Ikarus Engineering Limited - Limited company accounts 18.2

REGISTERED NUMBER: 03300612 (England and Wales)

Strategic Report, Report of the Director and

Financial Statements for the Year Ended 31 March 2018

for

Ikarus Engineering Limited

Page

Company Information

1

Strategic Report

2

Report of the Director

3

Report of the Independent Auditors

4

Statement of Income and Retained Earnings

6

Balance Sheet

7

Notes to the Financial Statements

8

DIRECTOR:

L Csiki

SECRETARY:

L M Csiki

REGISTERED OFFICE:

Brigham House

93 High Street

Biggleswade

Bedfordshire

SG18 0LD

REGISTERED NUMBER:

03300612 (England and Wales)

SENIOR STATUTORY AUDITOR:

Martin Williams ACA

AUDITORS:

George Hay Partnership LLP

Chartered Accountants

and Statutory Auditor

Unit 1B

Focus 4

Fourth Avenue

Letchworth

Hertfordshire

SG6 2TU

The director presents his strategic report for the year ended 31 March 2018.

REVIEW OF BUSINESS

The results for the year and financial position of the Company are as shown in the annexed financial

statements.

Turnover has continued to decrease in line with previous years, reducing 5% in the period, this is as a result

of changes in the structure of our ongoing projects, and the cessation of one of our bigger contracts, this in in

line with our expectation. We expect turnover to be similar in the future as we replace the old contracts with

new projects that are currently in the development phase. Our largest development project is almost market

ready, and we expect to see the positive affect of this on our turnover and margin in future periods.

Our gross margin in percentage terms has decreased in the period from 26.2% to 24.6% which is as a result

of changes in the make up of the ongoing projects as noted above, and also changes in the exchange rate.

The gains in previous periods have not been replicated this year as the currency has remained stable ahead

of an expected unstable year in 2019. Movement on the currency exchange rates can cause our profitability

to fluctuate, but we monitor the situation closely and are positive that we can maintain a reasonable margin

moving forward, even with the uncertainties surrounding the current markets. We also continue to work on

sustaining our margin by offsetting any selling price reductions with cheaper alternatives suppliers

Return on capital employed (calculated as operating profit divided by the sum of capital and reserves)

decreased to 80.8% (94.5% : 2017), this reflects the trading company only and is reflective of the overall

reductions noted above, even with this reduction the company still remains in a positive position.

In all cases the KPIs above have been calculated on a consistent basis and are based directly on the

amounts shown in the financial statements.

At the end of the year the Company was in a positive position with the Company's position in the marketplace

remained strong.

PRINCIPAL RISKS AND UNCERTAINTIES

The principal risks and uncertainties facing the company are:

- the effects of long term currency exchange rate fluctuations

- the continuing uncertainty and low growth projections surrounding the UK economy

- the uncertainty surrounding Brexit and the UK's future position in Europe

FUTURE DEVELOPMENTS

We are currently working on developing a new product with one of our customers, for a new piece of medical

equipment, this has taken considerable time and resources, and we hope in the foreseeable future to be in a

position to have a product that can be taken to the market.

We continue to look to the future, and securing contracts that preserve the prospects of Ikarus Engineering

Ltd and its key partners.

ON BEHALF OF THE BOARD:

L Csiki - Director

6 December 2018

The director presents his 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 the trading and distribution of

engineering products.

DIVIDENDS

An interim dividend of £2000 per share was paid on 23 June 2017. The director recommends that no final dividend be paid.

The total distribution of dividends for the year ended 31 March 2018 will be £ 2,000,000 .

DIRECTOR

L Csiki held office during the whole of the period from 1 April 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). 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.

ON BEHALF OF THE BOARD:

L Csiki - Director

6 December 2018

Opinion

We have audited the financial statements of Ikarus Engineering Limited (the 'company') for the year ended

31 March 2018 which comprise the Statement of Income and Retained Earnings, Balance Sheet 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 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 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, except to the extent

otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information and,

in doing so, consider whether the other information is materially inconsistent with the financial statements or

our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such

material inconsistencies or apparent material misstatements, we are required to determine whether there is a

material misstatement in the financial statements or a material misstatement of the other information. If,

based on the work we have performed, we conclude that there is a material misstatement of this other

information, we are required to report that fact. 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 three, 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.

Auditors' responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free

from material misstatement, whether due to fraud or error, and to issue a Report of the Auditors that includes

our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit

conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists.

Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate,

they could reasonably be expected to influence the economic decisions of users taken on the basis of these

financial statements.

A further description of our responsibilities for the audit of the financial statements is located on the Financial

Reporting Council's website at www.frc.org.uk/auditorsresponsibilities. This description forms part of our

Report of the Auditors.

Use of our report

This report is made solely to the company's members, as a body, in accordance with Chapter 3 of Part 16 of

the Companies Act 2006. Our audit work has been undertaken so that we might state to the company's

members those matters we are required to state to them in a Report of the Auditors and for no other purpose.

To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the

company and the company's members as a body, for our audit work, for this report, or for the opinions we

have formed.

Martin Williams ACA (Senior Statutory Auditor)

for and on behalf of George Hay Partnership LLP

Chartered Accountants

and Statutory Auditor

Unit 1B

Focus 4

Fourth Avenue

Letchworth

Hertfordshire

SG6 2TU

17 December 2018

TURNOVER

2

13,618,220

14,333,756

Cost of sales

10,268,040

10,577,714

GROSS PROFIT

3,350,180

3,756,042

Administrative expenses

431,010

336,065

OPERATING PROFIT

4

2,919,170

3,419,977

Interest receivable and similar income

150

2,820

2,919,320

3,422,797

Interest payable and similar expenses

5

456,601

345,406

PROFIT BEFORE TAXATION

2,462,719

3,077,391

Tax on profit

6

471,273

619,241

PROFIT FOR THE FINANCIAL YEAR

1,991,446

2,458,150

Retained earnings at beginning of year

3,619,621

3,161,471

Dividends

7

(2,000,000

)

(2,000,000

)

RETAINED EARNINGS AT END OF YEAR

3,611,067

3,619,621

FIXED ASSETS

Tangible assets

8

588,640

606,492

CURRENT ASSETS

Stocks

9

2,849,338

2,403,598

Debtors

10

4,901,258

3,068,559

Cash at bank

3,827,127

4,040,027

11,577,723

9,512,184

CREDITORS

Amounts falling due within one year

11

3,605,249

2,324,082

NET CURRENT ASSETS

7,972,474

7,188,102

TOTAL ASSETS LESS CURRENT LIABILITIES

8,561,114

7,794,594

CREDITORS

Amounts falling due after more than one year

12

4,949,047

4,173,973

NET ASSETS

3,612,067

3,620,621

CAPITAL AND RESERVES

Called up share capital

14

1,000

1,000

Retained earnings

15

3,611,067

3,619,621

SHAREHOLDERS' FUNDS

3,612,067

3,620,621

The financial statements were approved by the director on 6 December 2018 and were signed by:

L Csiki - Director

1.	ACCOUNTING POLICIES

Basis of preparing the financial statements

The financial statements have been prepared in accordance with applicable accounting standards

including Financial Reporting Standard 102 The Financial Reporting Standard Applicable in the UK and

Republic of Ireland (FRS 102) and the Companies Act 2006. The financial statements have been

prepared on a going concern basis under the historical cost convention, modified to include certain

items at fair value.

The significant accounting policies applied in the preparation of these financial statements are set out

below. These policies have been consistently applied to all years presented unless otherwise stated.

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 the amount derived from ordinary activities, and is measured at the fair value of the

consideration received or receivable. Revenue is reduced for estimated customer returns, rebates and

other similar allowances, and is stated net of VAT.

Revenue from the sale of goods is recognised when all the following conditions are satisfied:

- the Company has transferred to the buyer the significant risks and rewards of ownership of the

goods;

- the Company retains neither continuing managerial involvement to the degree usually associated

with ownership nor effective control over the goods sold;

- the amount of revenue 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.

Specifically, revenue from the sale of goods is recognised when goods are delivered and legal title is

passed.

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 cost

Plant and machinery

-

25% on reducing balance

At each balance sheet date, the Company reviews the carrying amounts of its property, plant and

equipment to determine whether there is any indication that any items of property, plant and equipment

have suffered an impairment loss. If any such indication exists, the recoverable amount of an asset is

estimated in order to determine the extent of the impairment loss, if any. Where it is not possible to

estimate the recoverable amount of the asset, the Company estimates the recoverable amount of the

cash-generating unit to which the asset belongs.

If the recoverable amount of an asset is estimated to be less than its carrying amount, the carrying

amount of the asset is reduced to its recoverable amount. Impairment loss is recognised as an

expense immediately.

Where an impairment loss subsequently reverses, the carrying amount of the asset is increased to the

revised estimate of its recoverable amount, to the extent that the increased carrying amount does not

exceed the carrying amount that would have been determined (net of depreciation) had no impairment

loss been recognised for the asset in prior years. A reversal of an impairment loss is recognised as

income immediately.

Stocks

Stocks are stated at the lower of cost and estimated selling price less costs to complete and sell.

Costs, which comprise direct production costs and an appropriate allocation of production overheads,

are based on the method most appropriate to the type of inventory class, but usually on a

first-in-first-out basis. Net realisable value is based on the estimated selling price less any estimated

completion or selling costs.

When stocks are sold, the carrying amount of those stocks is recognised as an expense in the period

in which the related revenue is recognised. The amount of any write-down of stocks to net realisable

value and all losses of stocks are recognised as an expense in the period in which the write-down or

loss occurs. The amount of any reversal of any write-down of stocks is recognised as a reduction in

the amount of inventories recognised as an expense in the period in which the reversal occurs.

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 that have been

enacted or substantively enacted by the balance sheet date.

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.

Foreign currencies

The financial statements are presented in Sterling (GBP), which is also the functional currency of the

company.

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.

Financial instruments

Debtors

Short term debtors are measured at transaction prices less impairment losses for bad and doubtful

debts.

Creditors

Short term trade creditors are measured at transaction price. Other financial liabilities, including loans,

are measured initially at fair value, net of transaction costs, and are measured subsequently at

amortised cost using the effective interest method unless the effect of discounting would be

immaterial, in which case these are stated at cost.

Group Loan

The loan with the company's parent undertaking is being repaid over a 5 year period with an effective

interest rate of 7% pa. No fair value adjustments have been made in respect of this loan as the

directors have assessed the rate to be on a commercial basis.

2.

TURNOVER

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

An analysis of turnover by class of business is given below:

2018

2017

£

£

Sale of goods

13,618,220

14,333,756

13,618,220

14,333,756

An analysis of turnover by geographical market is given below:

2018

2017

£

£

Europe

11,827,359

13,207,251

United States of America

212,295

74,520

Asia

1,578,566

1,051,985

13,618,220

14,333,756

3.	EMPLOYEES AND DIRECTORS

2018

2017

£

£

Wages and salaries

225,687

170,650

Social security costs

21,749

17,106

Other pension costs

5,439

2,285

252,875

190,041

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

2018

2017

Management & Administration

5

4

2018

2017

£

£

Director's remuneration

8,160

8,060

4.	OPERATING PROFIT

The operating profit is stated after charging:

2018

2017

£

£

Depreciation - owned assets

17,852

19,039

Auditors Remuneration

11,500

11,000

Auditors' remuneration for non audit work

9,750

8,750

5.

INTEREST PAYABLE AND SIMILAR EXPENSES

2018

2017

£

£

Loan

456,601

345,406

6.

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

471,273

619,241

Tax on profit

471,273

619,241

Reconciliation of total tax charge included in profit and loss

The tax assessed for the year is higher than the standard rate of corporation tax in the UK. The

difference is explained below:

2018

2017

£

£

Profit before tax

2,462,719

3,077,391

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

467,917

615,478

Effects of:

Depreciation in excess of capital allowances

3,356

3,763

Total tax charge

471,273

619,241

From 1 April 2017 the main rate of corporation tax was reduced from 20% to 19%. The Chancellor of

the Exchequer announced previously that this rate is set to reduce again from 1 April 2020 when the

rate will be 17%.

The above changes to the rate of corporation tax will impact the amount of future cash tax payments to

be made by the company.

7.

DIVIDENDS

2018

2017

£

£

Interim

2,000,000

2,000,000

8.	TANGIBLE FIXED ASSETS

Freehold

Plant and

property

machinery

Totals

£

£

£

COST

At 1 April 2017

and 31 March 2018

715,030

51,340

766,370

DEPRECIATION

At 1 April 2017

122,738

37,140

159,878

Charge for year

14,301

3,551

17,852

At 31 March 2018

137,039

40,691

177,730

NET BOOK VALUE

At 31 March 2018

577,991

10,649

588,640

At 31 March 2017

592,292

14,200

606,492

9.

STOCKS

2018

2017

£

£

Stocks

2,849,338

2,403,598

10.

DEBTORS: AMOUNTS FALLING DUE WITHIN ONE YEAR

2018

2017

£

£

Trade debtors

4,143,426

2,829,921

Other debtors

181,439

237,596

Sundry Debtors and Prepayments

570,719

-

Prepayments and accrued income

5,674

1,042

4,901,258

3,068,559

11.

CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR

2018

2017

£

£

Trade creditors

717,513

281,430

Amounts owed to group undertakings

1,320,000

1,320,000

Tax

225,368

367,351

VAT

393,455

312,644

Other creditors

58,143

42,657

Accruals and deferred income

890,770

-

3,605,249

2,324,082

12.

CREDITORS: AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR

2018

2017

£

£

Amounts owed to group undertakings

4,949,047

4,173,973

The Company was advanced a loan from its Parent, Ikarus Engineering (Holdings) Ltd, totalling

£6,600,000 during the year ended 31 March 2016. The initial advance is repayable over 5 years, and

interest is accruing at a rate of 7% p.a. Any further advances made by the Parent are under the same

terms. At the balance sheet date a total of £6,269,047 remained outstanding.

13.	FINANCIAL INSTRUMENTS

The carrying amounts of the company's financial instruments are:

2018

2017

Financial Assets

Debt instruments measured at amortised cost

- Trade debtors

4,143,426

2,829,921

- Cash

3,827,127

4,040,027

- Other debtors

757,832

238,638

Financial Liabilities

Measured at amortised cost

- Trade creditors

717,513

281,430

- Amounts owed to group undertakings

6,269,047

5,493,973

- Other creditors

948,913

42,657

14.	CALLED UP SHARE CAPITAL

Allotted, issued and fully paid:

Number:

Class:

Nominal

2018

2017

value:

£

£

1,000

Ordinary

1

1,000

1,000

15.

RESERVES

Retained

earnings

£

At 1 April 2017

3,619,621

Profit for the year

1,991,446

Dividends

(2,000,000

)

At 31 March 2018

3,611,067

Called-up share capital - represents the nominal value of shares that have been issued.

Retained earnings - includes all current and prior period retained profits and losses.

16.	PENSION COMMITMENTS

The company operates a defined contribution pension plan for its employees. The amount recognised

as an expense in the period was £5,439 (2017 - £2,285).

17.	ULTIMATE PARENT COMPANY

Ikarus Engineering (Holdings) Ltd is regarded by the director as being the company's ultimate parent

company.

18.	RELATED PARTY DISCLOSURES

The company has taken advantage of exemption, under the terms of Financial Reporting Standard 102

'The Financial Reporting Standard applicable in the UK and Republic of Ireland', as a wholly owned

subsidiary not to disclose related party transactions with its parent company. The parent company

Ikarus Engineering (Holdings) Limited prepares publicly available consolidated financial statements.

Key management personnel of the entity or its parent (in the aggregate)

2018

2017

£

£

Remuneration

8,160

8,060

Dividends

1,700,000

500,000

Amount due to related party

121,715

34,161

19.	ULTIMATE CONTROLLING PARTY

The company is under the control of its director, Mr L Csiki who owns 100% of the issued share capital

of the ultimate parent company, Ikarus Engineering (Holdings) Ltd.

The company's results have been included in the consolidated financial statements of Ikarus

Engineering (Holdings) Ltd, copies of which can be obtained from the registered office at:- 29E

Warwick Square, Pimlico, London, SW1V 2AD.