Rockford Components Limited - Limited company accounts 20.1

ROCKFORD COMPONENTS LIMITED - Company Information

IRIS Accounts Production v20.3.4.1 01838700 Board of Directors 1.1.19 31.12.19 31.12.19 false Auditors Opinion Ordinary 1.00000 iso4217:GBPiso4217:USDiso4217:EURxbrli:sharesxbrli:pure018387002018-12-31018387002019-12-31018387002019-01-012019-12-31018387002017-12-31018387002018-01-012018-12-31018387002018-12-3101838700ns16:EnglandWales2019-01-012019-12-3101838700ns15:PoundSterling2019-01-012019-12-3101838700ns11:Director12019-01-012019-12-3101838700ns11:PrivateLimitedCompanyLtd2019-01-012019-12-3101838700ns11:FRS1022019-01-012019-12-3101838700ns11:Audited2019-01-012019-12-3101838700ns11:LargeMedium-sizedCompaniesRegimeForDirectorsReport2019-01-012019-12-3101838700ns11:LargeMedium-sizedCompaniesRegimeForAccounts2019-01-012019-12-3101838700ns11:FullAccounts2019-01-012019-12-3101838700ns11:OrdinaryShareClass12019-01-012019-12-3101838700ns11:Director22019-01-012019-12-3101838700ns11:Director32019-01-012019-12-3101838700ns11:CompanySecretary12019-01-012019-12-3101838700ns11:RegisteredOffice2019-01-012019-12-3101838700ns11:Director52019-01-012019-12-3101838700ns11:Director42019-01-012019-12-3101838700ns6:CurrentFinancialInstruments2019-12-3101838700ns6:CurrentFinancialInstruments2018-12-3101838700ns6:Non-currentFinancialInstruments2019-12-3101838700ns6:Non-currentFinancialInstruments2018-12-3101838700ns6:ShareCapital2019-12-3101838700ns6:ShareCapital2018-12-3101838700ns6:RetainedEarningsAccumulatedLosses2019-12-3101838700ns6:RetainedEarningsAccumulatedLosses2018-12-3101838700ns6:ShareCapital2017-12-3101838700ns6:RetainedEarningsAccumulatedLosses2017-12-3101838700ns6:RetainedEarningsAccumulatedLosses2018-01-012018-12-3101838700ns6:RetainedEarningsAccumulatedLosses2019-01-012019-12-310183870042019-01-012019-12-310183870042018-01-012018-12-3101838700ns6:IntangibleAssetsOtherThanGoodwill2019-01-012019-12-3101838700ns6:PatentsTrademarksLicencesConcessionsSimilar2019-01-012019-12-3101838700ns6:OwnedOrFreeholdAssetsns6:LandBuildings2019-01-012019-12-3101838700ns6:LandBuildingsns6:LongLeaseholdAssets2019-01-012019-12-3101838700ns6:LeaseholdImprovements2019-01-012019-12-3101838700ns6:PlantMachinery2019-01-012019-12-3101838700ns6:MotorVehicles2019-01-012019-12-3101838700ns6:ComputerEquipment2019-01-012019-12-310183870012019-01-012019-12-3101838700ns16:UnitedKingdom2019-01-012019-12-3101838700ns16:UnitedKingdom2018-01-012018-12-3101838700ns16:Europe2019-01-012019-12-3101838700ns16:Europe2018-01-012018-12-3101838700ns6:TotalGeographicSegmentsIncludingAnyUnallocatedAmount2019-01-012019-12-3101838700ns6:TotalGeographicSegmentsIncludingAnyUnallocatedAmount2018-01-012018-12-3101838700ns11:HighestPaidDirector2019-01-012019-12-3101838700ns11:HighestPaidDirector2018-01-012018-12-3101838700ns6:OwnedAssets2019-01-012019-12-3101838700ns6:OwnedAssets2018-01-012018-12-3101838700ns6:PatentsTrademarksLicencesConcessionsSimilar2018-12-3101838700ns6:PatentsTrademarksLicencesConcessionsSimilar2019-12-3101838700ns6:PatentsTrademarksLicencesConcessionsSimilar2018-12-3101838700ns6:LandBuildings2018-12-3101838700ns6:LandBuildingsns6:LongLeaseholdAssets2018-12-3101838700ns6:LeaseholdImprovements2018-12-3101838700ns6:LandBuildings2019-01-012019-12-3101838700ns6:LandBuildings2019-12-3101838700ns6:LandBuildingsns6:LongLeaseholdAssets2019-12-3101838700ns6:LeaseholdImprovements2019-12-3101838700ns6:LandBuildings2018-12-3101838700ns6:LandBuildingsns6:LongLeaseholdAssets2018-12-3101838700ns6:LeaseholdImprovements2018-12-3101838700ns6:PlantMachinery2018-12-3101838700ns6:MotorVehicles2018-12-3101838700ns6:ComputerEquipment2018-12-3101838700ns6:PlantMachinery2019-12-3101838700ns6:MotorVehicles2019-12-3101838700ns6:ComputerEquipment2019-12-3101838700ns6:PlantMachinery2018-12-3101838700ns6:MotorVehicles2018-12-3101838700ns6:ComputerEquipment2018-12-3101838700ns6:CurrentFinancialInstrumentsns6:WithinOneYear2019-12-3101838700ns6:CurrentFinancialInstrumentsns6:WithinOneYear2018-12-3101838700ns6:CurrentFinancialInstruments2019-01-012019-12-3101838700ns6:BetweenOneTwoYearsns6:Non-currentFinancialInstruments2018-12-3101838700ns6:BetweenTwoFiveYearsns6:Non-currentFinancialInstruments2019-12-3101838700ns6:BetweenTwoFiveYearsns6:Non-currentFinancialInstruments2018-12-3101838700ns6:WithinOneYear2019-12-3101838700ns6:WithinOneYear2018-12-3101838700ns6:BetweenOneFiveYears2019-12-3101838700ns6:BetweenOneFiveYears2018-12-3101838700ns6:AllPeriods2019-12-3101838700ns6:AllPeriods2018-12-3101838700ns6:Secured2019-12-3101838700ns6:Secured2018-12-3101838700ns6:DeferredTaxation2018-12-3101838700ns6:DeferredTaxation2019-01-012019-12-3101838700ns6:DeferredTaxation2019-12-3101838700ns11:OrdinaryShareClass12019-12-3101838700ns6:RetainedEarningsAccumulatedLosses2018-12-31

REGISTERED NUMBER: 01838700 (England and Wales)

STRATEGIC REPORT, REPORT OF THE DIRECTORS AND

FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2019

FOR

ROCKFORD COMPONENTS LIMITED

Page

Company Information

Strategic Report

Report of the Directors

Report of the Independent Auditors

Statement of Comprehensive Income

Statement of Financial Position

Statement of Changes in Equity

Statement of Cash Flows

Notes to the Statement of Cash Flows

Notes to the Financial Statements

DIRECTORS:

Mrs P A Marks

P A Lion

L A Betts

SECRETARY:

Mrs P A Marks

REGISTERED OFFICE:

Rockford House

Acer Road

Rendlesham

Woodbridge

Suffolk

IP12 2GJ

REGISTERED NUMBER:

01838700 (England and Wales)

AUDITORS:

Ballams

Chartered Accountants

Statutory Auditors

Crane Court

302 London Road

Ipswich

Suffolk

IP2 0AJ

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

REVIEW OF BUSINESS

As anticipated in the 2018 Strategic Report, the year ended 31 December 2019 proved to be another challenging year for the company. Uncertainties caused by Brexit and the 2019 General Election in particular impacted upon the company's opportunities and marketplace. Although the company made a loss for the year before tax of £1,213,841, the gross profit rate began to show signs of improvement and overheads were reduced by more than £900,000 as a result of a cost restructure which commenced in November 2018.

A revised management structure was put into place in February 2019 to reset the business for future growth and profitability. This has also been aligned to investment into the development of improved IT automation of planning and reporting systems, giving more real time and forward looking accurate data linked through the parallel development of our MCRS (Management Control and Reporting System).

The company continued to work closely with the Sharing In Growth team through 2019 and into 2020, revising our Business Policy Deployment (BPD) programme to the new, company supported Future Factory Project, to ensure that the business delivers a return to stability through the key strategic areas of People Development, Sales Growth, Improved Efficiency and Delivery.

The civil aerospace programme experienced problems before COVID-19 and whilst this project was concluded by the end of 2019, the sale of surplus material was delayed in 2020 by the impact of COVID-19.

The COVID-19 pandemic has also seriously affected our forecast return to profitability. The business took the decision to pause in April 2020 due to supply chain issues and the wellbeing of our personnel. The company utilised the government furlough scheme when returning to operations from May 2020. Further cost reductions were necessary due to the shift in our order book, with the impact of the pandemic on the aerospace community in particular resulting in a reduction of order book and forecast for the remainder of 2020.

The company currently has a good order book and pipeline of opportunities for 2021 and beyond. It continues to invest into R&D of new product and service capability.

PRINCIPAL RISKS AND UNCERTAINTIES

The health risks posed by COVID-19 and the government restrictions that have been put in place to manage these risks have had a major impact on the business. However the business observes the guidelines on health and safety to maintain our employees' wellbeing and we will continue to monitor this situation daily for the foreseeable future. The impacts of COVID-19 have been factored into our operational and financial planning to ensure that the business remains viable whilst the pandemic and the associated restrictions continue.

Until the detail of the Brexit Deal is known potential risks remain regarding our ability to easily export into, and import from, Europe. These risks could affect two of our major customers in Belgium and France where we have current contracts and also opportunities for growth through our pipeline of opportunities.

Uncertainties lie around the UK fighting vehicle market and decisions are awaited from the UK Government regarding major investments into the upgrading of legacy vehicles.

GOING CONCERN

Taken together the impacts of the uncertainty surrounding Brexit and the 2019 General Election and the outbreak of the COVID-19 pandemic in 2020 have significantly affected the company's ability to return to profitability over the last twelve months. Consequently there continues to be a materiality uncertainty relating to going concern and this is further described in note 4 to these financial statements.

KEY PERFORMANCE INDICATORS

Financial Year

2019

2018

Turnover

£9,510,005

£9,378,710

Gross profit

£1,318,198

£1,207,197

Gross profit rate %

13.9%

12.9%

Exceptional charges to the comprehensive income statement

£Nil

£1,071,310

Loss before taxation

£1,213,841

£3,301,380

Net assets

£1,262,585

£2,428,954

ON BEHALF OF THE BOARD:

P A Lion - Director

30 December 2020

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

PRINCIPAL ACTIVITIES

The principal activities of the company in the year under review were those of design, manufacture, installation and the supply of cable assemblies, wiring harnesses, electromechanical sub-assemblies and systems solutions for the Defence, Aerospace, Marine, Automotive and Industrial Industries.

DIVIDENDS

Dividends totalling £Nil (2018 - £Nil) were paid during the year.

RESEARCH AND DEVELOPMENT

The company continues to invest in the development and skills base of its engineering team. New Technology Roadmaps have been created and are regularly reviewed for our customers and target markets in line with the five year business plan. This will inevitably increase our involvement with our current and new customers very early on in their programmes and projects and will enhance our visibility as an engineering based company that can deliver from conception to a manufactured product within our own broad manufacturing capability.

FUTURE DEVELOPMENTS

The company's order book remains healthy and there is a pipeline of opportunities in excess of £100m, including a number of high profile defence and industrial opportunities that have passed bid stage. We have mitigated the effect of the civil aerospace downturn by focusing on further opportunities within the industrial sector.

Updated marketing and greater utilisation of our website will continue to develop into 2021. Marketing through social media will increase and develop during 2021 as part of the company's Refresh activity.

This will all be underpinned by our Future Factory Strategy and supporting work streams.

DIRECTORS

The directors shown below have held office during the whole of the period from 1 January 2019 to the date of this report.

Mrs P A Marks

P A Lion

L A Betts

Other changes in directors holding office are as follows:

S D Hayter - resigned 5 September 2019

B S Hayter ceased to be a director after 31 December 2019 but prior to the date of this report.

FINANCIAL INSTRUMENTS

The company utilises within its operations financial instruments such as trade debtors, trade creditors, bank facilities, asset based facilities including invoice discounting and a director's loan.

LIQUIDITY AND CREDIT RISK

Liquidity risk is managed by the close monitoring of trade payables, trade receivables and bank and invoice discounting facilities. The company's main credit risk is that associated with trade debtors. This risk is managed by ensuring that the ongoing availability of credit facilities is supported by a regular assessment of a customers' credit status.

INTEREST RATE RISK

The financing of the company's operations is met through the management of working capital in conjunction with bank facilities, asset based facilities including invoice discounting and a director's loan. The company's bank and asset based facilities are available at agreed commercial rates and the director's loan is interest free with no fixed date for repayment.

EMPLOYMENT POLICIES

The company communicates with its employees on all levels and continues to work closely with ACAS to develop employees from all departments and to ensure that both management and employees are aware of their employment responsibilities.

The company is committed to the fair treatment of all its employees irrespective of gender, race, age religion, disability and sexual orientation. A diversity and dignity at work policy has been issued to ensure that all employees are treated correctly.

DIRECTORS' RESPONSIBILITIES STATEMENT

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 or she ought to have taken as a director in order to make himself or herself aware of any relevant audit information and to establish that the company's auditors are aware of that information.

AUDITORS

The auditors, Ballams, are deemed to be reappointed under section 487(2) of the Companies Act 2006.

ON BEHALF OF THE BOARD:

P A Lion - Director

30 December 2020

Qualified opinion

We have audited the financial statements of Rockford Components Limited (the 'company') for the year ended 31 December 2019 which comprise the Statement of Comprehensive Income, Statement of Financial Position, Statement of Changes in Equity, Statement of Cash Flows and Notes to the Statement of Cash Flows, 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 31 December 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 qualified opinion

The company's stocks at 31 December 2019 include a significant amount of items which have been held for a number of years and in respect of which their sale or utilisation in production is uncertain. Although as detailed in note 3 the directors fully consider the required provision for obsolete stocks, a key factor in their assessment is the level, timing and nature of the Governments future defence spending. In the absence of sufficient appropriate sales or utilisation of the relevant items after the financial year end, we were unable to satisfy ourselves as to the adequacy of the company's provision for obsolete stocks. Consequently we were unable to determine whether any adjustment to stocks held at 31 December 2019 was necessary. In addition, were any adjustment to stocks required, the strategic report would also need to be amended.

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 qualified opinion.

Material uncertainty related to going concern

We draw attention to note 4 to the financial statements, which indicates that the company incurred a net loss of £1,166,369 for the year ended 31 December 2019. As stated in note 4, this along with other matters as detailed in note 4, indicate that a material uncertainty exists that may cast significant doubt on the company’s ability to continue as a going concern. Our opinion is not modified in respect of this matter.

Other information

The directors are responsible for the other information. The other information comprises the information in the Strategic Report and the Report of the Directors, 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.

As described in the basis for qualified opinion section of our report, we were unable to satisfy ourselves as to the adequacy of the company's provision for obsolete stocks as at 31 December 2019. We have concluded that where the other information relates to related balances such as gross profit and net assets, it may be materially misstated for the same reason.

Opinions on other matters prescribed by the Companies Act 2006

Except for the possible effects of the matter described in the basis for the qualified opinion section of our report, 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

Except for the matter described in the basis for qualified opinion section of our report, 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.

Arising solely from the limitation on the scope of our work relating to obsolete stocks, referred to above:

• we have not obtained all the information and explanations that we considered necessary for the purpose of our audit; and

• we were unable to determine whether adequate accounting records have been kept.

We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:

• returns adequate for our audit have not been received from branches not visited by us; or

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

• certain disclosures of directors’ remuneration specified by law are not made.

Responsibilities of directors

As explained more fully in the Directors' Responsibilities Statement set out on page six, 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.

Michael Mortimer ACA FCCA (Senior Statutory Auditor)

for and on behalf of Ballams

Chartered Accountants

Statutory Auditors

Crane Court

302 London Road

Ipswich

Suffolk

IP2 0AJ

30 December 2020

TURNOVER

9,510,005

9,378,710

Cost of sales

8,191,807

8,171,513

GROSS PROFIT

1,318,198

1,207,197

Administrative expenses

2,523,355

3,449,315

(1,205,157

)

(2,242,118

)

Other operating income

9,625

22,400

(1,195,532

)

(2,219,718

)

Stock write down

(956,040

)

Freehold property impairment

(115,270

)

(1,195,532

)

(3,291,028

)

Interest receivable and similar income

1,406

Interest payable and similar expenses

(19,715

)

(10,431

)

LOSS BEFORE TAXATION

(1,213,841

)

(3,301,380

)

Tax on loss

(47,472

)

(254,365

)

LOSS FOR THE FINANCIAL YEAR

(1,166,369

)

(3,047,015

)

OTHER COMPREHENSIVE INCOME

TOTAL COMPREHENSIVE INCOME
FOR THE YEAR

(1,166,369

)

(3,047,015

)

FIXED ASSETS

Intangible assets

Tangible assets

705,388

784,167

705,388

784,167

CURRENT ASSETS

Stocks

3,473,682

4,343,676

Debtors

1,950,884

2,521,643

Cash at bank and in hand

40,516

16,578

5,465,082

6,881,897

CREDITORS

Amounts falling due within one year

4,288,289

5,189,638

NET CURRENT ASSETS

1,176,793

1,692,259

TOTAL ASSETS LESS CURRENT
LIABILITIES

1,882,181

2,476,426

CREDITORS

Amounts falling due after more than one year

(619,596

)

PROVISIONS FOR LIABILITIES

(47,472

)

NET ASSETS

1,262,585

2,428,954

CAPITAL AND RESERVES

Called up share capital

100

Retained earnings

1,262,485

2,428,854

SHAREHOLDERS' FUNDS

1,262,585

2,428,954

The financial statements were approved by the Board of Directors and authorised for issue on 30 December 2020 and were signed on its behalf by:

P A Lion - Director

Called up

Retained

Total

capital

earnings

equity

Balance at 1 January 2018

100

5,475,869

5,475,969

Changes in equity

Total comprehensive income

(3,047,015

)

(3,047,015

)

Balance at 31 December 2018

100

2,428,854

2,428,954

Changes in equity

Total comprehensive income

(1,166,369

)

(1,166,369

)

Balance at 31 December 2019

100

1,262,485

1,262,585

Cash flows from operating activities

Cash generated from operations

(544,153

)

(627,506

)

Interest paid

(19,715

)

(10,431

)

Tax paid

)

Taxation refund

194,973

77,244

Net cash from operating activities

(368,903

)

(560,693

)

Cash flows from investing activities

Purchase of tangible fixed assets

(2,176

)

(60,876

)

Sale of tangible fixed assets

575

Interest received

1,406

Net cash from investing activities

(770

)

(60,222

)

Cash flows from financing activities

New loans in year

750,000

Loan repayments in year

(23,262

)

Amount introduced by directors

56,493

800,050

Amount withdrawn by directors

(39,962

)

(261,733

)

Net cash from financing activities

743,269

538,317

Increase/(decrease) in cash and cash equivalents

373,596

(82,598

)

Cash and cash equivalents at beginning of
year

(333,080

)

(250,482

)

Cash and cash equivalents at end of year

40,516

(333,080

)

1.	RECONCILIATION OF LOSS BEFORE TAXATION TO CASH GENERATED FROM OPERATIONS

2019

2018

Loss before taxation

(1,213,841

)

(3,301,380

)

Depreciation charges

80,956

102,428

Profit on disposal of fixed assets

(105

)

Freehold property impairment

115,270

Finance costs

19,715

10,431

Finance income

(1,406

)

(79

)

(1,114,576

)

(3,073,435

)

Decrease in stocks

869,994

32,860

Decrease in trade and other debtors

375,794

720,973

(Decrease)/increase in trade and other creditors

(675,365

)

1,692,096

Cash generated from operations

(544,153

)

(627,506

)

2.	CASH AND CASH EQUIVALENTS

The amounts disclosed on the Statement of Cash Flows in respect of cash and cash equivalents are in respect of these Statement of Financial Position amounts:

Year ended 31 December 2019

31.12.19

1.1.19

Cash and cash equivalents

40,516

16,578

Bank overdrafts

(349,658

)

40,516

(333,080

)

Year ended 31 December 2018

31.12.18

1.1.18

Cash and cash equivalents

16,578

51,364

Bank overdrafts

(349,658

)

(301,846

)

(333,080

)

(250,482

)

3.	ANALYSIS OF CHANGES IN NET DEBT

At 1.1.19

Cash flow

At 31.12.19

Net cash

Cash at bank and in hand

16,578

23,938

40,516

Bank overdrafts

(349,658

)

349,658

(333,080

)

373,596

40,516

Debt

Debts falling due within 1 year

(107,143

)

(107,143

)

Debts falling due after 1 year

(619,596

)

(619,596

)

(726,739

)

(726,739

)

Total

(333,080

)

(353,143

)

(686,223

)

1.	STATUTORY INFORMATION

Rockford Components 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.	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.

Significant judgements and estimates

In preparing these financial statements the directors have made the following significant judgements and estimates:

Tangible fixed assets

Tangible fixed assets are depreciated over their estimated useful economic lives taking into account, where relevant, their estimated residual values. Useful economic lives and residual values are re-assessed annually and amended as considered necessary to reflect economic utilisation and physical condition of the assets.

Stocks

The allowance made by the company for obsolete stock items is determined by taking into account a number of factors such as technical obsolescence, traceability issues and likelihood of future use in production.

Turnover

Turnover represents sales of goods and services, derived from ordinary activities, net of VAT and trade discounts. Turnover is recognised either on delivery or, when appropriate, where there is a right to consideration based on contract performance.

Intangible assets

Intangible assets are initially measured at cost. After initial recognition, intangible assets are measured at cost less any accumulated amortisation and any accumulated impairment losses.

Know how are being amortised evenly over their estimated useful life of four years.

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.

Freehold property

2% on cost

Long leasehold land

not provided

Improvements to property

10% on cost

Plant and machinery

25% on reducing balance

Motor vehicles

25% on reducing balance

Computer equipment

25% on cost

Land is not depreciated.

Stocks

Stocks relate to materials, components and consumables which have not been utilised in the manufacture of product as at the statement of financial position date. Stocks are valued at the lower of cost and net realisable value, after making due allowance for obsolete items.

The directors determine the allowance for obsolete stock items by way of a three stage process. The first stage is to identify obsolete stock items relating to particular major contracts. The second stage involves the identification of stock items which are not commonly used across any recent or current contracts. Obsolete stock items identified at stages one and two are written down to nil.

The third stage of the process is based on the directors view that most large projects have a four year production cycle with a further period of high spares usage due to intense testing. After the first five years relevant stock items usage reduces over a period of a further five years and hence on this basis a 20% write down is made each year.

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, bank overdrafts, asset based facilities including invoice discounting and loans with related parties.

Debt instruments that are payable or receivable within one year, such as trade payables or receivables, are measured at the undiscounted amount of the cash or other consideration expected to be paid or received. Debt instruments that are repayable or receivable after one year are initially measured at the present value of the future cash flows and subsequently at amortised cost using the effective interest method.

Financial assets that are measured at cost and amortised cost are assessed at the end of each financial year for evidence of impairment. If objective evidence of impairment is found an impairment loss is recognised in the Income Statement.

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.

Pension costs and other post-retirement benefits

The company operates a defined contribution plan for the benefit of its employees. Contributions are expensed as they become payable.

Amounts recoverable on contracts

Amounts recoverable on contracts relate to part complete contracts where the company has gained a right to consideration based on contract performance. The value attributed to amounts recoverable on contracts includes the cost of materials, labour, and an appropriate allocation of overheads.

Impairment of non-financial assets

Assets not measured at fair value are reviewed for any indication that the asset may be impaired at each statement of financial position date. If such indication exists, the recoverable amount of the asset is compared to the carrying amount. Where the carrying amount exceeds its recoverable amount, an impairment loss is recognised in the statement of comprehensive income.

4.	GOING CONCERN

The company recorded a loss for the year of £1,166,369. Although 2019 was anticipated to be another challenging trading year, the company had previously projected a return to operating profit in the first quarter of 2020. Unfortunately the impact on the business of the COVID-19 pandemic has delayed the return to profit despite considerable progress being made with its cost reduction programme which commenced in November 2018.

Unaudited management accounts for the ten month period to October 2020 suggest that the company has improved its gross profit rate during 2020 although the COVID-19 pandemic has had a negative impact on forecasted turnover. It is likely therefore that the company will report a net loss for the 2020 year, albeit much smaller than the losses reported in 2018 and 2019.

The company currently has a reasonable order book and pipeline of opportunities. In addition the directors are optimistic that sales and usage of the company's older stocks will increase during 2021 due to a revised position at one of the company's principal customers.

Over the last two years the company has reduced its cost base considerably. If further progress can be made to increase its gross profit rate and assuming forecasted sales do not continue to be significantly affected by the COVID-19 pandemic long term, the directors believe that the company will return to profit in 2021.

After making enquiries the directors have a reasonable expectation that, with the continued support of stakeholders, the company will continue in operational existence for the foreseeable future and the company therefore continues to adopt the going concern basis in preparing its financial statements.

TURNOVER

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

An analysis of turnover by geographical market is given below:

2019

2018

United Kingdom

7,754,278

7,836,690

Europe

505,169

546,701

Rest of the World

1,250,558

995,319

9,510,005

9,378,710

6.	OTHER OPERATING INCOME

2019

2018

Rents received

22,400

Other income

9,625

22,400

7.	EMPLOYEES AND DIRECTORS

2019

2018

Wages and salaries

4,116,681

5,579,081

Social security costs

328,844

465,294

Other pension costs

67,648

56,638

4,513,173

6,101,013

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

2019

2018

Office, technical and management

Production

155

198

209

282

2019

2018

Directors' remuneration

249,816

320,635

Directors' pension contributions to money purchase schemes

3,565

2,108

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

Money purchase schemes

Information regarding the highest paid director is as follows:

2019

2018

Emoluments etc

81,920

89,133

Pension contributions to money purchase schemes

1,189

702

8.	EXCEPTIONAL ITEMS

In view of the continuing delays by the UK government in deciding when or whether to invest in new fighting vehicles or to upgrade legacy vehicles, the directors have changed their estimate of the likely use in production of some of the company's stocks. Further details regarding the directors' methods of estimation in respect of the required obsolete stock provision is described within note 3 - Accounting Policies. As a result of the directors' change in estimation methods, a stock write down of £956,040 has been charged to the statement of comprehensive income for the year ended 31 December 2018. For the year ended 31 December 2019 the directors decided to further advance the time based write off of stocks by one year and this has resulted in an additional obsolete stock provision of £206,868. This additional provision has been charged to cost of sales and as a consequence the gross profit rate for the year has decreased from 16.0% to 13.9%.

During 2019 the company's freehold property was valued for the purposes of a refinancing arrangement. The valuation gave rise to an impairment charge of £115,270 in the statement of comprehensive income for the year ended 31 December 2018.

INTEREST PAYABLE AND SIMILAR EXPENSES

2019

2018

Bank interest

11,450

10,431

Property loan facilities interest

8,265

19,715

10,431

10.	LOSS BEFORE TAXATION

The loss is stated after charging/(crediting):

2019

2018

Depreciation - owned assets

80,955

102,428

Profit on disposal of fixed assets

(105

)

Auditors' remuneration - audit work

13,500

13,000

Foreign exchange differences

6,036

6,198

11.

TAXATION

Analysis of the tax credit

The tax credit on the loss for the year was as follows:

2019

2018

Current tax:

UK corporation tax

(251,992

)

Deferred tax:

Origination and reversal of timing differences

(47,472

)

(2,373

)

Tax on loss

(47,472

)

(254,365

)

Reconciliation of total tax credit 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:

2019

2018

Loss before tax

(1,213,841

)

(3,301,380

)

Loss multiplied by the standard rate of corporation tax in the UK of 19%
(2018 - 19%)

(230,630

)

(627,262

)

Effects of:

Expenses not deductible for tax purposes

6,626

28,065

Refund relating to current year R & D tax credit claim

(251,992

)

Unprovided tax relief on trading losses carried forward

176,532

453,260

Losses used as part of R & D tax credit claim

143,564

Total tax credit

(47,472

)

(254,365

)

The company will be making a R & D tax credit claim for the year ended 31 December 2019. However since the amount of the claim has not yet been determined, no provision for the tax refund flowing therefrom has been made in these financial statements.

12.	INTANGIBLE FIXED ASSETS

Know how

COST

At 1 January 2019

and 31 December 2019

95,000

AMORTISATION

At 1 January 2019

and 31 December 2019

95,000

NET BOOK VALUE

At 31 December 2019

At 31 December 2018

13.	TANGIBLE FIXED ASSETS

Long

Improvements

Freehold

leasehold

property

land

property

COST

At 1 January 2019

683,790

65,000

197,583

Additions

Disposals

At 31 December 2019

683,790

65,000

197,583

DEPRECIATION

At 1 January 2019

233,790

119,453

Charge for year

4,876

16,456

Eliminated on disposal

At 31 December 2019

238,666

135,909

NET BOOK VALUE

At 31 December 2019

445,124

65,000

61,674

At 31 December 2018

450,000

65,000

78,130

Plant and

Motor

Computer

machinery

vehicles

equipment

Totals

COST

At 1 January 2019

773,931

64,469

174,768

1,959,541

Additions

2,176

Disposals

(4,300

)

(4,300

)

At 31 December 2019

776,107

60,169

174,768

1,957,417

DEPRECIATION

At 1 January 2019

630,905

51,639

139,587

1,175,374

Charge for year

36,201

3,934

19,488

80,955

Eliminated on disposal

(4,300

)

(4,300

)

At 31 December 2019

667,106

51,273

159,075

1,252,029

NET BOOK VALUE

At 31 December 2019

109,001

8,896

15,693

705,388

At 31 December 2018

143,026

12,830

35,181

784,167

Included in the cost of freehold property is land of £60,000 (2018 - £60,000) which is not depreciated.

During June 2019 the company's freehold property was independently valued for the purposes of a refinancing being undertaken. The market value of the property was considered to be £450,000 and hence an impairment of £115,270 was charged to the statement of comprehensive income in the 2018 Financial Statements.

14.

STOCKS

2019

2018

Materials, components and consumables

3,473,682

4,343,676

15.

DEBTORS

2019

2018

Amounts falling due within one year:

Trade debtors

1,253,389

1,659,893

Amounts recoverable on contracts

146,843

232,967

Other debtors

52,229

31,405

Tax

251,992

446,957

Prepayments and accrued income

185,145

150,421

1,889,598

2,521,643

Amounts falling due after more than one year:

Prepayments and accrued income

61,286

Aggregate amounts

1,950,884

2,521,643

Included in trade debtors are balances totalling £1,251,613 (2018 - £1,232,025) which are subject to invoice discounting arrangements. These trade debtor balances have been transferred to the counterparty, though the transaction does not qualify for derecognition on the basis that the late payment risk is retained by the company. The associated liability recognised in creditors amounts to £917,228 (2018 - £902,907).

16.

CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR

2019

2018

Bank loans and overdrafts (see note 18)

349,658

Other loans (see note 18)

107,143

Payments on account

2,013

11,115

Trade creditors

1,267,748

1,763,032

Invoice discounting facilities

917,228

902,907

Social security and other taxes

73,258

121,461

VAT

118,527

156,093

Other creditors

25,739

50,673

SiG funds repayable

16,148

Directors' current accounts

1,663,479

1,646,947

Accrued expenses

113,154

171,604

4,288,289

5,189,638

Included in directors' current accounts is £1,663,479 (2018 - £1,606,985) owed to Mrs P A Marks. This amount has no fixed date for repayment and no interest is payable on the amount outstanding. Mrs P A Marks has confirmed that repayment will not be sought until the company's cashflow permits.

17.

CREDITORS: AMOUNTS FALLING DUE AFTER MORE THAN ONE
YEAR

2019

2018

Other loans (see note 18)

619,596

18.

LOANS

An analysis of the maturity of loans is given below:

2019

2018

Amounts falling due within one year or on demand:

Bank overdrafts

349,658

Property loan facilities

107,143

349,658

Amounts falling due between one and two years:

Property loan facilities

107,143

Amounts falling due between two and five years:

Property loan facilities

321,428

Amounts falling due in more than five years:

Repayable by instalments

Property loan facilities

191,025

During 2019 the company undertook a refinancing consisting of a new invoice discounting facility and two new property loan facilities. These facilities replaced the previous bank overdraft and invoice discounting arrangements. The new facilities are secured on the company's assets and also on two sites utilised by the company but which are owned personally by the controlling director/shareholder Mrs P A Marks. The facilities made available totalled £2,250,000 and carry interest/discount margin at rates between 2.95% - 3.95% above bank base rate subject to a minimum base rate of 0.5%. The property loan facilities are repayable over a period of 84 months.

19.	LEASING AGREEMENTS

Minimum lease payments under non-cancellable operating leases fall due as follows:

2019

2018

Within one year

4,338

4,860

Between one and five years

3,021

2,430

7,359

7,290

20.	SECURED DEBTS

The following secured debts are included within creditors:

2019

2018

Bank overdraft

349,658

Property loan facilities

726,739

Invoice discounting facilities

917,228

902,907

1,643,967

1,252,565

The company's invoice discounting facilities are secured by way of fixed and floating charges over the company's assets and undertaking.

The company's bank facilities and property loan facilities are secured on the company's assets and on two sites utilised by the company but which are owned personally by the controlling director/shareholder Mrs P A Marks.

21.	FINANCIAL INSTRUMENTS

2019

2018

Financial assets

Cash and cash equivalents

40,516

16,578

Financial assets measured at amortised cost

1,400,232

1,892,860

1,440,748

1,909,438

Financial liabilities

Financial liabilities measured at amortised cost

4,577,207

4,689,806

4,577,207

4,689,806

Financial assets measured at amortised cost comprise debtors due within one year.

Financial liabilities measured at amortised cost comprise creditors due within one year and over one year.

22.	PROVISIONS FOR LIABILITIES

2019

2018

Deferred tax

Accelerated capital allowances

47,472

Deferred

tax

Balance at 1 January 2019

47,472

Credit to Statement of Comprehensive Income during year

(47,472

)

Balance at 31 December 2019

Deferred tax is provided for at a rate of 19% (2018 - 19%).

It is not practicable to estimate future movements in deferred tax balances as a result of accelerated capital allowances due to the uncertainty as to the timing of future asset purchases.

23.	CALLED UP SHARE CAPITAL

Allotted, issued and fully paid:

Number:

Class:

Nominal

2019

2018

value:

100

Ordinary

£1

100

24.

RESERVES

Retained

earnings

At 1 January 2019

2,428,854

Deficit for the year

(1,166,369

)

At 31 December 2019

1,262,485

25.	RELATED PARTY DISCLOSURES

Rockford Xellerix Computer Systems LLC

Rockford Xellerix Computer Systems LLC was formed to give access to the MENA region. It has its head office in Abu Dhabi and a 3000 square metre manufacturing facility on the Tawazun Industrial Park. Rockford Xellerix Computer Systems LLC is an offset compliant Emirati company controlled by the director P A Lion and former director S D Hayter and has a 51% local Emirati shareholder and sponsor in accordance with UAE law. The relationship between the two companies is treated like any other export customer/supplier relationship with Rockford Components Limited having 'preferred supplier' status.

During the year the company made sales to Rockford Xellerix Computer Systems LLC totalling £285,146 (2018 - £609,438). At the statement of financial position date the following amounts were due from Rockford Xellerix Computer Systems LLC:-

2019

2018

Trade amounts due from related party

437,636

Mrs P A Marks

A director of the company

Included in creditors due within one year is £1,663,479 (2018 - £1,606,985) owed to Mrs P A Marks. This amount has no fixed date for repayment and no interest is payable on the amount outstanding. Mrs P A Marks has confirmed that repayment will not be sought until the company's cashflow permits.

During the year the company operated partly from two sites owned personally by Mrs P A Marks. No rent was charged to the company. Also during the year the company undertook a refinancing consisting of a new invoice discounting facility and two new property loan facilities. These facilities are secured on the company's assets but also on the two sites owned by Mrs P A Marks personally.

26.	ULTIMATE CONTROLLING PARTY

The ultimate controlling party is Mrs P A Marks.