Eurocraft Technologies Limited - Limited company accounts 18.2

REGISTERED NUMBER: 08249178 (England and Wales)

STRATEGIC REPORT, REPORT OF THE DIRECTOR AND

FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2018

FOR

EUROCRAFT TECHNOLOGIES LIMITED

Page

Company Information

1

Strategic Report

2

Report of the Director

3

Report of the Independent Auditors

5

Statement of Comprehensive Income

7

Statement of Financial Position

8

Statement of Changes in Equity

9

Notes to the Financial Statements

10

DIRECTOR:

P Mehta

REGISTERED OFFICE:

Cinderbank

Dudley

West Midlands

DY2 9AE

REGISTERED NUMBER:

08249178 (England and Wales)

AUDITORS:

DNG Dove Naish LLP, Statutory Auditor

Eagle House

28 Billing Road

Northampton

NN1 5AJ

The director presents his strategic report for the year ended 31 December 2018.

The trading results for the year and the company's financial position at the end of the year are shown in the

attached financial statements.

REVIEW OF BUSINESS

Turnover has decreased by 20% this year, from £13,936,586 to £11,080,130.

Gross profit margin has increased by 2.6% from 23.3% to 25.9%, largely as a result of reduced staff costs

and reduced depreciation compared with last year as a consequence of an impairment review of plant and

machinery.

Profit before tax decreased by 44%, and as a percentage of turnover, has decreased to 6% from 8% in the

previous period as a result of increased overhead costs. The increase in administrative expenses is largely

due to the effect of currency movements.

Volume on its key contracts was down this year, but the company continued to work with its customers on the

development of new products and service offerings to house new and evolving technologies. The company

continues to invest and expand its operations, premises, manpower and machinery.

PRINCIPAL RISKS AND UNCERTAINTIES

Risk is a key element of the company's strategic management, whereby it addresses the risks attached to

each of its activities. This is reflected in the company's Business Continuity plan, which incorporates Risk

Tolerance Matrices, Business Impact Analyses and Action Plans.

Regular reviews of the company's Business Continuity plan, policies, quality control and health and safety

procedures are undertaken as part of the company's risk management process.

In common with many manufacturing businesses in the UK the company continues to be exposed to the

effects of global competition but focuses on providing quality products and solutions for its customers.

KEY PERFORMANCE INDICATORS

The company operates with a range of key performance indicators, the principal measures fall within the

following categories; profitability, sales & customer service, resource & cost effectiveness. These are

reviewed at regular QMS meetings.

SIGNED BY ORDER OF THE DIRECTORS:

P Mehta - Director

25 September 2019

The director presents his report with the financial statements of the company for the year ended 31 December 2018.

PRINCIPAL ACTIVITY

The principal activity of the company in the year under review was that of the design, manufacture and sale of

enclosure systems for use in the communications industries in both internal and external environments.

DIVIDENDS

No dividends will be distributed for the year ended 31 December 2018.

RESEARCH AND DEVELOPMENT

The company will continue to support its customers' design and technical authorities by developing new

product sets that meet their application specific requirements. The company has again invested in research

and development to achieve product approvals in a new product range.

FUTURE DEVELOPMENTS

The company continues to work in partnership with its major customers ensuring that its products and

solutions meet the demands of evolving technologies within the telecommunications sector.

DIRECTOR

P Mehta held office during the whole of the period from 1 January 2018 to the date of this report.

STATEMENT OF DIRECTOR'S RESPONSIBILITIES

The director is responsible for preparing the Strategic Report, the Report of the Director and the financial

statements in accordance with applicable law and regulations.

Company law requires the director to prepare financial statements for each financial year. Under that law the

director has elected to prepare the financial statements in accordance with United Kingdom Generally

Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law), including

Financial Reporting Standard 102 'The Financial Reporting Standard applicable in the UK and Republic of

Ireland'. Under company law the director must not approve the financial statements unless he is satisfied that

they give a true and fair view of the state of affairs of the company and of the profit or loss of the company for

that period. In preparing these financial statements, the director is required to:

-	select suitable accounting policies and then apply them consistently;

-	make judgements and accounting estimates that are reasonable and prudent;

-	prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.

The director is responsible for keeping adequate accounting records that are sufficient to show and explain

the company's transactions and disclose with reasonable accuracy at any time the financial position of the

company and enable him to ensure that the financial statements comply with the Companies Act 2006. He is

also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the

prevention and detection of fraud and other irregularities.

STATEMENT AS TO DISCLOSURE OF INFORMATION TO AUDITORS

So far as the director is aware, there is no relevant audit information (as defined by Section 418 of the

Companies Act 2006) of which the company's auditors are unaware, and he has taken all the steps that he

ought to have taken as a director in order to make himself aware of any relevant audit information and to

establish that the company's auditors are aware of that information.

AUDITORS

The auditors, DNG Dove Naish LLP, Statutory Auditor, will be proposed for re-appointment at the

forthcoming Annual General Meeting.

SIGNED BY ORDER OF THE DIRECTORS:

P Mehta - Director

25 September 2019

Opinion

We have audited the financial statements of Eurocraft Technologies Limited (the 'company') for the year

ended 31 December 2018 which comprise the Statement of Comprehensive Income, Statement of Financial

Position, Statement of Changes in Equity and 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 United Kingdom Accounting Standards, including Financial Reporting Standard 102 'The

Financial Reporting Standard applicable in the UK and Republic of Ireland' (United Kingdom Generally

Accepted Accounting Practice).

In our opinion the financial statements:

-	give a true and fair view of the state of the company's affairs as at 31 December 2018 and of its profit for the year then ended;

-	have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and

-	have been prepared in accordance with the requirements of the Companies Act 2006.

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 Auditors'

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.

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:

-	the director's use of the going concern basis of accounting in the preparation of the financial statements is not appropriate; or

-

the director has 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.

Other information

The director is responsible for the other information. The other information comprises the information in the

Strategic Report and the Report of the Director, but does not include the financial statements and our Report

of the Auditors thereon.

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.

Opinions on other matters prescribed by the Companies Act 2006

In our opinion, based on the work undertaken in the course of the audit:

-	the information given in the Strategic Report and the Report of the Director for the financial year for which the financial statements are prepared is consistent with the financial statements; and

-	the Strategic Report and the Report of the Director have been prepared in accordance with applicable legal requirements.

Matters on which we are required to report by exception

In the light of the knowledge and understanding of the company and its environment obtained in the course of

the audit, we have not identified material misstatements in the Strategic Report or the Report of the Director.

We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to

report to you if, in our opinion:

-	adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or

-	the financial statements are not in agreement with the accounting records and returns; or

-	certain disclosures of director's remuneration specified by law are not made; or

-	we have not received all the information and explanations we require for our audit.

Responsibilities of director

As explained more fully in the Statement of Director's Responsibilities set out on page three, the director is

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 director determines 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 director is responsible for assessing the company's ability to

continue as a going concern, disclosing, as applicable, matters related to going concern and using the going

concern basis of accounting unless the director either intends to liquidate the company or to cease

operations, or has no realistic alternative but to do so.

Auditors' responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free

from material misstatement, whether due to fraud or error, and to issue a Report of the Auditors that includes

our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit

conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists.

Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate,

they could reasonably be expected to influence the economic decisions of users taken on the basis of these

financial statements.

A further description of our responsibilities for the audit of the financial statements is located on the Financial

Reporting Council's website at www.frc.org.uk/auditorsresponsibilities. This description forms part of our

Report of the Auditors.

Use of our report

This report is made solely to the company's members, as a body, in accordance with Chapter 3 of Part 16 of

the Companies Act 2006. Our audit work has been undertaken so that we might state to the company's

members those matters we are required to state to them in a Report of the Auditors and for no other purpose.

To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the

company and the company's members as a body, for our audit work, for this report, or for the opinions we

have formed.

Andrew Clifford (Senior Statutory Auditor)

for and on behalf of DNG Dove Naish LLP, Statutory Auditor

Eagle House

28 Billing Road

Northampton

NN1 5AJ

25 September 2019

TURNOVER

3

11,080,130

13,936,586

Cost of sales

8,205,635

10,685,481

GROSS PROFIT

2,874,495

3,251,105

Administrative expenses

2,198,495

2,044,817

676,000

1,206,288

Other operating income

3,387

3,387

OPERATING PROFIT

5

679,387

1,209,675

Interest receivable and similar income

-

1,053

679,387

1,210,728

Interest payable and similar expenses

6

11,395

6,433

PROFIT BEFORE TAXATION

667,992

1,204,295

Tax on profit

7

148,072

400,756

PROFIT FOR THE FINANCIAL YEAR

519,920

803,539

OTHER COMPREHENSIVE INCOME

-

-

TOTAL COMPREHENSIVE INCOME FOR THE YEAR

519,920

803,539

FIXED ASSETS

Intangible assets

8

679,464

830,457

Tangible assets

9

968,998

917,308

1,648,462

1,747,765

CURRENT ASSETS

Stocks

10

2,231,520

2,472,873

Debtors

11

1,335,700

1,404,310

Cash at bank and in hand

24,711

345,586

3,591,931

4,222,769

CREDITORS

Amounts falling due within one year

12

1,855,032

3,096,577

NET CURRENT ASSETS

1,736,899

1,126,192

TOTAL ASSETS LESS CURRENT LIABILITIES

3,385,361

2,873,957

PROVISIONS FOR LIABILITIES

14

194,719

203,235

NET ASSETS

3,190,642

2,670,722

CAPITAL AND RESERVES

Called up share capital

15

10,000

10,000

Merger reserve

16

120,316

120,316

Retained earnings

16

3,060,326

2,540,406

SHAREHOLDERS' FUNDS

3,190,642

2,670,722

The financial statements were approved by the director on 25 September 2019 and were signed by:

P Mehta - Director

Called up

share

Retained

Merger

Total

capital

earnings

reserve

equity

£

£

£

£

Balance at 1 January 2017

10,000

1,736,867

120,316

1,867,183

Changes in equity

Total comprehensive income

-

803,539

-

803,539

Balance at 31 December 2017

10,000

2,540,406

120,316

2,670,722

Changes in equity

Total comprehensive income

-

519,920

-

519,920

Balance at 31 December 2018

10,000

3,060,326

120,316

3,190,642

1.	STATUTORY INFORMATION

Eurocraft Technologies Limited is a private company, limited by shares , registered in England and

Wales. The company's registered number and registered office address can be found on the Company

Information page.

The presentation currency of the financial statements is the Pound Sterling (£).

2.	ACCOUNTING POLICIES

Basis of preparing the financial statements

These financial statements have been prepared in accordance with Financial Reporting Standard 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland" and the Companies Act 2006. The financial statements have been prepared under the historical cost convention.

Financial Reporting Standard 102 - reduced disclosure exemptions

The company has taken advantage of the following disclosure exemptions in preparing these financial

statements, as permitted by FRS 102 "The Financial Reporting Standard applicable in the UK and

Republic of Ireland":

•

the requirements of Section 7 Statement of Cash Flows;

•

the requirement of Section 33 Related Party Disclosures paragraph 33.7.

Significant judgements and estimates

The preparation of financial statements requires the use of certain critical accounting estimates. It also

requires management to exercise its judgement in the process of applying the company accounting

policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions

and estimates are significant to the financial statements are disclosed within the individual accounting

policies below.

Turnover

Turnover represents the value, net of Value Added Tax, of goods sold and services provided to

customers.

Turnover is generally recognised when the goods have been dispatched, and title passes to the

customer. There are occasions where the customer does not require immediate dispatch but the

company has earned the right to consideration. These are treated as bill and hold arrangements and

turnover is recognised at the point the right to consideration is reached.

Goodwill

Goodwill, being the amount paid in connection with the acquisition of a business in 2013, is being amortised evenly over its estimated useful life of ten years.

Tangible fixed assets

Depreciation is provided at the following annual rates in order to write off each asset over its estimated

useful life, or if held under a finance lease, over the lease term, whichever is the shorter.

Plant and machinery - over 3 to 15 years straight line

Fixtures and fittings - over 3 to 8 years straight line

Leasehold improvements - over the period of the lease

Fixed assets are stated at cost less accumulated depreciation and accumulated impairment losses.

Where parts of an item of property, plant and equipment have different useful lives, they are accounted

for as separate items of property, plant and equipment.

Depreciation methods, useful lives and residual values are reviewed at each balance sheet date. The

selection of these residual values and estimated lives requires the exercise of judgement. The

directors are required to assess whether there is an indication of impairment to the carrying value of

assets. In making that assessment, judgements are made in estimating value in use. The directors

consider that the individual carrying values of assets are supportable by their value in use.

Stocks

Stocks and work in progress are valued at the lower of cost and net realisable value, after making due

allowance for obsolete and slow moving items.

Cost is calculated using the first-in, first-out method and includes all purchase, transport, and handling

costs in bringing stocks to their present location and condition.

Financial instruments

Cash and cash equivalents in the balance sheet comprise cash at banks and in hand and short term

deposits with an original maturity date of three months or less.

Debtors and creditors with no stated interest rate and receivable or payable within one year are

recorded at transaction price. Any losses arising from impairment are recognised in the statement of

comprehensive income under administrative expenses.

Financial liabilities and equity instruments are classified according to the substance of the contractual

arrangements entered into. An equity instrument is any contract that evidences a residual interest in

the assets of the entity after deducting all of its financial liabilities.

Where the contractual obligations of financial instruments (including share capital) are equivalent to a

similar debt instrument, those financial instruments are classed as financial liabilities. Financial

liabilities are presented as such in the balance sheet. Finance costs and gains or losses relating to

financial liabilities are included in the profit and loss account. Finance costs are calculated so as to

produce a constant rate of return on the outstanding liability.

Where the contractual terms of share capital do not have any terms meeting 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.

Taxation

Taxation for the year comprises current and deferred tax. Tax is recognised in the Statement of

Comprehensive Income, except to the extent that it relates to items recognised in other comprehensive

income or directly in equity.

Current or deferred taxation assets and liabilities are not discounted.

Current tax is recognised at the amount of tax payable using the tax rates and laws that have been

enacted or substantively enacted by the statement of financial position date.

Deferred tax

Deferred tax is recognised in respect of all timing differences that have originated but not reversed at

the statement of financial position date.

Timing differences arise from the inclusion of income and expenses in tax assessments in periods

different from those in which they are recognised in financial statements. Deferred tax is measured

using tax rates and laws that have been enacted or substantively enacted by the year end and that are

expected to apply to the reversal of the timing difference.

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.

Research and development

Expenditure on research and development is written off in the year in which it is incurred.

Foreign currencies

Assets and liabilities in foreign currencies are translated into sterling at the rates of exchange ruling at

the statement of financial position date. Transactions in foreign currencies are translated into sterling

at the rate of exchange ruling at the date of transaction. Exchange differences are taken into account

in arriving at the operating result.

Hire purchase and leasing commitments

Assets obtained under hire purchase contracts or finance leases are capitalised in the balance sheet.

Those held under hire purchase contracts are depreciated over their estimated useful lives. Those

held under finance leases are depreciated over their estimated useful lives or the lease term,

whichever is the shorter.

The interest element of these obligations is charged to profit or loss over the relevant period. The

capital element of the future payments is treated as a liability.

Pension costs and other post-retirement benefits

The company operates a defined contribution pension scheme. Contributions payable to the

company's pension scheme are charged to profit or loss in the period to which they relate.

3.

TURNOVER

The turnover and profit before taxation are attributable to the one principal activity of the company.

An analysis of turnover by geographical market is given below:

2018

2017

£

£

United Kingdom

11,067,210

13,931,074

Europe

12,920

5,512

11,080,130

13,936,586

4.	EMPLOYEES AND DIRECTORS

2018

2017

£

£

Wages and salaries

2,419,945

3,004,208

Social security costs

174,605

191,935

Other pension costs

66,037

43,449

2,660,587

3,239,592

The average number of employees during the year was as follows:

2018

2017

Office and management

7

7

Manufacturing

104

116

111

123

2018

2017

£

£

Director's remuneration

-

-

5.	OPERATING PROFIT

The operating profit is stated after charging/(crediting):

2018

2017

£

£

Depreciation - owned assets

206,260

320,935

Loss on disposal of fixed assets

7,000

2,312

Goodwill amortisation

150,993

150,993

Auditors' remuneration

12,975

13,000

Foreign exchange differences

68,045

(117,038

)

6.

INTEREST PAYABLE AND SIMILAR EXPENSES

2018

2017

£

£

Bank loan interest

-

1

Other interest payable

11,395

6,432

11,395

6,433

7.

TAXATION

Analysis of the tax charge

The tax charge on the profit for the year was as follows:

2018

2017

£

£

Current tax:

UK corporation tax

147,656

297,521

Deferred tax

416

103,235

Tax on profit

148,072

400,756

UK corporation tax has been charged at 19% (2017 - 19%).

Reconciliation of total tax charge included in profit and loss

The tax assessed for the year is higher than the standard rate of corporation tax in the UK. The

difference is explained below:

2018

2017

£

£

Profit before tax

667,992

1,204,295

Profit multiplied by the standard rate of corporation tax in the UK of 19% (2017 - 19%)

126,918

228,816

Effects of:

Expenses not deductible for tax purposes

4,383

10,795

Depreciation in excess of capital allowances

15,005

54,098

Deferred tax

416

103,235

Tax rate changes

1,350

3,812

Total tax charge

148,072

400,756

8.	INTANGIBLE FIXED ASSETS

Goodwill

£

COST

At 1 January 2018

and 31 December 2018

1,509,925

AMORTISATION

At 1 January 2018

679,468

Amortisation for year

150,993

At 31 December 2018

830,461

NET BOOK VALUE

At 31 December 2018

679,464

At 31 December 2017

830,457

9.	TANGIBLE FIXED ASSETS

Fixtures

Short

Plant and

and

leasehold

machinery

fittings

Totals

£

£

£

£

COST

At 1 January 2018

192,396

2,567,538

352,112

3,112,046

Additions

-

262,816

17,134

279,950

Disposals

-

(540,601

)

(11,018

)

(551,619

)

At 31 December 2018

192,396

2,289,753

358,228

2,840,377

DEPRECIATION

At 1 January 2018

162,659

1,757,132

274,947

2,194,738

Charge for year

12,093

180,267

13,900

206,260

Eliminated on disposal

-

(518,601

)

(11,018

)

(529,619

)

At 31 December 2018

174,752

1,418,798

277,829

1,871,379

NET BOOK VALUE

At 31 December 2018

17,644

870,955

80,399

968,998

At 31 December 2017

29,737

810,406

77,165

917,308

10.

STOCKS

2018

2017

£

£

Raw materials

1,076,673

792,754

Work-in-progress

440,330

403,727

Finished goods

714,517

1,276,392

2,231,520

2,472,873

11.

DEBTORS: AMOUNTS FALLING DUE WITHIN ONE YEAR

2018

2017

£

£

Trade debtors

1,150,189

1,181,258

Other debtors

50,401

60,186

Tax

12,088

12,088

Prepayments and accrued income

123,022

150,778

1,335,700

1,404,310