = 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 13 to 19 and the notes on pages
25 to 41 form part of these accounts.
ASSOCIATED BRITISH ENGINEERING PLC
GROUP CASH FLOW STATEMENT
FOR THE YEAR ENDED 31 MARCH 2015
2015 2014
GBP'000 GBP'000
Cash flows from operating activities
Cash used in operations (52) (445)
Interest received 22 20
Interest paid (70) (5)
----------------- -----------------
Net cash used in operating activities (100) (430)
----------------- -----------------
Cash flows from investing activities
Proceeds from sale of equipment 6 -
Purchase of equipment (10) (37)
Purchase of investments (220) (13)
Sale proceeds from trading investments 3 5
----------------- -----------------
Net cash used in investing activities (221) (45)
----------------- -----------------
Cash flows from financing activities
Repayment of finance leases (65) (65)
----------------- -----------------
Net cash used in financing activities (65) (65)
----------------- -----------------
Net decrease in cash and cash equivalents (386) (540)
Cash and cash equivalents at beginning
of year 2,992 3,532
----------------- ----------------
Cash and cash equivalents
at end of year 2,606 2,992
========= ========
CASH FLOW FROM OPERATING ACTIVITIES
2015 2014
GBP'000 GBP'000
Loss before taxation (179) (328)
Adjustments for:
Depreciation 53 53
Interest income (22) (20)
Finance expense 70 5
Foreign exchange difference (4) -
Pension scheme interest expense 62 40
Cash paid in excess of current service cost (150) (137)
Profit on disposal of equipment (6) -
Profit/(loss) on disposal of Available For Sale
investments 7 (1)
Changes in working capital:
(Increase)/decrease in inventories 113 (23)
(Increase)/decrease in trade and other receivables (76) (30)
Increase/(decrease) in payables 80 35
Fair value gains in investments - (39)
------------ ------------
(52) (445)
Taxes paid - -
------------ ------------
Cash used in operations (52) (445)
===== ======
The accounting policies on pages 13 to 19 and the notes on pages
25 to 41 form part of these accounts.
ASSOCIATED BRITISH ENGINEERING PLC
NOTES TO THE ACCOUNTS - GROUP
FOR THE YEAR ENDED 31 MARCH 2015
1. SEGMENTAL REPORTING
The following table shows an analysis of the Group's external
sales by geographical market:
2015 2014
GBP'000 GBP'000
United Kingdom 844 1,081
Europe 664 813
Far East and Australasia 383 98
Africa 40 314
North and South America 652 331
Middle East 43 30
Russia - -
------------- -------------
2,626 2,667
====== ======
The following table shows an analysis of the Group's external
sales from continuing operations:
2015 2014
GBP'000 GBP'000
Revenue from the sale of goods 304 -
Revenue from the rendering of services 2,322 2,667
------------- -------------
2,626 2,667
====== ======
All of the above revenue arises from diesel and related
engineering activities and originates in the United Kingdom.
In the years ended 31 March 2015 and 31 March 2014 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's activities consist of commodity and
natural resource trading, finance and investment.
Associated British Engineering Plc is the Group holding
company.
ASSOCIATED BRITISH ENGINEERING PLC
NOTES TO THE ACCOUNTS - GROUP (continued)
FOR THE YEAR ENDED 31 MARCH 2015
1. SEGMENTAL REPORTING (continued)
Year to 31 March Associated British Polar Akoris Trading
2015 British Engineering Engines Limited Limited Consolidated
Plc
GBP'000 GBP'000 GBP'000 GBP'000
External sales - 2,322 304 2,626
------------- ------------- ------------- -------------
Segment result (LBIT/PBIT) (139) 171 (163) (131)
------------- ------------- -------------- -------------
Net finance expenses (48)
Taxation (6)
-------------
Loss after tax (185)
=====
Other information
Capital additions - 10 - 10
Balance sheet
Segment assets 210 4,640 36 4,886
====== ====== ====== ======
Year to 31 March Associated British Polar Akoris Trading Consolidated
2014 British Engineering Engines Limited Limited
Plc
GBP'000 GBP'000 GBP'000 GBP'000
External sales - 2,667 - 2,667
------------ ------------ ------------ ------------
Segment result (PBIT) (182) 308 (434) (308)
------------ ------------ ------------ ------------
Net finance expenses (20)
Taxation 12
------------
Profit after tax (316)
======
Other information
Capital additions - 37 - 37
Balance sheet
Segment assets 288 4,443 333 5,064
====== ====== ====== ======
Included in the total Group revenue was GBP549,000 (2014:
GBP585,000) of sales which arose from 1 customer who contributed to
10% or more of the total Group revenue for the year ended 31 March
2015 (2014: two customers). The geographical market from which the
revenue from the 1 customer originates is the Unites States of
America.
ASSOCIATED BRITISH ENGINEERING PLC
NOTES TO THE ACCOUNTS - GROUP (continued)
FOR THE YEAR ENDED 31 MARCH 2015
2. OPERATING COSTS 2015 2014
GBP'000 GBP'000
Changes in inventories 113 (23)
Raw materials used 1,114 1,109
Staff costs 1,103 1,156
Depreciation and amortisation 53 52
Other expenses 374 681
---------------- ----------------
2,757 2,975
====== ======
3. OPERATING LOSS 2015 2014
GBP'000 GBP'000
Operating loss is stated after charging/(crediting)
Depreciation on owned assets 20 20
Depreciation on assets held under finance
leases 33 33
Fees payable to the Company's auditor for
the audit of the Company's annual accounts:
PLC audit costs 23 22
The audit of the Company's subsidiaries pursuant
to legislation 20 18
Operating lease rental on plant and machinery 34 35
Profit on disposal of property, plant & equipment 6 -
====== ======
4. STAFF COSTS AND EMPLOYEES 2015 2014
GBP'000 GBP'000
Wages and salaries 905 1000
Social security costs 91 107
Other pension costs 105 107
------------- -------------
1,101 1,214
====== ======
The average monthly number of persons employed by
the Group during the year was:
2015 2014
Number Number
By activity
Production 10 11
Administration 18 19
------------- -----------
28 30
====== =====
ASSOCIATED BRITISH ENGINEERING PLC
NOTES TO THE ACCOUNTS - GROUP (continued)
FOR THE YEAR ENDED 31 MARCH 2015
5. DIRECTORS' REMUNERATION
Directors received emoluments of GBP49,000 (2014: GBP45,000).
Further details can be found on page 57.
6. KEY MANAGEMENT COMPENSATION 2015 2014
GBP'000 GBP'000
Remuneration of Group directors 49 45
====== ======
The Group made no pension contributions in respect of Group
directors during the year ended 31 March 2015 or 31 March 2014.
7. NET FINANCE EXPENSE 2015 2014
GBP'000 GBP'000
Interest on obligations under finance
leases 8 5
---------- ----------
Interest expenses for borrowings
at amortised cost 8 5
Net interest cost on defined benefit
pension scheme 62 40
------------ ------------
70 45
------------ ------------
Interest receivable on cash and
cash equivalents (22) (25)
------------- -------------
(48) (20)
------------ ------------
ASSOCIATED BRITISH ENGINEERING PLC
NOTES TO THE ACCOUNTS - GROUP (continued)
FOR THE YEAR ENDED 31 MARCH 2015
8. TAXATION 2015 2014
GBP'000 GBP'000
The tax charge is set out below:
Current tax:
United Kingdom corporation tax at - -
21% (2014: 23%)
Deferred tax:
In respect of current year (6) 12
-------- ---------
Total current tax and tax on profit on ordinary
activities (6) 12
==== =====
The tax assessed for the period is different from the standard
rate of corporation tax in the UK of 21% (2014: 23%). The
differences are explained as follows:
2015 2014
GBP'000 GBP'000
Loss on ordinary activities before
tax (179) (328)
---------------- ----------------
Loss on ordinary activities multiplied by
standard rate of
Corporation tax in the UK of 21% (2014:
23%) (38) (75)
Effects of:
Expenses not deductible for tax purposes 4 7
Income not taxable (35) (33)
Tax losses and advance corporation
tax relief (ACT) - (3)
Depreciation for the period in excess
of capital allowances (4) 7
Adjustment to recognised deferred
tax (6) 12
Unrelieved tax losses 73 97
---------------- ----------------
Taxation expense in the consolidated
income statement (6) 12
======= ========
The Group has trading losses of approximately GBP1.64 million
(2014: GBP1.5 million) and capital losses of GBP8.5 million (2014:
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 GBP661,000 arising on the trading losses has
not been recognised in the financial statements.
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 year.
2015 2014
Weighted Weighted
Average Per shares Average Per shares
Loss number amount Loss Number amount
of of
GBP'000 Shares pence GBP'000 Shares Pence
Basic and
diluted earnings
per share (153) 2,048,990 (7.5p) (99) 2,048,990 (4p)
========= ========= ========= ========= ========= =========
.
ASSOCIATED BRITISH ENGINEERING PLC
NOTES TO THE ACCOUNTS - GROUP (continued)
FOR THE YEAR ENDED 31 MARCH 2015
10. PROPERTY, PLANT AND EQUIPMENT Freehold
land and Plant and
buildings machinery Total
GBP'000 GBP'000 GBP'000
COST
At 1 April 2013 689 1,552 2,241
Additions - 37 37
Disposals - (180) (180)
---------------- ------------------- -------------------
At 31 March 2014 689 1,409 2,098
---------------- ------------------- -------------------
At 1 April 2014 689 1,409 2,098
Additions - 10 10
Disposals - (9) (9)
---------------- ------------------- -------------------
At 31 March 2015 689 1,410 2,099
---------------- ------------------- -------------------
ACCUMULATED DEPRECIATION
At 1 April 2013 689 1,172 1,861
Charge for year - 53 53
Eliminated on disposals - (180) (180)
---------------- ------------------- -------------------
At 31 March 2014 689 1,045 1,734
---------------- ------------------- -------------------
At 1 April 2014 689 1,045 1,734
Charge for year - 53 53
Eliminated on disposals - (9) (9)
---------------- ------------------- -------------------
At 31 March 2015 689 1,089 1,778
---------------- ------------------- -------------------
CARRYING AMOUNTS
At 31 March 2015 - 321 321
======== ======== ==========
At 31 March 2014 - 364 364
======== ======== ==========
At 31 March 2013 - 380 380
======== ======== ==========
11. CAPITAL COMMITMENTS
At 31 March 2015 the Group had capital commitments of GBPNil
(2014: GBPNil).
ASSOCIATED BRITISH ENGINEERING PLC
NOTES TO THE ACCOUNTS - GROUP (continued)
FOR THE YEAR ENDED 31 MARCH 2015
12. INVENTORIES 2015 2014
GBP'000 GBP'000
Raw materials 94 107
Work in progress 81 117
Finished goods 764 828
------------- -------------
939 1,052
====== ======
The closing inventory balance of GBP3,369,000 (2014:
GBP3,371,000) is stated net of provisions of GBP2,430,000 (2014:
GBP2,219,000). There was an increase in provision of GBP211,000
(2014: GBP74,000 increase) in relation to slow moving stock.
13. TRADE AND OTHER RECEIVABLES 2015 2014
GBP'000 GBP'000
Trade receivables 420 469
Allowance for doubtful debts (86) (79)
----------- -----------
334 390
Prepayments and accrued income 269 137
----------- -----------
603 527
===== =====
ASSOCIATED BRITISH ENGINEERING PLC
NOTES TO THE ACCOUNTS - GROUP (continued)
FOR THE YEAR ENDED 31 MARCH 2015
13. TRADE AND OTHER RECEIVABLES (CONTINUED)
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 reference to past default experience of the counterparty and an
analysis of the counterparty's current financial position.
Trade receivables disclosed above include amounts (see below for
aged analysis) which are past due at the year-end but against which
the Group has not recognised an allowance for doubtful receivables.
There has not been a significant change in credit quality and the
amounts are still considered recoverable.
Ageing of past due but not impaired receivables:
2015 2014
GBP'000 GBP'000
31 - 60 days 18 105
61 - 90 days 2 34
91 - 120 days 279 100
----------- -----------
299 239
===== =====
Movement in the allowance for doubtful debts:
2015 2014
GBP'000 GBP'000
Balance at the beginning of
the period 79 32
Increase in provision 7 47
----------- -----------
Balance at the end of the period 86 79
===== =====
In determining the recoverability of a trade receivable the
Group considers 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 one large debtor balance at the year-end which accounts
for 51% of the balance due between 91 - 120 days. Management
considers that all the above financial assets that are not impaired
or past due are of good credit quality.
ASSOCIATED BRITISH ENGINEERING PLC
NOTES TO THE ACCOUNTS - GROUP (continued)
FOR THE YEAR ENDED 31 MARCH 2015
14. AVAILABLE FOR SALE INVESTMENTS 2015 2014
GBP'000 GBP'000
Listed Securities 417 129
==== ===
Available For Sale
financial assets
GBP
Opening balance 129
Additions 220
Net fair value gain 74
Disposals (6)
----------
Closing balance 417
=====
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 year end.
Available for sale investments, which are valued based on active
markets' prices, are reported under Level 1 in the fair value
hierarchy.
Reclassification of financial assets held for trading to
available for sale financial assets
The investments in securities were previously classified as held
for trading in the financial statements. The directors have
considered the nature of the investment portfolio in the context of
IAS 39 and have determined that it is more appropriate to classify
the investment portfolio as assets available for sale rather than
held for trading. Therefore the financial assets of GBP129,000 as
at 31 March 2014 have been reclassified on the balance sheet as
available for sale.
As a consequence of this change future gains and losses on the
investment portfolio will pass through other comprehensive income
rather than the profit and loss and be recorded in an Available for
Sale Reserve. In the year to 31 March 2015, an unrealised gain of
GBP75,000 has been recognised within other comprehensive income, of
which an GBP84,000 gain relates to the investment addition in the
year, and a GBP10,000 loss relates to the investments previously
classified as held for trading. The impact of this change on the
prior year results was GBP39,000 which is not considered to be
material and so no restatement of the prior year profit and loss
account and statement of comprehensive income has been made. In the
year ended 31 March 2015 GBP14,000 has been transferred from
retained earnings to a separate Available for Sale reserve to
reflect this change. This change has no impact on reported net
assets.
15. CALLED UP SHARE CAPITAL 2015 2014
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:
Number
Number of of
Ordinary Ordinary Deferred Deferred Share
Shares Shares Shares Shares premium
No. GBP'000 No. GBP'000 GBP'000
Balance at 1 April
2014 (GBP0.025/GBP1.9752
shares) 2,048,990 51 1,313,427 2,594 5,370
========== ========= ========== ========= ========
ASSOCIATED BRITISH ENGINEERING PLC
NOTES TO THE ACCOUNTS - GROUP (continued)
FOR THE YEAR ENDED 31 MARCH 2015
15. CALLED UP SHARE CAPITAL (Continued)
Further to the Extraordinary General Meeting held on 1 September
1999 the ordinary shares have 200 votes per share.
The deferred shares do not have voting rights and do not carry
any entitlement to attend general meetings of the Company; they are
not admitted to any Stock Exchange and carry a right to participate
in any return of capital once an amount of GBP100 has been paid in
respect of each new ordinary share.
16. NON-CONTROLLING INTERESTS
Movement in non-controlling interests during the year are disclosed
in the statement of changes in equity.
An increase in non-controlling interest of GBP32,000 was recognised
during the year in respect of the acquisition of an additional
26.8% stake in Akoris Trading Limited ("Akoris"), bringing
the total holding in Akoris at the year-end to 76.8%.
2015
GBP'000
Brought forward as at 1 April 2014 59
Arising on purchase of additional shares from
non-controlling interest * (33)
Share of result for the year (32)
-------------
Carried forward at 31 March 2015 (6)
======
* The additional shares were acquired for GBP1.
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 has a designated defined benefit Group
personal pension plan which meets stakeholder requirements.
The scheme exposes the Group to actuarial risks such as:
Salary risk:
The present value of the plan liability is calculated by
reference to the future salaries of participating members. Any
increase in members' salaries will increase the scheme's
liability.
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 3 active members, 34 deferred members and
56 pensioner members. The expected contribution to the scheme for
the forthcoming year is expected to be GBP158,000.
ASSOCIATED BRITISH ENGINEERING PLC
NOTES TO THE ACCOUNTS - GROUP (continued)
FOR THE YEAR ENDED 31 MARCH 2015
17. RETIREMENT BENEFIT SCHEMES (Continued)
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
Set out below is a table highlighting the impact on the results
of changing these assumptions.
There would be a similar, but opposite effect if the discount
rate was to be increased, the inflation rate was decreased and
members assumed to live one year or less.
Assumption Change in the Change in
Defined Benefit the Defined
Obligation Benefit Obligation
% (GBP'000)
0.25% p.a. reduction in discount
rate +4.0 75
0.25% increase in inflation +1.7 32
Members assumed to live one
year longer +3.7 70
In the year 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:
28.6% (2014:28.6%) of pensionable salaries less member
contributions, payable monthly by the 19(th) of the calendar month
after that to which they relate. In addition, the employer will pay
amounts into the scheme equal to the levy payments made by the
scheme to the Pension Protection Fund. Such amounts will be paid by
the employer within a year 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 2014, the employer
will make the following contributions over the period from 1 April
2014 to 31 March 2030:
-- From 1 April 2014 until 1 August 2014 contributions of
GBP17,000 per month has been paid in accordance with the previous
recovery plan.
-- From 1 August 2014, GBP10,000 per month are payable by the
19(th) of the calendar month after that to which they relate.
-- An additional lump sum relating to the profits of the
employer in respect of all accounting periods as from 1 April 2014
is payable in the financial year 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 year 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
ASSOCIATED BRITISH ENGINEERING PLC
NOTES TO THE ACCOUNTS - GROUP (continued)
FOR THE YEAR ENDED 31 MARCH 2015
17. RETIREMENT BENEFIT SCHEMES (CONTINUED)
2015 2014
GBP'000 GBP'000
(a) Pension cost (recognised in Income Statement)
Operating charge
Current service cost 25 28
-------------- --------------
Other finance charges
Interest on net defined benefit obligation 62 40
--------------- ---------------
Total pension cost recognised in the Income
Statement 87 68
======= =======
(b) Benefit liability 2015 2014 2013 2012 2011
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Present value of funded
obligations 8,424 7,101 6,748 6,451 6,577
Fair value of plan assets (6,532) (5,687) (5,817) (5,476) (4,725)
--------------- --------------- --------------- --------------- ---------------
Net liability 1,892 1,414 931 975 1,852
======= ======= ======= ======= =======
The major categories of plan assets
are as follows:
2015 2014
GBP'000 GBP'000
Equities (quoted) 1,502 847
Fixed Interest Gilts 1,069 340
Index-Linked Gilts 1,907 1,498
Corporate Bonds 1,075 2,929
Cash 923 -
Bank Balance 56 73
-------------- --------------
6,532 5,687
======= =======
Plan assets
The weighted-average asset allocations at the 2015 2014
year-end were as follows:
Equities (quoted) 23.0% 14.9%
Bonds 62.0% 83.8%
Cash 15.0% 1.3%
Plan risks
The defined benefit plan typically expose the Company to
actuarial risks, as stated on page 34, which are managed by a joint
working group, comprising the Trustees of the defined benefit plan
and employees of the Company.
ASSOCIATED BRITISH ENGINEERING PLC
NOTES TO THE ACCOUNTS - GROUP (continued)
FOR THE YEAR ENDED 31 MARCH 2015
17. RETIREMENT BENEFIT SCHEMES (continued)
(c) Change in benefit obligation 2015 2014
GBP'000 GBP'000
Benefit obligation at beginning of
the year 7,101 6,748
Current service cost 25 28
Interest cost 327 303
Actuarial losses arising from changes
in financial assumptions 1,235 393
Contributions by plan participants 6 5
Benefits paid (270) (376)
--------------- ---------------
Benefit obligation at end of the year 8,424 7,101
======= =======
2015 2014
GBP'000 GBP'000
(d) Change in plan assets
Fair value of plan assets at beginning of the
year 5,687 5,817
Expected return on plan assets 265 263
Actuarial gains/(loss) on plan assets
arising from changes in financial
assumptions 669 (187)
Contributions made by employer 175 165
Contributions by plan participants 6 5
Benefits paid (270) (376)
--------------- ---------------
Fair value of plan assets at end of the year 6,532 5,687
======= =======
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 3.4% pa (2014: 4.7%
p.a.).
(e) Principal actuarial assumptions 2015 2014
Inflation 1.8 2.1
Rate of increase in pensionable
salaries 2.5 2.5
Discount rate 3.4 4.7
Pension in payment increases 1.8 2.1
Revaluation rate for deferred
pensioners 1.8 2.1
Pre-retirement mortality PNMAOO, MC PNMAOO, MC 1%
1% PNFAOO, MC 1%
PNFAOO, MC
1%
Post retirement mortality PNMAOO, MC PNMAOO, MC 1%
1%
PNFAOO, MC PNFAOO, MC 1%
1%
Life expectancy from age 65 (years):
Male currently aged 65 22.9 22.8
Female currently aged 65 25.4 25.3
Male currently aged 45 24.9 24.7
Female currently aged 45 27.2 27.1
ASSOCIATED BRITISH ENGINEERING PLC
NOTES TO THE ACCOUNTS - GROUP (continued)
FOR THE YEAR ENDED 31 MARCH 2015
17. RETIREMENT BENEFIT SCHEMES (CONTINUED)
(f) Expected future cash flows
The Group's expected contribution to its defined benefit plans
in 2015 is expected to be GBP158,000. The Group does not expect any
material changes to the annual cash contributions over the next
three years given the funding position of the scheme. The defined
benefit obligations are based on the current value of expected
benefit payment cash flows to members over the next several
decades.
The overall weighted average duration of scheme liabilities as
at 31 March 2015 is approximately 19 years
18. PAYABLES 2015 2014
GBP'000 GBP'000
Current
Obligations under finance leases 65 65
Trade payables 283 174
Other taxation and social security 23 39
Other payables 300 24
Accruals 26 316
----------------- -----------------
697 618
======== ========
The net finance lease obligations
are due:
In one year or less 65 65
Between two and three years 107 172
---------------- ----------------
172 237
======== ========
All current payables apart from obligations under finance leases
are expected to mature within a period of 6 months.
19. 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 Group'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 Group's operations. At 31 March 2015
the Group has cash balances of GBP2,606,000 (2014: GBP2,992,000)
and no bank overdraft (2014: GBPNil).
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 GBP26,000 (2014: GBP30,000).
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 Group financial statements. These policies have
been consistently applied throughout the period.
ASSOCIATED BRITISH ENGINEERING PLC
NOTES TO THE ACCOUNTS - GROUP (continued)
FOR THE YEAR ENDED 31 MARCH 2015
19. FINANCIAL INSTRUMENTS (continued)
COMMODITY PRICE RISK
The Group is dependent upon its suppliers to effectively operate
a 'just in time' stock management system, which is utilised to
mitigate high warehousing costs. There is the potential to leave
the Group exposed to 'stock out' or shortages but the Group has not
experienced stock difficulties of this nature in the current or
prior year and does not envisage this going forward, due to its
strong supplier relations.
When prices are advantageous a strategic decision may be taken
to increase a stock level 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.
The price of aluminium which the Group trades in is dependent on
the activities of the competitors, speculators, exchange rate
movements and production costs. Akoris do not utilise derivative
contracts to hedge fluctuations on aluminium.
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 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.. The
maturity profile of the Group's finance lease liabilities is set
out in note 18.
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.
In order to manage credit risk the directors of the subsidiary
company set limits for customers based on a combination of payment
history and third party credit references. Credit limits are
reviewed by the subsidiary's directors on a regular basis in
conjunction with debt ageing and collection history. In 2015 and
2014 there were no concentrations of credit risk. The Group's top
five customers comprised 17% of the year 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 which generally covers the cost
of the goods. 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 year an additional provision of GBP5,000 has been
included in the financial statements.
At the year end 72% of current financial assets are aged greater
than 90 days. These amounted to GBP344,000 and GBP81,000 have been
provided for.
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;
ASSOCIATED BRITISH ENGINEERING PLC
NOTES TO THE ACCOUNTS - GROUP (continued)
FOR THE YEAR ENDED 31 MARCH 2015
19. FINANCIAL INSTRUMENTS (continued)
-- 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 1 Level 2 Level 3 Total
GBP'000 GBP'000 GBP'000 GBP'000
Available for sale financial
assets
Quoted securities 417 - - 417
====== ====== ====== ======
20. DEFERRED TAXATION
The deferred taxation liability at 31 March 2015 was GBP8,000
(31 March 2014: GBP2,000).
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 20% (2014: 20%)) are set out
below:
Group 2015 2014
GBP'000 GBP'000
Arising from trading losses 298 273
Arising from capital losses 1,700 1,700
Arising from pension deficit 378 283
------------- -------------
2,376 2,256
====== ======
21. CONTINGENT LIABILITIES
2015 2014
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 2015 or 31 March 2014.
22. COMMITMENTS UNDER OPERATING LEASES
At 31 March the Group had the following commitments under non-cancellable
operating leases:
Other
2015 2014
GBP'000 GBP'000
Within one year 8 13
Between two and five years
inclusive - 17
------------- -------------
8 30
====== ======
ASSOCIATED BRITISH ENGINEERING PLC
NOTES TO THE ACCOUNTS - GROUP (continued)
FOR THE YEAR ENDED 31 MARCH 2015
23. SUBSIDIARIES
At 31 March 2015 the Company held share capital in the following
subsidiaries:
Proportion Country of
Share held by the incorporation
Capital parent Nature of Business
British Polar Engines Ordinary 100% (2014: Great Britain Manufacture and
Limited 100%) supply of diesel
engines, associated
servicing and
sale of spare
parts
Akoris Trading Limited Ordinary 76.8% (2014: Great Britain Commodity and
50%) natural resource
trading, finance
and investment.
The group controls 100% of the voting power of the subscribed
shares and has control over the financial and operational policies
of Akoris Trading Limited. Therefore, Akoris Trading Limited is
controlled by the group and consolidated in these financial
statements. Movement in non-controlling interests are disclosed in
note 16 to the accounts.
24. RELATED PARTY TRANSACTIONS
At 31 March 2015 David Brown, a company director (resigned 11
December 2014), had a 12.4% (2014: 12.4%) interest in the shares of
Akoris Trading Limited.
At 31 March 2015, British Polar Engines had a 19.9% (2014: Nil)
holding in 3 Legs Resources PLC. Colin Weinberg a director of the
company held 0.1% holding in 3 Legs Resources at 31 March 2015.
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF ASSOCIATED
BRITISH ENGINEERING PLC
We have audited the parent company financial statements of
Associated British Engineering Plc for the year ended 31 March 2015
which comprise the principal accounting policies, the company
balance sheet, and the related notes. The financial reporting
framework that has been applied in their preparation is applicable
law and United Kingdom Accounting Standards (United Kingdom
Generally Accepted Accounting Practice).
This report is made solely to the company's members, as a body,
in accordance with Chapter 3 of Part 16 of the Companies Act 2006.
Our audit work has been undertaken so that we might state to the
company's members those matters we are required to state to them in
an auditor's report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility to
anyone other than the company and the company's members as a body,
for our audit work, for this report, or for the opinions we have
formed.
Respective responsibilities of directors and auditor
As explained more fully in the Directors' Responsibilities
Statement on page 50, the directors are responsible for the
preparation of the parent company financial statements and for
being satisfied that they give a true and fair view. Our
responsibility is to audit and express an opinion on the parent
company financial statements in accordance with applicable law and
International Standards on Auditing (UK and Ireland). Those
standards require us to comply with the Auditing Practices Board's
Ethical Standards for Auditors.
Scope of the audit of the financial statements
A description of the scope of an audit of financial statements
is provided on the Financial Reporting Council's website at
www.frc.org.uk/auditscopeukprivate.
Opinion on financial statements
In our opinion the parent company financial statements:
-- give a true and fair view of the state of the company's
affairs as at 31 March 2015 and of its loss for the year then
ended;
-- have been properly prepared in accordance with United Kingdom
Generally Accepted Accounting Practice; and
-- have been prepared in accordance with the requirements of the
Companies Act 2006.
Opinion on other matters prescribed by the Companies Act
2006
In our opinion:
-- the part of the Directors' Remuneration Report to be audited
has been properly prepared in accordance with the Companies Act
2006; and
-- the information given in the Strategic Report and Directors'
Report for the financial year for which the financial statements
are prepared is consistent with the parent company financial
statements.
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters
where the Companies Act 2006 requires us to report to you if, in
our opinion:
-- adequate accounting records have not been kept by the parent
company, or returns adequate for our audit have not been received
from branches not visited by us; or
-- the parent company 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 the information and explanations we require for our audit.
Other matter
We have reported separately on the Group financial statements of
Associated British Engineering plc for the year ended 31 March
2015.
Nicholas Watson
Senior Statutory Auditor
for and on behalf of Grant Thornton UK LLP
Statutory Auditor, Chartered Accountants
Oxford
Date: 28 July 2015
ASSOCIATED BRITISH ENGINEERING PLC
PRINCIPAL ACCOUNTING POLICIES - COMPANY
FOR THE YEAR ENDED 31 MARCH 2015
BASIS OF PREPARATION
The Company accounts have been prepared in accordance with
applicable UK accounting standards (United Kingdom Generally
Accepted Accounting Practice). The summary of the principal
accounting policies, which have been applied consistently, is set
out below. The policies have remained unchanged from the previous
year.
BASIS OF ACCOUNTING
The accounts are prepared on the historical cost basis, modified
to include the fair value of current asset investments.
The company does not present its own profit and loss account as
permitted by Section 408 of the Companies Act 2006. The company
loss is disclosed in note 12 to the company accounts.
GOING CONCERN
The financial statements have been prepared on the going concern
basis. There have been no changes to accounting policies in the
year. The most notable accounting event has been the increase in
the pension scheme deficit based on this year's actuarial forecast
and referred to in the Chairman's Statement. With reference to the
recovery plan agreed with the Trustees in conjunction with the
valuation of the pension scheme as at 1 April 2014, the Group will
make the following contributions over the period from 1 April 2014
to 31 March 2030:
-- From 1 April 2014 until 1 August 2014 contributions of
GBP17,000 per month have been paid in accordance with the previous
recovery plan.
-- From 1 August 2014, GBP10,000 per month will be payable by
the 19(th) of the calendar month after that to which they
relate.
-- An additional lump sum of relating to the profits of the
employer in respect of all accounting periods from 1 April 2014 is
payable in the financial year 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
GBP1050k 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 year 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
Based on the Group's budgets and cash forecasts, the Board
considers that the Group has sufficient resources to meet all
necessary outgoings and to enable it to continue in operational
existence for the foreseeable future.
CASH FLOW STATEMENT
The Company's results for the year ended 31 March 2015 are
included in the consolidated financial statements of Associated
British Engineering plc, which are publicly available.
Consequently, the Company has taken advantage of the exemption from
preparing a cash flow statement under the terms of FRS 1 - Cash
Flow Statements.
TANGIBLE FIXED ASSETS
Freehold land is not depreciated. Other fixed assets are
depreciated over their estimated useful lives at the following
annual rates to cost:
Freehold buildings 5 per cent straight line
Computer equipment 20 per cent straight line
DEFERRED TAXATION
Deferred tax is recognised on an undiscounted basis on all
timing differences where the transactions or events that give the
Company an obligation to pay more tax in the future, or a right to
pay less tax in the future, have occurred by the balance sheet
date. Deferred tax assets are recognised when it is more likely
than not that they will be recovered. Deferred tax is measured
using rates of tax and laws that have been enacted or substantively
enacted by the balance sheet date.
ASSOCIATED BRITISH ENGINEERING PLC
PRINCIPAL ACCOUNTING POLICIES - COMPANY
FOR THE YEAR ENDED 31 MARCH 2015
FOREIGN CURRENCIES
Monetary assets and liabilities denominated in foreign
currencies are translated at the rate of exchange ruling at the
year end date. Transactions in foreign currencies are recorded at
the rate ruling at the date of the transaction. Any exchange gains
or losses are credited or charged to the profit and loss account in
the year in which they arise.
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 profit and loss account.
Finance costs are calculated so as to produce a constant rate of
charge on the outstanding liability.
FINANCIAL INSTRUMENTS (continued)
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.
Trade and other debtors
Trade and other debtors are originally recognised at fair value
and subsequently amortised cost under effective interest method. A
provision against trade debtors is made when there is objective
evidence that the Company will not be able to collect all amounts
due to it in accordance the original terms of those receivables.
There is no general or specific provision for bad and doubtful
debts at year end. Trade debtors and cash and cash equivalents are
classified as loans and receivables.
Trade and other creditors
Trade and other creditors are initially recognised at fair
value, net of transaction costs and are subsequently held at
amortised cost.
INVESTMENTS
Fixed asset investments in subsidiaries are included at cost
less provisions for impairment.
Other investments are classified as available for sale and 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 measured at fair value.
Gains and losses arising from changes in fair value are shown in
the statement of total recognised gains and losses for the period.
When the asset is disposed of or deemed to be impaired, the
cumulative gain or loss is reclassified from the equity reserve to
profit or loss.
ASSOCIATED BRITISH ENGINEERING PLC Company Number: 00110663
COMPANY BALANCE SHEET
AS AT 31 MARCH 2015
Restated
2015 2014
Note GBP'000 GBP'000
FIXED ASSETS
Tangible assets 3 - -
Investments in subsidiaries 5 - -
Other investments 6 138 171
------------- -------------
138 171
------------ ------------
CURRENT ASSETS
Debtors 7 20 18
Cash at bank and in hand 52 98
------------- -------------
72 116
Creditors - amounts falling due within
one year 8 (122) (54)
------------- -------------
Net current (liabilities)/assets (50) 62
------------ ------------
Total assets less current liabilities 88 233
Creditors - amounts falling due after 8 - -
more than one year
------------- -------------
88 233
====== ======
CAPITAL AND RESERVES
Called up share capital 10 51 51
Deferred shares 10 2,594 2,594
Share premium account 12 5,370 5,370
Other reserve 212 212
Available for sale reserve 12 4 -
Profit and loss account 12 (8,143) (7,994)
------------- -------------
SHAREHOLDERS' FUNDS 88 233
====== ======
The financial statements were approved and authorised for issue
by the Board of Directors on 28 July 2015
and were signed below on its behalf by:
C Weinberg
Director
The accounting policies on pages 43 and 44 and the notes on
pages 46 to 49 form part of these accounts.
ASSOCIATED BRITISH ENGINEERING PLC
NOTES TO THE ACCOUNTS - COMPANY
FOR THE YEAR ENDED 31 MARCH 2015
1. ADMINISTRATIVE EXPENSES 2015 2014
GBP'000 GBP'000
Directors (note 2) and employees 60 64
Depreciation of tangible fixed assets:
owned - 1
====== ======
2. DIRECTORS
2015 2014
GBP'000 GBP'000
Remuneration in respect of directors was
as follows:
Remuneration 49 45
====== ======
The average number of employees, including directors, during the
year was 5 (2014: 5). More detailed information concerning directors'
remuneration is shown in the Directors' Remuneration Report.
3. TANGIBLE FIXED ASSETS Computer Freehold
land
equipment and buildings Total
GBP'000 GBP'000 GBP'000
COST
At 1 April 2014 2 - 2
Additions - - -
Disposals - - -
--------- -------------- -------------
At 31 March 2015 2 - 2
--------- -------------- -------------
DEPRECIATION
At 1 April 2014 2 - 2
Charge for the year - - -
Disposals - - -
--------- -------------- -------------
At 31 March 2015 2 - 2
--------- -------------- -------------
NET BOOK VALUE
At 31 March 2015 - - -
===== ====== ======
At 31 March 2014 - - -
===== ====== ======
4. CAPITAL COMMITMENTS
At 31 March 2015 the Company had no capital commitments (2014:
GBPNil).
ASSOCIATED BRITISH ENGINEERING PLC
NOTES TO THE ACCOUNTS - COMPANY
FOR THE YEAR ENDED 31 MARCH 2015
5. INVESTMENTS IN SUBSIDIARIES
The wholly owned subsidiaries are:
Company Activity Country of
Incorporation
British Polar Engines Limited Engineering England &
Wales
Akoris Trading Limited * Commodity England &
and natural Wales
resource trading,
finance and
investment
The investment in British Polar Engines Limited was fully
provided against at 31 March 2015 and 31 March 2014.
* Held indirectly via British Polar Engines Limited
6 OTHER INVESTMENTS 2015 2014
GBP'000 GBP'000
Equities 133 129
Cash on deposit 5 42
------------- -------------
138 171
====== ======
7. DEBTORS 2015 2014
GBP'000 GBP'000
Prepayments and accrued income 20 18
------------- -------------
20 18
====== ======
8. CREDITORS 2015 2014
GBP'000 GBP'000
Amounts falling due within one
year
Trade creditors 40 -
Other creditors 56 21
Accruals and deferred income 26 33
------------- -------------
122 54
====== ======
Amounts falling due after one 2015 2015
year
GBP'000 GBP'000
Amounts due to group undertakings - -
------------- -------------
- -
====== ======
ASSOCIATED BRITISH ENGINEERING PLC
NOTES TO THE ACCOUNTS - COMPANY
FOR THE YEAR ENDED 31 MARCH 2015
9. DEFERRED TAXATION
There is no unprovided deferred taxation liability
at 31 March 2015 or 31 March 2014.
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. The amounts
not recognised (all of which have been calculated at 20% (2014:
20%) are set out below:
2015 2014
GBP'000 GBP'000
Arising from trading losses 298 273
Arising from capital losses 1,655 1,655
------------- -------------
1,953 1,928
====== ======
10. CALLED UP SHARE CAPITAL 2015 2014
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:
2,040,000 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.
11. RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS
2015 2014
GBP'000 GBP'000
(Loss)/profit for the financial year (135) 671
Unrealised loss on available for sale investments (10) -
------------- -------------
(145) 671
Opening shareholders' funds 233 (438)
------------- -------------
Closing shareholders' funds 88 233
====== ======
ASSOCIATED BRITISH ENGINEERING PLC
NOTES TO THE ACCOUNTS - COMPANY
FOR THE YEAR ENDED 31 MARCH 2015
12. RESERVES
Available Profit and Share premium
For Sale loss
Reserve
GBP'000 GBP'000 GBP'000
At 1 April 2014 - (7,994) 5,370
Loss for the year (135) -
Transfer between reserves 14 (14) -
Unrealised loss on available (10) - -
for sale investments
------------- ------------- -------------
At 31 March 2015 4 (8,143) 5,370
====== ====== ======
There were no movements in other reserves during the year. As
permitted by the Companies Act 2006, the Company's profit and loss
account has not been included in these accounts. The Company's loss
for the financial year was GBP135,000 (2014: GBP671,000
profit).
13. CONTINGENT LIABILITIES
There were no contingent liabilities at 31 March 2015 or 31
March 2014.
14. RELATED PARTY TRANSACTIONS
The Company has taken advantage of the exemption conferred by
FRS 8 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 year. Under that law the directors
are required to prepare Group financial statements in accordance
with International Financial Reporting Standards, as adopted by the
European Union (IFRSs), and have elected to prepare the Parent
Company financial statements in accordance with United Kingdom
Generally Accepted Accounting Practice (United Kingdom Accounting
Standards and applicable laws). 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 and
profit or loss of the Company and 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 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.
The directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Company's
transactions and disclose with reasonable accuracy at any time the
financial position of the Company and Group and enable them to
ensure that the financial statements and the 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 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 Company'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. Having taken
advice from the Audit Committee, 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
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.
To the best of my knowledge:
-- 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 and profit or loss
of the Company and the undertakings included in the consolidation
taken as a whole; 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 Company and the undertakings included in the
consolidation taken as a whole, together with a description of the
principal risks and uncertainties that they face.
C Weinberg
Director
28 July 2015
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 principles of Section 1 of the UK
Corporate Governance Code, together with a statement regarding its
compliance with specific provisions. 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 year 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. This has not been considered
necessary due to the size and nature of the Board which consists of
one non-executive director and 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 to date but his rotation is being
actively considered by the Board;
-- There is no formal training programme for new directors on
joining the Board. This is contrary to provision B4.2. The has not
been considered necessary to date but is being actively considered
by the Board om 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.
Board of Directors
The Board comprises one non-executive director and 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 year with the Group's business, meet as
required and also attend formal Board meetings. The strategies
proposed by management of the company and its subsidiary(ies) 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 Group operates. During the year, 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 compiled with. There is also formal
agreed procedure for directors in the furtherance of their duties
to take independent professional advice as necessary at the
Company's expense.
The business address of each of the directors is 9 High Street,
Little Eversden, Cambridge CB23 1HE.
The Board is supported by a senior management team which
includes the following individuals:
Stewart Davis (67), non-executive director of BPE and former
managing director. Stewart has worked for BPE for 51 years and was
its sales director from 1985 to 2007.
ASSOCIATED BRITISH ENGINEERING PLC
CORPORATE GOVERNANCE REPORT (continued)
Jim Duncan (50), former Operations Director of BPE having joined
BPE some 35 years ago and was appointed joint managing director of
BPE responsible for engineering on Stewart Davis's retirement
Bill Girdwood (41) he joined BPE in October 2014 from another
engineering company and as joint managing director he is
responsible for sales.
Marc Weisberger (39) he was a founder, shareholder and managing
director of Akoris Trading Limited. He resigned in January 2015
Non-Executive Directors
Short biographies of the directors appear on page 56 and show
considerable and varied experience in the business world and the
City. During the year, Sir David Thomson Bt. was appointed a
director immediately after the AGM in 2014 and before the
resignation of David Brown; he was deemed to have vacated his
office in December 2014. Andrew Beaumont was also deemed to have
vacated his office as non-executive director on the same day.
Under the Company's Articles of Association, new directors and
at least one third of the directors retire from office each year.
The retiring director is eligible for re-election.
The role of non-executive directors is a vital element of
corporate accountability. Due to the small size of the Board and
because there are no full time executive directors, the directors
and the joint chairmen carry out certain executive
responsibilities.
Nomination
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 and
consolidated accounts; and to review and monitor the independence
of the statutory auditor and provision of additional services to
the Group.
As part of this process, the performance of the Group's major
divisions 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
2015 financial statements and how they were addressed are outlined
below:
Revenue Recognition and Management Override
The Committee have reviewed the systems and control processes in
place during the financial year to 31 March 2015 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.
Assessing external audit effectiveness
The Audit Committee reviews audit quality every year using
feedback from the Auditors, the Board 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.
ASSOCIATED BRITISH ENGINEERING PLC
CORPORATE GOVERNANCE REPORT (continued)
Audit Committee (continued)
Pensions
The Committee continued to monitor the Group's pension
arrangements, in particular the liability in respect of the defined
benefit plans, which are sensitive to assumptions made in respect
of discount rates and inflation. The Committee reviewed the
actuarial assumptions used and compared them with those used by
other companies, and considered them to be reasonable.
Provisions
The Committee reviewed whether certain provisions were
sufficient, in particular inventory provisions and decided that
they were reasonable and appropriate.
Appointing the auditor and safeguards on non-audit services
The current auditors have acted for more than ten years and do
not provide any non-audit services. The Audit Committee will
consider the practicalities of putting the audit out to tender.
Remuneration
The Company's remuneration committee comprises Rupert Pearce
Gould and Colin Weinberg. The remuneration committee is to meet at
least twice a year and has as its remit the determination and
review of, amongst others, the remuneration of directors including
group directors together with any incentive plans adopted, or be
adopted, by the Company and the Group.
Communication with Shareholders
The Board believes it is important to respond adequately to the
queries of both private and institutional shareholders. During the
year The Group responded to shareholder concerns about the
structure of the Board and the changes during the year were a
consequence of that.
The Chairman's Statement in the Annual Report contains a
business review. An interim business review is also provided with
the half yearly announcement. The Chairmen are available to
shareholders at any time to discuss strategy and governance
matters.
The Board seeks to ensure that its report and accounts and other
financial statements provide a clear assessment of the Group's
business. All shareholders have the opportunity to ask questions
and express their views at the Company's Annual General Meeting, at
which all directors are available to take questions.
AUDIT AND INTERNAL CONTROL
The directors are responsible for the Group's system of internal
control and reviewing its effectiveness. 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 Company are delegated to the
subsidiary's Board and there are limits which apply to capital
expenditure and significant contracts. During the year it is
believed that in the case of Akoris these had been breached and
appropriate action was taken.
- a regular review is undertaken to assess the risks facing the
trading subsidiary and to enhance the systems which manage the risk
identified. Local 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
ASSOCIATED BRITISH ENGINEERING PLC
CORPORATE GOVERNANCE REPORT (continued)
AUDIT AND INTERNAL CONTROL (continued)
- 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 year under review and up to the date of approval of
this report. The Audit Committee has kept under review the
effectiveness of the system of internal control and has reported
regularly to the Board.
Through these mechanisms, Group performance is continually
monitored, risks identified in a timely manner, their financial
implication assessed, control procedure re-evaluated and corrective
actions agreed and where possible implemented.
The Board believes that it is not currently appropriate for the
Company to maintain an internal audit function due to the size of
the Group and the manner in which the group operates. .
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 year and information on the nature of the non-audit fees appear
in note 3 to the financial statements. There were no non-audit fees
incurred from the auditor during the year. The Board also receive
an annual confirmation of independence from the auditors.
Fair, Balanced and Understandable
The process of compiling the Annual Report was improved 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 Company'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.
GOING CONCERN
The financial statements have been prepared on the going concern
basis. There have been no changes to accounting policies in the
year. The most notable accounting event has been the increase in
the pension scheme deficit based on this year's actuarial forecast
and referred to in the Chairman's Statement. With reference to the
recovery plan agreed with the Trustees in conjunction with the
valuation of the pension scheme as at 1 April 2014, the Group will
make the following contributions over the period from 1 April 2014
to 31 March 2030:
-- From 1 April 2014 until 1 August 2014 contributions of
GBP17,000 per month have been paid in accordance with the previous
recovery plan.
-- From 1 August 2014, GBP10,000 per month will be payable by
the 19(th) of the calendar month after that to which they
relate.
-- An additional lump sum of relating to the profits of the
employer in respect of all accounting periods as from 1 April 2014
is payable in the financial year 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
GBP1050k an additional payment of 10% of such profits
ASSOCIATED BRITISH ENGINEERING PLC
CORPORATE GOVERNANCE REPORT (continued)
GOING CONCERN (continued)
-- 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 year 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
Based on the Group's budgets and cash forecasts, the Board
considers that the Group has sufficient resources to meet all
necessary outgoings and to enable it to continue in operational
existence for the foreseeable future.
On behalf of the Board
C Weinberg
Director
28 July 2015
ASSOCIATED BRITISH ENGINEERING PLC
DIRECTORS' REMUNERATION REPORT
Introduction
This report is submitted in accordance with Schedule 8 of the
Large and Medium sized Companies and Groups (accounts and Reports)
(Amendment) Regulations 2013 in respect of the year ended 31 March
2015. 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, Grant Thornton UK 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 57 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 8 to 9.
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
During the year the Company started discussions under the
Chairmanship of Andrew Beaumont regarding the roles and
remuneration of Directors. The outcome was, without materially
altering the costs of the Board, to redefine the roles of the
directors as follows:-
Senior Non-executive Director - Stephen Cockburn
Joint Chairman and Deputy Chairman - Rupert Pearce Gould (part
time executive - operational)
Joint Chairman and Deputy Chairman - Colin Weinberg (part time
executive - finance)
The Company's policy is for the Directors to be remunerated in
the form of fees, payable monthly in arrears. The non-executive
directors each receive a fee for their services, which is agreed by
the Remuneration Committee after reviewing comparable organisations
and appointments. None of the non-executive directors receive a
pension or other benefit from the Company, nor do they participate
in any bonus or incentive schemes or share option schemes.
The fees are not specifically related to the Directors'
performance, either individually or collectively. The Board is also
entitled to be repaid all reasonable travelling subsistence and
other expenses incurred by them respectively whilst conducting
their duties as Directors, however no other remuneration or
compensation was paid or payable by the company during the period
to any of the current Directors. There will be no payment for loss
of office unless approved by a separate shareholder resolution.
Major decisions on Remuneration
The Company's policy is that the fees payable to each director
should reflect the time spent by the directors on the Company's
affairs and the responsibilities borne by each of the directors.
They should be sufficient to attract candidates of high calibre to
be recruited. The policy is for the Chairman 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 non-executive director has a service agreement with the
Company and Colin Weinberg has a similar agreement. 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.
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.
ASSOCIATED BRITISH ENGINEERING PLC
DIRECTORS' REMUNERATION REPORT
In accordance with the reporting requirements of Large and
Medium sized Companies and Groups (accounts and Reports)
(Amendment) Regulations 2013, an Ordinary resolution for the
approval of the remuneration policy of the Company to remain in
force for a three year period, will also be put to the members of
the Annual General Meeting and effective from that date.
ANNUAL REMUNERATION REPORT
DIRECTORS' REMUNERATION - SINGLE FIGURE TABLE (AUDITED)
2015 2014
Total Total
GBP'000 GBP'000
Mr S Cockburn 10 10
Mr R Pearce Gould (appointed 18 5 -
September 2014)
Mr C Weinberg 16 10
Mr D A H Brown (resigned 18 September
2014) 8 15
Sir David Thomson Bt. (appointed 3 -
18 September 2014
- vacated office 11 December 2014)
Mr A Beaumont (vacated office 11
December 2014) 7 10
-------- --------
49 45
==== ====
The amounts above all relate to directors fees and represent the
total remuneration of the company's directors but exclude fees 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 2015, as
in previous years.
Statement of Voting at the Annual General Meeting (AGM)
The 2013 Remuneration Report was presented to the AGM in
September 2014 and received shareholder approval following a vote
on a show of hands. 0.47% 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 above shows the Company's TSR performance compared to
the FTSE All Share index over the past five years. TSR is defined
as share price growth plus reinvested dividends. This provides a
basis for comparison with a relevant equity index but should be
treated with caution in view of the small market in the Company's
shares.
A statement of directors' shareholdings and interest is reported
in the directors' report on page 4.
Company Performance
The Board is responsible for the Company's business strategy and
performance.
The Statement of Directors' responsibilities, Corporate
Governance report and the Directors' Remuneration report on pages
50 to 58 form part of the Directors' report to the group financial
statements,
On behalf of the Board
C Weinberg
Director
28 July 2015
ASSOCIATED BRITISH ENGINEERING PLC
DIRECTORS AND ADVISERS
The Board comprises three directors:
STEPHEN COCKBURN (75) has been a non-executive director since
1979. He was a non-executive director of AIM-listed Fiske plc from
September 1999 until September 2014 and he was managing director of
The Investment Company plc from 1994 until 2013, where he remains a
non-executive director.
COLIN WEINBERG (66) 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 (63), was appointed as non-executive
director on 18 September 2014. 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 years until
2002.
SECRETARY & REGISTERED OFFICE BANKERS
haysmacintyre Company Secretaries Limited The Royal Bank of Scotland
plc
26 Red Lion Square 5th Floor
London Tay House
WC1R 4AG 300 Bath Street
Registered No. 110663 Glasgow
Tel No: 020 7969 5500 G2 4RS
AUDITOR CORPORATE ADVISERS
Grant Thornton UK LLP Beaumont Cornish Limited
3140 Rowan Place 2nd Floor
John Smith Drive
Oxford Bowman House
OX4 2WB 29 Wilson Street
London
REGISTRARS EC2M 2SJ
Computershare Investor Services plc
The Pavilions
Bridgwater Road
Bristol
BS13 8AE
SOLICITORS
Fladgate LLP
25 North Row
London
W1K 6DJ
Fladgate LLP
This information is provided by RNS
The company news service from the London Stock Exchange
END
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