REGISTERED NUMBER: 14029141 (England and Wales) |
LSTC Group Ltd |
Group Strategic Report, Report of the Directors and |
Consolidated Financial Statements for the Period 6 April 2022 to 30 June 2023 |
REGISTERED NUMBER: 14029141 (England and Wales) |
LSTC Group Ltd |
Group Strategic Report, Report of the Directors and |
Consolidated Financial Statements for the Period 6 April 2022 to 30 June 2023 |
LSTC Group Ltd (Registered number: 14029141) |
Contents of the Consolidated Financial Statements |
for the period 6 April 2022 to 30 June 2023 |
Page |
Company Information | 1 |
Group Strategic Report | 2 |
Report of the Directors | 4 |
Report of the Independent Auditors | 6 |
Consolidated Statement of Comprehensive Income | 9 |
Consolidated Balance Sheet | 10 |
Company Balance Sheet | 11 |
Consolidated Statement of Changes in Equity | 12 |
Company Statement of Changes in Equity | 13 |
Consolidated Cash Flow Statement | 14 |
Notes to the Consolidated Cash Flow Statement | 15 |
Notes to the Consolidated Financial Statements | 18 |
LSTC Group Ltd |
Company Information |
for the period 6 April 2022 to 30 June 2023 |
DIRECTORS: |
REGISTERED OFFICE: |
REGISTERED NUMBER: |
AUDITORS: |
Statutory Auditor |
Spitfire House |
19 Falcon Court |
Preston Farm Industrial Estate |
Stockton on Tees |
TS18 3TU |
LSTC Group Ltd (Registered number: 14029141) |
Group Strategic Report |
for the period 6 April 2022 to 30 June 2023 |
The directors present their strategic report of the company and the group for the period 6 April 2022 to 30 June 2023. |
The company's principal activity is that of a parent holding company. The group's principal business activities are to provide engineering professional services to the electricity sector. The group's focus is on the design and survey of overhead lines, underground cables and substation systems from low voltage to extra high voltage in the UK and internationally. |
REVIEW OF BUSINESS |
2023 was a year of further consolidation and growth for the group as whole following the formation of a new management team, together with existing members of management, and the successful acquisition by the company of the entire issued share capital of L S Transmission Consultancy Limited ("LSTC") and subsidiaries via a Management Buy-Out on 30 June 2022. It is noted that these consolidated financial statements show the results of the revised group structure from the date of acquisition and do not present comparative figures. Trading performance of the LSTC group as a whole remained relatively consistent with turnover increasing by 4% to £10.9m and gross profit of £2.7m (2022: £2.7m). Whilst efficiencies were made, changes in the mix of work and internal re-structuring costs resulted in a slightly reduced gross profit margin of 25% (2022: 26%). Overall, the directors are happy with the performance of the group in the first year of ownership. |
Key Performance Indicators |
The group tightly manages its cash flow and working capital and uses several KPI's to further monitor its performance. These include a range of financial and operational ratios as follows: |
- Gross profit/turnover |
- Operating profit/turnover |
- Debtor days |
- Work in progress days |
- Cash balance |
- Staff utilisation |
- Order book profile |
The operational performance indicators are commercially sensitive and have not been disclosed. |
LSTC Group Ltd (Registered number: 14029141) |
Group Strategic Report |
for the period 6 April 2022 to 30 June 2023 |
PRINCIPAL RISKS AND UNCERTAINTIES |
The directors are aware of the various risks inherent in the business and meet regularly to consider them. The key business risks are: |
Competition risk: |
The business is impacted by the supply of professional services into the electricity sector. The risk is mitigated by the relationships in place at all levels with the major suppliers to the sector and offering an extensive range of engineer services. |
Credit risk: |
The group operates a strict policy of credit checking and reviewing all new and existing commercial customers. |
Cash Flow/Liquidity risk: |
Cash flow and liquidity are monitored regularly against forecasts and available finance facilities to ensure the group has sufficient headroom. The group actively maintains a mixture of long-term and short-term committed facilities which are designed to ensure the group has sufficient available funds for operations and planned investment equivalent to at least one year's forecast requirements at all times. We continue to be well supported by HSBC Bank plc, with the management buyout in part funded through medium term borrowing with them. |
Staff risk: |
The group could be exposed to a lack of supply of skilled labour and mitigates this risk by providing a clear career plan and training programme for all levels of staff from graduates through to directors. The management buyout has also helped with retention of key employees. |
FUTURE DEVELOPMENTS |
The group is constantly looking to enhance its service offering to enable it to generate increased revenue |
opportunities. |
RESEARCH AND DEVELOPMENT ACTIVITIES |
With the implementation of greater loads, expectations of the network, the drive toward electricity being the key to green energies tackling climate change and achieving Net Zero by 2050, the group is continually working on projects to upgrade capabilities for delivering electricity through the network of structures, conductors, and components which, at the moment, are undefined and, once delivered, can be adopted by the industry and used going forward to future proof the network. |
ON BEHALF OF THE BOARD: |
LSTC Group Ltd (Registered number: 14029141) |
Report of the Directors |
for the period 6 April 2022 to 30 June 2023 |
The directors present their report with the financial statements of the company and the group for the period 6 April 2022 to 30 June 2023. |
INCORPORATION |
The company was incorporated on 6 April 2022 and commenced trading on 1 July 2022. |
DIVIDENDS |
No dividends will be distributed on Ordinary shares for the period ended 30 June 2023. |
DIRECTORS |
The directors who have held office during the period from 6 April 2022 to the date of this report are as follows: |
STATEMENT OF DIRECTORS' RESPONSIBILITIES |
The directors are responsible for preparing the Group 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). 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 the group and of the profit or loss of the group 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 and the group's transactions and disclose with reasonable accuracy at any time the financial position of the company and the group 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 the group 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 group'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 group's auditors are aware of that information. |
LSTC Group Ltd (Registered number: 14029141) |
Report of the Directors |
for the period 6 April 2022 to 30 June 2023 |
AUDITORS |
The auditors, Baines Jewitt Limited, will be proposed for re-appointment in accordance with section 485 of the Companies Act 2006.. |
ON BEHALF OF THE BOARD: |
Report of the Independent Auditors to the Members of |
LSTC Group Ltd |
Opinion |
We have audited the financial statements of LSTC Group Ltd (the 'parent company') and its subsidiaries (the 'group') for the period ended 30 June 2023 which comprise the Consolidated Statement of Comprehensive Income, Consolidated Balance Sheet, Company Balance Sheet, Consolidated Statement of Changes in Equity, Company Statement of Changes in Equity, Consolidated Cash Flow Statement and Notes to the Consolidated Cash Flow Statement, Notes to the Financial Statements, including a summary of significant accounting policies. 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). |
In our opinion the financial statements: |
- | give a true and fair view of the state of the group's and of the parent company affairs as at 30 June 2023 and of the group's profit for the period 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 group 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 |
In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate. |
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the group's and the parent company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue. |
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report. |
Other information |
The directors are responsible for the other information. The other information comprises the information in the Group 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, except to the extent otherwise explicitly stated in our report, 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 we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. 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. |
Opinions 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 Group 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 Group Strategic Report and the Report of the Directors have been prepared in accordance with applicable legal requirements. |
Report of the Independent Auditors to the Members of |
LSTC Group Ltd |
Matters on which we are required to report by exception |
In the light of the knowledge and understanding of the group and the parent company and its environment obtained in the course of the audit, we have not identified material misstatements in the Group 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 by the parent company, or returns adequate for our audit have not been received from branches not visited by us; or |
- | the parent 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. |
Responsibilities of directors |
As explained more fully in the Statement of Directors' Responsibilities set out on page four, 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 group's and the parent 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 group or the parent company or to cease operations, or have no realistic alternative but to do so. |
Auditors' 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. |
The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below: |
Based on our understanding of the company and industry, we identified that the principal risks of non-compliance with laws and regulations related to Health & Safety and Employment law, and we considered the extent to which non-compliance might have a material effect on the financial statements. We also considered those laws and regulations that have a direct impact on the preparation of the financial statements such as the Companies Act 2006. |
We evaluated management's opportunities for fraudulent manipulation of the financial statements (including the risk of override of controls). Audit procedures performed by the engagement team included: |
- | discussions with management, including consideration of known or suspected instances of non-compliance with laws and regulation and fraud; |
- | evaluation and testing of the operating effectiveness of management's controls designed to prevent and detect irregularities; |
- | challenging assumptions and judgements made by management in their significant accounting estimates; and |
- | identifying and testing journal entries, in particular any journal entries posted with unusual account combinations or posted by senior management. |
Report of the Independent Auditors to the Members of |
LSTC Group Ltd |
There are inherent limitations in the audit procedures described above and the further removed noncompliance with laws and regulations is from the events and transactions reflected in the financial statements, the less likely we would become aware of it. Also, the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery or intentional misrepresentations, or through collusion. |
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. |
Use of our report |
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. |
for and on behalf of |
Statutory Auditor |
Spitfire House |
19 Falcon Court |
Preston Farm Industrial Estate |
Stockton on Tees |
TS18 3TU |
LSTC Group Ltd (Registered number: 14029141) |
Consolidated Statement of Comprehensive Income |
for the period 6 April 2022 to 30 June 2023 |
Notes | £ |
TURNOVER | 3 | 10,896,060 |
Cost of sales | (8,174,159 | ) |
GROSS PROFIT | 2,721,901 |
Administrative expenses | (1,839,069 | ) |
882,832 |
Other operating income | 68,033 |
OPERATING PROFIT | 5 | 950,865 |
Interest receivable and similar income | 405 |
951,270 |
Interest payable and similar expenses | 6 | (429,986 | ) |
PROFIT BEFORE TAXATION | 521,284 |
Tax on profit | 7 | (249,528 | ) |
PROFIT FOR THE FINANCIAL PERIOD |
OTHER COMPREHENSIVE INCOME | - |
TOTAL COMPREHENSIVE INCOME FOR THE PERIOD |
271,756 |
Profit attributable to: |
Owners of the parent | 259,187 |
Non-controlling interests | 12,569 |
271,756 |
Total comprehensive income attributable to: |
Owners of the parent | 259,187 |
Non-controlling interests | 12,569 |
271,756 |
LSTC Group Ltd (Registered number: 14029141) |
Consolidated Balance Sheet |
30 June 2023 |
Notes | £ |
FIXED ASSETS |
Intangible assets | 9 | 5,973,277 |
Tangible assets | 10 | 335,216 |
Investments | 11 | - |
Investment property | 12 | - |
6,308,493 |
CURRENT ASSETS |
Stocks | 13 | 3,574 |
Debtors | 14 | 3,382,332 |
Cash at bank and in hand | 709,497 |
4,095,403 |
CREDITORS |
Amounts falling due within one year | 15 | (2,414,429 | ) |
NET CURRENT ASSETS | 1,680,974 |
TOTAL ASSETS LESS CURRENT LIABILITIES |
7,989,467 |
CREDITORS |
Amounts falling due after more than one year |
16 |
(7,165,626 |
) |
PROVISIONS FOR LIABILITIES | 20 | (49,903 | ) |
NET ASSETS | 773,938 |
CAPITAL AND RESERVES |
Called up share capital | 21 | 480,000 |
Retained earnings | 22 | 256,187 |
SHAREHOLDERS' FUNDS | 736,187 |
NON-CONTROLLING INTERESTS | 23 | 37,751 |
TOTAL EQUITY | 773,938 |
The financial statements were approved by the Board of Directors and authorised for issue on 28 March 2024 and were signed on its behalf by: |
J R Shipley - Director |
LSTC Group Ltd (Registered number: 14029141) |
Company Balance Sheet |
30 June 2023 |
Notes | £ |
FIXED ASSETS |
Intangible assets | 9 |
Tangible assets | 10 |
Investments | 11 |
Investment property | 12 |
CURRENT ASSETS |
Debtors | 14 |
Cash at bank |
CREDITORS |
Amounts falling due within one year | 15 | ( |
) |
NET CURRENT LIABILITIES | ( |
) |
TOTAL ASSETS LESS CURRENT LIABILITIES |
CREDITORS |
Amounts falling due after more than one year |
16 |
( |
) |
NET ASSETS |
CAPITAL AND RESERVES |
Called up share capital | 21 |
Retained earnings | 22 |
SHAREHOLDERS' FUNDS |
Company's profit for the financial year | 94,772 |
The financial statements were approved by the Board of Directors and authorised for issue on |
LSTC Group Ltd (Registered number: 14029141) |
Consolidated Statement of Changes in Equity |
for the period 6 April 2022 to 30 June 2023 |
Called up |
share | Retained | Non-controlling | Total |
capital | earnings | Total | interests | equity |
£ | £ | £ | £ | £ |
Changes in equity |
Issue of share capital | 480,000 | - | 480,000 | - | 480,000 |
Total comprehensive income | - | 259,187 | 259,187 | 12,569 | 271,756 |
Dividends | - | - | - | (4,000 | ) | (4,000 | ) |
Transfer between equity holder | - | (3,000 | ) | (3,000 | ) | 3,000 | - |
480,000 | 256,187 | 736,187 | 11,569 | 747,756 |
Non-controlling interest arising on business combination |
- |
- |
- |
26,182 |
26,182 |
Balance at 30 June 2023 | 480,000 | 256,187 | 736,187 | 37,751 | 773,938 |
LSTC Group Ltd (Registered number: 14029141) |
Company Statement of Changes in Equity |
for the period 6 April 2022 to 30 June 2023 |
Called up |
share | Retained | Total |
capital | earnings | equity |
£ | £ | £ |
Changes in equity |
Issue of share capital | - |
Total comprehensive income | - |
Balance at 30 June 2023 |
LSTC Group Ltd (Registered number: 14029141) |
Consolidated Cash Flow Statement |
for the period 6 April 2022 to 30 June 2023 |
Notes | £ |
Cash flows from operating activities |
Cash generated from operations | 1 | 1,186,400 |
Interest paid | (213,820 | ) |
Refund of overpaid tax | 33,099 |
Net cash from operating activities | 1,005,679 |
Cash flows from investing activities |
Purchase of tangible fixed assets | (116,644 | ) |
Sale of tangible fixed assets | 20,183 |
Sale of investment property | 192,517 |
Acquisition of subsidiary | (7,559,225 | ) |
Cash acquired with subsidiary | 4,950,472 |
Payment of deferred consideration | (120,531 | ) |
Interest received | 405 |
Net cash from investing activities | (2,632,823 | ) |
Cash flows from financing activities |
New loans in year | 3,000,000 |
Loan repayments in year | (684,284 | ) |
Capital repayments in year | (8,909 | ) |
Share issue | 250,000 |
Dividends paid to minority interests | (4,000 | ) |
Preference share dividends | (216,166 | ) |
Net cash from financing activities | 2,336,641 |
Increase in cash and cash equivalents | 709,497 |
Cash and cash equivalents at beginning of period |
2 |
- |
Cash and cash equivalents at end of period |
2 |
709,497 |
LSTC Group Ltd (Registered number: 14029141) |
Notes to the Consolidated Cash Flow Statement |
for the period 6 April 2022 to 30 June 2023 |
1. | RECONCILIATION OF PROFIT BEFORE TAXATION TO CASH GENERATED FROM OPERATIONS |
£ |
Profit before taxation | 521,284 |
Depreciation charges | 178,909 |
Profit on disposal of fixed assets | (8,985 | ) |
Goodwill amortisation | 663,697 |
Finance costs | 429,986 |
Finance income | (405 | ) |
1,784,486 |
Increase in stocks | (55 | ) |
Increase in trade and other debtors | (733,124 | ) |
Increase in trade and other creditors | 135,093 |
Cash generated from operations | 1,186,400 |
2. | CASH AND CASH EQUIVALENTS |
The amounts disclosed on the Cash Flow Statement in respect of cash and cash equivalents are in respect of these Balance Sheet amounts: |
Period ended 30 June 2023 |
30.6.23 | 6.4.22 |
£ | £ |
Cash and cash equivalents | 709,497 | - |
LSTC Group Ltd (Registered number: 14029141) |
Notes to the Consolidated Cash Flow Statement |
for the period 6 April 2022 to 30 June 2023 |
3. | ANALYSIS OF CHANGES IN NET DEBT |
Acquisition |
of | Other |
subsidiary | non-cash |
At 6.4.22 | Cash flow | undertaking | changes | At 30.6.23 |
£ | £ | £ | £ | £ |
Net cash |
Cash at bank |
and in hand | - | (2,852,419 | ) | 3,561,916 | 709,497 |
- | (2,852,419 | ) | 3,561,916 | 709,497 |
Liquid resources |
Deposits included |
in cash | - | (1,388,556 | ) | 1,388,556 | - |
- | (1,388,556 | ) | 1,388,556 | - | - |
Debt |
Finance leases | - | 8,909 | - | (78,517 | ) | (69,608 | ) |
Debts falling due |
within 1 year | - | 804,816 | (804,816 | ) | (838,699 | ) | (838,699 | ) |
Debts falling due |
after 1 year | - | - | (7,946,128 | ) | 838,699 | (7,107,429 | ) |
- | 813,725 | (8,750,944 | ) | (78,517 | ) | (8,015,736 | ) |
Total | - | (3,427,250 | ) | (3,800,472 | ) | (78,517 | ) | (7,306,239 | ) |
LSTC Group Ltd (Registered number: 14029141) |
Notes to the Consolidated Cash Flow Statement |
for the period 6 April 2022 to 30 June 2023 |
4. | ACQUISITION OF BUSINESS |
On 30th June 2022 the company acquired 100% of the share capital of L.S. Transmission Consultancy Limited. The business combination has been consolidated using the acquisition method. The assets and liabilities acquired are set out below: |
Net assets acquired | £ |
Tangible fixed assets | 330,163 |
Investment Property | 192,517 |
Stock | 3,519 |
Debtors | 2,599,207 |
Cash and cash equivalents | 4,950,472 |
Creditors | (1,377,471 | ) |
Tax recoverable | 158,008 |
Deferred tax asset | 22,962 |
Net assets acquired | 6,879,377 |
Non controlling interest | (26,182 | ) |
Goodwill | 6,636,974 |
13,490,169 |
Satisfied by |
Cash and cash equivalents | 7,559,225 |
Issue of shares in share for share exchange | 180,000 |
Issue of preference shares in share for share exchange | 4,803,700 |
Deferred consideration | 947,244 |
13,490,169 |
In the period from 1st July 2022 to 30th June 2023, L.S. Transmission Consultancy Limited and its subsidiaries consolidated turnover and profit before tax was £10,896,060 and £1,613,793 respectively. These amounts have been included in the consolidated statements of comprehensive income for the reporting period. |
LSTC Group Ltd (Registered number: 14029141) |
Notes to the Consolidated Financial Statements |
for the period 6 April 2022 to 30 June 2023 |
1. | STATUTORY INFORMATION |
LSTC Group Ltd is a |
2. | ACCOUNTING POLICIES |
Basis of preparing the financial statements |
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. The financial statements have been prepared under the historical cost convention, modified to include certain items at fair value. |
The financial statements have been prepared on a going concern basis. The directors have taken note of the guidance issued by the Financial Reporting Council on Going Concern Assessments in determining that this is the appropriate basis of preparation of the financial statements and have considered a number of factors. This has specifically included reviewing banking facilities in place and detailed forecasting using sensitivity analysis to ensure that the worst case scenario situation does not put the going concern concept at risk. |
The significant accounting policies applied in the preparation of these financial statements are set out below. These policies have been consistently applied to all years presented unless otherwise stated. |
Basis of consolidation |
The consolidated accounts include the results of the company and its subsidiary undertakings made up to the group financial year end at 30 June 2023. The acquisition method of accounting has been adopted. The consolidated profit and loss account includes the results of all subsidiary undertakings. |
Intercompany transactions have been eliminated on consolidation. The results of companies acquired or disposed of in the year are included to the date of their disposal or from the effective date of acquiring control. |
Turnover |
Turnover is measured at the fair value of the consideration received or receivable net of VAT and trade discounts. The policies adopted for the recognition of turnover are as follows: |
Rendering of services |
Turnover represents the value of services provided under contracts to the extent that there is a right to consideration and is recorded at the value of that consideration due. Where a contract has only been partially completed at the balance sheet date turnover represents the value of the services provided to date based on a proportion of the total expected consideration at completion. |
Goodwill |
Goodwill recognised represents the excess of the fair value and directly attributable costs of the |
purchase consideration over the fair values to the group's interest in the identifiable net assets, |
liabilities and contingent liabilities acquired. |
Goodwill is amortised over its expected useful life. Where the group is unable to make a reliable |
estimate of useful life, goodwill is amortised over a period not exceeding 10 years. Goodwill is |
assessed for impairment when there are indicators of impairment and any impairment is charged to |
the income statement. Reversals of impairment are recognised when the reasons for the impairment no longer apply. |
Intangible assets |
Intangible assets are initially measured at cost. After initial recognition, intangible assets are measured at cost less any accumulated amortisation and any accumulated impairment losses. |
LSTC Group Ltd (Registered number: 14029141) |
Notes to the Consolidated Financial Statements - continued |
for the period 6 April 2022 to 30 June 2023 |
2. | ACCOUNTING POLICIES - continued |
Tangible fixed assets |
Tangible fixed assets are stated at cost (or deemed cost) or valuation less accumulated depreciation and accumulated impairment losses. Cost includes those costs that are directly attributable to making the asset capable of operating as intended. |
Depreciation is provided at the following annual rates in order to write off each asset over its estimated useful life. |
Fixtures and fittings | 25% on reducing balance |
Motor vehicles | 25% straight line |
Plant & Machinery | 50% on reducing balance |
Computer equipment | 50% on reducing balance |
Government grants |
Government grants in respect of revenue expenditure are recognised and credited to profit and loss when there is reasonable assurance that the entity will comply with the conditions attaching to the grant and the grant will be received. |
Investment property |
Investment properties are measured at fair value at each reporting date. Changes in fair value are |
recognised directly in the profit and loss account. |
Stocks |
Stocks are valued at the lower of cost and net realisable value, after making due allowance for |
obsolete and slow moving items. |
Contract work in progress is included in debtors stated at net realisable value. Cumulative turnover (i.e. the total turnover recorded in respect of the contract in the profit and loss accounts of all accounting periods since inception of the contract) is compared with total payments on account. If turnover exceeds payments on account an "amount recoverable on contracts" is established and separately disclosed within debtors. If payments on account are greater than turnover to date, the excess is classified within creditors. |
Payments on account include all direct expenditure and an appropriate proportion of fixed and variable overheads. |
LSTC Group Ltd (Registered number: 14029141) |
Notes to the Consolidated Financial Statements - continued |
for the period 6 April 2022 to 30 June 2023 |
2. | ACCOUNTING POLICIES - continued |
Financial instruments |
The company only enters into basic financial instruments transactions that result in the recognition of financial assets and liabilities like trade and other accounts receivable and payable and loans from banks and other third parties. |
Debt instruments (other than those wholly repayable or receivable within one year), including loans and other accounts receivable and payable, are initially measured at present value of the future cash flows and subsequently at amortised cost using the effective interest method. Debt instruments that are payable or receivable within one year, typically trade payables or receivables, are measured, initially and subsequently, at the undiscounted amount of the cash or other consideration, expected to be paid or received. However if the arrangements of a short-term instrument constitute a financing transaction, like the payment of a trade debt deferred beyond normal business terms or financed at a rate of interest that is not a market rate or in case of an out-right short-term loan not at market rate, the financial asset or liability is measured, initially, at the present value of the future cash flow discounted at a market rate of interest for a similar debt instrument and subsequently at amortised cost. |
Financial assets that are measured at cost and amortised cost are assessed at the end of each reporting period for objective evidence of impairment. If objective evidence of impairment is found, an impairment loss is recognised in the Income statement. |
Financial assets and liabilities are offset and the net amount reported in the Balance Sheet when there is an enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously. |
Taxation |
Taxation for the period comprises current and deferred tax. Tax is recognised in the Consolidated Statement of Comprehensive Income, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. |
Current or deferred taxation assets and liabilities are not discounted. |
Current tax is recognised at the amount of tax payable using the tax rates and laws that have been enacted or substantively enacted by the balance sheet date. |
Deferred tax |
Deferred tax is recognised in respect of all timing differences that have originated but not reversed at the balance sheet date. |
Timing differences arise from the inclusion of income and expenses in tax assessments in periods different from those in which they are recognised in financial statements. Deferred tax is measured using tax rates and laws that have been enacted or substantively enacted by the period end and that are expected to apply to the reversal of the timing difference. |
Unrelieved tax losses and other deferred tax assets are recognised only to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. |
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 balance sheet 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. |
LSTC Group Ltd (Registered number: 14029141) |
Notes to the Consolidated Financial Statements - continued |
for the period 6 April 2022 to 30 June 2023 |
2. | ACCOUNTING POLICIES - continued |
Pension costs and other post-retirement benefits |
The group operates a defined contribution pension scheme. Contributions payable to the group's pension scheme are charged to profit or loss in the period to which they relate. |
Loans and borrowings |
Loans and borrowings are initially recognised at the transaction price including transaction costs. |
Subsequently, they are measured at amortised cost using the effective interest rate method, less |
impairment. |
Impairment |
Assets not measured at fair value are reviewed for any indication that the asset may be impaired at |
each balance sheet date. If such indication exists, the recoverable amount of the asset, or the asset's cash generating unit, is estimated and compared to the carrying amount. Where the carrying amount exceeds its recoverable amount, an impairment loss is recognised in profit or loss unless the asset is carried at a revalued amount where the impairment loss is a revaluation decrease. |
3. | TURNOVER |
The turnover and profit before taxation are attributable to the principal activities of the group. |
An analysis of turnover by geographical market is given below: |
£ |
United Kingdom | 10,839,420 |
Europe | 45,392 |
Other | 11,248 |
10,896,060 |
4. | EMPLOYEES AND DIRECTORS |
£ |
Wages and salaries | 4,995,905 |
Social security costs | 509,298 |
Other pension costs | 212,040 |
5,717,243 |
The average number of employees during the period was as follows: |
Directors | 6 |
Other | 76 |
£ |
Directors' remuneration | 589,904 |
Directors' pension contributions to money purchase schemes | 28,879 |
Compensation to director for loss of office | 223,804 |
The number of directors to whom retirement benefits were accruing was as follows: |
Money purchase schemes | 5 |
LSTC Group Ltd (Registered number: 14029141) |
Notes to the Consolidated Financial Statements - continued |
for the period 6 April 2022 to 30 June 2023 |
4. | EMPLOYEES AND DIRECTORS - continued |
Information regarding the highest paid director is as follows: |
£ |
Emoluments etc | 122,634 |
Pension contributions to money purchase schemes | 7,854 |
5. | OPERATING PROFIT |
The operating profit is stated after charging/(crediting): |
£ |
Depreciation - owned assets | 178,909 |
Profit on disposal of fixed assets | (8,985 | ) |
Goodwill amortisation | 663,697 |
Auditors' remuneration | 17,500 |
Foreign exchange differences | 3,018 |
Operating lease rentals | 142,453 |
Exceptional items | 236,687 |
The operating profit is stated after charging exceptional staff restructuring and associated costs totalling £236,687. |
6. | INTEREST PAYABLE AND SIMILAR EXPENSES |
£ |
Bank loan interest | 154,351 |
Hire purchase | 59,469 |
Preference share dividends | 216,166 |
429,986 |
7. | TAXATION |
Analysis of the tax charge |
The tax charge on the profit for the period was as follows: |
£ |
Current tax: |
UK corporation tax | 147,808 |
Tax under/(over) provided in prior years | 28,855 |
Total current tax | 176,663 |
Deferred tax | 72,865 |
Tax on profit | 249,528 |
UK corporation tax has been charged at 20 % . |
LSTC Group Ltd (Registered number: 14029141) |
Notes to the Consolidated Financial Statements - continued |
for the period 6 April 2022 to 30 June 2023 |
7. | TAXATION - continued |
Reconciliation of total tax charge included in profit and loss |
The tax assessed for the period is higher than the standard rate of corporation tax in the UK. The difference is explained below: |
£ |
Profit before tax | 521,284 |
Profit multiplied by the standard rate of corporation tax in the UK of 19 % |
99,044 |
Effects of: |
Expenses not deductible for tax purposes | 167,326 |
Adjustments to tax charge in respect of previous periods | 28,855 |
Changes in rate of tax | 13,947 |
Enhanced capital allowances | (3,847 | ) |
R&D enhanced deduction | (136,622 | ) |
Adjustment to deferred tax losses brought forward | 80,825 |
Total tax charge | 249,528 |
In the Spring Budget 2021, the Government announced that from 1 April 2023 the corporation tax rate will increase to 25%. This was substantively enacted on 24 May 2021. The effects of this have been reflected in the financial position at 30 June 2023. |
The expected net reversal of deferred tax assets and liabilities in 2024 is £36,399 this is due to the reversal of accelerated capital allowances and short term timing differences. |
The aggregate amount of research and development expenditure recognised during the year as an expense was £604,497.Trading losses resulting from R&D tax claims that have been surrendered for payable tax credits are included within debtors. |
8. | INDIVIDUAL STATEMENT OF COMPREHENSIVE INCOME |
As permitted by Section 408 of the Companies Act 2006, the Income Statement of the parent company is not presented as part of these financial statements. |
9. | INTANGIBLE FIXED ASSETS |
Group |
Goodwill |
£ |
COST |
Additions | 6,636,974 |
At 30 June 2023 | 6,636,974 |
AMORTISATION |
Amortisation for period | 663,697 |
At 30 June 2023 | 663,697 |
NET BOOK VALUE |
At 30 June 2023 | 5,973,277 |
LSTC Group Ltd (Registered number: 14029141) |
Notes to the Consolidated Financial Statements - continued |
for the period 6 April 2022 to 30 June 2023 |
10. | TANGIBLE FIXED ASSETS |
Group |
Fixtures |
Plant and | and | Motor | Computer |
machinery | fittings | vehicles | equipment | Totals |
£ | £ | £ | £ | £ |
COST |
Additions | 19,523 | - | 78,517 | 97,121 | 195,161 |
Disposals | (13,964 | ) | - | (27,691 | ) | (110,341 | ) | (151,996 | ) |
On acquisition of subsidiary | 42,656 | 15,210 | 289,707 | 1,008,352 | 1,355,925 |
At 30 June 2023 | 48,215 | 15,210 | 340,533 | 995,132 | 1,399,090 |
DEPRECIATION |
Charge for period | 3,398 | 1,334 | 42,333 | 131,844 | 178,909 |
Eliminated on disposal | (3,861 | ) | - | (27,691 | ) | (109,246 | ) | (140,798 | ) |
On acquisition of subsidiary | 31,908 | 13,876 | 209,369 | 770,610 | 1,025,763 |
At 30 June 2023 | 31,445 | 15,210 | 224,011 | 793,208 | 1,063,874 |
NET BOOK VALUE |
At 30 June 2023 | 16,770 | - | 116,522 | 201,924 | 335,216 |
Included within tangible fixed assets of the group are assets held under finance leases/hire purchase contracts with net book values of £75,245. |
11. | FIXED ASSET INVESTMENTS |
Company |
Shares in |
group |
undertakin |
£ |
COST |
Additions |
At 30 June 2023 |
NET BOOK VALUE |
At 30 June 2023 |
The group or the company's investments at the Balance Sheet date in the share capital of companies include the following: |
Subsidiaries |
Registered office: Stephensons House, Stephensons Way, Wyvern Business Park, Derby, DE21 6LY |
Nature of business: |
% |
Class of shares: | holding |
LSTC Group Ltd (Registered number: 14029141) |
Notes to the Consolidated Financial Statements - continued |
for the period 6 April 2022 to 30 June 2023 |
11. | FIXED ASSET INVESTMENTS - continued |
Registered office: Stephensons House, Stephensons Way, Wyvern Business Park, Derby, DE21 6LY |
Nature of business: |
% |
Class of shares: | holding |
Registered office: Stephensons House, Stephensons Way, Wyvern Business Park, Derby, DE21 6LY |
Nature of business: |
% |
Class of shares: | holding |
All of the above investments were acquired by the company on 30 June 2022. The investments are measured at cost less impairment on the basis they represent shares in unlisted entities that are not publicly traded. |
12. | INVESTMENT PROPERTY |
Group |
Total |
£ |
FAIR VALUE |
Disposals | (192,517 | ) |
On acquisition of subsidiary | 192,517 |
At 30 June 2023 | - |
NET BOOK VALUE |
At 30 June 2023 | - |
13. | STOCKS |
Group |
£ |
Stocks | 3,574 |
14. | DEBTORS: AMOUNTS FALLING DUE WITHIN ONE YEAR |
Group | Company |
£ | £ |
Trade debtors | 1,336,937 |
Amounts recoverable on |
contracts | 1,574,670 |
Other debtors | 2,111 |
Called up share capital not paid | 50,000 |
Prepayments and accrued income | 418,614 |
3,382,332 |
LSTC Group Ltd (Registered number: 14029141) |
Notes to the Consolidated Financial Statements - continued |
for the period 6 April 2022 to 30 June 2023 |
15. | CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR |
Group | Company |
£ | £ |
Bank loans and overdrafts (see note 17) | 720,569 |
Hire purchase contracts (see note 18) | 11,411 |
Trade creditors | 356,316 |
Amounts owed to group undertakings | - |
Tax | 51,754 |
Social security and other taxes | 693,506 |
Other creditors | 173,758 |
Accruals and deferred income | 407,115 |
2,414,429 |
16. | CREDITORS: AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR |
Group | Company |
£ | £ |
Bank loans (see note 17) | 1,595,147 |
Preference shares (see note 17) | 4,803,699 |
Hire purchase contracts (see note 18) | 58,197 |
Other creditors | 708,583 |
7,165,626 |
17. | LOANS |
An analysis of the maturity of loans is given below: |
Group | Company |
£ | £ |
Amounts falling due within one year or | on demand: |
Bank loans | 720,569 |
Amounts falling due between one and | two years: |
Bank loans - 1-2 years | 767,778 |
Amounts falling due between two and | five years: |
Bank loans - 2-5 years | 827,369 |
Amounts falling due in more than five | years: |
Repayable otherwise than by instalments |
Preference shares | 4,803,699 | 4,803,699 |
LSTC Group Ltd (Registered number: 14029141) |
Notes to the Consolidated Financial Statements - continued |
for the period 6 April 2022 to 30 June 2023 |
17. | LOANS - continued |
Bank loans outstanding at 30 June 2023 include a variable rate loan of £1,161,141 and a fixed rate loan of £1,154,575. The loans are repayable by monthly instalments over a period of three years to June 2026. Interest is charged at a variable rate of 2.85% over base and a fixed rate of 5.39% respectively. |
Other creditors due within and over one year includes deferred consideration totalling £826,715, payable by monthly instalments over a five year period. Interest is charged at a rate of 3.5% over base. |
Details of shares shown as liabilities are as follows: |
Allotted, issued and fully paid: |
Number: | Class: | Nominal |
value: | £ |
Preference shares | £1 | 4,803,699 |
During the period, 4,803,699 £1 preference shares were issued in a share for share exchange as part of a business combination to acquire 100% of the share capital of L.S. Transmission Consultancy Limited. |
The rights attached to the preference shares are as follows: |
The holders of preference shares are entitled to a fixed cumulative preferential dividend at an annual rate of 4.5% of the issue price, before the company pays any dividend in respect of any other share. |
On a return of capital on liquidation, capital reduction or otherwise, the surplus assets of the company remaining after the payment of its liabilities shall be applied first in paying to each holder of preference shares an amount equal to the issue price together with any unpaid preference dividend, before the company makes any payment to any holder of any class of ordinary shares. |
The preference shares do not entitle the holders to attend or vote at any general meeting. |
The preference shares are irredeemable and do not confer any rights of redemption. |
18. | LEASING AGREEMENTS |
Minimum lease payments fall due as follows: |
Group |
Hire |
purchase |
contracts |
£ |
Net obligations repayable: |
Within one year | 11,411 |
Between one and five years | 58,197 |
69,608 |
LSTC Group Ltd (Registered number: 14029141) |
Notes to the Consolidated Financial Statements - continued |
for the period 6 April 2022 to 30 June 2023 |
18. | LEASING AGREEMENTS - continued |
Group |
Non- | cancellable | operating | leases |
£ |
Within one year | 59,917 |
Between one and five years | 29,912 |
89,829 |
19. | SECURED DEBTS |
The following secured debts are included within creditors: |
Group |
£ |
Bank loans | 2,315,716 |
Other creditors | 826,713 |
Hire purchase contracts | 69,608 |
3,212,037 |
Bank loans are secured by debenture containing fixed and floating charges over all assets and intellectual property of the company and the group. |
Other creditors are secured by a debenture containing fixed and floating charges over all property or undertaking of company and the group. |
Hire purchase contracts are secured against the assets to which they relate. |
20. | PROVISIONS FOR LIABILITIES |
Group |
£ |
Deferred tax | 49,903 |
Group |
Deferred |
tax |
£ |
Charge to Statement of Comprehensive Income during period | 72,809 |
On acquisition of subsidiary | (22,906 | ) |
Balance at 30 June 2023 | 49,903 |
LSTC Group Ltd (Registered number: 14029141) |
Notes to the Consolidated Financial Statements - continued |
for the period 6 April 2022 to 30 June 2023 |
21. | CALLED UP SHARE CAPITAL |
Allotted, issued and fully paid: |
Number: | Class: | Nominal |
value: | £ |
Ordinary B | £1 | 180,000 |
Allotted and issued: |
Number: | Class: | Nominal |
value: | £ |
Ordinary A | £1 | 300,000 |
During the period, the company allotted and issued 300,000 Ordinary A shares of £1 each at par value. At 30 June 2023 50,000 Ordinary A £1 shares remain unpaid and are included within debtors. |
During the period, the company allotted and issued 180,000 Ordinary B shares of £1 each at par value in a share for share exchange as part of a business combination to acquire 100% of the share capital of L.S. Transmission Consultancy Limited. |
The Ordinary A and Ordinary B £1 shares rank pari passu and each have full voting rights and equal rights in respect of capital. In respect of dividends the company may declare and pay dividends on either one or both of the designated classes of shares and such declaration may be of different amounts. |
22. | RESERVES |
Group |
Retained |
earnings |
£ |
Profit for the period | 259,187 |
Transfer between equity holder | (3,000 | ) |
At 30 June 2023 | 256,187 |
Company |
Retained |
earnings |
£ |
Profit for the period |
At 30 June 2023 |
LSTC Group Ltd (Registered number: 14029141) |
Notes to the Consolidated Financial Statements - continued |
for the period 6 April 2022 to 30 June 2023 |
23. | NON-CONTROLLING INTERESTS |
£ |
Arising on acquisition of subsidiary | 26,182 |
Arising on profit/(loss) in the year | 12,569 |
Dividends paid to non-controlling interest | (4,000 | ) |
Other transfers between equity holders | 3,000 |
At 30th June 2023 | 37,751 |
24. | PENSION COMMITMENTS |
The group makes payments to a defined contribution pension scheme. The charge for the period |
amounted to £212,040. The amount outstanding at 30th June 2023 was £55,273. |
25. | RELATED PARTY DISCLOSURES |
The company has taken advantage of exemption, under the terms of Financial Reporting Standard 102 'The Financial Reporting Standard applicable in the UK and Republic of Ireland', not to disclose related party transactions with wholly owned subsidiaries within the group, which have been eliminated on consolidation. |
Entities over which the entity has control, joint control or significant influence |
£ |
Sales | 18,772 |
Amount due from related party | 15,147 |
Key management personnel of the entity or its parent (in the aggregate) |
£ |
Rental charges | (35,850 | ) |
Interest charges on deferred consideration | (59,469 | ) |
Deferred consideration due to related party | (826,715 | ) |
Interest is charged on deferred consideration included within other creditors at a rate of 3.5% over base per annum. |
During the year, total key management remuneration of £793,375 was paid across the group. |
Preferential dividends totalling £216,166 were paid to the holders of preference shares. |
26. | ULTIMATE CONTROLLING PARTY |
LSTC Group Limited is the ultimate parent company and the parent undertaking of the largest group for which group accounts are prepared. The company is under the control of the directors but has no ultimate controlling party. |