Polcom UK Limited - Limited company accounts 18.2

REGISTERED NUMBER: 05297107 (England and Wales)

GROUP STRATEGIC REPORT, REPORT OF THE DIRECTORS AND

CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST DECEMBER 2017

FOR

POLCOM UK LIMITED

Page

Company Information

1

Group Strategic Report

2

Report of the Directors

4

Report of the Independent Auditors

6

Consolidated Statement of Comprehensive Income

8

Consolidated Balance Sheet

9

Company Balance Sheet

10

Consolidated Statement of Changes in Equity

11

Company Statement of Changes in Equity

12

Consolidated Cash Flow Statement

13

Notes to the Consolidated Financial Statements

14

DIRECTORS:

M M Slominski

L W Slominski

SECRETARY:

A R Whitehead

REGISTERED OFFICE:

The Moorings

Dane Road Industrial Estate

Sale

Cheshire

M33 7BH

REGISTERED NUMBER:

05297107 (England and Wales)

AUDITORS:

KAY JOHNSON GEE LLP

CHARTERED ACCOUNTANTS AND STATUTORY AUDITORS

1 City Road East

Manchester

M15 4PN

SOLICITORS:

MLP Solicitors LLP

Market Street

Altrincham

Cheshire

WA14 1QE

The directors present their strategic report of the company and the group for the year ended 31st December 2017.

REVIEW OF BUSINESS

The principal activities of the group during the year was that of supplying hotel furniture and construction of modular

hotels.

The results and position of the group, and position of the parent company, as set out on pages 9 to 13 of these

financial statements. During the year and the previous year, the group has focussed on delivery of two modular hotels

in the UK, the first of which opened in 2017. The second is expected to open in Autumn 2018. To assist with market

penetration, these have been delivered with minimal profit. The directors expect margins in the modular market to

improve as the group's ability to deliver complete hotels is demonstrated to the market. The parent group continues to

provide adequate support to enable this strategy to develop.

During the year, a company, Trucktel Limited, into which the group had made an investment of £562,000 ceased

trading due to a shareholder dispute. It is uncertain if the group can recover any value that was developed, and

therefore the investment has been written off in its entirety in the year. The owners of the group continue to support

the group financially as it absorbs the impact of this exceptional event. This project has absorbed considerable

management effort with minimal return, so closure of the project will benefit the company in the long run.

The directors are confident that as the group's reputation grows, both turnover and profitability will develop and

improve over the coming years.

PRINCIPAL RISKS AND UNCERTAINTIES

As part of an international business, exchange rate risk is a principal consideration. However, the wider family of

companies to which the group belongs trade internationally in multiple currencies, so generally, currency fluctuations

cancel themselves out in that environment.

In the construction industry, credit risk is considerable, so the group maintains a tight discipline over customer credit.

Furthermore, the company maintains a credit insurance policy with a reputable insurer and as a result, the directors

consider the risk of material bad debts to be low.

The group has no long-term debt.so the directors consider that any increase in interest rates will have no direct impact.

As an international trader, the impact of the UK's exit from the EU is potentially a major risk to smooth transmission of

goods and services. However, the directors are optimistic that the UK government and EU will come to acceptable

arrangements to ensure the smooth continuation of trade after the exit.

DEVELOPMENT AND PERFORMANCE

The group continues to enhance its reputation. Future developments will come from a combination of increased

activity and margin in the modular market and increased activity to win new business worldwide in the furniture

market. At December 2017, the group is excellently placed to take advantage of modular construction opportunities in

the UK and abroad.

RESEARCH AND DEVELOPMENT

The group reduced research and development this year until the next phase of development of totally modular hotels

is required. Due to lower usage of the technology in North America in 2017, royalties fell. However the directors expect

that trend to reverse in 2018.

FINANCIAL KEY PERFORMANCE INDICATORS

The directors are obliged to report financial key performance indicators and consider the following are the most

relevant and appropriate:

2017

2016

£

£

Sales

27,143,802

14,358,398

Gross profit

424,737

649,332

Operating margins

1.56%

4.52%

Profit/(loss) on ordinary activities before tax

(771,125

)

194,434

EBITDA

(177,308

)

268,989

Current ratio

1.06

1.07

NON-FINANCIAL KEY PERFORMANCE INDICATORS

The directors consider that the main non-financial KPI relate to safety on its sites. During the year, here were no

fatalities on any site (2016: nil) and there were no work suspensions imposed by the supervising authorities (2016: nil).

During the year, there have been no material insurance claims arising from the group's activities (2016: nil).

ON BEHALF OF THE BOARD:

M M Slominski - Director

22nd June 2018

The directors present their report with the financial statements of the company and the group for the year ended

31st December 2017.

DIVIDENDS

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

DIRECTORS

The directors shown below have held office during the whole of the period from 1st January 2017 to the date of this

report.

M M Slominski

L W Slominski

DISCLOSURE IN THE STRATEGIC REPORT

The Group has chosen, in accordance with Section 414 C(ii) of the Companies Act 2006, and as noted in this Directors'

Report, to include certain matters in its Strategic Report that would otherwise be required to disclose in this Directors'

Report, specifically in respect of the principal activities, review of the business, research and development, future

developments and key risks in the business.

STATEMENT OF DIRECTORS' RESPONSIBILITIES

The directors are responsible for preparing the Group 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 the group and of the profit or loss of the group 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 and the group's transactions and disclose with reasonable accuracy at any time the financial position of the

company and the group 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 the group 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 group'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 group's

auditors are aware of that information.

AUDITORS

Under section 487(2) of the Companies Act 2006 KAY JOHNSON GEE LLP, will be deemed to have been reappointed as

auditors 28 days after these financial statements were sent to members or 28 days after the latest date prescribed for

filing the accounts with the registrar, whichever is earlier.

ON BEHALF OF THE BOARD:

M M Slominski - Director

22nd June 2018

Opinion

We have audited the financial statements of Polcom UK Limited (the 'parent company') and its subsidiaries (the

'group') for the year ended 31st December 2017 which comprise the Consolidated Statement of Comprehensive

Income, Consolidated Balance Sheet, Company Balance Sheet, Consolidated Statement of Changes in Equity, Company

Statement of Changes in Equity, Consolidated Cash Flow Statement 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 group's and of the parent company affairs as at 31st December 2017 and of the group's 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 group 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 group'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 Group

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 Group 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 Group 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 group and the parent company and its environment obtained in

the course of the audit, we have not identified material misstatements in the Group 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 by the parent company, or returns adequate for our audit have not been received from branches not visited by us; or

-	the parent company 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 group's and the parent 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 group or the parent 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.

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 an auditor’s report 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.

Michael Garrett (Senior Statutory Auditor)

for and on behalf of KAY JOHNSON GEE LLP

CHARTERED ACCOUNTANTS AND STATUTORY AUDITORS

1 City Road East

Manchester

M15 4PN

22nd June 2018

TURNOVER

27,143,802

14,358,398

Cost of sales

26,719,065

13,709,066

GROSS PROFIT

424,737

649,332

Administrative expenses

1,317,261

621,859

(892,524

)

27,473

Other operating income

122,871

171,272

OPERATING (LOSS)/PROFIT

4

(769,653

)

198,745

Interest receivable and similar income

1,181

5,770

(768,472

)

204,515

Interest payable and similar expenses

6

2,653

10,081

(LOSS)/PROFIT BEFORE TAXATION

(771,125

)

194,434

Tax on (loss)/profit

7

(76,361

)

39,145

(LOSS)/PROFIT FOR THE FINANCIAL YEAR

(694,764

)

155,289

FIXED ASSETS

Intangible assets

9

160,512

236,319

Tangible assets

10

12,648

17,186

Investments

11

Interest in associate

-

350,000

173,160

603,505

CURRENT ASSETS

Debtors

12

6,790,551

13,243,465

Cash at bank

1,829,584

2,319,837

8,620,135

15,563,302

CREDITORS

Amounts falling due within one year

13

8,416,505

15,093,865

NET CURRENT ASSETS

203,630

469,437

TOTAL ASSETS LESS CURRENT LIABILITIES

376,790

1,072,942

PROVISIONS FOR LIABILITIES

14

-

1,388

NET ASSETS

376,790

1,071,554

CAPITAL AND RESERVES

Called up share capital

15

100,000

100,000

Retained earnings

16

276,790

971,554

SHAREHOLDERS' FUNDS

376,790

1,071,554

The financial statements were approved and authorised for issue by the Board of Directors on 22nd June 2018 and

were signed on its behalf by:

M M Slominski - Director

FIXED ASSETS

Intangible assets

9

160,512

236,319

Tangible assets

10

12,648

17,186

Investments

11

100,001

350,101

273,161

603,606

CURRENT ASSETS

Debtors

12

1,956,298

6,101,846

Cash at bank

659,241

1,145,935

2,615,539

7,247,781

CREDITORS

Amounts falling due within one year

13

2,463,910

6,770,989

NET CURRENT ASSETS

151,629

476,792

TOTAL ASSETS LESS CURRENT LIABILITIES

424,790

1,080,398

PROVISIONS FOR LIABILITIES

14

-

1,388

NET ASSETS

424,790

1,079,010

CAPITAL AND RESERVES

Called up share capital

15

100,000

100,000

Retained earnings

324,790

979,010

SHAREHOLDERS' FUNDS

424,790

1,079,010

Company's (loss)/profit for the financial year

(654,220

)

163,103

The financial statements have been prepared in accordance with the provisions of Part 15 of the Companies Act 2006 relating to small companies.

The financial statements were approved and authorised for issue by the Board of Directors on 22nd June 2018 and were signed on its behalf by:

L W Slominski - Director

Called up

share

Retained

Total

capital

earnings

equity

£

£

£

Balance at 1st January 2016

100,000

816,265

916,265

Profit for the year

-

155,289

155,289

Total comprehensive income

-

155,289

155,289

Balance at 31st December 2016

100,000

971,554

1,071,554

Deficit for the year

-

(694,764

)

(694,764

)

Total comprehensive income

-

(694,764

)

(694,764

)

Balance at 31st December 2017

100,000

276,790

376,790

Called up

share

Retained

Total

capital

earnings

equity

£

£

£

Balance at 1st January 2016

100,000

815,907

915,907

Profit for the year

-

163,103

163,103

Total comprehensive income

-

163,103

163,103

Balance at 31st December 2016

100,000

979,010

1,079,010

Deficit for the year

-

(654,220

)

(654,220

)

Total comprehensive income

-

(654,220

)

(654,220

)

Balance at 31st December 2017

100,000

324,790

424,790

Cash flows from operating activities

Cash generated from operations

20

(521,502

)

1,562,535

Interest paid

(2,653

)

(10,081

)

Tax paid

37,216

(61,234

)

Net cash from operating activities

(486,939

)

1,491,220

Cash flows from investing activities

Purchase of intangible fixed assets

-

(85,475

)

Purchase of tangible fixed assets

-

(11,254

)

Interest received

1,181

5,770

Net cash from investing activities

1,181

(90,959

)

Cash flows from financing activities

Amount withdrawn by directors

(4,495

)

(2,295

)

Share issue

-

(100

)

Net cash from financing activities

(4,495

)

(2,395

)

(Decrease)/increase in cash and cash equivalents

(490,253

)

1,397,866

Cash and cash equivalents at beginning of year

21

2,319,837

921,971

Cash and cash equivalents at end of year

21

1,829,584

2,319,837

1.	STATUTORY INFORMATION

Polcom UK Limited is a private company limited by share capital, incorporated in England and Wales,

registration number 05297107. The address of the registered office is The Moorings, Dane Road Industrial

Estate, Sale, Cheshire, M33 7BH. The principal place of business is Hotel, The Avenue, Heriot-Watt University,

Riccarton, Edinburgh.

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.

Basis of consolidation

The consolidated financial statements include the statements on the company and its subsidiary undertakings

made up to 31st December 2017. A subsidiary is an entity that is controlled by the parent. The results of

subsidiary undertakings are included in the consolidated profit and loss account from the date that control

commences until the date that control ceases. Control is established when the company has the power to

govern the operating and financial policies of an entity so as to obtain benefits from its activities. In assessing

control, the group takes into consideration potential voting rights that are currently exercisable.

Significant judgements and estimates

In the application of the company's accounting policies above, management is required to make judgements,

estimates and assumptions about the carrying value of assets and liabilities that are not readily apparent from

other sources. The estimates and underlying assumptions are based on historical experience and other factors

that are considered to be relevant. Actual results may differ from these estimates.

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

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

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

Amounts recoverable on contracts

In accordance with FRS 102, specific provisions are made where appropriate against the amounts recoverable

on contracts. The amount provided at the balance sheet date was £204,594 (2016 - £382,892).

Turnover

Turnover is measured at the fair value of the consideration received or receivable and represents amounts

receivable for goods supplied and services rendered, stated net of discounts and of Value Added Tax.

Revenue from the sale of goods is recognised when the significant risks and rewards of ownership of the goods

have transferred to the buyer, usually on despatch of the goods, the amount of revenue can be measured

reliably, it is probable that the associated economic benefits will flow to the entity, and the costs incurred or to

be incurred in respect of the transactions can be measured reliably.

Royalty Income

The company receives royalty income from other associated companies based on a percentage of their

turnover on the sale of modular systems and in particular the technology developed by the company.Royalty

income is accounted for on a receivable basis.

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.

Intangible assets - patents and licences

Separately acquired patents and trademarks are included at cost and amortised in equal annual instalments

over a period of 5 years which is their estimated useful economic life. Provision is made for any impairment.

Tangible fixed assets

Fixed assets are stated at cost less accumulated depreciation and accumulated impairment losses.

Depreciation on fixed assets is charged to the profit and loss so as to write off their value, over their estimated

useful lives, using the following methods:

Plant and machinery

-

20% straight line

Motor vehicles

-

33% straight line

Computer Equipment

-

33% reducing balance

At each balance sheet date, the company reviews the carrying amounts of its fixed assets to determine whether

there is any indication that any items 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.

Investments in associates

In the Company balance sheet, investments in subsidiaries and associates are measured at cost less

impairment.

Taxation

Taxation for the year comprises current and deferred tax. Tax is recognised in the Consolidated 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 balance sheet date.

Deferred tax

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

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.

Hire purchase and leasing commitments

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

lease.

Trade and other debtors

Trade and other debtors are initially recognised at fair value and thereafter stated at amortised cost using the

effective interest method, less impairment losses for bad and doubtful debts except where the effect of

discounting would be immaterial. In such cases, the receivables are stated at cost less impairment losses for

bad and doubtful debts.

Trade and other creditors

Trade and other creditors are initially recognised at fair value and thereafter stated at amortised cost using the

effective interest method unless the effect of discounting would be immaterial, in which case they are stated at

cost.

Cash and cash equivalents

Cash and cash equivalents comprise cash at bank and in hand.

3.	EMPLOYEES AND DIRECTORS

2017

2016

£

£

Wages and salaries

74,342

101,296

Social security costs

7,562

11,234

81,904

112,530

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

2017

2016

Administration

4

2

The average number of employees by undertakings that were proportionately consolidated during the year was

NIL (2016 - NIL).

2017

2016

£

£

Directors' remuneration

8,000

8,060

4.	OPERATING (LOSS)/PROFIT

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

2017

2016

£

£

Hire of plant and machinery

191,623

-

Depreciation - owned assets

4,538

6,979

Development costs amortisation

75,807

63,265

Auditors' remuneration

8,500

5,000

Audit of subsidiary accounts

5,000

6,500

Foreign exchange differences

(25,839

)

(22,460

)

Exceptional item

512,000

-

5.	EXCEPTIONAL ITEMS

The exceptional item is an impairment charge made against the investment in Trucktel Limited, together with a

full provision against the amounts loaned to that company.

6.

INTEREST PAYABLE AND SIMILAR EXPENSES

2017

2016

£

£

Other interest paid

2,653

10,081

7.

TAXATION

Analysis of the tax (credit)/charge

The tax (credit)/charge on the loss for the year was as follows:

2017

2016

£

£

Current tax:

UK corporation tax

-

37,757

Corporation tax prior years

(74,973

)

-

Total current tax

(74,973

)

37,757

Deferred tax

(1,388

)

1,388

Tax on (loss)/profit

(76,361

)

39,145