Company registration number 2527559 (England and Wales)
CEMA LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
CEMA LIMITED
COMPANY INFORMATION
Directors
Mr F Ciaurro
Mr C Arthey
Mr P Gregory
Mr G Morley
Mr M Parsons
Mr R Sharpe
Mr S Roberts
Mr P Wright
Mr D P Francis
Secretary
Mrs C Hardy
Company number
2527559
Registered office
White House
Wollaton Street
Nottingham
NG1 5GF
Auditor
Higson & Co (Nottingham) Limited
White House
Wollaton Street
Nottingham
NG1 5GF
Business address
Pintail Close
Victoria Business Park
Netherfield
Nottingham
NG4 2SG
CEMA LIMITED
CONTENTS
Page
Strategic report
1
Directors' report
2 - 3
Independent auditor's report
4 - 7
Statement of income and retained earnings
8
Statement of financial position
9
Statement of cash flows
10
Notes to the financial statements
11 - 25
CEMA 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
The company has had a satisfactory trading year in line with the previous year. Profits for the year are as forecasted.
Financial risk management objectives and policies
The principal risk that could materially affect the business, revenues, operating income, net income, net assets or liquidity is general economic risk. The knock on effect of Brexit, the pandemic and the war in Ukraine have resulted in an increase in fuel and energy prices, coupled with unstable steel and copper prices and with inflation currently at 7% have created some uncertainty. This current 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 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 technology utilised in these sectors.
The company has continued with the new partnership from last year with a water board in the south of the country and and have retained all frameworks for this.
They directors are also pleased to announce the continuation of another strong partnership with another water board in the north.
Future developments that are planned to be introduced internally over the next 12 months are;
Moving towards cloud based server systems
Reconstruction of the Sage 200 system, removing obsolete parts of the system therefore future proofing the management of the system, this work will be completed later in the calendar year.
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.
Key performance indicators
Mr F Ciaurro
Director
12 September 2024
CEMA 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.
Principal activities
The principal activity of the company continued to be that of an electrical engineering company, specialising in understanding and meeting the requirements of the UK water industry.
Results and dividends
The results for the year are set out on page 8.
Ordinary dividends were paid amounting to £2,000. The directors do not recommend payment of a further dividend.
Directors
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
Mr F Ciaurro
Mr C Arthey
Mr P Gregory
Mr G Morley
Mr M Parsons
Mr R Sharpe
Mr S Roberts
Mr P Wright
Mr D P Francis
Auditor
In accordance with the company's articles, a resolution proposing that Higson & Co (Nottingham) Limited be reappointed as auditor of the company will be put at a General Meeting.
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.
CEMA LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 3 -
Strategic report
The company has chosen in accordance with Companies Act 2006, s. 414C(11) to set out in the company's strategic report information required by Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008, Sch. 7 to be contained in the directors' report.
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.
On behalf of the board
Mr F Ciaurro
Director
12 September 2024
CEMA LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF CEMA LIMITED
- 4 -
Opinion
We have audited the financial statements of Cema Limited (the 'company') for the year ended 31 December 2023 which comprise the statement of income and retained earnings, the statement of financial position, 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 FRS 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
In auditing the financial statements, we have concluded that the director's 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 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.
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.
CEMA LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF CEMA 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 and 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, 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.
CEMA LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF CEMA 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 A further description of our responsibilities for the audit of the financial statements is located at the Financial Reporting Council’s website at: https://www.frc.org.uk/auditorsresponsibilities.
CEMA LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF CEMA 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
NG1 5GF
12 September 2024
CEMA LIMITED
STATEMENT OF INCOME AND RETAINED EARNINGS
FOR THE YEAR ENDED 31 DECEMBER 2023
- 8 -
2023
2022
Notes
£
£
Turnover
3
24,538,227
24,760,240
Cost of sales
(20,993,323)
(21,510,011)
Gross profit
3,544,904
3,250,229
Administrative expenses
(3,146,009)
(3,182,616)
Other operating income
76,799
Operating profit
8
475,694
67,613
Interest receivable and similar income
7
17,827
47,363
Interest payable and similar expenses
11
(22,397)
(40,579)
Amounts written off investments
9
-
(6,997)
Profit before taxation
471,124
67,400
Tax on profit
10
(105,443)
(67,686)
Profit/(loss) for the financial year
365,681
(286)
Retained earnings brought forward
2,553,165
2,573,451
Dividends
12
(2,000)
(20,000)
Retained earnings carried forward
2,916,846
2,553,165
The income statement has been prepared on the basis that all operations are continuing operations.
CEMA LIMITED
STATEMENT OF FINANCIAL POSITION
AS AT
31 DECEMBER 2023
31 December 2023
- 9 -
2023
2022
Notes
£
£
£
£
Fixed assets
Tangible assets
13
294,957
301,296
Investment property
14
1,087,949
683,674
1,382,906
984,970
Current assets
Stocks
15
99,970
87,489
Debtors
16
8,309,423
8,315,323
Cash at bank and in hand
294,485
1,033,636
8,703,878
9,436,448
Creditors: amounts falling due within one year
17
(6,420,355)
(7,059,199)
Net current assets
2,283,523
2,377,249
Total assets less current liabilities
3,666,429
3,362,219
Creditors: amounts falling due after more than one year
18
(126,389)
(201,485)
Provisions for liabilities
Deferred tax liability
20
69,209
53,584
Defined benefit pension liability
21
541,000
541,000
(610,209)
(594,584)
Net assets
2,929,831
2,566,150
Capital and reserves
Called up share capital
22
10,017
10,017
Share premium account
2,968
2,968
Profit and loss reserves
2,916,846
2,553,165
Total equity
2,929,831
2,566,150
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:
Mr F Ciaurro
Director
Company registration number 2527559 (England and Wales)
CEMA LIMITED
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2023
- 10 -
2023
2022
Notes
£
£
£
£
Cash flows from operating activities
Cash absorbed by operations
27
(139,124)
(20,184)
Interest paid
(22,397)
(40,579)
Income taxes paid
(273,282)
Net cash outflow from operating activities
(161,521)
(334,045)
Investing activities
Purchase of tangible fixed assets
(122,708)
(351,029)
Proceeds on disposal of tangible fixed assets
18,517
120,588
Purchase of investment property
(404,276)
(448,260)
Purchase of investments
(506,077)
Proceeds on disposal of investments
-
275,058
Receipts arising from loans made
(6,997)
Interest received
17,827
16,419
Dividends received
30,944
Net cash used in investing activities
(996,717)
(363,277)
Financing activities
Payment of finance leases obligations
(84,993)
160,129
Dividends paid
(2,000)
(20,000)
Net cash (used in)/generated from financing activities
(86,993)
140,129
Net decrease in cash and cash equivalents
(1,245,231)
(557,193)
Cash and cash equivalents at beginning of year
1,033,636
1,590,829
Cash and cash equivalents at end of year
294,485
1,033,636
CEMA LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
- 11 -
1
Accounting policies
Company information
Cema Limited is a private company limited by shares incorporated in England and Wales. The registered office is White House, Wollaton Street, Nottingham, NG1 5GF. The principal place of business is Pintail Close, Victoria Business Park, Netherfield, Nottingham, NG4 2SG.
1.1
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, modified to include the revaluation of freehold properties and to include investment properties and certain financial instruments at fair value. The principal accounting policies adopted are set out below.
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.
1.2
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.
1.3
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 the sale of goods is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer (usually on dispatch of the goods), the amount of revenue can be measured reliably, it is probable that the economic benefits associated with the transaction will flow to the entity and the costs incurred or to be incurred in respect of the transaction can be measured reliably.
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.
1.4
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.
CEMA LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 12 -
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:
Plant and equipment
15% reducing balance
Fixtures and fittings
15% reducing balance
Motor vehicles
25% straight line
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.
1.5
Investment property
Investment property, which is property held to earn rentals and/or for capital appreciation, is initially recognised at cost, which includes the purchase cost and any directly attributable expenditure. Subsequently it is measured at fair value at the reporting end date. Changes in fair value are recognised in profit or loss.
1.6
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.
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.
1.7
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.
CEMA LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 13 -
1.8
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.
1.9
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.
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.
CEMA LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 14 -
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.
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.
1.10
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.
1.11
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.
CEMA LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 15 -
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.
1.12
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.
1.13
Retirement benefits
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
The cost of providing benefits under defined benefit plans is determined separately for each plan using the projected unit credit method, and is based on actuarial advice.
The change in the net defined benefit liability arising from employee service during the year is recognised as an employee cost. The cost of plan introductions, benefit changes, settlements and curtailments are recognised as an expense in measuring profit or loss in the period in which they arise.
The net interest element is determined by multiplying the net defined benefit liability by the discount rate, taking into account any changes in the net defined benefit liability during the period as a result of contribution and benefit payments. The net interest is recognised in profit or loss as other finance revenue or cost.
Remeasurement changes comprise actuarial gains and losses, the effect of the asset ceiling and the return on the net defined benefit liability excluding amounts included in net interest. These are recognised immediately in other comprehensive income in the period in which they occur and are not reclassified to profit and loss in subsequent periods.
The net defined benefit pension asset or liability in the balance sheet comprises the total for each plan of the present value of the defined benefit obligation (using a discount rate based on high quality corporate bonds), less the fair value of plan assets out of which the obligations are to be settled directly. Fair value is based on market price information, and in the case of quoted securities is the published bid price. The value of a net pension benefit asset is limited to the amount that may be recovered either through reduced contributions or agreed refunds from the scheme.
1.14
Leases
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessees. All other leases are classified as operating leases.
Assets held under finance leases are recognised as assets at the lower of the assets fair value at the date of inception and the present value of the minimum lease payments. The related liability is included in the statement of financial position as a finance lease obligation. Lease payments are treated as consisting of capital and interest elements. The interest is charged to profit or loss so as to produce a constant periodic rate of interest on the remaining balance of the liability.
CEMA LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 16 -
Rental income from operating leases is recognised on a straight line basis over the term of the relevant lease. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised on a straight line basis over the lease term.
2
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.
3
Turnover and other revenue
2023
2022
£
£
Turnover analysed by class of business
Assembly of control panels & Installation contracts
24,538,227
24,760,240
2023
2022
£
£
Other revenue
Interest income
17,827
16,419
Dividends received
-
30,944
The whole of the turnover is attributable to the principal activity of the company wholly undertaken in the United Kingdom.
4
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
31,585
32,763
CEMA LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 17 -
5
Employees
The average monthly number of persons (including directors) employed by the company during the year was:
2023
2022
Number
Number
Management and administration
45
44
Production
121
112
Total
166
156
Their aggregate remuneration comprised:
2023
2022
£
£
Wages and salaries
7,010,400
6,607,882
Social security costs
578,312
547,787
Pension costs
121,900
110,135
7,710,612
7,265,804
6
Directors' remuneration
2023
2022
£
£
Remuneration for qualifying services
453,489
727,125
Company pension contributions to defined contribution schemes
14,112
13,757
467,601
740,882
The number of directors for whom retirement benefits are accruing under defined benefit schemes amounted to 4 (2022 - 4).
Remuneration disclosed above include the following amounts paid to the highest paid director:
2023
2022
£
£
Remuneration for qualifying services
69,191
74,374
CEMA LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 18 -
7
Interest receivable and similar income
2023
2022
£
£
Interest income
Other interest income
17,827
16,419
Other income from investments
Dividends received
30,944
Total income
17,827
47,363
8
Operating profit
2023
2022
Operating profit for the year is stated after charging/(crediting):
£
£
Depreciation of owned tangible fixed assets
129,047
120,620
Profit on disposal of tangible fixed assets
(18,517)
(38,259)
9
Amounts written off investments
2023
2022
£
£
Gain/(loss) on disposal of investments held at fair value
-
(6,997)
10
Taxation
2023
2022
£
£
Current tax
UK corporation tax on profits for the current period
89,818
Adjustments in respect of prior periods
26,731
Total current tax
89,818
26,731
Deferred tax
Origination and reversal of timing differences
15,625
40,955
Total tax charge
105,443
67,686
CEMA LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
10
Taxation
(Continued)
- 19 -
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
471,124
67,400
Expected tax charge based on the standard rate of corporation tax in the UK of 25.00% (2022: 19.00%)
117,781
12,806
Tax effect of expenses that are not deductible in determining taxable profit
105,640
82,361
Unutilised tax losses carried forward
151,117
Change in unrecognised deferred tax assets
(8,698)
(44,618)
Effect of change in corporation tax rate
(2,329)
Permanent capital allowances in excess of depreciation
(106,951)
(133,980)
Taxation charge for the year
105,443
67,686
11
Interest payable and similar expenses
2023
2022
£
£
Other finance costs:
Interest on finance leases and hire purchase contracts
22,397
35,418
Other interest
5,161
22,397
40,579
12
Dividends
2023
2022
£
£
Final paid
2,000
20,000
CEMA LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 20 -
13
Tangible fixed assets
Plant and equipment
Fixtures and fittings
Motor vehicles
Total
£
£
£
£
Cost
At 1 January 2023
140,775
551,106
719,923
1,411,804
Additions
95,713
26,995
122,708
Disposals
(46,995)
(46,995)
At 31 December 2023
140,775
646,819
699,923
1,487,517
Depreciation and impairment
At 1 January 2023
126,112
508,133
476,263
1,110,508
Depreciation charged in the year
2,200
20,803
106,044
129,047
Eliminated in respect of disposals
(46,995)
(46,995)
At 31 December 2023
128,312
528,936
535,312
1,192,560
Carrying amount
At 31 December 2023
12,463
117,883
164,611
294,957
At 31 December 2022
14,663
42,973
243,660
301,296
The net carrying value of tangible fixed assets includes the following in respect of assets held under finance leases or hire purchase contracts.
2023
2022
£
£
Motor vehicles
164,611
243,660
14
Investment property
2023
£
Fair value
At 1 January 2023
683,673
Additions through external acquisition
404,276
At 31 December 2023
1,087,949
Investment property comprises of an apartment at Avenida De Francia, Malaga, Spain and four residential properties in the UK. The fair value of the investment properties have been arrived at on the basis of a valuation carried by the directors. The valuation was made on an open market value basis by reference to market evidence of transaction prices for similar properties.
CEMA LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 21 -
15
Stocks
2023
2022
£
£
Raw materials and consumables
99,970
87,489
16
Debtors
2023
2022
Amounts falling due within one year:
£
£
Trade debtors
5,909,366
2,996,075
Amounts owed by group undertakings
1,404,481
4,294,190
Other debtors
971,586
993,826
Prepayments and accrued income
23,990
31,232
8,309,423
8,315,323
17
Creditors: amounts falling due within one year
2023
2022
Notes
£
£
Obligations under finance leases
19
96,467
106,364
Trade creditors
3,015,584
2,576,201
Amounts owed to group undertakings
1,332,137
2,438,351
Corporation tax
89,818
Other taxation and social security
179,131
398,810
Other creditors
63,265
309,368
Accruals and deferred income
1,643,953
1,230,105
6,420,355
7,059,199
18
Creditors: amounts falling due after more than one year
2023
2022
Notes
£
£
Obligations under finance leases
19
126,389
201,485
19
Finance lease obligations
2023
2022
Future minimum lease payments due under finance leases:
£
£
Within one year
96,467
106,364
In two to five years
126,389
201,485
222,856
307,849
CEMA LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
19
Finance lease obligations
(Continued)
- 22 -
Finance lease payments represent rentals payable by the company for certain items of plant and machinery. Leases include purchase options at the end of the lease period, and no restrictions are placed on the use of the assets. The average lease term is 5 years. All leases are on a fixed repayment basis and no arrangements have been entered into for contingent rental payments.
20
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
69,209
53,584
2023
Movements in the year:
£
Liability at 1 January 2023
53,584
Charge to profit or loss
15,625
Liability at 31 December 2023
69,209
The deferred tax liability set out above relates to accelerated capital allowances.
21
Retirement benefit schemes
2023
2022
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
121,900
110,135
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 company operates a defined benefit scheme for qualifying employees.
The most recent actuarial valuations of plan assets and the present value of the defined benefit obligation were carried out at by the Fellow of the Institute of Actuaries in 2018. The present value of the defined benefit obligation, the related current service cost and past service cost were measured using the projected unit credit method.
CEMA LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
21
Retirement benefit schemes
(Continued)
- 23 -
2023
2022
Key assumptions
%
%
Discount rate
2.7
2.7
Inflation RPI
3.2
3.2
Inflation CPI
2.1
2.1
Mortality assumptions
2023
2022
Assumed life expectations on retirement at age 65:
Years
Years
The amounts included in the statement of financial position arising from the company's obligations in respect of defined benefit plans are as follows:
2023
2022
Liabilities/(assets):
£
£
Present value of defined benefit obligations
541,000
541,000
Deficit in scheme
541,000
541,000
2023
Movements in the present value of defined benefit obligations
£
Liabilities at 1 January 2023 and 31 December 2023
541,000
The defined benefit obligations arise from plans which are wholly or partly funded.
The actual return on plan assets was £- (2022 - £-).
22
Share capital
2023
2022
2023
2022
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Ordinary shares of £1 each
10,000
10,000
10,000
10,000
Ordinary B shares of £1 each
8
8
8
8
Ordinary C shares of £1 each
5
5
5
5
Ordinary D shares of £1 each
4
4
4
4
10,017
10,017
10,017
10,017
23
Related party transactions
Transactions with related parties
During the year the company entered into the following transactions with related parties:
CEMA LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
23
Related party transactions
(Continued)
- 24 -
Sales
Purchases
2023
2022
2023
2022
£
£
£
£
Entities with control, joint control or significant influence over the company
1,500
843,398
873,020
Other related parties
419,074
688,341
1,609,455
2,281,298
The companies are related parties due to the group structure and / or the directors 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 companies.
2023
2022
Amounts due to related parties
£
£
Other related parties
1,332,137
2,438,351
The following amounts were outstanding at the reporting end date:
2023
2022
Amounts due from related parties
£
£
Entities with control, joint control or significant influence over the company
1,035,844
1,639,574
Other related parties
368,637
2,654,616
24
Directors' transactions
Loans with interest charged at HMRC approved rates were made to the following directors:
Description
Opening balance
Amounts advanced
Amounts repaid
Closing balance
£
£
£
£
Mr F Ciaurro - Directors loan account
(213,560)
285,042
(71,482)
-
Mr R Sharpe - Directors loan account
(4,493)
-
-
(4,493)
(218,053)
285,042
(71,482)
(4,493)
CEMA LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 25 -
25
Ultimate controlling party
The company is under the control of Cema Group Limited registered in England & Wales number 09874998, The registered office is White House, Wollaton, Street, Nottingham, NG1 5GF.
26
Analysis of changes in net funds
1 January 2023
Cash flows
31 December 2023
£
£
£
Cash at bank and in hand
1,033,636
(739,151)
294,485
Obligations under finance leases
(307,849)
84,993
(222,856)
725,787
(654,158)
71,629
27
Cash absorbed by operations
2023
2022
£
£
Profit/(loss) for the year after tax
365,681
(286)
Adjustments for:
Taxation charged
105,443
67,686
Finance costs
22,397
40,579
Investment income
(17,827)
(47,363)
Gain on disposal of tangible fixed assets
(18,517)
(38,259)
Depreciation and impairment of tangible fixed assets
129,047
120,620
Other gains and losses
-
6,997
Movements in working capital:
Increase in stocks
(12,481)
(3,915)
Decrease/(increase) in debtors
5,900
(1,302,506)
(Decrease)/increase in creditors
(718,765)
1,136,263
Cash absorbed by operations
(139,122)
(20,184)
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