The Directors present the Annual Report for the year ended 31 October 2015.

During the year, turnover decreased to £12,008,894 (2014 - £12,803,118). This performance was achieved in a highly competitive market where the directors feel that the reputation for quality and service engendered by the company has helped to retain existing customers and attract new business.

The directors consider that the overall financial performance has been satisfactory given current market conditions.

The core business remains stable and the directors consider that the on-going development of new products and markets will lead to future revenue growth. In addition, the focus on research and development will leave the company well placed to meet the future needs of its customers and continue to evolve.

The directors continually monitor the key risks facing the company.

At the present time the directors believe that the key risks facing the business relate to the current economic situation, retention of key staff, competitiveness in the sector and the development of new and exciting new products.

The company continues to develop and sell a wide range of electrical products to an established customer base. It enjoys long standing relationships with both customers and suppliers, as well as having an experienced and knowledgeable workforce. It continues to expand its customer base, research and develop new products, and modernise its distribution and management processes.

The directors consider that the key financial performance indicators are those that communicate the financial performance and strength of the company as a whole, these being turnover, profit and cash reserves. The key non-financial performance indicators continue to be customer gains and retention.

The principal activity of the company continued to be that of electrical component distributors.

Alwyns LLP were appointed auditors to the company and in accordance with section 485 of the Companies Act 2006, a resolution proposing that they be re-appointed will be put at a General Meeting.

We have audited the financial statements of A & A Electrical Distributors Limited for the year ended 31 October 2015 set out on pages 6 to 18. 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 auditors' 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.

As explained more fully in the Directors' Responsibilities Statement set out on pages 2 - 3, 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 Ethical Standards for Auditors.

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.

In our opinion the financial statements: give a true and fair view of the state of the company's affairs as at 31 October 2015 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. In our opinion 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.

give a true and fair view of the state of the company's affairs as at 31 October 2015 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.

In our opinion 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.

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

The financial statements are prepared under the historical cost convention.

Investments held as fixed assets are stated at cost, together with subsequent capital contributions where appropriate, less any provisions for impairment in value.

Investment income from investment in Limited Liability Partnerships is recognised in the financial statements when the company becomes entitled to its share of profits from the fixed asset investment.

In accordance with FRS 20, the value determined at the grant date of the shares is expensed on a straight-line basis to the profit and loss account over the vesting period based on the company's estimate of shares that will eventually vest.

The value is calculated using a generally accepted valuation methodology allowing for the lack of an observable market price as the company is an unlisted limited company.

Contributions to Qualifying Employee Share Ownership Trust (QUEST) and Share Incentive Plan

In accordance with UITF 38 contributions to the QUEST and SIP are not recognised in the profit and loss account until such time as the shares vest unconditionally with the employees. Until that time the investment in the shares of the holding company are shown as an investment.

Employee Benefit Trust

The company has an Employee Benefit Trust (EBT) for the benefit of certain employees. In accordance with UITF 32, until such time as the assets of the EBT vest unconditionally with the employees, the assets and liabilities of the EBT are included within the relevant assets and liabilities of the company.

Employer Financed Retirement Benefit Scheme (EFRBS)

In accordance with UITF Abstract 32 ‘Employee Benefit Trusts and other intermediate payment arrangements’ the Company does not include the assets and liabilities of the Scheme on its balance sheet to the extent that it considers that it will not retain any future economic benefit from the assets of the Scheme and will not have control of the rights or other access to those future economic benefits.

The A & A 2000 Limited Qualifying Employee Share Ownership Trust (QUEST) was established to hold shares for the benefit of employees generally. The aim is the shares will be approached to employees on a long term basis when the founder shareholders retire or the business is sold.

The A & A 2000 Limited Share Incentive Plan (SIP) was established to purchase shares for the benefit of employees. On 23 October 2009 shares were awarded as disclosed in note 14.

The value of the shares at the grant date was £60,301. As A & A 2000 Limited is a private company there is no observable market price for the shares granted. Therefore, the value of the shares was measured using generally accepted valuation methodology which allowed for this.

At the year end the EBT has advanced loans of £1,054,830 (2014: £1,054,830) which are included within other debtors above.

The A & A 2000 Limited Share Incentive Plan (SIP) was established to reward employees with shares in the parent company.

On 23 October 2009 19,204 "A" ordinary shares of £0.01 each were awarded to the employees. The terms of the award are as follows:

(a) The shares were awarded to any employee who had been employed by A&A Electrical Distributors Limited for 18 months

(b) The shares were awarded to 58 employees in total

(c) The vesting period is five years

(d) The employee will lose their shares if they cease to be in Relevant Employment within three years from the date of the award, unless the employment ceased for one of the following reasons:

1. injury or disability;

2. redundancy;

3. transfer of employment to which the Transfer of Undertaking (Protection of Employment) Regulations 1981 apply;

4. charge of control of other circumstances ending the associated company status of the employer company;

5. retirement on or after reaching retirement age;

6. death.

In accordance with FRS 20, the value of the shares is expensed through the profit and loss account over the vesting period of five years.

The company is a member of A.D. R&D LLP and is liable to contribute to the assets of the LLP in the event of a winding-up before 1st November 2020. The maximum liability in relation to this undertaking is £2,142,000. The company does not believe that a winding-up of the LLP is probable and has not made provision for the liability at the balance sheet date.

The immediate and ultimate holding company was A & A 2000 Limited in both years. Mr A M Warren and Mrs A K Warren are considered to be the controlling parties.

The company has taken advantage of the exemption in Financial Reporting Standard Number 8 from the requirement to disclose transactions with group companies on the grounds.

At the year end the company owed the holding company £1,570,724 (2014: £1,570,724). The loan is interest free and under no formal terms.

The company leases its premises from its self administered pension scheme paying rent of £200,000 per annum. The lease expires in January 2021.

At the year end the company owed the directors £3,054,611 (2014: £3,345,612).