Associated British Engineering : ABE Report and Accounts to 31 March 2016

Company Registration No. 00110663 (England and Wales) ASSOCIATED BRITISH ENGINEERING PLC ANNUAL REPORT AND FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2016

ASSOCIATED BRITISH ENGINEERING PLC REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2016
CONTENTS	Page
Financial highlights	1
Chairman's statement	2
Directors' report	3
Strategic report	6
Report of the independent auditor - Group	10
Group accounting policies	15
Group income statement	22
Group statement of comprehensive income	23
Group statement of financial position	24
Group statement of changes in equity	25
Group cash flow statement	26
Notes to the Group financial statements	27
Company statement of financial position	42
Company statement of changes in equity	43
Company cash flow statement	44
Notes to the company financial statements	45
Statement of directors' responsibilities	51
Corporate governance report	52
Directors' remuneration report	57
Directors, registered office and advisers	60

The Directors' Report on pages 3 to 5 and the Directors' Remuneration Report on pages 57 to 59 have each been drawn up in accordance with the requirements of English law and liability in respect thereof is also governed by English law. In particular, the responsibility of the directors for these reports is owed solely to Associated British Engineering plc.

The directors submit to the members their Report and Accounts for the Group for the year ended 31 March 2016. Pages 1 to 9 and 52 to 60, including the Financial Highlights, Chairman's Statement, Directors' Report, Strategic Report, Corporate Governance Report, Directors' Remuneration Report and the Directors, Registered Office and Advisers page form part of the Report of the Directors.

FINANCIAL HIGHLIGHTS

2016	2015
£'000	£'000
REVENUE	1,766	2,626
OPERATING LOSS	(568)	(131)
LOSS BEFORE TAXATION	(621)	(179)
NET ASSETS	1,485	2,182
BASIC LOSS PER 2.5p ORDINARY SHARE	(29.9p)	(7.5p)
EQUITY SHAREHOLDERS' FUNDS PER 2.5p ORDINARY SHARE	£0.73	£1.06

CHAIRMAN'S STATEMENT FOR THE YEAR ENDED 31 MARCH 2016

2016 was a year of change. We have lost three long serving employees including a managing director, we have experienced a severe downturn in the fortunes of the oil sector and we have been subject to warranty claims and disputes at an unprecedented level as customers attempt to claw back costs and justify non-payment. In these circumstances it is a credit to the organisation and the continuing staff that the Group's operating loss is not greater than £568,000 an increase on the previous year's loss of £131,000. This performance was largely due to a fall in turnover at the Group's main operating subsidiary, British Polar Engines Limited ("BPE"), and its subsidiary Akoris Trading Limited ("Akoris") which fell by some £860,000 in the year to 31 March 2016 - this is split as to a decrease of £557,000 in BPE and a decrease of £303,000 in Akoris. The BPE business turnover remains subject to the vagaries of the offshore oil drilling market and world demand generally for power generation. Akoris depends on it finding profitable new business.

Despite the offshore oil market experiencing a sharp downturn in activity and reduction in profits that severely impacted on the demand for our products and services; our principal subsidiary, BPE continues to actively seek out new customers and remains confident that sales will start to pick up as customers seek value driven products from our Scottish engineering base. Our 100 years of experience in these markets coupled with value driven Scottish engineering means that BPE as an OEM is well placed to weather the storm.

We continue to suffer from the vagaries of pension valuations. The number of active members continues to decline and the match between liability and bond markets is difficult to achieve that means that we still experience swings. The net result is that the IAS 19 Pension Valuation still moves around and if the £ Sterling falls we may find a positive movement and vice a versa. In the current year the pension deficit for BPE has increased from £1,892,000 to £1,931,000 as at 31 March 2016. Shareholders will appreciate that the calculations surrounding these figures result from a combination of facts and assumptions which are set out in much more detail in the notes to these accounts.

The Board continues to keep central costs at a low level. However at the operating level BPE has recruited new staff to replace the retiring staff. At the same time, we have looked at our sales processes and related KPI's with a view to improving sales efficiency. We are also looking at new sources for gensets and diesel engines that we can sell to customers that are not looking to repair older models. We are building a base for the future and have noticed some positive responses in our established markets.

In addition to the organic opportunities, we remain open to the thought of a suitable corporate transaction to take the Group into a new sector; but accept that this may be difficult to find in these difficult markets. Our other investments including SalvaRx has continued to show a useful increase in value and some of the cash has been deployed to earn higher rates of interest; these have been able to generate useful increases in value from our latent resources.

As a small group we are reliant on the dedication of our staff who despite the reduced activity are working well and looking hard at each and every opportunity. The Board thanks them all for their effort and commitment.

Rupert Pearce Gould and Colin Weinberg Chairmen

Date: 28 July 2016