Industrial Power Units Property Limited - Limited company accounts 20.1

REGISTERED NUMBER: 00641876 (England and Wales)

STRATEGIC REPORT, DIRECTORS' REPORT AND

AUDITED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 OCTOBER 2019

FOR

INDUSTRIAL POWER UNITS PROPERTY LIMITED

PREVIOUSLY KNOWN AS

INDUSTRIAL POWER UNITS LIMITED

Page

Company Information

1

Strategic Report

2

Directors' Report

3

Report of the Independent Auditors

4

Statement of Comprehensive Income

6

Balance Sheet

7

Statement of Changes in Equity

8

Cash Flow Statement

9

Notes to the Cash Flow Statement

10

Notes to the Financial Statements

11

DIRECTORS:

R T Beebee

I Cleary

SECRETARY:

S J Beebee

REGISTERED OFFICE:

2 Cygnus Way

West Bromwich

West Midlands

B70 0XB

REGISTERED NUMBER:

00641876 (England and Wales)

AUDITORS:

Magma Audit LLP

Chartered Accountants

Statutory Auditor

Unit 2, Charnwood Edge Business Park

Syston Road

Leicestershire

LE7 4UZ

The directors present their strategic report for the year ended 31 October 2019.

REVIEW OF BUSINESS

The company has reported a small loss for the year at the pre-tax level in what has been a difficult trading year for the company overall, with Brexit uncertainty damaging consumer confidence to invest along with pressures on margins for certain products and services offered by the company.

IPU have continued to invest in the future and build on its own design and build product offerings, with new focus on the opportunities ahead, driven by legislation in the diesel emissions sector.

As disclosed in our last report, the company decided to sell its Engine Heating Division in early 2019, but in mitigation we did take on the distribution of a new product line from September 2018 and therefore it is pleasing that turnover is only slightly down on the previous year.

Subsequent to our year end on 1 November 2019, the current group has undergone a further reorganisation whereby our 3 trading divisions have now been demerged out into their own separate companies with a separate holding company above each of them. This enables each company to focus on its own area of expertise. Further details are set out in the post balance sheet event note in the accounts.

Following this reorganisation, this now leaves the company operating largely as a property investment company providing office and warehouse space to the demerged businesses.

Given the fundamental changes that have happened to the company post year end, we have this year not presented any financial key performance indicators within this report. Had we done so, we would have focused on areas such as turnover, profit/(loss) before tax, profits/(losses) retained and return on capital employed. We believe that these are easily identifiable from the accounts.

PRINCIPAL RISKS AND UNCERTAINTIES

The risks and uncertainties that faced the business at 31 October 2019 have now changed greatly following the demerger of the 3 trading divisions into new entities on 1 November 2019. We now see the company's risks as ensuring that the property remains occupied in order that it may repay its borrowings along with potential interest rate risks from any fluctuations that arise from changes there.

Since the year end, there has also been a Covid-19 outbreak with the effects thereof still not fully clear. We have taken advantage of utilising the option of a capital repayment holiday on our borrowings for a period of time to help conserve cashflow as much as possible. We continue to recharge rents to our tenants but these have been at lower rates than those agreed pre the outbreak of the Covid-19 situation.

We, as Directors continue to review and consider the changes and impact that Covid-19 has or is having at the end of each month along with being mindful of the other risks and uncertainties identified above and adjusting company plans accordingly. At this stage, we have forecasts and cash flows in place that support the company's needs for the foreseeable future and we continue to be of the opinion that there are no issues with regards the going concern of the company.

ON BEHALF OF THE BOARD:

R T Beebee - Director

29 October 2020

The directors present their report with the financial statements of the company for the year ended 31 October 2019.

CHANGE OF NAME

The company passed a special resolution on 8 November 2019 changing its name from Industrial Power Units Limited to Industrial Power Units Property Limited.

PRINCIPAL ACTIVITY

The principal activity of the company in the year under review was that of suppliers of electric governing, hydraulic and air starting systems.

DIVIDENDS

Interim dividends were paid amounting to £73,136 (2018: £155,808). The directors recommend that no final dividends will be paid.

EVENTS SINCE THE END OF THE YEAR

Information relating to events since the end of the year is given in the notes to the financial statements.

DIRECTORS

The directors shown below have held office during the whole of the period from 1 November 2018 to the date of this report.

R T Beebee

I Cleary

STATEMENT OF DIRECTORS' RESPONSIBILITIES

The directors are responsible for preparing the Strategic Report, the Directors' Report 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, Magma Audit LLP, will be proposed for re-appointment at the forthcoming Annual General Meeting.

ON BEHALF OF THE BOARD:

R T Beebee - Director

29 October 2020

Opinion

We have audited the financial statements of Industrial Power Units Property Limited (the 'company') for the year ended 31 October 2019 which comprise the Statement of Comprehensive Income, Balance Sheet, Statement of Changes in Equity, Cash Flow Statement and Notes to the Cash Flow Statement, 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 October 2019 and of its loss 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 directors' use of the going concern basis of accounting in the preparation of the financial statements is not appropriate; or

-

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.

Other information

The directors are responsible for the other information. The other information comprises the information in the Strategic Report and the Directors' Report, 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 Directors' Report for the financial year for which the financial statements are prepared is consistent with the financial statements; and

-	the Strategic Report and the Directors' Report 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 Directors' Report.

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.

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.

Paul Orton ACA FCCA (Senior Statutory Auditor)

for and on behalf of Magma Audit LLP

Chartered Accountants

Statutory Auditor

Unit 2, Charnwood Edge Business Park

Syston Road

Leicestershire

LE7 4UZ

30 October 2020

TURNOVER

4

12,754,573

12,880,883

Cost of sales

(7,748,213

)

(7,478,383

)

GROSS PROFIT

5,006,360

5,402,500

Administrative expenses

(5,072,762

)

(5,025,456

)

(66,402

)

377,044

Other operating income

210,707

101,354

OPERATING PROFIT

6

144,305

478,398

Interest payable and similar expenses

7

(145,023

)

(123,357

)

(LOSS)/PROFIT BEFORE TAXATION

(718

)

355,041

Tax on (loss)/profit

8

(10,805

)

58,000

(LOSS)/PROFIT FOR THE FINANCIAL YEAR

(11,523

)

413,041

OTHER COMPREHENSIVE INCOME

-

-

TOTAL COMPREHENSIVE INCOME FOR THE YEAR

(11,523

)

413,041

FIXED ASSETS

Intangible assets

10

211,750

303,750

Tangible assets

11

3,382,562

3,570,016

Investments

12

81

81

3,594,393

3,873,847

CURRENT ASSETS

Stocks

13

1,602,742

1,418,293

Debtors

14

2,770,123

3,018,084

Cash at bank and in hand

229,284

70,940

4,602,149

4,507,317

CREDITORS

Amounts falling due within one year

15

(3,226,280

)

(3,185,791

)

NET CURRENT ASSETS

1,375,869

1,321,526

TOTAL ASSETS LESS CURRENT LIABILITIES

4,970,262

5,195,373

CREDITORS

Amounts falling due after more than one year

16

(2,188,171

)

(2,339,423

)

PROVISIONS FOR LIABILITIES

20

(88,800

)

(78,000

)

NET ASSETS

2,693,291

2,777,950

CAPITAL AND RESERVES

Called up share capital

21

34,004

34,004

Revaluation reserve

22

444,552

448,297

Capital redemption reserve

22

6,000

6,000

Retained earnings

22

2,208,735

2,289,649

SHAREHOLDERS' FUNDS

2,693,291

2,777,950

The financial statements were approved by the Board of Directors and authorised for issue on 29 October 2020 and were signed on its behalf by:

R T Beebee - Director

Called up

Capital

share

Retained

Revaluation

redemption

Total

capital

earnings

reserve

reserve

equity

£

£

£

£

£

Balance at 1 November 2017

34,004

2,022,421

458,292

6,000

2,520,717

Changes in equity

Dividends

-

(155,808

)

-

-

(155,808

)

Total comprehensive income

-

413,041

-

-

413,041

Depreciation written back

-

9,995

(9,995

)

-

-

Balance at 31 October 2018

34,004

2,289,649

448,297

6,000

2,777,950

Changes in equity

Dividends

-

(73,136

)

-

-

(73,136

)

Total comprehensive income

-

(11,523

)

-

-

(11,523

)

Depreciation written back

-

3,745

(3,745

)

-

-

Balance at 31 October 2019

34,004

2,208,735

444,552

6,000

2,693,291

Cash flows from operating activities

Cash generated from operations

1

952,995

501,589

Interest paid

(145,023

)

(123,357

)

Tax paid

(5

)

-

Taxation refund

-

56,195

Net cash from operating activities

807,967

434,427

Cash flows from investing activities

Purchase of tangible fixed assets

(87,426

)

(63,246

)

Sale of tangible fixed assets

57,362

43,184

Net cash from investing activities

(30,064

)

(20,062

)

Cash flows from financing activities

New loans advances in the year

1,813,500

-

Loan repayments in the year

(1,867,047

)

(150,446

)

Capital repayments on hire purchase

(163,157

)

(75,978

)

Amount introduced/(repaid) by directors

714,086

26,808

Equity dividends paid

(73,136

)

(155,808

)

Decrease in invoice discount facility

(1,043,805

)

(149,333

)

Net cash from financing activities

(619,559

)

(504,757

)

Increase/(decrease) in cash and cash equivalents

158,344

(90,392

)

Cash and cash equivalents at beginning of year

2

70,940

161,332

Cash and cash equivalents at end of year

2

229,284

70,940

1.	RECONCILIATION OF (LOSS)/PROFIT BEFORE TAXATION TO CASH GENERATED FROM OPERATIONS

2019

2018

£

£

(Loss)/profit before taxation

(718

)

355,041

Depreciation charges

363,511

360,662

Profit on disposal of fixed assets

(17,881

)

(17,032

)

Deferred consideration adjustment

20,000

20,000

Government grants

(24,964

)

(24,964

)

Finance costs

145,023

123,357

484,971

817,064

Increase in stocks

(184,449

)

(231,817

)

Decrease in trade and other debtors

247,961

796,175

Increase/(decrease) in trade and other creditors

404,512

(879,833

)

Cash generated from operations

952,995

501,589

2.	CASH AND CASH EQUIVALENTS

The amounts disclosed on the Cash Flow Statement in respect of cash and cash equivalents are in respect of these Balance Sheet amounts:

Year ended 31 October 2019

31/10/19

1/11/18

£

£

Cash and cash equivalents

229,284

70,940

Year ended 31 October 2018

31/10/18

1/11/17

£

£

Cash and cash equivalents

70,940

161,332

1.	STATUTORY INFORMATION

Industrial Power Units Property 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.

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 as modified by the revaluation of certain assets.

Preparation of consolidated financial statements

The financial statements contain information about Industrial Power Units Property 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, Industrial Power Units Holdings Limited, 2 Cygnus Way, West Bromwich, West Midlands, B70 0XB.

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.

Turnover

Revenue from the sale of goods is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer (usually on dispatch of the goods) , the amount of revenue can be measured reliably, it is probable that the economic benefits associated with the transaction will flow to the entity and the costs incurred or to be incurred in respect of the transaction can be measured reliably.

Intangible assets - goodwill

Acquired goodwill is written off in equal annual instalments overs its estimated useful economic life of 5 years.

Tangible fixed assets

Tangible fixed assets are initially measured at cost and subsequently measured at cost or valuation, net of depreciation and any impairment losses.

Depreciation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:

Freehold land and buildings

2% straight line

Plant and machinery

15% straight line

Fixtures, fittings & computer equipment

15% - 100% straight line

Motor vehicles

25% straight line

The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is credited or charged to profit or loss.

Investments in subsidiaries

Interests in subsidiaries, associates and jointly controlled entities are initially measured at cost and subsequently measured at cost less any accumulated impairment losses. The investments are assessed for impairment at each reporting date and any impairment losses or reversals of impairment losses are recognised immediately in profit or loss.

A subsidiary is an entity controlled by the company. Control is the power to govern the financial and operating policies of the entity so as to obtain benefits from its activities.

Stocks

Stocks are stated at the lower of cost and estimated selling price less costs to complete and sell. Cost comprises direct materials and, where applicable, direct labour costs and those overheads that have been incurred in bringing the stocks to their present location and condition.

At each reporting date, an assessment is made for impairment. Any excess of the carrying amount of stocks

over its estimated selling price less costs to complete and sell is recognised as an impairment loss in profit or

loss. Reversals of impairment losses are also recognised in profit or loss.

Cash and cash equivalents

Cash and cash equivalents are basic financial assets and include cash in hand, deposits held at call with banks, other short-term liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities.

Financial instruments

The company has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12

‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.

Financial instruments are recognised in the company's balance sheet when the company becomes party to the contractual provisions of the instrument.

Financial assets and liabilities are offset , with the net amounts presented in the financial statements, when there is a legally 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.

(i) Financial assets

Basic financial assets, which include debtors and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised.

(ii) Financial liabilities

Basic financial liabilities, including creditors and bank loans are initially recognised at transaction price unless

the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future receipts discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.

Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.

Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of

business from suppliers. Amounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.

Equity instruments

Equity instruments issued by the company are recorded at the proceeds received, net of direct issue costs.

Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the company.

Taxation

The tax expense for the year comprises current and deferred tax.

Tax is recognised in profit or loss except that a change attributable to an item of income and expense recognised as other comprehensive income or to an item recognised directly in equity is also recognised in other comprehensive income or directly in equity respectively.

Deferred tax balances are recognised in respect of all timing differences that have originated but not reversed by the Balance Sheet date, except that:

- The recognition of deferred tax assets is limited to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits; and

- Any deferred tax balances are reversed if and when all conditions for retaining associated tax allowances have been met.

Both current and deferred tax is determined using tax rates and laws that have been enacted or substantively enacted by the balance sheet date.

Research and development

Research expenditure is written off against profits in the year in which it is incurred. Identifiable development expenditure is capitalised to the extent that the technical, commercial and financial feasibility can be demonstrated.

Foreign currencies

Monetary assets and liabilities in foreign currencies are translated into sterling at the rates of exchange ruling at the balance sheet 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.

Rentals paid under operating leases are charged to profit or loss on a straight line basis over the period of the lease.

Leases that do not transfer all the risks and rewards of ownership are classified as operating leases. Payments under operating leases are charged to profit or loss on a straight line basis over the period of the lease.

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.

Employee benefits

The costs of short-term employee benefits are recognised as a liability and an expense, unless those costs are required to be recognised as part of the cost of stock or fixed assets.

The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received.

Termination benefits are recognised immediately as an expense when the company is demonstrably committed to terminate the employment of an employee or to provide termination benefits.

Government grants

Government grants are presented within deferred income on the Balance Sheet with recognition of income being in line with the annual depreciation charge of the associated capital asset.

Going concern

At the time of approving the financial statements, the directors have a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future despite the ensuing global pandemic. Thus the directors continue to adopt the going concern basis of accounting in preparing the financial statements.

3.	CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY

In the application of the company’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.

The estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are as follows.

(i) Useful economic lives of tangible assets

The annual depreciation charge for tangible assets is sensitive to changes in the estimated useful economic lives and residual values of the assets. The useful economic lives and residual values are reassessed annually. They are amended when necessary to reflect current estimates, based on technological advancement, future investments, economic utilisation and the physical condition of the assets. The annual amortisation charge for capital grants directly reflects the depreciation charge of such assets. See note 11 for the carrying amount of the property, plant and equipment, and note 2 for the useful economic lives for each class of assets.

(ii) Stock provisioning

The company supplies engine starting, engine control, fuel polishing systems and oil conditioning products for critical diesel and gas engine applications and is subject to changing consumer demands and design trends. As a result it is necessary to consider the recoverability of the cost of stock and the associated provisioning required. When calculating the stock provision, management considers the nature and condition of the stock, as well as applying assumptions around the anticipated saleability of the stock. See note 13 for the net of provisioning carrying amount of stock.

(iii) Impairment of debtors

The company makes an estimate of the recoverable value of trade debtors. When assessing impairment of trade debtors, management considers factors including the current credit rating of the debtor, the ageing profile of debtors and historical experience. See note 14 for the net carrying amount of trade debtors.

4.

TURNOVER

The turnover and loss (2018 - profit) before taxation are attributable to the one principal activity of the company.

An analysis of turnover by geographical market is given below:

2019

2018

£

£

United Kingdom

8,864,013

8,142,691

Europe

1,570,430

1,577,722

Rest of the World

2,320,130

3,160,470

12,754,573

12,880,883

5.	EMPLOYEES AND DIRECTORS

2019

2018

£

£

Wages and salaries

2,470,136

2,585,026

Social security costs

278,338

290,325

Other pension costs

292,582

307,623

3,041,056

3,182,974

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

2019

2018

Directors

2

2

Administration and operations staff

84

85

86

87

2019

2018

£

£

Directors' remuneration

135,029

208,392

Directors' pension contributions to money purchase schemes

58,819

89,936

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

Money purchase schemes

2

2

6.	OPERATING PROFIT

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

2019

2018

£

£

Hire of plant and machinery

12,138

19,333

Other operating leases

8,547

10,447

Depreciation - owned assets

204,999

209,832

Depreciation - assets on hire purchase contracts

86,512

70,830

Profit on disposal of fixed assets

(17,881

)

(17,032

)

Goodwill amortisation

72,000

80,000

Foreign exchange differences

(8,646

)

31,860

Cost of stocks recognised as an expense

7,793,274

7,562,607

Research and development costs

46,345

12,471

Government grants

(24,964

)

(24,964

)

Fees payable to the company's auditor for the audit of the company's financial statements

18,145

20,000

7.

INTEREST PAYABLE AND SIMILAR EXPENSES

2019

2018

£

£

Bank loan interest

84,345

55,268

Hire purchase interest payable

14,642

10,520

Invoice discount interest

46,036

57,569

145,023

123,357