Eurocraft Technologies Limited - Limited company accounts 16.3

REGISTERED NUMBER: 08249178 (England and Wales)

STRATEGIC REPORT, REPORT OF THE DIRECTOR AND

FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2016

FOR

EUROCRAFT TECHNOLOGIES LIMITED

Page

Company Information

1

Strategic Report

2

Report of the Director

3

Report of the Independent Auditors

5

Statement of Comprehensive Income

7

Statement of Financial Position

8

Statement of Changes in Equity

9

Notes to the Financial Statements

10

DIRECTOR:

P Mehta

REGISTERED OFFICE:

Cinderbank

Dudley

West Midlands

DY2 9AE

REGISTERED NUMBER:

08249178 (England and Wales)

AUDITORS:

DNG Dove Naish

Chartered Accountants

and Statutory Auditor

Eagle House

28 Billing Road

Northampton

NN1 5AJ

The director presents his strategic report for the year ended 31 December 2016.

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

attached financial statements.

REVIEW OF BUSINESS

The comparative figures are for an 18 month period to 31 December 2015 and are therefore not entirely

comparable.

The director is pleased to report that turnover has increased on an annual pro-rata basis by 33%.

Gross profit margin has improved by 2.7% from 25.6% to 28.3% as a result of efficiencies achieved in the

supply chain.

Profit before tax has increased on an annual pro-rata basis by 242%, and as a percentage of turnover, has

increased to 13% from 5% in the previous period.

Volume on its key contracts grew and the company continued to work with its customers on the development

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

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

PRINCIPAL RISKS AND UNCERTAINTIES

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

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

Tolerance Matrices, Business Impact Analyses and Action Plans.

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

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

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

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

KEY PERFORMANCE INDICATORS

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

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

reviewed at regular QMS meetings.

SIGNED BY ORDER OF THE DIRECTORS:

P Mehta - Director

25 September 2017

The director presents his report with the financial statements of the company for the year ended 31 December 2016.

PRINCIPAL ACTIVITY

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

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

DIVIDENDS

No dividends will be distributed for the year ended 31 December 2016.

RESEARCH AND DEVELOPMENT

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

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

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

FUTURE DEVELOPMENTS

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

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

DIRECTOR

P Mehta held office during the whole of the period from 1 January 2016 to the date of this report.

STATEMENT OF DIRECTOR'S RESPONSIBILITIES

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

statements in accordance with applicable law and regulations.

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

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

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

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

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

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

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

-	select suitable accounting policies and then apply them consistently;

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

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

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

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

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

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

prevention and detection of fraud and other irregularities.

STATEMENT AS TO DISCLOSURE OF INFORMATION TO AUDITORS

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

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

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

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

AUDITORS

The auditors, DNG Dove Naish, will be proposed for re-appointment at the forthcoming Annual General

Meeting.

SIGNED BY ORDER OF THE DIRECTORS:

P Mehta - Director

25 September 2017

We have audited the financial statements of Eurocraft Technologies Limited for the year ended

31 December 2016 on pages seven to twenty. The financial reporting framework that has been applied in

their preparation is applicable law and United Kingdom Accounting Standards (United Kingdom Generally

Accepted Accounting Practice), including Financial Reporting Standard 102 'The Financial Reporting

Standard applicable in the UK and Republic of Ireland'.

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.

Respective responsibilities of director and auditors

As explained more fully in the Statement of Director's Responsibilities set out on page three, the director is responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit and express an opinion on the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board's Ethical Standards for Auditors.

Scope of the audit of the financial statements

An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient

to give reasonable assurance that the financial statements are free from material misstatement, whether

caused by fraud or error. This includes an assessment of: whether the accounting policies are appropriate to

the company's circumstances and have been consistently applied and adequately disclosed; the

reasonableness of significant accounting estimates made by the director; and the overall presentation of the

financial statements. In addition, we read all the financial and non-financial information in the Strategic Report

and the Report of the Director to identify material inconsistencies with the audited financial statements and to

identify any information that is apparently materially incorrect based on, or materially inconsistent with, the

knowledge acquired by us in the course of performing the audit. If we become aware of any apparent material

misstatements or inconsistencies we consider the implications for our report.

Opinion on financial statements

In our opinion the financial statements:

-	give a true and fair view of the state of the company's affairs as at 31 December 2016 and of its profit for the year then ended;

-	have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice, including Financial Reporting Standard 102 'The Financial Reporting Standard applicable in the UK and Republic of Ireland'; and

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

Opinion on other matter prescribed by the Companies Act 2006

In our opinion, based on the work undertaken in the course of our audit, the information given in the Strategic

Report and the Report of the Director for the financial year for which the financial statements are prepared is

consistent with the financial statements, and has been prepared in accordance with applicable legal

requirements. In the light of the knowledge and understanding of the company and its environment, we have

not identified any material misstatements in the Strategic Report or the Report of the Director.

Matters on which we are required to report by exception

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

report to you if, in our opinion:

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

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

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

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

Andrew Clifford (Senior Statutory Auditor)

for and on behalf of DNG Dove Naish

Chartered Accountants

and Statutory Auditor

Eagle House

28 Billing Road

Northampton

NN1 5AJ

28 September 2017

TURNOVER

3

11,407,948

12,837,710

Cost of sales

8,179,683

9,544,910

GROSS PROFIT

3,228,265

3,292,800

Administrative expenses

1,784,023

2,563,054

1,444,242

729,746

Other operating income

3,387

5,622

OPERATING PROFIT

6

1,447,629

735,368

Interest receivable and similar income

253

5

1,447,882

735,373

Amounts written off investments

7

(3,076

)

10,703

1,450,958

724,670

Interest payable and similar expenses

8

12,361

93,679

PROFIT BEFORE TAXATION

1,438,597

630,991

Tax on profit

9

24,943

175,057

PROFIT FOR THE FINANCIAL YEAR

1,413,654

455,934

OTHER COMPREHENSIVE INCOME

-

-

TOTAL COMPREHENSIVE INCOME FOR THE YEAR

1,413,654

455,934

FIXED ASSETS

Intangible assets

11

981,450

1,132,443

Tangible assets

12

1,134,556

725,759

Investments

13

-

127,675

2,116,006

1,985,877

CURRENT ASSETS

Stocks

14

1,601,391

970,790

Debtors

15

2,966,462

1,254,155

Cash at bank and in hand

141,339

415,253

4,709,192

2,640,198

CREDITORS

Amounts falling due within one year

16

4,952,505

4,162,984

NET CURRENT LIABILITIES

(243,313

)

(1,522,786

)

TOTAL ASSETS LESS CURRENT LIABILITIES

1,872,693

463,091

CREDITORS

Amounts falling due after more than one year

17

-

(8,142

)

PROVISIONS FOR LIABILITIES

21

(5,510

)

(1,420

)

NET ASSETS

1,867,183

453,529

CAPITAL AND RESERVES

Called up share capital

22

10,000

10,000

Merger reserve

23

120,316

120,316

Retained earnings

23

1,736,867

323,213

SHAREHOLDERS' FUNDS

1,867,183

453,529

The financial statements were approved by the director on 25 September 2017 and were signed by:

P Mehta - Director

Called up

share

Retained

Merger

Total

capital

earnings

reserve

equity

£

£

£

£

Balance at 1 July 2014

10,000

102,544

120,316

232,860

Changes in equity

Dividends

-

(235,265

)

-

(235,265

)

Total comprehensive income

-

455,934

-

455,934

Balance at 31 December 2015

10,000

323,213

120,316

453,529

Changes in equity

Total comprehensive income

-

1,413,654

-

1,413,654

Balance at 31 December 2016

10,000

1,736,867

120,316

1,867,183

1.	STATUTORY INFORMATION

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

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

Information page.

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

2.	ACCOUNTING POLICIES

Basis of preparing the financial statements

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

This is the first year in which the financial statements have been prepared under FRS 102. Refer to the

notes for an explanation of the transition

Financial reporting standard 102 - reduced disclosure exemptions

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

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

Republic of Ireland":

•

the requirements of Section 7 Statement of Cash Flows;

•

the requirement of Section 33 Related Party Disclosures paragraph 33.7.

Significant judgements and estimates

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

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

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

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

policies below.

Turnover

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

customers.

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

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

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

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

Goodwill

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

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.

Tangible fixed assets

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

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

Plant and machinery - over 3 to 15 years straight line

Fixtures and fittings - over 3 to 8 years straight line

Leasehold improvements - over the period of the lease

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

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

for as separate items of property, plant and equipment.

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

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

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

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

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

Investments in subsidiaries

Investments in subsidiary undertakings are recognised at cost.

Stocks

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

allowance for obsolete and slow moving items.

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

costs in bringing stocks to their present location and condition.

Financial instruments

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

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

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

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

comprehensive income under administrative expenses.

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

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

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

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

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

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

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

produce a constant rate of return on the outstanding liability.

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

financial liability then this is classed as an equity instrument. Dividends and distributions relating to

equity instruments are debited direct to equity.

Taxation

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

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

comprehensive income or directly in equity.

Current or deferred taxation assets and liabilities are not discounted.

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

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

Deferred tax

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

the statement of financial position date.

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

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

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

expected to apply to the reversal of the timing difference.

Unrelieved tax losses and other deferred tax assets are recognised only to the extent that it is probable

that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits.

Research and development

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

Foreign currencies

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

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

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

in arriving at the operating result.

Hire purchase and leasing commitments

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

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

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

whichever is the shorter.

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

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

Pension costs and other post-retirement benefits

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

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

3.

TURNOVER

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

An analysis of turnover by geographical market is given below:

Period

1/7/14

Year Ended

to

31/12/16

31/12/15

£

£

United Kingdom

11,364,986

12,822,500

Europe

42,962

14,375

Rest of the world

-

835

11,407,948

12,837,710

4.	EMPLOYEES AND DIRECTORS

Period

1/7/14

Year Ended

to

31/12/16

31/12/15

£

£

Wages and salaries

2,902,659

3,188,368

Social security costs

172,291

230,250

Other pension costs

43,619

67,979

3,118,569

3,486,597

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

Period

1/7/14

Year Ended

to

31/12/16

31/12/15

Office and management

6

7

Manufacturing

99

90

105

97

5.	DIRECTORS' EMOLUMENTS

Period

1/7/14

Year Ended

to

31/12/16

31/12/15

£

£

Directors' remuneration

-

141,191

Directors' pension contributions to money purchase schemes

-

22,250

Compensation to director for loss of office

-

30,000

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

Money purchase schemes

-

2

6.	OPERATING PROFIT

The operating profit is stated after charging:

Period

1/7/14

Year Ended

to

31/12/16

31/12/15

£

£

Depreciation - owned assets

121,655

169,561

Depreciation - assets on hire purchase contracts

33,466

44,178

Loss on disposal of fixed assets

-

3,754

Goodwill amortisation

150,993

226,489

Auditors' remuneration

12,350

35,656

Foreign exchange differences

73,603

48,268

7.	AMOUNTS WRITTEN OFF INVESTMENTS

Period

1/7/14

Year Ended

to

31/12/16

31/12/15

£

£

Amounts written off investment

(3,076

)

10,703

8.

INTEREST PAYABLE AND SIMILAR EXPENSES

Period

1/7/14

Year Ended

to

31/12/16

31/12/15

£

£

Bank loan interest

2

114

Other interest payable

12,359

93,565

12,361

93,679

9.

TAXATION

Analysis of the tax charge

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

Period

1/7/14

Year Ended

to

31/12/16

31/12/15

£

£

Deferred tax

24,943

175,057

Tax on profit

24,943

175,057

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:

Period

1/7/14

Year Ended

to

31/12/16

31/12/15

£

£

Profit before tax

1,438,597

630,991

Profit multiplied by the standard rate of corporation tax in the UK of 20% (2015 - 20%)

287,719

126,198

Effects of:

Expenses not deductible for tax purposes

30,433

50,727

Capital allowances in excess of depreciation

(29,051

)

(8,806

)

Utilisation of tax losses

(134,616

)

(168,119

)

Deferred tax

24,943

175,057

Group relief

(154,485

)

-

Total tax charge

24,943

175,057

10.

DIVIDENDS

Period

1/7/14

Year Ended

to

31/12/16

31/12/15

£

£

Interim

-

235,265

11.	INTANGIBLE FIXED ASSETS

Goodwill

£

COST

At 1 January 2016

and 31 December 2016

1,509,925

AMORTISATION

At 1 January 2016

377,482

Amortisation for year

150,993

At 31 December 2016

528,475

NET BOOK VALUE

At 31 December 2016

981,450

At 31 December 2015

1,132,443