Girbau UK Limited - Limited company accounts 18.2

REGISTERED NUMBER: 00641996 (England and Wales)

Strategic Report, Report of the Directors and

Financial Statements for the Year Ended 31 December 2018

for

Girbau UK Limited

Page

Company Information

1

Strategic Report

2

Report of the Directors

6

Report of the Independent Auditors

8

Statement of Comprehensive Income

10

Statement of Financial Position

11

Statement of Changes in Equity

12

Notes to the Financial Statements

13

DIRECTORS:

A Alamany

G Clofent

REGISTERED OFFICE:

Girbau House

Trust Industrial Estate

Wilbury Way

Hitchin

Hertfordshire

SG4 0UZ

REGISTERED NUMBER:

00641996 (England and Wales)

AUDITORS:

George Hay Partnership LLP

Chartered Accountants

and Statutory Auditor

Unit 1B

Focus 4

Fourth Avenue

Letchworth

Hertfordshire

SG6 2TU

REVIEW OF BUSINESS

Girbau UK operates as three divisions, Commercial Sales, Industrial Sales and Service and Spares. During

the year the business went through a significant restructure, with Girbau SA becoming the sole shareholder

and owner of the business. Peter Marsh, Managing Director and Forbes MacDougall Financial Director

resigned from their respective positions on the Board on the 28th November 2018.

Peter Rankin was appointed as Acting Managing Director of the business on 1st November 2018 and then

subsequently appointed as Managing Director along with the appointment of a new Board of Directors on the

18th February 2019.

A shortfall in Industrial Sales during the year resulted in revenues being down against 2017. One off

exceptional restructuring charges and additional support costs resulted in the business making a loss for the

year. However, a number of large industrial contracts were won at the end of the year and as a result the

business goes into 2019 with a strong orderbook, a positive momentum of change and with the full support

and engagement of Girbau SA.

Commercial Sales

Turnover for the year was £4.7M against £5M in 2017. This was primarily due to a restructuring in the

commercial sales team, which resulted in significantly reduced headcount over the course of the year.

However, individual sales performance remained strong and the majority of the sales team had their best year

to date. We have now started a recruitment process to bring new sales talent into the business, which will

strengthen our sales in 2019. Towards the end of the year we replaced our aging CRM solutions with

Salesforce, which once fully adopted, will bring greater visibility and control into the sales process, allowing us

to manage and support our customers, sales leads and sales opportunities more professionally. Brexit and

its effect on the exchange rate continues to cause uncertainty in the market place and whilst we have put a

robust plan and contingencies in place, it remains an area of concern for 2019. Margins in the care home

sector continue to be under pressure as controls on local authority funding along with several other factors

are causing our partners and ourselves to undertake detailed reviews of all existing supply contracts.

Spares and Service

Our Spares and Service division achieved a 5% Net sales growth during 2018, which was a positive result

given that we allocated a significant amount of unplanned resources and materials to unfinished projects and

warranty works during the year. In-order to further improve the level of service and support we provide to our

customers as well as improving our own internal process, during the year we integrated a business

intelligence package into our Service Management System. This has allowed our staff and our customers to

see and analyse our real time performance of customer support calls, parts enquiries, response times and

first time fix rates. Resulting in improved ownership, understanding and accountability across the business.

Industrial Sales

The Industrial Division had a disappointing year. Turnover was £2.3M compared to £4.6M for 2017, this was

down to several factors, including personnel changes and the loss of the relationship and supply agreement

between Lavatec and Girbau UK at the beginning of 2018. However, by the end of the year we had seen a

significant recovery of our position and we finished the year with a strong orderbook to take us into 2019.

During the year we secured a repeat order from an existing customer for a new major industrial laundry

project just outside Cambridge. This is excellent news for the business, not only because it's a sizable order,

but also because it confirms the confidence and trust our customers have in us in being able to supply,

deliver, support and service such projects repeatedly. We expect 2019 to be a record year for this division as

we transition from being a small player in this sector to significant competitor.

Overall Performance

The overall performance for the company was disappointing in 2018 with a turnover of £12.7M against

£15.1M in 2017 and operating loss £1.2M against a loss of £89K in 2017. Turnover was affected by reduced

sales in the Industrial Division, which was due to staff changes and a lack of significant large projects being

won during the year. The operating loss for the year includes extraordinary items realised as a result of the

change of ownership and Directors during the year as well as additional charges for unplanned works and

restructuring across different divisions of the business over the course of the year.

We are confident that the underlying business model and its sectors remain robust. This along with the

operational advances that have been made during the year, a new Board of Directors in place to lead the

business, we believe that 2019 will see us recover to a positive position and place us on track to grow

significantly over the next 3-4 years.

PRINCIPAL RISKS AND UNCERTAINTIES

Where possible the company will continue to reduce its reliance on the care industry and continue its

expansion into the hotel and leisure sector which is seen as a major growth potential for the next 3-5 years.

The medium-term impact of Brexit with its potential impact on UK exchange rates will continue to make for an

interesting period and it is expected that we will see continuing periods of volatility both in the exchange rate

as well as short-term demand as customers attempt to second guess various impacts on the UK economy.

Exposure to foreign currency, credit and liquidity risks arises in the normal course of the Company's business.

These risks are limited by the Company's financial management policies and practices described below:

Foreign currency risk

The Company has limited exposure to foreign currency risk. The majority of the Company's sales and

purchases are denominated in Sterling. The Company monitors their foreign currency risk closely and takes

steps to minimise this risk at an early stage.

Credit risk

The Company is at risk from its customers defaulting in making payments for goods and services that have

been supplied to them. To minimise this risk the Company has procedures in place to ensure that customers

have either demonstrated creditworthiness or can provide sufficient collateral prior to delivery of goods. The

Company's exposure to this risk is continually monitored so that any potential problems are detected at an

early stage.

Liquidity risk

The directors have ultimate responsibility for liquidity risk management in maintaining adequate reserves,

banking facilities and reserve borrowing facilities.They do this by continually monitoring forecast and actual

cash flows.

Interest rate risk

The Company is exposed to interest rate risk through the impact of rate changes on interest bearing

borrowing. The interest rates and terms of repayment of the Company's bank loans are disclosed in note 17

to the financial statements. The Company's policy is to obtain the most favourable interest rates available for

its borrowings.

Interest is paid on assets purchased through finance leases. All financial leases have a fixed rate of interest

which applies for the duration of the agreement, therefore there will be no affect to the interest payable in the

event of future interest rate changes.

USE OF FINANCIAL INSTRUMENTS

The company operates a cautious view with regard to risk, and we are fortunate that our parent company

allows us to buy from them in pounds sterling, as they are in a position to purchase forward and mitigate

exchange risks.

Robust policies exist for conducting day-to-day business. New accounts are checked for credit risk, and

overall credit limits for customers are monitored by both the accounts department and the directors of the

company. The use of an external credit checking agency is used where level of business justifies this.

Creditors and debtors are monitored on a weekly basis with vigorous month-end reporting. Systems exist for

chasing out of term debtors including formal proceedings if necessary. Material debtors outside terms are

brought to the attention of both the finance manager and the directors.

The company monitors credit terms given to its customers especially where amounts are material, such that

these will not cause undue strain to liquidity or cash management.

FUTURE DEVELOPMENTS

On February 18th 2019 the following changes were made to the Board of Directors of the business;

- Mercè Girbau was appointed Director and Chairman of the Board

- Peter Rankin was appointed as Managing Director

- Eva Benito was appointed as a Director

- Josep Ramon Veiga was appointed as a Director

- Guillem Clofent resigned as a Director from the Board

Alex Alamany remains a Director on the Board and was appointed as Company Secretary on the 21st March

2019.

Further to the changes to the Board, the business has also been restructured to more closely mirror that of

the group, with both executive and functional management teams now in place to oversee the day to day

running and operation of the business.

We continue to believe that 2019 will be a positive year for the business. We have won a number of

significant projects at the start of the year, which will be realised during 2019 and we continue to build upon

our excellent reputation for delivering these on time, to budget and with minimal disruption to our customers

operations and businesses.

The care home sector and major groups continue to challenge us, both on price and contractual terms and

whilst we have an excellent working relationship with them, established over many years of excellent service,

we need to ensure that the business is sustainable and profitable going forward.

Over the next two years we will continue to improve our adoption and integration of group wide systems,

policies and values to further improve efficiencies and reduce costs. This will include the further integration of

salesforce and introduction of SAP into the business, as well as better use of ICT systems throughout the

company.

ON BEHALF OF THE BOARD:

P J Rankin - Director

24 April 2019

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

PRINCIPAL ACTIVITY

The principal activity of the company in the year under review was that of the import and sale of commercial

laundry equipment, and the servicing thereof.

DIVIDENDS

No dividends will be distributed for the year ended 31 December 2018.

DIRECTORS

The directors shown below have held office during the whole of the period from 1 January 2018 to the date of

this report.

A Alamany

G Clofent

Other changes in directors holding office are as follows:

F MacDougall - resigned 28 November 2018

P C Marsh - resigned 28 November 2018

FINANCIAL INSTRUMENTS

The financial risk management objectives are to ensure sufficient working capital for the company. This is

achieved by careful management of cash balances and, where necessary, the use of bank overdraft facilities.

STATEMENT OF DIRECTORS' RESPONSIBILITIES

The directors are responsible for preparing the Strategic Report, the Report of the Directors and the financial

statements in accordance with applicable law and regulations.

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

the directors have elected to prepare the financial statements in accordance with United Kingdom Generally

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

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

Ireland'. Under company law the directors must not approve the financial statements unless they are satisfied

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

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

-	select suitable accounting policies and then apply them consistently;

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

-	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.

AUDITORS

The auditors, George Hay Partnership LLP, will be proposed for re-appointment at the forthcoming Annual

General Meeting.

ON BEHALF OF THE BOARD:

P J Rankin - Director

24 April 2019

Opinion

We have audited the financial statements of Girbau UK Limited (the 'company') for the year ended

31 December 2018 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).

In our opinion the financial statements:

-	give a true and fair view of the state of the company's affairs as at 31 December 2018 and of its loss 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, 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.

Opinions on other matters prescribed by the Companies Act 2006

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

-	the information given in the Strategic Report and the Report of the Directors for the financial year for which the financial statements are prepared is consistent with the financial statements; and

-	the Strategic Report and the Report of the Directors have been prepared in accordance with applicable legal requirements.

Matters on which we are required to report by exception

In the light of the knowledge and understanding of the company and its environment obtained in the course of

the audit, we have not identified material misstatements in the Strategic Report or the Report of the Directors.

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

report to you if, in our opinion:

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

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

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

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

Responsibilities of directors

As explained more fully in the Statement of Directors' Responsibilities set out on page six, the directors are

responsible for the preparation of the financial statements and for being satisfied that they give a true and fair

view, and for such internal control as the directors determine necessary to enable the preparation of financial

statements that are free from material misstatement, whether due to fraud or error.

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

continue as a going concern, disclosing, as applicable, matters related to going concern and using the going

concern basis of accounting unless the directors either intend to liquidate the company or to cease

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

Auditors' responsibilities for the audit of the financial statements

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

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

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

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

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

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

financial statements.

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.

M L 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

10 May 2019

TURNOVER

3

13,221,173

15,163,007

Cost of sales

10,400,972

11,802,047

GROSS PROFIT

2,820,201

3,360,960

Administrative expenses

3,939,678

3,416,821

OPERATING LOSS

5

(1,119,477

)

(55,861

)

Interest payable and similar expenses

6

82,497

33,354

LOSS BEFORE TAXATION

(1,201,974

)

(89,215

)

Tax on loss

7

256

82,305

LOSS FOR THE FINANCIAL YEAR

(1,202,230

)

(171,520

)

OTHER COMPREHENSIVE INCOME

-

-

TOTAL COMPREHENSIVE INCOME FOR THE YEAR

(1,202,230

)

(171,520

)

FIXED ASSETS

Intangible assets

9

101,891

127,364

Tangible assets

10

591,060

880,548

Investments

11

-

-

692,951

1,007,912

CURRENT ASSETS

Stocks

12

2,194,892

2,164,451

Debtors

13

2,200,384

4,207,580

Cash at bank and in hand

1,486,201

725,675

5,881,477

7,097,706

CREDITORS

Amounts falling due within one year

14

5,514,350

5,550,564

NET CURRENT ASSETS

367,127

1,547,142

TOTAL ASSETS LESS CURRENT LIABILITIES

1,060,078

2,555,054

CREDITORS

Amounts falling due after more than one year

15

1,126,124

1,418,870

NET (LIABILITIES)/ASSETS

(66,046

)

1,136,184

CAPITAL AND RESERVES

Called up share capital

21

1,112,632

1,112,632

Capital redemption reserve

22

17,578

17,578

Retained earnings

22

(1,196,256

)

5,974

SHAREHOLDERS' FUNDS

(66,046

)

1,136,184

The financial statements were approved by the Board of Directors on 24 April 2019 and were signed on its behalf by:

P J Rankin - Director

Called up

Capital

share

Retained

redemption

Total

capital

earnings

reserve

equity

£

£

£

£

Balance at 1 January 2017

1,112,632

197,494

17,578

1,327,704

Changes in equity

Dividends

-

(20,000

)

-

(20,000

)

Total comprehensive income

-

(171,520

)

-

(171,520

)

Balance at 31 December 2017

1,112,632

5,974

17,578

1,136,184

Changes in equity

Total comprehensive income

-

(1,202,230

)

-

(1,202,230

)

Balance at 31 December 2018

1,112,632

(1,196,256

)

17,578

(66,046

)

1.	STATUTORY INFORMATION

Girbau UK 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

The financial statements have been prepared under the historical cost convention as modified by the

revaluation of certain financial instruments measured at fair value in accordance with the accounting

policies set out below.

These financial statements have been prepared in compliance with FRS 102 - The Financial Reporting

Standard applicable in the UK and Republic of Ireland and the Companies Act 2006.

In preparing the financial statements management develops estimated and judgements that affect the

reported amount of assets and liabilities, revenue and costs, and related disclosures of the financial

statements. Actual results many differ from estimated under different assumptions and conditions.

Going Concern

At the balance sheet date the company had an overall balance sheet deficit of £66,046. The company

continues to operate within its financial parameters and with the support its parent company, Girbau

SA, which has confirmed its intention to continue to support the company for the foreseeable future.

On this basis the directors consider it appropriate to prepare the financial statements on a going

concern basis.

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.

Preparation of consolidated financial statements

The financial statements contain information about Girbau UK 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, Girbau S.A., Carretera de Manlleu, Km.1, 08500 Vic, Barcelona,

Spain..

Significant judgements and estimates

In the application of the Company's accounting policies, which are described in note 2, management is

required to make judgements, estimates and assumptions about the carrying values 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.

The key sources of estimation uncertainty that have a significant effect on the amounts recognised in

the financial statements are described below;

Warranty provision - extended warranties are offered to some customers and these are accounted for

in the financial statements based on a percentage of revenue which is deemed to be the best estimate

attributable for this cost. See below for further details on the calculation method for the warranty

provision.

Extended warranties are offered to some customers as part of a machine sale, these range between 2

and 3 years. There are also extended warranties sold with some machines.

Provision is made for the estimated costs of fulfilling the warranty based on the company's exposure to

parts and labour costs. These are calculated differently depending on the type of sales. Warranties on

commercial sales are calculated based on an estimated labour cost of 2% of revenue per year, and

labour is 1% of revenue per year. Warranties on industrial sales are estimated based on the size and

complexity of the job.

Where warranties are sold revenues are recognised evenly over the period of the warranty and costs

as incurred. Provision is also made for any expected losses as soon as they are known.

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 parts and machines as specified in the strategic report 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 installed and legal title is

passed. When such goods are sold under rental agreements revenue is recognised evenly over the

term.

Goodwill

Goodwill, being the amount paid in connection with the acquisition of a business in 2009, 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.

Short leasehold

-

10% on cost

Plant and machinery

-

over period of lease

Fixtures and fittings

-

10% on cost

Motor vehicles

-

33% on cost and 25% on cost

Computer equipment

-

33% on cost and 10% on 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.

Related parties

For the purposes of these financial statements, a party is considered to be related to the Company if:

- the party has the ability, directly or indirectly, through one or more intermediaries, to control the

Company or exercise significant influence over the company in making financial and operating policy

decisions, or has joint control over the Company;

- the Company and the party are subject to common control;

- the party is an associate of the Company or a joint venture in which the Company is a venturer;

- the party is a member of key management personnel of the Company or the Company’s parent, or a

close family member of such an individual, or is an entity under the control, joint control or significant

influence of such individuals;

- the party is a close family member of a party referred to in (i) or is an entity under the control, joint

control or significant influence of such individuals;

- the party is a post-employment benefit plan which is for the benefit of employees of the Company or

of any entity that is a related party of the Company; or

- the party, or any member of a group of which it is part, provides key management personnel services

to the company or its parent.

Close family members of an individual are those family members who may be expected to influence,

or be influenced by, that individual in their dealings with the entity.

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 taxation

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

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 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.

Rentals payable under operating leases are charged to profit and loss on a straight line basis over the

lease term. The aggregate benefit of a lease incentives are recognised as a reduction to the expense

recognised over the lease term on a straight line basis.

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.

Warranty

Extended warranties are offered to some customers as part of a machine sale, these range between 2

and 3 years. There are also extended warranties sold with some machines.

Provision is made for the estimated costs of fulfilling the warranty based on the company's exposure to

parts and labour costs. These are calculated differently depending on the type of sales. Warranties on

commercial sales are calculated based on an estimated labour cost of 2% of revenue per year, and

labour is 1% of revenue per year. Warranties on industrial sales are estimated based on the size and

complexity of the job.

Where warranties are sold revenues are recognised evenly over the period of the warranty and costs

as incurred. Provision is also made for any expected losses as soon as they are known.

Creditors

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

bank 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.

Debtors

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

debts.

3.

TURNOVER

The turnover and loss 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

9,431,886

11,366,867

Rendering of services

3,708,020

3,705,562

Rental contract income

81,267

90,578

13,221,173

15,163,007