Company registration number 01745436 (England and Wales)
LLORET CONTROL SYSTEMS LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
LLORET CONTROL SYSTEMS LIMITED
COMPANY INFORMATION
Directors
R Smith
S J Sjoblom
D A Lovelock
C L Young
Secretary
C L Young
Company number
01745436
Registered office
Lloret House
20 Ullswater Crescent
Coulsdon
Surrey
CR5 2HR
Auditor
Beavis Morgan Audit Limited
82 St John Street
London
EC1M 4JN
LLORET CONTROL SYSTEMS LIMITED
CONTENTS
Page
Strategic report
1
Directors' report
2
Directors' responsibilities statement
3
Independent auditor's report
4 - 6
Statement of income and retained earnings
7
Balance sheet
8
Notes to the financial statements
9 - 21
LLORET CONTROL SYSTEMS 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 started 2023 with a strong secured order book which contributed to the growth in turnover compared to 2022.
Profit for the year was impacted by the administration of a large mechanical and electrical main contractor during the year, as shown in note 3 to the financial statements. Strong management and robust procedures ensured that the impact of this to the business was limited and the business was able to recover quickly.
In order to maintain and increase our market share, the directors recognise that there must be continued development of the business outside of the traditional scope. The directors have identified the growth of its Converged Network Systems and Master Systems Integrator role as a key area for development over the coming years. During 2023 we have built on our previous successes in this area and have continued to secure more projects within this market. This now equates to circa 30% of our ongoing business.
Our order book includes significant projects for blue chip technology businesses which has led to increased interest in our services from similar businesses and from the contractors delivering these projects. These projects also offer ongoing service and maintenance opportunities which has continued to grow during the year.
The company moves forward into 2024 with a healthy secured order book and continues to exceed its business plan objectives.
Principal risks and uncertainties
The company's business arena incorporates commercial and high end residential property markets, schools, data centres, and process systems and therefore changes in the activity levels within these markets are likely to affect the results. Growth can be achieved by increasing market share at the expense of other competitors or expanding into other new markets; energy cost control now features as such an activity. The directors believe that the existing market is fiercely competitive and price is a very sensitive factor. As competition increases with price under pressure the directors continue to monitor cost levels to ensure an adequate return is received.
Financial instruments
The company's principal financial instruments comprise bank balances, bank facilities, trade creditors, trade debtors, and finance lease agreements.
Liquidity risk is managed by maintaining a balance between the continuity of funding and flexibility through the use of bank overdraft facilities at floating rates of interest and unsecured credit facilities. The company manages the liquidity risk by ensuring there are sufficient funds to meet the payment of liabilities as they fall due.
Trade debtors are managed in respect of credit and cash flow risk by having a broad customer base and the regular monitoring of amounts outstanding for both time and credit limits.
D A Lovelock
Director
19 September 2024
LLORET CONTROL SYSTEMS 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 continues to be the design and supply of electronic control systems for use within the construction industry.
Results and dividends
The results for the year are set out on page 7.
Ordinary interim dividends were paid amounting to £600,000. The directors do not recommend payment of a final dividend.
Directors
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
R Smith
S J Sjoblom
D A Lovelock
C L Young
Research and development
Lloret Control Systems has conducted systematic, extensive and eligible R&D overcoming significant technological uncertainty to develop new and innovative technology solutions for the instrumentation and controls industry.
Post reporting date events
Details of events after the reporting period are provided in note 21 to the financial statements.
Auditor
The auditor, Beavis Morgan Audit Limited, is deemed to be reappointed under section 487(2) of the Companies Act 2006.
Matters covered in the 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. It has done so in respect of information on the company's financial risk management objectives and policies, exposure to financial risks and future developments.
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
D A Lovelock
Director
19 September 2024
LLORET CONTROL SYSTEMS LIMITED
DIRECTORS' RESPONSIBILITIES STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2023
- 3 -
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; and
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.
LLORET CONTROL SYSTEMS LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF LLORET CONTROL SYSTEMS LIMITED
- 4 -
Opinion
We have audited the financial statements of Lloret Control Systems Limited (the 'company') for the year ended 31 December 2023 which comprise the statement of income and retained earnings, the balance sheet 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
In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the 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.
LLORET CONTROL SYSTEMS LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF LLORET CONTROL SYSTEMS LIMITED (CONTINUED)
- 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, 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.
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.
The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below.
LLORET CONTROL SYSTEMS LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF LLORET CONTROL SYSTEMS LIMITED (CONTINUED)
- 6 -
Extent to which the audit was considered capable of detecting irregularities, including fraud
Discussions with and enquiries of management and those charged with governance were held with a view to identifying those laws and regulations that could be expected to have a material impact on the financial statements. During the engagement team briefing, the outcomes of these discussions and enquiries were shared with the team, as well as consideration as to where and how fraud may occur in the entity.
The following laws and regulations were identified as being of significance to the entity:
Audit procedures undertaken in response to the potential risks relating to irregularities (which include fraud and non-compliance with laws and regulations) comprised of: inquiries of management and those charged with governance as to whether the entity complies with such laws and regulations; enquiries with the same concerning any actual or potential litigation or claims; inspection of relevant legal correspondence; review of board minutes; testing the appropriateness of journal entries; and the performance of analytical review to identify unexpected movements in account balances which may be indicative of fraud.
No instances of material non-compliance were identified. However, the likelihood of detecting irregularities, including fraud, is limited by the inherent difficulty in detecting irregularities, the effectiveness of the entity’s controls, and the nature, timing and extent of the audit procedures performed. Irregularities that result from fraud might be inherently more difficult to detect than irregularities that result from error. As explained above, there is an unavoidable risk that material misstatements may not be detected, even though the audit has been planned and performed in accordance with ISAs (UK).
A further description of our responsibilities is available on the Financial Reporting Council’s website at: https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.
This report is made solely to the company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in 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.
Richard Thacker
Senior Statutory Auditor
For and on behalf of Beavis Morgan Audit Limited
19 September 2024
Chartered Accountants
Statutory Auditor
82 St John Street
London
EC1M 4JN
LLORET CONTROL SYSTEMS LIMITED
STATEMENT OF INCOME AND RETAINED EARNINGS
FOR THE YEAR ENDED 31 DECEMBER 2023
- 7 -
2023
2022
Notes
£
£
Turnover
4
14,778,315
12,280,341
Cost of sales
(10,786,463)
(8,949,400)
Gross profit
3,991,852
3,330,941
Administrative expenses
(2,704,383)
(2,432,573)
Other operating income
5
1,000
Exceptional item
3
(611,154)
Operating profit
5
676,315
899,368
Interest payable and similar expenses
8
(23,105)
(16,931)
Profit before taxation
653,210
882,437
Tax on profit
9
(28,014)
(2,485)
Profit for the financial year
625,196
879,952
Retained earnings brought forward
1,990,822
1,110,870
Dividends
10
(600,000)
Retained earnings carried forward
2,016,018
1,990,822
The statement of income and retained earnings has been prepared on the basis that all operations are continuing operations.
LLORET CONTROL SYSTEMS LIMITED
BALANCE SHEET
AS AT
31 DECEMBER 2023
31 December 2023
- 8 -
2023
2022
Notes
£
£
£
£
Fixed assets
Tangible assets
11
300,355
165,327
Current assets
Debtors
12
7,682,526
5,501,161
Cash at bank and in hand
293,762
809,245
7,976,288
6,310,406
Creditors: amounts falling due within one year
13
(6,112,117)
(4,345,140)
Net current assets
1,864,171
1,965,266
Total assets less current liabilities
2,164,526
2,130,593
Creditors: amounts falling due after more than one year
14
(118,223)
(137,500)
Provisions for liabilities
Deferred tax liability
16
30,265
2,251
(30,265)
(2,251)
Net assets
2,016,038
1,990,842
Capital and reserves
Called up share capital
18
20
20
Profit and loss reserves
2,016,018
1,990,822
Total equity
2,016,038
1,990,842
The financial statements were approved by the board of directors and authorised for issue on 19 September 2024 and are signed on its behalf by:
D A Lovelock
Director
Company registration number 01745436 (England and Wales)
LLORET CONTROL SYSTEMS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
- 9 -
1
Accounting policies
Company information
Lloret Control Systems Limited is a private company limited by shares incorporated in England and Wales. The registered office is Lloret House, 20 Ullswater Crescent, Coulsdon, Surrey, CR5 2HR.
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 on the historical cost convention. The principal accounting policies adopted are set out below.
This company is a qualifying entity for the purposes of FRS 102, being a member of a group where the parent of that group prepares publicly available consolidated financial statements, including this company, which are intended to give a true and fair view of the assets, liabilities, financial position and profit or loss of the group. The company has therefore taken advantage of exemptions from the following disclosure requirements:
The financial statements of the company are consolidated in the financial statements of Lloret Holdings Limited. These consolidated financial statements are available from its registered office, Lloret House, 20 Ullswater Crescent, Coulsdon, Surrey, England, CR5 2HR.
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. This is because there is expected to be adequate working capital to be able to cover any reasonably conceivable expenditure in that time. Thus the directors continue to adopt the going concern basis of accounting in preparing the financial statements.
1.3
Research and development expenditure
Research and development expenditure is recognised in profit or loss in the year in which it is incurred.
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.
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:
Leasehold improvements
Straight line over the term of the lease
Plant and machinery
15% straight line
Fixtures, fittings & equipment
25% straight line
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 recognised in the statement of income.
LLORET CONTROL SYSTEMS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 10 -
1.5
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.
1.6
Long term contracts and revenue recognition
Revenue comprises amounts receivable under customer contracts, net of value added tax.
Where the outcome of a customer contract can be estimated reliably, revenue and costs are recognised by reference to the stage of completion of the contract activity at the reporting end date. Variations in contract work, claims and incentive payments are included to the extent that the amount can be measured reliably and its receipt is considered probable.
When it is probable that total contract costs will exceed total contract turnover, the expected loss is recognised as an expense immediately.
Where the outcome of a contract cannot be estimated reliably, contract revenue is recognised to the extent of contract costs incurred where it is probable that they will be recoverable. Contract costs are recognised as expenses in the period in which they are incurred. When costs incurred in securing a contract are recognised as an expense in the period in which they are incurred, they are not included in contract costs if the contract is obtained in a subsequent period.
The “percentage of completion method” is used to determine the appropriate amount to recognise in a given period. The stage of completion is assessed on the basis of work performed. Costs incurred in the year in connection with future activity on a contract are excluded from contract costs in determining the stage of completion. These costs are presented as stocks, prepayments or other assets depending on their nature, and provided it is probable they will be recovered.
1.7
Cash and cash equivalents
Cash at bank and in hand are basic financial assets and include cash in hand and deposits held at call with banks.
1.8
Financial instruments
The company has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ of FRS 102 to all of its financial instruments.
Financial instruments are recognised in the company's balance sheet 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 trade and other debtors, contract receivables, amounts owed by related parties, 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.
LLORET CONTROL SYSTEMS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 11 -
Impairment of financial assets
Financial assets 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 trade and other creditors, bank loans, finance lease liabilities and amounts due to related parties, 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.
Derecognition of financial liabilities
Financial liabilities are derecognised when the company’s contractual obligations expire or are discharged or cancelled.
1.9
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.
1.10
Taxation
The tax expense represents the sum of the tax currently payable and deferred tax.
LLORET CONTROL SYSTEMS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 12 -
Current tax
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the profit and loss account 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 enacted or substantially enacted 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 profit and loss account, 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.
Research and Development
Tax credits in relation to research and development expenditure are included within cost of sales. Tax credits are recognised when the value of relief can be estimated reliably.
1.11
Employee benefits
The costs of short-term employee benefits are recognised as a liability and an expense.
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.
1.12
Retirement benefits
The company operates a defined contribution pension scheme and the pension charge represents the amounts payable by the company to the fund in respect of the year.
1.13
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 asset's fair value at the date of inception and the present value of the minimum lease payments. The related liability is included in the balance sheet as a finance lease obligation. Lease payments are treated as consisting of capital and interest elements. The interest is charged to the statement of income so as to produce a constant periodic rate of interest on the remaining balance of the liability.
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.
LLORET CONTROL SYSTEMS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 13 -
1.14
Government grants
Government grants are recognised at the fair value of the asset received or receivable when there is reasonable assurance that the grant conditions will be met and the grants will be received.
Grants relating to an asset are recognised in income systematically over the asset's expected useful life. If part of such a grant is deferred it is recognised as deferred income rather than being deducted from the asset's carrying amount.
1.15
Foreign exchange
Transactions in currencies other than pounds sterling are recorded at the rates of exchange prevailing at the dates of the transactions. At each reporting end date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the reporting end date. Gains and losses arising on translation in the period are included in profit or loss.
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.
Key sources of estimation uncertainty
The estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are as follows.
Estimated useful lives of tangible assets
Estimation is required in determining the useful lives of such assets and their residual values. See note 11 for the carrying amounts of tangible assets.
Revenue recognition
Estimation is required in calculating the stage of completion of contracts, in order to determine the amount of revenue which can be recognised for the provision of services. Carrying amounts held in respect of long term contracts at the balance sheet date are £3,082,037 (2022: £2,522,955) of deferred income and accrued costs and £536,220 (2022: £156,896) of amounts recoverable on long term contracts.
Bad and doubtful debts
Provisions are made of those debts considered by the directors to be doubtful. The debts considered to be irrevocably bad are written off. See note 12 for the carrying amounts of trade debtors.
3
Exceptional item
2023
2022
£
£
Expenditure
Debts provided for as a result of customer administration
611,154
-
During the year a customer entered administration. The expense above relates to a provision against trade debtors outstanding at year end from this customer.
LLORET CONTROL SYSTEMS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 14 -
4
Turnover
An analysis of the company's turnover, all of which comprises contract revenue derived from its principal activity, is as follows:
2023
2022
£
£
Turnover analysed by geographical market
United Kingdom
14,778,315
12,280,341
5
Operating profit
2023
2022
Operating profit for the year is stated after charging/(crediting):
£
£
Exchange (gains)/losses
6,423
Research and development tax credits
(95,384)
(145,000)
Qualifying research and development expenditure
1,436,577
1,475,550
Government grants
-
(1,000)
Fees payable to the company's auditor for the audit of the company's financial statements
34,000
33,000
Depreciation of owned tangible fixed assets
51,957
55,580
Depreciation of tangible fixed assets held under finance leases
50,052
33,382
Profit on disposal of tangible fixed assets
(25,500)
(28,000)
Operating lease charges
144,043
143,057
6
Employees
The average monthly number of persons (including directors) employed by the company during the year was:
2023
2022
Number
Number
Directors
2
2
Administration
9
8
Design, production and project management
50
43
Total
61
53
Their aggregate remuneration comprised:
2023
2022
£
£
Wages and salaries
3,131,888
2,725,230
Social security costs
402,053
356,673
Pension costs
155,428
122,744
3,689,369
3,204,647
LLORET CONTROL SYSTEMS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 15 -
7
Directors' remuneration
2023
2022
£
£
Remuneration for qualifying services
296,099
302,899
Company pension contributions to defined contribution schemes
17,526
10,498
313,625
313,397
The number of directors for whom retirement benefits are accruing under defined contribution schemes amounted to 2 (2022 - 2).
Remuneration disclosed above include the following amounts paid to the highest paid director:
2023
2022
£
£
Remuneration for qualifying services
185,552
195,618
Company pension contributions to defined contribution schemes
7,029
6,826
8
Interest payable and similar expenses
2023
2022
£
£
Interest on bank loans
18,864
16,198
Interest on finance leases and hire purchase contracts
4,241
643
Other interest
90
23,105
16,931
9
Taxation
2023
2022
£
£
Deferred tax
Origination and reversal of timing differences
44,102
10,351
Changes in tax rates
(1,944)
Adjustment in respect of prior periods
(16,088)
(5,922)
Total deferred tax
28,014
2,485
LLORET CONTROL SYSTEMS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
9
Taxation
(Continued)
- 16 -
The charge for the year can be reconciled to the profit per the statement of income as follows:
2023
2022
£
£
Profit before taxation
653,210
882,437
Expected tax charge based on the standard rate of corporation tax in the UK of 23.52% (2022: 19.00%)
153,635
167,663
Tax effect of expenses that are not deductible in determining taxable profit
25,923
17,606
Depreciation on assets not qualifying for tax allowances
9,668
6,722
Research and development tax credit
(22,434)
(27,550)
Deferred tax adjustments in respect of prior years
(16,088)
(5,922)
Effect of difference in deferred tax rate
2,613
540
Additional deduction for R&D expenditure
(327,245)
(359,290)
Surrender of losses for R&D tax credit
201,942
202,716
Taxation charge for the year
28,014
2,485
In 2023 research and development tax credits of £95,384 (2022: £145,000) have been offset against the gross research and development costs incurred within cost of sales.
10
Dividends
2023
2022
£
£
Interim paid
600,000
LLORET CONTROL SYSTEMS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 17 -
11
Tangible fixed assets
Leasehold improvements
Plant and machinery
Fixtures, fittings & equipment
Motor vehicles
Total
£
£
£
£
£
Cost
At 1 January 2023
411,061
37,891
207,301
479,599
1,135,852
Additions
10,548
226,489
237,037
Disposals
(98,975)
(98,975)
At 31 December 2023
411,061
37,891
217,849
607,113
1,273,914
Depreciation and impairment
At 1 January 2023
280,916
27,942
193,195
468,472
970,525
Depreciation charged in the year
41,106
2,778
8,073
50,052
102,009
Eliminated in respect of disposals
(98,975)
(98,975)
At 31 December 2023
322,022
30,720
201,268
419,549
973,559
Carrying amount
At 31 December 2023
89,039
7,171
16,581
187,564
300,355
At 31 December 2022
130,145
9,949
14,106
11,127
165,327
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
187,564
12
Debtors
2023
2022
Amounts falling due within one year:
£
£
Trade debtors
6,718,311
4,906,640
Amounts recoverable under contracts
536,220
156,896
Corporation tax recoverable
95,384
145,000
Amounts owed by related parties
81,232
113,208
Other debtors
94,571
54,300
Prepayments and accrued income
156,808
125,117
7,682,526
5,501,161
LLORET CONTROL SYSTEMS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 18 -
13
Creditors: amounts falling due within one year
2023
2022
Notes
£
£
Bank loan
137,500
150,000
Obligations under finance leases
15
51,408
Trade creditors
2,075,482
1,234,888
Amounts owed to parent undertakings
155,926
Amounts owed to related parties
27,671
-
Taxation and social security
162,431
126,767
Other creditors
452,402
Accruals and deferred income
3,205,223
2,677,559
6,112,117
4,345,140
The bank loan is a Coronavirus Business Interruption Loan that is 80% backed by the government. The amount is repayable by monthly instalments and matures on 25 November 2024. It has an interest rate of base rate plus 2.34%.
The directors, S J Sjoblom and R G Smith, have given personal guarantees of £100,000 each in support of a bank overdraft facility. The bank overdraft facility, which was undrawn at 31 December 2023 and 31 December 2022, is secured by a debenture on the company's assets.
Accruals and deferred income includes £3,082,037 (2022: £2,522,955) in relation to deferred income and accrued costs arising from the accounting for long term contracts.
14
Creditors: amounts falling due after more than one year
2023
2022
Notes
£
£
Bank loan
137,500
Obligations under finance leases
15
118,223
118,223
137,500
15
Finance lease obligations
2023
2022
Future minimum lease payments due under finance leases:
£
£
Within one year
51,408
In two to five years
118,223
169,631
Finance lease payments represent rentals payable by the company for certain motor vehicles. 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 remaining is 3.5 years. All leases are on a fixed repayment basis and no arrangements have been entered into for contingent rental payments.
LLORET CONTROL SYSTEMS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 19 -
16
Deferred taxation
Deferred tax assets and liabilities are offset where the company has a legally enforceable right to do so. The following is the analysis of the deferred tax balances (after offset) for financial reporting purposes:
Liabilities
Liabilities
2023
2022
Balances:
£
£
Accelerated capital allowances
54,218
10,117
Tax losses
(23,953)
(7,866)
30,265
2,251
2023
Movements in the year:
£
Liability at 1 January 2023
2,251
Charge to profit or loss
28,014
Liability at 31 December 2023
30,265
The deferred tax liability set out above is expected to reverse within 12 months and relates to accelerated capital allowances netted off with trade losses carried forward that are expected to mature within the same period.
17
Retirement benefit schemes
2023
2022
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
155,428
122,744
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.
18
Share capital
2023
2022
2023
2022
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Ordinary shares of £1 each
20
20
20
20
19
Financial commitments, guarantees and contingent liabilities
The company is party to a cross guarantee and debenture with fellow subsidiary Lloret Maintenance Limited and parent company Lloret Holdings Limited over loan and overdraft facilities.
The amount guaranteed by the company under this agreement at 31 December 2023 was £55,000 (2022: £115,000) which is secured by fixed and floating charges over the assets of the company and its fellow subsidiary companies as per a debenture dated 14 September 2015.
LLORET CONTROL SYSTEMS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 20 -
20
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
145,607
126,588
Between two and five years
176,026
252,627
321,633
379,215
21
Events after the reporting date
Subsequent to the year end, management decided to merge the operations of Lloret Control Systems Limited and fellow subsidiary undertaking Lloret Maintenance Limited. From February 2024, post the balance sheet date, there has been a systematic transfer of all ongoing and new projects from Lloret Maintenance Limited to Lloret Control Systems Limited. This is part of a strategic move intended to consolidate the project activities under Lloret Control Systems Limited.
This merger has enabled management to reduce the administrative burden of maintaining two separate entities and to present a unified brand identity as "Lloret" to stakeholders. This restructuring is material to operational and financial future, with its effects to be reflected in subsequent financial statements.
22
Related party transactions
As permitted under FRS102 s33.1A, the financial statements do not disclose transactions with the parent undertaking and wholly owned fellow subsidiaries.
Lloret Maintenance Limited
At the balance sheet date trade debtors included £12,263 (2022 - £59,331) and amounts owed to related parties included £27,671 owed to (2022 - £7,534 owed from included under amounts owed by related parties) Lloret Maintenance Limited ("LML"). Trade creditors included £2,916 (2022 - £3,539) owed to LML.
LML is a fellow wholly-owned subsidiary.
Lloret Fire Solutions Limited
During the year the company charged management fees of £120,000 (2022 - £120,000) to Lloret Fire Solutions Limited ("LFSL"), made sales of £78,946 (2022 - £76,264) to LFSL and made purchases of £209,106 (2022 - £121,981) from LFSL.
At the balance sheet date trade debtors included £37,327 (2022 - £56,109) and amounts owed by related parties included £62,157 (2022 - £105,674) owed by LFSL. Trade creditors included £12,000 (2022 - £12,595) owed to LFSL.
LFSL is related by virtue of common directorship.
Lloret Holdings Limited
At the balance sheet date amounts owed by related parties included £19,075 owed by (2022 - £155,926 owed to included under amounts due to parent undertaking) Lloret Holdings Limited.
Lloret Holdings Limited is related by virtue of being Lloret Control Systems Limited's immediate parent company.
LLORET CONTROL SYSTEMS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 21 -
23
Control
The immediate parent company is Lloret Holdings Limited, a company registered in England and Wales. Lloret Holdings Limited is both the largest and smallest group into which Lloret Control Systems Limited is consolidated. A copy of the group financial statements may be obtained from Lloret House, 20 Ullswater Crescent, Coulsdon, Surrey, CR5 2HR.
The ultimate parent company in its capacity as sole trustee of Lloret Group Employee Ownership Trust is Lloret EOT Limited, a company limited by guarantee and registered in England and Wales.
There is no one ultimate controlling party.
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