Company registration number 01185881 (England and Wales)
LLOYD MORRIS ELECTRICAL LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
LLOYD MORRIS ELECTRICAL LIMITED
COMPANY INFORMATION
Directors
Mr R A Hill
Mr G Morley
Mrs K J Moss
Mr J C Keenan
Mr D R Thomas
Secretary
Mrs K J Moss
Company number
01185881
Registered office
Unit 4 Blackwood Business Park
Ash Road South
Wrexham Industrial Estate
Wrexham
LL13 9UG
Auditor
Higson & Co (Nottingham) Limited
White House
Wollaton Street
Nottingham
NG1 5GF
Bankers
Barclays Bank PLC
Raymond Court
Princes Drive
Colwyn Bay
LL29 8HT
LLOYD MORRIS ELECTRICAL LIMITED
CONTENTS
Page
Strategic report
1
Directors' report
2 - 3
Independent auditor's report
4 - 7
Statement of comprehensive income
8
Statement of financial position
9
Statement of changes in equity
10
Statement of cash flows
11
Notes to the financial statements
12 - 26
LLOYD MORRIS ELECTRICAL LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2023
- 1 -
The directors present the strategic report for the year ended 31 December 2023.
Review of the business
We aim to present a review of the development and performance of our business during the year and its position at the year-end. Our review is consistent with the size and nature of our business and is written in the context of the risks and uncertainties we face.
The principal activity of the company during the year continued to be that of electrical contracting.
We consider that our key financial performance indicators are those that communicate the financial performance and strength of the company as a whole, these including turnover, gross profit and operating profit.
During the year various changes were made to improve efficiency and as a result the company has had another satisfactory trading year given the continuing difficulties faced by the UK in relation to inflationary pressures and rising interest rates. Profits for the year are in line with expectations.
The company, due to the commitment of a highly skilled and dedicated workforce working with customers and supply chain partners have been able to adjust and evolve working practices in the face of the challenges presented by the country's economic issues.
Given the straightforward nature of the business the directors are of the opinion that analysis using additional KPI's is not necessary for an understanding of the development, performance or position of the company.
Principal risks and uncertainties
The company operates in a highly competitive market.
The directors manage the operation of the company using a number of indicators including trade debtors, amounts owed by customers on contracts, cash at bank, trade and other creditors and performance ratios derived from monthly management accounts.
The principal risk that could materially affect the business, revenues, operating income, net income, net assets or liquidity is general economic risk.
This risk is being managed by regularly forecasting future cashflows and monitoring banking facilities to ensure sufficient funds are available to meet the company's financial obligations for the foreseeable future.
Development and performance
The objective of the directors is to continue to grow the turnover of the company within the water industry but they are also looking into opportunities to expand outside of this sector. The directors consider the sector they work in and those they intend to expand into as being low risk, largely due to the company's experience in the technology utilised in those sectors.
The company has secured further frameworks in 2023 and 2024 which should help secure work for the foreseeable future.
Future developments include the introduction of cloud based server systems.
The directors are confident of the company's ability to manage through the current challenges and to continue to be stronger in its chosen markets.
Mr R A Hill
Director
12 September 2024
LLOYD MORRIS ELECTRICAL LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 DECEMBER 2023
- 2 -
The directors present their annual report and financial statements for the year ended 31 December 2023.
Directors
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
Mr R A Hill
Mr G Morley
Mrs K J Moss
Mr J C Keenan
Mr D R Thomas
Results and dividends
The results for the year are set out on page 8.
No ordinary dividends were paid. The directors do not recommend payment of a final dividend.
Financial instruments
Financial assets measured at amortised cost comprise of cash at bank, trade debtors, amounts owed by customers on installation contracts, prepayments and other debtors.
Financial liabilities measured at amortised cost consist of bank and other loans, trade creditors, amounts owed to group undertakings, corporation tax, VAT, other tax and social security and accruals.
Future developments
The company has continued to invest in it's infastructure which it is believed will increase returns going forward.
Auditor
The auditor is deemed to have been re-appointed in accordance with section 487 of the companies Act 2006.
Statement of directors' responsibilities
The directors are responsible for preparing the annual report and the financial statements in accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period. In preparing these financial statements, the directors are required to:
select suitable accounting policies and then apply them consistently;
make judgements and accounting estimates that are reasonable and prudent;
state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements;
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.
LLOYD MORRIS ELECTRICAL LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 3 -
Statement of disclosure to auditor
So far as each person who was a director at the date of approving this report is aware, there is no relevant audit information of which the company’s auditor is unaware. Additionally, the directors individually have taken all the necessary steps that they ought to have taken as directors in order to make themselves aware of all relevant audit information and to establish that the company’s auditor is aware of that information.
Strategic report
The company has chosen in accordance with section 414C(11) of the Companies Act 2006 (Strategic Report and Directors Report) Regulations 2013 set out in the company's strategic report information required by schedule 7 of the Large and Medium-sized companies and Groups (Accounts and Reports) Regulations 2008.
This report was approved by the board of directors on 12 September 2024 and signed on behalf of the board by:
2024-09-17
Mr R A Hill
Director
LLOYD MORRIS ELECTRICAL LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF LLOYD MORRIS ELECTRICAL LIMITED
- 4 -
Opinion
We have audited the financial statements of Lloyd Morris Electrical Limited (the 'company') for the year ended 31 December 2023 which comprise the statement of comprehensive income, the statement of financial position, the statement of changes in equity, the statement of cash flows and notes to the financial statements, including 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 company's affairs as at 31 December 2023 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.
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 Auditor's 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.
The other information comprises the information included in the annual report other than the financial statements and our auditor's report thereon. The directors are responsible for the other information contained within the annual report. 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. 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 course of 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 our audit:
the information given in the strategic report and the directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
the strategic report and the directors' report have been prepared in accordance with applicable legal requirements.
LLOYD MORRIS ELECTRICAL LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF LLOYD MORRIS ELECTRICAL LIMITED
- 5 -
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 in the course of the audit, we have not identified material misstatements in the strategic report or the directors' report.
We have nothing to report in respect of the following matters in relation to which 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 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 directors' responsibilities statement set out on page 3, 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 is 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.
LLOYD MORRIS ELECTRICAL LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF LLOYD MORRIS ELECTRICAL LIMITED
- 6 -
Auditor's 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 an auditor’s report 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.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. 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 risk of fraud or non-compliance with laws and regulations related to:
management bias in respect of accounting estimates and judgements made;
management override of control;
posting of unusual journals or transactions
non-compliance with bank loan covenants
We focussed on those area that could give rise to a material misstatement in the Company financial statements. Our procedures included, but were not limited to:
Enquiry of management and those charged with governance around actual and potential litigation and claims, including instances of non-compliance with laws and regulations and fraud;
Reviewing minutes of meetings of those charged with governance where available;
Reviewing legal expenditure in the year to identify instances of non-compliance with laws and regulations and fraud
Reviewing financial statement disclosures and testing to supporting documentation to assess compliance with applicable laws and regulations.
Performing audit work over the risk of management override of controls, including testing of journal entries and other adjustments for appropriateness, evaluating the business rationale of significant transactions outside the normal course of business and reviewing accounting estimates for bias. In particular allowance for bad debt provisions and insurance claim liabilities.
It is the primary responsibility of management, with the oversight of those charged with governance, to ensure that the entity's operations are conducted in accordance with the provisions of laws and regulations and for the prevention and detection of fraud. Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading to a material misstatement in the financial statements or non-compliance with regulation. This risk increases the more that compliance with a law or regulation is removed from the events and transactions reflected in the financial statements, as we will be less likely to become aware of instances of non-compliance. The risk is also greater regarding irregularities occurring due to fraud rather than error, as fraud involves intentional concealment, forgery, collusion, omission or misrepresentation.
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website at: https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our Auditors' report.
LLOYD MORRIS ELECTRICAL LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF LLOYD MORRIS ELECTRICAL LIMITED
- 7 -
This report is made solely to the company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's members as a body, for our audit work, for this report, or for the opinions we have formed.
David Wallwork BA FCA (Senior Statutory Auditor)
for and on behalf of Higson & Co (Nottingham) Limited
Chartered Accountants
Statutory Auditor
White House
Wollaton Street
Nottingham
12 September 2024
NG1 5GF
LLOYD MORRIS ELECTRICAL LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2023
- 8 -
2023
2022
Notes
£
£
Turnover
3
13,511,941
11,315,837
Cost of sales
(11,023,437)
(9,465,676)
Gross profit
2,488,504
1,850,161
Distribution costs
(5,042)
(40,666)
Administrative expenses
(1,720,544)
(1,487,849)
Other operating income
29,903
28,031
Operating profit
4
792,821
349,677
Interest payable and similar expenses
8
(31,221)
(37,545)
Profit before taxation
761,600
312,132
Tax on profit
10
(187,723)
Profit for the financial year
573,877
312,132
The income statement has been prepared on the basis that all operations are continuing operations.
LLOYD MORRIS ELECTRICAL LIMITED
STATEMENT OF FINANCIAL POSITION
AS AT
31 DECEMBER 2023
31 December 2023
- 9 -
2023
2022
Notes
£
£
£
£
Fixed assets
Tangible assets
11
1,041,509
847,199
Investments
12
100
100
1,041,609
847,299
Current assets
Stocks
14
55,477
52,835
Debtors
15
3,571,229
3,217,652
Cash at bank and in hand
1,223,139
441,540
4,849,845
3,712,027
Creditors: amounts falling due within one year
16
(3,716,972)
(2,838,493)
Net current assets
1,132,873
873,534
Total assets less current liabilities
2,174,482
1,720,833
Creditors: amounts falling due after more than one year
17
(31,465)
(192,274)
Provisions for liabilities
Deferred tax liability
19
40,582
(40,582)
-
Net assets
2,102,435
1,528,559
Capital and reserves
Called up share capital
22
11,764
11,764
Profit and loss reserves
2,090,671
1,516,795
Total equity
2,102,435
1,528,559
The financial statements were approved by the board of directors and authorised for issue on 12 September 2024 and are signed on its behalf by:
Mrs K J Moss
Director
Company registration number 01185881 (England and Wales)
LLOYD MORRIS ELECTRICAL LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2023
- 10 -
Share capital
Profit and loss reserves
Total
Notes
£
£
£
Balance at 1 January 2022
11,764
1,263,993
1,275,757
Year ended 31 December 2022:
Profit and total comprehensive income
-
312,132
312,132
Dividends
9
-
(59,330)
(59,330)
Balance at 31 December 2022
11,764
1,516,795
1,528,559
Year ended 31 December 2023:
Profit and total comprehensive income
-
573,877
573,877
Balance at 31 December 2023
11,764
2,090,671
2,102,435
LLOYD MORRIS ELECTRICAL LIMITED
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2023
- 11 -
2023
2022
Notes
£
£
£
£
Cash flows from operating activities
Cash generated from operations
26
1,315,913
411,544
Interest paid
(31,221)
(37,545)
Net cash inflow from operating activities
1,284,692
373,999
Investing activities
Purchase of tangible fixed assets
(317,391)
(131,468)
Proceeds on disposal of tangible fixed assets
1,625
750
Dividends received
60,000
Other income received from investments
(60,000)
Net cash used in investing activities
(315,766)
(130,718)
Financing activities
Repayment of bank loans
(187,326)
(114,555)
Payment of finance leases obligations
(3,262)
Dividends paid
(59,330)
Net cash used in financing activities
(187,326)
(177,147)
Net increase in cash and cash equivalents
781,600
66,134
Cash and cash equivalents at beginning of year
441,540
375,406
Cash and cash equivalents at end of year
1,223,139
441,540
LLOYD MORRIS ELECTRICAL LIMITED
STATEMENT OF CASH FLOWS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 12 -
1
Judgements and key sources of estimation uncertainty
In the application of the company’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.
2
Accounting policies
Company information
Lloyd Morris Electrical Limited is a private company limited by shares incorporated in England and Wales. The registered office is Unit 4 Blackwood Business Park, Ash Road South, Wrexham Industrial Estate, Wrexham, LL13 9UG.
2.1
Accounting convention
These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006.
The financial statements are prepared in sterling, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £.
The financial statements have been prepared under the historical cost convention. The principal accounting policies adopted are set out below.
2.2
The company is exempt from the obligation to prepare and deliver group accounts as it is included in the accounts of Cema Group Limited, registered in England number 09874998.
These financial statements therefore represent information about the company as an individual undertaking and not about its group.
2.3
Going concern
Atruet the time of approving the financial statements, the directors have a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future. Thus the directors continue to adopt the going concern basis of accounting in preparing the financial statements.
2.4
Turnover
Turnover is recognised at the fair value of the consideration received or receivable for goods and services provided in the normal course of business, and is shown net of VAT and other sales related taxes. The fair value of consideration takes into account trade discounts, settlement discounts and volume rebates.
Revenue from contracts for the provision of professional services is recognised by reference to the stage of completion when the stage of completion, costs incurred and costs to complete can be estimated reliably. The stage of completion is calculated by comparing costs incurred, mainly in relation to contractual hourly staff rates and materials, as a proportion of total costs. Where the outcome cannot be estimated reliably, revenue is recognised only to the extent of the expenses recognised that it is probable will be recovered.
LLOYD MORRIS ELECTRICAL LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
2
Accounting policies
(Continued)
- 13 -
2.5
Research and development expenditure
Research expenditure is written off against profits in the year in which it is incurred. Identifiable development expenditure is capitalised to the extent that the technical, commercial and financial feasibility can be demonstrated.
2.6
Tangible fixed assets
Tangible fixed assets are initially measured at cost and subsequently measured at cost or valuation, net of depreciation and any impairment losses.
Depreciation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:
Freehold land and buildings
2% straight line
Plant and equipment
25% reducing balance
Fixtures and fittings
25% reducing balance
Motor vehicles
25% reducing balance
The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is credited or charged to profit or loss.
2.7
Fixed asset investments
Interests in subsidiaries, associates and jointly controlled entities are initially measured at cost and subsequently measured at cost less any accumulated impairment losses. The investments are assessed for impairment at each reporting date and any impairment losses or reversals of impairment losses are recognised immediately in profit or loss.
A subsidiary is an entity controlled by the company. Control is the power to govern the financial and operating policies of the entity so as to obtain benefits from its activities.
An associate is an entity, being neither a subsidiary nor a joint venture, in which the company holds a long-term interest and where the company has significant influence. The company considers that it has significant influence where it has the power to participate in the financial and operating decisions of the associate.
Entities in which the company has a long term interest and shares control under a contractual arrangement are classified as jointly controlled entities.
2.8
Impairment of fixed assets
At each reporting period end date, the company reviews the carrying amounts of its tangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the company estimates the recoverable amount of the cash-generating unit to which the asset belongs.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.
LLOYD MORRIS ELECTRICAL LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
2
Accounting policies
(Continued)
- 14 -
Recognised impairment losses are reversed if, and only if, the reasons for the impairment loss have ceased to apply. Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.
2.9
Stocks
Stocks are stated at the lower of cost and estimated selling price less costs to complete and sell. Cost comprises direct materials and, where applicable, direct labour costs and those overheads that have been incurred in bringing the stocks to their present location and condition.
At each reporting date, an assessment is made for impairment. Any excess of the carrying amount of stocks over its estimated selling price less costs to complete and sell is recognised as an impairment loss in profit or loss. Reversals of impairment losses are also recognised in profit or loss.
2.10
Contracts
Where the outcome of contracts can be reliably estimated, contract revenue and contract costs are recognised by reference to the stage of completion of the contract activity as at the year end.
Where the outcome of contracts cannot be estimated reliably, revenue is recognised to the extent of contract costs incurred that it is probable will be recoverable, and contract costs are recognised as an expense in the period in which they are incurred.
When it is probable that total contract costs will exceed total contract revenue, the expected loss is expenses immediately, with a corresponding provision for an onerous contract being recognised.
Where the collectability of an amount already recognised as contract revenue is no longer probable, the uncollectible amount is expensed rather than recognised as an adjustment to the amount of contract revenue.
The entity uses the percentage of completion method to determine the amounts to be recognised in the period. The stage of completion is measured by reference to the contract costs incurred up to the end of the reporting period as a percentage of total estimated costs for each contract. Costs incurred for work performed to date do not include costs relating to future activity, such as for materials or prepayments.
2.11
Cash and cash equivalents
Cash and cash equivalents are basic financial assets and include cash in hand, deposits held at call with banks, other short-term liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities.
2.12
Financial instruments
The company has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.
Financial instruments are recognised in the company's statement of financial position when the company becomes party to the contractual provisions of the instrument.
Financial assets and liabilities are offset, with the net amounts presented in the financial statements, when there is a legally 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.
LLOYD MORRIS ELECTRICAL LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
2
Accounting policies
(Continued)
- 15 -
Basic financial assets
Basic financial assets, which include debtors and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised.
Other financial assets
Other financial assets, including investments in equity instruments which are not subsidiaries, associates or joint ventures, are initially measured at fair value, which is normally the transaction price. Such assets are subsequently carried at fair value and the changes in fair value are recognised in profit or loss, except that investments in equity instruments that are not publicly traded and whose fair values cannot be measured reliably are measured at cost less impairment.
Impairment of financial assets
Financial assets, other than those held at fair value through profit and loss, are assessed for indicators of impairment at each reporting end date.
Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected. If an asset is impaired, the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset’s original effective interest rate. The impairment loss is recognised in profit or loss.
If there is a decrease in the impairment loss arising from an event occurring after the impairment was recognised, the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been, had the impairment not previously been recognised. The impairment reversal is recognised in profit or loss.
Derecognition of financial assets
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the company transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.
Classification of financial liabilities
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the company after deducting all of its liabilities.
Basic financial liabilities
Basic financial liabilities, including creditors, bank loans, loans from fellow group companies and preference shares that are classified as debt, are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future payments discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.
Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.
Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Amounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.
LLOYD MORRIS ELECTRICAL LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
2
Accounting policies
(Continued)
- 16 -
Other financial liabilities
Derivatives, including interest rate swaps and forward foreign exchange contracts, are not basic financial instruments. Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured at their fair value. Changes in the fair value of derivatives are recognised in profit or loss in finance costs or finance income as appropriate, unless hedge accounting is applied and the hedge is a cash flow hedge.
Debt instruments that do not meet the conditions in FRS 102 paragraph 11.9 are subsequently measured at fair value through profit or loss. Debt instruments may be designated as being measured at fair value through profit or loss to eliminate or reduce an accounting mismatch or if the instruments are measured and their performance evaluated on a fair value basis in accordance with a documented risk management or investment strategy.
Derecognition of financial liabilities
Financial liabilities are derecognised when the company’s contractual obligations expire or are discharged or cancelled.
2.13
Equity instruments
Equity instruments issued by the company are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the company.
2.14
Taxation
The tax expense represents the sum of the tax currently payable and deferred tax.
Current tax
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the income statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The company’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.
Deferred tax
Deferred tax liabilities are generally recognised for all timing differences and deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Such assets and liabilities are not recognised if the timing difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.
The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the income statement, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset when the company has a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.
LLOYD MORRIS ELECTRICAL LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
2
Accounting policies
(Continued)
- 17 -
2.15
Employee benefits
The costs of short-term employee benefits are recognised as a liability and an expense, unless those costs are required to be recognised as part of the cost of stock or fixed assets.
The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received.
Termination benefits are recognised immediately as an expense when the company is demonstrably committed to terminate the employment of an employee or to provide termination benefits.
2.16
Retirement benefits
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
The company operates a defined benefit pension scheme for certain employees. The contributions to the scheme are charged to the profit and loss account so as to spread the cost of pensions over the service lives of employees. Variations from the regular costs are spread over the average expected remaining working lives of current members in the scheme.
2.17
Leases
Rentals payable under operating leases, including any lease incentives received, are charged to profit or loss on a straight line basis over the term of the relevant lease except where another more systematic basis is more representative of the time pattern in which economic benefits from the leases asset are consumed.
3
Turnover
2023
2022
£
£
Turnover analysed by class of business
Assembly of control panels
5,890,376
5,212,858
Installation contracts
7,621,565
6,102,979
13,511,941
11,315,837
The whole of the turnover is attributable to the principal activity of the company wholly undertaken in the United Kingdom.
4
Operating profit
2023
2022
Operating profit for the year is stated after charging:
£
£
Research and development costs
-
105,533
Depreciation of owned tangible fixed assets
117,758
67,955
Loss on disposal of tangible fixed assets
3,698
1,237
Operating lease charges
136,446
167,709
LLOYD MORRIS ELECTRICAL LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 18 -
5
Auditor's remuneration
2023
2022
Fees payable to the company's auditor and associates:
£
£
For audit services
Audit of the financial statements of the company
15,600
14,860
6
Employees
The average monthly number of persons (including directors) employed by the company during the year was:
2023
2022
Number
Number
Staff
30
30
Hourly Paid
87
92
Total
117
122
Their aggregate remuneration comprised:
2023
2022
£
£
Wages and salaries
4,588,474
4,248,269
Social security costs
409,770
404,044
Pension costs
135,054
107,015
5,133,298
4,759,328
7
Directors' remuneration
2023
2022
£
£
Remuneration for qualifying services
174,571
173,799
Company pension contributions to defined contribution schemes
32,063
12,041
206,634
185,840
The number of directors for whom retirement benefits are accruing under defined contribution schemes amounted to 3 (2022 3)
LLOYD MORRIS ELECTRICAL LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 19 -
8
Interest payable and similar expenses
2023
2022
£
£
Interest on financial liabilities measured at amortised cost:
Interest on bank overdrafts and loans
15,124
17,609
Interest payable to group undertakings
16,097
19,082
31,221
36,691
Other finance costs:
Interest on finance leases and hire purchase contracts
-
854
31,221
37,545
9
Dividends
2023
2022
£
£
Final paid
59,330
10
Taxation
2023
2022
£
£
Current tax
UK corporation tax on profits for the current period
147,141
Deferred tax
Origination and reversal of timing differences
40,582
Total tax charge
187,723
LLOYD MORRIS ELECTRICAL LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
10
Taxation
(Continued)
- 20 -
The actual charge for the year can be reconciled to the expected charge for the year based on the profit or loss and the standard rate of tax as follows:
2023
2022
£
£
Profit before taxation
761,600
312,132
Expected tax charge based on the standard rate of corporation tax in the UK of 23.52% (2022: 19.00%)
179,128
59,305
Tax effect of expenses that are not deductible in determining taxable profit
147
Group relief
(5,812)
Effect of capital allowances and depreciation
(31,987)
(15,167)
Utilisation of tax losses
(38,473)
Deferred taxation
40,582
Taxation charge for the year
187,723
-
11
Tangible fixed assets
Freehold land and buildings
Plant and equipment
Fixtures and fittings
Motor vehicles
Total
£
£
£
£
£
Cost
At 1 January 2023
760,641
143,302
152,189
316,751
1,372,883
Additions
102,342
12,521
42,336
160,192
317,391
Disposals
(31,257)
(31,257)
At 31 December 2023
862,983
155,823
194,525
445,686
1,659,017
Depreciation and impairment
At 1 January 2023
113,548
125,813
139,203
147,120
525,684
Depreciation charged in the year
15,300
7,502
13,831
81,125
117,758
Eliminated in respect of disposals
(25,934)
(25,934)
At 31 December 2023
128,848
133,315
153,034
202,311
617,508
Carrying amount
At 31 December 2023
734,135
22,508
41,491
243,375
1,041,509
At 31 December 2022
647,093
17,489
12,986
169,631
847,199
12
Fixed asset investments
2023
2022
Notes
£
£
Investments in subsidiaries
13
100
100
LLOYD MORRIS ELECTRICAL LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 21 -
13
Subsidiaries
Details of the company's subsidiaries at 31 December 2023 are as follows:
Name of undertaking
Registered office
Class of
% Held
shares held
Direct
Merlin Systems Limited
Unit 4
Ordinary
100
Blackwood Business Park
Ash Road South
Wrexham Industrial Estate
Wrexham LL13 9UG
The aggregate capital and reserves and the result for the year of the subsidiaries noted above was as follows:
Name of undertaking
Capital and Reserves
Profit/(Loss)
£
£
Merlin Systems Limited
220,897
166,822
14
Stocks
2023
2022
£
£
Raw materials
55,477
52,835
15
Debtors
2023
2022
Amounts falling due within one year:
£
£
Trade debtors
3,218,374
2,560,944
Amounts owed by customers on contracts
338,436
645,163
Prepayments and accrued income
14,419
11,545
3,571,229
3,217,652
LLOYD MORRIS ELECTRICAL LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 22 -
16
Creditors: amounts falling due within one year
2023
2022
Notes
£
£
Bank loans
18
93,198
119,715
Trade creditors
1,683,483
1,463,630
Amounts owed to group undertakings
407,962
299,600
Corporation tax
147,141
Other taxation and social security
200,687
247,198
Deferred income
20
1,072,347
594,679
Accruals and deferred income
112,154
113,671
3,716,972
2,838,493
17
Creditors: amounts falling due after more than one year
2023
2022
Notes
£
£
Bank loans
18
31,465
192,274
18
Loans
2023
2022
£
£
Bank loans
124,663
311,989
Payable within one year
93,198
119,715
Payable after one year
31,465
192,274
Barclays Bank PLC hold as security a limited guarantee dated 8 May 2009 given by Cema Limited, the parent company for £300,000, a charge over the land and buildings at Miners Road, Llay Industrial Estate, Llay, Wrexham LL12 0PJ on the Bank's standard form dated 27 June 2014, a charge over land behind Miners Road, Llay Industrial Estate, Llay, Wrexham LL12 0PJ on the Bank's standard form dated 7 August 2015 and a cross guarantee and debenture between Lloyd Morris Electrical Limited and Merlin Systems Limited dated 22 November 2019.
Barclays Bank PLC also hold as security a limited guarantee given by the Secretary of State for business, energy and industrial strategy for £200,000 dated 26 May 2020.
19
Deferred taxation
The following are the major deferred tax liabilities and assets recognised by the company and movements thereon:
Liabilities
Liabilities
2023
2022
Balances:
£
£
Accelerated capital allowances
40,582
-
LLOYD MORRIS ELECTRICAL LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
19
Deferred taxation
(Continued)
- 23 -
2023
Movements in the year:
£
Liability at 1 January 2023
-
Charge to profit or loss
40,582
Liability at 31 December 2023
40,582
The deferred tax liability set out above is expected to reverse within [12 months] and relates to accelerated capital allowances that are expected to mature within the same period.
20
Deferred income
2023
2022
£
£
Other deferred income
1,072,347
594,679
LLOYD MORRIS ELECTRICAL LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 24 -
21
Retirement benefit schemes
2023
2022
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
135,054
107,015
The company operates a defined contribution pension scheme for all qualifying employees. The assets of the scheme are held separately from those of the company in an independently administered fund.
Defined benefit schemes
The amount recognised in profit or less in relation to defined benefit plans was £NIL (2022 £NIL).
Lloyd Morris Electrical Limited operates a defined benefit pension scheme through Prudential Platinum Pension which is a centralised scheme available to employers throughout the United Kingdom. Each participating employer (or group company arrangement) has its owned ring-fenced section and accordingly there is no cross subsidy between employers, other than in a group company arrangement.
The scheme provides retirement and death in service benefits for members and their dependants. It is a deferred scheme which means that the benefits under it are calculated on a pre-determined basis specified in the scheme's rules.
At 31 December 2023 there were no active members (2022 0), 1 deferred member (2022 1) and 5 pensioner annuitants (2022 5).
Formal actuarial valuations are carried out every 3 years.
The latest formal actuarial valuation was undertaken at 31 December 2022 and showed a funding level of 114% at that date (31/12/2019 108%). The sub scheme showed a surplus of £62,000 (2019 £57,300) at the valuation date.
Cema Limited purchased the share capital of Lloyd Morris Electrical Limited on 25 February 2009 and a clause was included in the purchase agreement indemnifying the company against any losses suffered in respect of the scheme.
There is a reserve of £20,000 (2022 £20,000) included in accruals to cover any shortfall that may arise.
22
Share capital
2023
2022
2023
2022
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Ordinary shares of £1 each
8,000
8,000
8,000
8,000
Ordinary A shares of £1 each
2,000
2,000
2,000
2,000
Ordinary B shares of £1 each
1,764
1,764
1,764
1,764
11,764
11,764
11,764
11,764
LLOYD MORRIS ELECTRICAL LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 25 -
23
Operating lease commitments
Lessee
At the reporting end date the company had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:
2023
2022
£
£
Within one year
2,909
8,125
Between two and five years
166,890
198,231
169,799
206,356
24
Ultimate controlling party
The company is under the control of Cema Group Limited registered in England and Wales number 09874998.
The registered office address is White House, Wollaton Street, Nottingham NG1 5GF.
25
Related party transactions
Transactions with related parties
During the year the company entered into the following transactions with related parties:
Name of related party
Nature of relationship
Entities with control, joint control or significant influence over the company
Parent company
Other related parties
Other group companies
Description of
Income
Payments
transaction
2023
2022
2023
2022
£
£
£
£
Entities with control, joint control or significant influence over the company
126,333
88,009
273,723
164,644
Other related parties
148,788
84,539
493,662
270,769
Balances with related parties
Amounts owed by
Amounts owed to
related parties
related parties
2023
2022
2023
2022
£
£
£
£
Entities with control, joint control or significant influence over the company
-
-
107,706
166,451
Other related parties
-
-
300,256
133,149
LLOYD MORRIS ELECTRICAL LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
25
Related party transactions
(Continued)
- 26 -
The companies are related parties due to the group structure and/or F G Ciaurro having an interest in these companies. The transactions in the year related to net sales or purchases (shown in brackets) carried out on an arms length basis. Any difference between the transactional values and the balances owed by/to relates to the movement of funds between customers.
During the year Lloyd Morris Electrical Limited paid a dividend of £Nil (2022 £59,330) to Cema Group Limited.
26
Cash generated from operations
2023
2022
£
£
Profit for the year after tax
573,877
312,132
Adjustments for:
Taxation charged
187,723
Finance costs
31,221
37,545
Loss on disposal of tangible fixed assets
3,698
1,237
Depreciation and impairment of tangible fixed assets
117,758
67,955
Movements in working capital:
(Increase)/decrease in stocks
(2,642)
9,090
Increase in debtors
(353,577)
(429,671)
Increase/(decrease) in creditors
280,187
(181,423)
Increase in deferred income
477,668
594,679
Cash generated from operations
1,315,913
411,544
27
Analysis of changes in net funds
1 January 2023
Cash flows
31 December 2023
£
£
£
Cash at bank and in hand
441,540
781,599
1,223,139
Borrowings excluding overdrafts
(311,989)
187,326
(124,663)
129,551
968,925
1,098,476
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