Mechanical Services Limited - Accounts

Registered number

01894014

Mechanical Services Limited

Abbreviated Reports and Accounts

30 June 2014

Mechanical Services Limited
Abbreviated Reports and accounts
Contents
Page
Company information	1
Director's report	2
Strategic report	3
Statement of director's responsibilities	4
Independent auditors' report	5
Abbreviated profit and loss account	6
Abbreviated balance sheet	7
Cash flow statement	8
Notes to the accounts	9-15

Mechanical Services Limited

Company Information

Director

G A Ivory

Secretary

M M Ivory

Auditors

Lloyd & Co

103/105 Brighton Road

Coulsdon

Surrey

CR5 2NG

Bankers

National Westminster Bank plc

159 Rushey Green

Catford

London

SE6 4BJ

Registered office

Merlin House

606 Purley Way

Croydon

Surrey

CR0 4RF

Registered number

01894014

Mechanical Services Limited
Director's Report
The director presents his report and accounts for the year ended 30 June 2014.
Principal activities
The company's principal activity during the year continued to be the installation of air conditioning and heating equipment.
Directors
The following served as director during the year:
	G A Ivory
Results and dividends
The profit for the year after taxation amounted to £776,361. Ordinary dividends of £500,000 have been paid in the year leaving reserves carried forward of £2,898,740.
Events since the balance sheet date
No material events have occurred since the balance sheet date that in the opinion of the director would effect the accounts or future prospects of the company.
Single european currency
The company's performance has not so far been adversely affected by the introduction of the single european currency. The director is confident that this will continue to be the case.
Disclosure of information to auditors

The director confirms that:
●	so far as he is aware, there is no relevant audit information of which the company's auditor is unaware; and
●	he has taken all the steps that he ought to have taken as a director in order to make himself aware of any relevant audit information and to establish that the company's auditor is aware of that information.

Auditors

The auditors, Messrs Lloyd & Co, Chartered Accountants, are deemed to be reappointed in accordance with section 485 of the Companies Act 2006 by virtue of an elective resolution passed on 18 September 1992.

Approval of this report

This report was approved by the board on 05 December 2014

M M Ivory

Secretary

Mechanical Services Limited

Strategic Report

The company's turnover of £22,091,410 was 1.8% down and gross profit of £5,102,645 was 4.3% down on the previous year, however the company has performed beyond expectations and the balance sheet remains sufficiently robust to enable it to manage its order book without the need for third party finance.

The following Key Performance Indicators have been selected as most relevant to enable comparison of the companys performance year on year and with other companies operating in the sector;

gross profit 23.1% (2013-23.7%); operating profit 4.4% (2013-7.1%); return on capital 26.3% (2013-38.2%)

In recent years the company has expanded and strengthened its management team. It is now well positioned to manage business and financial risks and uncertainties as they arise and to maintain market share by focussing on service levels, control of costs and maximising use of available resources. The director remains confident that this approach will enable the company to remain profitable. The principlal risks and uncertainties facing the company are:

i) downward pressure on pricing resulting from the increasing number of contractors entering the market place.

ii) the scarcity of labour now that the sector and the construction industry generally has emerged from the recession.

iii) the risk of the economy returning to recession.

iv) the financial impact of ever more burdensome employment legislation.

Approval of this report

This report was approved by the board on 05 December 2014

G A Ivory

Director

Mechanical Services Limited

Statement of Director's Responsibilities

The director is responsible for preparing the report and accounts in accordance with applicable law and regulations.
Company law requires the director to prepare accounts for each financial year. Under that law the director has elected to prepare the accounts in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the director must not approve the accounts unless he is 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 accounts, the director is required to:
●	select suitable accounting policies and then apply them consistently;
●	make judgements and estimates that are reasonable and prudent;
●	prepare the accounts on the going concern basis unless it is inappropriate to presume that the company will continue in business.
The director is 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 him to ensure that the accounts comply with the Companies Act 2006. He is 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.

Mechanical Services Limited
Independent Auditors' Report
to Mechanical Services Limited
under section 449 of the Companies Act 2006
This report is made solely to the company in accordance with section 449 of the Companies Act 2006. Our work has been undertaken so that we might state to the company those matters we are required to state to them in an auditors' report on abbreviated accounts 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, for our work, for this report, or for the opinions we have formed.
Respective responsibilities of director and auditors
Opinion
Michael L Martin FCA	103/105 Brighton Road
(Senior Statutory Auditor)	Coulsdon
for and on behalf of	SURREY
Lloyd & Co	CR5 2NG
Chartered Accountants
Statutory Auditor
Dated 18 December 2014

Mechanical Services Limited
Abbreviated Profit and Loss Account
for the year ended 30 June 2014
Notes						2014		2013
£							£
Gross profit						5,102,645		5,332,376
Administrative expenses						(4,134,029)		(3,719,900)
Operating profit				3		968,616		1,612,476
Profit/(loss) on the disposal of tangible fixed assets				4		3,089		(259,091)
						971,705		1,353,385
Rent receivable						15,000		23,330
Interest receivable						14,247		42,134
Interest payable				7		(11)		-
Profit on ordinary activities before taxation						1,000,941		1,418,849
Tax on profit on ordinary activities				8		(224,580)		(396,442)
Profit for the financial year				16		776,361		1,022,407
Continuing operations
None of the company's activities were acquired or discontinued during the above two financial years.
Statement of total recognised gains and losses
The company has no recognised gains or losses other than the profit for the above two financial years.

Mechanical Services Limited
Abbreviated Balance Sheet
as at 30 June 2014
Notes				2014			2013
£					£
Fixed assets
Tangible assets	9			275,370			348,153
Current assets
Work in progress	10		16,369			51,250
Debtors	11		2,518,300			3,168,713
Cash at bank and in hand			3,054,589			2,616,900
			5,589,258			5,836,863
Creditors: amounts falling due within one year	12		(2,912,393)			(3,504,908)
Net current assets				2,676,865			2,331,955
Total assets less current liabilities				2,952,235			2,680,108
Provisions for liabilities
Deferred taxation	14			(3,495)			(7,729)
Net assets				2,948,740			2,672,379
Capital and reserves
Called up share capital	15			50,000			50,000
Profit and loss account	16			2,898,740			2,622,379
Shareholders' funds	18			2,948,740			2,672,379
The Abbreviated accounts have been prepared in accordance with the special provisions in section 445(3) of the Companies Act 2006 relating to medium sized companies.
G A Ivory
Director
Approved by the board on 05 December 2014
Registered number:
1894014

Mechanical Services Limited
Cash Flow Statement
for the year ended 30 June 2014
Notes			2014		2013
£				£
Reconciliation of operating profit to net cash
inflow from operating activities
Operating profit			968,616		1,612,476
Depreciation			91,790		113,852
Decrease in stocks			34,881		71,312
Decrease/(increase) in debtors			650,413		(634,326)
Decrease in creditors			(419,669)		(339,526)
Net cash inflow from operating activities			1,326,031		823,788
CASH FLOW STATEMENT
Net cash inflow from operating activities			1,326,031		823,788
Returns on investments and servicing of finance	19		29,236		65,464
Taxation			(403,243)		(295,769)
Capital expenditure	19		(15,918)		884,293
			936,106		1,477,776
Equity dividends paid			(500,000)		(1,800,000)
			436,106		(322,224)
Financing	19		1,583		(1,361)
Increase/(decrease) in cash			437,689		(323,585)
Reconciliation of net cash flow to movement in net financing
Increase/(decrease) in cash in the period			437,689		(323,585)
(Increase)/decrease in debt and lease financing			(1,583)		1,361
Change in net financing	20		436,106		(322,224)
Net funds at 1 July			2,616,900		2,939,124
Net funds at 30 June			3,053,006		2,616,900

Mechanical Services Limited
Notes to the Abbreviated Accounts
for the year ended 30 June 2014
1	Accounting policies
	The principal accounting policies adopted by the company are as follows:
	Basis of preparation
	The accounts have been prepared under the historical cost convention and in accordance with applicable United Kingdom Accounting Standards.
	Turnover
	Turnover represents the value of goods supplied and services performed by the company in the year, net of value added tax and trade discounts.
	Tangible assets and depreciation
	Tangible fixed assets are stated at cost less depreciation.
	Depreciation is provided on all tangible fixed assets (with a full charge in the year of acquisition but no charge in the year of disposal), other than freehold land, at rates calculated to write off the cost, less estimated residual value, of each asset evenly over its expected useful life, as follows:
	Short leasehold buildings			10% straight line method
	Plant and machinery			25% reducing balance method
	Work in progress
	Work in progress is valued at the lower of cost and net realisable value. It represents costs incurred on contracts prior to the point where an income entitlement arises.
	Deferred taxation
	Full provision is made for deferred taxation resulting from timing differences between the recognition of gains and losses in the accounts and their recognition for tax purposes. The deferred tax balance has not been discounted.
	Hire purchase contracts
	Tangible assets acquired under hire purchase contracts are capitalised at their estimated fair value at the date of inception of each contract. Obligations under such agreements are included in creditors net of interest allocated to future periods. Interest is charged to the Profit and Loss Account so as to produce a constant periodic rate of charge on the net obligation outstanding in each period.
	Operating leases
	Rentals applicable to operating leases where substantially all of the benefits and risks of ownership remain with the lessor are charged to the Profit and Loss Account as incurred.
	Pensions
	The company operates defined contribution pension schemes. Contributions are charged to the Profit and Loss Account as they become payable in accordance with the rules of the schemes.
2	Analysis of turnover					2014		2013
£							£
	By activity:
	Principal activity					22,091,410		22,504,836
	By geographical market:
	UK					22,091,410		22,504,836
3	Operating profit					2014		2013
£							£
	This is stated after charging:
	Depreciation of owned fixed assets					87,346		113,852
	Depreciation of assets held under hire purchase contracts					4,444		-
	Operating lease rentals - plant and machinery					21,019		4,479
	Operating lease rentals - land and buildings					128,500		48,500
	Auditors' remuneration for audit services					14,200		11,850
4	Profit/(loss) on disposal of tangible fixed assets					2014		2013
£							£
	Loss on disposal of land and buildings					-		(273,865)
	Profit on disposal of plant and machinery					3,089		14,774
						3,089		(259,091)
5	Director's emoluments					2014		2013
£							£
	Emoluments					230,742		237,673
	Number of directors in company pension schemes:					2014		2013
Number							Number
	Defined contribution schemes					1		1
6	Staff costs					2014		2013
£							£
	Wages and salaries					5,516,537		5,048,374
	Social security costs					633,886		590,056
	Other pension costs					28,456		22,866
						6,178,879		5,661,296
	Average number of employees during the year					Number	Number
	Administration					48		45
	Site based					62		59
						110		104
7	Interest payable					2014		2013
£							£
	Hire purchase contracts					11		-
8	Taxation					2014		2013
£							£
	Analysis of charge in period
	Current tax:
	UK corporation tax on profits of the year					228,814		403,243
	Deferred tax:
	Origination and reversal of timing differences					(4,234)		(6,801)
	Tax on profit on ordinary activities					224,580		396,442
	Factors affecting tax charge for period
	The differences between the tax assessed for the period and the standard rate of corporation tax are explained as follows:
						2014		2013
£							£
	Profit on ordinary activities before tax					1,000,941		1,418,849
	Standard (effective) rate of corporation tax in the UK					22.501%		23.751%
£							£
	Profit on ordinary activities multiplied by the standard rate of corporation tax					225,222		336,990
	Effects of:
	Adjustment to earlier year					-		-
	Expenses not deductible for tax purposes					3,023		3,941
	Depreciation for year in excess of capital allowances					3,508		62,312
	Marginal rate relief					(2,939)		-
	Current tax charge for period					228,814		403,243
9	Tangible fixed assets
				Leasehold land and buildings		Plant and machinery		Total
£					£		£
	Cost
	At 1 July 2013			65,980		909,928		975,908
	Additions			-		39,428		39,428
	Disposals			-		(127,559)		(127,559)
	At 30 June 2014			65,980		821,797		887,777
	Depreciation
	At 1 July 2013			39,588		588,167		627,755
	Charge for the year			6,598		85,192		91,790
	On disposals			-		(107,138)		(107,138)
	At 30 June 2014			46,186		566,221		612,407
	Net book value
	At 30 June 2014			19,794		255,576		275,370
	At 30 June 2013			26,392		321,761		348,153
	Net book value of fixed assets included above held under hire purchase contracts					13,331		-
10	Work in progress					2014		2013
£							£
	Work in progress					16,369		51,250
11	Debtors					2014		2013
£							£
	Trade debtors					2,479,050		3,126,507
	Prepayments					39,250		42,206
						2,518,300		3,168,713
12	Creditors: amounts falling due within one year					2014		2013
£							£
	Hire purchase contracts					1,583		-
	Trade creditors					1,791,768		2,437,069
	Corporation tax					228,814		403,243
	Other taxes and social security costs					798,537		589,997
	Director's loan account					-		-
	Other creditors					91,691		74,599
						2,912,393		3,504,908
13	Obligations under hire purchase contracts					2014		2013
£							£
	Amounts payable:
	Within one year					1,583		-
14	Deferred taxation					2014		2013
£							£
	Accelerated capital allowances					3,495		7,729
	Undiscounted provision for deferred tax					3,495		7,729
						2014		2013
£							£
	At 1 July					7,729		14,530
	Deferred tax (credit)/charge in profit and loss account					(4,234)		(6,801)
	At 30 June					3,495		7,729
15	Share capital	Nominal		2014		2014		2013
value			Number		£		£
	Allotted, called up and fully paid:
	Ordinary shares	£1 each		50,000		50,000		50,000
16	Profit and loss account					2014		2013
£							£
	At 1 July					2,622,379		3,399,972
	Profit for the financial year					776,361		1,022,407
	Dividends					(500,000)		(1,800,000)
	At 30 June					2,898,740		2,622,379
17	Dividends					2014		2013
£							£
	Dividends for which the company became liable during the year:
	Dividends paid					500,000		1,800,000
18	Reconciliation of movement in shareholders' funds					2014		2013
£							£
	At 1 July					2,672,379		3,449,972
	Profit for the financial year					776,361		1,022,407
	Dividends					(500,000)		(1,800,000)
	At 30 June					2,948,740		2,672,379
19	Gross cash flows					2014		2013
£							£
	Returns on investments and servicing of finance
	Rent received					15,000		23,330
	Interest received					14,247		42,134
	Interest element of hire purchase payments					(11)		-
						29,236		65,464
	Capital expenditure
	Payments to acquire tangible fixed assets					(39,428)		(170,470)
	Receipts from sales of tangible fixed assets					23,510		1,054,763
						(15,918)		884,293
	Financing
	Capital element of hire purchase payments					1,583		(1,361)
20	Analysis of changes in net financing
		At 1 Jul 2013		Cash flows		Non-cash changes		At 30 Jun 2014
£			£		£		£
	Cash at bank and in hand	2,616,900		437,689				3,054,589
	Hire purchase contracts	-		(1,583)				(1,583)
	Total	2,616,900		436,106		-		3,053,006
21	Pension commitments
	The company contributes to defined contribution pension schemes for the benefit of the director and certain employees and to workplace pension schemes for the benefit of all jobholders having entitlement. The assets of the schemes are held separately from those of the company in independently managed funds. Contributions charged to the Profit and Loss Account amounted to £28,456 (2013 - £22,866).
22	Other financial commitments
	At the year end the company had annual commitments under non-cancellable operating leases as set out below:
		Land and buildings		Land and buildings	Other		Other
		2014		2013		2014		2013
£			£		£		£
	Operating leases which expire:
	within one year	-		-		974		-
	within two to five years	32,500		32,500		27,402		8,168
	in over five years	96,000		96,000		3,189		-
		128,500		128,500		31,565		8,168
23	Related party transactions					2014		2013
£							£
	G A Ivory
	director/shareholder
	dividend paid (including family interest)					(500,000)		(1,800,000)
	G A Ivory
	director/shareholder
	sale of motor vehicle to the company					-		(35,000)
	G A Ivory and Mrs M M Ivory
	shareholders
	purchase of freehold of company's trading premises					-		1,194,000
	G A Ivory and Mrs M M Ivory
	shareholders
	market rent for use of trading premises by the company					(96,000)		(16,000)
	The purchase of the vehicle and sale and lease back of the trading premises are at market value.
24	Ultimate controlling party
	Throughout the year the company was under the control of G A Ivory, the sole director who has an interest (including family interest) in the entire share capital.