Welland Power Limited - Limited company accounts 18.1.1

REGISTERED NUMBER: 07193695 (England and Wales)

WELLAND POWER LIMITED

STRATEGIC REPORT,

REPORT OF THE DIRECTORS AND

FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 MARCH 2018

Page

Company Information

1

Strategic Report

2

Report of the Directors

3

Report of the Independent Auditors

4

to

5

Income Statement

6

Other Comprehensive Income

7

Statement of Financial Position

8

Statement of Changes in Equity

9

Notes to the Financial Statements

10

to

16

DIRECTORS:

C L Farrow

E J R Farrow

REGISTERED OFFICE:

Unit 2

Welland Business Park

Clay Lake

Spalding

Lincolnshire

PE12 6BL

REGISTERED NUMBER:

07193695 (England and Wales)

AUDITORS:

Duncan & Toplis Limited, Statutory Auditor

Enterprise Way

Pinchbeck

Spalding

Lincolnshire

PE11 3YR

The directors present their strategic report for the year ended 31 March 2018.

REVIEW OF BUSINESS

The company's continues to trade well in a tough international market. Volumes again improved over the previous period. Net

margin declined, due to a softening worldwide market for our products, clearance of some stock and less favourable currency

positions from GBP gaining some strength across the period against the USD.

The business continued its growth in the current financial year. This growth has been supported by significant injection of additional

share capital and also retention of profits from previous periods. The balance sheet is now robust and it is anticipated that Welland

will be able to utilise this to support higher margin business and projects worldwide. Further investment in IT projects and staff

across the period are supporting productivity, while additional space for storage is going to improve our workflows and allow for

additional volume to be realised when the market recovers.

The business and its customers suffered from extended delivery times in the period on some standard product ranges and the

business intends to increase its capacity, stock and staffing numbers to limit the impact on customers during times of high demand.

This inevitably led to some loss of orders, limiting the growth in this period.

Through the next period the business intends to try to support its net margins in the difficult environment.

Other than the decline in pre-tax profit margins by 0.3% and the return on capital and assets (which have been impaired by the

balance sheet expansion) the business continues to improves its performance indicators and ratios demonstrating its excellent

financial performance over the period. The business continues to pay its creditors quickly. Debtors days increased markedly due to

some specific contract payments of high value over the year end. Our liquidity ratio doubled from 0.87 to 1.78 reflecting our

markedly improved financial position; our stock turnover ratio almost doubled to 18, reflecting our tighter stock control and

management at year end. Overall the key performance indicators show the business is increasingly in a strong position and

continues to deliver impressive sets of financial results.

PRINCIPAL RISKS AND UNCERTAINTIES

The business faces risks across from a market in temporary decline, increased competition and decreasing credit quality in its

export markets. The continuing uncertainty surrounding the UK's exit from the European Union adds significant currency risk. It is

also worth noting that monetary policy tightening in the USA appears to be causing a shortage of foreign exchange in territories

where their currency is tied to the USD and others are finding their currencies depreciating, causing our imported products to be

more expensive. While this is balanced by a similar decline in the GBP, there is no guarantee this will continue.

ON BEHALF OF THE BOARD:

C L Farrow - Director

28 June 2018

The directors present their report with the financial statements of the company for the year ended 31 March 2018.

PRINCIPAL ACTIVITY

The principal activity of the company in the year under review was that of machinery manufacturers and dealers.

DIVIDENDS

Interim dividends per share were paid as follows:

1.398p

- 10 April 2017

1.398p

- 6 July 2017

1.398p

- 21 November 2017

1.398p

- 9 January 2018

5.592

The directors recommend that no final dividend be paid.

The total distribution of dividends for the year ended 31 March 2018 will be £ 44,736 .

DIRECTORS

The directors shown below have held office during the whole of the period from 1 April 2017 to the date of this report.

C L Farrow

E J R Farrow

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). Under company law the directors must not approve the financial statements

unless they are satisfied that they give a true and fair view of the state of affairs of the company and of the profit or loss of the

company for that period. In preparing these financial statements, the directors are required to:

-	select suitable accounting policies and then apply them consistently;

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

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

The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company's

transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure

that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the

company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

STATEMENT AS TO DISCLOSURE OF INFORMATION TO AUDITORS

So far as the directors are aware, there is no relevant audit information (as defined by Section 418 of the Companies Act 2006) of

which the company's auditors are unaware, and each director has taken all the steps that he ought to have taken as a director in

order to make himself aware of any relevant audit information and to establish that the company's auditors are aware of that

information.

ON BEHALF OF THE BOARD:

C L Farrow - Director

28 June 2018

Opinion

We have audited the financial statements of Welland Power Limited (the 'company') for the year ended 31 March 2018 which

comprise the Income Statement, Other 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 March 2018 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 directors' use of the going concern basis of accounting in the preparation of the financial statements is not appropriate; or

-

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

Other information

The directors are responsible for the other information. The other information comprises the information in the Strategic Report

and the 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 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 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 three, the directors are responsible for the

preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as

the directors determine necessary to enable the preparation of financial statements that are free from material misstatement,

whether due to fraud or error.

In preparing the financial statements, the directors are responsible for assessing the company's ability to continue as a going

concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the

directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.

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.

Alistair Main FCA (Senior Statutory Auditor)

for and on behalf of Duncan & Toplis Limited, Statutory Auditor

Enterprise Way

Pinchbeck

Spalding

Lincolnshire

PE11 3YR

28 June 2018

TURNOVER

3

22,728,611

20,100,726

Cost of sales

21,029,095

18,784,552

GROSS PROFIT

1,699,516

1,316,174

Administrative expenses

989,158

610,012

710,358

706,162

Other operating income

14,000

1,500

OPERATING PROFIT

5

724,358

707,662

Interest payable and similar expenses

6

8,640

17,048

PROFIT BEFORE TAXATION

715,718

690,614

Tax on profit

7

133,104

138,093

PROFIT FOR THE FINANCIAL YEAR

582,614

552,521

PROFIT FOR THE YEAR

582,614

552,521

OTHER COMPREHENSIVE INCOME

Revaluation of fixed assets

171,695

-

Income tax relating to other comprehensive income

(29,188

)

-

OTHER COMPREHENSIVE INCOME FOR THE YEAR, NET OF INCOME TAX

142,507

-

TOTAL COMPREHENSIVE INCOME FOR THE YEAR

725,121

552,521

FIXED ASSETS

Tangible assets

9

388,007

106,181

CURRENT ASSETS

Stocks

10

1,211,133

1,906,192

Debtors

11

2,637,397

833,124

Cash at bank and in hand

452,648

355,849

4,301,178

3,095,165

CREDITORS

Amounts falling due within one year

12

1,731,043

1,357,144

NET CURRENT ASSETS

2,570,135

1,738,021

TOTAL ASSETS LESS CURRENT LIABILITIES

2,958,142

1,844,202

PROVISIONS FOR LIABILITIES

16

48,696

15,141

NET ASSETS

2,909,446

1,829,061

CAPITAL AND RESERVES

Called up share capital

17

1,200,001

800,001

Revaluation reserve

18

142,507

-

Retained earnings

18

1,566,938

1,029,060

SHAREHOLDERS' FUNDS

2,909,446

1,829,061

The financial statements were approved by the Board of Directors on 28 June 2018 and were signed on its behalf by:

C L Farrow - Director

Called up

share

Retained

Revaluation

Total

capital

earnings

reserve

equity

£

£

£

£

Balance at 1 April 2016

800,001

502,443

-

1,302,444

Changes in equity

Dividends

-

(25,904

)

-

(25,904

)

Total comprehensive income

-

552,521

-

552,521

Balance at 31 March 2017

800,001

1,029,060

-

1,829,061

Changes in equity

Issue of share capital

400,000

-

-

400,000

Dividends

-

(44,736

)

-

(44,736

)

Total comprehensive income

-

582,614

142,507

725,121

Balance at 31 March 2018

1,200,001

1,566,938

142,507

2,909,446

1.	STATUTORY INFORMATION

Welland Power Limited is a private company, limited by shares , registered in England and Wales. The company's registered

number and registered office address can be found on the Company Information page.

2.	ACCOUNTING POLICIES

Basis of preparing the financial statements

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

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.

Turnover

Turnover is measured at the fair value of the consideration received or receivable, excluding discounts, rebates, value

added tax and other sales taxes.

Revenue is recognised based on the terms of the sale, either on despatch from the company or on delivery and acceptance

by the customer.

Tangible fixed assets

During the year the company have changed accounting policy from recognising asset at historical cost less accumulated

depreciation to a revaluation model where assets are recognised at revaluation value less subsequent accumulated

depreciation to ensure that its carrying value does not differ materially from its fair value at the reporting date. This

provides more reliable and relevant information about the financial position of the company.

Revaluations are undertaken with sufficient regularity to ensure the carrying amount does not differ materially from that

which would be determined using fair value at the reporting date.

Fair values are determined from market based evidence. The last revaluation was undertaken at 31 March 2018.

Revaluation gains and losses are recognised in the Statement of Comprehensive Income unless losses exceed the previously

recognised gains or reflect a clear consumption of economic benefits, in which case the excess losses are recognised in the

profit or loss.

Revalued assets are subsequently being depreciated at rates varying from 20% to 33% on revalued amount in order to

write down assets to residual values over their remaining useful economic life.

Stocks

Stocks are valued at the lower of cost and estimated selling price less costs to complete and sell, and after making due

allowance for obsolete and slow moving items.

Taxation

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

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

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.

Deferred government grants

Deferred government grants in respect of capital expenditure are treated as deferred income and are credited to the profit

and loss account over the estimate useful life of the assets to which they relate.

Financial instruments

The company has adopted the Sections 11 and 12 of FRS 102 in respect of financial instruments.

Basic financial assets, including trade and other debtors and cash and bank balances are initially recognised at transaction

price, unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value

of the future receipts discounted at a market rate of interest.

At the end of each reporting period financial assets measured at amortised cost are assessed for objective evidence of

impairment. If an asset is impaired the impairment loss is the difference between the carrying amount and the present

value of the estimated cash flows discounted at the asset's original effective interest rate. The impairment loss is

recognised in profit or loss.

Basic financial liabilities, including trade and other creditors, bank loans, loans from fellow group companies and preference

shares that are classified as debt, are initially recognised at transaction price, unless the arrangement constitutes a

financing transaction, where the debt instrument is measured at the present value of the future receipts discounted at a

market rate of interest.

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

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

suppliers. Accounts payable are classified as current liabilities if payment is due within one year or less. If not, they are

presented as non-current liabilities. Trade creditors are recognised initially at transaction price and subsequently measured

at amortised cost using the effective interest method.

Critical accounting judgements and estimation uncertainty

In the application of the Company's accounting policies, management is required to make judgements, estimates and

assumptions about the carrying value of assets and liabilities that are not readily apparent from other sources. The

estimates and underlying assumptions are based on historical experience and other factors that are considered to be

relevant. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are

recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the

revision and future periods if the revision affects both current and future periods.

There are currently no key sources of estimation uncertainty that have a significant effect on the amounts recognised in the

financial statements.

3.

TURNOVER

Exports represent approximately 90% of the turnover.

4.	EMPLOYEES AND DIRECTORS

2018

2017

£

£

Wages and salaries

504,130

407,376

Social security costs

38,529

29,646

Other pension costs

6,958

8,364

549,617

445,386

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

2018

2017

Direct labour

18

15

Administration

10

8

28

23

2018

2017

£

£

Directors' remuneration

8,864

14,728

5.	OPERATING PROFIT

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

2018

2017

£

£

Other operating leases

68,428

67,344

Depreciation - owned assets

47,346

27,809

(Profit)/loss on disposal of fixed assets

(400

)

184

Auditors' remuneration

9,000

-

Auditors' remuneration for non audit work

1,437

-

Foreign exchange differences

17,393

108,535

6.

INTEREST PAYABLE AND SIMILAR EXPENSES

2018

2017

£

£

Bank interest

8,496

17,048

Other interest

144

-

8,640

17,048

7.

TAXATION

Analysis of the tax charge

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

2018

2017

£

£

Current tax:

UK corporation tax

128,737

125,152

Deferred tax

4,367

12,941

Tax on profit

133,104

138,093

UK corporation tax has been charged at 19% .

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:

2018

2017

£

£

Profit before tax

715,718

690,614

Profit multiplied by the standard rate of corporation tax in the UK of 19% (2017 - 20%)

135,986

138,123

Effects of:

Expenses not deductible for tax purposes

287

110

Capital allowances in excess of depreciation

(2,412

)

(140

)

Change in tax rate

(757

)

-

Total tax charge

133,104

138,093

Tax effects relating to effects of other comprehensive income

2018

Gross

Tax

Net

£

£

£

Revaluation of fixed assets

171,695

(29,188

)

142,507

8.

DIVIDENDS

2018

2017

£

£

Ordinary shares of £1 each

Interim

44,736

25,904

9.	TANGIBLE FIXED ASSETS

Fixtures

Plant and

and

machinery

fittings

Totals

£

£

£

COST OR VALUATION

At 1 April 2017

190,073

9,304

199,377

Additions

128,530

28,947

157,477

Revaluations

88,903

4,950

93,853

At 31 March 2018

407,506

43,201

450,707

DEPRECIATION

At 1 April 2017

90,836

2,360

93,196

Charge for year

36,258

11,088

47,346

Revaluation adjustments

(77,842

)

-

(77,842

)

At 31 March 2018

49,252

13,448

62,700

NET BOOK VALUE

At 31 March 2018

358,254

29,753

388,007

At 31 March 2017

99,237

6,944

106,181

Cost or valuation at 31 March 2018 is represented by:

Fixtures

Plant and

and

machinery

fittings

Totals

£

£

£

Valuation in 2017

88,903

4,950

93,853

Cost

318,603

38,251

356,854

407,506

43,201

450,707

If all tangible fixed assets had not been revalued they would have been included at the following historical cost:

2018

2017

£

£

Cost

318,603

-

Aggregate depreciation

127,094

-

Tangible fixed assets were valued on an open market basis on 31 March 2018 by relevant distributors of the products .

10.

STOCKS

2018

2017

£

£

Valuation

1,211,133

1,906,192

The difference between purchase price or production cost of stocks and their replacement cost is not material.

Stocks recognised as an expense in the period were £19,483,670 (2017 - £17,872,595).

11.

DEBTORS: AMOUNTS FALLING DUE WITHIN ONE YEAR

2018

2017

£

£

Trade debtors

2,589,455

821,805

Provision for bad debts

(193,188

)

(237,585

)

Amounts owed by participating interests

703

703

VAT

184,462

197,817

Prepayments and accrued income

55,965

50,384

2,637,397

833,124

12.

CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR

2018

2017

£

£

Bank loans and overdrafts (see note 13)

56

30

Trade creditors

1,427,266

1,115,049

Amounts owed to participating interests

157,506

99,831

Corporation Tax

128,737

125,152

Social security and other taxes

5,864

8,990

Other creditors

522

-

Accruals and deferred income

11,092

8,092

1,731,043

1,357,144

13.

LOANS

An analysis of the maturity of loans is given below:

2018

2017

£

£

Amounts falling due within one year or on demand:

Bank overdrafts

56

30

14.	LEASING AGREEMENTS

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

2018

2017

£

£

Within one year

68,428

-

15.	FINANCIAL INSTRUMENTS

The company has the following financial instruments:

2018

2017

£

£

Financial assets that are debt instruments measured at amortised cost

Trade debtors

2,396,267

584,220

Financial liabilities measured at amortised cost

Bank loans and overdrafts

56

30

Trade creditors

1,427,266

1,115,049

There is no interest income or expense for financial assets and liabilities that are not measured at fair value through profit

and loss.