TIDMASBE
RNS Number : 1184U
Associated British Engineering PLC
31 March 2021
Company Registration No. 00110663 (England and Wales)
ASSOCIATED BRITISH ENGINEERING PLC
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE PERIODED
30 SEPTEMBER 2020
ASSOCIATED BRITISH ENGINEERING PLC Company Registration No.
00110663 (England and Wales)
REPORT AND FINANCIAL STATEMENTS
FOR THE PERIODED 30 SEPTEMBER 2020
CONTENTS Page
Financial highlights 1
Chairmen's statement 2
Directors' report 3
Strategic report 6
Report of the independent auditor - Group 9
Group and Parent Company accounting policies 14
Consolidated income statement 20
Consolidated statement of comprehensive income 21
Group statement of financial position 22
Group statement of changes in equity 23
Group cash flow statement 24
Notes to the Group financial statements 25
Company statement of financial position 37
Company statement of changes in equity 48
Company cash flow statement 49
Notes to the Company financial statements 40
Statement of directors' responsibilities 46
Corporate governance report 47
Directors' remuneration report 52
Directors, registered office and advisers 55
The Directors' Report on pages 3 to 5 and the Directors'
Remuneration Report on pages 52 to 54 have each been drawn up in
accordance with the requirements of English law and liability in
respect thereof is also governed by English law. In particular, the
responsibility of the directors for these reports is owed solely to
Associated British Engineering plc.
The directors submit to the members their Report and Accounts
for the Group for the period ended 30 September 2020. Pages 1 to 8
and 47 to 55, including the Financial Highlights, Chairmen's
Statement, Directors' Report, Strategic Report, Corporate
Governance Report, Directors' Remuneration Report and the
Directors, Registered Office and Advisers page form part of the
Report of the Directors.
ASSOCIATED BRITISH ENGINEERING PLC
FINANCIAL HIGHLIGHTS
30 Sep 31 Mar
2020 2019
GBP'000 GBP'000
REVENUE 165 1,134
OPERATING PROFIT/ (LOSS) 139 (1,742)
PROFIT/ (LOSS) BEFORE TAXATION 145 (1,810)
NET ASSETS/ (LIABILITIES) 591 (3,708)
BASIC PROFIT/ (LOSS) PER 2.5p ORDINARY SHARE 263.0p (84.5p)
EQUITY SHAREHOLDERS' FUNDS PER 2.5p ORDINARY GBP0.29 (GBP1.81)
SHARE
ASSOCIATED BRITISH ENGINEERING PLC
CHAIRMEN'S STATEMENT
FOR THE PERIODED 30 SEPTEMBER 2020
The shareholders of Associated British Engineering Plc (ABE)
will be disappointed that the operations of its main subsidiary
British Polar Engines Ltd (BPE) failed to improve since the last
annual accounts and up to the beginning of 2020 to a sufficient
degree to counter the drag of the historic pension fund
liabilities. Following a period of marketing and approval at the
shareholder meeting held on 3 August 2020, the Group disposed of
its shareholding in BPE together with its loan to that company.
Consequently as at 30 September 2020 the Group had one remaining
subsidiary, Akoris Trading Limited, and some investments.
The actuarial increases to the liabilities of the pension fund
together with judgement of likely future actuarial movements meant
that there seemed to be no end in sight to actuarial increases and
reducing the deficit. While the disposal of BPE is regrettable it
had proved necessary for the future of BPE for it to combine with
another business.
You will see from our financial numbers and the balance sheet
that in the period our net assets have improved by over GBP4
million. This is due primarily to the Pension Fund no longer being
a liability of the Group as at 30 September 2020. We are unable to
comment on the trading of BPE as we have been denied access to the
accounts of our former subsidiary. We do not believe that this
impacts in any way on our balance sheet position as at 30 September
2020.
It is hoped that the BPE staff and the business at Helen Street
will prosper under its new ownership with a more diverse business
model and that BPE will contribute profits for its new owners. We
take this opportunity to thank all of our former group employees
for their support over many years and especially from the start of
the Pandemic in early 2020.
The Board has, meanwhile, taken the opportunity to again reduce
the cost base of the remaining parts of the Associated British
Engineering Plc group. Since the year end the investments have made
a useful gain in value and the company has started the process of
diversifying the investments. It is expected that these and future
capital gains will be tax free due to inherited capital gains tax
losses; the Board will take the opportunity to liquidate
investments and invest for future growth when suitable
opportunities occur.
Your company is now in a position to talk to potential
acquisitions without having to consider the impact of the pension
fund and related historical deficits. Your Board is now committed
to using all its efforts to identifying and acquiring a new
business with growth potential and hopefully showing profits for
our group and a financial return for our patient shareholders.
Rupert Pearce Gould and Colin Weinberg
Chairmen
Date: 30 March 2021
ASSOCIATED BRITISH ENGINEERING PLC
DIRECTORS' REPORT
FOR THE PERIODED 30 SEPTEMBER 2020
The directors submit their report and audited accounts for the
period ended 30 September 2020.
RESULTS AND DIVIDS
The Group's profit after tax and exceptional items amounted to
GBP144,800 (2019: GBP1,731,000 loss). The directors are unable to
recommend a dividend on the ordinary shares for the period (2019:
GBPNil per ordinary share).
DIRECTORS
The names of the directors who served during the period from 1
April 2019 to 30 September 2020 are:
Mr C Weinberg Director
Mr R Pearce Gould Director
Biographical details of the directors are set out on page
55.
With regard to the appointment and replacement of directors, the
Company is governed by its Articles of Association, the Corporate
Governance Code, the Companies Act 2006 and related
legislation.
In accordance with the Articles of Association Mr R Pearce Gould
retires by rotation and, being eligible, offers himself for
re-election.
DIRECTORS' AND OFFICERS' LIABILITY INSURANCE
The group has, as permitted by s.234 and s.235 of the Companies
Act 2006, maintained insurance cover on behalf of the directors and
secretary indemnifying them against certain liabilities which may
be incurred by them in relation to the company.
SUBSTANTIAL HOLDINGS
As at 18 February 2021 and at 30 September 2020 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
The Bank of New York (Nominees) The Bank of New York Nominees owns
Limited 12.98% of issued ordinary shares, of
which Colin Weinberg. owns 3.44% of
issued share capital.
Fiske Nominees Limited (FISKPOOL) FISKPOOL owns 12.87% of issued ordinary
shares, of which Stephen Cockburn has
a combined beneficial and non beneficial
interest in 7.53% of issued share capital.
R A Pearce Gould Mr Pearce Gould's overall holding is
12.89% of issued ordinary shares, which
includes Rulegale below.
Stephen Cockburn Mr Cockburn's overall beneficial and
non beneficial interest is 9.18% of
issued ordinary shares, including Fiske
Nominees above.
C Weinberg Mr Weinberg's overall holding is 8.22%
of issued ordinary shares, including
Bank of New York above.
Lynchwood Nominees Limited Lynchwood owns 6.74% of issued ordinary
(2006420) shares.
Rulegale Nominees Limited JAMSCLT owns 5.28% of which Mr R A
(JAMSCLT) Pearce Gould has all of the issued
ordinary shares.
ASSOCIATED BRITISH ENGINEERING PLC
DIRECTORS' REPORT (continued)
FOR THE PERIODED 30 SEPTEMBER 2020
___________________________________________________________________________________
Shareholders Notes
Hargreaves Lansdown (Nominees) Hargreaves Lansdown owns 5.27% of issued
Ltd (VRA) ordinary shares.
W B Nominees Limited W B Nominees Limited owns 4.39% of
issued ordinary shares.
Barclays Direct Investing Barclays Direct owns 3.68% of issued
Nominees Ltd (Clients) ordinary shares.
Vidacos Nominees Limited BBUCCCC owns 3.40% of which Graeme
(BBUCCC) Marshall owns all of the issued ordinary
shares.
Winterflood Securities Limited Winterflood Securities owns 3.04% of
(WINSCREEP) issued share capital.
BENEFICIAL INTERESTS IN SIGNIFICANT CONTRACTS
None of the directors had a material interest in any contract of
significance to which the Company or any of its subsidiaries was
party during the period.
BENEFICIAL INTERESTS IN THE SHARE CAPITAL OF THE COMPANY
The beneficial interests of the directors, who served during the
period, their spouses and dependents in the share capital of the
Company according to the register kept by the Company as at 1 April
2019 and 30 September 2020 were as follows:
Ordinary shares
of
2.5p 2.5p
2020 2019
No. No.
Mr C Weinberg 168,404 167,416
Mr R Pearce Gould 264,049 264,049
No share options or derivatives were held by any of the
directors at 30 September 2020 or 1 April 2019.
Since 30 September 2020 and up to and including 12 March 2021
there have been no changes in the directors' interests in the share
capital of the Company.
FINANCIAL INTERESTS
The Group uses various financial instruments and these include
cash, equity investments and various others, such as trade
receivables and trade payables which arise directly from its
operations. The main purpose of these financial instruments is to
raise finance for the Group's operations.
Further details of the policies adopted by the Group in respect
of the financial risk management are included within note 19 to the
Group financial statements and the Strategic Report.
ASSOCIATED BRITISH ENGINEERING PLC
DIRECTORS' REPORT (continued)
FOR THE PERIODED 30 SEPTEMBER 2020
. FINANCIAL INTERESTS - CAPITAL
The structure of the Group's and Company's capital, at nominal
value, is as follows:
No. in Nominal Total % of
issue Value Value Capital
GBP GBP GBP
Ordinary shares 2,048,990 0.025 51,255 1.9
Deferred shares 1,313,427 1.975 2,594,018 98.1
========== ======== ========== =========
DISABLED PERSONS
It is the Group's policy to give sympathetic consideration to
the recruitment, continuing employment, training, career
development and promotion of disabled persons.
EMPLOYEES
The Group recognises the importance of employees to the success
of the business and ensures that they are fully informed of events
that directly affect them and their working environment.
GLOBAL GHG EMISSIONS DATA FOR THE PERIODED 30 SEPTEMBER 2020
As reported elsewhere, the directors have no information on BPE
or its Global GHG. The Global GHG for the other parts of the Group
for the period covered by these accounts was zero.
GOING CONCERN
After making appropriate enquiries, the Directors have a
reasonable expectation that the Company and the Group will have
adequate resources to continue in operational existence for the
foreseeable future.
AUDITOR AND DISCLOSURE OF INFORMATION TO THE AUDITOR
On 12 March 2020, Haysmacintyre LLP resigned as Auditors of the
Company.
Bright Grahame Murray were appointed as Auditors to the Company
and in accordance with section 485 of the Companies Act 2006, a
resolution proposing that they be re-appointed will be put at a
General Meeting.
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.
This confirmation is given and should be interpreted in
accordance with the provisions of section 418 of the Companies Act
2006.
A resolution to confirm the reappointment of Bright Grahame
Murray as auditor of the Company will be proposed at the 2021 AGM.
The confirmation has been recommended to the Board by its Audit
Committee and Bright Grahame Murray have indicated their
willingness to remain in office.
By order of the Board
Colin Weinberg
For and on behalf of the Board of Directors
Date: 30 March 2021
ASSOCIATED BRITISH ENGINEERING PLC
STRATEGIC REPORT
FOR THE PERIODED 30 SEPTEMBER 2020
BUSINESS REVIEW
A review of the business and of events during the period is
contained in the Chairmen's Statement on page 2 which forms part of
the Strategic Report.
BUSINESS MODEL AND STRATEGY
The Associated British Engineering Group has one subsidiary
undertaking:
Akoris Trading Limited ("Akoris").
On 4 August 2020, the Group disposed of its investment in
British Polar Engines ("BPE"), as outlined in note 10, page 42 of
these financial statements.
BPE's business model and strategy:
On 2 July 2019, the Company made an announcement to the Stock
Exchange in relation to the proposed future of BPE. It was in
advanced discussions prior to the 2019 year-end and, as a
consequence of this process, it was decided by the Board of BPE
that they should engage FRP Advisory LLP to advise on negotiations
with the Trustees of the Pension Fund and the Pensions Regular and
consider the future of the operating business of BPE including
marketing the company for sale. As shareholders are aware the
Company disposed of its interest in BPE on 4 August 2020
immediately following authorisation by shareholders.
PRINCIPAL RISKS AND UNCERTAINTIES FACING THE BUSINESS
The Group's main operating business was its subsidiary BPE. The
sale of BPE took place on 4 August 2020.The group now operates only
one subsidiary.
The Board controls risks by adopting appropriate strategies and
maintaining strong systems of internal control.
These strategies however cannot attempt to eliminate all risk,
but control the risks that we believe are appropriate to take to
maintain the group. Details of the group's risk management
processes are given in the Corporate Governance report on page
50.
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.
The Board is looking to identify additional business to acquire
with either high profitability or with the prospect of significant
profitability.
Market conditions
The company has currently no significant trade. There remains a
risk regarding the marketability of some of its investments and the
ability to liquidate them.
Reputational risk
Over many periods the Group has built up a reputation for
integrity and is aware that this can be easily damaged with the
consequential cost. To mitigate this risk, policies are in place
which, cover standards of behaviour and good governance.
COVID-19 risk
Following the disposal of BPE and the low numbers of employees,
COVID-19 does not affect the Group.
Brexit risk
As the service we provide is predominantly delivered to UK-based
customers, the impact of Brexit on our business is not as
significant as it is to other businesses. As a Board, we will
continue to closely monitor developments in the UK Government's
Brexit plans and any potential impacts on the company and so like
most businesses we are keen to have certainty over how Brexit will
be implemented.
ASSOCIATED BRITISH ENGINEERING PLC
STRATEGIC REPORT (continued)
FOR THE PERIODED 30 SEPTEMBER 2020
Defined Benefit pension scheme funding
As previously stated, the subsidiary undertaking BPE was sold on
4 August 2020 and as a consequence the Group no longer has an
exposure to any defined benefit scheme.
Cyclical nature of the business
The trading outlook for the Group remains unpredictable due to
the requirement to identify a trading business in the midst of a
Global pandemic
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 over the long term 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.
There is nothing to report on environmental, employee, social
and community matters or essential contractual or other
arrangements.
ASSOCIATED BRITISH ENGINEERING PLC
STRATEGIC REPORT (continued)
FOR THE PERIODED 30 SEPTEMBER 2020
Our employees
Whilst the Group does not have a specific human rights policy,
it has a strong commitment to upholding the principles of human
rights across our business.
CORPORATE GOVERNANCE
Details of corporate governance, which is part of this report
for the period to 30 September 2020, are disclosed in the corporate
governance report on page 47.
CORPORATE SOCIAL RESPONSIBILITY
The Group is committed to the protection of the environment and
the development of processes which ensure that any adverse impact
on the environment arising from its trading activities is minimised
by encouraging reduction in waste, awareness of recycling, and
encouraging employees to pay regard to environmental issues.
Employees
The Group's ability to achieve its commercial objectives and to
service the needs of society and 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 three people, made up of two male
part time executives and one male part time administrator.
Total no. of officers/employees Number of males Number of females
% %
Senior Management 2 100 0
-------------------------------- ---------------- ------------------
Whole Workforce 1 100 0
-------------------------------- ---------------- ------------------
By order of the Board
Colin Weinberg
For and on behalf of the Board of Directors
Date: 30 March 2021
INDEPENT AUDITOR'S REPORT TO THE MEMBERS OF
ASSOCIATED BRITISH ENGINEERING PLC
Disclaimer of opinion
We were engaged to audit the financial statements of Associated
British Engineering PLC (the "parent company") and its subsidiary
companies (the "Group") for the period ended 30 September 2020
which comprise of the consolidated income statement, the
consolidated statement of comprehensive income, the Group statement
of financial position, the Group statement of cash flows, the Group
statement of changes in equity, the Company balance sheet, the
Company statement of changes in equity, the Company statement of
cash flows and the notes to the financial statements, including a
summary of significant accounting policies. The financial reporting
framework that has been applied in their preparation is applicable
law and International Financial Reporting Standards (IFRSs) as
adopted by the European Union and, as applied in accordance with
the provisions of the Companies Act 2006.
We do not express an opinion on the accompanying financial
statements of the group. Because of the significance of the matter
described in the basis for disclaimer of opinion section of our
report, we have not been able to obtain sufficient appropriate
audit evidence to provide a basis for an audit opinion on these
financial statements.
Basis for disclaimer of opinion
On 4 August 2020 the company disposed of its investment in
British Polar Engines Limited which was the main trading subsidiary
of Associated British Engineering PLC. We have been unable to
obtain from the management of British Polar Engines Limited details
of the profit and loss account during the period 1 April 2019 until
the date of disposal in August 2020. We are therefore unable to
confirm or verify by alternative means the amounts included in the
consolidated statement of comprehensive income. As a result of this
matter we have been unable to determine whether any adjustments
might have been found necessary to the elements included in the
consolidated statement of comprehensive income or consolidated
statement of cash flows. This has not impacted our work on the
consolidated statement of financial position as at the 30 September
2020 and the remainder of the group, as the assets and liabilities
of the disposed subsidiary are not included at the balance sheet
date. The parent company statement of financial position is also
unaffected as the investment has been disposed.
An overview of the scope of our audit
We tailored the scope of our audit to ensure that we performed
enough work to be able to give an opinion on the financial
statements as a whole, taking into account the structure of the
Group, the accounting processes and controls, and the industry in
which the Group operates.
The Group includes the listed parent Company (Associated British
Engineering PLC) and the main trading entity (British Polar Engines
Limited). The Group's accounting process is structured around
finance teams based in Cambridge and Glasgow, maintaining their own
accounting records and controls.
The main focus of our audit has been the parent company as
explained above the main trading subsidiary, British Polar Engines
Limited, was disposed of during the period.
Our application of materiality
We apply the concept of materiality both in planning and
performing our audit, and in evaluating the effect of misstatements
on our audit and on the financial statements. For the purposes of
determining whether the financial statements are free from material
misstatement we define materiality as the magnitude of misstatement
that makes it probable that the economic decisions of a reasonably
knowledgeable person, relying on the financial statements, would be
changed or influenced.
We determined materiality for the Group to be GBP15,000, which
is 2.64% of gross assets. Gross assets is used as the benchmark for
materiality as it is considered the critical performance measure of
the Group. We use a different level of materiality, performance
materiality, to drive the extent of our testing and this was set at
83.33% of financial statement materiality for the audit of the
group financial statements.
INDEPENT AUDITOR'S REPORT TO THE MEMBERS OF
ASSOCIATED BRITISH ENGINEERING PLC
We agreed with the Audit Committee that we would report to the
Committee all audit differences in excess of GBP750 as well as
differences below that threshold that, in our view, warranted
reporting on qualitative grounds. We also report to the Audit
Committee on disclosure matters that we identified when assessing
the overall presentation of the financial statements.
Other information
The other information comprises the information included in the
annual report as set out on pages 1 to 54 other than the financial
statements and our auditor's report thereon. The Directors' are
responsible for the other information.
Our opinion on the financial statements does not cover the other
information and, except to the extent otherwise explicitly stated
in this report, we do not express any form of assurance conclusion
thereon.
In connection with our audit of the financial statements, our
responsibility is to read the other information and, in doing so,
consider whether the other information is materially inconsistent
with the financial statements or our knowledge obtained in the
audit or otherwise appears to be materially misstated.
If we identify such material inconsistencies or apparent
material misstatements, we are required to determine whether there
is a material misstatement in the financial statements or a
material misstatement of the other information. If, based on the
work we have performed, we conclude that there is a material
misstatement of the other information we are required to report on
that fact. We have nothing to report in this regard.
In this context, we also have nothing to report in regard to our
responsibility to specifically address the following items in the
other information and to report as uncorrected material
misstatements of the other information where we conclude that those
items meet the following conditions:
-- Fair, balanced and understandable set out on page 50 - the
statement given by the Directors that they consider the annual
report and financial statements taken as a whole is fair, balanced
and understandable and provides the information necessary for
shareholders to assess the Company's performance, business model
and strategy, is materially inconsistent with our knowledge
obtained in the audit; or
-- Audit Committee reporting set out on pages 48 and 49 - the
section describing the work of the audit committee does not
appropriately address matters communicated by us to the audit
committee; or
-- Directors' statement of compliance with the UK Corporate
Governance Code set out on page 47 - the parts of the Directors'
statement required under the Listing Rules relating to the
Company's compliance with the UK Corporate Governance Code
containing provisions specified for review by the auditor in
accordance with Listing Rule 9.8.10R(2) do not properly disclose a
departure from a relevant provision of the UK Corporate Governance
Code.
Opinion on other matters prescribed by the Companies Act
2006
Because of the significance of the matter described in the basis
for disclaimer opinion section of our report, we have been unable
to form an opinion, whether based on the work undertaken in the
course of the audit:
-- the information given in the strategic report and the
directors' report for the financial period for which the financial
statements are prepared is consistent with the financial statements
and those reports have been prepared in accordance with applicable
legal requirements;
INDEPENT AUDITOR'S REPORT TO THE MEMBERS OF
ASSOCIATED BRITISH ENGINEERING PLC
-- the information about internal control and risk management
systems in relation to financial reporting processes and about
share capital structures, given in compliance with rules 7.2.5 and
7.2.6 in the Disclosure Rules and Transparency Rules sourcebook
made by the Financial Conduct Authority (the FCA Rules), is
consistent with the financial statements and has been prepared in
accordance with applicable legal requirements; and
-- information about the company's corporate governance code and
practices and about its administrative, management and supervisory
bodies and their committees complies with rules 7.2.2, 7.2.3 and
7.2.7 of the FCA Rules.
Matters on which we are required to report by exception
Notwithstanding our disclaimer of an opinion on the financial
statements, in the light of the knowledge and understanding of the
group and the parent company and its environment obtained in the
course of the audit performed subject to the pervasive limitation
described above, we have not identified material misstatements
in;
-- the strategic report or the directors' report; or
-- the information about internal control and risk management
systems in relation to financial reporting processes and about
share capital structures, given in compliance with rules 7.2.5 and
7.2.6 of the FCA Rules.
Arising from the limitation of our work referred to above:
-- We have not obtained all the information and explanations
that we considered necessary for the purpose of our audit; and
-- We were unable to determine whether adequate accounting records have been kept.
We have nothing to report in respect of the following matters in
relation to which the Companies Act 2006 requires us to report to
you if, in our opinion:
-- 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
-- a corporate governance statement has not been prepared by the parent company.
Corporate governance statement The Listing Rules require us to
review the directors' statement in relation to going concern,
longer-term viability and that part of the Corporate Governance
Statement relating to the group's compliance with the provisions of
the UK Corporate Governance Statement specified for our review.
Based on the work undertaken as part of our audit, we have
concluded that each of the following elements of the Corporate
Governance Statement is materially consistent with the financial
statements or our knowledge obtained during the audit:
-- Directors' statement with regards the appropriateness of
adopting the going concern basis of accounting and any material
uncertainties identified set out on pages 50 and 51;
-- Directors' explanation as to its assessment of the entity's
prospects, the period this assessment covers and why the period is
appropriate set out on pages 50 and 51.
INDEPENT AUDITOR'S REPORT TO THE MEMBERS OF
ASSOCIATED BRITISH ENGINEERING PLC
-- Directors' statement on fair, balanced and understandable set out on page 50;
-- Board's confirmation that it has carried out a robust
assessment of the e-merging and principal risks set out on page
50;
-- The section of the annual report that describes the review of
effectiveness of risk management and internal control systems set
out on page 50; and;
-- The section describing the work of the audit committee set out on page 48.
Responsibilities of Directors
As explained more fully in the Directors' Responsibilities
Statement, the Directors are responsible for the preparation of the
financial statements and for being satisfied that they give a true
and fair view, and for such internal control as the directors
determine is necessary to enable the preparation of financial
statements that are free from material misstatement, whether due to
fraud or error.
In preparing the financial statements, the directors are
responsible for assessing the Group's and the parent company's
ability to continue as a going concern, disclosing, as applicable,
matters related to going concern and using going concern basis of
accounting unless the directors either intend to liquidate the
group or the parent company or to cease operations, or have no
realistic alternative to do so.
Those charged with governance are responsible for overseeing the
Group's financial reporting process.
Auditor's responsibilities for the audit of the financial
statements
Our responsibility is to conduct an audit of the company's
financial statements in accordance with International Standards on
Auditing (UK) and to issue an auditor's report. However, because of
the matter described in the basis for disclaimer of opinion section
of our report, we were not able to obtain sufficient appropriate
audit evidence to provide a basis for an audit opinion on these
financial statements.
Explanation as to what extent the audit was considered capable
of detecting irregularities, including fraud
The objectives of our audit, in respect to fraud are; to
identify and assess the risks of material misstatement of the
financial statements due to fraud; to obtain sufficient appropriate
audit evidence regarding the assessed risks of material
misstatement due to fraud, through designing and implementing
appropriate responses; and to respond appropriately to fraud or
suspected fraud identified during the audit. However, the primary
responsibility for the prevention and detection of fraud rests with
both those charged with governance of the entity and
management.
Our approach was as follows:
-- We obtained an understanding of the legal and regulatory
frameworks that are applicable to the Group and determined that the
most significant are the Companies Act 2006, the Listing Rules and
the UK Corporate Governance Code.
-- We understood how the Group is complying with those
frameworks through discussions with the Audit Committee and
management in combination with a review of the Group's documented
policies and procedures.
-- We assessed the susceptibility of the Group's financial
statements to material misstatement including how fraud might occur
by considering the key risks impacting the financial statements.
Given the activities of the Group, we consider management override
as being most likely to occur in the recognition of revenue.
-- We have reviewed that the Group's control environment is
adequate for the size and operating model of such a listed
Company.
INDEPENT AUDITOR'S REPORT TO THE MEMBERS OF
ASSOCIATED BRITISH ENGINEERING PLC
Other matters we are required to address
Following recommendations of the audit committee, we were
appointed by the audit committee to audit the financial statements
for the period ending 30 September 2020 and subsequent financial
periods. The period of total uninterrupted engagement is 1 year
which covers the period ending 30 September 2020.
The non-audit services prohibited by the FRC's Ethical Standard
were not provided to the group or the parent company and we remain
independent of the group and the parent company in conducting our
audit.
Our audit opinion is consistent with the additional report to
the Audit Committee.
Use of our report
This report is made solely to the parent company's members, as a
body, in accordance with Chapter 3 of Part 16 of the Companies Act
2006. Our audit work has been undertaken so that we might state to
the parent company's members those matters we are required to state
to them in an auditor's report and for no other purpose. To the
fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the parent company and the
parent company's members as a body, for our audit work, for this
report, or for the opinions we have formed.
Matthew Eade
Senior Statutory Auditor
For and on behalf of Bright Grahame Murray
Emperor's Gate
114a Cromwell Road
Kensington
London
SW7 4AG
Date: 30 March 2021
ASSOCIATED BRITISH ENGINEERING PLC
GROUP AND PARENT COMPANY ACCOUNTING POLICIES
FOR THE PERIODED 30 SEPTEMBER 2020
BASIS OF PREPARATION
The Company is a public limited company incorporated in the
United Kingdom under the Companies Act 2006. The address of the
registered office is given on the final page of this annual
report.
The financial statements have been prepared on the going concern
basis. In the prior period, the financial statements were prepared
on the break-up basis.
These Group consolidated accounts and the company accounts have
been prepared in accordance with International Financial Reporting
Standards (IFRS) and IFRIC interpretations endorsed by the European
Union (EU) and with those parts of the Companies Act 2006
applicable to companies reporting under IFRS.
The Company's ordinary shares are listed on the London Stock
Exchange (LSE) under the ticker (ASBE) albeit that at the date of
preparation share trading was suspended. These financial statements
are presented in pound sterling because that is the currency of the
primary economic environment in which the Group operates and all
values are rounded to the nearest thousand pounds (GBP'000) except
where otherwise indicated.
The Company's accounting reference date is 30 September. These
financial statements are for the period 1 April 2019 to 30
September 2020 (18 months). The comparative figures are for the
period 1 April 2018 to 31 March 2019.
NEWLY ISSUED ACCOUNTING STANDARDS
The following standards and amendments to existing standards
became effective from 1 January 2020 and are applicable for the
current reporting period:
-- Amendments to IFRS 3, Business Combinations. The amendment
clarifies the definition of a business by providing a new framework
for determining whether transactions should be accounted for as
acquisitions (or disposals) of assets or businesses.
-- Amendments to IAS 1, Presentation of Financial Statements,
and IAS 8, Accounting Policies, Changes in Accounting Estimates and
Errors. The amendments clarify the definition of 'materiality' and
how it should be applied. The amendments also improve the
explanations of the definition and ensure consistency across all
IFRS standards.
-- Amendments to IFRS 9, Financial Instruments, IAS 39,
Financial Instruments: Recognition and Measurement, and IFRS 7,
Financial Instruments: Disclosures. The amendments provide relief
from specific hedge accounting requirements to address the
potential uncertainty caused by the IBOR reform.
The adoption of the above new and revised standards had no
impact on the financial statements of the Group for the period
ended 30 September 2020.
The following amendments to existing standards have been issued,
but will become effective for annual periods beginning on or after
1 January 2021.
-- Amendments to IAS 1, Presentation of Financial Statements.
The amendments clarify the basis used for the classification of
current and non-current liabilities.
-- Amendments to IAS 8, Accounting policies, Changes in
Accounting Estimates and Errors. The amendments introduce the
definition of an accounting estimate and include other amendments
to IAS 8 to distinguish changes in accounting estimates from
changes in accounting policies.
-- Amendments to IAS 37, Provisions, Contingent Liabilities and
Contingent Assets. The amendments clarify the costs that should be
included when assessing whether a contract is onerous.
ASSOCIATED BRITISH ENGINEERING PLC
GROUP AND PARENT COMPANY ACCOUNTING POLICIES (continued)
FOR THE PERIODED 30 SEPTEMBER 2020
GOING CONCERN
The Company has sufficient financial resources. As a
consequence, the Directors believe the Company is well placed to
manage its business risks successfully, including the impact of
Covid-19 and Brexit. The Directors regularly review the
forecasts.
In accordance with their responsibilities, the Directors of the
Company have considered the appropriateness of the going concern
basis, which has been used in the preparation of these financial
statements. The Directors have prepared trading and cash flow
forecasts for the Company, which take into account the future
performance of the Company and consider the impact of the Covid-19
pandemic. The forecasts, including allowance for reasonable
possible changes in trading performance indicate that the Company
should be able to operate for at least 12 months from the approval
of these financial statements. The Strategic Report and Directors
Report includes further disclosure on the Covid-19 impact.
The forecasts for the 12 months from approval of these financial
statements have been considered. As a result of the above
assessment, the Directors have a reasonable expectation that the
Company has adequate resources to continue in operational existence
for a minimum period of 12 months from the date of signing these
financial statements. Thus, they are adopting the going concern
basis in preparing the annual financial statements.
BASIS OF CONSOLIDATION
The consolidated accounts include the Company and its subsidiary
undertaking (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 the subsidiary
undertaking are made up to 30 September 2020.
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 acquisition of subsidiaries by the Group.
The cost on an acquisition is measured as the fair value of the
assets given, equity instruments issued, and liabilities incurred
or assumed at the date of exchange. Acquisition costs are expensed
in the consolidated income statement for the period in which they
are incurred.
The consolidated financial statements consist of the results of
the following entities:
Entity Summary Description
Associated British Engineering Plc (ABE) Holding Company
Akoris Trading Ltd (AT) Trading Company
British Polar Engines Ltd (BPE) Trading Company. Disposal in the
year.
Please refer to note 10 on page 42.
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 AND PARENT COMPANY ACCOUNTING POLICIES (continued)
FOR THE PERIODED 30 SEPTEMBER 2020
ACCOUNTING JUDGEMENTS
The key areas where management have exercised judgement in the
period, and the thought processes undertaken, are as follows:
DEFERRED TAX
Judgement is applied by management in determining the extent to
which the recovery of carried forward tax losses is probable for
the purpose of meeting the criteria for recognition as deferred tax
assets. Note 20 sets out information on carried forward tax losses
for which a deferred tax asset has not been recognised.
Accounting estimates
The key accounting estimates having an impact on carrying
amounts of assets and liabilities in the reporting period are as
follows:
INVENTORIES
Inventories are stated at the lower of cost (including an
appropriate proportion of attributable supplier rebates and
discounts) and net realisable values.
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 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.
PROVISION FOR DOUBTFUL DEBTS
At the balance sheet date, each subsidiary evaluates the
recoverability of trade receivables and records provisions for
doubtful or disputed debts based on experience including
comparisons of the relative age of accounts and consideration of
the history. The actual level of debt collected may differ from the
estimated levels of recovery and could impact future operating
results positively or negatively. As at 30 September 2020
the Group has provided GBPNil (2019: GBP834,000) against its trade receivables.
LEASED ASSETS
Leases of property and plant and equipment, where the Group has
substantially all the risks and rewards of ownership, are
classified as finance leases. Assets held under finance leases are
capitalised at lease inception at the lower of the asset's fair
value and the present value of the minimum lease payments.
Obligations related to finance leases, net of finance charges in
respect of future periods, are included as appropriate within
borrowings. The interest element of the finance cost is charged to
the income statement over the life of the lease so as to produce a
constant periodic rate of interest on the remaining balance of the
liability for each period. The property, plant or equipment is
depreciated on the same basis as owned plant and equipment or over
the life of the lease, if shorter.
Leases where the lessor retains substantially all the risks and
rewards of ownership are classified as operating leases. Operating
lease rentals (net of any related lease incentives) are charged
against profit on a straight line basis over the period of the
lease.
FOREIGN CURRENCIES
The functional and presentational currency of the parent company
and its subsidiaries is UK Pound Sterling, rounded to the nearest
thousand. Transactions in currencies other than the functional
currency are translated at the rate ruling at the date of the
transaction. At each balance sheet date, monetary assets and
liabilities denominated in foreign currencies are translated at the
rate of exchange ruling at the balance sheet date. Any gains or
losses arising from the transactions are taken to the income
statement.
ASSOCIATED BRITISH ENGINEERING PLC
GROUP AND PARENT COMPANY ACCOUNTING POLICIES (continued)
FOR THE PERIODED 30 SEPTEMBER 2020
PROPERTY, PLANT AND EQUIPMENT
Plant and equipment are stated at cost less depreciation and any
impairment in value. Depreciation is calculated to write down the
cost of all plant and equipment less its residual value by annual
instalments over their expected useful lives on the following
bases:
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 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.
Current tax payable is based on the taxable profit or loss for
the period. Taxable profit differs from net profit as reported in
the income statement because it excludes items of income or expense
that are taxable or deductible in other periods and it further
excludes items that are never taxable or deductible. The Group's
liability for current tax is calculated using tax rates that have
been enacted or substantively enacted by the balance sheet
date.
Deferred tax is provided in full, using the liability method, on
temporary differences arising between the tax bases of assets and
liabilities and their carrying amounts in the consolidated
financial statements. The deferred tax is not accounted for if it
arises from initial recognition of an asset or liability in a
transaction, other than a business combination, that at the time of
the transaction affects neither accounting nor taxable profit nor
loss. Deferred tax is determined using tax rates (and laws) that
have been enacted or substantially enacted by the balance sheet
date and are expected to apply when the related deferred tax asset
is realised or the deferred tax liability is settled.
Deferred tax is provided on temporary differences arising on
investments in subsidiaries, except where the timing of reversal of
the temporary differences is controlled by the Group and it is
probable that the temporary difference will not reverse in the
foreseeable future .
Deferred tax assets are recognised to the extent that it is
probable that future taxable profit will be available against which
the temporary differences can be utilised.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents in the Statement of Financial Position
comprise cash at bank and in hand and short term deposits with a
maturity of three months or less which are subject to an
insignificant risk of changes in value.
FINANCIAL ASSETS
Financial assets are recognised initially at fair value,
normally being the transaction price. In the case of financial
assets not at fair value through profit or loss, directly
attributable transaction costs are also included. The subsequent
measurement of financial assets depends on their classification.
The group derecognises financial assets when the contractual rights
to the cash flows expire or the financial asset is transferred to a
third party. This includes the de-recognition of receivables for
which discounting arrangements are entered into.
ASSOCIATED BRITISH ENGINEERING PLC
GROUP AND PARENT COMPANY ACCOUNTING POLICIES (continued)
FOR THE PERIODED 30 SEPTEMBER 2020
FINANCIAL INSTRUMENTS
Financial liabilities and equity instruments are classified
according to the substance of the contractual arrangements entered
into.
Where the contractual obligations of financial instruments
(including share capital) are equivalent to a similar debt
instrument, those financial instruments are classed as financial
liabilities. Financial liabilities are presented as such in the
balance sheet. Finance costs and gains or losses relating to
financial liabilities are included in the income statement. Finance
costs are calculated so as to produce a constant rate of charge on
the outstanding liability. Where none of the contractual terms of
share capital meet the definition of a financial liability then
this is classed as an equity instrument. Dividends and
distributions relating to equity instruments are debited direct to
equity.
Further analysis of the Group's financial instruments, and the
relevant exposure to risks and uncertainties, is stated in note 19
and the various classifications of financial assets and liabilities
are identified and explained.
Trade and other receivables
At the balance sheet date, the Company and its subsidiary
evaluate the recoverability of trade receivables and record
provisions for doubtful or disputed debts based on experience
including comparisons of the relative age of accounts and
consideration of history. The actual level of debt collected may
differ from the estimated levels of recovery and could impact
future operating results positively or negatively.
Cash and cash equivalents
Cash and cash equivalents comprise cash on hand, demand
deposits, and other short-term highly liquid investments that have
maturities of three months or less from inception, are readily
convertible to a known amount of cash and are subject to an
insignificant risk of changes in value.
Trade and other payables
Trade and other payables are originally recognised at fair
value, net of transaction costs. Subsequent measurement is at
amortised cost using the effective interest rate method.
Investments in securities
Investments are recognised and derecognised on a trade date
where a purchase or sale of an investment is under a contract whose
terms require delivery of the investment within the timeframe
established by the market concerned, and are initially measured at
fair value, with all transaction costs being written off to the
income statement as incurred.
Investments are classified as available for sale and are
measured at subsequent reporting dates at fair value. Gains and
losses arising from changes in fair value of available for sale
financial assets are included in other comprehensive income for the
period. When the asset is disposed of or deemed to be impaired, the
cumulative gain or loss is reclassified from equity reserve to
income statement.
IMPAIRMENT OF PROPERTY, PLANT AND EQUIPMENT
At each balance sheet date the Group reviews the carrying
amounts of its property, plant and equipment to determine whether
there is any indication that those assets have suffered an
impairment loss. If any such indication exists, the recoverable
amount of the asset is estimated in order to determine the extent
of the impairment loss (if any). Where the asset does not generate
cash flows that are independent from other assets, the Group
estimates the recoverable amount of the cash-generating unit to
which the asset belongs.
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.
ASSOCIATED BRITISH ENGINEERING PLC
GROUP AND PARENT COMPANY ACCOUNTING POLICIES (continued)
FOR THE PERIODED 30 SEPTEMBER 2020
Where an impairment loss subsequently reverses, the carrying
amount of the asset (cash-generating unit) is increased to the
revised estimate of its recoverable amount, but so that the
increased carrying amount does not exceed the carrying amount that
would have been determined had no impairment loss been recognised
for the asset (cash-generating unit) in prior periods.
SEGMENTAL REPORTING
The standard requires financial information to be disclosed in
the financial statements in the same format in which it is
disclosed to the chief operating decision-maker. The chief
decision-maker has been identified as the Board, at which level
strategic decisions are made.
EQUITY AND RESERVES
Share capital represents the nominal value of shares that have
been issued except for the preference shares classified as debt.
Deferred shares represent shares arising from the sub-division of
ordinary shares of GBP2.
Share premium includes any premiums received on issue of share
capital. Any transaction costs associated with the issuing of
shares are deducted from share premium, net of any related income
tax benefits. Retained earnings include all current and prior
period retained profits and losses. Available for sale reserve
includes all gains and losses relating to Available for Sale
financial assets. Other reserves relate to movements not classified
in any of the reserves detailed above. Revaluation reserve includes
all gains and losses relating to Property, Plant and Equipment. All
transactions with owners of the parent are recorded separately
within equity.
ASSOCIATED BRITISH ENGINEERING PLC
CONSOLIDATED INCOME STATEMENT
FOR THE PERIODED 30 SEPTEMBER 2020
30 Sep 31 Mar
Note 2020 2019
GBP'000 GBP'000
REVENUE 1 165 1,134
Operating costs 2 (26) (2,552)
Exceptional items 3 - (324)
------------ ----------------------
OPERATING PROFIT/(LOSS) 4 139 (1,742)
Finance expense 7 - (68)
Finance income 7 1 -
Other income 5 -
------------ ----------------------
PROFIT/(LOSS) BEFORE TAXATION 145 (1,810)
Taxation 8 - 79
------------ ----------------------
PROFIT/( LOSS) FOR THE PERIOD FROM
CONTINUOUS OPERATIONS 145 (1,731)
============ ======================
PROFIT ON DISPOSAL OF DISCONTINUED OPERATIONS
(PAGE 42) 10 5,239 -
TOTAL PROFIT/(LOSS) FOR THE PERIOD 5,384 (1,731)
============ ===============
PROFIT/(LOSS) PER SHARE ON PROFIT/(LOSS)
FOR THE PERIOD
ATTRIBUTABLE TO EQUITY HOLDERS OF THE
PARENT COMPANY
BASIC AND DILUTED PROFIT FROM DISCONTINUED 256.0p -
OPERATIONS
BASIC AND DILUTED PROFIT/(LOSS) 9 263.0p (84.5p)
============ ======================
Profit/(Loss) for the period attributable
to:
Owners of the Company 5,384 (1,731)
Non-controlling interests - -
------------ ----------------------
5,384 (1,731)
------------ ----------------------
The accounting policies on pages 14 to 19 and the notes on pages
25 to 36 form part of these accounts.
ASSOCIATED BRITISH ENGINEERING PLC
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE PERIODED 30 SEPTEMBER 2020
30 Sep 31 Mar
Note 2020 2019
GBP'000 GBP'000
Profit/(Loss) for the period 5,384 (1,731)
-------- ---------
Other comprehensive income/(loss)
Re-measurement of the net defined benefit
liability (*) 17 - (3,471)
Gain/ (Loss) on available for sale financial
asset (**) 327 568
(Deficit)/surplus on revaluation of property - (50)
Other comprehensive profit/(loss) for the
period 327 (2,953)
-------- ---------
TOTAL COMPREHENSIVE INCOME/(LOSS) FOR THE
PERIOD 5,711 (4,684)
======== =========
Total comprehensive income/(loss) attributable
to:
Owners of the Company 5,711 (4,684)
Non-controlling interests - -
5,711 (4,684)
======== =========
(*) = Items which will not subsequently be reclassified to the
Income Statement.
(**) = Items which may subsequently be reclassified to the
Income Statement.
The accounting policies on pages 14 to 19 and the notes on pages
25 to 36 form part of these accounts.
ASSOCIATED BRITISH ENGINEERING PLC Company Number: 00110663
GROUP STATEMENT OF FINANCIAL POSITION
AS AT 30 SEPTEMBER 2020
Note 2020 2019
GBP'000 GBP'000
ASSETS
Non-current assets
Property, plant and equipment 10 - -
Available for sale financial assets 14 413 21
-------- ----------
413 21
Current assets
Property, plant and equipment 10 - 534
Available for sale financial assets 14 - 714
Inventories 12 - 165
Trade and other receivables 13 24 125
Cash and cash equivalents 186 389
210 1,927
-------- ----------
Total assets 623 1,948
======== ==========
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 reserves 11 11
Available for Sale reserve 270 805
Revaluation reserve - 550
Retained earnings (7,705) (13,089)
-------- ----------
Equity attributable to the Parent Company's
Equity shareholders 591 (3,708)
-------- ----------
Total equity 591 (3,708)
-------- ----------
LIABILITIES
Non-current liabilities
Retirement benefit obligations 17 - -
Obligation under finance leases 18 - -
- -
-------- ----------
Current liabilities
Trade and other payables 18 32 664
Obligations under finance leases 18 - 10
Retirement benefit obligations 17 - 4,982
32 5,656
-------- ----------
Total liabilities 32 5,656
Total equity and liabilities 623 1,948
======== ==========
The financial statements were approved and authorised for issue
by the Board of Directors on 30 March 2021 and were signed below on
its behalf by:
C Weinberg
Director
The accounting policies on pages 14 to 19 and the notes on pages
25 to 36 form part of these accounts.
ASSOCIATED BRITISH ENGINEERING PLC
GROUP STATEMENT OF CHANGES IN EQUITY
FOR THE PERIODED 30 SEPTEMBER 2020
Attributa-ble
Share Share Deferred Other Available Revaluation Retained to owners
capital premium shares reserve for Sale reserve earnings of the Total
reserve parent
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance at
1 April 2018 51 5,370 2,594 11 (64) 600 (7,586) 976 976
Loss for the
period - - - - - - (1,731) (1,731) (1,731)
Other
comprehensive
income
Actuarial loss
in defined
benefit plan
(*) - - - - - - (3,471) (3,471) (3,471)
Unrealised
loss on
Available
for Sale
financial
assets (**) - - - - 568 - - 568 568
Realised gain
on Available
for Sale
Financial
assets - - - - 301 - (301) - -
Revaluation
Surplus on
revaluation
of freehold
property - - - - - (50) - (50) (50)
-------------- -------------- --------------- -------------- -------------- -------------- --------------- --------------- ---------------
Total
comprehensive
income for
the period - - - - 869 - (5,503) (4,684) (4,684)
-------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- --------------
Balance at
1 April 2019 51 5,370 2,594 11 805 550 (13,089) (3,708) (3,708)
-------------- -------------- --------------- -------------- -------------- -------------- --------------- --------------- ---------------
Profit for
the period - - - - - - 145 145 145
Other
comprehensive
income
Actuarial loss
in defined - - - - - - - - -
benefit plan
(*)
Disposal of
subsidiary - - - - (862) (550) 5,239 3,827 3,827
Unrealised
gain on
Available
for Sale
financial
assets (**) - - - - 327 - - 327 327
Realised gain
on
Available for
Sale
Financial - - - - - - - - -
assets
Revaluation
Surplus on - - - - - - - - -
revaluation
of freehold
property
-------------- -------------- --------------- -------------- -------------- -------------- --------------- --------------- ---------------
Total - - - - - - - - -
comprehensive
income for
the period
-------------- -------------- --------------- -------------- -------------- -------------- --------------- --------------- ---------------
Balance at
30 September
2020 51 5,370 2,594 11 270 - (7,705) 591 591
====== ====== ====== ====== ====== ====== ======= ======= ======
(*) = 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 14 to 19 and the notes on pages
25 to 36 form part of these accounts.
ASSOCIATED BRITISH ENGINEERING PLC
GROUP CASH FLOW STATEMENT
FOR THE PERIODED 30 SEPTEMBER 2020
2020 2019
GBP'000 GBP'000
Cash flows from operating activities
Cash used in operations 91 (80)
Interest received - -
Interest paid - (68)
Taxation - -
--------- --------
Net cash used in operating activities 91 (148)
--------- --------
Cash flows from investing activities
Proceeds from sale of equipment - 24
Purchase of equipment - (16)
Movements in investments (65) -
Sale proceeds from trading investments - 210
Sale proceeds from subsidiary disposal/loan assignment 100 -
Net cash increase from investing activities 35 218
--------- --------
Cash flows from financing activities
Repayment of finance leases - (25)
Net cash used in financing activities - (25)
--------- --------
Net increase in cash and cash equivalents 126 45
Cash decrease on disposal of subsidiary (329) -
Cash and cash equivalents at beginning of period 389 344
--------- --------
Cash and cash equivalents at end of period 186 389
========= ========
CASH FLOW FROM OPERATING ACTIVITIES
2020 2019
GBP'000 GBP'000
Profit/(loss) from continuous operations 145 (1,810)
Adjustments for:
Depreciation - 91
Finance expense - 68
Foreign exchange difference - (11)
Pension scheme interest expense - 38
Cash paid in excess of current service cost - (204)
Profit on disposal of equipment - (6)
Impairment of assets - 156
Profit on disposal of AFS investments - (108)
Changes in working capital:
Decrease/(increase) in inventories - 872
(Increase)/decrease in trade and other receivables (20) 393
(Decrease)/increase in payables (34) 33
91 (80)
Cash used in operations 91 (80)
========= ========
The accounting policies on pages 14 to 19 and the notes on pages
25 to 36 form part of these accounts.
ASSOCIATED BRITISH ENGINEERING PLC
NOTES TO THE ACCOUNTS - GROUP
FOR THE PERIODED 30 SEPTEMBER 2020
1. SEGMENTAL REPORTING
The following table shows an analysis of the Group's external
sales by geographical market:
30 Sep 31 Mar
2020 2019
GBP'000 GBP'000
United Kingdom 165 627
Europe - 240
Far East and Australasia - 87
Africa - 81
North and South America - 87
Middle East - 12
165 1,134
============ ============
The following table shows an analysis of the Group's external
sales from operations:
30 Sep 31 Mar
2020 2019
GBP'000 GBP'000
Revenue from the sale of goods (Diesel and
engineering related services) - 773
Revenue from the rendering of services 165 361
165 1,134
======== ========
In the periods ended 30 September 2020 and 31 March 2019, save
for dollar bank accounts and overseas debtors, all of the assets
held by the Group were located in the United Kingdom and all
capital expenditure was incurred within the United Kingdom.
Operating segments
The following segment information has been prepared in
accordance with IFRS 8, "Operating Segments", which defines
requirements for the disclosure of financial information of an
entity's operating segments.
The Board consider the Group on an individual company basis.
Reports by individual companies are used by the chief
decision-maker in the Group. Significant operating segments are
Associated British Engineering Plc and Akoris Trading Limited. As
outlined in note 10 on page 42, British Polar Engines Limited, a
former subsidiary undertaking, was disposed of during the
period.
The Group's operations are located in the United Kingdom. Any
transactions between business units are on normal commercial terms
and conditions.
Akoris Trading Limited is a commodity and natural resource
trading, finance and investment company.
Associated British Engineering Plc is the Group's holding
company.
ASSOCIATED BRITISH ENGINEERING PLC
NOTES TO THE ACCOUNTS - GROUP (continued)
FOR THE PERIODED 30 SEPTEMBER 2020
1. SEGMENTAL REPORTING (continued)
Associated
Period to 30 September British British Akoris
2020 Engineering Polar Trading Consolidated
Plc Engines Limited
Limited
GBP'000 GBP'000 GBP'000 GBP'000
External sales 165 Unavailable - 165
------------- ------------ ---------- ------------------
Segment result (PBIT) 146 Unavailable (1) 145
------------- ------------ ---------- ------------------
Net finance expenses -
Taxation -
------------------
Profit after tax 145
==================
Other information
Capital additions - Unavailable - -
Balance sheet
Segment assets 591 Unavailable 32 623
============= ============ ========== ==================
Associated
Period to 31 March 2019 British British Akoris
Engineering Polar Trading Consolidated
Plc Engines Limited
Limited
GBP'000 GBP'000 GBP'000 GBP'000
External sales - 1,134 - 1,134
------------- ------------ ---------- ------------------
Segment result (LBIT)/
PBIT (49) (1,687) (6) (1,742)
------------- ------------ ---------- ------------------
Net finance expenses (68)
Taxation 79
------------------
Loss after tax (1,731)
==================
Other information
Capital additions - 16 - 16
Balance sheet
Segment assets 86 1,843 19 1,948
============= ============ ========== ==================
Included in the total Group revenue was GBPNil (2019:
GBP253,000) of sales which arose from one customer who contributed
to 10% or more of the total Group revenue for the period ended 30
September 2020 (2019: two customers). The geographical market from
which the revenue from the customers originate is principally the
United Kingdom.
2. OPERATING COSTS 30 Sep 31 Mar
2020 2019
GBP'000 GBP'000
Raw materials used - 1,175
Staff costs (note 5) 65 616
Depreciation of property plant and equipment - 91
Other expenses (39) 670
-------- --------
26 2,552
======== ========
All of the revenue recognised by the Group during the year arose
from contracts from customers as defined in IFRS 15.
ASSOCIATED BRITISH ENGINEERING PLC
NOTES TO THE ACCOUNTS - GROUP (continued)
FOR THE PERIODED 30 SEPTEMBER 2020
3. EXCEPTIONAL ITEM 30 Sep 31 Mar
2020 2019
GBP'000 GBP'000
Exceptional item - (324)
Following the directors' decision to prepare previous year's
financial statements on a basis other than going concern,
impairments arose to bring certain assets to their recoverable
amounts and were shown as an exceptional item above. The items
which relate to the impairment are tangible fixed assets
(GBP156,000) and trade receivables (GBP167,944).
4. OPERATING PROFIT/(LOSS) 30 Sep 31 Mar
2020 2019
GBP'000 GBP'000
Operating profit/(loss) is stated after
charging/(crediting)
Depreciation on owned assets - 59
Depreciation on assets held under finance
leases - 32
Fees payable to the Company's auditor for
the audit of the Company's annual accounts:
PLC audit costs 9 24
The audit of the Company's subsidiaries
pursuant to legislation 1 22
Operating lease rental on plant and machinery - 25
Profit on disposal of property, plant &
equipment - (6)
======== ================
5. STAFF COSTS AND EMPLOYEES 30 Sep 31 Mar
2020 2019
GBP'000 GBP'000
Wages and salaries 62 332
Social security costs 3 34
Other pension costs - 250
-------- ----------------
65 616
======== ================
The average monthly number of persons employed
by the Group during the period was:
30 Sep 31 Mar
2020 2019
Number Number
By activity
Production - 5
Administration 3 11
-------- ----------------
3 16
======== ================
6. DIRECTORS' REMUNERATION
Directors received emoluments of GBP78,336 (2019: GBP57,000).
Further details can be found on page 53.
30 Sep 31 Mar
KEY MANAGEMENT COMPENSATION 2020 2019
GBP'000 GBP'000
Remuneration of Group directors 42 30
================= ========
The Group made no pension contributions in respect of Group
directors during the period ended 30 September 2020 or 31 March
2019.
ASSOCIATED BRITISH ENGINEERING PLC
NOTES TO THE ACCOUNTS - GROUP (continued)
FOR THE PERIODED 30 SEPTEMBER 2020
7. NET FINANCE EXPENSE 30 Sep 31 Mar
2020 2019
GBP'000 GBP'000
Interest on obligations under finance leases - 30
-------- --------
Interest expenses for borrowings at amortised
cost - 30
-------- --------
Net interest cost on defined benefit pension
scheme - 38
-------- --------
- 68
-------- --------
Interest receivable on cash and (1) -
cash equivalents
-------- --------
(1) 68
-------- --------
8. TAXATION 30 Sep 31 Mar
2020 2019
GBP'000 GBP'000
The tax charge is set out below:
Current tax:
United Kingdom corporation tax at 19% (2018: - -
19%)
Research & Development tax credit - 79
In respect of current period - -
--------- --------
Total current tax and tax on profit on ordinary
activities - 79
========== ========
The tax assessed for the period is different from the standard
rate of corporation tax in the UK of 19% (2019: 19%). The
differences are explained as follows:
30 Sep 31 Mar
2020 2019
GBP ' 0 GBP'000
0 0
Profit/(loss) on ordinary activities before
tax 145 (1,810)
-------- --------
Profit/(loss) on ordinary activities multiplied
by standard rate of Corporation tax in the
UK of 19% (2019: 19%)
28 (344)
Effects of:
Fixed asset differences
Expenses not deductible for tax purposes - (1)
Amounts (charged)/credited directly to equity
or otherwise transferred - 11
Income not taxable - -
Depreciation for the period in excess of capital - -
allowances
Adjustment to recognised deferred tax - 22
Other tax adjustments - -
Surrender of group relief - 14
Losses carried forward - 298
Utilisation of tax losses (28) -
Research & Development credit - 79
-------- --------
Taxation credit in the consolidated income
statement - 79
======== ========
The Group has trading losses of approximately GBP1.4million
(2019: GBP4.5 million) and capital losses of GBP8.3 million (2019:
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 GBP265k (2019: GBP765k) arising on the
trading losses has not been recognised in the financial
statements.
ASSOCIATED BRITISH ENGINEERING PLC
NOTES TO THE ACCOUNTS - GROUP (continued)
FOR THE PERIODED 30 SEPTEMBER 2020
9. PROFIT/(LOSS) PER SHARE
The calculation of loss per ordinary share is based on the loss
attributable to ordinary shareholders divided by the weighted
average number of shares in issue during the period.
2020 2019
Weighted Weighted
Average Per shares Average Per shares
number amount number amount
Profit of shares pence Loss of shares pence
GBP'000 GBP'000
Basic and diluted
profit/(loss)
per share 5,384 2,048,990 263.0p (1,731) 2,048,990 (84.5p)
========= =========== ============= ======== =========== =============
10. PROPERTY, PLANT AND EQUIPMENT Freehold
land and Plant
buildings and machinery Total
GBP'000 GBP'000 GBP'000
COST
At 1 April 2018 689 1,448 2,137
Additions - 16 16
Disposals - (24) (24)
- - (50)
----------- ---------------- --------
At 31 March 2019 689 1,440 2,129
----------- ---------------- --------
At 1 April 2020 689 1,440 2,079
Additions - - -
Disposal of subsidiary 689 1,438 2,077
At 30 SEPTEMBER 2020 - 2 2
----------- ---------------- --------
ACCUMULATED DEPRECIATION
At 1 April 2018 110 1,193 1,303
Charge for period 34 57 91
Eliminated on disposals - (7) (7)
Impairment 50 158 208
At 31 March 2019 194 1,401 1,595
----------- ---------------- --------
At 1 April 2020 194 1,401 1,595
Charge for period 34 50 84
Eliminated on disposal of subsidiary (228) (1,449) (1,677)
At 30 SEPTEMBER 2020 - 2 2
----------- ---------------- --------
CARRYING AMOUNTS
At 30 SEPTEMBER 2020 - - -
=========== ================ ========
At 31 March 2019 495 39 534
=========== ================ ========
At 31 March 2018 579 255 834
=========== ================ ========
At 30 September 2020 assets held under finance leases included
in plant and machinery had a carrying value of GBPNil (2019:
GBP9,188).
ASSOCIATED BRITISH ENGINEERING PLC
NOTES TO THE ACCOUNTS - GROUP (continued)
FOR THE PERIODED 30 SEPTEMBER 2020
11. CAPITAL COMMITMENTS
At 30 September 2020 the Group had capital commitments of GBPNil
(2019: GBPNil).
12. INVENTORIES 2020 2019
GBP'000 GBP'000
Raw materials - 23
Work in progress - 9
Finished goods - 133
---------- --------
- 165
========== ========
13. TRADE AND OTHER RECEIVABLES 2020 2019
GBP'000 GBP'000
Trade receivables - 922
Allowance for doubtful debts - (834)
-------- --------
- 88
Other receivables 21 -
Prepayments and accrued income 3 37
-------- --------
24 125
======== ========
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, in the
prior period, recognised an allowance for doubtful debts based
on estimated irrecoverable amounts
determined by the history and by reference to the counterparty
and an analysis of the counterparty's
current financial position. No such allowance was deemed
necessary as at 30 September 2020.
Trade receivables disclosed above include amounts (see below for
aged analysis) which are past due and impaired at the year-end. The
Group has recognised an allowance for doubtful debts against
these
items.
Ageing of trade receivables
2020 2019
GBP'000 GBP'000
0 - 30 days - 79
31 - 60 days - 18
61 - 90 days - 15
91 - 120 days - 810
Provision against past due and impaired amounts - (834)
---------- --------
- 88
========== ========
ASSOCIATED BRITISH ENGINEERING PLC
NOTES TO THE ACCOUNTS - GROUP (continued)
FOR THE PERIODED 30 SEPTEMBER 2020
13. TRADE AND OTHER RECEIVABLES (Continued)
Movement in the allowance for doubtful debts:
2020 2019
GBP'000 GBP'000
Balance at the beginning of the period 834 609
Increase in provision - 225
Disposal of subsidiary 834 -
Balance at the end of the period - 834
======== ========
In determining the recoverability of a trade receivable the
Group considers, inter alia, any change in the credit quality of
the trade receivable from the date credit was initially granted up
to the reporting date.
In the prior year, the Group had exposure to two large debtor
balances at the period end which accounted for 31% of the balance
due between 61 -120 days. There were no such large debtors as at 30
September 2020. Management considers that all the above financial
assets that are not provided for, impaired or past due, are of good
credit quality.
14. AVAILABLE FOR SALE INVESTMENTS 2020 2019
GBP'000 GBP'000
Listed Securities (quoted and unquoted) 413 735
======== ========
GBP'000
Opening balance 735
Intragroup transfer 65
Revaluations 327
Disposal of subsidiary (714)
Closing balance 413
============
Gains or losses on available for sale investments are presented
within other comprehensive income.
IFRS 13 requires that the fair value reflects "exit price" and
is valued in line with the relevant "unit of account" and the fair
value of the equity investments held is calculated by reference to
the quoted market price at the period end.
Available for sale investments are valued based on active
markets' prices. In the prior year, the fair value of financial
instruments were held at a discount to the quoted market price
(recoverable amount), following the decision by the directors to
prepare the financial statements on a basis other than going
concern. As at 30 September 2020, the investments are reported
under Level 1 in the fair value hierarchy.
As described in the prior year financial statements the Group
held an investment in SalvaRx Group plc. During the year that
entity disposed of its interest in its subsidiary, SalvaRx Limited
to Portage Biotech Inc. Subsequently as part of a demerger, SalvaRx
Group plc transferred 12,600,000 shares in Portage Biotech Inc, to
the Group. Following the sale of BPE 40% of those shares and the
shares in SalvaRx Group plc were transferred to the Company. Colin
Weinberg, a shareholder, resigned as a director of SalvaRx Group
plc on 8 January 2019.
ASSOCIATED BRITISH ENGINEERING PLC
NOTES TO THE ACCOUNTS - GROUP (continued)
FOR THE PERIODED 30 SEPTEMBER 2020
15. CALLED UP SHARE CAPITAL 2020 2019
GBP'000 GBP'000
Nominal value:
Allotted and fully paid:
2,048,990 ordinary shares of GBP0.025 each 51 51
1,313,427 deferred shares of GBP1.975 each 2,594 2,594
-------- --------
2,645 2,645
======== ========
Carrying value:
Equity shares:
2,048,990 ordinary shares of GBP0.025
each 51 51
======== ========
The structure of the Group and Company's capital is as
follows:
Ordinary Ordinary Deferred Deferred Share
Shares Shares Shares Shares Premium
No. GBP'000 No. GBP'000 GBP'000
Balance at 30 September
2020 (GBP0.025/GBP1.9752
shares) 2,048,990 51 1,313,427 2,594 5,370
========== ========= ========== ========= ========
Further to the Extraordinary General Meeting held on 1 September
1999 the ordinary shares have 200 votes per share.
The deferred shares do not have voting rights and do not carry
any entitlement to attend general meetings of the Company; they are
not admitted to any Stock Exchange and carry a right to participate
in any return of capital once an amount of GBP100 has been paid in
respect of each new ordinary share.
Capital management
The Group manages its capital to ensure that entities in the
Group will be able to continue as going concerns while maximising
the return to stakeholders through the optimisation of the debt and
equity balance.
The capital structure of the Group consists of called up share
capital, deferred shares, share premium account, other reserves and
retained earnings. The Group is not subject to any externally
imposed capital requirements.
16. NON-CONTROLLING INTERESTS
At the period-end, the Group held 99.7% of Akoris Trading Limited's
Ordinary Share capital.
17. RETIREMENT BENEFIT SCHEMES
The Group has, as a result of the disposal of British Polar
Engines Ltd, no retirement defined benefit scheme.
ASSOCIATED BRITISH ENGINEERING PLC
NOTES TO THE ACCOUNTS - GROUP (continued)
FOR THE PERIODED 30 SEPTEMBER 2020
18. PAYABLES 2020 2019
GBP'000 GBP'000
Current
Obligations under finance leases - 10
Trade payables 2 163
Other taxation and social security - 8
Other payables 21 43
Accruals 9 440
-------- --------
32 664
======== ========
The net finance lease obligations are due:
In one period or less - 10
Between two and three periods - -
-------- --------
- 10
======== ========
All current payables are expected to mature within a period of 6
months.
19. FINANCIAL INSTRUMENTS
The fair value of financial assets and liabilities, together
with the carrying amounts shown in the Group balance sheet, are as
follows.
No financial assets or liabilities have been reclassified during
the period.
2020 2019
Loans and Fair value Loans and Fair value
Receivables Profit or receivables Profit
loss or loss
GBP'000 GBP'000 GBP'000 GBP'000
Financial assets:
Trade and other receivables 24 - 125 -
------------ ----------- ------------ -----------
Total current 24 - 125 -
Total 24 - 125 -
============ =========== ============ ===========
Financial liabilities:
Loans - - - -
------------ ----------- ------------ -----------
Total non- current - - - -
Trade and other payables 32 - 664 -
Loans - - 10 -
------------ ----------- ------------ -----------
Total current 32 - 674 -
Total 32 - 674 -
============ =========== ============ ===========
Trade and other receivables exclude the value of any prepayments
or accrued income. Trade and other payables exclude the value of
deferred income. All financial assets and liabilities have a
carrying value that approximates to fair value. For trade and other
receivables, allowances are made within the book value for credit
risk.
ASSOCIATED BRITISH ENGINEERING PLC
NOTES TO THE ACCOUNTS - GROUP (continued)
FOR THE PERIODED 30 SEPTEMBER 2020
19. FINANCIAL INSTRUMENTS (continued)
RISKS
The main risks arising from the Group's financial instruments
are market risk, liquidity risk and credit risk. Market risk
includes price commodity risk, foreign exchange risk and interest
rate risk. The Group has an exposure to foreign exchange risk to
the extent that investments may be priced in US dollars or other
currencies and 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 GBP1,865 (2019: GBP3,892).
The Board reviews and agrees policies for managing each of the
above risks and they are summarised below and in the accounting
policies to the Group financial statements. These policies have
been consistently applied throughout the period.
COMMODITY PRICE RISK
The Group holds no stock and as such has no exposure to
commodities.
LIQUIDITY RISK
The Group's liquidity is dependent on the cash balances
available and it is the Group's policy to place surplus cash on
deposit to ensure it has an appropriate rate of return. The Board
reviews an annual 12 month financial projection as well as
information regarding cash balances. The maturity profile of the
Group's finance lease liabilities is set out in note 22.
CREDIT RISK
The Group's principal financial assets are cash deposits,
available for sale financial assets and trade and other
receivables. The credit risk associated with the cash is limited as
the counterparties have high credit ratings assigned by
international credit-rating agencies. The principal credit risk
arises therefore from its trade and other receivables and available
for sale financial assets.
In order to manage credit risk the directors of the subsidiary
company set limits for customers based on a combination of payment
history, third party credit references and knowledge of the
customers. Credit limits are reviewed by the subsidiary's directors
on a regular basis in conjunction with debt ageing and experience.
In 2019 there were a limited number of concentrations of credit
risk. In the prior year, the Group had exposure to two large debtor
balances at the period end which accounted for almost a third of
the balance due between 61 and 120 days. There were no such large
debtors as at 30 September 2020.
Where appropriate, the subsidiary company requests payment or
part-payment in advance of shipment. In connection with the trade
receivables, there is a risk of warranty claims, which the
subsidiary company tries to minimise. The carrying value of the
trade receivables represents the maximum credit risk exposure and
therefore sensitivity analysis has not been performed.
Collection procedures in relation to receivables are initiated
once the credit terms are exceeded and trade receivables both due
and not yet due are reviewed on a line by line basis, with adequate
provision being made against period end balances where appropriate.
During the period an additional provision of GBPNil (2019:
GBP225,000) has been included in the financial statements.
At the period end, 0% (2019: 84.5%) of current financial assets
are aged greater than 90 days. These amounted to GBPNil and, of
this amount, GBPNil has been provided for (2019: GBP810,350 and
GBP771,770 respectively).
ASSOCIATED BRITISH ENGINEERING PLC
NOTES TO THE ACCOUNTS - GROUP (continued)
FOR THE PERIODED 30 SEPTEMBER 2020
19. FINANCIAL INSTRUMENTS (continued)
FAIR VALUE OF FINANCIAL INSTRUMENTS
The following table provides an analysis of financial
instruments that are measured subsequent to initial recognition at
fair value into Levels 1 to 3 based on the degree to which the fair
value is observable:
-- Level 1 fair value measurements are those derived from quoted
prices in active markets for identical assets or liabilities;
-- Level 2 fair value measurements are those derived from inputs
other than quoted prices included within Level 1 that are
observable for the asset or liability, either directly (i.e. as
prices) or indirectly (i.e. derived from prices); and
-- Level 3 fair value measurements are those derived from
valuation techniques that include inputs for the asset or liability
that are not based on observable market data (unobservable
inputs).
Level Level Level Total
1 2 3
GBP'000 GBP'000 GBP'000 GBP'000
Available for sale financial
assets
Quoted and unquoted securities 413 - - 413
======== ======== ======== ========
In the prior year, the fair value of financial instruments was
observed to be Level 2 (2019: GBP735,000). However, during the
current period 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.
20. DEFERRED TAXATION
The deferred taxation liability at 30 September 2020 was GBPNil
(2019: GBPNil).
No provision has been made for the potential deferred tax assets
on the trading losses carried forward as they are not sufficiently
certain to crystallise in the foreseeable future. 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 19% (2019: 17%) are set out below:
Group 2020 2019
GBP'000 GBP'000
Arising from trading losses 265 765
Arising from capital losses 1,577 1,451
Arising from pension deficit - 847
-------- --------
1,842 3,063
======== ========
21. CONTINGENT LIABILITIES
2020 2019
GBP'000 GBP'000
a) Banker's indemnities - 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 30 September 2020 or 31 March 2019.
ASSOCIATED BRITISH ENGINEERING PLC
NOTES TO THE ACCOUNTS - GROUP (continued)
FOR THE PERIODED 30 SEPTEMBER 2020
22. COMMITMENTS UNDER OPERATING LEASES
At 30 September 2020 the Group had the following commitments
under non-cancellable operating
leases:
Other
2020 2019
GBP'000 GBP'000
Within one period - 1
Between two and five periods inclusive - 3
---------- --------
- 4
========== ========
23. SUBSIDIARIES
At 30 September 2020 the Company held share capital in the
following subsidiaries:
Company % Holding Activity Registered Country of
office Incorporation
British Polar Engines 100% Manufacture and 133 Helen Scotland
Limited * supply of diesel Street, Govan,
engines, associated Glasgow,
servicing and G51 3HD
sale of spare
parts
Akoris Trading 99.7% Commodity, natural 9 High Street England &
Limited resource finance, Little Eversden Wales
trading and investment Cambridge
CB23 1HE
* The investment in British Polar Engines Limited and Akoris
Trading Limited was fully provided against at 31 March 2019.
British Polar Engines Limited was disposed of on 4 August 2020, as
outlined in note 10 on page 42.
ASSOCIATED BRITISH ENGINEERING PLC Company Number: 00110663
COMPANY STATEMENT OF FINANCIAL POSITION
AS AT 30 SEPTEMBER 2020
31 March
2020 2019
Note GBP'000 GBP'000
ASSETS
Non-current assets
Property, plant and equipment 7 - -
Investments in subsidiaries 9 - -
Available for sale financial assets 11 413 21
-------- ---------
413 21
-------- ---------
Current assets
Trade and other receivables 12 24 5
Cash and cash equivalents 154 60
-------- ---------
178 65
-------- ---------
T Total assets 591 86
======== =========
EQUITY AND LIABILITIES
Called up share capital 16 51 51
Deferred shares 16 2,594 2,594
Share premium account 5,370 5,370
Other reserve 212 212
Available for sale reserve 270 (57)
Retained earnings (7,936) (8,182)
-------- ---------
Total equity 561 (12)
-------- ---------
LIABILITIES
Current liabilities
Trade and other payables 13 30 98
Total liabilities 30 98
======== =========
Total equity and liabilities 591 86
======== =========
Under section 408 of the Companies Act 2006, the company is
exempt from the requirements to present its own Income statement.
The profit after tax for the period was GBP245,757 (2019: loss
GBP25,605)
The financial statements were approved and authorised for issue
by the Board of Directors on 30 March 2021 and were signed below on
its behalf by:
C Weinberg
Director
The accounting policies on pages 14 and 19 and the notes on
pages 40 to 45 form part of these accounts.
ASSOCIATED BRITISH ENGINEERING PLC
COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE PERIODED 30 SEPTEMBER 2020
Available Total
Share Share Deferred Other for Retained
capital premium shares reserve Sale earnings
Financial
Assets
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP000
Balance at 1
April 2018 51 5,370 2,594 212 (32) (8,172) 23
-------------- -------------- --------------- -------------- -------------- --------------- --------------
Loss for the
period - - - - - (26) (26)
Other
comprehensive
income
Unrealised
loss on
Available
for Sale
financial
assets
(**)Realised
gain on
Available
for Sale - - - - (9) - (9)
financial
assets
(**) - - - - (16) 16 -
-------------- -------------- --------------- -------------- -------------- --------------- ---------------
Total
comprehensive
income
for the
period - - - - (25) (10) (35)
-------------- -------------- --------------- -------------- -------------- --------------- ---------------
Balance at 31
March 2019 51 5,370 2,594 212 (57) (8,182) (12)
-------------- -------------- --------------- -------------- -------------- --------------- --------------
Profit for the
period - - - - - 246 246
Other
comprehensive
income
Unrealised
gain on
Available
for Sale
financial
assets
(**) - - - - 327 327
Realised gain - - - - - - -
on Available
for Sale
financial
assets
(**)
-------------- -------------- --------------- -------------- -------------- --------------- ---------------
Total
comprehensive
income
for the
period - - - - 327 246 573
-------------- -------------- --------------- -------------- -------------- --------------- ---------------
Balance at 30
September
2020 51 5,370 2,594 212 270 (7,936) 561
====== ====== ====== ====== ====== ======= =======
(**) = Items which may subsequently be reclassified to the
Income Statement.
The accounting policies on pages 14 and 19 and the notes on
pages 40 to 45 form part of these accounts.
ASSOCIATED BRITISH ENGINEERING PLC
COMPANY CASH FLOW STATEMENT
FOR THE PERIODED 30 SEPTEMBER 2020
2020 2019
GBP'000 GBP'000
Cash flows from operating activities
Cash used in operations 59 (55)
Interest received - 23
Net cash used in operating activities 59 (32)
-------- --------
Cash flows from investing activities
New investments (65) -
Sale proceeds from trading investments - 68
Sale proceeds from subsidiary disposal 100 -
Net cash derived from investing activities 35 68
-------- --------
Cash flows from financing activities - -
Net cash used in financing activities - -
-------- --------
Net increase/ (decrease) in cash and cash equivalents 94 36
Cash and cash equivalents at beginning of period 60 24
-------- --------
Cash and cash equivalents at end of period 154 60
======== ========
CASH FLOW FROM OPERATING ACTIVITIES
2020 2019
GBP'000 GBP'000
Profit/(loss) before taxation 246 (25)
Adjustments for:
Interest income - (23)
Non-cash write offs - 1
Profit on disposal of Available for Sale investments - (2)
Profit on disposal of subsidiary undertaking (100) -
Changes in working capital:
Decrease/(increase) in trade and other receivables (19) (5)
(Decrease)/increase in trade and other payables (68) -
Taxes paid - -
-------- --------
Cash used in operations 59 (55)
======== ========
The accounting policies on pages 14 and 19 and the notes on
pages 40 to 45 form part of these accounts.
ASSOCIATED BRITISH ENGINEERING PLC
NOTES TO THE ACCOUNTS - COMPANY
FOR THE PERIODED 30 SEPTEMBER 2020
1. OPERATING COSTS AND OPERATING LOSS
Operating loss is stated after charging
30 Sep 31 Mar
2020 2019
GBP'000 GBP'000
Fees payable to the Company's auditor for
the audit of the company's annual accounts 9 23
2. STAFF COSTS AND EMPLOYEES 30 Sep 31 Mar
2020 2019
GBP'000 GBP'000
Wages and salaries 62 54
Social security costs 3 -
65 54
========= =========
The average monthly number of persons employed by the Company
during the period was:
30 Sep 31 Mar
2020 2019
Number Number
By activity
Directors 2 2
Administration 1 1
3 3
======= =======
3. DIRECTORS' REMUNERATION 30 Sep 31 Mar
2020 2019
GBP'000 GBP'000
Remuneration in respect of directors was as
follows:
Remuneration 42 32
======== ========
4. KEY MANAGEMENT COMPENSATION 30 Sep 31 Mar
2020 2019
GBP'000 GBP'000
Remuneration of Company directors 42 32
======== ========
The Company made no pension contributions in respect of Company
directors during the period ended 30 September 2020 or 31 March
2019.
5. INTEREST RECEIVED 30 Sep 31 Mar
2020 2019
GBP'000 GBP'000
Interest receivable on cash and cash equivalents - (23)
---------- --------
- (23)
========== ========
6. TAXATION
There is no taxation liability at 30 September
2020 (31 March 2019: GBPNil)
ASSOCIATED BRITISH ENGINEERING PLC
NOTES TO THE ACCOUNTS - COMPANY
FOR THE PERIODED 30 SEPTEMBER 2020
7. PROPERTY, PLANT AND EQUIPMENT
Computer
equipment Total
GBP'000 GBP'000
COST
At 1 April 2018 2 2
At 31 March 2019 2 2
------------ --------
At 1 April 2019 2 2
At 30 September 2020 2 2
------------ --------
ACCUMULATED DEPRECIATION
At 1 April 2018 2 2
At 31 March 2019 2 2
------------ --------
At 1 April 2019 2 2
At 30 September 2020 2 2
------------ --------
CARRYING AMOUNTS
At 30 September 2020 - -
============ ========
At 31 March 2019 - -
============ ========
At 1 April 2018 - -
============ ========
8. CAPITAL COMMITMENTS
At 30 September 2020 the Company has no capital commitments (31
March 2019: GBPNil)
9. INVESTMENTS IN SUBSIDIARIES
Company % Holding Activity Registered Country of
office Incorporation
British Polar Engines 100% Manufacture 133 Helen Scotland
Limited * and supply Street, Govan,
of diesel Glasgow,
engines, G51 3HD
associated
servicing
and sale
of spare
parts
Akoris Trading Limited 99.7% Commodity, 9 High Street England &
natural resource Little Eversden Wales
trading and Cambridge
investment CB23 1HE
* The investment in British Polar Engines Limited and Akoris
Trading Limited was fully provided against at 31 March 2019.
British Polar Engines Limited was disposed of on 4 August 2020, as
outlined in note 10 below.
ASSOCIATED BRITISH ENGINEERING PLC
NOTES TO THE ACCOUNTS - COMPANY
FOR THE PERIODED 30 SEPTEMBER 2020
10. DISPOSAL OF SUBSIDIARY (continued)
The Board of Associated British Engineering Plc after a period
of marketing the business of its wholly owned subsidiary British
Polar Engines Limited ("BPE") as being for sale agreed terms to
dispose of its interests in the company BPE to Mr N. Marks on
behalf of himself and Mewa Industrial Holdings Limited. Following
the subsequent approval by both the Pension Fund and Associated
British Engineering Plc.'s shareholders, on the 4 August 2020 the
Company completed the sale of all the ordinary share capital in its
Principal Trading subsidiary BPE for GBP1 and also assigned the
balance of its remaining debt due from BPE to its parent company,
Associated British Engineering Plc for GBP100,000. Consequently
following this sale the trade of BPE including its pension fund's
assets and liabilities, were no longer part of the Group. The
results of BPE for the period from 1 April 2019 to 4 August 2020
are uncertain and depended to a large extent on the trading
conditions in the later part of this period and on an assessment of
the pension fund's performance. Unfortunately this was also a
period of considerable disruption due to a) COVID19, b) our chief
accountant of BPE having time off for personal problems and c)
uncertainty regarding the pension fund. Following the sale the
directors of the Company, despite strenuous efforts, have been
denied access to the accounting records of BPE to clarify the
trading position for this period to 4 August 2020. The Directors
are of the opinion that the lack of information on BPE does not
materially affect the understanding of the balance sheet at 30
September 2020 or the business of the Group as it is currently
constituted.
The results of the disposed subsidiary up to the date of the
disposal, which have been included in the
Income statement were as follows:
As at 31 March 2019
GBP'000
Revenue 1,134
Cost of sales (1,148)
Administrative expenses (1,556)
Depreciation and impairment (238)
Other income and exchange gains 106
Finance costs (68)
Loss before taxation (1,770)
Income tax credit 79
Net loss attributable to discontinuation (1,691)
At the disposal date of 4 August 2020, the total net liability
value of GBP5,139,275 consisted of:
Tangible assets GBP534,000
Available for sale investments GBP714,000
Inventories GBP165,000
Cash at bank GBP328,985
Other receivables GBP119,504
Other payables (GBP2,018,764)
Retirement benefit obligation (GBP4,982,000)
GBP5,139,275
Group gain on disposal of subsidiary
Consideration received GBP100,000
Net liability disposed of (GBP5,139,275)
Gain on disposal GBP5,239,275
Loss from discontinued operations -
Total gain from discontinued operations GBP5,239,275
ASSOCIATED BRITISH ENGINEERING PLC
NOTES TO THE ACCOUNTS - COMPANY
FOR THE PERIODED 30 SEPTEMBER 2020
11 AVAILABLE FOR SALE INVESTMENTS 2020 2019
GBP'000 GBP'000
Listed securities 413 21
======== ========
Available
For Sale
financial
assets
GBP
Opening balance 21
Intragroup transfer 65
Net fair value gain 327
Closing balance 413
-----------
Gains or losses on available for sale investments are presented
within other comprehensive income.
IFRS 13 requires that the fair value reflects "exit price" and
is valued in line with the relevant "unit of account" and the fair
value of the equity investments held is calculated by reference to
the quoted market price at the period end.
Available for sale investments, which are valued based on active
markets' prices, are reported under Level 1 in the fair value
hierarchy.
12 TRADE AND OTHER RECEIVABLES 2020 2019
GBP'000 GBP'000
Amounts falling due within one period
Trade and other receivables 21 -
Other taxation and social security receivables 3 5
------------------ --------
24 5
================== ========
13 TRADE AND OTHER PAYABLES 2020 2019
GBP'000 GBP'000
Amounts falling due within one period
Trade and other payables 23 57
Accruals and deferred income 7 41
------------------ --------
30 98
================== ========
14 FINANCIAL INSTRUMENTS
The fair values of cash and cash equivalents, available for sale
financial assets, receivables and payables are assumed to
approximate to their carrying values.
The Company's financial instruments comprise cash and various
items, such as trade and other receivables, available for sale
financial assets and trade and other payables that arise directly
from its operations. The main purpose of these financial
instruments is to finance the Company's operations. At 30 September
2020 the Company has cash balances of GBP153,840 (2019: GBP60,000)
and no bank overdraft (2019: GBPNil).
ASSOCIATED BRITISH ENGINEERING PLC
NOTES TO THE ACCOUNTS - COMPANY
FOR THE PERIODED 30 SEPTEMBER 2020
14 FINANCIAL INSTRUMENTS (continued)
RISKS
The main risks arising from the Company's financial instruments
are market risk, liquidity risk and credit risk. Market risk
includes foreign exchange risk and interest rate risk. The Company
has limited exposure to foreign exchange risk and also has no
loans, therefore limited exposure to interest rate risk.
Cash and cash equivalents held at floating rates expose the
entity to cash flow risk. Interest rate risk is limited to the cash
and cash equivalents.
Based on the balance sheet value of cash and cash equivalents, a
1% change in interest base rates would lead to an increase or
decrease in income and equity of GBP1,539 (2019: GBP600).
The Board reviews and agrees policies for managing each of the
above risks and they are summarised overleaf and in the accounting
policies to the Company financial statements. These policies have
been consistently applied throughout the period.
LIQUIDITY RISK
The Company's liquidity is dependent on the cash balances
available and it is the Company's policy to place surplus cash on
deposit to ensure as high a rate of return as possible. The Board
reviews an annual 12 month financial projection as well as
information regarding cash balances on a monthly basis.
CREDIT RISK
The Company's principal financial assets are cash deposits,
available for sale financial assets and trade and other
receivables. The credit risk associated with the cash is limited as
the counterparties have high credit ratings assigned by
international credit-rating agencies. The credit risk arising from
its trade and other receivables is negligible.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The following table provides an analysis of financial
instruments that are measured subsequent to initial recognition at
fair value into Levels 1 to 3 based on the degree to which the fair
value is observable:
-- Level 1 fair value measurements are those derived from quoted
prices in active markets for identical assets or liabilities;
-- Level 2 fair value measurements are those derived from inputs
other than quoted prices included within Level 1 that are
observable for the asset or liability, either directly (i.e. as
prices) or indirectly (i.e. derived from prices); and
-- Level 3 fair value measurements are those derived from
valuation techniques that include inputs for the asset or liability
that are not based on observable market data (unobservable
inputs).
Level Level Level Total
1 2 3
GBP'000 GBP'000 GBP'000 GBP'000
Available for sale financial
assets
Quoted and unquoted securities
(2020) 413 - - 413
======== ======== ======== ========
Available for sale financial
assets
Quoted securities (2019) 21 - - 21
=== ===
ASSOCIATED BRITISH ENGINEERING PLC
NOTES TO THE ACCOUNTS - COMPANY
FOR THE PERIODED 30 SEPTEMBER 2020
15 DEFERRED TAXATION
2020 2019
GBP'000 GBP'000
Arising from trading losses 265 259
Arising from capital losses 1,577 1,408
-------- --------
1,842 1,667
======== ========
The trading losses are available to be used against future
profits.
Deferred tax assets on the trading losses have not been provided
in the financial statements as they are not sufficiently certain to
crystallise in the foreseeable future. The amounts not recognised
are set out above.
16 CALLED UP SHARE CAPITAL 2020 2019
GBP'000 GBP'000
Nominal value:
Allotted and fully paid:
2,048,990 ordinary shares of GBP0.025 each 51 51
1,313,427 deferred shares of GBP1.975 each
share premium 2,594 2,594
-------- --------
2,645 2,645
======== ========
Carrying value:
Equity shares:
2,048,990 ordinary shares of GBP0.025 each 51 51
======== ========
Further to the Extraordinary General Meeting held on 1 September
1999 the ordinary shares have 200 votes per share.
The deferred shares do not have voting rights and do not carry
any entitlement to attend general meetings of the Company; they are
not admitted to any Stock Exchange and carry a right to participate
in any return of capital once an amount of GBP100 has been paid in
respect of each new ordinary share.
17 CONTINGENT LIABILITIES
There were no contingent liabilities at 30 September 2020 or 31
March 2019.
18 RELATED PARTY TRANSACTIONS
The Company has taken advantage of the exemption with regard to
disclosing transactions with wholly-owned subsidiaries, on the
grounds that the results of the subsidiaries are included in the
publicly available consolidated financial statements of Associated
British Engineering Plc.
ASSOCIATED BRITISH ENGINEERING PLC
STATEMENT OF DIRECTORS' RESPONSIBILITIES
STATEMENT OF DIRECTORS' RESPONSIBILITIES
The directors are responsible for preparing the Strategic
Report, the Directors' Report, the Remuneration Report and the
financial statements in accordance with applicable law and
regulations.
Company law requires the directors to prepare financial
statements for each financial period. Under that law the directors
are required to prepare financial statements in accordance with
International Financial Reporting Standards, as adopted by the
European Union (IFRSs) and have also been chosen to prepare the
parent company financial statements under IFRS as adopted by the
European Union. Under Company Law the directors must not approve
the financial statements unless they are satisfied that they give a
true and fair view of the state of affairs of the Group and Company
and profit or loss of the Group for that period. In preparing these
financial statements, the directors are required to:
-- select suitable accounting policies and then apply them consistently
-- make judgements and accounting estimates that are reasonable and prudent
-- state whether applicable accounting standards, IFRS as
adopted by the European Union have been followed, subject to any
material departures disclosed and explained in the financial
statements
-- prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the Company will
continue in business
-- prepare a directors' reports, strategic report and directors'
remuneration report which comply with the requirements of the
Companies Act 2006.
The directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Group's and
Company's transactions and disclose with reasonable accuracy at any
time the financial position of the Company and the Group and enable
them to ensure that the financial statements and the directors
remuneration report comply with the Companies Act 2006 and Article
4 of the IAS Regulations. They are also responsible for
safeguarding the assets of the Company and the Group and hence for
taking reasonable steps for the prevention and detection of fraud
and other irregularities.
The directors confirm that:
-- so far as each director is aware, there is no relevant audit
information of which the Group's auditor is unaware; and
-- the directors have taken all steps that they ought to have
taken to make themselves aware of any relevant audit information
and to establish that the auditor is aware of that information.
-- the directors are responsible for preparing the annual report
in accordance with applicable law and regulations. The directors
consider the annual report and the financial statements, taken as a
whole, provides the information necessary to assess the company's
performance, business model and strategy and is fair, balanced and
understandable
WEBSITE PUBLICATION
The directors are responsible for the maintenance and integrity
of the corporate and financial information included on the
Company's website. Legislation in the United Kingdom governing the
preparation and dissemination of financial statements may differ
from legislation in other jurisdictions.
DIRECTORS' RESPONSIBILITIES PURSUANT TO DTR4
To the best of their knowledge, the directors confirm:
-- the financial statements, prepared in accordance with the
applicable set of accounting standards, give a true and fair view
of the assets, liabilities, financial position of the Group and
Company and profit or loss of the Group as at 30 September 2020;
and
-- the annual report, including the Strategic Report includes a
fair review of the development and performance of the business and
the position of the Group and Company, together with a description
of the principal risks and uncertainties faced.
C Weinberg
Director
Date: 30 March 2021
ASSOCIATED BRITISH ENGINEERING PLC
CORPORATE GOVERNANCE REPORT
(AS REFERRED TO IN THE DIRECTORS' REPORT)
In accordance with the requirements of the Listing Rules of the
Financial Conduct Authority, set out below are details of the
Company's corporate governance arrangements, including a statement
as to how the Company applies the main principles of the UK
Corporate Governance Code ("the Code"), together with a statement
regarding its compliance with specific provisions. The Code is
publicly available on the Financial Reporting Council's website
www.frc.org.uk . Whilst welcoming the principles contained within
the Code, the Board considers that it should be recognised that
what may be appropriate for a large Company may not necessarily be
so appropriate for a smaller company and the Company's current
circumstances. As a result, the Company has been in compliance
throughout the period with the provisions set out in the UK
Corporate Governance Code with the following exceptions:-
-- The division of responsibilities between the roles of
chairman and chief executive have not been clearly established, set
out in writing and agreed by the Board. This is contrary to
provision A.2.1. This has not been put in place because there is no
chief executive on the Board but the appointment of joint-chairmen
provides checks and balances;
-- The Company does not have a Nomination Committee, this is
contrary to provisions B2.1-B2.2 and B2.4. This has not been
considered necessary due to the size and nature of the Board which
consists of two part time executive directors;
-- The non-executive director of the Company has not been
appointed for specific terms as required by provision B2.3. This
has not been considered necessary as the sole incumbent resigned
and a new non-executive director has not been appointed;
-- There is no formal training programme for new directors on
joining the Board. This is contrary to provision B4.2. This has not
been considered necessary to date but will be actively considered
by the Board for new appointments;
-- The Board has not undertaken a formal and rigorous annual
evaluation of its own performance and the individual directors.
This is contrary to provision B.6.1. When a new non-executive
director is appointed this will be implemented.
-- The Board has not appointed independent non-executive
directors as required by B1.2, C.3.1, A4 and D2.1. The Board is
actively pursuing suitable candidates for the position(s).
Board of Directors
The Board comprises two part time executive directors, as
detailed in the Directors' Report.
The Board of Directors is responsible for formulating strategy
and monitoring financial performance. The directors are in frequent
contact throughout the period with the Group's management, meet as
required and also attend formal Board meetings. The strategies
proposed by management of the company and its subsidiaries are
fully discussed, critically examined against the best and long term
interests of not only the shareholders, but also customers,
employees, suppliers and various communities and environments
within which the Company operates. During the period, all serving
directors were in attendance at Board meetings.
The Board retains full responsibility for the direction and
control of the Group and has a formal schedule of matters in
respect of which decisions are reserved to it, covering key areas
including strategy formulation, acquisitions or disposals, approval
of the budget for the subsidiary, financial results, board
appointments and proposals for dividend payments.
The Board has full and timely access to relevant information
throughout the Group .
All directors have access to the advice and services of the
Company Secretary, who is responsible to the Board for ensuring
that Board procedures are complied with. There is also formal
agreed procedure for directors in the furtherance of their duties
to take independent professional advice as necessary at the Group's
expense.
The business address of each of the directors is 9 High Street,
Little Eversden, Cambridge CB23 1HE.
ASSOCIATED BRITISH ENGINEERING PLC
CORPORATE GOVERNANCE REPORT (continued)
(AS REFERRED TO IN THE DIRECTORS' REPORT)
The board is supported by Peter Morton the ABE Office
Administrator.
The Current Directors
Rupert Pearce Gould
Colin Weinberg
Short biographies of the directors appear on page 55 and show
considerable and varied experience in the business world and the
City.
Under the Company's Articles of Association, new directors and
at least one third of the directors retire from office each period.
The retiring director is eligible for re-election.
At the period end, there were no independent non-executive
directors. The directors continue to search for a suitable
candidate for the role and intend to appoint a non- executive
director in the near future.
Nominations Committee
The appointment of directors will be discussed by the full Board
until such time as there are two non-executive directors to form an
effective committee. Potential new non-executive directors are
proposed by all the members of the Board and major shareholders;
the Board considers these in the light of the Company's business
requirements and the need to have a balanced Board. The Board will
then implement an appropriate review committee.
Audit Committee
The Company's audit committee comprises the full Board. The
audit committee meets at least twice a year to monitor the
financial reporting process, including its annual and interim
accounts; the effectiveness of the Company's internal controls and
risk management systems; statutory audit of the annual accounts;
and to review and monitor the independence of the statutory auditor
and provision of additional services to the Company.
There is no internal audit function. Due to the size of the
finance function and the close involvement of directors, the Board
and the Audit Committee do not consider there to be a need for a
separate internal audit function.
As part of this process, the performance of the Group's major
division is considered, with key judgements, estimates and
accounting policies being approved by the subsidiary Board ahead of
recommendation to the Group board. The primary areas of financial
reporting judgement considered by the Committee in relation to the
2020 financial statements and how they were addressed are outlined
below:
Going concern
The committee considered the use of the going concern basis
following the disposal of BPE. The audit committee has considered
and approves of the changes in the company's policy of reducing the
forecast period of the business insofar as it has exempted
management from producing three-period projections. This will be
reviewed annually.
Revenue Recognition and Management Override
The Committee have reviewed the systems and control processes in
place during the financial period to 30 September 2020 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.
Recoverability of receivables
The Committee have reviewed the policy for providing for
doubtful debts and believe them to be both robust and adequate.
ASSOCIATED BRITISH ENGINEERING PLC
CORPORATE GOVERNANCE REPORT (continued)
(AS REFERRED TO IN THE DIRECTORS' REPORT)
Appointing the auditor
On 12 March 2020, Haysmacintyre LLP resigned as Auditors of the
Company.
Bright Grahame Murray were appointed as Auditors to the Company
and in accordance with section 485 of the Companies Act 2006, a
resolution proposing that they be re-appointed will be put at a
General Meeting.
Safeguards on non-audit services
Bright Grahame Murray do not provide any prohibited non-audit
services. In accordance with section 485 of the Companies Act 2006,
a resolution proposing that they be re-appointed will be put at a
General Meeting.
Assessing external audit effectiveness
The Audit Committee reviews audit quality every period using
feedback from the Auditors and Senior Management Team. The
effectiveness and quality of the audit process is considered by
focussing on the scope of the audit and auditor independence in
order to ensure that the quality of the audit process is not
compromised and remains effective.
The Board consider the independence and objectivity of the
external auditor on an annual basis, with particular regard to
non-audit services. There were no prohibited non-audit fees
incurred from the auditor during the period. The Board also receive
an annual confirmation of independence from the auditors.
The committee has overseen the preparation of the viability
statement and has conducted a robust examination of the risks
identified, the resulting actions that may be required and the
project outcomes.
Remuneration
The Company's remuneration committee comprises Rupert Pearce
Gould and Colin Weinberg. The remuneration committee is to meet at
least twice a period and has as its remit the determination and
review of, amongst others, the remuneration of directors including
company directors together with any incentive plans adopted, or to
be adopted, by the Company and the Group.
Communication with Shareholders
The Board believes it is important to respond adequately to the
queries of both private and institutional shareholders . The
Chairman's Statement in the Annual Report contains a business
review. An interim business review is also provided with the
half-period announcement. The Chairmen are available to
shareholders at any time to discuss strategy and governance
matters.
AUDIT AND INTERNAL CONTROL
The Board seeks to ensure that its report and accounts and other
financial statements provide a clear assessment of the Group's
business. All shareholders have the opportunity to ask questions
and express their views at the Company's Annual General Meeting, at
which all directors are available to take questions.
The directors are responsible for the Group's system of internal
control and reviewing its effectiveness and the processes in place
for risk management.
These controls can only ever provide reasonable but not absolute
assurance that assets are safeguarded against material misstatement
or loss, that proper accounting records are maintained, and that
the information used internally, or for publication, is accurate
and reliable. The key procedures, which existed to provide external
control, are as follows:
- A regular review is undertaken to assess the risks facing the
trading subsidiary and to enhance the systems which manage the risk
identified. Management establishes control procedures for each of
the risks identified and reports whether the key controls have
operated effectively
- Agreement of Group short term financial objectives and business plans
- Review by the Board of monthly Group Financial Statements and
monitoring of results against budget. The executive directors
attend regular Board meetings of the subsidiary
ASSOCIATED BRITISH ENGINEERING PLC
CORPORATE GOVERNANCE REPORT (continued)
(AS REFERRED TO IN THE DIRECTORS' REPORT)
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.
- Clearly defined organisation structures with segregation of
duties wherever practicable. Operating and financial
responsibilities for the subsidiary Companies are delegated to the
subsidiary Board and there are limits which apply to capital
expenditure and significant contracts.
- The executive directors attend regular Board meetings of the subsidiary
- Board control over treasury, taxation, legal, insurance and personnel issues
- The acquisition or disposal of a business may not be completed
without the approval of the Board.
- The operational responsibility for preparing the consolidated
accounts is delegated to a third party service provider with the
Board retaining responsibility for overall content, presentation
and final review of the consolidated accounts.
Risk Management
The Board confirms that there is an ongoing process for
identifying, evaluating and managing significant business risks
faced by the Group, including those risks relating to social,
environmental and ethical matters. This process was in place
throughout the period under review and up to the date of approval
of this report. The Audit Committee has kept under review the
effectiveness of the system of internal control and has reported
regularly to the Board.
Through these mechanisms, Group performance is continually
monitored, risks identified in a timely manner via a robust risk
assessment, their financial implication assessed, control procedure
re-evaluated and corrective actions agreed and where possible
implemented
The Board believes that it is not currently appropriate for the
Group to maintain an internal audit function due to the size of the
Group and the manner in which the Group operates.
Fair, Balanced and Understandable
We consistently seek to improve the process of compiling the
Annual Report to give the Board more time to assess whether it was
fair, balanced and understandable, as required by the Code. The
Board considered whether the Annual Report contained the necessary
information for shareholders to assess the Group's performance,
business model and strategy. The tone was reviewed to ensure a
balanced approach and, with the support of the Audit Committee, the
Board made sure the narrative at the front end of the report was
consistent with the financial statements.
VIABILITY STATEMENT
In accordance with provision C2.2 of the UK Corporate Governance
Code, published by the Financial Reporting Council ("FRC") in
September 2015, the directors have assessed the viability of the
Group over the immediate and foreseeable future and in
consideration of its sales and marketing projections. This
assessment has been made taking account of the current position of
the Group, the present immediate plan, the corporate planning
process, a budget for the operating company and the Group's
principal risks associated with the current plan.
The provision C2.2 of the UK Corporate Governance Code and
Appendix B of the FRC Guidance state that the period covered for
longer term viability statement should be significantly longer than
12 months from approval of the financial statements as set out in
the basis of preparation in the account policies of these financial
statements.
ASSOCIATED BRITISH ENGINEERING PLC
CORPORATE GOVERNANCE REPORT (continued)
(AS REFERRED TO IN THE DIRECTORS' REPORT)
VIABILITY STATEMENT (continued)
In assessing the prospects of the Group, the directors noted
that such assessment is subject to a degree of uncertainty that can
be expected to increase looking out over time and, accordingly,
that future outcomes cannot be guaranteed or predicted with
certainty. The Board have concluded that, at the time of theses
financial statements being signed, there is adequate visibility of
the 12 months ahead for these financial statements to be prepared
on the going concern basis.
On behalf of the Board
C Weinberg
Director
Date: 30 March 2021
ASSOCIATED BRITISH ENGINEERING PLC
DIRECTORS' REMUNERATION REPORT
Introduction
This report is submitted in accordance with Schedule 8 of the
Large and Medium sized Companies (accounts and Reports) (Amendment)
Regulations 2014 in respect of the period ended 30 September 2020.
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, Bright Grahame Murray, is required to
give its opinion on certain information included in this report,
this comprises of the Directors Remuneration - single figure table
on page 53 and the information on directors shareholdings which is
contained in the directors' report on page 4 and also forms part of
this directors' remuneration report. Their report on these and
other matters is set out on pages 3 to 5.
Consideration by the Directors of Matters Relating to Directors'
Remuneration
The Company's Remuneration Committee considers Directors'
remuneration and has not sought advice or services from any person
in respect of its consideration of Directors' remuneration during
the period although the Directors expect from time to time to
review the fees against those paid to boards of directors of
comparable organisations and appointments. The Company does not
have a Chief Executive Officer, Senior Management or any full time
employees and relies on senior management in each subsidiary.
DIRECTORS' REMUNERATION POLICY REPORT
The roles of the directors are as follows:-
Joint Chairman and Deputy Chairman - Rupert Pearce Gould (part
time executive - operational)
Joint Chairman and Deputy Chairman - Colin Weinberg (part time
executive - finance)
The Company's policy is for the Directors to be remunerated in
the form of fees, payable monthly in arrears. The directors each
receive a fee for their services, which is agreed by the
Remuneration Committee after reviewing comparable organisations and
appointments. None of the directors receive a pension or other
benefit from the Company, nor do they participate in any bonus or
incentive schemes or share option schemes.
The fees are not specifically related to the Directors'
performance, either individually or collectively. The Board is also
entitled to be repaid all reasonable travelling subsistence and
other expenses incurred by them respectively whilst conducting
their duties as Directors, however no other remuneration or
compensation was paid or payable by the company during the period
to any of the current Directors. There will be no payment for loss
of office unless approved by a separate shareholder resolution.
Major decisions on Remuneration
The Company's policy is that the fees payable to each director
should reflect the time spent by the directors on the Company's
affairs and the responsibilities borne by each of the directors.
They should be sufficient to attract candidates of high calibre to
be recruited. The policy is for the Chairmen of the Board to be
paid higher fees than the other directors in recognition of the
more onerous role. The Remuneration policy is to review the
director's fee rates from time to time, benchmarking the fees
against comparable organisations and appointments, although such
review will not necessarily result in any change. Due to the nature
of the Company, there are no full time employees and therefore the
requirement to consider the percentage change in remuneration of
all employees when determining the Directors' remuneration is not
considered to be relevant.
The directors have agreements with the company that may be
terminated on one period's notice. In accordance with the Articles
of Association each director retires from office at the third
annual general meeting after the annual general meeting at which he
was last elected. A retiring director is eligible for
re-election.
ASSOCIATED BRITISH ENGINEERING PLC
DIRECTORS' REMUNERATION REPORT (Continued)
A Director may resign by notice in writing to the Board at any
time giving one month's notice. None of the Directors are entitled
to compensation payable upon early termination of their
arrangements other than in respect of any unexpired notice
period.
In accordance with the reporting requirements of Large and
Medium sized Companies (accounts and Reports) (Amendment)
Regulations 2014, an Ordinary resolution for the approval of the
remuneration policy of the Company to remain in force for a
three-period period, was put to the members of the Annual General
Meeting and was effective from that date.
DIRECTORS'REMUNERATION - SINGLE FIGURE TABLE 30 Sep 31 Mar
(AUDITED)
2020 2019
Total Total
GBP'000 GBP'000
Mr R Pearce Gould 14 10
Mr C Weinberg 28 20
42 30
======== ========
The amounts above all relate to directors fees and represent the
total remuneration of the company's directors but excludes fees of
GBP36,000 for consultancy fees (2019: GBP27,000) paid by a
subsidiary to Cambridge Management Consultants Limited, a company
related to Mr Pearce Gould.
This section of the report is subject to approval by a simple
majority of shareholders at the AGM in 2021, as in previous
periods.
Statement of Voting at the Annual General Meeting (AGM)
The 2019 Remuneration Report was presented to the AGM in
September 2019 and received shareholder approval following a vote
on a show of hands. 1.1% of the votes cast on the proxy forms were
against the Report and no votes were withheld. The proxy forms
returned contained no explanation for the votes against the
resolution.
Total Shareholder Return (TSR)
Source: Yahoo UK finance
ASSOCIATED BRITISH ENGINEERING PLC
DIRECTORS' REMUNERATION REPORT
The graph on page 58 shows the Company's TSR performance
compared to the FTSE All Share index over the past ten periods. TSR
is defined as share price growth plus reinvested dividends. This
provides a basis for comparison with a relevant equity index but
should be treated with caution in view of the small market in the
Company's shares.
A statement of directors' shareholdings and interest is reported
in the directors' report on page 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
45 to 54 form part of the Directors' report.
On behalf of the Board
C Weinberg
Director
Date : 30 March 2021
ASSOCIATED BRITISH ENGINEERING PLC
DIRECTORS, REGISTERED OFFICE AND ADVISERS
The Board comprises two directors:
COLIN WEINBERG (70) became a non-executive director on 10
November 2003. He was a member of the London Stock Exchange from
1980 to 1987 and was admitted to fellowship of the Securities
Institute in 1995. He was previously a non-executive director of
Peckham Building Society.
RUPERT PEARCE GOULD (69) was appointed as non-executive director
on 18 September 2016. Rupert has a degree in engineering and has
served as an executive director and chairman in both the public and
private sector. He was chairman of BPE from 2000 to 2020.
SECRETARY BANKERS
Mr R A Pearce Gould The Royal Bank of Scotland plc
61-65 Church Street Glasgow Cardonald B Branch
Harston 2139 Paisley Road West
Cambridge Glasgow
CB22 7NP G52 3JW
Registered No.110663
rpg@cmc-group.co.uk
AUDITOR CORPORATE ADVISERS
Bright Grahame Murray Beaumont Cornish Limited
Emperor's Gate 2nd Floor
114a Cromwell Road Bowman House
Kensington 29 Wilson Street
London London
SW7 6AG EC2M 2SJ
REGISTRARS SOLICITORS
Computershare Investor Services Harrison Clark Rickerbys Limited
plc
The Pavilions Compass House
Bridgwater Road Chivers Way, Histon
Bristol Cambridge
BS13 8AE CB24 9AD
REGISTERED OFFICE
9 High Street
Little Eversden
Cambridge
CB23 1HE
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END
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