TIDMASBE
RNS Number : 5866Q
Associated British Engineering PLC
30 November 2016
ASSOCIATED BRITISH ENGINEERING PLC
INTERIM REPORT
FOR THE SIX MONTHSED
30 SEPTEMBER 2016
ASSOCIATED BRITISH ENGINEERING PLC
INTERIM REPORT
FOR THE SIX MONTHSED 30 SEPTEMBER 2016
CONTENTS PAGE
Chairman's statement 1
Responsibility statement 2
Group income statement 3
Group statement of comprehensive income 4
Group interim balance sheet 5
Group interim statement of changes in shareholders'
equity 6
Group interim cash flow statement 7 - 8
Notes to the interim report 9 - 17
ASSOCIATED BRITISH ENGINEERING PLC
CHAIRMAN'S STATEMENT
INTERIM REPORT FOR THE SIX MONTHSED 30 SEPTEMBER 2016
SUMMARY OF RESULTS Six months Six months Year
to to to
30 September 30 September 31 March
2016 2015 2016
GBP'000 GBP'000 GBP'000
Revenue 522 640 1,766
Loss before Tax (543) (478) (621)
Earnings/(loss) per Share
Basic (26.5p) (23p) (29.9p)
Diluted (26.5p) (23p) (29.9p)
The Group incurred a pre-tax loss of GBP543,000 for the
six-month period to 30 September 2016. This represents an increased
loss of GBP65,000 on the similar financial period last year and is
due to a reduction in profit before interest and tax at British
Polar Engines Limited (`BPE`).
The turnover for our main operating subsidiary, BPE, has
decreased to GBP522,000 (30 September 2015: GBP640,000) resulting
in a loss before interest and tax of GBP505,000 (30 September 2015:
Loss GBP459,000). The principal reason for this further decrease is
that a number of the group's customers, especially in the oil
sector, have cut spending. Expected business with some of the
group's overseas customers has been delayed due to local regional
issues and the introduction of new sales lines has taken time to
make a contribution. The subsidiary has taken the time to repair
and maintain plant that would otherwise have been outsourced. The
group has reviewed the overall position and remains confident that
it can recover future sales and expects to see an improvement over
the next six months.
The Board keeps the central costs of the Group under review and
maintains them at a very low level. It is also working to ensure
that its investments and cash in the business generate value for
shareholders commensurate with the risk.
The Board continues to review options for the future development
of the Group.
These are difficult times but the Group has taken corrective
action and our review of the market shows that there are
opportunities to recover the situation.
Colin Weinberg
Chairman
30 November 2016
1
ASSOCIATED BRITISH ENGINEERING PLC
RESPONSIBILITY STATEMENT
INTERIM REPORT FOR THE SIX MONTHSED 30 SEPTEMBER 2016
The Directors of the Company confirm to the best of their
knowledge that:
a) the Interim Report has been prepared in accordance with IAS 34;
b) the Interim Report includes a fair view of the information
required by DTR 4.2.7R, being an indication of the important events
that have occurred during the first six months of the financial
year and a description of the principal risks and uncertainties for
the remaining six months of the year; and
c) the Interim Report includes a fair review of the information
required by DTR 4.2.8R, being disclosure of related party
transactions that have taken place in the first six months of the
current financial year and that have materially affected the
financial position or performance of the group during that period;
and any changes in the related party transactions described in the
latest annual financial statements that could do so.
By order of the Board
Colin Weinberg
Chairman
30 November 2016
2
ASSOCIATED BRITISH ENGINEERING PLC
GROUP INCOME STATEMENT
FOR THE SIX MONTHSED 30 SEPTEMBER 2016
Six months Six months Year
to to to
30 September 30 September 31 March
2016 2015 2016
GBP'000 GBP'000 GBP'000
Revenue 522 640 1,766
Operating costs (1,073) (1,117) (2,334)
--------------- -------------- ----------
OPERATING LOSS (551) (477) (568)
Finance expense (4) (1) (68)
Finance income 12 - 15
--------------- -------------- ----------
LOSS BEFORE TAXATION (543) (478) (621)
Taxation - - 8
--------------- -------------- ----------
LOSS FOR PERIOD ATTRIBUTABLE
TO EQUITY HOLDERS OF THE
PARENT COMPANY (543) (478) (613)
=============== ============== ==========
LOSS PER SHARE ON LOSS FOR
THE PERIOD ATTRIBUATABLE
TO EQUITY HOLDERS OF THE
PARENT COMPANY
Basic and diluted (26.5p) (23p) (29.9p)
=============== ============== ==========
Loss for the period attributable
to:
Owners of the company (543) (473) (613)
Non-controlling interest - (5) -
--------------- -------------- ----------
(543) (478) (613)
=============== ============== ==========
3
ASSOCIATED BRITISH ENGINEERING PLC
GROUP STATEMENT OF COMPREHENSIVE INCOME
FOR THE SIX MONTHSED 30 SEPTEMBER 2016
Six months Six months Year
to to to
30 September 30 September 31 March
2016 2015 2016
GBP'000 GBP'000 GBP'000
Loss for the period (543) (478) (613)
-------------- -------------- ----------
Other comprehensive income
Re-measurement of the net
defined benefit liability
(*) - - (99)
Gain/(loss) on available
for sale financial asset
(**) (39) 12 15
Reclassification of realised - - -
gain/loss on available for
sale financial assets (**)
-------------- -------------- ----------
(39) 12
Other comprehensive income
for the year (84)
TOTAL COMPREHENSIVE EXPENSE
FOR THE YEAR (582) (466) (697)
============== ============== ==========
Total comprehensive loss
attributable to:
Owners of the company (582) (461) (697)
Non-controlling interests - (5) -
-------------- -------------- ----------
(582) (466) (697)
============== ============== ==========
(*) = 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.
4
ASSOCIATED BRITISH ENGINEERING PLC Company Number: 00110663
GROUP INTERIM BALANCE SHEET
AS AT 30 SEPTEMBER 2016
At 30 At 30 At 31
September September March
2016 2015 2016
GBP'000 GBP'000 GBP'000
ASSETS
Non-current assets
Property, plant and equipment 270 279 296
Available for sale financial
assets 394 580 433
----------- ----------- --------
664 859 729
Current assets
Inventories 1,136 987 958
Trade and other receivables 599 193 793
Cash and cash equivalents 1,138 2,228 1,577
----------- ----------- --------
2,873 3,408 3,328
----------- ----------- --------
Total assets 3,537 4,267 4,057
=========== =========== ========
EQUITY AND LIABILITIES
Called up share capital 51 51 51
Deferred shares 2,594 2,594 2,594
Share premium account 5,370 5,370 5,370
Other components of equity 11 11 11
Available for Sale financial
assets 65 101 104
Retained earnings (7,188) (6,400) (6,645)
----------- ----------- --------
Equity attributable to the
Company's Equity Shareholders 903 1,727 1,485
Non-controlling interests - (11) -
----------- ----------- --------
903 1,716 1,485
----------- ----------- --------
LIABILITIES
Non-current liabilities
Retirement benefit obligation 1,931 1,892 1,931
Obligation under finance
leases 11 74 43
Deferred tax liabilities - 8 -
----------- ----------- --------
1,942 1,974 1,974
----------- ----------- --------
Current liabilities
Trade and other payables 659 512 533
Obligations under finance
leases 33 65 65
----------- ----------- --------
692 577 598
----------- ----------- --------
Total liabilities 2,634 2,551 2,572
----------- ----------- --------
Total equity and liabilities 3,537 4,267 4,057
=========== =========== ========
5
ASSOCIATED BRITISH ENGINEERING PLC
GROUP INTERIM STATEMENT OF CHANGES IN EQUITY
FOR THE SIX MONTHSED 30 SEPTEMBER 2016
Available
for Attributable Non-controlling
Share Share Deferred Other Sale Retained to owners interests
Capital Premium Shares Reserve Financial Earnings of parent Total
Assets
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance at
1 April 2015 51 5,370 2,594 11 89 (5,927) 2,188 (6) 2,182
Loss for the
period - - - - - (473) (473) - (478)
Balance at
30 September
2015 51 5,370 2,594 11 101 (6,400) 1,727 (6) 1,716
--------- --------- ---------- --------- ---------- ---------- -------------- ----------------- --------
Loss for the
period - - - - - (140) (140) - (140)
Other - - - - - - - - -
comprehensive
income
Actuarial loss
in defined
benefit
plan - - - - - (99) (99) - (99)
Unrealised
gain on
Available
For Sale
Financial
Assets (**) - - - - 3 - 3 - 3
Reclassification
of realised
gain/loss - - - - - - - - -
on Available
For Sale
financial
assets (**)
Transfer from
retained earnings
to Available - - - - - - - - -
for sale
financial
assets
Transactions
with owners
Purchase of
shares from
non-
controlling
interest - - - - - (6) (6) 6 -
--------- --------- ---------- --------- ---------- ---------- -------------- ----------------- --------
Total
comprehensive
income
for the period - - - - 3 (245) (242) - 1,485
--------- --------- ---------- --------- ---------- ---------- -------------- ----------------- --------
Balance at
1 April 2016 51 5,370 2,594 11 104 (6,645) 1,485 - 1,485
Loss for the
period - - - - - (543) (543) - (543)
Unrealised
loss on
Available
For Sale
Financial
Assets (**) - - - - (39) - (39) - (39)
--------- --------- ---------- --------- ---------- ---------- -------------- ----------------- --------
Balance at
30 September
2016 51 5,370 2,594 11 65 (7,188) 903 - 903
========= ========= ========== ========= ========== ========== ============== ================= ========
(*) = Items which will not subsequently be reclassified to the Income Statement.
(**) = Items which may subsequently be reclassified to the Income Statement.
6
ASSOCIATED BRITISH ENGINEERING PLC
GROUP INTERIM CASH FLOW STATEMENT
FOR THE SIX MONTHSED 30 SEPTEMBER 2016
Six months Six months Year
to to to
30 September 30 September 31 March
2016 2015 2016
GBP'000 GBP'000 GBP'000
Cash flows from operating
activities
Cash used in operations (379) (192) (890)
Interest received 12 - 15
Interest paid (4) (1) (68)
Net cash used in operating
activities (371) (193) (943)
-------------- -------------- ----------
Cash flows from investing
activities
Proceeds from sale of equipment - - 6
Purchase of equipment (4) (3) (28)
Purchase of investments - (150) -
Purchase of investments held - - -
for sale proceeds
Net cash used in investing
activities (4) (153) (22)
-------------- -------------- ----------
Cash flows from financing
activities
Cash raised from non-controlling - - -
interests
Proceeds from finance leases/(redemption
of) (64) (32) (64)
Redemption of loan notes - - -
Net cash generated from financing
activities (64) (32) (64)
-------------- -------------- ----------
Net decrease in cash and
cash equivalents (439) (378) (1,029)
Cash and cash equivalents
at beginning of period 1,577 2,606 2,606
-------------- -------------- ----------
Cash and cash equivalents
at end of period 1,138 2,228 1,577
============== ============== ==========
7
ASSOCIATED BRITISH ENGINEERING PLC
GROUP INTERIM CASH FLOW STATEMENT (continued)
FOR THE SIX MONTHSED 30 SEPTEMBER 2016
CASH FLOW FROM OPERATING Six months Six months Year
ACTIVITIES to to to
30 September 30 September 31 March
2016 2015 2016
GBP'000 GBP'000 GBP'000
Loss before taxation (543) (478) (621)
Adjustments for:
Depreciation 30 38 53
Interest income (12) - (15)
Finance expense 4 1 68
Foreign exchange difference - 2 (7)
Pension scheme interest expense - - 61
Cash paid in excess of current
pensions service cost - - (121)
Profit on disposal of equipment - - (6)
Profit on disposal of Available - - -
for Sale investments
Changes in working capital:
(Increase)/decrease in inventories (178) (47) (19)
Decrease/(increase) in trade
and other receivables 194 411 (190)
(Decrease)/increase in payables 126 (119) (93)
-------------- -------------- ----------
(379) (192) (890)
Taxes paid - - -
Cash used in operations (379) (192) (890)
============== ============== ==========
8
ASSOCIATED BRITISH ENGINEERING PLC
NOTES TO THE INTERIM REPORT
FOR THE SIX MONTHSED 30 SEPTEMBER 2016
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PREPARATION
The company is incorporated in the United Kingdom under the
Companies Act 2006.
This unaudited Group Interim Report has been prepared in
accordance with IAS 34 Interim Financial Reporting and the
disclosure requirements of the Listing Rules. The policies set out
below have been consistently applied to all periods presented.
This Group Interim Report is not audited.
The results for the year ended 31 March 2016 have been extracted
from the statutory consolidated financial statements of Associated
British Engineering Plc, which are prepared in accordance with
IFRS, as adopted by the EU.
GOING CONCERN
The financial statements have been prepared on the going concern
basis. There have been no changes to accounting policies in the 6
month period to 30 September 2016. 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.
BASIS OF CONSOLIDATION
The Group Interim Report incorporates the financial statements
of Associated British Engineering Plc and its subsidiary
undertakings to 30 September each year. All inter-company balances
and transactions have been eliminated in full. The Group Interim
Report includes the results of subsidiaries acquired or disposed of
during the year from or to the effective date of acquisition or
disposal.
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. Acquisition-related costs
are generally recognised in profit or loss as incurred.
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.
9
ASSOCIATED BRITISH ENGINEERING PLC
NOTES TO THE INTERIM REPORT (continued)
FOR THE SIX MONTHSED 30 SEPTEMBER 2016
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
BUSINESS COMBINATIONS (continued)
Goodwill is measured in 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.
Accounting Judgements
The key areas where management have exercised judgement in the
period, and the thought process undertaken, are as follows:
Pension Scheme
The Directors are in regular contact with the Trustees of the
pension scheme in connection with the following 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 where possible all 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 certain
industry standards and norms.
Deferred taxation
Please refer to taxation policy below.
10
ASSOCIATED BRITISH ENGINEERING PLC
NOTES TO THE INTERIM REPORT (continued)
FOR THE SIX MONTHSED 30 SEPTEMBER 2016
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
ACCOUNTING ESTIMATES AND JUDGEMENTS (continued)
Available for Sale Financial Assets
During the year to 31 March 2016, British Polar Engines
investment in 3 Legs Resources PLC was consolidated into an
investment in SalvaRx following a reverse acquisition. As a result,
1 new share in SalvaRx Group PLC was issued for every 100 shares
previously held in 3 Legs Resources. Following the reverse
acquisition, British Polar Engines holding in 3 Legs Resources of
19.9% became a 2.36% holding in SalvaRx. The directors have judged
that this holding does not give the group 'significant influence'
over SalvaRx Group PLC, and so this investment has not been
accounted for as an associate in these financial statements.
Accounting Estimates
The accounting estimate having an impact on carrying amounts of
assets and liabilities in the reporting period is as follows:
Inventories
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 between 5% and 100% over all
stock lines that have not moved for more than one year.
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.
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 calculated 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, 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.
11
ASSOCIATED BRITISH ENGINEERING PLC
NOTES TO THE INTERIM REPORT (continued)
FOR THE SIX MONTHSED 30 SEPTEMBER 2016
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
LEASED ASSETS (continued)
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.
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are stated at cost less
deprecation 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 basis:
Freehold buildings 5 per cent
Plant and machinery 7 1/2 - 331/3 per cent
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 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.
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 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.
12
ASSOCIATED BRITISH ENGINEERING PLC
NOTES TO THE INTERIM REPORT (continued)
FOR THE SIX MONTHSED 30 SEPTEMBER 2016
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICES (continued)
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.
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 and 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.
13
ASSOCIATED BRITISH ENGINEERING PLC
NOTES TO THE INTERIM REPORT (continued)
FOR THE SIX MONTHSED 30 SEPTEMBER 2016
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICES (continued)
FINANCIAL INSTRUMENTS (continued)
Trade and other receivables
Trade and other receivables are originally recognised at fair
value. 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.
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.
IMPAIRMENT OF TANGIBLE ASSETS
At each balance sheet date, the Group reviews the carrying
amounts of its tangible assets to determine whether there is any
indication that those assets have suffered an impairment loss. If
any such indication exists, the recoverable amount of the asset is
estimated in order to determine the extent of the impairment loss
(if any). Where the asset does not generate cash flows that are
independent from other assets, the Group estimates the recoverable
amount of the cash-generating unit to which the asset belongs.
Recoverable amount is the higher of fair value less costs to
sell and value in use. In assessing value in use the estimated
future cash flows are discounted to their present value using a
pre-tax discount rate that reflects current market assessments of
the time value of money and the risks specific to the asset for
which the estimates of future cash flows have not been adjusted. If
the recoverable amount of an asset (or cash-generating unit) is
estimated to be less than its carrying amount, the carrying amount
of the asset (or 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 (or 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 (or cash-generating unit) in prior years.
EQUITY AND RESERVES
Share capital represents the nominal value of shares that have
been issued except for the preference shares classified as
debt.
Deferred shares represent shares arising from the sub-division
of ordinary shares of GBP2.
Share premium includes any premiums received on issue of share
capital. Any transaction costs associated with the issuing of
shares are deducted from share premium, net of any related income
tax benefits.
14
ASSOCIATED BRITISH ENGINEERING PLC
NOTES TO THE INTERIM REPORT (continued)
FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2016
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICES (continued)
EQUITY AND RESERVES (continued)
Retained earnings include all current and prior period retained
profits and losses.
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.
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.
2. SEGMENTAL ANALYSIS
Six months Six months Year
to to to
30 September 30 September 31 March
2016 2015 2016
GBP'000 GBP'000 GBP'000
United Kingdom 281 210 853
Europe 64 328 406
Far East and Australasia 122 42 19
Africa - 12 188
North and South America 55 20 272
Middle East - 28 28
522 640 1,766
============== ============== ==========
All of the above revenue arises from diesel, related engineering
activities and aluminium trading. All revenue originates in the
United Kingdom.
In the periods detailed above 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 IFRS8, "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-makers 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. The company
curtailed its trading activity in the year.
Associated British Engineering Plc is the group holding
company.
15
ASSOCIATED BRITISH ENGINEERING PLC
NOTES TO THE INTERIM REPORT (continued)
FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2016
2 SEGMENTAL ANALYSIS (continued)
Associated
British
Engineering British Akoris
PLC Polar Trading Consolidated
Engines Ltd
Ltd
GBP'000 GBP'000 GBP'000
Six months to 30 September
2016
External sales - 522 - 522
Segment result (PBIT) (44) (505) (2) (551)
------------- ---------- ---------- ---------------
Net finance income 8
Taxation -
Profit after tax (543)
===============
Other information
Capital additions - 4 - 4
Balance sheet
Segment assets 137 3,371 29 3,537
============= ========== ========== ===============
Six months to 30 September
2015
External sales - 640 - 640
Segment result (PBIT) (17) (459) (1) (467)
------------- ---------- ---------- ---------------
Net finance expenses (1)
Taxation -
Profit after tax (468)
===============
Other information
Capital additions - 3 - 3
Balance sheet
Segment assets 199 4,036 32 4,267
============= ========== ========== ===============
There were three customers who contributed more than 10% of the
total group revenue for the six months ending 30 September 2016
(2015: three customers).
16
ASSOCIATED BRITISH ENGINEERING PLC
NOTES TO THE INTERIM REPORT (continued)
FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2016
3. PRINCIPAL RISKS AND UNCERTAINTIES
In light of the industry in which the trading subsidiaries
operate, there are a number of risks and uncertainties which could
have an impact on the performance of the Group for the remaining
six months of the year.
The Directors have considered the principal risks and
uncertainties relating to its future business which might affect
the financial performance of the Group in 2017. The Group continues
to be exposed to the principal risks and uncertainties as described
on page 8 of the 2016 Annual Report and Accounts. A copy of the
2016 Annual Report and Accounts is available on the Company's
website.
The principal risks currently facing the Group are set out below
but are not arranged in order of relative impact or
probability:
-- Dependency on key markets;
-- Timing and renewal of key contracts;
-- Foreign exchange risk;
-- Recruitment and retention of key employees;
-- Identification of acquisitions that fit the Group's strategy;
-- Compliance with laws and regulations
The Directors meet on a regular basis to discuss these risks and
uncertainties and appropriate actions are taken to mitigate these
risks and to develop suitable strategies to protect the long term
performance of the Group.
17
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR BSBDBBDXBGLG
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