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Registration number: 04584656

Micro Systems (UK) Limited

Annual Report and Consolidated Financial Statements

for the Year Ended 31 December 2016

Prospero Accounting Ltd
Statutory Auditors
Lowry House
17 Marble Street
Manchester
M2 3AW

 

Micro Systems (UK) Limited

Contents

Company Information

1

Strategic Report

2 to 3

Directors' Report

4 to 5

Statement of Directors' Responsibilities

6

Independent Auditor's Report

7 to 8

Consolidated Profit and Loss Account

9

Consolidated Statement of Comprehensive Income

10

Consolidated Balance Sheet

11

Balance Sheet

12

Consolidated Statement of Changes in Equity

13

Statement of Changes in Equity

14

Consolidated Statement of Cash Flows

15

Statement of Cash Flows

16

Notes to the Financial Statements

17 to 43

 

Micro Systems (UK) Limited

Company Information

Chairman

Mr G Clark

Chief executive

Mr G Clark

Directors

Mr G Clark

Mrs M Robinson

Registered office

101 Golborne Enterprise Park
Golborne
Warrington
Cheshire
WA3 3GR

Solicitors

Beyond Corporate
3rd Floor
Castlefield House
Liverpool Road
Manchester
M3 4SB

Bankers

National WestminsterBank Plc
4 Standishgate
Wigan
Lancashire
WN1 1UE

Auditors

Prospero Accounting Ltd
Statutory Auditors
Lowry House
17 Marble Street
Manchester
M2 3AW

 

Micro Systems (UK) Limited

Strategic Report for the Year Ended 31 December 2016

The directors present their strategic report for the year ended 31 December 2016.

Principal activity

The principal activity of the company is medical manufacturing and consultancy

Fair review of the business

We aim to present a balanced and comprehensive review of the development and performance of our business during the year and its position at the year end. Our review is consistent with the size and complexity of our business and is written in the context of the risks and uncertainties we face.

We specialise in and the design, manufacture and validation of micro and ultra precision injection moulds for the medical, pharmaceutical and optical markets. We also have a dedicated Branch in Vienna South, Austria, which offers full production capability to manufacture micro medical parts with appropriate quality accreditation, ISO13485. In addition to this, we have a mould manufacturing and testing facility in Singapore which complements our UK manufacturing site utilising duplicate machinery, inspection and software.

The directors are pleased with the group's profitability during the year, although turnover has reduced somewhat during the period. Production efficiency and rectification costs have improved although the reduced turnover shows in the machine utilisation figures due to spare capacity available during the year. We have recently secured projects from new Medical Device customers, and we will work on growing the turnover in a controlled manner so as not to affect overall profitability.

As with most UK manufacturing companies, we are still unsure about the impact following the Brexit vote. We have a significant proportion of skilled EU employees working in key positions, an EU manufacturing facility in Vienna, Austria, and more than 50% of sales are for the export market. We are still monitoring the situation closely, but it appears that there is still a lot of negotiations to be carried out between the UK and EU before the situation is clarified. We are confident that we can retain these EU employees due to their high skill level and salary levels.

The board of directors has chosen a number of financial and non-financial key performance indicators (KPI's) to measure the groups progress. The source of the data is consistent with published financial information in the audited financial statements. The table below sets out these KPI's

The company's key financial and other performance indicators during the year were as follows:

 

Unit

2016

2015

Percentage growth in revenue to measure the growth of the business

%

(30)

21

Return on sales at operating profit level measuring the overall operational efficiency

%

12

11

Gross profit margin as a measure of the profitability of sales

%

40

37

Current Ratio used to measure the company's ability to pay its current liabilities

2

1

Return on capital employed

%

21

31

 

Micro Systems (UK) Limited

Strategic Report for the Year Ended 31 December 2016

Principal risks and uncertainties

There are a number of risks and uncertainties that can impact the performance of the group, some of which are outside the control of the directors. These include the underlying trend of the UK economy and the wider world manufacturing base in the world's developed economies, specifically as an increasing proportion of the group's sales are export based. However, the majority of the group’s customers are international blue chip medical manufacturing companies, operating at the forefront of technology within their particular sector.

The principal risks and uncertainties to the business which the directors can control are as follows:

1. Foreign Exchange Risk

The group sells to customers both in US dollars and the Euro, as well as operating in Austria with the Euro as the currency and in Singapore where the local currency is the Singapore dollar. The group is therefore exposed to the risk of exchange rate losses, through unanticipated fluctuations in the exchange rates of these currencies with sterling. The directors mitigate against this risk by foreign exchange risk hedging in the form of forward buying of the appropriate currency in consultation with its bankers.

2. Adequate Funding

The group operates in a number of different jurisdictions and utilises within its business, expensive computer aided design and plant and machinery for manufacture. It also undertakes a considerable number of projects which are long term in nature, sometimes in excess of a year in duration. It is essential therefore that the group has adequate and appropriate funding in place to finance its working capital and capital expenditure. The directors do this through a combination of retained profits and cash flows in the business, bank borrowing, asset finance and customer deposits, so that they are matched with the expected lives of the expenditure being undertaken.

Approved by the Board on 29 October 2017 and signed on its behalf by:

.........................................
Mr G Clark
Chairman and chief executive

 

Micro Systems (UK) Limited

Directors' Report for the Year Ended 31 December 2016

The directors present their report and the for the year ended 31 December 2016.

Directors of the group

The directors who held office during the year were as follows:

Mr G Clark - Chairman and chief executive

Mrs M Robinson

Financial instruments

Objectives and policies

The directors have considered the exposure of the group to financial risks. The objective of the group is to minimise the potential adverse effects of the risks it faces on the financial performance the group.

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

Price risk - is the risk that the company under charges for the work that it has done. Products and services are priced according to the complexity of the work being undertaken and the number of hours budgeted to complete that job and the materials required. Job specifications and the resulting price are often worked on and agreed on with the client as part of the development of a project and form the basis of a formal agreed price.


Credit risk - is the risk that a customer does not pay for the goods and/or services supplied. The group's policy is that all new customers are subject to credit checks prior to orders being placed. The group also regularly reviews credit limits of existing customers and monitors their payment history. All sales are also subject to a formally agreed and signed sales order process.


Liquidity risk - is the risk that an asset of the group can not be traded quickly enough to prevent a loss and the group will not have sufficient financial resources to meet its liabilities as they fall due. Liquidity is managed by regularly reviewing the group's borrowing facilities to ensure they are adequate in the short term to meet its short term cash flow requirements and in the medium term together with profit retention to enable the group to meet its strategy for growth.


Cash flow risk - is the risk that the group runs out of cash to meet its day to day liabilities. The directors' regularly monitor cash flow projections of the group to ensure it has adequate available funds for its continuing operations. Sales orders are also subject to a deposit to assist financing working capital.

Future developments

The Singapore Manufacturing Operations have now been relocated to a brand new purpose built medical manufacturing hub, approximately 15 minutes drive from the previous facility. This has enabled us to more than double our existing mould manufacturing capacity as stage 1 expansion during 2016. Stage 2, to be completed by end of 2017, will significantly improve our injection moulding operations with additional on site testing and the ability to carry out full production moulding once it is approved to ISO 13485.

Research and development

The company undertakes research and development into advanced manufacturing techniques. The results of this research allow us to demonstrate capability to customers in the areas of ultra precision and micro machining.

Branches outside the United Kingdom

The company has a branch in Brunn am Gebirge, Vienna South, Austria for Production Micro Moulding.

 

Micro Systems (UK) Limited

Directors' Report for the Year Ended 31 December 2016

Disclosure of information to the auditor

Each director has taken steps that they ought to have taken as a director in order to make themselves aware of any relevant audit information and to establish that the company's auditor is aware of that information. The directors confirm that there is no relevant information that they know of and of which they know the auditor is unaware.

Approved by the Board on 29 October 2017 and signed on its behalf by:

.........................................
Mr G Clark
Chairman and chief executive

 

Micro Systems (UK) Limited

Statement of Directors' Responsibilities

The directors acknowledge their responsibilities for preparing the Annual Report 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 apply them consistently;

make judgements and accounting estimates that are reasonable and prudent;

state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements; and

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.

 

Micro Systems (UK) Limited

Independent Auditor's Report to the Members of Micro Systems (UK) Limited

We have audited the financial statements of Micro Systems (UK) Limited for the year ended 31 December 2016, set out on pages 9 to 43. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice).

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.

Respective responsibilities of directors and auditor

As explained more fully in the Statement of Directors' Responsibilities (set out on page 6), the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit and express an opinion on the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board’s (APB’s) Ethical Standards for Auditors to the financial statements, in the circumstances set out in note 30 to the financial statements.

Scope of the audit of the financial statements

An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of: whether the accounting policies are appropriate to the company’s circumstances and have been consistently applied and adequately disclosed; the reasonableness of significant accounting estimates made by the directors; and the overall presentation of the financial statements. In addition, we read all the financial and non-financial information in the Annual Report to identify material inconsistencies with the audited financial statements and to identify any information that is apparently materially incorrect based on, or materially inconsistent with, the knowledge acquired by us in the course of performing the audit. If we become aware of any apparent material misstatements or inconsistencies we consider the implications for our report.

Opinion on the financial statements

In our opinion the financial statements:

give a true and fair view of the state of the group's and the company's affairs as at 31 December 2016 and of the group's profit 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.

Opinion on other matter 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 Directors' Report for the financial year for which the financial statements are prepared is consistent with the financial statements; and

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

In the light of our 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 and the Directors' Report.

 

Micro Systems (UK) Limited

Independent Auditor's Report to the Members of Micro Systems (UK) Limited

Matters on which we are required to report by exception

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 company, or returns adequate for our audit have not been received from branches not visited by us; or

the 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.

......................................
Rennie Graham Evans (Senior Statutory Auditor)
For and on behalf of Prospero Accounting Ltd, Statutory Auditor

Lowry House
17 Marble Street
Manchester
M2 3AW

29 October 2017

 

Micro Systems (UK) Limited

Consolidated Profit and Loss Account for the Year Ended 31 December 2016

Note

Total
31 December
2016
£

(As restated)
Total
31 December
2015
£

Turnover

3

7,677,083

11,034,483

Cost of sales

 

(4,160,212)

(6,619,288)

Gross profit

 

3,516,871

4,415,195

Administrative expenses

 

(2,868,528)

(3,269,124)

Other operating income

4

191,567

143,626

Operating profit

6

839,910

1,289,697

Other interest receivable and similar income

8

9,671

9,612

Interest payable and similar expenses

9

(73,318)

(77,692)

 

(63,647)

(68,080)

Profit before tax

 

776,263

1,221,617

Taxation

13

(101,086)

(206,874)

Profit for the financial year

 

675,177

1,014,743

Profit/(loss) attributable to:

 

Owners of the company

 

676,506

1,012,247

Minority interests

 

(1,329)

2,496

 

675,177

1,014,743

 

Micro Systems (UK) Limited

Consolidated Statement of Comprehensive Income for the Year Ended 31 December 2016

Note

2016
£

(As restated)

2015
£

Profit for the year

 

675,177

1,014,743

Foreign currency translation gains/(losses)

 

33,534

(5,619)

Total comprehensive income for the year

 

708,711

1,009,124

Total comprehensive income attributable to:

 

Owners of the company

 

710,040

1,006,628

Minority interests

 

(1,329)

2,496

 

708,711

1,009,124

 

Micro Systems (UK) Limited

(Registration number: 04584656)
Consolidated Balance Sheet as at 31 December 2016

Note

2016
£

(As restated)

2015
£

Fixed assets

 

Intangible assets

14

2,650

3,094

Tangible assets

15

2,881,458

2,742,695

Investments

16

1

-

 

2,884,109

2,745,789

Current assets

 

Stocks

17

261,031

267,454

Debtors

18

2,604,099

3,738,970

Cash at bank and in hand

 

1,393,802

1,049,109

 

4,258,932

5,055,533

Creditors: Amounts falling due within one year

20

(2,190,086)

(3,941,600)

Net current assets

 

2,068,846

1,113,933

Total assets less current liabilities

 

4,952,955

3,859,722

Creditors: Amounts falling due after more than one year

20

(1,522,311)

(982,958)

Provisions for liabilities

(263,984)

(198,815)

Net assets

 

3,166,660

2,677,949

Capital and reserves

 

Called up share capital

22

100,000

100,000

Profit and loss account

3,063,227

2,573,187

Equity attributable to owners of the company

 

3,163,227

2,673,187

Minority interests

 

3,433

4,762

Total equity

 

3,166,660

2,677,949

Approved and authorised by the Board on 29 October 2017 and signed on its behalf by:

.........................................

Mr G Clark

Chairman and chief executive

 

Micro Systems (UK) Limited

(Registration number: 04584656)
Balance Sheet as at 31 December 2016

Note

2016
£

(As restated)

2015
£

Fixed assets

 

Tangible assets

15

2,129,441

2,439,289

Investments

16

869,157

221,300

 

2,998,598

2,660,589

Current assets

 

Stocks

17

239,324

245,799

Debtors

18

1,785,862

3,593,789

Cash at bank and in hand

 

1,350,192

1,008,942

 

3,375,378

4,848,530

Creditors: Amounts falling due within one year

20

(2,133,655)

(3,717,688)

Net current assets

 

1,241,723

1,130,842

Total assets less current liabilities

 

4,240,321

3,791,431

Creditors: Amounts falling due after more than one year

20

(838,397)

(982,958)

Provisions for liabilities

(263,984)

(198,815)

Net assets

 

3,137,940

2,609,658

Capital and reserves

 

Called up share capital

100,000

100,000

Profit and loss account

3,037,940

2,509,658

Total equity

 

3,137,940

2,609,658

The company made a profit after tax for the financial year of £748,282 (2015 - profit of £888,003).

Approved and authorised by the Board on 29 October 2017 and signed on its behalf by:
 

.........................................

Mr G Clark

Chairman and chief executive

 

Micro Systems (UK) Limited

Consolidated Statement of Changes in Equity for the Year Ended 31 December 2016
Equity attributable to the parent company

Share capital
£

Profit and loss account
£

Total
£

Non- controlling interests
£

Total equity
£

At 1 January 2016

100,000

2,573,187

2,673,187

4,762

2,677,949

Profit/(loss) for the year

-

676,506

676,506

(1,329)

675,177

Other comprehensive income

-

33,534

33,534

-

33,534

Total comprehensive income

-

710,040

710,040

(1,329)

708,711

Dividends

-

(220,000)

(220,000)

-

(220,000)

At 31 December 2016

100,000

3,063,227

3,163,227

3,433

3,166,660

Share capital
£

Profit and loss account
£

Total
£

Non- controlling interests
£

Total equity
£

At 1 January 2015

100,000

1,946,559

2,046,559

2,266

2,048,825

Profit for the year

-

1,012,247

1,012,247

2,496

1,014,743

Other comprehensive income

-

(5,619)

(5,619)

-

(5,619)

Total comprehensive income

-

1,006,628

1,006,628

2,496

1,009,124

Dividends

-

(380,000)

(380,000)

-

(380,000)

At 31 December 2015

100,000

2,573,187

2,673,187

4,762

2,677,949

 

Micro Systems (UK) Limited

Statement of Changes in Equity for the Year Ended 31 December 2016

Share capital
£

Profit and loss account
£

Total
£

At 1 January 2016

100,000

2,509,658

2,609,658

Profit for the year

-

748,282

748,282

Total comprehensive income

-

748,282

748,282

Dividends

-

(220,000)

(220,000)

At 31 December 2016

100,000

3,037,940

3,137,940

Share capital
£

Profit and loss account
£

Total
£

At 1 January 2015

100,000

2,001,655

2,101,655

Profit for the year

-

888,003

888,003

Total comprehensive income

-

888,003

888,003

Dividends

-

(380,000)

(380,000)

At 31 December 2015

100,000

2,509,658

2,609,658

 

Micro Systems (UK) Limited

Consolidated Statement of Cash Flows for the Year Ended 31 December 2016

Note

2016
£

(As restated)

2015
£

Cash flows from operating activities

Profit for the year

 

675,177

1,014,743

Adjustments to cash flows from non-cash items

 

Depreciation and amortisation

6

578,658

614,632

(Profit)/loss on disposal of tangible assets

5

(47,251)

18,415

Finance income

8

(9,671)

(9,612)

Finance costs

9

74,994

74,717

Income tax expense

13

101,086

206,874

 

1,372,993

1,919,769

Working capital adjustments

 

Decrease in stocks

17

6,423

551,751

Decrease/(increase) in trade debtors

18

1,414,870

(2,148,406)

(Decrease)/increase in trade creditors

20

(1,146,125)

1,289,751

Increase in provisions

82,250

-

Cash generated from operations

 

1,730,411

1,612,865

Income taxes paid

13

(147,059)

(150,194)

Net cash flow from operating activities

 

1,583,352

1,462,671

Cash flows from investing activities

 

Interest received

9,671

9,612

Acquisitions of tangible assets

(795,667)

(833,711)

Proceeds from sale of tangible assets

 

129,856

120,979

Advances of loans, classified as investing activities

 

(280,000)

-

Acquisition of investments in joint ventures and associates

16

(1)

-

Net cash flows from investing activities

 

(936,141)

(703,120)

Cash flows from financing activities

 

Interest paid

9

(74,237)

(74,717)

Repayment of bank borrowing

 

(8,333)

(100,000)

Repayment of other borrowing

 

-

(324)

Receipts from finance lease debtors

 

300,000

561,254

Payments to finance lease creditors

 

(328,262)

(680,255)

Dividends paid

(220,000)

(380,000)

Net cash flows from financing activities

 

(330,832)

(674,042)

Net increase in cash and cash equivalents

 

316,379

85,509

Cash and cash equivalents at 1 January

 

1,049,109

969,219

Effect of exchange rate fluctuations on cash held

 

28,314

(5,619)

Cash and cash equivalents at 31 December

 

1,393,802

1,049,109

 

Micro Systems (UK) Limited

Statement of Cash Flows for the Year Ended 31 December 2016

Note

2016
£

(As restated)

2015
£

Cash flows from operating activities

Profit for the year

 

748,282

888,003

Adjustments to cash flows from non-cash items

 

Depreciation and amortisation

6

500,214

590,906

(Profit)/loss on disposal of tangible assets

5

(47,251)

18,415

Finance income

(13,177)

(9,610)

Finance costs

74,237

74,333

Income tax expense

13

101,086

206,874

 

1,363,391

1,768,921

Working capital adjustments

 

Decrease in stocks

17

6,475

537,239

Decrease/(increase) in trade debtors

18

2,087,926

(2,022,174)

(Decrease)/increase in trade creditors

20

(1,665,375)

1,080,119

Increase in provisions

82,250

-

Cash generated from operations

 

1,874,667

1,364,105

Income taxes paid

13

(147,059)

(150,194)

Net cash flow from operating activities

 

1,727,608

1,213,911

Cash flows from investing activities

 

Interest received

13,177

9,610

Acquisition of subsidiaries

16

(647,857)

-

Acquisitions of tangible assets

(272,972)

(580,674)

Proceeds from sale of tangible assets

 

129,856

120,979

Advances of loans, classified as investing activities

 

(280,000)

-

Net cash flows from investing activities

 

(1,057,796)

(450,085)

Cash flows from financing activities

 

Interest paid

(74,237)

(74,333)

Repayment of bank borrowing

 

(8,333)

(100,000)

Proceeds from other borrowing draw downs

 

-

28

Repayment of other borrowing

 

(35)

-

Receipts from finance lease debtors

 

300,000

532,640

Payments to finance lease creditors

 

(325,957)

(676,906)

Dividends paid

(220,000)

(380,000)

Net cash flows from financing activities

 

(328,562)

(698,571)

Net increase in cash and cash equivalents

 

341,250

65,255

Cash and cash equivalents at 1 January

 

1,008,942

943,687

Cash and cash equivalents at 31 December

 

1,350,192

1,008,942

 

Micro Systems (UK) Limited

Notes to the Financial Statements for the Year Ended 31 December 2016

1

General information

The company is a private company limited by share capital incorporated in England and Wales.

The address of its registered office is:
101 Golborne Enterprise Park
Golborne
Warrington
Cheshire
WA3 3GR

These financial statements were authorised for issue by the Board on 29 October 2017.

2

Accounting policies

Summary of significant accounting policies and key accounting estimates

The principal accounting policies applied in the preparation of these financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated.

Statement of compliance

These financial statements were prepared in accordance with Financial Reporting Standard 102 'The Financial Reporting Standard applicable in the UK and Republic of Ireland'.

Basis of preparation

These financial statements have been prepared using the historical cost convention except that as disclosed in the accounting policies certain items are shown at fair value.

GB pounds sterling (£)

Basis of consolidation

The consolidated financial statements consolidate the financial statements of the company and its subsidiary undertakings drawn up to 31 December 2016.

No Profit and Loss Account is presented for the company as permitted by section 408 of the Companies Act 2006. The company made a profit after tax for the financial year of £748,281 (2015 - profit of £888,003).

 

Micro Systems (UK) Limited

Notes to the Financial Statements for the Year Ended 31 December 2016

A subsidiary is an entity controlled by the company. Control is achieved where the company has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities.

The results of subsidiaries acquired or disposed of during the year are included in the Profit and Loss Account from the effective date of acquisition or up to the effective date of disposal, as appropriate. Where necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with those used by the group.

The purchase method of accounting is used to account for business combinations that result in the acquisition of subsidiaries by the group. The cost of a business combination is measured as the fair value of the assets given, equity instruments issued and liabilities incurred or assumed at the date of exchange, plus costs directly attributable to the business combination. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. Any excess of the cost of the business combination over the acquirer’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities recognised is recorded as goodwill.

Inter-company transactions, balances and unrealised gains on transactions between the company and its subsidiaries, which are related parties, are eliminated in full.

Intra-group losses are also eliminated but may indicate an impairment that requires recognition in the consolidated financial statements.

Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the group. Non-controlling interests in the net assets of consolidated subsidiaries are identified separately from the group’s equity therein. Non-controlling interests consist of the amount of those interests at the date of the original business combination and the non-controlling shareholder’s share of changes in equity since the date of the combination.

 

Micro Systems (UK) Limited

Notes to the Financial Statements for the Year Ended 31 December 2016

Judgements

Preparation of the financial statements requires management to make significant judgements, estimates and assumptions that affect the amounts reported for assets and liabilities as at the balance sheet date and the amounts reported for revenues and expenses during the year. However, the nature of estimation means that the actual outcomes could differ from those estimates. The following judgements (apart from those involving estimates) have had the most significant effect on items in the financial statements where these judgements have been made include:

1. The group trades in the US, Carribean, Europe and the Far East and its trade includes the use of foreign currencies, namely the US $, the Euro € and the Singapore $. Management has to make judgements about future exchange rate fluctuations, particulalry in relation to Sterling (£), and whether or not to hedge against fluctuations by buying forward contracts.

2. The calculation of tax liabilities involves uncertainties in the application of complex tax laws. Determining tax provisions therefore requires judgement on the treatment of certain transactions. Deferred tax is recognised on tax losses not yet used and on temporary differences where it is probable that there will be a taxable revenue against which these can be offset. Management has made judgements as to the probability of future taxable revenues being generated against which tax losses will be available for offset.

Key sources of estimation uncertainty

1. The stage of completion of long term contracts and the amounts recoverable on long term contracts. The carrying amount is £153,160 (2015 -£1,245,427).

2. The obsolesence provision for stock of parts for dies, both blank and finished and therefore the net value of stock. The carrying amount is £205,999 (2015 -£100,000).

Revenue recognition

Turnover comprises the fair value of the consideration received or receivable for the sale of goods and provision of services in the ordinary course of the group’s activities. Turnover is shown net of sales/value added tax, returns, rebates and discounts and after eliminating sales within the company.

The group recognises revenue when:
The amount of revenue can be reliably measured;
it is probable that future economic benefits will flow to the entity;
and specific criteria have been met for each of the group's activities.

Contract revenue recognition

For long term contracts, profit is recognised by reference to the stage of completion of each contract where there is reasonable certainty that the contract will be profitable. Where the outcome of the contract cannot be established with reasonable certainty, no profit is recognised. Forseeable lossses are provided for in full at the point which the loss is recognised.

Where amounts invoiced exceed the value of the work done, the excess is accounted for as payments received on account and is included within creditors. Where the value of work done exceeds the amounts invoiced, the excess is accounted for as amounts recoverable on contracts and is included within debtors. Retentions are included within trade debtors.

Where a contract's individual components operate independently of each other, revenue and related costs are recorded as the right to consideration and earned by the performance of the contract's seperable parts. Profits are therefore recognised as they accrue on each seperable component.

Where additional costs are expected to arise on a contract after the balance sheet date these costs are accrued in the current year, and where costs are incurred in advance of the value of the work being recoverable from the customers the costs are included in work in progress,

 

Micro Systems (UK) Limited

Notes to the Financial Statements for the Year Ended 31 December 2016

Government grants

Grants from the government are recognised at their fair value where there is a reasonable assurance that the grant will be received and the group will comply will all the attached conditions.

Government grants relating to costs are deferred and recognised in the profit and loss account over the period necessary to match them with the costs that they are intended to compensate.

Government grants related to property, plant and equipment are included in non-current liabilities as deferred government grants and are credited to the profit and loss account on a straight line basis over the expected lives of the related assets.

Foreign currency transactions and balances

Functional currency and presentation currency
The individual financial statements of each group entity are presented in the currency of the primary economic environment in which the entity operates (its functional currency). For the purpose of the consolidated financial statements, the results and finacial position are presented in Sterling (£)

Company
Transactions in foreign currencies are recorded at the exchange rate ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated at the closing rates at the balance sheet date. All exchange differences are included in the profit and loss account.

Group
The financial statements of overseas subsidiary undertakings are translated from their functional currency to Sterling (£) at the rate ruling on the balance sheet date. Income and expenses are translated using the average rate for the period, unless exchage rates fluctuated significantly during that period, in which case the exchange rates at the date of the transactions are used. The exhange differences arising on the retranslation of opening net assets are taken directly to other comprehensive income and are not reclassified to profit and loss. All other translation differences are taken to the profit and loss account, with the exception of differences on foreign currency borrowings to the extent they are used to finance or provide a hedge against group equity investments in foreign enterprises, which are taken to other comprehensive income together with the exchange difference on the net investment in these enterprises. Tax charges and credits attributable to exchange differences on those borrowings are also taken to other comprehensive income.

Tax

The tax expense for the period comprises current and deferred tax. Tax is recognised in profit or loss, except that a change attributable to an item of income or expense recognised as other comprehensive income is also recognised directly in other comprehensive income.

The current income tax charge is calculated on the basis of tax rates and laws that have been enacted or substantively enacted by the reporting date in the countries where the group operates and generates taxable income.

Deferred income tax is recognised on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements and on unused tax losses or tax credits in the group. Deferred income tax is determined using tax rates and laws that have been enacted or substantively enacted by the reporting date.

The carrying amount of deferred tax assets are reviewed at each reporting date and a valuation allowance is set up against deferred tax assets so that the net carrying amount equals the highest amount that is more likely than not to be recovered based on current or future taxable profit.

Tangible assets

Tangible assets are stated in the statement of financial position at cost, less any subsequent accumulated depreciation and subsequent accumulated impairment losses.

The cost of tangible assets includes directly attributable incremental costs incurred in their acquisition and installation.

 

Micro Systems (UK) Limited

Notes to the Financial Statements for the Year Ended 31 December 2016

Depreciation

Depreciation is charged so as to write off the cost of assets, other than land and properties under construction over their estimated useful lives, as follows:

Asset class

Depreciation method and rate

Fixtures and fittings

25% straight line basis

Leasehold land and buildings

25% straight line basis

Plant and machinery

20% reducing balance basis

Office equipment

33.3% straight line basis

Motor vehicles

25% reducing balance basis

Business combinations

Business combinations are accounted for using the purchase method. The consideration for each acquisition is measured at the aggregate of the fair values at acquisition date of assets given, liabilities incurred or assumed, and equity instruments issued by the group in exchange for control of the acquired, plus any costs directly attributable to the business combination. When a business combination agreement provides for an adjustment to the cost of the combination contingent on future events, the group includes the estimated amount of that adjustment in the cost of the combination at the acquisition date if the adjustment is probable and can be measured reliably.

Goodwill

Goodwill arising on the acquisition of an entity represents the excess of the cost of acquisition over the group’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities of the entity recognised at the date of acquisition. Goodwill is initially recognised as an asset at cost and is subsequently measured at cost less accumulated amortisation and accumulated impairment losses. Goodwill is held in the currency of the acquired entity and revalued to the closing rate at each reporting period date. Goodwill is amortised over its useful life, which shall not exceed ten years if a reliable estimate of the useful life cannot be made.

Amortisation

Amortisation is provided on intangible assets so as to write off the cost, less any estimated residual value, over their useful life as follows:

Asset class

Amortisation method and rate

Goodwill

10% straight line basis

Investments

Investments in equity shares which are publicly traded or where the fair value can be measured reliably are initially measured at fair value, with changes in fair value recognised in profit or loss. Investments in equity shares which are not publicly traded and where fair value cannot be measured reliably are measured at cost less impairment.


Interest income on debt securities, where applicable, is recognised in income using the effective interest method. Dividends on equity securities are recognised in income when receivable.

Cash and cash equivalents

Cash and cash equivalents comprise cash on hand and call deposits, and other short-term highly liquid investments that are readily convertible to a known amount of cash and are subject to an insignificant risk of change in value.

 

Micro Systems (UK) Limited

Notes to the Financial Statements for the Year Ended 31 December 2016

Debtors

Trade debtors are amounts due from customers for merchandise sold or services performed in the ordinary course of business.

Trade debtors are recognised initially at the transaction price. They are subsequently measured at amortised cost using the effective interest method, less provision for impairment. A provision for the impairment of trade debtors is established when there is objective evidence that the group will not be able to collect all amounts due according to the original terms of the receivables.

Inventories

Stocks are stated at the lower of cost and estimated selling price less costs to complete and sell. Cost is determined using the first-in, first-out (FIFO) method.

The cost of finished goods and work in progress comprises direct materials and, where applicable, direct labour costs and those overheads that have been incurred in bringing the inventories to their present location and condition. At each reporting date, stocks are assessed for impairment. If stocks are impaired, the carrying amount is reduced to its selling price less costs to complete and sell; the impairment loss is recognised immediately in profit or loss.

Creditors

Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Accounts payable are classified as current liabilities if the group does not have an unconditional right, at the end of the reporting period, to defer settlement of the creditor for at least twelve months after the reporting date. If there is an unconditional right to defer settlement for at least twelve months after the reporting date, they are presented as non-current liabilities.

Trade creditors are recognised initially at the transaction price and subsequently measured at amortised cost using the effective interest method.

Borrowings

Interest-bearing borrowings are initially recorded at fair value, net of transaction costs. Interest-bearing borrowings are subsequently carried at amortised cost, with the difference between the proceeds, net of transaction costs, and the amount due on redemption being recognised as a charge to the Profit and Loss Account over the period of the relevant borrowing.

Interest expense is recognised on the basis of the effective interest method and is included in interest payable and similar charges.

Borrowings are classified as current liabilities unless the group has an unconditional right to defer settlement of the liability for at least twelve months after the reporting date.

Provisions

The group recognises a provision for annual leave accrued by employees as a result of services rendered in the current period, for which employees are entitled to carry forward and use within the next 12 months. The provision is measured at the salary cost payable plus employers national insurance for the period of absence.

 

Micro Systems (UK) Limited

Notes to the Financial Statements for the Year Ended 31 December 2016

Leases

Leases in which substantially all the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases are charged to profit or loss on a straight-line basis over the period of the lease.

Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee.

Assets held under finance leases are recognised at the lower of their fair value at inception of the lease and the present value of the minimum lease payments. These assets are depreciated on a straight-line basis over the shorter of the useful life of the asset and the lease term. The corresponding liability to the lessor is included in the Balance Sheet as a finance lease obligation.

Lease payments are apportioned between finance costs in the Profit and Loss Account and reduction of the lease obligation so as to achieve a constant periodic rate of interest on the remaining balance of the liability.

Share capital

Ordinary shares are classified as equity. Equity instruments are measured at the fair value of the cash or other resources received or receivable, net of the direct costs of issuing the equity instruments. If payment is deferred and the time value of money is material, the initial measurement is on a present value basis.

Dividends

Dividend distribution to the company’s shareholders is recognised as a liability in the financial statements in the reporting period in which the dividends are declared.

Defined contribution pension obligation

A defined contribution plan is a pension plan under which fixed contributions are paid into a pension fund and the group has no legal or constructive obligation to pay further contributions even if the fund does not hold sufficient assets to pay all employees the benefits relating to employee service in the current and prior periods.

Contributions to defined contribution plans are recognised as employee benefit expense when they are due. If contribution payments exceed the contribution due for service, the excess is recognised as a prepayment.

3

Revenue

The analysis of the group's revenue for the year from continuing operations is as follows:

2016
£

2015
£

Sale of goods

7,677,083

10,958,083

Grants received

-

76,400

7,677,083

11,034,483

4

Other operating income

The analysis of the group's other operating income for the year is as follows:

2016
£

2015
£

Miscellaneous other operating income

191,567

143,626

 

Micro Systems (UK) Limited

Notes to the Financial Statements for the Year Ended 31 December 2016

5

Other gains and losses

The analysis of the group's other gains and losses for the year is as follows:

2016
£

2015
£

Gain (loss) on disposal of property, plant and equipment

47,251

(18,415)

6

Operating profit

Arrived at after charging/(crediting)

2016
£

2015
£

Depreciation expense

578,214

614,188

Amortisation expense

444

444

Operating lease expense - other

34,223

43,019

(Profit)/loss on disposal of property, plant and equipment

(47,251)

18,415

7

Government grants

Grant received as part of a European wide consortium headed up by Phillips Electronics Nederland BV into developing a blood analysis device.
The amount of grants recognised in the financial statements was £Nil (2015 - £76,400).

 

8

Other interest receivable and similar income

2016
£

2015
£

Interest income on bank deposits

71

12

Other finance income

9,600

9,600

9,671

9,612

9

Interest payable and similar expenses

2016
£

2015
£

Interest on bank overdrafts and borrowings

16,288

8,862

Interest on obligations under finance leases and hire purchase contracts

58,706

63,955

Interest expense on other finance liabilities

-

1,900

Foreign exchange (gains) / losses

(1,676)

2,975

73,318

77,692

 

Micro Systems (UK) Limited

Notes to the Financial Statements for the Year Ended 31 December 2016

10

Staff costs

The aggregate payroll costs (including directors' remuneration) were as follows:

2016
£

(As restated)

2015
£

Wages and salaries

2,429,265

3,045,645

Social security costs

280,594

270,405

Pension costs, defined contribution scheme

101,303

67,868

Other employee expense

10,547

8,606

2,821,709

3,392,524

The average number of persons employed by the group (including directors) during the year, analysed by category was as follows:

2016
No.

2015
No.

Production

30

36

Administration and support

17

17

47

53

11

Directors' remuneration

The directors' remuneration for the year was as follows:

2016
£

2015
£

Remuneration

137,680

351,526

Contributions paid to money purchase schemes

12,711

14,058

150,391

365,584

During the year the number of directors who were receiving benefits and share incentives was as follows:

2016
No.

2015
No.

Accruing benefits under money purchase pension scheme

2

2

In respect of the highest paid director:

2016
£

2015
£

Remuneration

49,457

211,813

 

Micro Systems (UK) Limited

Notes to the Financial Statements for the Year Ended 31 December 2016

12

Auditors' remuneration

2016
£

2015
£

Audit of these financial statements

10,400

13,923

Audit of the financial statements of subsidiaries of the company pursuant to legislation

3,488

3,140

13,888

17,063

Other fees to auditors

Taxation compliance services

795

1,273

All other non-audit services

2,944

5,625

3,739

6,898


 

13

Taxation

Tax charged/(credited) in the income statement

2016
£

2015
£

Current taxation

UK corporation tax

133,000

153,968

UK corporation tax adjustment to prior periods

(14,833)

-

118,167

153,968

Deferred taxation

Arising from origination and reversal of timing differences

(3,495)

51,308

Arising from changes in tax rates and laws

(13,586)

1,598

Total deferred taxation

(17,081)

52,906

Tax expense in the income statement

101,086

206,874

 

Micro Systems (UK) Limited

Notes to the Financial Statements for the Year Ended 31 December 2016

The tax on profit before tax for the year is lower than the standard rate of corporation tax in the UK (2015 - lower than the standard rate of corporation tax in the UK) of 20% (2015 - 20%).

The differences are reconciled below:

2016
£

(As restated)

2015
£

Profit before tax

776,263

1,221,617

Corporation tax at standard rate

155,252

244,323

(Decrease)/increase from effect of different UK tax rates on some earnings

(16,166)

55

Effect of expense not deductible in determining taxable profit (tax loss)

(40,344)

(9,779)

Decrease in UK and foreign current tax from adjustment for prior periods

(14,833)

-

Tax increase/(decrease) from effect of capital allowances and depreciation

3,115

(53,570)

Tax increase from other short-term timing differences

380

1,988

Tax increase from effect of unrelieved loss on foreign subsidiaries

13,872

23,857

Other tax effects for reconciliation between accounting profit and tax expense (income)

(190)

-

Total tax charge

101,086

206,874

The main rate of UK corporation tax rate decreased from 20% to 19 % from 1st April 2017.

Deferred tax

Group

Deferred tax assets and liabilities

2016

Asset
£

Accelerated capital allowances

3,115

Other timing differences

380

 

3,495

2015

Asset
£

Liability
£

Accelerated capital allowances

-

203,065

Other timing differences

4,250

-

 

4,250

203,065

 

Micro Systems (UK) Limited

Notes to the Financial Statements for the Year Ended 31 December 2016

Company

Deferred tax assets and liabilities

2016

Asset
£

Accelerated capital allowances

3,115

Other timing differenes

380

 

3,495

2015

Asset
£

Liability
£

Accelerated capital allowances

-

203,065

Other timing differenes

4,250

-

 

4,250

203,065

The main rate of UK corporation tax rate is to be decreased to 17% for Financial Year 2020 taking effect from 1 April 2020 to 31 March 2021.

14

Intangible assets

Group

Goodwill
 £

Total
£

Cost or valuation

At 1 January 2016

4,426

4,426

At 31 December 2016

4,426

4,426

Amortisation

At 1 January 2016

1,332

1,332

Amortisation charge

444

444

At 31 December 2016

1,776

1,776

Carrying amount

At 31 December 2016

2,650

2,650

At 31 December 2015

3,094

3,094

Amortisation of goodwill is included in profit for the year in the comprehensive income statement.

The aggregate amount of research and development expenditure recognised as an expense during the period is £220,000 (2015 - £142,000).
 

 

Micro Systems (UK) Limited

Notes to the Financial Statements for the Year Ended 31 December 2016

15

Tangible assets

Group

Land and buildings
£

Furniture, fittings and equipment
 £

Motor vehicles
 £

Other property, plant and equipment
 £

Total
£

Cost or valuation

At 1 January 2016

593,669

199,896

294,325

5,096,125

6,184,015

Additions

362,137

58,560

34,120

340,850

795,667

Disposals

-

-

-

(348,666)

(348,666)

At 31 December 2016

955,806

258,456

328,445

5,088,309

6,631,016

Depreciation

At 1 January 2016

550,795

170,563

82,992

2,633,054

3,437,404

Charge for the year

13,638

14,135

59,550

490,892

578,215

Eliminated on disposal

-

-

-

(266,061)

(266,061)

At 31 December 2016

564,433

184,698

142,542

2,857,885

3,749,558

Carrying amount

At 31 December 2016

391,373

73,758

185,903

2,230,424

2,881,458

At 31 December 2015

40,958

27,333

211,333

2,463,071

2,742,695

Included within the net book value of land and buildings above is £Nil (2015 - £Nil) in respect of freehold land and buildings, £Nil (2015 - £Nil) in respect of long leasehold land and buildings and £391,373 (2015 - £40,958) in respect of short leasehold land and buildings.
 

 

Micro Systems (UK) Limited

Notes to the Financial Statements for the Year Ended 31 December 2016

Assets held under finance leases and hire purchase contracts

The net carrying amount of tangible assets includes the following amounts in respect of assets held under finance leases and hire purchase contracts:

 

2016
£

2015
£

Plant and machinery

1,260,105

1,573,216

Motor vehicles

180,968

202,249

 

1,441,073

1,775,465

Restriction on title and pledged as security

Tangible fixed assets with a carrying amount of £2,093,852 (2015 - £2,396,415) has been pledged as security for the company's bank loan and overdraft facilities with National Westminster Bank..

 

Micro Systems (UK) Limited

Notes to the Financial Statements for the Year Ended 31 December 2016

Company

Land and buildings
£

Furniture, fittings and equipment
 £

Motor vehicles
 £

Other property, plant and equipment
 £

Total
£

Cost or valuation

At 1 January 2016

499,449

181,086

224,751

4,700,672

5,605,958

Additions

-

18,467

34,120

220,385

272,972

Disposals

-

-

-

(348,666)

(348,666)

At 31 December 2016

499,449

199,553

258,871

4,572,391

5,530,264

Depreciation

At 1 January 2016

456,575

154,825

74,890

2,480,379

3,166,669

Charge for the year

10,620

10,603

45,109

433,883

500,215

Eliminated on disposal

-

-

-

(266,061)

(266,061)

At 31 December 2016

467,195

165,428

119,999

2,648,201

3,400,823

Carrying amount

At 31 December 2016

32,254

34,125

138,872

1,924,190

2,129,441

At 31 December 2015

42,874

26,261

149,861

2,220,293

2,439,289

Included within the net book value of land and buildings above is £Nil (2015 - £Nil) in respect of long leasehold land and buildings and £32,255 (2015 - £42,874) in respect of short leasehold land and buildings.
 

 

Micro Systems (UK) Limited

Notes to the Financial Statements for the Year Ended 31 December 2016

Assets held under finance leases and hire purchase contracts

The net carrying amount of tangible assets includes the following amounts in respect of assets held under finance leases and hire purchase contracts:

 

2016
£

2015
£

Plant and machinery

1,260,105

1,573,216

Motor vehicles

123,204

140,792

 

1,383,309

1,714,008

Restriction on title and pledged as security

Tangible fixed assets with a carrying amount of £2,093,852 (2015 - £2,396,415) has been pledged as security for the company's loan and bank overdraft facilities with National Westminster Bank..

16

Investments

Group

Details of undertakings

Details of the investments (including principal place of business of unincorporated entities) in which the group holds 20% or more of the nominal value of any class of share capital are as follows:

Undertaking

Registered office

Holding

Proportion of voting rights and shares held

     

2016

2015

Subsidiary undertakings

Micro Systems Engineering Solutions Pte Ltd*

2 Tukang Innovation Grove
#05-02 JTC MedTech HUB
618305

Ordinary

98%

98%

 

Singapore

     

Associates

Micro Optika Systems Pte Ltd

29 Buroh Street
JTC Sapce One @ Buroh Street
Singapore 627559

Ordinary

50%

0%

 

Singapore

     

* indicates direct investment of the company

 

Micro Systems (UK) Limited

Notes to the Financial Statements for the Year Ended 31 December 2016

Subsidiary undertakings

The principal activity of Micro Systems Engineering Solutions Pte Ltd is design, manufacture and validation of ultra precision injection moulds for the medical, pharmaceutical and optical markets.

Associate undertakings

The principal activity of Micro Optika Systems Pte Ltd is Trading and maufacture of polymer optics Its financial period end is 31 May..
 

 

Company

2016
£

2015
£

Investments in subsidiaries

869,157

221,300

Subsidiaries

£

Cost or valuation

At 1 January 2016

221,300

Additions

647,857

At 31 December 2016

869,157

Provision

Carrying amount

At 31 December 2016

869,157

At 31 December 2015

221,300

Details of undertakings

Details of the investments (including principal place of business of unincorporated entities) in which the company holds 20% or more of the nominal value of any class of share capital are as follows:

Undertaking

Registered office

Holding

Proportion of voting rights and shares held

     

2016

2015

Subsidiary undertakings

Micro Systems Engineering Solutions Pte Ltd

2 Tukang Innovation Grove
#05-02 JTC MedTech HUB
618305

Ordinary

98%

98%

 

Singapore

     

The principal activity of Micro Systems Engineering Solutions Pte Ltd is design, manufacture and validation of ultra precision injection moulds for the medical, pharmaceutical and optical markets.

 

Micro Systems (UK) Limited

Notes to the Financial Statements for the Year Ended 31 December 2016

17

Stocks

 

Group

Company

2016
£

2015
£

2016
£

2015
£

Work in progress

82,991

167,454

61,284

145,799

Other inventories

178,040

100,000

178,040

100,000

261,031

267,454

239,324

245,799

Group

The cost of stocks recognised as an expense in the year amounted to £1,095,122 (2015 - £2,084,812).

Impairment of inventories

The amount of impairment loss included in profit or loss is £205,999 (2015 - £348,492). The amount of impairment loss included in other comprehensive income is £Nil (2015 - £Nil). The amount of reversal of impairment recognised in profit or loss is £Nil (2015 - £Nil). The amount of reversal of impairment recognised in other comprehensive income is £Nil (2015 - £Nil).

The carrying amount of stocks pledged as security for liabilities amounted to £178,040 (2015 - £100,000).

Company

The cost of stocks recognised as an expense in the year amounted to £1,074,338 (2015 - £2,068,397).

Impairment of inventories

The amount of impairment loss included in profit or loss is £205,999 (2015 - £348,492). The amount of impairment loss included in other comprehensive income is £Nil (2015 - £Nil). The amount of reversal of impairment recognised in profit or loss is £Nil (2015 - £Nil). The amount of reversal of impairment recognised in other comprehensive income is £Nil (2015 - £Nil).

The carrying amount of stocks pledged as security for liabilities amounted to £178,040 (2015 - £100,000).

18

Debtors

   

Group

Company

Note

2016
£

2015
£

2016
£

2015
£

Trade debtors

 

1,080,629

2,121,538

1,077,324

2,120,905

Amounts owed by related parties

28

1,083,914

120,000

400,000

120,000

Other debtors

 

118,372

66,279

88,358

50,596

Prepayments

 

96,875

71,898

64,945

56,861

Accrued income

 

71,149

113,828

2,075

-

Gross amount due from customers for contract work

 

153,160

1,245,427

153,160

1,245,427

   

2,604,099

3,738,970

1,785,862

3,593,789

Less non-current portion

 

(400,000)

(120,000)

(1,064,857)

(120,000)

Total current trade and other debtors

 

2,204,099

3,618,970

721,005

3,473,789

 

Micro Systems (UK) Limited

Notes to the Financial Statements for the Year Ended 31 December 2016

Details of non-current trade and other debtors

Group

£400,000 (2015 - £120,000) of Loan to Optimold Ltd is classified as non current. The loan is subject to a capital holiday in the first year which is 2017 with interest payable at 8% and then repayable at £8,333 per month over years 2 to 5 plus interest at 5%.

Company

£400,000 (2015 - £120,000) of Loan to Optimold Ltd is classified as non current. The loan is subject to a capital holiday in the first year which is 2017 with interest payable at 8% and then repayable at £8,333 per month over years 2 to 5 plus interest at 5%.

The loan is unsecured.

£664,857 (2015 - £Nil) of Loan to Micro Systems Engineering Solutions Pte Ltd is classified as non current. The loan is subject to a capital holiday in the first year which is 2017 with interest payable at 8% and then repayable at £13,851 per month over years 2 to 5 plus interest at 5%.

The loan is unsecured.

19

Cash and cash equivalents

 

Group

Company

2016
£

2015
£

2016
£

2015
£

Cash on hand

27

24

-

-

Cash at bank

1,393,775

1,049,085

1,350,192

1,008,942

1,393,802

1,049,109

1,350,192

1,008,942

20

Creditors

   

Group

Company

Note

2016
£

2015
£

2016
£

2015
£

Due within one year

 

Loans and borrowings

24

585,037

467,599

552,557

442,323

Trade creditors

 

478,119

1,170,119

430,267

981,223

Amounts due to related parties

28

-

-

115,037

30,696

Social security and other taxes

 

64,218

65,405

59,057

65,405

Outstanding defined contribution pension costs

 

4,007

3,713

4,007

3,713

Other payables

 

13,144

51,049

-

43,600

Accrued expenses

 

752,848

842,334

703,647

809,347

Income tax liability

13

125,076

153,968

125,076

153,968

Gross amount due to customers for contract work

 

167,637

1,187,413

144,007

1,187,413

 

2,190,086

3,941,600

2,133,655

3,717,688

Due after one year

 

Loans and borrowings

24

838,397

982,958

838,397

982,958

Other non-current financial liabilities

 

683,914

-

-

-

 

1,522,311

982,958

838,397

982,958

 

Micro Systems (UK) Limited

Notes to the Financial Statements for the Year Ended 31 December 2016

21

Pension and other schemes

Defined contribution pension scheme

The group operates a defined contribution pension scheme. The pension cost charge for the year represents contributions payable by the group to the scheme and amounted to £101,303 (2015 - £67,868).

Contributions totalling £4,007 (2015 - £3,713) were payable to the scheme at the end of the year and are included in creditors.

22

Share capital

Allotted, called up and fully paid shares

 

2016

2015

 

No.

£

No.

£

Ordinary shares of £1 each

100,000

100,000

100,000

100,000

         

Rights, preferences and restrictions

Ordinary have the following rights, preferences and restrictions:
All ordinary shares rank pari passu in relation to voting rights, rights to dividends and capital on the winding up of the company.

23

Minority interests

The minority interests relate to:

Micro Systems Engineering Solutions Pte Ltd of which 2% (2015 - 2%) of the voting rights are held outside of the group.
 

24

Loans and borrowings

 

Group

Company

2016
£

2015
£

2016
£

2015
£

Non-current loans and borrowings

Finance lease liabilities

838,397

982,958

838,397

982,958

 

Group

Company

2016
£

2015
£

2016
£

2015
£

Current loans and borrowings

Bank borrowings

-

8,333

-

8,333

Finance lease liabilities

575,286

458,987

552,315

433,711

Other borrowings

9,751

279

242

279

585,037

467,599

552,557

442,323

 

Micro Systems (UK) Limited

Notes to the Financial Statements for the Year Ended 31 December 2016

Group

Bank borrowings

EFG Loan is denominated in Sterling with a nominal interest rate of 3.75%, and the final instalment is due on 28 January 2016. The carrying amount at year end is £Nil (2015 - £8,333).

The EFG loan is secured by a debenture from National Westminster Bank dated 16th November 2010 over the undertaking all property and assets, present and future, including goodwill, uncalled capital, buildings, fixtures, fixed plant and machinery.
Monthly repayments at £8,333 completed in January 2016.

Other borrowings

Hire Purchase & Finance Lease Creditors with a carrying amount of £1,413,685 (2015 - £1,441,994) is denominated in Sterling and one in Singapore $ with a nominal interest rate of various. The final instalment is due on 4 June 2020.

The hire purchase contracts and finance leases are secured on the assets being financed.
Monthly repayments of varying amounts covering 17 separate agreements.

Company

Bank borrowings

EFG Loan is denominated in Sterling with a nominal interest rate of 3.75%, and the final instalment is due on 28 January 2016. The carrying amount at year end is £Nil (2015 - £8,333).

The EFG loan is secured by a debenture from National Westminster Bank dated 16 November 2010 over the undertaking all property and assets, including goodwill, uncalled capital, buildings, fixtures, plant and machinery.
Monthly repayments of £8,333 completed in January 2016.

Other borrowings

Hire Purchase and Finance Lease Creditors with a carrying amount of £1,390,712 (2015 - £1,416,669) is denominated in Sterling with a nominal interest rate of various. The final instalment is due on 4 June 2020.

The hire purchase contracts and finance leases are secured on the assets being financed.
Monthly repayments of varying amounts covering 16 separate agreements.

25

Obligations under leases and hire purchase contracts

Group

Finance leases

The total of future minimum lease payments is as follows:

2016
£

2015
£

Not later than one year

559,039

439,434

Later than one year and not later than five years

854,646

1,002,510

1,413,685

1,441,944

 

Micro Systems (UK) Limited

Notes to the Financial Statements for the Year Ended 31 December 2016

Operating leases

The total of future minimum lease payments is as follows:

2016
£

2015
£

Not later than one year

251,055

119,092

Later than one year and not later than five years

248,032

381,343

499,087

500,435

The amount of non-cancellable operating lease payments recognised as an expense during the year was £220,930 (2015 - £195,955).

Company

Finance leases

The total of future minimum lease payments is as follows:

2016
£

2015
£

Not later than one year

552,315

433,711

Later than one year and not later than five years

838,397

982,957

1,390,712

1,416,668

Operating leases

The total of future minimum lease payments is as follows:

2016
£

2015
£

Not later than one year

171,900

52,598

Later than one year and not later than five years

38,548

241,628

210,448

294,226

The amount of non-cancellable operating lease payments recognised as an expense during the year was £147,058 (2015 - £141,891).

26

Dividends

 

2016

2015

 

£

£

Interim dividend of £2.20 (2015 - £3.80) per ordinary share

220,000

380,000

The directors are proposing a final dividend of £Nil (2015 - £Nil) per share totalling £Nil (2015 - £Nil). This dividend has not been accrued in the Balance Sheet.

 

Micro Systems (UK) Limited

Notes to the Financial Statements for the Year Ended 31 December 2016

27

Commitments

Group

Capital commitments

The total amount contracted for but not provided in the financial statements was £Nil (2015 - £Nil).

Company

Capital commitments

The total amount contracted for but not provided in the financial statements was £Nil (2015 - £Nil).

28

Related party transactions

Group

Summary of transactions with entities with joint control or significant interest

Optimold Ltd - a company in which Mr G Clark, the chief executive and director of Mirco Systems (UK) Ltd, is also a director and owns 40% of the ordinary share capital.
 Sales and purchase of goods and services and sharing of overheads and some staff in jointly occupied premises.

Optimold Ltd has a loan from Micro Systems (UK) Ltd as detailed in note 8 to the financial statements. A further £280,000 was advanced during this accounting period.


 Normal trade terms of 30 days from end of the month of the date of the invoice. Micro Systems (UK) Ltd has assisted Optimold Ltd by extending its credit terms as Optimold Ltd's cash flow has required.
 

Summary of transactions with subsidiaries

Micro Systems Engineering Solutions Pte Ltd
 Inter company purchases by Micro Systems (UK) Ltd from Micro Systems Engineering Solutions Pte Ltd.
 Payment 30 days from month end of the date of the invoice.
 

Income and receivables from related parties

2016

Entities with joint control or significant influence
£

Sale of goods

377,860

Amounts receivable from related party

220,155

2015

Entities with joint control or significant influence
£

Sale of goods

473,401

Amounts receivable from related party

393,604

 

Micro Systems (UK) Limited

Notes to the Financial Statements for the Year Ended 31 December 2016

Expenditure with and payables to related parties

2016

Entities with joint control or significant influence
£

Subsidiary
£

Purchase of goods

1,083,206

481,040

Rendering of services

-

3,240

Transfers of research and development

-

166,525

Transfers under finance arrangements (including loans and equity contributions)

-

647,857

1,083,206

1,298,662

Amounts payable to related party

56,362

107,710

2015

Entities with joint control or significant influence
£

Subsidiary
£

Purchase of goods

917,432

488,970

Rendering of services

-

23,545

Transfers of research and development

-

90,000

Settlement of liabilities

-

34,744

917,432

637,259

Amounts payable to related party

92,895

23,369

Loans to related parties

2016

Entities with joint control or significant influence
£

Subsidiary
£

At start of period

120,000

-

Advanced

280,000

647,857

Interest transactions

-

3,577

At end of period

400,000

651,434

2015

Entities with joint control or significant influence
£

At start of period

120,000

 

Micro Systems (UK) Limited

Notes to the Financial Statements for the Year Ended 31 December 2016

Terms of loans to related parties

The loan to the related party Optimold Ltd is subject to a capital holiday in the first year from January 2017 to December 2017 with interest payable at 8%. The loan is then repayable in equal instalments per calendar month over years 2 to 5, plus interest at 5% per calendar month.

The loan is unsecured.

 The loan to the subsidiary company Micro Systems Egineering Solutions Pte Ltd is denominated in Singapore $. The loan subject to a capital holiday in the first year from December 2016 to November 2017 with interest payable at 8%. The loan is then repayable in equal instalments per calendar month over years 2 to 5, plus interest at 5% per calendar month.

The loan is unsecured.

 

Company

Summary of transactions with entities with joint control or significant interest

Optimold Ltd - a company in which Mr G Clark, the chief executive and director of Micro Systems (UK) Ltd, is also a director and owns 40% of the ordinary share capital.
 Sales and purchase of goods and services and sharing of overheads and some staff in jointly occupied premises.

Optimold Ltd has a loan from Micro Systems (UK) Ltd as detailed in note 8 to the financial statements. A further £280,000 was advanced during this accounting period.


 Normal trade terms of 30 days from end of month of the date of the invoice. Micro Systems (UK) Ltd has assisted Optimold Ltd in its financing by extending its credit terms as Optimold Ltd's cash flow has required.
 

Summary of transactions with subsidiaries

Micro Systems Engineering Solutions Pte Ltd
 Inter company purchases by Micro Systems (UK) Ltd from Micro Systems Engineering Solutions Pte Ltd
 Payment 30 days from month end of invoice.
 

Income and receivables from related parties

2016

Entities with joint control or significant influence
£

Sale of goods

377,860

Amounts receivable from related party

220,155

2015

Entities with joint control or significant influence
£

Sale of goods

473,401

Amounts receivable from related party

393,604

 

Micro Systems (UK) Limited

Notes to the Financial Statements for the Year Ended 31 December 2016

Expenditure with and payables to related parties

2016

Entities with joint control or significant influence
£

Subsidiary
£

Purchase of goods

1,083,206

481,040

Rendering of services

-

3,240

Transfers of research and development

-

166,525

Transfers under finance arrangements (including loans and equity contributions)

-

647,857

1,083,206

1,298,662

Amounts payable to related party

56,362

107,710

2015

Entities with joint control or significant influence
£

Subsidiary
£

Purchase of goods

917,432

488,970

Rendering of services

-

23,545

Transfers of research and development

-

90,000

Settlement of liabilities

-

34,744

917,432

637,259

Amounts payable to related party

92,895

23,369

Loans to related parties

2016

Entities with joint control or significant influence
£

Subsidiary
£

At start of period

120,000

-

Advanced

280,000

647,857

Interest transactions

-

3,577

At end of period

400,000

651,434

2015

Entities with joint control or significant influence
£

At start of period

120,000

 

Micro Systems (UK) Limited

Notes to the Financial Statements for the Year Ended 31 December 2016

Terms of loans to related parties

The loan to the related party Optimold Ltd is subject to a capital holiday in the first year from January 2017 to December 2017 with interest payable at 8%. The loan is then repayable in equal instalments per calendar month over years 2 to 5, plus interest at 5% per calendar month.

The loan is unsecured.

 The loan to the subsidiary company Micro Systems Egineering Solutions Pte Ltd is denominated in Singapore $. The loan subject to a capital holiday in the first year from December 2016 to November 2017 with interest payable at 8%. The loan is then repayable in equal instalments per calendar month over years 2 to 5, plus interest at 5% per calendar month.

The loan is unsecured.

 

29

Financial instruments

Group

Categorisation of financial instruments

2016
£

2015
£

Financial liabilities measured at amortised cost

1,413,683

1,450,278

1,413,683

1,450,278

Financial assets pledged as collateral

The carrying amount of the financial assets pledged as collateral is £Nil (2015 - £Nil).

Company

Categorisation of financial instruments

2016
£

2015
£

Financial liabilities measured at amortised cost

1,390,954

1,425,002

1,390,954

1,425,002

The total amount of impairment loss during the year is £- (2015 - £-)

Financial instruments at fair value through profit or loss that are not held as part of a trading portfolio and not derivatives

The amount of change during the period in the fair value of the financial instrument that is attributable to changes in the credit risk of that instrument is £Nil (2015 - £Nil).
The amount of change cumulatively in the fair value of the financial instrument that is attributable to changes in the credit risk of that instrument is £Nil (2015 - £Nil).

30

APB Ethical Standards relevant circumstances

In common with many other businesses of our size and nature, we use our auditors to prepare and submit payroll returns to the tax authorities and assist with the preparation of forms P11D and the year end financial statements.