REGISTERED NUMBER: 03954360 (England and Wales)

Strategic Report, Report of the Directors and

Financial Statements

for the Year Ended 31st December 2016

for

Mec Com Limited

Page

Company Information

1

Strategic Report

2

Report of the Directors

5

Report of the Independent Auditors

7

Statement of Comprehensive Income

10

Statement of Financial Position

11

Statement of Changes in Equity

12

Statement of Cash Flows

13

Notes to the Statement of Cash Flows

14

Notes to the Financial Statements

15

DIRECTORS:

Mr R J Bunce

Mr N J Lathe

SECRETARY:

Mr N J Lathe

REGISTERED OFFICE:

Units 15A-C

Airfield Industrial Estate

Hixon

Staffordshire

ST18 0PF

REGISTERED NUMBER:

03954360 (England and Wales)

AUDITORS:

Rice & Co Limited

Chartered Accountants

Statutory Auditors

14a Market Place

Uttoxeter

Staffordshire

ST14 8HP

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

REVIEW OF BUSINESS

The company managed to continue a trend of very positive trading results and benefited from a further rise

in Sales growth achieving an increase in Turnover of 12%. P.B.I.T. (Profit before Interest and Taxation) as a

result increased from 5.3% the previous year to 7.8% for 2016.

Following the strategy of recent years, during 2016 the company continued with the development of its

global supply chain and in particular the on-going development and expansion of work generated from its

associated entity - European Fabrications S.R.L. based in Cluj-Napoca, Romania. This facility continued to

provide Mec Com with the advantages of a low cost manufacturing base in Eastern Europe.

This continued expansion saw a further increase of over 10% (£3.9m to £4.3m) in the value of products

manufactured in Romania by European Fabrications and other suppliers.

During the year the business won additional significant orders from existing customers in the Power &

Distribution sector for the full product assembly and test of Electro-mechanical components resulting in the

sizable increase in Turnover and numbers employed at its Hixon facility.

Review of 2016 Results:

Turnover in the year was £13,630,310, an increase of 12% from the £12,165,381 achieved in the previous

year.

Raw Materials and Consumables costs increased by £512,428 from 2015 to £7,818,138 and represented

57.4% of Sales, a decrease from the previous year of 2.7%.

Staff Costs (Payroll) increased by 24% to £3,300,051 and represented 24.2% of Sales, an increase of 2.3%

from 2015.

The average number of employees increased by 29 to stand at 150 employees during the year.

Profit before Taxation on continuing trade activities increased by £434,361 to £1,016,895 from the

previous year (2015 - £582,534).

KEY PERFORMANCE INDICATORS

The board of directors recognise Key Performance Indicators as an integral part of monitoring the progress

of the business.

Performance indicators are identified in the Annual Business Plan and appropriate targets set.

It is the responsibility of the management team to regularly monitor and review these figures and report the

results and any corrective actions to the board.

The key performance indicators used to monitor the financial performance of the company include, profit

before interest and taxation (P.B.I.T.) as a % of sales which closed the year on 7.7% up from 5.3% from the

previous year.

Sales per employee decreased from £101,000 to £91,000, whilst Net Profit before taxation per employee

increased from £4,800 to stand at £6,800 during 2016.

Other Balance Sheet indicators showed the following movements :

Inventory days decreased by 9 days from 109 days at the end of 2015 to close on 100 days, Trade

receivables/debtor days increased by 4 days to close on 66 days during the year with Trade payables/average

creditor days decreasing from 67 days average to also close on 66 days average by the end of the year.

PRINCIPAL RISKS AND UNCERTAINTIES

Commercial Relationships

The Company benefits from close commercial relationships with a number of key customers and suppliers.

The loss of any of these key customers or suppliers, or a significant worsening in commercial terms could

have a material impact on results.

The Company devotes significant resources to supporting these relationships to ensure they continue to

operate satisfactorily. Wherever practical, the Company endeavours to maintain more than one source of a

particular supply.

Competitors

The Company faces fierce competition from low cost countries namely China, India and from those located

in Eastern Europe.

The Company continually works to streamline its cost base to ensure it remains competitive. Part of this

ongoing initiative is the expansion of a global supply chain involving the procurement of high volume parts

from China as well as medium to high volume products from facilities in Romania.

Maintaining High Quality

As the Company primarily supplies products into the protection and control systems of major electrical

distribution networks maintaining a high quality standards are essential. Failure to comply with the

necessary standards could significantly damage the Company's reputation and performance.

The Company has established policies and operating procedures which are periodically subject to both

internal and external audit. The Company is accredited under ISO 9001 and ISO 14001 Environmental

standard.

Health and Safety

A significant number of the Company's employees work in a manufacturing environment in close proximity

to machinery. In addition to the possible injury to individuals, serious accidents could result in prosecution

and fines and damage the reputation and performance of the Company.

The Company works to identify and minimise all Health and Safety risks in order to provide a safe and

healthy workplace for employees and visitors. Risk assessments and workplace training is undertaken in all

areas of the business.

Energy and Raw Materials

The Company's products contain a number of raw materials and its operations require significant levels of

energy; notably gas and electricity. Any increases or volatility in prices or any prolonged interruption in

supply could have a material impact on the Company's results.

The Company regularly undertakes purchasing reviews and uses forward buying or other contractual means

where appropriate to manage the risks.

Other Risks

Other external risks include global, political and economic conditions, foreign exchange, interest rates, credit

risk and business continuity.

The company seeks to mitigate exposure to all forms of risk, where practicable, and to transfer risk to

insurers, where cost effective.

FINANCIAL INSTRUMENTS

The directors are constantly reviewing the objectives of the business operations to identify areas where it is

able to reduce financial risk without hindrance to on site operations.

Credit

To counteract the risk of bad debts the business has increased the use of credit checking facilities to assess

the risk to the company of contracting with each customer.

The Company also insures its debtor book against any potential bad debts.

Liquidity

The business has a very strong relationship with its banking team. The company has the facilities to meet its

needs on an ongoing basis, namely using an invoice discounting facility to factor its debtor book.

Hedging Forecast Transactions

A proportion of the Company's sales are denominated in currencies other than Sterling (Euros) which are

only partially matched by expenses denominated in those currencies. A significant weakening of these

currencies against sterling could materially impact the Company's performance.

The Company sets internal exchange rates for determining pricing and enters into forward contracts based on

forecast transactions to achieve or better these rates.

Cash flow

Cash flow forecasts are prepared weekly and any facilities reviewed to cover any foreseeable funding

requirements with an allowance for unforeseen events.

FUTURE DEVELOPMENTS

The company is expecting to see a further rise in demand for new products over the next 12 months, not only

from customers in its traditional core market of Power & Distribution, but from other markets including

Food Processing, Machine Tool, Medical and other General Fabrication work.

It is also anticipated to continue the trend of complementing sub contract component manufacture with a

higher degree of Vertical Integration including full product assembly and test over the forthcoming years,

and the business is expecting to see a continuation of significant growth in this area.

ON BEHALF OF THE BOARD:

Mr N J Lathe - Director

22nd May 2017

The directors present their report with the financial statements of the company for the year ended 31st December 2016.

DIVIDENDS

The total distribution of dividends for the year ended 31st December 2016 will be £ 236,564 .

DIRECTORS

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

of this report.

Mr R J Bunce

Mr N J Lathe

DISCLOSURE IN THE STRATEGIC REPORT

Information regarding financial instruments and future developments is contained within the strategic report

included in these financial statements.

STATEMENT OF DIRECTORS' RESPONSIBILITIES

The directors are responsible for preparing the Strategic Report, the Report of the Directors and the financial

statements in accordance with applicable law and regulations.

Company law requires the directors to prepare financial statements for each financial year. Under that law

the directors have elected to prepare the financial statements in accordance with United Kingdom Generally

Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law), including

Financial Reporting Standard 102 'The Financial Reporting Standard applicable in the UK and Republic of

Ireland'. Under company law the directors must not approve the financial statements unless they are satisfied

that they give a true and fair view of the state of affairs of the company and of the profit or loss of the

company for that period. In preparing these financial statements, the directors are required to:

-	select suitable accounting policies and then apply them consistently;

-	make judgements and accounting estimates that are reasonable and prudent;

-	prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.

The directors are responsible for keeping adequate accounting records that are sufficient to show and explain

the company's transactions and disclose with reasonable accuracy at any time the financial position of the

company and enable them to ensure that the financial statements comply with the Companies Act 2006.

They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps

for the prevention and detection of fraud and other irregularities.

STATEMENT AS TO DISCLOSURE OF INFORMATION TO AUDITORS

So far as the directors are aware, there is no relevant audit information (as defined by Section 418 of the

Companies Act 2006) of which the company's auditors are unaware, and each director has taken all the steps

that he ought to have taken as a director in order to make himself aware of any relevant audit information

and to establish that the company's auditors are aware of that information.

AUDITORS

The auditors, Rice & Co Limited, will be proposed for re-appointment at the forthcoming Annual General

Meeting.

ON BEHALF OF THE BOARD:

Mr N J Lathe - Director

22nd May 2017

Opinion

We have audited the financial statements of Mec Com Limited (the 'company') for the year ended

31st December 2016 on pages ten to twenty six. The financial reporting framework that has been applied in

their preparation is applicable law and United Kingdom Accounting Standards, including Financial

Reporting Standard 102 'The Financial Reporting Standard applicable in the UK and Republic of Ireland'

(United Kingdom Generally Accepted Accounting Practice).

This report is made solely to the company's members, as a body, in accordance with Chapter 3 of Part 16 of

the Companies Act 2006. Our audit work has been undertaken so that we might state to the company's

members those matters we are required to state to them in a Report of the Auditors and for no other purpose.

To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the

company and the company's members as a body, for our audit work, for this report, or for the opinions we

have formed.

In our opinion the financial statements:

-	give a true and fair view of the state of the company's affairs as at 31st December 2016 and of its 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.

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and

applicable law. Our responsibilities under those standards are further described in the Auditors'

responsibilities for the audit of the financial statements section of our report. We are independent of the

company in accordance with the ethical requirements that are relevant to our audit of the financial statements

in the UK, including the FRC's Ethical Standard, and we have fulfilled our other ethical responsibilities in

accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and

appropriate to provide a basis for our opinion.

Conclusions relating to going concern

We have nothing to report in respect of the following matters in relation to which the ISAs (UK) require us

to report to you where:

-	the directors' use of the going concern basis of accounting in the preparation of the financial statements is not appropriate; or

-

the directors have not disclosed in the financial statements any identified material uncertainties that may cast significant doubt about the company's ability to continue to adopt the going concern basis of accounting for a period of at least twelve months from the date when the financial statements are authorised for issue.

Other information

The directors are responsible for the other information. The other information comprises the information in

the Strategic Report and the Report of the Directors, but does not include the financial statements and our

Report of the Auditors thereon.

Our opinion on the financial statements does not cover the other information and we do not express any form

of assurance conclusion thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information

and, in doing so, consider whether the other information is materially inconsistent with the financial

statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based

on the work we have performed, we conclude that there is a material misstatement of this other information,

we are required to report that fact. We have nothing to report in this regard.

Opinion on other matters prescribed by the Companies Act 2006

In our opinion, based on the work undertaken in the course of the audit:

-	the information given in the Strategic Report and the Report of the Directors for the financial year for which the financial statements are prepared is consistent with the financial statements; and

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

Matters on which we are required to report by exception

In the light of the knowledge and understanding of the company and its environment obtained the course of

the audit, we have not identified material misstatements in the Strategic Report or the Report of the

Directors.

We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to

report to you if, in our opinion:

-	adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or

-	the financial statements are not in agreement with the accounting records and returns; or

-	certain disclosures of directors' remuneration specified by law are not made; or

-	we have not received all the information and explanations we require for our audit.

Responsibilities of directors

As explained more fully in the Statement of Directors' Responsibilities set out on page five, the directors are

responsible for the preparation of the financial statements and for being satisfied that they give a true and

fair view, and for such internal control as the directors determine necessary to enable the preparation of

financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the directors are responsible for assessing the company's ability to

continue as a going concern, disclosing, as applicable, matters related to going concern and using the going

concern basis of accounting unless the directors either intend to liquidate the company or to cease

operations, or have no realistic alternative but to do so.

Our responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free

from material misstatement, whether due to fraud or error, and to issue a Report of the Auditors that includes

our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit

conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists.

Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate,

they could reasonably be expected to influence the economic decisions of users taken on the basis of these

financial statements.

A further description of our responsibilities for the audit of the financial statements is located on the

Financial Reporting Council's website at www.frc.org.uk/auditorsresponsibilities. This description forms

part of our Report of the Auditors.

Steven Dale FCA (Senior Statutory Auditor)

for and on behalf of Rice & Co Limited

Chartered Accountants

Statutory Auditors

14a Market Place

Uttoxeter

Staffordshire

ST14 8HP

22nd May 2017

TURNOVER

4

13,630,310

12,165,381

Cost of sales

10,279,595

9,240,599

GROSS PROFIT

3,350,715

2,924,782

Distribution costs

371,329

444,670

Administrative expenses

2,060,177

1,865,292

2,431,506

2,309,962

919,209

614,820

Other operating income

147,097

28,395

OPERATING PROFIT

6

1,066,306

643,215

Interest payable and similar expenses

7

49,411

60,681

PROFIT BEFORE TAXATION

1,016,895

582,534

Tax on profit

8

192,763

123,673

PROFIT FOR THE FINANCIAL YEAR

824,132

458,861

OTHER COMPREHENSIVE INCOME

-

-

TOTAL COMPREHENSIVE INCOME FOR THE YEAR

824,132

458,861

FIXED ASSETS

Tangible assets

10

1,022,360

661,876

CURRENT ASSETS

Stocks

11

2,150,252

2,183,764

Debtors

12

2,612,493

2,131,827

Cash at bank and in hand

254,500

118,762

5,017,245

4,434,353

CREDITORS

Amounts falling due within one year

13

4,016,578

3,992,524

NET CURRENT ASSETS

1,000,667

441,829

TOTAL ASSETS LESS CURRENT LIABILITIES

2,023,027

1,103,705

CREDITORS

Amounts falling due after more than one year

14

(331,688

)

(20,151

)

PROVISIONS FOR LIABILITIES

18

(48,260

)

(28,043

)

NET ASSETS

1,643,079

1,055,511

CAPITAL AND RESERVES

Called up share capital

19

2,120

2,340

Capital redemption reserve

20

880

660

Retained earnings

20

1,640,079

1,052,511

SHAREHOLDERS' FUNDS

1,643,079

1,055,511

The financial statements were approved by the Board of Directors on 22nd May 2017 and were signed on its behalf by:

Mr N J Lathe - Director

Called up

Capital

share

Retained

redemption

Total

capital

earnings

reserve

equity

£

£

£

£

Balance at 1st January 2015

2,780

786,293

220

789,293

Changes in equity

Issue of share capital

(440

)

-

-

(440

)

Dividends

-

(192,643

)

-

(192,643

)

Total comprehensive income

-

458,861

440

459,301

Balance at 31st December 2015

2,340

1,052,511

660

1,055,511

Changes in equity

Issue of share capital

(220

)

-

-

(220

)

Dividends

-

(236,564

)

-

(236,564

)

Total comprehensive income

-

824,132

220

824,352

Balance at 31st December 2016

2,120

1,640,079

880

1,643,079

Cash flows from operating activities

Cash generated from operations

1

975,829

516,886

Interest paid

(46,424

)

(55,173

)

Interest element of hire purchase payments paid

(2,987

)

(5,508

)

Tax paid

(157,376

)

(11,592

)

Dividends paid

(236,564

)

(192,643

)

Net cash from operating activities

532,478

251,970

Cash flows from investing activities

Purchase of tangible fixed assets

(84,857

)

(126,365

)

Grants received - tangible fixed assets

48,500

-

Net cash from investing activities

(36,357

)

(126,365

)

Cash flows from financing activities

Bank loan repayments

(7,778

)

(46,667

)

Hire purchase repayments

(62,971

)

(117,463

)

Movement in directors' current accounts

36,838

7,770

Purchase of own shares

(70,000

)

(95,000

)

Net cash from financing activities

(103,911

)

(251,360

)

Increase/(decrease) in cash and cash equivalents

392,210

(125,755

)

Cash and cash equivalents at beginning of year

2

(137,710

)

(11,955

)

Cash and cash equivalents at end of year

2

254,500

(137,710

)

1.	RECONCILIATION OF PROFIT BEFORE TAXATION TO CASH GENERATED FROM OPERATIONS

2016

2015

£

£

Profit before taxation

1,016,895

582,534

Depreciation charges

269,373

249,974

Finance costs

49,411

60,681

1,335,679

893,189

Decrease/(increase) in stocks

33,512

(565,801

)

(Increase)/decrease in trade and other debtors

(480,666

)

275,371

Increase/(decrease) in trade and other creditors

87,304

(85,873

)

Cash generated from operations

975,829

516,886

2.	CASH AND CASH EQUIVALENTS

The amounts disclosed on the Statement of Cash Flows in respect of cash and cash equivalents are in

respect of these Statement of Financial Position amounts:

Year ended 31st December 2016

31.12.16

1.1.16

£

£

Cash and cash equivalents

254,500

118,762

Bank overdrafts

-

(256,472

)

254,500

(137,710

)

Year ended 31st December 2015

31.12.15

1.1.15

£

£

Cash and cash equivalents

118,762

13,336

Bank overdrafts

(256,472

)

(25,291

)

(137,710

)

(11,955

)

1.	STATUTORY INFORMATION

Mec Com Limited is a company limited by shares and incorporated in the United Kingdom. The

financial statements are presented in Sterling, which is also the functional currency of the company.

The registered office and principal place of business are Units 15 A-C Airfield Industrial Estate,

Hixon, Staffordshire ST18 0PF. The principal activity of the company is the manufacture of

mechanical and electromechanical components, assemblies and sub-assemblies.

2.	STATEMENT OF COMPLIANCE

These financial statements have been prepared in accordance with Financial Reporting Standard 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland" and the Companies Act 2006.

3.	ACCOUNTING POLICIES

Basis of preparing the financial statements

The financial statements have been prepared under the historical cost convention.

Turnover

Turnover is measured at the fair value of the consideration received or receivable, excluding

discounts, rebates, value added tax and other sales taxes.

Turnover is recognised when the significant risks and rewards of ownership of the goods has

transferred to the buyer. This is usually at the point the customer has signed for the delivery of the

goods.

Tangible fixed assets

Depreciation is provided at the following annual rates in order to write off each asset over its estimated useful life or, if held under a finance lease, over the lease term, whichever is the shorter.

Improvements to property

-

20% on cost and 10% on cost

Plant and machinery

-

20% on cost

Fixtures and fittings

-

20% on cost and 10% on cost

Motor vehicles

-

25% on cost

Computer equipment

-

33% on cost

Tangible fixed assets are reviewed annually to determine whether there is any indication that those

assets have suffered an impairment loss. If there is an indication of possible impairment, the

recoverable amount of any affected asset is estimated and compared with its carrying amount. If

estimated recoverable amount is lower, the carrying amount is reduced to its estimated recoverable

amount, and an impairment loss is recognised immediately in profit or loss.

Stocks

Stocks are valued at the lower of cost, using the first in first out method, and selling price less costs to

complete and sell. Provision is made for obsolete and slow moving items.

Research and development

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

Foreign currencies

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

the reporting date. Transactions in foreign currencies are translated into sterling at the rate of

exchange ruling at the date of transaction. Exchange differences are taken into account in arriving at

the operating result.

Hire purchase and leasing commitments

Assets obtained under hire purchase contracts or finance leases are capitalised in the statement of

financial position. Those held under hire purchase contracts are depreciated over their estimated

useful lives. Those held under finance leases are depreciated over their estimated useful lives or the

lease term, whichever is the shorter.

The interest element of these obligations is charged to profit or loss over the relevant period. The

capital element of the future payments is treated as a liability.

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

of the lease.

Pension costs and other post-retirement benefits

The company operates a defined contribution pension scheme. Contributions payable to the

company's pension scheme are charged to profit or loss in the period to which they relate.

Debtors

Short term debtors are measured at transaction price, less any impairment.

Creditors

Short term trade and other creditors are measured at transaction price. Other financial liabilities,

including bank loans, are initially measured at fair value, net of transaction costs, and are measured

subsequently at amortised cost using the effective interest method.

Derivative financial instruments

Derivative financial instruments are recognised at fair value with any gains or losses being reported in

profit or loss.

Government grants

Grants received as a contribution towards capital expenditure are credited to profit over the useful

economic life of the related asset.

Grants received in respect of immediate financial support are recognised in profit in the financial year

in which they become receivable.

Taxation

Current tax is recognised for the amount payable in respect of the taxable profit for the current or past

reporting periods using the tax rates and laws that have been enacted or substantively enacted by the

reporting date.

Deferred tax is recognised in respect of all timing differences that have originated but not reversed at

the reporting date where transactions or events have occurred at that date that will result in an

obligation to pay more tax in the future, or a right to pay less tax in the future. Timing differences are

temporary differences between the company's taxable profits and its results as stated in the financial

statements.

Deferred tax is measured on an undiscounted basis at the tax rates that are anticipated to apply in the

periods in which the timing differences are expected to reverse, based on tax rates and laws that have

been enacted or substantively enacted by the reporting date.

4.

TURNOVER

The turnover and profit before taxation are attributable to the one principal activity of the company.

An analysis of turnover by geographical market is given below:

2016

2015

£

£

UK

6,820,193

5,454,016

Europe

4,645,042

4,096,619

Rest of the World

2,165,075

2,614,746

13,630,310

12,165,381

5.	EMPLOYEES AND DIRECTORS

2016

2015

£

£

Wages and salaries

3,052,925

2,456,972

Social security costs

222,639

185,610

Other pension costs

24,487

19,524

3,300,051

2,662,106

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

2016

2015

Directors

2

2

Administration

50

48

Production

98

71

150

121