Norbar Torque Tools Ltd - Limited company accounts 20.1

REGISTERED NUMBER: 00380480 (England and Wales)

STRATEGIC REPORT,

REPORT OF THE DIRECTORS AND

FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2020

FOR

NORBAR TORQUE TOOLS LTD

Page

Company Information

1

Strategic Report

2

Report of the Directors

6

Report of the Independent Auditors

8

Statement of Comprehensive Income

12

Balance Sheet

13

Statement of Changes in Equity

14

Notes to the Financial Statements

15

DIRECTORS:

N A Brodey

R Miller

J Kostrzewa

A R Lobo

J M Arregui Saez

SECRETARY:

C L Rohll

REGISTERED OFFICE:

Wildmere Road

Banbury

Oxfordshire

OX16 3JU

REGISTERED NUMBER:

00380480 (England and Wales)

AUDITORS:

Luckmans Duckett Parker Limited

Chartered Accountants

Statutory Auditors

1110 Elliott Court

Herald Avenue

Coventry Business Park

Coventry

West Midlands

CV5 6UB

The directors present their strategic report for the year ended 31 December 2020.

REVIEW OF BUSINESS

The company's range of products is focused on the torque tool market (torque tools and measuring instruments) with the addition of ultrasonic measurement for measuring bolt length and tension. To some extent the company's prosperity is related to the amount of activity in the engineering sectors around the world and any change in the level of activity is likely to affect the results. The company continues to focus on six main industrial sectors or "critical industries" - oil and gas, mining and refining, power generation, transportation, general assembly and aerospace. As the global pandemic affected these sectors in 2020, so too was the company's business affected. However, many of our products are essential to the ongoing maintenance and operation of these sectors, and the company is emerging from the pandemic in a strong position.

The company continues to have four different routes to market as follows:

1) Distribution through Norbar companies including those in the US, China, India and Australia;

2) Distribution through global Snap-on family companies;

3) Independent distributors of tools and torque products; and

4) Catalogue companies selling a wide range of tools, some of which are under the customers' brand name.

This multi-tiered approach to market serves the company well however, like all things, it is subject to ongoing review to see if the model needs changing in any particular country or industrial sector. The impact of internet sales is becoming increasingly apparent with both advantages in terms of reaching a wider customer base and disadvantages in the disruptive effect it has on existing supply chains. This may lead to changes to the distribution model in future. The very broad nature of the company's distribution, not just in geographic market terms, but also industrial markets, means that to some extent the company is protected from any specific country risk or industrial sector risk.

During 2020 the company held multiple "Rapid Continuous Improvement" or RCI events - week long events aimed at eliminating waste in the company's processes or products during the course of the week. RCI is a unique way to engage employees at all levels by teaching them how to recognise waste within their operation or function and empowering them with the tools and resources necessary to eliminate that waste. More continuous improvement initiatives are planned for 2021.

The key financial highlights are as follows:

2018 (£)

2019 (£)

2020 (£)

Turnover

31,472,454

33,436,819

30,445,515

Turnover Growth

11.1%

6.2%

(8.9%

)

Gross Profit Margin

37.2%

41.4%

37.1%

Profit before tax

1,768,644

3,786,444

2,454,646

In 2020 the company continued to invest heavily in new product development. Norbar expanded its popular EvoTorque® Battery Tool (EBT) offering to expand the controllable torque range lower - enabling the EBT range of products to address the needs of even more critical industries, such as automotive and heavy-duty fleet maintenance. Other research and development work carried out in 2020 will lead to exciting new product launches in 2021 which will help to boost performance further in terms of turnover and profit.

The average number of employees dropped by circa 1% as some natural turnover replacements were delayed until 2021. Norbar maintained its skilled workforce throughout the pandemic whist remaining profitable, enabling the company to emerge from the pandemic from a position of relative strength.

Overall, 2020 was a difficult year with decreasing revenue, lower profitability driven by lower sales, but buoyed by Rapid Continuous Improvement efforts which aided productivity.

PRINCIPAL RISKS AND UNCERTAINTIES

In common with all trading businesses, the company is exposed to a variety of risks in the conduct of its normal business operations. The company maintains a range of insurance policies against major identified insurable risks including (but not limited to) those related to business interruption, damage to property and equipment, product and employee liability. While it is not possible to completely record or quantify every material risk, below is summary of those risks that the directors believe are most significant to the company's business:

Operational and commercial risks

The company's revenues are principally derived from the sales of torque tightening and measuring tools and instruments. The markets for these products (and therefore revenues) are subject to variations in patterns of demand and economic growth. The wide range of markets and geographic territories serviced by the group mitigates this risk, although exposure to the oil industry means that significant drops in the oil price do have an effect on the company's revenue. This effect is somewhat offset by the relative stability in natural gas prices. Both the oil industry and the gas industry purchase similar products and solutions.

Market competition

Competition within the torque tool industry remains strong with competitors at both the high quality and lower quality/lower price ends of the market which puts pressure on selling prices. The company has also become aware of copies of its products entering the market which pose risks to both sales and reputation as the copies may be incorrectly associated with the company. The company will continue to develop and sell high quality products and the directors believe that in this market it remains competitive. The company is also investing in registered intellectual property protection to help mitigate this risk.

Foreign exchange risk

The company continues to sell mainly in pounds and so the economic recovery in the UK post-Brexit and post-pandemic will provide an ongoing currency risk. However, currency risk is now mitigated through hedging. The company's strategy is to focus on continuous improvement and increasing its efficiency to help counteract the impact of increased prices and salaries.

Suppliers

Although the company takes care to ensure alternative sources of supply are available for goods on which the company's business is critically dependent, this is not always possible. The company follows a policy of local supply where possible and has strong relationships with its key suppliers. It is actively looking to re-shore the supply of some components which are currently sourced from outside of the UK. In addition, the company is leveraging the greater buying power of its parent company to help source goods at a better price.

IT and systems reliability

The company is dependent on its information technology systems to operate its business efficiently, without failure or interruption. While data within key systems is regularly backed up and the system is subject to virus and fire wall protection, any failure of back-up systems or other major interruption to the information technology system could have a disruptive effect on the company's business.

Skilled employees

In order to remain competitive, the company needs to remain at the forefront of the development of new products. To do this it needs to be able to recruit and retain suitably skilled employees, particularly engineers and skilled CNC machine operators. The company is working closely with local schools and universities to promote engineering as a career for all genders and to attract suitably skilled individuals to the company at all levels including apprenticeships.

Political change

The company sells worldwide including into regions that are politically unstable and sales can be impacted by sanctions or other export controls that may be imposed by the UK government. An increasing move towards protectionism in major markets including Russia, China and India also pose risks to the business. The company continues to investigate the possibility of local assembly in some markets to counteract this risk.

Brexit and Trade

Norbar has implemented plans in place to adapt to the UK's new trading status on the world stage post-Brexit. While some delays in imports and exports are likely, these delays are temporary as new logistics procedures are adopted at home and abroad. Additionally, it is unclear what benefits new free trade agreements may yield.

Coronavirus Pandemic

The ongoing pandemic will affect industries served by Norbar and could have an effect on Norbar's revenue. This effect is somewhat mitigated by the nature of Norbar's goods and services in the field of torque. Torque products are necessary to maintain safe operation of oil and gas production, the production of electricity, mining, manufacturing and the mobility of fleets of ground, air and sea transport - all of which are critical industries, necessary even in times of pandemics. Operationally, Norbar maintains a COVID-secure workplace.

SECTION 172(1) STATEMENT

As with many organisations in the 2020 financial year, objectives were required to be recast in the light of the Coronavirus pandemic. Using the company's hierarchy of Safety, Quality, Delivery and Cost, we invested significantly in the health and safety of our employees, following government guidelines and delivering a robust regime that prevented 'employee to employee' transmission of the virus throughout the year. We maintained production for all but one week, so supporting our customers, some of whom are in essential services as well as protecting the income and wellbeing of our people. We continued engagement with our customers and suppliers through virtual means, recognising that their long-term success is essential to our long-term success. The step change in travel reduced our carbon footprint and we took lessons from that, with an increased scrutiny of travel as restrictions were relaxed. Our standing in the community and in our supply chain was enhanced, with the visitors who did enter our building stating that we had the best measures they had seen.

ENGAGEMENT WITH EMPLOYEES

Norbar's parent company, Snap-on Inc., expresses a vision of being an employer of choice, a brand of choice and a business partner of choice.

Norbar maintains open and frequent dialogue with employees of all levels. Specifically, directors meet with employees monthly by holding an Employee Council where all departments and shifts are represented. The Employees' Council (EC) allows all employees to participate in the decisions that help us achieve our mission and vision. Additionally, Norbar offers all employees a profit-sharing scheme so that everyone can benefit from the company's financial success.

ENGAGEMENT WITH SUPPLIERS, CUSTOMERS AND OTHERS

Through our sales forces and distributors, we make daily contacts with thousands of professionals in their workplaces across the globe. Each of these contacts represents an opportunity to understand in depth our customers' wants and needs, which we believe provides us with an important strategic advantage.

Guided by our core beliefs and values, Snap-on's and Norbar's commitments to integrity and social responsibility extend to its worldwide supply base.

ON ORDER OF THE BOARD:

N A Brodey - Director

30 July 2021

The directors present their report with the financial statements of the company for the year ended 31 December 2020.

DIVIDENDS

No dividends will be distributed for the year ended 31 December 2020.

RESEARCH AND DEVELOPMENT

The company continues with its research and development activities. The purpose of this is to develop new concepts to improve the technology used in torque tools and to continue to bring new products to market to enable the company to maintain its product range as being a worldwide market leading torque tool manufacturer.

DIRECTORS

The directors shown below have held office during the whole of the period from 1 January 2020 to the date of this report.

N A Brodey

R Miller

J Kostrzewa

A R Lobo

J M Arregui Saez

EMPLOYEES

The company shares information with employees through cascade briefings or "Team Briefs". The directors continue to meet regularly with the senior managers to discuss the core aspects of the business and to consider trading trends and marketing policies that are applicable to an ever-changing global sales environment.

The company has monthly gatherings to communicate general news and has an elected representative body which complies with the European Information and Consultation Directive requirements.

DISABLED EMPLOYEES

The company has policies and procedures in place to encourage employees with disabilities. Managers receive education in the requirements of the Disability Discrimination Act 1995 and the Equality Act 2010.

To remove any possible discrimination our application form for recruitment does not ask if a potential applicant has a disability. After selection of candidates, in our invite, for interview letter we ask what reasonable adjustments can be made to enable that applicant to attend.

We work closely with our Occupational Health team to make the necessary reasonable adjustments for those who become disabled to allow them to continue to carry out their job roles.

Our Equal Opportunities policy commits that we treat all our employees equally for recruitment, selection, training and development and promotion.

STREAMLINED ENERGY AND CARBON REPORTING

Norbar is committed to the reduction of its carbon footprint and has had an ISO50001 registered Energy Management System since 2015. This means Norbar has been monitoring its energy use since that date and has been actively looking to introduce energy saving measures. In addition, in 2015 Norbar installed a solar array on the roof of its factory which produces approximately 8% of its electricity requirements.

The figures shown below are for Norbar's energy consumption in financial year 2020 in kWh including purchased electricity, electricity generated by the solar array and car fuel usage. Norbar does not have a gas supply. The related carbon footprint, measured in CO2e metric tonnes, for purchased electricity and car fuel usage has been calculated using the UK Government conversion factors for company reporting of greenhouse gas emissions. This figure has been used to generate the intensity ratio by dividing it by the total sales for 2020. The total emission savings from the solar array generation have been calculated using the same UK Government factors and have not been included in the intensity ratio calculation.

Energy consumption (purchased electricity) plus car fuel usage (kWh)

2475909

Electricity consumption (generated by solar array) (kWh)

193906

Total gross emissions (purchased electricity plus car fuel usage) (CO2e metric tonnes)

578.8

Total emission savings from solar array generation (CO2e metric tonnes)

53.7

Sales (£million)

30.4

Intensity ratio Tonnes CO2e per £1 million sales

19.0

For the financial year ending 31 December 2020, the measures taken by Norbar to reduce its energy consumption and carbon footprint included upgrading the heating, ventilation and air conditioning system to make it more flexible and efficient and the completion of installation of LED lighting throughout the factory. The conversion of fleet vehicles from traditional petrol or diesel models to hybrid or fully electric models also started in 2020.

DISCLOSURE IN THE STRATEGIC REPORT

Reports for Engagement with Employees and Engagement with Suppliers, Customers and Others are included in the Strategic 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), including Financial Reporting Standard 102 'The Financial Reporting Standard applicable in the UK and Republic of Ireland'. 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;

-	state whether applicable accounting standards have been followed, subject to any material departures disclosed and explained in the financial statements;

-	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.

ON ORDER OF THE BOARD:

N A Brodey - Director

30 July 2021

Opinion

We have audited the financial statements of Norbar Torque Tools Ltd (the 'company') for the year ended 31 December 2020 which comprise the Statement of Comprehensive Income, Balance Sheet, Statement of Changes in Equity and Notes to the Financial Statements, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 'The Financial Reporting Standard applicable in the UK and Republic of Ireland' (United Kingdom Generally Accepted Accounting Practice).

In our opinion the financial statements:

-	give a true and fair view of the state of the company's affairs as at 31 December 2020 and of its profit for the year then ended;

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

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

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditors' responsibilities for the audit of the financial statements section of our report. We are independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC's Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Conclusions relating to going concern

In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.

Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.

Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.

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 this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

Opinions on other matters prescribed by the Companies Act 2006

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

-	the information given in the Strategic Report and the Report of the 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 seven, 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.

Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:

In identifying and assessing the risk of material misstatement in respect of irregularities, including fraud and non-compliance with laws and regulations, our procedures included the following:

- reference to past history and experience of the Entity,

- enquiry of management, including obtaining and reviewing supporting documentation concerning

the Entity's procedures relating to:

- identifying and complying with laws and regulations and whether they were aware of any instances

of non-compliance;

- detection and response to risk of fraud and whether they were aware of any actual or suspected

instances of fraud.

- assessment of the controls and processes that the Entity has in place to mitigate risk

Our assessments included the identification of the following potential areas for fraud:

- Management override of control;

- Revenue recognition, particularly in respect of delivery of goods

We design audit procedures by tailored and directed testing to aid and support the level of determined level of risk. In response to the assessed risk we plan audit tests and procedures that target specific areas where misstatement may occur. These procedures and the extent to which they are capable of detecting

irregularities, including fraud, are detailed below:

- We critically assessed the appropriateness and tested the application of the revenue and cost

recognition policies

- We tested the appropriateness of accounting journals and other adjustments made in the

preparation of the financial statements

- We reviewed the Entity's accounting policies for non-compliance with relevant standards.

- We made enquiries of management and reviewed correspondence with the relevant authorities to

identify any irregularities or instances of non-compliance with laws and regulations

In performing an audit in accordance with UK GAAP, we exercise professional judgement and maintain

professional scepticism throughout the audit process.

The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from

error, as fraud may involve collusion or override of internal controls. There are inherent limitations in the audit procedures performed.

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.

Mark Spafford FCCA ACA (Senior Statutory Auditor)

for and on behalf of Luckmans Duckett Parker Limited

Chartered Accountants

Statutory Auditors

1110 Elliott Court

Herald Avenue

Coventry Business Park

Coventry

West Midlands

CV5 6UB

30 July 2021

TURNOVER

3

30,445,515

33,436,819

Cost of sales

19,136,790

19,590,514

GROSS PROFIT

11,308,725

13,846,305

Administrative expenses

9,248,340

10,431,228

2,060,385

3,415,077

Other operating income

394,260

360,630

OPERATING PROFIT

5

2,454,645

3,775,707

Interest receivable and similar income

1

10,737

PROFIT BEFORE TAXATION

2,454,646

3,786,444

Tax on profit

6

460,863

712,532

PROFIT FOR THE FINANCIAL YEAR

1,993,783

3,073,912

OTHER COMPREHENSIVE INCOME

-

-

TOTAL COMPREHENSIVE INCOME FOR THE YEAR

1,993,783

3,073,912

FIXED ASSETS

Intangible assets

7

91,514

90,665

Tangible assets

8

8,754,602

8,876,065

8,846,116

8,966,730

CURRENT ASSETS

Stocks

9

4,128,418

4,911,720

Debtors

10

14,098,041

11,204,090

Cash at bank and in hand

346,226

334,852

18,572,685

16,450,662

CREDITORS

Amounts falling due within one year

11

3,042,606

3,025,954

NET CURRENT ASSETS

15,530,079

13,424,708

TOTAL ASSETS LESS CURRENT LIABILITIES

24,376,195

22,391,438

PROVISIONS FOR LIABILITIES

14

784,522

793,548

NET ASSETS

23,591,673

21,597,890

CAPITAL AND RESERVES

Called up share capital

15

62,770

62,770

Retained earnings

16

23,528,903

21,535,120

SHAREHOLDERS' FUNDS

23,591,673

21,597,890

The financial statements were approved by the Board of Directors and authorised for issue on 30 July 2021 and were signed on its behalf by:

N A Brodey - Director

Called up

share

Retained

Total

capital

earnings

equity

£

£

£

Balance at 1 January 2019

62,770

18,461,208

18,523,978

Changes in equity

Total comprehensive income

-

3,073,912

3,073,912

Balance at 31 December 2019

62,770

21,535,120

21,597,890

Changes in equity

Total comprehensive income

-

1,993,783

1,993,783

Balance at 31 December 2020

62,770

23,528,903

23,591,673

1.	STATUTORY INFORMATION

Norbar Torque Tools Ltd is a private company, limited by shares , registered in England and Wales. The company's registered number and registered office address can be found on the Company Information page.

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

2.	ACCOUNTING POLICIES

Basis of preparing the financial statements

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

Financial Reporting Standard 102 - reduced disclosure exemptions

The company has taken advantage of the following disclosure exemption 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.

Turnover

Turnover is measured at the fair value of the consideration received or receivable, excluding discounts, rebates, value added tax and other sales taxes.

Turnover from the sale of goods are recognised when significant risks and rewards of ownership of the goods have transferred to the buyer, the amount of turnover can be measured reliably, it is probable that the economic benefits associated with the transaction will flow to the company and the costs incurred or to be incurred in respect of the transaction can be measured reliably. This is either on an ex-works basis for international sales or a CIP basis for domestic sales.

Intellectual property

Amortisation is provided to write off intellectual property over its estimated useful life of 5 years from the acquisition date of the intellectual property.

Computer software

Amortisation is provided to write off computer software over its estimated useful life of 5 years from when the asset comes into use by the company.

Tangible fixed assets

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

Improvements to property

-

4% on cost

Plant and machinery

-

Over 10 years

Fixtures and fittings

-

Straight line over 15 years

Motor vehicles

-

25% on reducing balance

Tangible fixed assets are stated at cost (or deemed cost) or valuation less accumulated depreciation and accumulated impairment losses. Cost includes costs directly attributable to making the asset capable of operating as intended.

Stocks

Stocks and work in progress are valued at the lower of cost and net realisable value, after making due allowance for obsolete and slow moving items.

Cost is calculated using the first-in, first-out method and includes all purchase, transport, and handling costs in bringing stocks to their present location and condition.

Stocks are valued on a First In First Out basis using a standard costing pricing model.

Stock recognised in cost of sales during the year as an expense was £NIL.

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 balance sheet date.

Deferred tax

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

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.

Government grants

Revenue grants are charged to the profit and loss account when the expenditure is incurred. Capital grants are deducted from the acquisition cost of fixed assets acquired under the terms of the grant.

Changes in accounting estimates

Bad Debt Provision

Bad debts are assessed according to how long the customer is over their terms by:

100% for customers with known trading issues

90%- 180 days or more over their terms

50% - between 121-179 days over their terms

20% - between 90-120 days over their terms

Stock Provision

Stock provision is assessed on usage over the past 12 months compared to the relative stock holdings,

Quantity over 12 mths usage - 5%

Quantity over 24 mths usage - 20%

Quantity over 36 mths usage - 30%

No usage in last 12 mths - 100%

3.

TURNOVER

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

An analysis of turnover by geographical market is given below:

2020

2019

£

£

United Kingdom

6,908,545

7,847,432

Overseas

23,536,970

25,589,387

30,445,515

33,436,819

4.	EMPLOYEES AND DIRECTORS

2020

2019

£

£

Wages and salaries

11,169,862

11,759,955

Social security costs

1,241,259

1,123,609

Other pension costs

630,631

607,880

13,041,752

13,491,444

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

2020

2019

Production

213

223

Management and administration

91

85

304

308

2020

2019

£

£

Directors' remuneration

167,960

368,145

5.	OPERATING PROFIT

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

2020

2019

£

£

Depreciation - owned assets

788,295

861,619

Computer software amortisation

33,179

48,301

Auditors' remuneration

19,500

19,000

Foreign exchange differences

(6,121

)

18,593

Research and development expenditure

22,088

48,782

6.

TAXATION

Analysis of the tax charge

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

2020

2019

£

£

Current tax:

UK corporation tax

422,120

630,441

Research & Developments Expenditure Credit

47,769

53,916

Total current tax

469,889

684,357

Deferred tax provision movement

(9,026

)

28,175

Tax on profit

460,863

712,532

Reconciliation of total tax charge included in profit and loss

The tax assessed for the year is lower than the standard rate of corporation tax in the UK. The difference is explained below:

2020

2019

£

£

Profit before tax

2,454,646

3,786,444

Profit multiplied by the standard rate of corporation tax in the UK of 19% (2019 - 19%)

466,383

719,424

Effects of:

Expenses not deductible for tax purposes

738

2,044

Capital allowances in excess of depreciation

(6,258

)

-

Depreciation in excess of capital allowances

-

40,864

Utilisation of tax losses

-

(49,800

)

expenditure credit

Total tax charge

460,863

712,532

7.	INTANGIBLE FIXED ASSETS

Intellectual

Computer

property

software

Totals

£

£

£

COST

At 1 January 2020

60,500

403,040

463,540

Additions

-

34,028

34,028

At 31 December 2020

60,500

437,068

497,568

AMORTISATION

At 1 January 2020

60,500

312,375

372,875

Amortisation for year

-

33,179

33,179

At 31 December 2020

60,500

345,554

406,054

NET BOOK VALUE

At 31 December 2020

-

91,514

91,514

At 31 December 2019

-

90,665

90,665

8.	TANGIBLE FIXED ASSETS

Improvements

Fixtures

to

Plant and

and

property

machinery

fittings

£

£

£

COST

At 1 January 2020

3,292,920

11,115,592

409,645

Additions

-

633,287

52,606

Disposals

-

(19,061

)

-

At 31 December 2020

3,292,920

11,729,818

462,251

DEPRECIATION

At 1 January 2020

709,392

4,854,769

387,984

Charge for year

146,905

622,612

11,742

At 31 December 2020

856,297

5,477,381

399,726

NET BOOK VALUE

At 31 December 2020

2,436,623

6,252,437

62,525

At 31 December 2019

2,583,528

6,260,823

21,661