Stokes Group Limited - Limited company accounts 18.2

REGISTERED NUMBER: 02567976 (England and Wales)

STRATEGIC REPORT,

REPORT OF THE DIRECTORS AND

AUDITED FINANCIAL STATEMENTS

FOR THE PERIOD

1ST JANUARY 2018 TO 30TH DECEMBER 2018

FOR

STOKES GROUP LIMITED

Page

Company Information

1

Strategic Report

2

Report of the Directors

3

Report of the Independent Auditors

4

Income Statement

7

Other Comprehensive Income

8

Statement of Financial Position

9

Statement of Changes in Equity

10

Notes to the Financial Statements

11

DIRECTORS:

M Rabanal Nunez

J Telleria Basanez

SECRETARY:

L K Seville

REGISTERED OFFICE:

34 Cochrane Road

Holly Hall

Dudley

West Midlands

DY2 0SE

REGISTERED NUMBER:

02567976 (England and Wales)

SENIOR STATUTORY AUDITOR:

Matthew Adam Bailey

AUDITORS:

Howards Limited

Chartered Certified Accountants

Statutory Auditors

Newport House

Newport Road

Stafford

Staffordshire

ST16 1DA

The directors present their strategic report for the period 1st January 2018 to 30th December 2018.

Introduction

The Directors of Stokes Group Limited present the Strategic report of the Company for the period ended 30 December

2018. The Company is a wholly-owned subsidiary of Mahindra CIE Automotive, a part of CIE Automotive Group, a

global enterprise headquartered in Spain, with revenues of around €3.0 billion in 2018 (2017 €2.8 billion excluding

discontinued activities).

Business background

The Company manufactures steel forgings on a variety of forging presses at the UK site in Dudley, West Midlands.

The Company has a long tradition of supplying quality parts into the automotive sector.

The Company supplies parts which feature on Jaguar Land Rover, Volvo, Ford and Honda models. 96% of sales are

made within the European Union with other exports to the United States and China.

The Company is accredited with ISO9001, ISO16949 and ISO14001.

REVIEW OF BUSINESS

The company's owners, Mahindra CIE Automotive have reached the view that it was not possible to create a profitable

sustainable business at Stokes. It was proposed that the company should wind-down and cease operations entirely

with production ending in the first half of 2019.

As a specialist automotive supplier, the Company has been severely impacted by the uncertainty in the UK Automotive

market, with demand at key customers falling sharply compared to the expected levels. Key products have been

replaced with non-forged alternatives.

Despite being an efficient and cost competitive European supplier with excellent quality and delivery performance,

important customers have chosen to source their forged components from overseas at prices that could not be matched

and potential overseas customers were concerned about the impact of Brexit.

After discussions with the employees of the Company it was agreed that no viable alternative strategies were available

and the formal announcement for the closure of the Company was made.

The directors consider the company is no longer a going concern and therefore have made the adjustments they

consider necessary, as described in note 3 of these financial statements, which includes a provision for the expected

future costs associated with the company closure.

PRINCIPAL RISKS AND UNCERTAINTIES

Commodity price risk

The Company's exposure to the price of steel is high, therefore selling prices are monitored regularly to reduce the

impact of such risk. Wherever possible, contracts entered into with customers include price escalation clauses to pass

on movements in steel prices.

Levels of demand in the market

The Company's market is largely reliant on the strength of the global automotive industry and therefore faces uncertain

demand for products. Lack of consumer confidence caused by Brexit and concerns over the long term viability of diesel

engines has seen demand fall.

Economic conditions

The operating and financial performance of the Company is influenced by the economic conditions within the

geographic areas within which it operates, in particular the UK and Eurozone. Currently, a key uncertainty around the

UK and Eurozone economic outlook is driven by the proposed exit of the UK from the European Union ('Brexit')..

FINANCIAL KEY PERFORMANCE INDICATORS

The Company monitors its financial performance through the constant measure, in it's management accounts, of key

performance indicators; primarily the earnings before interest, tax, depreciation, and amortisation percentage which was

1.1% (2017 3.6%) before exceptional items stated in note 6 to the financial statements.

ON BEHALF OF THE BOARD:

L K Seville - Secretary

13th December 2019

The directors present their report with the financial statements of the company for the period 1st January 2018 to 30th December 2018.

CESSATION OF TRADING

The company ceased trading on 30th November 2019.

PRINCIPAL ACTIVITY

The principal activity of the company in the period under review was that of the manufacture of forgings and provision of

general engineering services.

DIVIDENDS

No dividends will be distributed for the period ended 30th December 2018.

DIRECTOR

P G Morgan held office from 1st January 2018 until after 30th December 2018 but prior to the date of this report.

M Rabanal Nunez and J Telleria Basanez were appointed as directors after 30th December 2018 but prior to the date of this report.

STATEMENT OF DIRECTORS' RESPONSIBILITIES

The directors are responsible for preparing the Strategic Report, the Report of the Directors and the financial statements

in accordance with applicable law and regulations.

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

have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting

Practice (United Kingdom Accounting Standards and applicable law). 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

company and of the profit or loss of the company 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;

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

The directors are 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 them to ensure that the financial statements comply with the Companies Act 2006. They are 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 directors are 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 each director 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, Howards Limited, will be proposed for re-appointment at the forthcoming Annual General Meeting.

ON BEHALF OF THE BOARD:

L K Seville - Secretary

13th December 2019

Qualified opinion

We have audited the financial statements of Stokes Group Limited (the 'company') for the period ended

30th December 2018 which comprise the Income Statement, Other 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, except for the possible effects of the matter described in the basis for qualified opinion section of our

report, the financial statements:

- give a true and fair view of the state of the company’s affairs as at 30 December 2018 and of the

company’s loss for the period 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 qualified opinion

We were not appointed as auditor of the company until after 30 December 2018 and thus did not observe the counting

of physical inventories at the end of the period. We were unable to satisfy ourselves by alternative means concerning

the inventory quantities held at 30 December 2018, which are included in the balance sheet at £2,344,957, by using

other audit procedures. Consequently we were unable to determine whether any adjustment to this amount was

necessary.

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 qualified opinion.

Conclusions relating to going concern

We draw attention to note 3 in the financial statements, which indicates that the company is no longer a going concern

following the decision to close the business. As stated in note 3, appropriate adjustments have been made to the

financial statements which the directors consider necessary. Our opinion is not modified in respect of this matter.

Key audit matters

Except for the matter described in the basis for qualified opinion section, we have determined that there are no key audit

matters to be communicated in our report.

Other information

The other information comprises the information included in the annual report, 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. As described in the basis for qualified opinion section of our report, we were

unable to satisfy ourselves concerning the inventory quantities of £2,344,957 held at 30 December 2018. We have

concluded that where the other information refers to the inventory balance or related balances such as cost of sales, it

may be materially misstated for the same reason.

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 Directors 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 Directors 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 Directors.

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 directors' remuneration specified by law are not made; or

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

Responsibilities of directors

As explained more fully in the Statement of Directors' Responsibilities set out on page three, 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 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 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 directors either intend to liquidate the company or to cease operations, or have 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.

As part of an audit in accordance with ISAs (UK), we exercise professional judgement and maintain professional

scepticism throughout the audit. We also:

-

Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

-	Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company's internal control.

-	Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors.

-

Conclude on the appropriateness of the directors' use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the company's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our Report of the Auditors to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our Report of the Auditors. However, future events or conditions may cause the company to cease to continue as a going concern.

-	Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of

the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our

audit.

From the matters communicated with those charged with governance, we determine those matters that were of most

significance in the audit of the financial statements of the current period and are therefore the key audit matters. We

describe these matters in our Report of the Auditors unless law or regulation precludes public disclosure about the

matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report

because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits

of such communication.

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.

Matthew Adam Bailey (Senior Statutory Auditor)

for and on behalf of Howards Limited

Chartered Certified Accountants

Statutory Auditors

Newport House

Newport Road

Stafford

Staffordshire

ST16 1DA

13th December 2019

TURNOVER

4

7,874,214

10,652,719

Cost of sales

6,402,337

9,352,331

GROSS PROFIT

1,471,877

1,300,388

Administrative expenses

1,961,075

2,395,726

(489,198

)

(1,095,338

)

Other operating income

1,416

17,000

OPERATING LOSS

6

(487,782

)

(1,078,338

)

Exceptional Items

7

4,656,484

-

(5,144,266

)

(1,078,338

)

Interest payable and similar expenses

8

410,243

430,916

LOSS BEFORE TAXATION

(5,554,509

)

(1,509,254

)

Tax on loss

9

-

-

LOSS FOR THE FINANCIAL PERIOD

(5,554,509

)

(1,509,254

)

LOSS FOR THE PERIOD

(5,554,509

)

(1,509,254

)

OTHER COMPREHENSIVE INCOME

-

-

TOTAL COMPREHENSIVE LOSS FOR THE PERIOD

(5,554,509

)

(1,509,254

)

FIXED ASSETS

Intangible assets

10

-

-

Tangible assets

11

1,093,470

1,840,938

Investments

12

2

2

1,093,472

1,840,940

CURRENT ASSETS

Stocks

13

2,344,957

1,863,167

Debtors

14

1,050,613

1,144,746

Prepayments and accrued income

53,992

50,794

Cash at bank and in hand

1,357,285

639,780

4,806,847

3,698,487

CREDITORS

Amounts falling due within one year

15

4,356,598

1,867,529

NET CURRENT ASSETS

450,249

1,830,958

TOTAL ASSETS LESS CURRENT LIABILITIES

1,543,721

3,671,898

CREDITORS

Amounts falling due after more than one year

16

1,530,894

10,390,962

NET ASSETS/(LIABILITIES)

12,827

(6,719,064

)

CAPITAL AND RESERVES

Called up share capital

20

13,832,931

1,546,531

Share premium

21

6,903,196

6,903,196

Capital redemption reserve

21

41,268

41,268

Retained earnings

21

(20,764,568

)

(15,210,059

)

SHAREHOLDERS' FUNDS

12,827

(6,719,064

)

The financial statements were approved by the Board of Directors on 13th December 2019 and were signed on its behalf by:

M Rabanal Nunez - Director

Called up

Capital

share

Retained

Share

redemption

Total

capital

earnings

premium

reserve

equity

£

£

£

£

£

Balance at 1st January 2017

1,546,531

(13,700,805

)

6,903,196

41,268

(5,209,810

)

Changes in equity

Total comprehensive loss

-

(1,509,254

)

-

-

(1,509,254

)

Balance at 31st December 2017

1,546,531

(15,210,059

)

6,903,196

41,268

(6,719,064

)

Changes in equity

Issue of share capital

12,286,400

-

-

-

12,286,400

Total comprehensive loss

-

(5,554,509

)

-

-

(5,554,509

)

Balance at 30th December 2018

13,832,931

(20,764,568

)

6,903,196

41,268

12,827

1.	STATUTORY INFORMATION

Stokes Group Limited is a private company, limited by shares, registered in England and Wales. The company's

registered number is 02567976 and the registered office address is 34 Cochrane Road, Holly Hall, Dudley, West

Midlands, United Kingdom.

The principal activity of the company is that of the manufacturing of forgings and general engineering.

2.	STATEMENT OF COMPLIANCE

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.

3.	ACCOUNTING POLICIES

Basis of preparing the financial statements

The financial statements have been prepared under the historical cost convention.

Functional currency

The financial statements are prepared in sterling (£). The functional currency of the company is sterling (£).

Going concern

The directors issued a notice on 17 October 2018 stating the intention of the company to close the business and

after an extended closure period it ceased trading on the 30 November 2019 and therefore is no longer a going

concern. Provisions have been made in respect of contracts which have become onerous at the reporting date

and for the future costs of closing the business which were committed at the reporting date. The directors do not

consider that any other adjustments are necessary.

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 3 Financial Statement Presentation paragraph 3.17(d);

•

the requirement of Section 33 Related Party Disclosures paragraph 33.7.

Preparation of consolidated financial statements

The financial statements contain information about Stokes Group Limited as an individual company and do not

contain consolidated financial information as the parent of a group. The company is exempt under Section 400

of the Companies Act 2006 from the requirements to prepare consolidated financial statements as it and its

subsidiary undertaking are included by full consolidation in the consolidated financial statements of its parent,

CIE Automotive S.A., Alameda Mazarredo 69, 8 48009 Bilbao (Vizcaya), Espana.

Related party exemption

The company has taken advantage of exemption, under the terms of Financial Reporting Standard 102 'The

Financial Reporting Standard applicable in the UK and Republic of Ireland', not to disclose related party

transactions with wholly owned subsidiaries within the group.

Significant judgements and estimates

Preparation of the financial statements require management to make significant judgements and estimates. The

items included in the financial statements where these judgements and estimates have been made include:

Stock provision

At each reporting date, stocks are assessed for impairment. Management uses their judgement in assessing

whether stocks are impaired and how much impairment loss to record, based on their knowledge of trading

conditions in the market and past experience.

Bad debt provision

A specific provision is made at each period end date based on management knowledge of the customer base

Useful economic life of fixed assets

The useful economic life of fixed assets used in the production process is an estimate significant to the financial

statements. Management regularly reviews the lives of assets and their residual values in line with business

development.

Classification of dies and tooling

The Company recognises these items as stock due to the maintenance processes that are used to return the

dilapidated dies and tooling back to a new condition. The Company decided that due to the processes involved,

and the length of the life of the tooling, holding these assets as current assets was more appropriate than

recognising them elsewhere in the Statement of Financial Position.

Recoverability of deferred tax assets

Management estimation is required to determine the amount of deferred tax assets that can be recognised,

based upon likely timing and level of future taxable profits together with an assessment of the effect of future tax

planning strategies.

Turnover

Turnover comprises revenue recognised by the Company in respect of goods and services supplied during the

year, exclusive of Value Added Tax and trade discounts. Turnover is recognised on the delivery of products to

customers.

Goodwill

Goodwill is the difference between amounts paid on the acquisition of a business and the fair value of the

identifiable assets and liabilities. It is amortised to the Statement of Comprehensive Income over its estimated

economic life.

Tangible fixed assets

Depreciation is provided at the following annual rates in order to write off the cost less estimated residual value of each asset over its estimated useful life or, if held under a finance lease, over the lease term, whichever is the shorter.

Freehold property

-

2% on cost

Improvements to property

-

Equally over the lease term

Plant and machinery

-

33% on cost and 10% on cost

Government grants

Government grants relating to tangible fixed assets are treated as deferred income and release to the Statement

of Comprehensive Income over the expected useful lives of the assets concerned. Other grants are credited to

the Statement of Comprehensive Income as the related expenditure is incurred.

Investments in subsidiaries

Investments in subsidiary undertakings are measured at cost less accumulated impairment

Stocks

Stocks and work in progress are valued at the lower of cost and net reaslisable value. Cost is determined on a

"first in first out" basis after making due allowance for obsolete and slow-moving stocks. Cost includes all direct

costs and an appropriate proportion of fixed and variable overheads.

Financial instruments

The company only enters into basic financial instruments transactions that result in the recognition of financial

assets and liabilities like trade and other accounts receivable and payable, loans from banks and other third

parties, loans to related parties and investments in non-puttable ordinary shares.

Financial assets that are measured at cost and amortised cost are assessed at the end of each reporting period

for objective evidence of impairment. If objective evidence of impairment is found, an impairment loss is

recognised in profit or loss.

For financial assets measured at amortised cost, the impairment loss is measured as the difference between an

asset's carrying amount and the present value of estimated cash flows discounted at the asset's original effective

interest rate. If a financial asset has a variable interest rate, the discount rate for measuring any impairment loss

is the current effective interest rate determined under the contract.

For financial assets measured at cost less impairment, the impairment loss is measured as the difference

between an asset's carrying amount and the best estimate, which is an approximation, of the amount that the

company would receive for the asset if it were to be sold at the reporting date.

Financial assets and liabilities are offset and the net amount reported in the statement of financial position when

there is an enforceable right to set off the recognised amounts and there is an intention to settle on a net basis

or to realise the asset and settle the liability simultaneously.

Taxation

Taxation for the period comprises current and deferred tax. Tax is recognised in the Income Statement, 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 period 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.

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 and finance leases are capitalised as tangible fixed assets.

Assets acquired by finance lease are depreciated over the shorter or the lease term and heir useful lives. Assets

acquired by hire purchase are depreciated over their useful lives. Finance leases are those where substantially

all of the benefits and risks of ownership are assumed by the Company. Obligations under such agreements are

included in creditors net of the finance charge allocated to future periods. The finance element of the rental

payment is charged to the Statement of Comprehensive Income so as to produce a constant periodic rate of

charge on the net obligation outstanding in each period,

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.

Provisions

Provisions are recognised when the company has a legal or constructive obligation at the reporting date as a

result of a past event, it is probable that the company will be required to settle the obligation and the amount of

the obligation can be reliably estimated.

Provisions are recognised at the best estimate of the amount required to settle the obligation at the reporting

date.

Impairment of non financial assets

At each reporting date non-financial assets not carried at fair value, like goodwill and plant, property and

equipment, are reviewed to determine whether there is an indication that an asset may be impaired. If there is an

indication of possible impairment, the recoverable amount of any asset or group of related assets, which is the

higher of value in use and the fair value less cost to sell, is estimated and compared with its carrying amount. If

the recoverable amount is lower, the carrying amount of the asset is reduced to its recoverable amount and an

impairment loss is recognised immediately in profit or loss.

Inventories are also assessed for impairment at each reporting date. The carrying amount of each item of

inventory, or group of similar items, is compared with its selling price less costs to complete and sell. If an item of

inventory or group of similar items is impaired, its carrying amount is reduced to selling price less costs to

complete and sell, and an impairment loss is recognised immediately in profit or loss.

If an impairment loss is subsequently reversed, the carrying amount of the asset or group of related assets is

increased to the revised estimate of its recoverable amount, but not to exceed the amount that would have been

determined had no impairment loss been recognised for the asset or group of related assets in prior periods. A

reversal of an impairment loss is recognised immediately in profit or loss.

Goodwill

Goodwill relates to the subsidiary undertakings which were acquired by the company. The goodwill was being

amortised over it's estimated useful life however is now fully impaired.

4.

TURNOVER

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

An analysis of turnover by geographical market is given below:

Period

1.1.18

to

Year Ended

30.12.18

31.12.17

£

£

United Kingdom

5,415,304

5,772,253

Europe

2,123,263

4,027,560

Rest of the world

335,647

852,906

7,874,214

10,652,719

5.	EMPLOYEES AND DIRECTORS

Period

1.1.18

to

Year Ended

30.12.18

31.12.17

£

£

Wages and salaries

2,047,162

2,257,013

Social security costs

174,611

211,361

Other pension costs

111,867

96,238

2,333,640

2,564,612

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

Period

1.1.18

to

Year Ended

30.12.18

31.12.17

Office and management

15

15

Manufacturing

63

78

78

93

Period

1.1.18

to

Year Ended

30.12.18

31.12.17

£

£

Director's remuneration

69,294

81,545

Director's pension contributions to money purchase schemes

15,796

13,005

The number of directors to whom retirement benefits were accruing was as follows:

Money purchase schemes

1

1

6.	OPERATING LOSS

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

Period

1.1.18

to

Year Ended

30.12.18

31.12.17

£

£

Hire of plant and machinery

56,674

75,630

Other operating leases

120,222

109,920

Depreciation - owned assets

281,236

548,579

Depreciation - assets on finance leases

54,374

54,914

Profit on disposal of fixed assets

(38,267

)

-

Auditors' remuneration

11,499

18,736

Taxation compliance services

4,219

4,500

Foreign exchange differences

(126,505

)

393,935