TIDMASBE
RNS Number : 0710V
Associated British Engineering PLC
28 November 2019
ASSOCIATED BRITISH ENGINEERING PLC
INTERIM REPORT
FOR THE SIX MONTHSED
30 SEPTEMBER 2019
ASSOCIATED BRITISH ENGINEERING PLC
INTERIM REPORT
FOR THE SIX MONTHSED 30 SEPTEMBER 2019
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 - 19
ASSOCIATED BRITISH ENGINEERING PLC
CHAIRMAN'S STATEMENT
INTERIM REPORT FOR THE SIX MONTHSED 30 SEPTEMBER 2019
SUMMARY OF RESULTS Six months Six months Year to
to to 30 March
30 September 30 September 2019
2019 2018 GBP'000
GBP'000 GBP'000
Revenue 557 498 1,134
Loss before Tax (179) (342) (1,810)
Earnings/(loss) per Share
Basic (8.7p) (16.7p) (84.5p)
Diluted (8.7p) (16.7p) (84.5p)
The Group incurred a pre-tax loss of GBP179,000 for the
six-month period to 30 September 2019. This represents a decreased
loss of GBP163,000 on the similar financial period last year and is
due to a reduction in the loss before interest and tax at British
Polar Engines Limited (`BPE`).
The turnover for our main operating subsidiary British Polar
Engines (BPE) increased to GBP557,000 for the period ending 30(th)
September 2019 (2018: GBP498,000) resulting in a reduced loss for
the interim period of GBP246,000 (2018 loss GBP356,000). It is a
disappointment that the sales increase was modest and as a result
and following these results the Board have instituted a round of
reorganisation and rationalisation within the various arms of the
business. Post the period end, the Board has negotiated the
utilisation of surplus space that will benefit future results as
from the fourth quarter's figures. Since the last set of figures
there have been signs that sales opportunities in the spares
business are increasing and we are working hard to convert these
leads into firm sales.
In late 2018 the board of BPE started discussions with the
Trustees of the Pension Fund to resolve the longer term costs to
the company of the Pension Fund. There was further disappointment
from BPE's pension fund actuarial valuations in 2019, which despite
years of additional contributions showed the funds deficit was
again on the increase. It was therefore decided to enter
discussions to close off the cost of the Pension Fund to BPE.
The Board of BPE, supported by the Board of your company,
entered into discussions with the Trustees of the Pension Fund, the
Pensions Regulator and the Pension Protection Fund. As part of
those discussions the Board of BPE decided that they should engage
FRP Advisory LLP to advise on negotiations with the Trustees and
the Pensions Regulator and consider the future of the operating
business of BPE including marketing it as for sale. This process is
still ongoing.
The Board keeps the central costs of the Group under review and
maintains them at a very low level. There are some signs that sales
opportunities are increasing again and we are working hard to
convert them. The Board 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.
Colin Weinberg and Rupert Pearce Gould
Chairmen
28 November 2019
1
ASSOCIATED BRITISH ENGINEERING PLC
RESPONSIBILITY STATEMENT
INTERIM REPORT FOR THE SIX MONTHSED 30 SEPTEMBER 2019
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 and Rupert Pearce Gould
Chairmen
28 November 2019
2
ASSOCIATED BRITISH ENGINEERING PLC
GROUP INCOME STATEMENT
FOR THE SIX MONTHSED 30 SEPTEMBER 2019
Six months Six months Period
to to to
30 September 30 September 31 March
2019 2018 2019
GBP'000 GBP'000 GBP'000
Revenue 557 498 1,134
Operating costs (734) (835) (2,552)
Exceptional items - - (324)
-------------- -------------- ----------
OPERATING LOSS (177) (337) (1,742)
Finance expense (2) (5) (68)
Finance income - - -
-------------- -------------- ----------
LOSS BEFORE TAXATION (179) (342) (1,810)
Taxation - - 79
-------------- -------------- ----------
LOSS FOR PERIOD ATTRIBUTABLE TO EQUITY
HOLDERS OF THE PARENT COMPANY (179) (342) (1,731)
============== ============== ==========
LOSS PER SHARE ON LOSS FOR THE PERIOD
ATTRIBUATABLE TO EQUITY HOLDERS OF
THE PARENT COMPANY
Basic and diluted (8.7p) (16.7p) (84.5p)
============== ============== ==========
Loss for the period attributable
to:
Owners of the company (179) (342) (1,731)
Non-controlling interest - - -
-------------- -------------- ----------
(179) (342) (1,731)
============== ============== ==========
3
ASSOCIATED BRITISH ENGINEERING PLC
GROUP STATEMENT OF COMPREHENSIVE INCOME
FOR THE SIX MONTHSED 30 SEPTEMBER 2019
Six months Six months Period
to to to
30 September 30 September 31 March
2019 2018 2019
GBP'000 GBP'000 GBP'000
Loss for the period (179) (342) (1,731)
-------------- -------------- ----------
Other comprehensive income
Re-measurement of the net defined
benefit liability (*) - - (3,471)
Gain/(loss) on available for sale
financial asset (**) (79) 384 568
Surplus on revaluation of properties - - (50)
-------------- -------------- ----------
Other comprehensive income for the
period (79) 384 (2,953)
TOTAL COMPREHENSIVE INCOME FOR THE
YEAR (258) 42 (4,684)
============== ============== ==========
Total comprehensive loss attributable
to:
Owners of the company (258) 42 (4,684)
Non-controlling interests - - -
-------------- -------------- ----------
(258) 42 (4,684)
============== ============== ==========
(*) = 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 2019
At 30 At 30 Period
September September to
2019 2018 31 March
2019
GBP'000 GBP'000 GBP'000
ASSETS
Non-current assets
Property, plant and equipment - 784 -
Available for sale financial assets 8 565 21
----------- ----------- ----------
8 1,349 21
Current assets
Property, plant and equipment 523 - 534
Available for sale financial assets 644 - 714
Inventories 109 1,008 165
Trade and other receivables 79 220 125
Cash and cash equivalents 271 474 389
----------- ----------- ----------
1,626 1,702 1,927
----------- ----------- ----------
Total assets 1,634 3,051 1,948
=========== =========== ==========
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 725 319 805
Revaluation reserve 550 600 550
Retained earnings (13,267) (7,927) (13,089)
----------- ----------- ----------
Equity attributable to the Company's
Equity Shareholders (3,966) 1,018 (3,708)
Non-controlling interests - - -
----------- ----------- ----------
(3,966) 1,018 (3,708)
----------- ----------- ----------
LIABILITIES
Non-current liabilities
Retirement benefit obligation - 1,354 -
Obligation under finance leases - 4 -
Deferred tax liabilities - - -
----------- ----------- ----------
- 1,358 -
----------- ----------- ----------
Current liabilities
Trade and other payables 613 660 664
Obligations under finance leases 5 15 10
Retirement benefit obligation 4,982 - 4,982
----------- ----------- ----------
5,600 675 5,656
----------- ----------- ----------
Total liabilities 5,600 2,033 5,656
----------- ----------- ----------
Total equity and liabilities 1,634 3,051 1,948
=========== =========== ==========
5
ASSOCIATED BRITISH ENGINEERING PLC
GROUP INTERIM STATEMENT OF CHANGES IN EQUITY
FOR THE SIX MONTHSED 30 SEPTEMBER 2019
Available
for Sale Attributable
Share Share Deferred Other Financial Revaluation Retained to owners
Capital Premium Shares Reserve Assets reserve Earnings of parent Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance at 1
April
2018 51 5,370 2,594 11 (64) 600 (7,586) 976 976
Loss for the
period - - - - - - (342) (342) (342)
Unrealised
gain
on Available
For Sale
Financial
Assets (**) - - - - 384 - - 384 384
Balance at 30
September
2018 51 5,370 2,594 11 320 600 (7,928) 1,018 1,018
--------- --------- ---------- --------- ---------- ------------ ---------- -------------- ----------
Loss for the
period - - - - - - (1,389) (1,389) (1,389)
Other
comprehensive
income
Actuarial loss
in
defined
benefit
plan - - - - - - (3,471) (3,471) (3,471)
Unrealised
gain
on Available
For Sale
Financial
Assets (**) - - - - 184 - - 184 184
Realised loss
on
Available
For Sale
Financial
Assets - - - - 301 - (301) - -
Revaluation
Deficit on
revaluation
of freehold
property - - - - - (50) - (50) (50)
--------- --------- ---------- --------- ---------- ------------ ---------- -------------- ----------
Total
comprehensive
income
for the
period - - - - 485 (50) (5,161) (4,726) (4,726)
--------- --------- ---------- --------- ---------- ------------ ---------- -------------- ----------
Balance at 1
April
2019 51 5,370 2,594 11 805 550 (13,089) (3,708) (3,708)
Loss for the
period - - - - - - (179) (179) (179)
Unrealised
loss
on Available
For Sale
Financial
Assets (**) - - - - (79) - - (79) (79)
Realised gain
on
Available
For Sale
Financial
Assets - - - - (1) - 1 - -
--------- --------- ---------- --------- ---------- ------------ ---------- -------------- ----------
Balance at 30
September
2018 51 5,370 2,594 11 725 550 (13,267) (3,966) (3,966)
========= ========= ========== ========= ========== ============ ========== ============== ==========
(*) = 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 2019
Six months Six months Period
to to to
30 September 30 September 31 March
2019 2018 2019
GBP'000 GBP'000 GBP'000
Cash flows from operating activities
Cash used in operations (115) (8) (80)
Interest received - - -
Interest paid (2) (4) (68)
Taxation - - -
-------------- -------------- ----------
Net cash used in operating activities (117) (12) (148)
-------------- -------------- ----------
Cash flows from investing activities
Proceeds from sale of equipment - 18 24
Purchase of equipment (1) (2) (16)
Purchase of investments - - -
Sale proceeds of investments held
for sale 5 142 210
Net cash used in investing activities 4 158 218
-------------- -------------- ----------
Cash flows from financing activities
New finance lease - - -
Proceeds from finance leases/(redemption
of) (5) (16) (25)
Redemption of loan notes - - -
Net cash generated from financing
activities (5) (16) (25)
-------------- -------------- ----------
Net decrease in cash and cash equivalents (118) 130 45
Cash and cash equivalents at beginning
of period 389 344 344
-------------- -------------- ----------
Cash and cash equivalents at end
of period 271 474 389
============== ============== ==========
7
ASSOCIATED BRITISH ENGINEERING PLC
GROUP INTERIM CASH FLOW STATEMENT (continued)
FOR THE SIX MONTHSED 30 SEPTEMBER 2019
CASH FLOW FROM OPERATING ACTIVITIES Six months Six months Period
to to to
30 September 30 September 31 March
2019 2018 2019
GBP'000 GBP'000 GBP'000
Loss before taxation (179) (342) (1,810)
Adjustments for:
Depreciation 11 33 91
Interest income - - -
Finance expense 2 4 68
Foreign exchange difference - - (11)
Pension scheme interest expense - - 38
Cash paid in excess of current pensions
service cost - - (204)
Profit on disposal of equipment - (1) (6)
Impairment of assets - - 156
Profit on disposal of Available for
Sale investments - (58) (108)
Changes in working capital:
Decrease/(increase) in inventories 56 29 872
Decrease/(increase) in trade and
other receivables 46 299 393
Increase/(decrease) in payables (51) 28 33
-------------- -------------- ----------
(115) (8) (80)
Taxes paid - - -
Cash used in operations (115) (8) (80)
============== ============== ==========
8
ASSOCIATED BRITISH ENGINEERING PLC
NOTES TO THE INTERIM REPORT
FOR THE SIX MONTHSED 30 SEPTEMBER 2019
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 period ended 31 March 2019 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.
NEW AND AMED STANDARDS ADOPTED BY THE GROUP
The following standards became applicable for the current
reporting period:
-- IFRS 16 in respect of Leases which became effective for
accounting periods beginning on or after 1 January 2019.
The directors anticipate that the adoption of the above
Standards and Interpretations in this and future periods will have
no material impact on the financial statements of the Group, except
as follows:
-- IFRS 16 is effective for annual periods beginning on or after
1 January 2019 and it removes the current distinction between an
operating and finance lease, introducing consistent requirements
for all leases similar to the current finance lease accounting. The
lease value for leased premises as well as other smaller trade
related operating leases will be brought onto the Statement of
Financial Position at the fair value of the future minimum lease
payments.
GOING CONCERN
The Group's business activities, together with the factors
likely to affect its future development, performance and position
are set out in the Chairmen's statement on page 1. The financial
position of the Group, its cash flows and liquidity position are
described in the financial statements.
As described in detail in the last Chairmen's Statement the
Board of Directors' commenced discussions with the Trustees of the
Pension Fund with the intention of resolving the longer-term costs
to the Group of the Pension Fund with the view to closing off the
cost of the Pension Fund to the Group. The Board of Directors'
therefore entered into detailed discussions with the Trustees of
the Pension Fund, the Pensions Regulator and the Pension Protection
Fund with the view to obtaining a resolution of these matters.
These discussions are on going.
On 2 July 2019, it was announced to the market that FRP Advisory
LLP had been engaged to advise on negotiations with the Trustees
and the Pensions Regulator and consider the future of the operating
business of BPE including marketing the Company for sale. This
process is still ongoing.
Consequently, the Directors have concluded that BPE is expected
to be reconstructed, sold or cease trading within a period of 6
months from the date that these financial statements will be
approved and, consequently have agreed that the going concern basis
of preparation is no longer applicable.
9
ASSOCIATED BRITISH ENGINEERING PLC
NOTES TO THE INTERIM REPORT (continued)
FOR THE SIX MONTHSED 30 SEPTEMBER 2019
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
GOING CONCERN (continued)
As such, these financial statements have continued to be
prepared on a basis other than the going concern basis and, we have
used the same provisions as the review revealed in July/August of
this year given its proximity to the period end and adjustments
have been made accordingly to liabilities and to reduce the
carrying value of these assets to their expected recoverable
amounts.
The assessment of the recoverable amount of these assets is
considered to be a key accounting judgement and further details of
this judgement can be found disclosed in these financial
statements.
BASIS OF CONSOLIDATION
As set out in the Directors' report, the Directors have decided
to prepare the financial statements on a basis other than that of a
going concern. In adopting the basis other than going concern at 31
March 2019 and subsequently for these interim financial statements,
the following policies and procedures were implemented:
-- At 31 March 2019 all BPE non-current assets are considered as
realisable, hence reclassified as current assets
-- All BPE assets have been disclosed at values at which they are expected to be realised
-- All liabilities reflect the full amount at which they are expected to materialise
The 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.
10
ASSOCIATED BRITISH ENGINEERING PLC
NOTES TO THE INTERIM REPORT (continued)
FOR THE SIX MONTHSED 30 SEPTEMBER 2019
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
REVENUE RECOGNITION
The Group has adopted Revenue from Contracts with Customers
(IFRS 15) with an adoption date of 1 April 2018. The Group has
assessed the requirements of IFRS 15 and have determined that the
existing revenue recognition policy is in line with the
requirements of this new standard, as all revenue relates to
contracts held with customers. This adoption, therefore, did not
result in a change in the accounting policy outlined below:
Revenue is measured at the fair value of the consideration
receivable by the Group for goods supplied and services provided,
excluding value added tax and trade discounts. Revenue from the
sale of spare parts is recognised when the goods are dispatched or,
if under a bill and hold arrangement, when they are available for
despatch to a specific customer. Revenue from the sale of engines
is recognised in accordance with the performance of contractual
terms and specifically when the engines have been satisfactorily
tested in accordance with contractual terms. Revenue from servicing
and repair work is recognised when the work is completed.
ACCOUNTING ESTIMATES AND JUDGEMENTS
Management are required, in accordance with IFRS, to exercise
judgement and to make estimates and assumptions regarding the
application of accounting policies and the resulting effect on
reported amounts of assets, liabilities, income, and expenses.
These estimates and assumptions are based on historical experience
and a review of current conditions prevailing at the time but
actual results may differ from these estimates. Any such revision
is recognised in the financial statements in the period in which
the change in circumstance is detected.
Accounting Judgements
The key areas where management have exercised judgement in the
period, and the thought process undertaken, are as follows:
Going Concern
The Directors anticipate that the trade of the Company's
principal subsidiary BPE is expected to be re-constructed, sold or
cease trading within 6 months from the date that these financial
statements will be approved and, consequently have agreed that the
going concern basis of preparation is no longer applicable.
Pension Scheme
The directors are in regular contact with the Trustees of the
pension scheme in connection with three keys areas where judgement
is exercised; the assumptions underpinning the actuarial valuation,
continued negotiations regarding the pension scheme and in relation
to the payment plan. The directors then assess the relevant
estimates and assumptions and have now deemed the pension scheme to
be prepared under the solvency basis, which provides an estimate of
the cost of transferring all liabilities to an insurer. This basis
has been derived in line with the s.143 basis prescribed by the
Pension Protection Fund ("PPF") that was in force as at 1 April
2019.
11
ASSOCIATED BRITISH ENGINEERING PLC
NOTES TO THE INTERIM REPORT (continued)
FOR THE SIX MONTHSED 30 SEPTEMBER 2019
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
ACCOUNTING ESTIMATES AND JUDGEMENTS (continued)
Pension Scheme (continued)
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.
Deferred taxation
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
Available for Sale Financial Assets
British Polar Engines holding in SalvaRx was 1.92% (September
2018: 2.13%). 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:
Recoverable amount of assets
Following the directors' decision to prepare the financial
statements on a basis other than going concern, inventories,
property, plant and equipment, trade and other receivables,
available for sale assets have been written down to their
recoverable amount. The directors appointed a specialist to value
the above items at their recoverable amounts. Additional
information is provided in the basis of preparation in the
accounting policies.
Inventories
In previous interim reporting periods, inventories were stated
at the lower of cost and net realisable value. Following the
directors' decision to prepare the financial statements on a basis
other than going concern, inventories have been written down to
their recoverable amount. The comparatives are prepared in
accordance with the accounting policies adopted in previous
periods.
Inventories held by the Group consist of raw material (mainly
components), work in progress (manufactured engines and parts) and
finished goods (both purchased and manufactured engines and
parts).
The directors' review their assumptions and accounting
estimates, along with the accounting policies adopted in preparing
these financial statements, on a regular basis and recognise any
change in the period in which circumstances vary.
INVENTORIES AND IMPAIRMENT OF INVENTORIES
Cost is on a first in, first out basis. Net realisable value is
the estimated selling price in the normal course of business, less
estimated costs of completion and provision is made for obsolete,
slow moving and defective inventories. However, following the
directors' decision to prepare the financial statements on a basis
other than going concern, inventories have been written down to
their recoverable amount.
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.
12
ASSOCIATED BRITISH ENGINEERING PLC
NOTES TO THE INTERIM REPORT (continued)
FOR THE SIX MONTHSED 30 SEPTEMBER 2019
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.
PROPERTY, PLANT AND EQUIPMENT
In previous interim reporting periods, plant and equipment are
stated at cost less depreciation and any impairment in value. The
comparatives are prepared in accordance with the accounting
policies adopted in previous periods. Freehold property is held
under a revaluation model as outlined below. Depreciation is
calculated to write down the cost of all property, plant and
equipment less its residual value by annual instalments over their
expected useful lives on the following bases:
Freehold buildings 5 per cent straight line
Plant and machinery 7 1/2 - 331/3 per cent straight line
Assets held under finance leases are depreciated over their
expected useful lives on the same basis as owned assets or where
shorter, over the term of the relevant lease. The gain or loss
arising on the disposal or retirement of an asset is determined as
the difference between the sales proceeds and the carrying amount
of the asset and is recognised as income.
The carrying values of plant and machinery are reviewed for
impairment when events or changes in circumstances indicate the
carrying value may not be recoverable. If any such indication
exists, and where the carrying values exceed the estimated
recoverable amount, the assets or cash generating units are written
down to their recoverable amounts. Following the directors'
decision to prepare the financial statements on a basis other than
going concern, property, plant and equipment have been written down
to their recoverable amount.
Freehold property is held under the revaluation model and was
carried at a revalued amount, being their fair value at the date of
valuation less any subsequent accumulated depreciation and
subsequent accumulated impairment losses. The fair value of the
land and buildings is usually considered to be their market value.
This changed from a cost model to a revaluation model is a change
in accounting policy.
Revaluation gains and losses are recognised in other
comprehensive income and accumulated in equity, except to the
extent that a revaluation gain reverses a revaluation loss
previously recognised in the Income Statement or a revaluation loss
exceeds the accumulated revaluation gains recognised in equity;
such gains and losses are recognised in the Income Statement.
TAXATION
The tax expense represents the sum of the tax currently payable
and deferred tax.
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.
13
ASSOCIATED BRITISH ENGINEERING PLC
NOTES TO THE INTERIM REPORT (continued)
FOR THE SIX MONTHSED 30 SEPTEMBER 2019
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICES (continued)
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 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.
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 osses are recognised in full in the period in
which they occur. They are recognised outside profit or loss and
presented in the Group statement of comprehensive income.
Past service cost is recognised immediately to the extent that
the benefits are already vested, and otherwise is amortised on a
straight-line basis over the average period until the benefits
become vested. The retirement benefit obligation recognised in the
balance sheet represents the present value of the defined benefit
obligation as adjusted for unrecognised past service cost, and as
reduced by the fair value of scheme assets. Any asset resulting
from this calculation is limited to cumulative unrecognised past
service cost, plus the present value of available refunds and
reductions in future contributions to the plan.
Actuarial gains and losses, which represent differences between
the expected and actuarial returns on the plan assets and the
effect of changes in actuarial assumptions, are recognised in the
statement of other comprehensive income in the period in which they
occur. Pension payments to the Group's defined contribution schemes
are charged to the income statement as they arise.
The directors have assessed the relevant estimates and
assumptions and have now deemed the pension scheme to be prepared
under the solvency basis, which provides an estimate of the cost of
transferring all liabilities to an insurer. This basis has been
derived in line with the s.143 basis prescribed by the Pension
Protection Fund ("PPF") that was in force as at 1 April 2019.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents in the 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.
14
ASSOCIATED BRITISH ENGINEERING PLC
NOTES TO THE INTERIM REPORT (continued)
FOR THE SIX MONTHSED 30 SEPTEMBER 2019
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICES (continued)
FINANCIAL ASSETS
Financial assets are recognised initially at fair value,
normally being the transaction price. In the case of
financial assets not at fair value through profit or loss,
directly attributable transaction costs are also included. The
subsequent measurement of financial assets depends on their
classification. The group derecognises financial assets when the
contractual rights to the cash flows expire or the financial asset
is transferred to a third party. This includes the de-recognition
of receivables for which discounting arrangements are entered
into.
FINANCIAL INSTRUMENTS
Financial liabilities and equity instruments are classified
according to the substance of the contractual arrangements entered
into.
Where the contractual obligations of financial instruments
(including share capital) are equivalent to a similar debt
instrument, those financial instruments are classed as financial
liabilities 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.
Trade and other receivables
In previous interim reporting periods, trade and other
receivables were 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.
However, following the directors' decision to prepare the
financial statements on a basis other than going concern, trade and
other receivables have been written down to their recoverable
amount. The comparatives are prepared in accordance with the
accounting policies adopted in previous periods.
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. However,
during the current year this has subsequently changed given that
they are now held at a discount to the quoted market price. The
directors consider it appropriate to apply a discount due to a lack
of liquidity in the markets. Gains and losses arising from changes
in fair value of available for sale financial assets are included
in other comprehensive income for the period. When the asset is
disposed of or deemed to be impaired, the cumulative gain or loss
is reclassified from equity reserve to income statement.
15
ASSOCIATED BRITISH ENGINEERING PLC
NOTES TO THE INTERIM REPORT (continued)
FOR THE SIX MONTHSED 30 SEPTEMBER 2019
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICES (continued)
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
EQUITY AND RESERVES
Share capital represents the nominal value of shares that have
been issued except for the preference shares classified as
debt.
Deferred shares represent shares arising from the sub-division
of ordinary shares of GBP2.
Share premium includes any premiums received on issue of share
capital. Any transaction costs associated with the issuing of
shares are deducted from share premium, net of any related income
tax benefits.
Retained earnings include all current and prior period retained
profits and losses.
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.
16
ASSOCIATED BRITISH ENGINEERING PLC
NOTES TO THE INTERIM REPORT (continued)
FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2019
2. SEGMENTAL ANALYSIS
Six months Six months Period
to to to
30 September 30 September 31 March
2019 2018 2019
GBP'000 GBP'000 GBP'000
United Kingdom 274 255 627
Europe 106 97 240
Far East and Australasia 52 41 87
Africa 5 74 81
North and South America 75 31 87
Middle East 45 - 12
557 498 1,134
============== ============== ==========
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 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-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 did not carry out trading activity in the
period.
Associated British Engineering Plc is the group holding
company.
17
ASSOCIATED BRITISH ENGINEERING PLC
NOTES TO THE INTERIM REPORT (continued)
FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2019
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
2019
External sales - 557 - 557
Segment result (PBIT) (27) (150) - (177)
------------- ---------- ---------- ---------------
Net finance expense (2)
Taxation -
Loss after tax (179)
===============
Other information
Capital additions - - - -
Balance sheet
Segment assets 71 1,563 - 1,634
============= ========== ========== ===============
Six months to 30 September
2018
External sales - 498 - 498
Segment result (PBIT) (68) (270) 1 (337)
------------- ---------- ---------- ---------------
Net finance expenses (5)
Taxation -
Profit after tax (342)
===============
Other information
Capital additions - 2 - 2
Balance sheet
Segment assets 101 2,934 16 3,051
============= ========== ========== ===============
There was one customer that contributed more than 10% of the
total group revenue for the six months ending 30 September 2019
(2018: two customers).
18
ASSOCIATED BRITISH ENGINEERING PLC
NOTES TO THE INTERIM REPORT (continued)
FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2018
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 2019. The Group continues
to be exposed to the principal risks and uncertainties as described
on page 8 of the 2019 Annual Report and Accounts. A copy of the
2019 Annual Report and Accounts is available on the Company's
website.
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.
19
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
IR DGBDBDGDBGCI
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