Jones Stroud Insulations Limited - Limited company accounts 18.1d

REGISTERED NUMBER: 03989743 (England and Wales)

Jones Stroud Insulations Limited

Strategic Report, Report of the Director and

Financial Statements

For The Year Ended 31 December 2017

Page

Company Information

1

Strategic Report

2

Report of the Director

4

Report of the Independent Auditors

6

Statement of Comprehensive Income

9

Statement of Financial Position

10

Statement of Changes in Equity

11

Notes to the Financial Statements

12

DIRECTOR:

R G Stenhouse

SECRETARY:

N R Currie

REGISTERED OFFICE:

Queens Mill

Queen Street

Longridge

Preston

Lancashire

PR3 3BS

REGISTERED NUMBER:

03989743 (England and Wales)

AUDITORS:

Lloyd Piggott Limited

Chartered Accountants and Statutory Auditor

St George's House

56 Peter Street

Manchester

M2 3NQ

BANKERS:

National Westminster Bank

East Midlands

PO Box 7895

6th Floor, Cumberland Place

Nottingham

NG1 7ZS

SOLICITORS:

Nicholson Graham & Jones

110 Cannon Street

London

EC4N 6AR

The director presents his strategic report for the year ended 31 December 2017.

REVIEW OF BUSINESS

The company recorded a sales turnover of £27,201,993 for the year to 31st December 2017, representing an

increase in sales of 13.4% compared to the previous year. On this turnover the business achieved a PBT of

£1,827,426 for the same period representing an increase in profits of 20.8%. The main influences on the

increased profit were a general upturn in market activity.The exchange rate of sterling versus the euro had a

positive effect on revenues throughout the year and the company continues to hedge against both the euro

and the US Dollar. New export business was obtained in both new and existing markets resulting in a gain in

market share at several major global energy companies. There were no significant bad debts and the

company continues to insure against all trade debtors. Liquidity will continue to be funded by on-going

operations.

There were no post balance sheet events affecting the company.

PRINCIPAL RISKS AND UNCERTAINTIES

The management feels the company is not unduly at risk from currency exchange rates as sales and

purchases are partly hedged in both Euros/US Dollars and Sterling. However, any major movement of

sterling against the euro will effect revenues whether positive or negative.

Credit risk is minimised by insuring against all trading debtors. However, there is an excess to be paid and a

small number of current customers are not covered by insurance.

The company's liquidity will continue to be funded by on-going operations and secured bank borrowings.

FINANCIAL INSTRUMENTS

The company has a normal level of exposure to price, credit, liquidity and cash flow risks arising from

trading activities which are conducted mainly in sterling and Euros. Euro transactions are partly covered by

suitable currency hedging contracts at an exchange rate agreed for the year.

FUTURE DEVELOPMENTS

The company has continued to invest heavily during 2017 in state of the art processing lines and technical

personnel. Further investment in these areas, to enable access to new and developing markets, will continue

through 2018.

Increasing raw material and labour costs in 2018 are expected, and will have a negative effect on margins in

our core businesses. Efforts to increase productivity during 2018 will be needed to mitigate these increased

costs.

Focus in 2018 will be to increase sales in high and medium voltage export markets, especially developing

countries and the USA. An increased investment and sales focus into advanced composite markets will bring

additional revenue through 2018.

KEY PERFORMANCE INDICATORS

The management team continues to monitor business activity through a range of critical indicators on a

weekly and monthly basis. These include:

1. EBIT target 8% - 2017 = 6.8%.

ON BEHALF OF THE BOARD:

R G Stenhouse - Director

10 April 2018

The director presents his report with the financial statements of the company for the year ended 31 December 2017.

PRINCIPAL ACTIVITIES

The company's principal activities during the year were the manufacture of Electrical Insulation, Thermal

Insulation and Composite Materials for a range of high technology markets including High Voltage Power

generation, Low Voltage Rotating Machines, Wind Power Generation, Automotive, Aerospace and Defence.

DIVIDENDS

No interim dividend was paid during the year. The director recommends a final dividend of 0.214 per share.

The total distribution of dividends for the year ended 31 December 2017 will be £ 1,000,000 .

RESEARCH AND DEVELOPMENT

During the course of the year the company continued to invest in the research and development of new and

existing products for both the UK and export.

FUTURE DEVELOPMENTS

Information regarding the future developments of the company can be found in the strategic report.

DIRECTOR

R G Stenhouse held office during the whole of the period from 1 January 2017 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, Lloyd Piggott Limited, will be proposed for re-appointment at the forthcoming Annual

General Meeting.

ON BEHALF OF THE BOARD:

R G Stenhouse - Director

10 April 2018

Opinion

We have audited the financial statements of Jones Stroud Insulations Limited (the 'company') for the year

ended 31 December 2017 which comprise the Statement of Comprehensive Income, Statement of Financial

Position, Statement of Changes in Equity and Notes to the Financial Statements, including a summary of

significant accounting policies. The financial reporting framework that has been applied in their preparation

is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102

'The Financial Reporting Standard applicable in the UK and Republic of Ireland' (United Kingdom Generally

Accepted Accounting Practice).

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.

In our opinion the financial statements:

-	give a true and fair view of the state of the company's affairs as at 31 December 2017 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

We have nothing to report in respect of the following matters in relation to which the ISAs (UK) require us

to report to you where:

-	the director's use of the going concern basis of accounting in the preparation of the financial statements is not appropriate; or

-

the director has not disclosed in the financial statements any identified material uncertainties that may cast significant doubt about the company's ability to continue to adopt the going concern basis of accounting for a period of at least twelve months from the date when the financial statements are authorised for issue.

Other information

The director is responsible for the other information. The other information comprises the information in the

Strategic Report and the Report of the Director, 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 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, 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.

Opinion 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 Director 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 Director 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

Director.

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.

Responsibilities of director

As explained more fully in the Statement of Director's Responsibilities set out on page four, the director is

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 director determines 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 director is 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 director either intends to liquidate the company or to cease

operations, or has no realistic alternative but to do so.

Our 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.

Gary Dodds FCA (Senior Statutory Auditor)

for and on behalf of Lloyd Piggott Limited

Chartered Accountants and Statutory Auditor

St George's House

56 Peter Street

Manchester

M2 3NQ

11 April 2018

TURNOVER

3

27,201,993

23,979,703

Cost of sales

19,347,265

17,107,321

GROSS PROFIT

7,854,728

6,872,382

Administrative expenses

6,010,347

5,337,117

OPERATING PROFIT

5

1,844,381

1,535,265

Interest receivable and similar income

-

216

1,844,381

1,535,481

Interest payable and similar expenses

6

16,955

22,793

PROFIT BEFORE TAXATION

1,827,426

1,512,688

Tax on profit

7

368,764

342,210

PROFIT FOR THE FINANCIAL YEAR

1,458,662

1,170,478

OTHER COMPREHENSIVE INCOME

-

-

TOTAL COMPREHENSIVE INCOME FOR THE YEAR

1,458,662

1,170,478

FIXED ASSETS

Intangible assets

9

560,110

744,937

Tangible assets

10

7,442,487

6,814,798

Investments

11

20,000

20,000

8,022,597

7,579,735

CURRENT ASSETS

Stocks

12

3,706,494

3,877,844

Debtors

13

5,566,282

5,038,205

Cash at bank and in hand

1,183,391

1,461,087

10,456,167

10,377,136

CREDITORS

Amounts falling due within one year

14

2,483,612

1,983,635

NET CURRENT ASSETS

7,972,555

8,393,501

TOTAL ASSETS LESS CURRENT LIABILITIES

15,995,152

15,973,236

CREDITORS

Amounts falling due after more than one year

15

(750,745

)

(1,168,534

)

PROVISIONS FOR LIABILITIES

20

(500,069

)

(519,026

)

NET ASSETS

14,744,338

14,285,676

CAPITAL AND RESERVES

Called up share capital

21

4,667,001

4,667,001

Retained earnings

22

10,077,337

9,618,675

SHAREHOLDERS' FUNDS

14,744,338

14,285,676

The financial statements were approved by the director on 10 April 2018 and were signed by:

R G Stenhouse - Director

Called up

share

Retained

Total

capital

earnings

equity

£

£

£

Balance at 1 January 2016

4,667,001

8,448,197

13,115,198

Changes in equity

Total comprehensive income

-

1,170,478

1,170,478

Balance at 31 December 2016

4,667,001

9,618,675

14,285,676

Changes in equity

Dividends

-

(1,000,000

)

(1,000,000

)

Total comprehensive income

-

1,458,662

1,458,662

Balance at 31 December 2017

4,667,001

10,077,337

14,744,338

1.	STATUTORY INFORMATION

Jones Stroud Insulations 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.

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.

Preparation of consolidated financial statements

The financial statements contain information about Jones Stroud Insulations Limited as an individual

company and do not contain consolidated financial information as the parent of a group. The

company is exempt under Section 400 of the Companies Act 2006 from the requirements to prepare

consolidated financial statements as it and its subsidiary undertaking are included by full

consolidation in the consolidated financial statements of its parent, Krempel (UK) Holdings Ltd, .

Significant judgements and estimates

The preparation of the financial statements in conformity with generally accepted accounting

principles requires the director to make estimates and assumptions that affect the reported amounts of

assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial

statements and the reported amounts of revenues and expenses during the reporting period. Actual

results in the future could differ from those estimates. In this regard, the director believes that the

critical accounting policies where judgements or estimations are necessarily applied are summarised

below:

Goodwill and residual values

The Director has reviewed the asset lives and associated residual values of goodwill, and in particular,

the useful economic life and residual value and has concluded that asset lives and residual values are

appropriate.

Depreciation and residual values

The Director has reviewed the asset lives and associated residual values of all fixed asset classes, and

in particular, the useful economic life and residual values and has concluded that asset lives and

residual values are appropriate.

Work in Progress

The key judgements and estimates in determining the value of work in progress are labour rates and

machine utilisation rates.

These assessments include a degree of uncertainty and therefore if these judgements change,

amendments to work in progress may be necessary.

Turnover

Turnover, which is stated net of VAT, is recognised when the risks and rewards of ownership are

transferred by way of delivery.

Goodwill

Goodwill, being the amount paid in connection with the acquisition of the business in 2000, is being

amortised evenly over its estimated useful economic life of 20 years.

Goodwill, being the amount brought into the business in relation the absorption of Krempel Ltd into

Jones Stroud Insulations Ltd, is being amortised evenly over it remaining useful economic life of 10

years.

Goodwill is reviewed for impairment at the end of the first full financial year following acquisition

and in other periods if events or changes in circumstances indicate that the carrying value may not be

recoverable.

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.

Freehold property

-

2% on reducing balance

Plant and machinery

-

15% on reducing balance

Fixtures and fittings

-

25% on reducing balance and straight line over 5 years

Motor vehicles

-

30% on reducing balance

Once net book value reaches less than £500 the asset will be written down to nil.

The carrying values of tangible assets are reviewed for impairments in periods if events or changes in

circumstances indicate the carrying value may not be recovered.

Tangible fixed assets are stated at cost less depreciation.

Stocks

Stocks are stated at the lower of cost and net realisable value. Costs include all cost incurred in

bringing each product to its present location and condition as follows:

Raw materials, consumables and goods for resale

-

purchase cost on a first - in, first - out basis

Work in progress and finished goods

-

cost of direct materials and labour plus attributable overheads based on a normal level of activity.

Net realisable value is based on estimated selling price less any further costs expected to be incurred

to completion.

The company policy for obsolete stock is to review and provide where necessary for any finished

goods stock where the product line has not moved within the last twelve months.

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

Transactions in foreign currencies are recorded at the rate ruling at the previous month end.

Monetary assets and liabilities denominated in foreign currencies are retranslated at the rate of

exchange ruling at the balance sheet date.

All differences are taken to the profit and loss account.

Hire purchase and leasing commitments

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

of the lease.

Pension costs and other post-retirement benefits

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

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

Investments

Investments are recorded at cost and reviewed for impairment on an annual basis.

Debtors

The company currently uses a Confidential Invoice Discounting service provided by Royal Bank Of

Scotland. This allows funds to be immediately available against current invoicing.

Financial instruments

Financial assets and financial liabilities are recognised in the Group's balance sheet when the Group

becomes a party to the contractual provisions of the instrument. The principal financial assets and

liabilities of the Group are as follows:

(a) Trade receivables and trade payables

Trade receivables do not carry interest and are stated at their initial fair value reduced by appropriate

allowances for estimated irrecoverable amounts.

Trade payables on normal terms are not interest bearing and are stated at their nominal value.

(b) Cash and cash equivalents

Cash and cash equivalents in the cash flow statement comprise cash at bank and in hand, net of bank

overdrafts. Bank overdrafts are included within financial liabilities in current liabilities in the balance

sheet.

(c) Bank and other borrowings

Interest-bearing bank and other borrowings are recorded at the fair value of the proceeds received.

Finance charges, including premiums payable on settlement or redemption and direct issue costs, are

accounted for on an accruals basis in the income statement using the effective interest method and are

added to the carrying value of the instrument to the extent that they are not settled in the period in

which they arise.

3.

TURNOVER

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

An analysis of turnover by geographical market is given below:

2017

2016

£

£

United Kingdom

9,428,226

7,514,911

Europe

14,139,033

13,671,601

Asia

393,253

296,003

Africa

72,480

254,218

Americas

219,855

23,642

Australasia

221,977

216,721

Eastern block

2,727,169

2,002,607

27,201,993

23,979,703

The company operates in three principle areas of activity, that of (1) manufacturers of materials for

the electrical, consumer product and reinforced plastics and (2) manufacturers of electrical

insulation/engineering materials, precision moulding and machined parts industries, (3) manufacturers

of electrical and thermal insulants.

4.	EMPLOYEES AND DIRECTORS

2017

2016

£

£

Wages and salaries

6,196,708

5,579,668

Social security costs

599,531

536,697

Other pension costs

160,670

159,430

6,956,909

6,275,795

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

2017

2016

Production

187

173

Sales and marketing

9

9

Administration

14

13

210

195

Key Personnel:

2017

2016

£

£

Key personnel's remuneration

723,372

548,668

Key personnel's pension contributions

43,300

46,175

2017

2016

£

£

Director's remuneration

275,236

212,483

Director's pension contributions to money purchase schemes

22,400

20,775

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

Money purchase schemes

1

1

Information regarding the highest paid director is as follows:

2017

2016

£

£

Emoluments etc

275,236

212,483

Pension contributions to money purchase schemes

22,400

20,775

5.	OPERATING PROFIT

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

2017

2016

£

£

Other operating leases

89,362

73,501

Depreciation - owned assets

880,427

960,601

Profit on disposal of fixed assets

(1,467

)

-

Goodwill amortisation

184,827

184,828

Auditors' remuneration

15,000

12,000

Auditors' remuneration for non audit work

15,355

21,100

Foreign exchange differences

271,243

(39,213

)

6.

INTEREST PAYABLE AND SIMILAR EXPENSES

2017

2016

£

£

Bank interest

76

-

Bank loan interest

16,879

22,793

16,955

22,793

7.

TAXATION

Analysis of the tax charge

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

2017

2016

£

£

Current tax:

UK corporation tax

387,486

360,719

Under provision of tax

235

-

Total current tax

387,721

360,719

Deferred tax

(18,957

)

(18,509

)

Tax on profit

368,764

342,210

UK corporation tax has been charged at 19% (2016 - 20%).