Sella Controls Limited - Limited company accounts 17.3

REGISTERED NUMBER: 02937377 (England and Wales)

Strategic Report, Report of the Directors and

Financial Statements

for the Year Ended 31 March 2017

for

Sella Controls Limited

Page

Company Information

1

Strategic Report

2

Report of the Directors

4

Report of the Independent Auditors

6

Profit and Loss Account

9

Other Comprehensive Income

10

Balance Sheet

11

Statement of Changes in Equity

12

Notes to the Financial Statements

13

DIRECTORS:

I F Wright

J D Blackwell

E A Turnock

N G Banner

SECRETARY:

J D Blackwell

REGISTERED OFFICE:

Unit 3 Ivanhoe Office Park

Ivanhoe Park Way

Ashby De La Zouch

Leicestershire

LE65 2AB

REGISTERED NUMBER:

02937377 (England and Wales)

AUDITORS:

Bates Weston Audit Ltd

Statutory Auditors

Chartered Accountants

The Mills

Canal Street

Derby

DE1 2RJ

BANKERS:

Santander Corporate Bank

Leicester Corporate Centre

Carlton Park

Building 4, Level 1

Narborough

Leicestershire

LE19 0AL

SOLICITORS:

Geldards

Number One Pride Place

Pride Park

Derby

DE24 8QR

The directors present their strategic report for the year ended 31 March 2017.

REVIEW OF BUSINESS

We aim to present a balanced and comprehensive review of the development and performance of the

business during the past financial year and its position at the year-end. Our review is consistent with the size,

nature and complexity of the business.

This report reflects the progress made by the business in the 12 months of trading to 31 March 2017. We

consider that our key financial performance indicators are those that communicate the financial performance

and strength of the business as a whole, these being order intake, sales revenue and profit margins.

During the year the order intake of the business was £7.9m (2016 - £6.1m), an increase of 30%, reflecting

both a recovery in the downturn we experienced in the oil and gas sector together with substantial growth in

our rail business. Orders consisted of a mixture of engineering projects, small to medium sized modification

works and technical support services across a varying number of industries; with the diversity of the business

helping to drive growth across all of our market sectors.

The business enters the new financial year with an order book of £5.4m (2016 - £3.1m) and this provides a

solid platform on which we will deliver a strong financial performance in the new year. Opportunities for

securing new contracts remain very strong and are supported by a well-qualified and extensive list of project

pursuits across all of our market sectors.

Sales revenue was £6.4m (2016 - £7.7m) which remained under pressure as we concluded some challenging

projects and the downturn in the oil and gas sector also impacted revenues prior to new orders coming on

stream. Once again the mixture of contract size and industry mix continues to give the business strong

resilience to what continued to be challenging economic circumstances.

A small operating loss was made in the year of £90k (2016 - operating profit of £186k). The business has

continued to be impacted by the lower gross profit margins due to project challenges and lower sales

volumes. The business continues to concentrate on maintaining the underlying quality of our engineering

business whilst reducing none essential operating costs.

Throughout the year the business continued to invest in the development of engineering staff and with the

continued backdrop of legislative requirements for compliance with safety, emissions and environmental

standards, our traditional markets for high integrity safety systems remain strong.

In addition to this, our continued investment in the development of new products, technologies and

applications for both the rail and oil and gas industries places the business in an excellent position to now

move forward with a number of new revenue streams due to materialise. This is evidenced by the significant

increase in new sales orders which will flow through into sales revenues in the new year.

In summary the directors are confident of achieving the business's targets and we again commence the new

financial year with a good order book and excellent new sales opportunities, underpinned by our industry and

product diversity.

PRINCIPAL RISKS AND UNCERTAINTIES

The principal risks and uncertainties facing the business are around the winning of new business against the

backdrop of the challenging current economic climate and these risks are mitigated through the industry and

product diversity of the business, underpinned by the excellent sales prospects and project pursuits lists.

FINANCIAL INSTRUMENTS

Price risk, credit risk, liquidity risk and cash flow risk

Price risk

The business normally enters into fixed price contracts with its customers and mitigates any short-term price

risk through its bid pricing and validation process. The business is exposed to currency fluctuations which

impact upon its underlying cost base over time, however short term cash flow risk from currency variations is

mitigated by the use of foreign currency exchange forward contracts to hedge this.

Credit risk

The financial assets of the business are cash, bank balances and trade receivables and the primary credit

risk is attributable to its trade receivables however the business deals with government backed agencies or

major multinational companies who are highly credit worthy. As such credit risk is considered to be low in

respect of trade and other receivables.

The credit risk on liquid funds is limited because the counterparties are banks with high credit-ratings

assigned by international credit-rating agencies. The business assesses the credit ratings of these

counterparties as required to ensure that any potential credit risk is mitigated.

Liquidity risk

Liquidity is managed through the profitable ongoing business transactions and the working capital and

overdraft facilities. The business has sufficient cash and available facilities to manage its liquidity risk.

The financial statements are prepared on the basis of going concern. The business's activities, together with

the factors likely to affect its future development, performance and position are set out in the fair review of the

business. The directors have considered the working capital requirements for a period of 12 months from the

date of this report. As a consequence, the directors believe that the business is well placed to manage its

business risks successfully. After making enquiries, the directors have a reasonable expectation that the

business has adequate resources to continue in operational existence for the foreseeable future. Accordingly,

they continue to adopt the going concern basis in preparing the financial statements.

Cash flow risk

The business's activities expose it to cash flow risk as projects progress however this is mitigated through the

negotiation of appropriate stage and progress payments as part of the bid validation process and then

underpinned by the managing of adequate working capital and overdraft facilities.

EVENTS AFTER THE BALANCE SHEET DATE

On 1 June 2017, the company changed its name from Hima-Sella Limited to Sella Controls Limited. The

change of name reflects the successful and continued development of the business across an increasing

number of industry sectors and allows the creation and establishment of our own unique brand identity. This

provides the platform to market our innovative Tracklink® family of technologies and associated products on

a worldwide basis. The new name also reflects the company’s heritage. From its foundation 43 years ago in

Whaley Bridge, Derbyshire to the present day, Sella Controls is a name synonymous with innovation, quality

and excellent service. Sella Controls will continue its long standing and successful relationship with HIMA

Paul Hildebrandt GmbH of Bruehl, Germany, as the UK’s leading supplier of functional safety solutions. With

over 40 years experience in providing full life cycle services, functional safety management and turnkey safety

solutions, Sella Controls remains the logical solution for all functional safety requirements. The company will

continue to operate in its current structure. At the same time the company changed its company logo and

corporate image to reflect and strengthen the Sella Controls brand.

ON BEHALF OF THE BOARD:

J D Blackwell - Director

27 November 2017

The directors present their report with the financial statements of the company for the year ended 31 March 2017.

CHANGE OF NAME

The company passed a special resolution on 1 June 2017 changing its name from Hima-Sella Limited to Sella Controls Limited.

PRINCIPAL ACTIVITY

The principal activity of the company is the development, design, manufacture and supply of high integrity

electronic control systems and associated technical support activities.

DIVIDENDS

No dividends will be distributed for the year ended 31 March 2017.

DIRECTORS

The directors shown below have held office during the whole of the period from 1 April 2016 to the date of this

report.

I F Wright

J D Blackwell

E A Turnock

N G Banner

DISCLOSURE IN THE STRATEGIC REPORT

The matters required to be disclosed under SI (2008) 410 Sch 7 relating to research and development and

financial instruments are contained within the Strategic Report as applicable in accordance with s414C(11) of

the Companies Act 2006.

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:

J D Blackwell - Director

27 November 2017

Opinion

We have audited the financial statements of Sella Controls Limited (the 'company') for the year ended

31 March 2017 on pages nine to twenty one. 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 2017 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 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 four, 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.

As part of an audit in accordance with ISAs (UK), we exercise professional judgement and maintain

professional scepticism throughout the audit. We also:

-

Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

-	Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company's internal control.

-	Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors.

-

Conclude on the appropriateness of the directors' use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the company's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our Report of the Auditors to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our Report of the Auditors. However, future events or conditions may cause the company to cease to continue as a going concern.

-	Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

We communicate with those charged with governance regarding, among other matters, the planned scope

and timing of the audit and significant audit findings, including any significant deficiencies in internal control

that we identify during our audit.

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.

Ian Neal FCA CTA (Senior Statutory Auditor)

for and on behalf of Bates Weston Audit Ltd

Statutory Auditors

Chartered Accountants

The Mills

Canal Street

Derby

DE1 2RJ

1 December 2017

TURNOVER

3

6,399,815

7,709,630

Cost of sales

3,884,529

4,737,354

GROSS PROFIT

2,515,286

2,972,276

Administrative expenses

2,605,276

2,786,381

OPERATING (LOSS)/PROFIT

5

(89,990

)

185,895

Interest receivable and similar income

313

391

(89,677

)

186,286

Interest payable and similar expenses

6

58,585

55,828

(LOSS)/PROFIT BEFORE TAXATION

(148,262

)

130,458

Tax on (loss)/profit

7

(20,952

)

(28,930

)

(LOSS)/PROFIT FOR THE FINANCIAL YEAR

(127,310

)

159,388

(LOSS)/PROFIT FOR THE YEAR

(127,310

)

159,388

OTHER COMPREHENSIVE INCOME

-

-

TOTAL COMPREHENSIVE INCOME FOR THE YEAR

(127,310

)

159,388

FIXED ASSETS

Tangible assets

8

530,539

595,969

CURRENT ASSETS

Stocks

9

101,634

126,974

Debtors

10

5,942,237

5,615,111

Cash at bank and in hand

6,282

3,658

6,050,153

5,745,743

CREDITORS

Amounts falling due within one year

11

4,040,953

3,674,663

NET CURRENT ASSETS

2,009,200

2,071,080

TOTAL ASSETS LESS CURRENT LIABILITIES

2,539,739

2,667,049

CAPITAL AND RESERVES

Called up share capital

15

200,000

200,000

Revaluation reserve

16

323,968

323,968

Capital redemption reserve

16

400,000

400,000

Retained earnings

16

1,615,771

1,743,081

SHAREHOLDERS' FUNDS

2,539,739

2,667,049

The financial statements were approved by the Board of Directors on 27 November 2017 and were signed on its behalf by:

J D Blackwell - Director

I F Wright - Director

Called up

Capital

share

Retained

Revaluation

redemption

Total

capital

earnings

reserve

reserve

equity

£

£

£

£

£

Balance at 1 April 2015

200,000

1,583,693

323,968

400,000

2,507,661

Changes in equity

Total comprehensive income

-

159,388

-

-

159,388

Balance at 31 March 2016

200,000

1,743,081

323,968

400,000

2,667,049

Changes in equity

Total comprehensive income

-

(127,310

)

-

-

(127,310

)

Balance at 31 March 2017

200,000

1,615,771

323,968

400,000

2,539,739

1.	STATUTORY INFORMATION

Sella Controls 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 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

Other than on certain long term contracts, turnover represents amounts chargeable, net of value

added tax, in respect of the sale of goods and services to customers. Turnover is recognised when the

company has transferred the significant risks and rewards of ownership to the buyer and it is probable

that the company will receive the previously agreed upon payment. On certain long term contracts,

turnover represents the estimated sales value of the work performed in the year.

Tangible fixed assets

Tangible fixed assets are stated at historical cost less accumulated depreciation and any accumulated

impairment losses. Historical cost includes expenditure that is directly attributable to bringing the asset

to the location and condition necessary for it to be capable of operating in the manner intended by

management.

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

useful life.

Long leasehold

- straight line over 25 years

Plant and machinery

- 10% - 33% straight line

Fixtures and fittings

- 4% - 20% on cost

The assets' residual values, useful lives and depreciation methods are reviewed, and adjusted

prospectively if appropriate, or if there is an indication of a significant change since the last reporting

date.

Gains and losses on disposals are determined by comparing the proceeds with the carrying amount

and are recognised within 'administrative expenses' in the profit and loss account.

Stocks

Stock and work in progress is stated at the lower of cost and net realisable value, after due regard for

obsolete and slow moving stocks. Cost is based on a first in, first out basis and includes materials,

direct labour and production overheads appropriate to the relevant stage of completion. Net realisable

value is based on selling price less anticipated costs to completion and selling costs.

Raw materials and work in progress cost is that incurred in bringing each product to its present

location and condition based on direct material replacement cost. Finished goods are valued at

estimated selling price less gross margin, taking account of overhead and labour costs during the

manufacturing process.

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

to completion and disposal.

Long term contracts are those extending in excess of 12 months and any of a shorter duration which

are material to the activity of the period. Attributable profit is recognised once the outcome of a long

term contract can be assessed with reasonable certainty. Attributable profit is recognised on the cost

percentage completion method. Immediate provision is made for all foreseeable losses if a contract is

assessed as unprofitable.

Deferred tax

Deferred tax arises from timing differences that are differences between taxable total profits and total

comprehensive income as stated in the financial statements. These timing differences arise from the

inclusion of income and expenses in tax assessments in periods different from those in which they are

recognised in the financial statements.

A deferred tax asset is recognised only when it is more likely than not that there will be suitable taxable

profits from which the future reversal of underlying timing differences and losses can be deducted.

Provision is made at current rates for taxation deferred in respect of all material timing differences.

Research and development

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

Foreign currencies

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

the 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.

The company uses derivative financial instruments to reduce exposure to foreign exchange risk, the

company does not hold or issue derivatives for speculative purposes.

Derivatives are initially recognised at fair value at the date the derivative contract is entered into and

are subsequently re-measured to their fair value at each reporting date. The resulting gain or loss is

recognised in the profit and loss account immediately unless the derivative is designated and effective

as a hedging instrument, in which event the timing of the recognition in the profit and loss account

depends on the nature of the hedge relationship.

Pension costs and other post-retirement benefits

The company operates a defined contribution plan for its employees. A defined contribution plan is a

pension plan under which the company pays fixed contributions into a separate entity. Once the

contributions have been paid the company has no further payments obligations. The contributions are

recognised as an expense when they fall due. Amounts not paid are shown in accruals in the balance

sheet. The assets of the plan are held separately from the company in independently administered

funds.

Leasing commitments

Rentals paid under operating leases are charged to the profit and loss account as incurred.

Related parties

The company is a wholly owned subsidiary undertaking of Sella Limited. The company has taken

advantage of the exemption contained within Financial Reporting Standard 102 and has therefore not

disclosed transactions with entities which form part of the group, other than as normally disclosed in

the notes to the financial statements.

Judgements in applying accounting policies and key sources of estimation uncertainty

In the application of the company's accounting policies the directors are required to make judgement

estimates and assumptions about the carrying amounts of the company's assets and liabilities. These

are based on historical experience and other factors that are considered relevant and are reviewed on

a regular basis and recognised in the period in which the estimate is revised. Actual results may differ

from these estimates.

The following are the critical judgements and where relevant the key sources of estimation uncertainty:

Tangible fixed assets are depreciated over their useful economic lives taking into account their residual

values where appropriate. The actual lives of the assets and residual values are assessed annually

and may vary depending on a number of factors. In re-assessing the asset lives, factors such as

technological innovation, product life cycles and maintenance programmes are taken into account.

Residual values consider such things as future market conditions, the remaining life of the asset and

projected disposal values.

The recoverability of debtors is assessed on the likelihood and circumstances of the particular cost.

The value of stock is assessed for impairment. In re-assessing the stock value, factors such as slow

movement and obsolescence are taken in to account.

Long term contracts are those extending in excess of 12 months and any of a shorter duration which

are material to the activity of the period. Attributable profit is recognised once the outcome of a long

term contract can be assessed with reasonable certainty. Attributable profit is recognised on the cost

percentage completion method. Immediate provision is made for all foreseeable losses if a contract is

assessed as unprofitable.

3.

TURNOVER

The turnover and loss (2016 - profit) before taxation are attributable to the one principal activity of the

company.

An analysis of turnover by geographical market is given below:

2017

2016

£

£

United Kingdom

4,831,066

5,971,000

Europe

930,932

1,301,419

Rest of world

637,817

437,211

6,399,815

7,709,630

Contract sales make up £6,261,815 (2016 - £7,709,630) of the above turnover figure. The balance

relates to commissions.

4.	EMPLOYEES AND DIRECTORS

2017

2016

£

£

Wages and salaries

2,526,328

2,775,946

Social security costs

264,655

294,688

Other pension costs

63,714

69,280

2,854,697

3,139,914

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

2017

2016

Directors

4

5

Production

52

58

Administration and support

19

15

Sales, marketing and distribution

7

8

82

86

2017

2016

£

£

Directors' remuneration

56,273

119,038

Directors' pension contributions to money purchase schemes

6,300

8,385

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

Money purchase schemes

1

2

5.	OPERATING (LOSS)/PROFIT

The operating loss (2016 - operating profit) is stated after charging/(crediting):

2017

2016

£

£

Depreciation - owned assets

75,775

93,253

Loss on disposal of fixed assets

1,752

-

Auditors' remuneration

16,100

13,184

Auditors' remuneration for non audit work

10,265

6,850

Foreign exchange differences

4,472

(81,009

)

Operating lease payments

198,083

172,550

Research and development

163,633

172,972

6.

INTEREST PAYABLE AND SIMILAR EXPENSES

2017

2016

£

£

Bank interest payable

58,585

55,828

7.

TAXATION

Analysis of the tax credit

The tax credit on the loss for the year was as follows:

2017

2016

£

£

Current tax:

UK corporation tax

(40,735

)

-

Adjustments in respect of

previous years

(54,174

)

-

Foreign tax:

Current tax on income

3,788

70

Total current tax

(91,121

)

70

Deferred tax

70,169

(29,000

)

Tax on (loss)/profit

(20,952

)

(28,930

)

Reconciliation of total tax credit 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:

2017

2016

£

£

(Loss)/profit before tax

(148,262

)

130,458

(Loss)/profit multiplied by the standard rate of corporation tax in the UK of 20% (2016 - 20%)

(29,652

)

26,092

Effects of:

Expenses not deductible for tax purposes

9,742

7,817

Adjustments to tax charge in respect of previous periods

(54,174

)

-

Other permanent differences

75,868

(18,413

)

Research and development enhanced deduction

(42,545

)

(44,973

)

Foreign tax

3,788

70

Losses surrendered to group

-

477

Losses taken as research and development tax credit

56,186

-

Research and development tax credit

(40,735

)

-

Lower tax rate on deferred tax

570

-

Total tax credit

(20,952

)

(28,930

)