TIDMASBE

RNS Number : 5202B

Associated British Engineering PLC

10 June 2021

ASSOCIATED BRITISH ENGINEERING PLC

INTERIM REPORT

FOR THE SIX MONTHSED

31 MARCH 2021

ASSOCIATED BRITISH ENGINEERING PLC

INTERIM REPORT

FOR THE SIX MONTHSED 31 MARCH 2021

 
 CONTENTS                                                PAGE 
 
 
 Chairman's statement                                     1 
 
 
 Responsibility statement                                 2 
 
 
 Group income statement                                   3 
 
 
 Group statement of comprehensive income                  4 
 
 
 Group interim balance sheet                              5 
 
 
 Group interim statement of changes in shareholders' 
  equity                                                  6 
 
 
 Group interim cash flow statement                      7 - 8 
 
 
 Notes to the interim report                            9 - 15 
 

ASSOCIATED BRITISH ENGINEERING PLC

CHAIRMAN'S STATEMENT

INTERIM REPORT FOR THE SIX MONTHSED 31 MARCH 2021

 
 SUMMARY OF RESULTS                                     Six months             Period to 
                                                                to          30 September 
                                                     31 March 2021                  2020 
                                                           GBP'000               GBP'000 
 
 Revenue                                                         -                   165 
 (Loss)/profit before tax                                     (49)                   145 
  Profit on disposal of discontinued 
   operations                                                    -                 5,239 
 
 Earnings per share 
 Basic                                                      (2.3p)                263.0p 
 Diluted                                                    (2.3p)                263.0p 
 

As shareholders are aware the Company disposed of its interest in British Polar Engines Limited on 4 August 2020 immediately following authorisation by shareholders; the audited results for the period to 30 September 2020 were published on 31 March 2021 and are available from our web site. Although there was an audit qualification, which related to our inability to access or be provided with information at British Polar Engines, this did not relate to the balance sheet as at 30 September 2020 - so we started with a clean base.

You will see from our financial numbers and balance sheet that in the period there was a loss of GBP49k that covered company expenses and was offset by realising gains on the sales of our investments of GBP283k, see page 6 of the accounts, GBP140k that related to prior periods and GBP143k that related to this 6 month period. This is due to the increase in value of the Company's investments in the period.

As the investments have gained in value, the Company has started the process of realising its investments. It is expected that these and future capital gains will be tax free due to inherited capital gains tax losses so no provision has been made for any tax payments. The Board will take the opportunity to liquidate investments and invest for future growth when suitable opportunities occur.

Your Company is now in a position to talk to potential acquisitions without having to consider the impact of the pension fund and related historical deficits. The Board is now committed to using all its efforts to identifying and acquiring a new business with growth potential and hopefully showing profits for our group and a financial return for our patient shareholders.

The Board continues to review options for the future development of the Group.

Colin Weinberg and Rupert Pearce Gould

Chairmen

8 June 2021

1

ASSOCIATED BRITISH ENGINEERING PLC

RESPONSIBILITY STATEMENT

INTERIM REPORT FOR THE SIX MONTHSED 31 MARCH 2021

The Directors of the Company confirm to the best of their knowledge that:

   a)   the Interim Report has been prepared in accordance with IAS 34; 

b) the Interim Report includes a fair view of the information required by DTR 4.2.7R, being an indication of the important events that have occurred during the first six months of the financial year and a description of the principal risks and uncertainties for the remaining six months of the year; and

c) the Interim Report includes a fair review of the information required by DTR 4.2.8R, being disclosure of related party transactions that have taken place in the first six months of the current financial year and that have materially affected the financial position or performance of the group during that period; and any changes in the related party transactions described in the latest annual financial statements that could do so.

By order of the Board

Colin Weinberg and Rupert Pearce Gould

Chairmen

8 June 2021

2

ASSOCIATED BRITISH ENGINEERING PLC

GROUP INCOME STATEMENT

FOR THE SIX MONTHSED 31 MARCH 2021

 
                                                                Six months                     Period to 
                                                                        to                  30 September 
                                                                  31 March                          2020 
                                                                      2021 
                                                                   GBP'000                       GBP'000 
 
 REVENUE                                                                 -                           165 
 
 Operating costs                                                      (50)                          (26) 
 
 OPERATING (LOSS)/PROFIT                                              (50)                           139 
 
 Finance expense                                                    -                                  - 
 Finance income                                                         -                              1 
  Other income                                                           1                             5 
                                                  ------------------------       ----------------------- 
 
 (LOSS)/PROFIT BEFORE TAXATION                                        (49)                           145 
 Taxation                                                                -                             - 
                                                  ------------------------       ----------------------- 
 
 (LOSS)/PROFIT FOR THE PERIOD 
  FROM CONTINUOUS OPERATIONS                                          (49)                           145 
                                                  ========================       ======================= 
 
 PROFIT ON DISPOSAL OF DISCONTINUED 
  OPERATIONS                                                          -                           5,239 
 
 TOTAL (LOSS)/PROFIT FOR THE 
  PERIOD                                                              (49)                        5,384 
                                                  ========================       ======================= 
 
 (LOSS)/PROFIT PER SHARE ON 
  (LOSS)/PROFIT FOR THE PERIOD 
  ATTRIBUATABLE TO EQUITY HOLDERS 
  OF THE PARENT COMPANY 
 Basic and diluted profit from                                           -                        256.0p 
  discontinued operations                                           (2.3p)                        263.0p 
  Basic and diluted (loss)/profit 
                                                  ========================       ======================= 
 
 (Loss)/profit for the period 
  attributable to: 
 Owners of the company                                                (49)                       5,384 
 Non-controlling interest                                                -                             - 
                                                  ------------------------       ----------------------- 
 
                                                                      (49)                       5,384 
                                                  ========================       ======================= 
 

Profit on disposal of discontinued operations reported in the comparative period relates to the disposal of

British Polar Engines Limited ("BPE"), the Group's main trading subsidiary, completed on 4 August 2020,

details of which were disclosed in the statutory consolidated financial statements of Associated British

Engineering Plc for the period to 30 September 2020.

3

ASSOCIATED BRITISH ENGINEERING PLC

GROUP STATEMENT OF COMPREHENSIVE INCOME

FOR THE SIX MONTHSED 31 MARCH 2021

 
                                              Six months              Period to 
                                                      to           30 September 
                                                30 March                   2020 
                                                    2021 
                                                 GBP'000                GBP'000 
 
 (Loss)/profit for the period                       (49)                  5,384 
                                             -----------  --------------------- 
 
 Other comprehensive income 
 Gain on available for sale financial 
  asset 
     Gains released to Retained Earnings             143                      - 
     Unrealised gains (*)                            373                    327 
 
 Other comprehensive income for the 
  period                                             516                    327 
                                             -----------  --------------------- 
 
 TOTAL COMPREHENSIVE INCOME FOR THE 
  YEAR                                               467                  5,711 
                                             ===========  ===================== 
 
 Total comprehensive income attributable 
  to: 
 Owners of the Company                               467                  5,711 
 Non-controlling interests                             -                      - 
                                             -----------  --------------------- 
 
                                                     467                  5,711 
                                             ===========  ===================== 
 

(*) = Items which may subsequently be reclassified to the Income Statement.

All activities are classified as continuing.

4

ASSOCIATED BRITISH ENGINEERING PLC Company Number: 00110663

GROUP INTERIM BALANCE SHEET

AS AT 31 MARCH 2021

 
                                                  At       Period to 
                                            31 March    30 September 
                                                2021            2020 
                                             GBP'000         GBP'000 
 ASSETS 
 Non-current assets 
 Property, plant and equipment                     -               - 
 Available for sale financial assets             622             413 
                                          ----------  -------------- 
                                                 622             413 
 
 Current assets 
 Property, plant and equipment                     -               - 
 Available for sale financial assets               -               - 
 Inventories                                       -               - 
 Trade and other receivables                      99              24 
 Cash and cash equivalents                       383             186 
                                          ----------  -------------- 
                                                 482             210 
                                          ----------  -------------- 
 Total assets                                  1,104             623 
                                          ==========  ============== 
 
 EQUITY AND LIABILITIES 
 Called up share capital                          51              51 
 Deferred shares                               2,594           2,594 
 Share premium account                         5,370           5,370 
 Other components of equity                       11              11 
 Fair value reserve                              558             270 
 Revaluation reserve                               -               - 
 Retained earnings                           (7,526)         (7,705) 
                                          ----------  -------------- 
 
 Equity attributable to the Company's 
  Equity Shareholders                          1,058             591 
 
 Non-controlling interests                         -               - 
                                          ----------  -------------- 
                                               1,058             591 
                                          ----------  -------------- 
 
 LIABILITIES 
 Non-current liabilities 
 Retirement benefit obligation                     -               - 
 Obligation under finance leases                   -               - 
                                                   -               - 
                                          ----------  -------------- 
 
 Current liabilities 
 Trade and other payables                         46              32 
                                                  46              32 
                                          ----------  -------------- 
 
 Total liabilities                                46              32 
                                          ----------  -------------- 
 
 Total equity and liabilities                  1,104             623 
                                          ==========  ============== 
 

5

ASSOCIATED BRITISH ENGINEERING PLC

GROUP INTERIM STATEMENT OF CHANGES IN EQUITY

FOR THE SIX MONTHSED 31 MARCH 2021

 
 
                                                                                                                                                                                    Attributable 
                               Share                 Share             Deferred                Other           Fair value             Revaluation                Retained              to owners 
                             Capital               Premium               Shares              Reserve              reserve                 reserve                Earnings              of parent                     Total 
                             GBP'000               GBP'000              GBP'000              GBP'000              GBP'000                 GBP'000                 GBP'000                GBP'000                   GBP'000 
 
 
 Balance at 1 
  April 
  2019                            51                 5,370                2,594                   11                  805                     550                (13,089)                (3,708)                   (3,708) 
                  ------------------  --------------------  -------------------  -------------------  -------------------  ----------------------  ----------------------  ---------------------  ------------------------ 
 Profit for the 
  period                           -                     -                    -                    -                    -                       -                     145                    145                       145 
 
 Other 
 comprehensive 
 income 
 Disposal of 
  subsidiary                       -                     -                    -                    -                (862)                   (550)                   5,239                  3,827                     3,827 
 Unrealised gain 
  on Available 
  For Sale 
  Financial 
  Assets (*)                       -                     -                    -                    -                  327                       -                       -                    327                       327 
                  ------------------  --------------------  -------------------  -------------------  -------------------  ----------------------  ----------------------  ---------------------  ------------------------ 
 Balance at 1 
  October 
  2020                            51                 5,370                2,594                   11                  270                       -                 (7,705)                    591                       591 
                  ------------------  --------------------  -------------------  -------------------  -------------------  ----------------------  ----------------------  ---------------------  ------------------------ 
 Loss for the 
  period                           -                     -                    -                    -                    -                       -                    (49)                   (49)                      (49) 
 
  Other 
  comprehensive 
  income 
 Unrealised gain 
  on Available 
  For Sale 
  Financial 
  Assets                    -                            -                    -                    -           516                     -                                -            516                               516 
 Realised gain 
 on Available 
 For Sale 
 Financial 
 Assets 
    Fair Value 
     adjustments                   -                     -                    -                    -                   55                       -                    (55)                      -                         - 
    Realised 
     gains                         -                     -                    -                    -                (283)                       -                    283                       -                         - 
 
 Balance at 31 
  March 2021                      51                 5,370                2,594                   11                  558                       -                 (7,526)                  1,058                     1,058 
                  ==================  ====================  ===================  ===================  ===================  ======================  ======================  =====================  ======================== 
 
 
 
                                       (*) Items which may subsequently be reclassified to the Income Statement. 
 

6

ASSOCIATED BRITISH ENGINEERING PLC

GROUP INTERIM CASH FLOW STATEMENT

FOR THE SIX MONTHSED 31 MARCH 2021

 
                                                            Six months             Period to 
                                                                    to          30 September 
                                                              31 March                  2020 
                                                                  2021 
                                                               GBP'000               GBP'000 
 
 Cash flows from operating activities 
 Cash used in operations                                         (110)                    91 
 Interest received                                                   -                     - 
 Interest paid                                                       -                     - 
 Taxation                                                            -                     - 
                                                 ---------------------  -------------------- 
 Net cash used in operating activities                           (110)                    91 
                                                 ---------------------  -------------------- 
 
 Cash flows from investing activities 
 Proceeds from sale of equipment                                     -                    - 
 Purchase of equipment                                               -                    - 
 Movements investments                                               -                  (65) 
 Sale proceeds of investments held                                 307                     - 
  for sale 
 Sale proceeds from subsidiary disposal/loan 
  assignment                                                         -                   100 
                                                 ---------------------  -------------------- 
 
 Net cash used in investing activities                             307                    35 
                                                 ---------------------  -------------------- 
 
 
 Net increase in cash and cash equivalents                         197                   126 
 Cash decrease on disposal of subsidiary                             -                 (329) 
 Cash and cash equivalents at beginning 
  of period                                                        186                   389 
                                                 ---------------------  -------------------- 
 
 Cash and cash equivalents at end 
  of period                                                        383                   186 
                                                 =====================  ==================== 
 

7

ASSOCIATED BRITISH ENGINEERING PLC

GROUP INTERIM CASH FLOW STATEMENT (continued)

FOR THE SIX MONTHSED 31 MARCH 2021

 
 CASH FLOW FROM OPERATING ACTIVITIES           Six months          Period 
                                                       to              to 
                                                 31 March    30 September 
                                                     2021            2020 
                                                  GBP'000         GBP'000 
 
  (Loss)/Profit before taxation                      (49)             145 
 
 Adjustments for: 
  Depreciation                                          -               - 
  Interest income                                       -               - 
  Finance expense                                       -               - 
  Foreign exchange difference                           -               - 
  Profit on disposal of equipment                       -               - 
 
 Changes in working capital: 
  Increase in trade and other receivables            (75)            (20) 
  Increase/(decrease) in payables                      14            (34) 
                                              -----------  -------------- 
                                                    (110)              91 
 Taxes paid                                             -               - 
 
 Cash used in operations                            (110)              91 
                                              ===========  ============== 
 

8

ASSOCIATED BRITISH ENGINEERING PLC

NOTES TO THE INTERIM REPORT

FOR THE SIX MONTHSED 31 MARCH 2021

   1.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 

BASIS OF PREPARATION

The Company is incorporated in the United Kingdom under the Companies Act 2006.

This unaudited Group Interim Report has been prepared in accordance with IAS 34 Interim Financial Reporting and the disclosure requirements of the Listing Rules. The policies set out below have been consistently applied to all periods presented.

This Group Interim Report is not audited.

These financial statements are for the period 1 October 2020 to 31 March 2021. The comparative figures are for the period 1 April 2019 to 30 September 2020 (18 months). The last interim period of account for which interim financial statements were prepared was for the 6 months ended 30 September 2019. As such, these numbers have not been included as they are not directly comparable and not considered to enhance the understanding of the reader. In addition, the directly comparable 6 month period from 1 October 2019 to 31 March 2020 has not been included as the directors do not have access to the figures for this period. This is referenced in the below disclaimer of opinion which was included in the Audit Report in the financial statements for the 18 month period ended 30 September 2020.

On 4 August 2020 the company disposed of its investment in British Polar Engines Limited which was the main trading subsidiary of Associated British Engineering PLC. We have been unable to obtain from the management of British Polar Engines Limited details of the profit and loss account during the period 1 April 2019 until the date of disposal in August 2020. We are therefore unable to confirm or verify by alternative means the amounts included in the consolidated statement of comprehensive income. As a result of this matter we have been unable to determine whether any adjustments might have been found necessary to the elements included in the consolidated statement of comprehensive income or consolidated statement of cash flows. This has not impacted our work on the consolidated statement of financial position as at the 30 September 2020 and the remainder of the group, as the assets and liabilities of the disposed subsidiary are not included at the balance sheet date. The parent company statement of financial position is also unaffected as the investment has been disposed.

The results for the period ended 30 September 2020 have been extracted from the statutory consolidated financial statements of Associated British Engineering Plc, which are prepared in accordance with IFRS, as adopted by the EU.

NEW AND AMED STANDARDS ADOPTED BY THE GROUP

The following standards and amendments to existing standards became effective from 1 January 2020 and are applicable for the current reporting period:

-- Amendments to IFRS 3, Business Combinations. The amendment clarifies the definition of a business by providing a new framework for determining whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses.

-- Amendments to IAS 1, Presentation of Financial Statements, and IAS 8, Accounting Policies, Changes in Accounting Estimates and Errors. The amendments clarify the definition of 'materiality' and how it should be applied. The amendments also improve the explanations of the definition and ensure consistency across all IFRS standards.

-- Amendments to IFRS 9, Financial Instruments, IAS 39, Financial Instruments: Recognition and Measurement, and IFRS 7, Financial Instruments: Disclosures. The amendments provide relief from specific hedge accounting requirements to address the potential uncertainty caused by the IBOR reform.

9

ASSOCIATED BRITISH ENGINEERING PLC

NOTES TO THE INTERIM REPORT (continued)

FOR THE SIX MONTHSED 30 SEPTEMBER 2019

   1.     SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) 

NEW AND AMED STANDARDS ADOPTED BY THE GROUP (continued)

The adoption of the above new and revised standards had no impact on the financial statements of the

Group for the period ended 31 March 2021.

The following amendments to existing standards have been issued, but will become effective for annual

periods beginning on or after 1 January 2021.

-- Amendments to IAS 1, Presentation of Financial Statements. The amendments clarify the basis used for the classification of current and non-current liabilities.

-- Amendments to IAS 8, Accounting policies, Changes in Accounting Estimates and Errors. The amendments introduce the definition of an accounting estimate and include other amendments to IAS 8 to distinguish changes in accounting estimates from changes in accounting policies.

-- Amendments to IAS 37, Provisions, Contingent Liabilities and Contingent Assets. The amendments clarify the costs that should be included when assessing whether a contract is onerous.

GOING CONCERN

The Group's business activities, together with the factors likely to affect its future development, performance and position are set out in the Chairmen's statement on page 1. The financial position of the Group, its cash flows and liquidity position are described in the financial statements.

The Company has sufficient financial resources. As a consequence, the Directors believe the Company is

well placed to manage its business risks successfully, including the impact of Covid-19 and Brexit. The Directors regularly review the forecasts.

In accordance with their responsibilities, the Directors of the Company have considered the appropriateness of the going concern basis, which has been used in the preparation of these financial statements. The Directors have prepared trading and cash flow forecasts for the Company, which take into account the future performance of the Company and consider the impact of the Covid-19 pandemic. The forecasts, including allowance for reasonable possible changes in trading performance indicate that the Company should be able to operate for at least 12 months from the approval of these financial statements.

The forecasts for the 12 months from approval of these financial statements have been considered. As a result of the above assessment, the Directors have a reasonable expectation that the Company has adequate resources to continue in operational existence for a minimum period of 12 months from the date

of signing these financial statements. Thus, they are adopting the going concern basis in preparing the annual financial statements.

BASIS OF CONSOLIDATION

The Group Interim Report incorporates the financial statements of Associated British Engineering Plc and its subsidiary undertakings for the six months to 31 March 2021. All inter-company balances and transactions have been eliminated in full. The Group Interim Report includes the results of subsidiaries acquired or disposed of during the year from or to the effective date of acquisition or disposal.

A subsidiary is an entity controlled, either directly or indirectly, by the Company, where control is the power

to govern the financial and operating policies of the entity so as to obtain benefit from its activities. The acquisition method of accounting is used to account for acquisition of subsidiaries by the Group. The cost on an acquisition is measured as the fair value of the assets given, equity instruments issued, and liabilities incurred or assumed at the date of exchange. Acquisition costs are expensed in the consolidated income statement for the period in which they are incurred.

10

ASSOCIATED BRITISH ENGINEERING PLC

NOTES TO THE INTERIM REPORT (continued)

FOR THE SIX MONTHSED 31 MARCH 2021

   1.     SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) 

The consolidated financial statements consist of the results of the following entities:

Entity Summary Description

Associated British Engineering Plc (ABE) Holding Company

Akoris Trading Ltd (AT) Trading Company

REVENUE RECOGNITION

Revenue is measured at the fair value of the consideration receivable by the Group for goods supplied and services provided, excluding value added tax and trade discounts. Revenue from the sale of spare parts is recognised when the goods are dispatched or, if under a bill and hold arrangement, when they are available for despatch to a specific customer. Revenue from the sale of engines is recognised in accordance with the performance of contractual terms and specifically when the engines have been satisfactorily tested in accordance with contractual terms. Revenue from servicing and repair work is recognised when the work is completed.

ACCOUNTING ESTIMATES AND JUDGEMENTS

Management are required, in accordance with IFRS, to exercise judgement and to make estimates and assumptions regarding the application of accounting policies and the resulting effect on reported amounts of assets, liabilities, income, and expenses. These estimates and assumptions are based on historical experience and a review of current conditions prevailing at the time but actual results may differ from these estimates. Any such revision is recognised in the financial statements in the period in which the change in circumstance is detected.

Accounting Judgement

The key areas where management have exercised judgement in the period, and the thought process undertaken, are as follows:

Deferred taxation

Judgement is applied by management in determining the extent to which the recovery of carried forward tax losses is probable for the purpose of meeting the criteria for recognition as deferred tax assets.

TAXATION

The tax expense represents the sum of the tax currently payable and deferred tax.

Current tax payable is based on the taxable profit or loss for the period. Taxable profit differs from net profit as reported in the income statement because it excludes items of income or expense that are taxable or deductible in other periods and it further excludes items that are never taxable or deductible. The Group's liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the balance sheet date.

Deferred tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. The deferred tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction, other than a business combination, that at the time of the transaction affects neither accounting nor taxable profit nor loss. Deferred tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the balance sheet date and are expected to apply when the related deferred tax asset is realised or the deferred tax liability is settled.

11

ASSOCIATED BRITISH ENGINEERING PLC

NOTES TO THE INTERIM REPORT (continued)

FOR THE SIX MONTHSED 31 MARCH 2021

   1.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) 

TAXATION (continued)

Deferred tax is provided on temporary differences arising on investments in subsidiaries, except where the timing of reversal of the temporary differences is controlled by the Group and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax assets are recognised to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised.

FOREIGN CURRENCIES

The functional and presentational currency of the parent company and its subsidiaries is UK Pound Sterling, rounded to the nearest thousand. Transactions in currencies other than the functional currency are translated at the rate ruling at the date of the transaction. At each balance sheet date, monetary assets and liabilities denominated in foreign currencies are translated at the rate of exchange ruling at the balance sheet date. Any gains or losses arising from the transactions are taken to the income statement.

CASH AND CASH EQUIVALENTS

Cash and cash equivalents comprise cash on hand, demand deposits, and other short-term highly liquid investments that have maturities of three months or less from inception, are readily convertible to a known amount of cash and are subject to an insignificant risk of changes in value.

FINANCIAL INSTRUMENTS

Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into.

Where the contractual obligations of financial instruments (including share capital) are equivalent to a similar debt instrument, those financial instruments are classed as financial liabilities and are presented as such in the balance sheet. Finance costs and gains or losses relating to financial liabilities are included in the income statement. Finance costs are calculated so as to produce a constant rate of charge on the outstanding liability. Where none of the contractual terms of share capital meet the definition of a financial liability then this is classed as an equity instrument. Dividends and distributions relating to equity instruments are debited direct to equity.

Trade and other receivables

Trade and other receivables are originally recognised at fair value. Subsequent measurement is at amortised cost using the effective interest rate method. A provision against trade receivables is made when there is objective evidence that the group will not be able to collect all amounts due to it in accordance with the original terms of those receivables.

Trade and other payables

Trade and other payables are originally recognised at fair value, net of transaction costs. Subsequent measurement is at amortised cost using the effective interest rate method.

Investments in securities

Investments are recognised and derecognised on a trade date where a purchase or sale of an investment is under a contract whose terms require delivery of the investment within the timeframe established by the market concerned, and are initially measured at fair value, with all transaction costs being written off to the income statement as incurred. Investments are classified as available for sale and are measured at subsequent reporting dates at fair value. Gains and losses arising from changes in fair value of available for sale financial assets are included in other comprehensive income for the period. When the asset is disposed of or deemed to be impaired, the cumulative gain or loss is reclassified from equity reserve to income statement.

12

ASSOCIATED BRITISH ENGINEERING PLC

NOTES TO THE INTERIM REPORT (continued)

FOR THE SIX MONTHSED 31 MARCH 2021

   1.     SUMMARY OF SIGNIFICANT ACCOUNTING POLOICIES (continued) 

EQUITY AND RESERVES

Share capital represents the nominal value of shares that have been issued except for the preference shares classified as debt. Deferred shares represent shares arising from the sub-division of ordinary shares of GBP2.

Share premium includes any premiums received on issue of share capital. Any transaction costs associated with the issuing of shares are deducted from share premium, net of any related income tax benefits. Retained earnings include all current and prior period retained profits and losses. Available for sale reserve includes all gains and losses relating to Available for Sale financial assets. Other reserves relate to movements not classified in any of the reserves detailed above. Revaluation reserve includes all gains and losses relating to Property, Plant and Equipment. All transactions with owners of the parent are recorded separately within equity.

SEGMENTAL REPORTING

The standard requires financial information to be disclosed in the financial statements in the same format in which it is disclosed to the chief operating decision-maker. The chief decision-maker has been identified as the Board, at which level strategic decisions are made.

   2.    SEGMENTAL ANALYSIS 
 
                      Six months           Period 
                              to               to 
                        31 March     30 September 
                            2021             2020 
                         GBP'000          GBP'000 
 
 United Kingdom                 -              165 
 
               -                              165 
   =============                   ============== 
 

All revenue originates in the United Kingdom.

In the periods ended 31 March 2021 and 30 September 2020, save for dollar bank accounts and overseas debtors, all of the assets held by the Group were located in the United Kingdom and all capital expenditure was incurred within the United Kingdom.

Operating segments

The following segment information has been prepared in accordance with IFRS 8, "Operating Segments", which defines requirements for the disclosure of financial information of an entity's operating segments.

The Board consider the Group on an individual company basis. Reports by individual companies are used by the chief decision-maker in the Group. Significant operating segments are Associated British Engineering Plc and Akoris Trading Limited.

The Group's operations are located in the United Kingdom. Any transactions between business units are on normal commercial terms and conditions.

Akoris Trading Limited is a commodity and natural resource trading, finance and investment company.

Associated British Engineering Plc is the Group's holding company.

13

ASSOCIATED BRITISH ENGINEERING PLC

NOTES TO THE INTERIM REPORT (continued)

FOR THE SIX MONTHS ENDED 31 MARCH 2021

   2.     SEGMENTAL ANALYSIS (continued) 
 
                                Associated 
                                   British 
                               Engineering        Akoris 
                                       Plc       Trading     Consolidated 
                                                     Ltd 
                                   GBP'000       GBP'000 
 Six months to 31 March 
  2021 
 External sales                          -             -                - 
 
 Segment result (PBIT)                (47)           (2)             (49) 
                             -------------  ------------  --------------- 
 
 Net finance expense                                                    - 
 Taxation                                                               - 
 
 Loss after tax                                                      (49) 
                                                          =============== 
 
 Other information 
 Capital additions                       -             -                - 
 
 Balance sheet 
 Segment assets                      1,074            30            1,104 
                             =============  ============  =============== 
 
  Period to 30 September 
   2020 
 External sales                        165             -              165 
 
 Segment result (PBIT)                 146           (1)              145 
                             -------------  ------------  --------------- 
 
 Net finance expenses                                                   - 
 Taxation                                                               - 
 
 Profit after tax                                                     145 
                                                          =============== 
 
 Other information 
 Capital additions                       -             -                - 
 
 Balance sheet 
 Segment assets                        591            32              623 
                             =============  ============  =============== 
 

14

ASSOCIATED BRITISH ENGINEERING PLC

NOTES TO THE INTERIM REPORT (continued)

FOR THE SIX MONTHS ENDED 31 MARCH 2021

   3.         PRINCIPAL RISKS AND UNCERTAINTIES 

The main risks arising from the Group's financial instruments are market risk, liquidity risk and credit risk. Market risk includes price commodity risk, foreign exchange risk and interest rate risk. The Group has an exposure to foreign exchange risk to the extent that investments may be priced in US dollars or other currencies and has no loans, therefore limited exposure to interest rate risk.

Cash and cash equivalents held at floating rates expose the entity to cash flow risk. Interest rate risk is limited to the cash and cash equivalents.

Based on the balance sheet value of cash and cash equivalents, a 1% change in interest base rates would lead to an increase or decrease in income and equity of GBP3,828 (2020: GBP1,865).

The Board reviews and agrees policies for managing each of the above risks and they are summarised below and in the accounting policies to the Group financial statements. These policies have been consistently applied throughout the period.

COMMODITY PRICE RISK

The Group holds no stock and as such has no exposure to commodities.

LIQUIDITY RISK

The Group's liquidity is dependent on the cash balances available and it is the Group's policy to place surplus cash on deposit to ensure it has an appropriate rate of return. The Board reviews an annual 12 month financial projection as well as information regarding cash balances.

CREDIT RISK

The Group's principal financial assets are cash deposits, available for sale financial assets and trade and other receivables. The credit risk associated with the cash is limited as the counterparties have high credit ratings assigned by international credit-rating agencies. The principal credit risk arises therefore from its trade and other receivables and available for sale financial assets.

15

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June 10, 2021 07:27 ET (11:27 GMT)

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