SinterCast Limited |
Strategic Report |
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The directors present their strategic report for the year ended 31 December 2018. Review of business of the company and of the SinterCast AB (publ) group For a group that specialises in measurement, 2018 was a landmark year for the SinterCast group, achieving record performance in virtually all of the parameters that we measure. From the foundation of a 19% increase in series production, our revenue surpassed our previous record by 16%; our operating result was 11% higher; and, our earnings per share were 21% higher. The increase in series production also drove higher Sampling Cup demand, setting new a record of 197,900 Sampling Cups shipped, 17% above our previous best. One of the highlights of 2018 was the fourth quarter start of production of the Cummins 6.7 litre turbodiesel used in Ram Super Duty pick up applications. The Cummins engine marks our first production of an in-line diesel engine for passenger vehicles, delivering the last wave of the Five Wave market development scenario that we first introduced in 2002. With a potential volume of approximately 300,000 Engine Equivalents per year, the Ram production boosted our production above the three million Engine Equivalent milestone in February 2019 and forms the basis of our target for double-digit growth again in 2019. The results of this company, which is a wholly owned subsidiary of SinterCast AB (publ), a company registered in Sweden, reflect the overall improvement in the group's results. |
Risks and Uncertainty Factors for the company and the SinterCast AB (publ) group Uncertainty factors for SinterCast include the timing of OEM decisions for new CGI engines and other components, adherence to start-of-production dates and ramp projections, the global economy for new vehicle sales, technology trends and emissions legislation, and the individual sales success of vehicles equipped with SinterCast-CGI components. In Europe, passenger vehicle sales have increased for the last five years and most forecasters indicate a stable or positive near-term outlook for both passenger vehicles and commercial vehicles. However, political uncertainty remains and this could affect infrastructure, investment, trade and, ultimately, vehicle sales. In Asia, the dominant Chinese market has shown recovery in the commercial vehicle sector, which represents the primary opportunity for CGI. Growth for SinterCast in China depends on the continued modernisation of road infrastructure, enforcement of emissions legislation, and acceptance of the SinterCast business model. In North America, passenger vehicle sales remain strong and SinterCast has benefitted from the recent market growth and the trend toward larger crossovers, SUVs and pick-ups. Although the top three best-selling vehicles in America have recently committed to diesel engine options, the long-term outlook for diesel passenger vehicles remains uncertain. The possible renegotiation of free trade agreements could also have an impact on the North American passenger vehicle and commercial vehicle markets. |
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This report was approved by the board on 20 August 2019 and signed on its behalf. |
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Dr S Dawson |
Director |
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Basis for opinion |
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the financial statements section of our report. We are independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. |
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Conclusions relating to going concern |
We have nothing to report in respect of the following matters in relation to which the ISAs (UK) require us to report to you where: |
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the directors' use of the going concern basis of accounting in the preparation of the financial statements is not appropriate; or |
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the directors have not disclosed in the financial statements any identified material uncertainties that may cast significant doubt about the company’s ability to continue to adopt the going concern basis of accounting for a period of at least twelve months from the date when the financial statements are authorised for issue. |
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Other information |
The other information comprises the information included in the report and financial statements, 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 our 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 this other information, we are required to report that fact. |
We have nothing to report in this regard. |
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Opinions on other matters prescribed by the Companies Act 2006 |
In our opinion, based on the work undertaken in the course of the audit: |
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the information given in the strategic report and the directors’ report for the financial year for which the financial statements are prepared is consistent with the financial statements; and |
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the strategic report and the directors’ report have been prepared in accordance with applicable legal requirements. |
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Matters on which we are required to report by exception |
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Debtors |
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Short term debtors are measured at transaction price (which is usually the invoice price), less any impairment losses for bad and doubtful debts. Loans and other financial assets are initially recognised at transaction price including any transaction costs and subsequently measured at amortised cost determined using the effective interest method, less any impairment losses for bad and doubtful debts. |
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Creditors |
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Short term creditors are measured at transaction price (which is usually the invoice price). Loans and other financial liabilities are initially recognised at transaction price net of any transaction costs and subsequently measured at amortised cost determined using the effective interest method. |
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Taxation |
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A current tax liability is recognised for the tax payable on the taxable profit of the current and past periods. A current tax asset is recognised in respect of a tax loss that can be carried back to recover tax paid in a previous period. Deferred tax is recognised in respect of all timing differences between the recognition of income and expenses in the financial statements and their inclusion in tax assessments. Unrelieved tax losses and other deferred tax assets are recognised only to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Deferred tax is measured using the tax rates and laws that have been enacted or substantively enacted by the reporting date and that are expected to apply to the reversal of the timing difference, except for revalued land and investment property where the tax rate that applies to the sale of the asset is used. Current and deferred tax assets and liabilities are not discounted. |
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Provisions |
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Provisions (ie liabilities of uncertain timing or amount) are recognised when there is an obligation at the reporting date as a result of a past event, it is probable that economic benefit will be transferred to settle the obligation and the amount of the obligation can be estimated reliably. |
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Foreign currency translation |
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Transactions in foreign currencies are initially recognised at the rate of exchange ruling at the date of the transaction. At the end of each reporting period foreign currency monetary items are translated at the closing rate of exchange. Non-monetary items that are measured at historical cost are translated at the rate ruling at the date of the transaction. All differences are charged to profit or loss. |
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Leased assets |
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Operating lease payments are recognised as an expense on a straight line basis over the lease term. |
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Pensions |
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Contributions to defined contribution plans are expensed in the period to which they relate. |
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2 |
Analysis of turnover |
2018 |
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2017 |
£ |
£ |
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Sale of goods |
9,061 |
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6,148 |
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Services rendered |
554,613 |
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549,405 |
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563,674 |
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555,553 |
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By geographical market: |
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UK |
14,267 |
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22,214 |
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Europe |
549,407 |
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533,339 |
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563,674 |
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555,553 |
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3 |
Operating profit |
2018 |
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2017 |
£ |
£ |
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This is stated after charging: |
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Depreciation of owned fixed assets |
807 |
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807 |
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Auditors' remuneration for audit services |
3,500 |
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3,500 |
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Key management personnel compensation (including directors' emoluments) |
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407,376 |
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390,503 |
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Foreign exchange differences |
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(75) |
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2 |
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Production costs |
7,945 |
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5,425 |
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4 |
Directors' emoluments |
2018 |
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2017 |
£ |
£ |
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Emoluments |
338,376 |
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323,003 |
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Company contributions to defined contribution pension plans |
69,000 |
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67,500 |
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407,376 |
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390,503 |
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Highest paid director: |
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Emoluments |
338,376 |
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323,003 |
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Company contributions to defined contribution pension plans |
69,000 |
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67,500 |
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407,376 |
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390,503 |
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Number of directors to whom retirement benefits accrued: |
2018 |
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2017 |
Number |
Number |
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Defined contribution plans |
1 |
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1 |
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5 |
Staff costs |
2018 |
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2017 |
£ |
£ |
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Wages and salaries |
338,376 |
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323,003 |
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Social security costs |
45,335 |
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45,330 |
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Other pension costs |
69,000 |
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67,500 |
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452,711 |
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435,833 |
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Average number of employees during the year |
Number |
Number |
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Administration |
1 |
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1 |
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6 |
Taxation |
2018 |
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2017 |
£ |
£ |
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Analysis of charge in period |
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Tax on profit on ordinary activities |
- |
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- |
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Factors affecting tax charge for period |
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The differences between the tax assessed for the period and the standard rate of corporation tax are explained as follows: |
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2018 |
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2017 |
£ |
£ |
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Profit on ordinary activities before tax |
22,825 |
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6,045 |
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Standard rate of corporation tax in the UK |
19.25% |
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19.25% |
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£ |
£ |
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Profit on ordinary activities multiplied by the standard rate of corporation tax |
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4,394 |
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1,164 |
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Effects of: |
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Expenses not deductible for tax purposes |
821 |
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11,885 |
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Utilisation of tax losses |
(5,215) |
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(13,049) |
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Current tax charge for period |
- |
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- |
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Factors that may affect future tax charges |
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The company has estimated tax losses of £2,786,501 (2017 - £2,756,093) available for carry forward against future trading profits. |
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7 |
Tangible fixed assets |
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Computer equipment |
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Fixtures and fittings |
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Total |
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At cost |
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At cost |
£ |
£ |
£ |
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Cost or valuation |
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At 1 January 2018 |
3,763 |
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2,914 |
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6,677 |
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At 31 December 2018 |
3,763 |
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2,914 |
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6,677 |
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Depreciation |
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At 1 January 2018 |
2,284 |
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2,914 |
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5,198 |
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Charge for the year |
807 |
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- |
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807 |
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At 31 December 2018 |
3,091 |
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2,914 |
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6,005 |
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Carrying amount |
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At 31 December 2018 |
672 |
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- |
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672 |
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At 31 December 2017 |
1,479 |
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- |
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1,479 |
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8 |
Debtors |
2018 |
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2017 |
£ |
£ |
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Trade debtors |
7,029 |
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5,321 |
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Amounts owed by group undertakings and undertakings in which the company has a participating interest |
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183,653 |
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362,355 |
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Other debtors |
5,784 |
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538 |
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Prepayments and accrued income |
1,655 |
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1,699 |
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198,121 |
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369,913 |
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9 |
Creditors: amounts falling due within one year |
2018 |
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2017 |
£ |
£ |
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Trade creditors |
2,388 |
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30 |
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Other taxes and social security costs |
17,402 |
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11,157 |
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Other creditors |
4,053 |
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3,045 |
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Accruals and deferred income |
73,865 |
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258,373 |
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97,708 |
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272,605 |
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10 |
Share capital |
Nominal |
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2018 |
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2018 |
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2017 |
value |
Number |
£ |
£ |
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Allotted, called up and fully paid: |
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Ordinary shares |
£1 each |
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3,159,093 |
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3,159,093 |
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3,159,093 |
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11 |
Other reserves |
2018 |
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2017 |
£ |
£ |
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At 1 January 2018 |
286,775 |
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286,775 |
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At 31 December 2018 |
286,775 |
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286,775 |
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12 |
Profit and loss account |
2018 |
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2017 |
£ |
£ |
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At 1 January 2018 |
(3,336,828) |
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(3,342,873) |
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Profit for the financial year |
22,825 |
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6,045 |
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At 31 December 2018 |
(3,314,003) |
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(3,336,828) |
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13 |
Related party transactions |
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The company has taken advantage of the exemption in FRS 102 from the requirement to disclose transactions with the company's parent company on the grounds that the company is a wholly owned subsidiary of that parent company. There were no other related party transactions. |
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14 |
Controlling party |
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The immediate and ultimate parent company is SinterCast AB (publ), a company registered in Sweden, Company registration no. 556233-6494, SinterCast AB (publ) prepares group financial statements and copies can be obtained from Box 10203, SE-100 55, Stockholm, Sweden. |
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15 |
Presentation currency |
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The financial statements are presented in Sterling. |
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16 |
Legal form of entity and country of incorporation |
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SinterCast Limited is a private company limited by shares and incorporated in England. |
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17 |
Principal place of business |
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The address of the company's principal place of business and registered office is: |
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Kingswick House |
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Kingswick Drive |
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Ascot |
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Berkshire |
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SL5 7BH |