Select Committee on Standards and Privileges Seventh Report

Annex YY

Extract from Coopers and Lybrand long form report on Transfer Technology Ltd concerning Debtors

1026  There is various demonstration equipment which is included in finished goods at actual cost of £95,000. No depreciation is charged on this equipment since management argue that it can be sold at above cost. In our view and in accordance with generally accepted accounting practice, demonstration equipment should be subject to appropriate amortisation. We make the appropriate adjustments in Section IX.

1027  Included in finished goods is £21,000 represented the cost of an M200 machine which is presently on loan to a customer because the machine originally supplied to him does not meet the necessary specification. In management's view, it is not cost effective to rectify the original machine. The machine on loan should, therefore, be written off.

1028  In addition, finished goods included, CNC machines which were produced for Systems 3R Limited. (£15,000) These machines are not up to specification and system 3R Ltd are refusing to give The Group credit for them. Whilst The Group has initiated legal proceedings against 3R, the carrying value of these machines must be in doubt and provisions may be required. We adjust for this Section IX.

1029  Transtec Inc's finished goods includes a development machine with a cost of £25,000. This is being written off over four years. It should be reclassified into fixed assets. We adjust for this in Section IX.

1030  Included in Sarclad are stocks amounting to £16,000 which have not moved since the 1990 year end. A provision of £6,000 is held against these stocks.


1031  There is uncertainty surrounding the recoverability of £503,000 due from Roll Centre Inc a company wholly owned by Mr Robinson. Mr Robinson has indicated that he is prepared to offer a personal guarantee as to the recoverability of these amounts, and is currently making arrangements to pay £200,000 into The Group.

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