L.E.M Limited - Limited company accounts 18.2

REGISTERED NUMBER: 05687169 (England and Wales)

GROUP STRATEGIC REPORT,

DIRECTORS' REPORT AND

AUDITED

CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2018

FOR

L.E.M LIMITED

Page

Company Information

1

Group Strategic Report

2

Directors' Report

3

Report of the Independent Auditors

5

Consolidated Statement of Income and Retained Earnings

7

Consolidated Statement of Financial Position

8

Company Statement of Financial Position

9

Consolidated Statement of Cash Flows

10

Notes to the Consolidated Statement of Cash Flows

11

Notes to the Consolidated Financial Statements

12

DIRECTORS:

Mrs L Callaby

Mr E Blundell

REGISTERED OFFICE:

Boughton Leigh House

Brownsover Road

Rugby

Warwickshire

CV21 1AW

REGISTERED NUMBER:

05687169 (England and Wales)

AUDITORS:

TGFP

Chartered Accountants & Statutory Auditors

Fulford House

Newbold Terrace

Leamington Spa

Warwickshire

CV32 4EA

The directors present their strategic report of the company and the group for the year ended 31 December 2018.

REVIEW OF BUSINESS

The financial results for the year ended 31 December 2018 reflect an increase in turnover of 6%, which was in line with

our original forecast for the year. We are able to maintain our high level of retained business, which represents the

majority of the turnover. Our new business levels for the first half of the year were down on target but following

changes to our marketing campaigns in the second half of the year, we saw a significant increase in new business and

ended up exceeding our original forecast.

Our marketing spend was 14% higher than in 2017, which was due to the changes implemented in the second half of

the year.

The slight overall reduction in other expenditure was mainly due to our new premises proving to be more cost effective

than the previous office.

The 2019 forecasts currently reflect a further increase in turnover compare to 2018. This is due to maintaining existing

levels of retained business whilst again increasing new business levels.

The group's key financial performance indicators during the year are:

Turnover - £13,881,014 (2017 - £13,064,401)

Profit for the financial year - £125,461 (2017 - £199,342)

PRINCIPAL RISKS AND UNCERTAINTIES

The principal risks identified by the directors are credit risk and liquidity risk.

ON BEHALF OF THE BOARD:

Mrs L Callaby - Director

26 September 2019

The directors present their report with the financial statements of the company and the group for the year ended

31 December 2018.

PRINCIPAL ACTIVITY

The principal activity of the group in the year under review was that of insurance and re-insurance brokers.

The principal activity of the company is that of a holding company.

DIVIDENDS

No dividends will be distributed for the year ended 31 December 2018.

DIRECTORS

The directors shown below have held office during the whole of the period from 1 January 2018 to the date of this

report.

Mrs L Callaby

Mr E Blundell

FINANCIAL INSTRUMENTS

The business' principal financial instruments comprise bank balances, insurance debtors, insurance creditors and other

creditors. The main purpose of these instruments is to finance the business' operations.

Debtors are managed in respect of credit risk by policies concerning the credit offered to customers and the regular

monitoring of amounts outstanding for both time and credit limits.

Creditors liquidity risk is managed by ensuring sufficient funds are available to meet amounts due.

STRATEGIC REPORT

In accordance with section 414C(11) of the Companies Act 2006 (Strategic Report and Directors Report) Regulations

2013, the company has prepared a Strategic Report, which includes information that would have previously been

included in the Directors' Report.

STATEMENT OF DIRECTORS' RESPONSIBILITIES

The directors are responsible for preparing the Group Strategic Report, the Directors' 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 the group and of the profit or loss of the group for that period. In preparing these financial statements,

the directors are required to:

-	select suitable accounting policies and then apply them consistently;

-	make judgements and accounting estimates that are reasonable and prudent;

-	prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.

The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the

company's and the group's transactions and disclose with reasonable accuracy at any time the financial position of the

company and the group and enable them to ensure that the financial statements comply with the Companies Act 2006.

They are also responsible for safeguarding the assets of the company and the group and hence for taking reasonable

steps for the prevention and detection of fraud and other irregularities.

STATEMENT AS TO DISCLOSURE OF INFORMATION TO AUDITORS

So far as the directors are aware, there is no relevant audit information (as defined by Section 418 of the Companies

Act 2006) of which the group's auditors are unaware, and each director has taken all the steps that he ought to have

taken as a director in order to make himself aware of any relevant audit information and to establish that the group's

auditors are aware of that information.

AUDITORS

The auditors, TGFP, will be proposed for re-appointment at the forthcoming Annual General Meeting.

ON BEHALF OF THE BOARD:

Mrs L Callaby - Director

26 September 2019

Opinion

We have audited the financial statements of L.E.M Limited (the 'parent company') and its subsidiaries (the 'group') for

the year ended 31 December 2018 which comprise the Consolidated Statement of Income and Retained Earnings,

Consolidated Statement of Financial Position, Company Statement of Financial Position, Consolidated Statement of

Cash Flows and Notes to the Consolidated Statement of Cash Flows, Notes to the Financial Statements, including a

summary of significant accounting policies. The financial reporting framework that has been applied in their preparation

is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 'The Financial

Reporting Standard applicable in the UK and Republic of Ireland' (United Kingdom Generally Accepted Accounting

Practice).

In our opinion the financial statements:

-	give a true and fair view of the state of the group's and of the parent company affairs as at 31 December 2018 and of the group's 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.

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law.

Our responsibilities under those standards are further described in the Auditors' responsibilities for the audit of the

financial statements section of our report. We are independent of the group in accordance with the ethical

requirements that are relevant to our audit of the financial statements in the UK, including the FRC's Ethical Standard,

and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit

evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Conclusions relating to going concern

We have nothing to report in respect of the following matters in relation to which the ISAs (UK) require us to report to

you where:

-	the directors' use of the going concern basis of accounting in the preparation of the financial statements is not appropriate; or

-

the directors have not disclosed in the financial statements any identified material uncertainties that may cast significant doubt about the group's ability to continue to adopt the going concern basis of accounting for a period of at least twelve months from the date when the financial statements are authorised for issue.

Other information

The directors are responsible for the other information. The other information comprises the information in the Group

Strategic Report and the Directors' Report, but does not include the financial statements and our Report of the Auditors

thereon.

Our opinion on the financial statements does not cover the other information and, except to the extent otherwise

explicitly stated in our report, we do not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing

so, consider whether the other information is materially inconsistent with the financial statements or our knowledge

obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or

apparent material misstatements, we are required to determine whether there is a material misstatement in the

financial statements or a material misstatement of the other information. If, based on the work we have performed, we

conclude that there is a material misstatement of this other information, we are required to report that fact. We have

nothing to report in this regard.

Opinions on other matters prescribed by the Companies Act 2006

In our opinion, based on the work undertaken in the course of the audit:

-	the information given in the Group Strategic Report and the Directors' Report for the financial year for which the financial statements are prepared is consistent with the financial statements; and

-	the Group Strategic Report and the Directors' Report have been prepared in accordance with applicable legal requirements.

Matters on which we are required to report by exception

In the light of the knowledge and understanding of the group and the parent company and its environment obtained in

the course of the audit, we have not identified material misstatements in the Group Strategic Report or the Directors'

Report.

We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to

you if, in our opinion:

-	adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received from branches not visited by us; or

-	the parent company financial statements are not in agreement with the accounting records and returns; or

-	certain disclosures of directors' remuneration specified by law are not made; or

-	we have not received all the information and explanations we require for our audit.

Responsibilities of directors

As explained more fully in the Statement of Directors' Responsibilities set out on page three, the directors are

responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and

for such internal control as the directors determine necessary to enable the preparation of financial statements that are

free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the directors are responsible for assessing the group's and the parent company's

ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going

concern basis of accounting unless the directors either intend to liquidate the group or the parent company or to cease

operations, or have no realistic alternative but to do so.

Auditors' responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from

material misstatement, whether due to fraud or error, and to issue a Report of the Auditors that includes our opinion.

Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with

ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and

are considered material if, individually or in the aggregate, they could reasonably be expected to influence the

economic decisions of users taken on the basis of these financial statements.

A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting

Council's website at www.frc.org.uk/auditorsresponsibilities. This description forms part of our Report of the Auditors.

Use of our report

This report is made solely to the company's members, as a body, in accordance with Chapter 3 of Part 16 of the

Companies Act 2006. Our audit work has been undertaken so that we might state to the company's members those

matters we are required to state to them in a Report of the Auditors and for no other purpose. To the fullest extent

permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's

members as a body, for our audit work, for this report, or for the opinions we have formed.

BENJAMIN REYNOLDS BSc(Hons) FCA (Senior Statutory Auditor)

for and on behalf of TGFP

Chartered Accountants & Statutory Auditors

Fulford House

Newbold Terrace

Leamington Spa

Warwickshire

CV32 4EA

26 September 2019

TURNOVER

3

13,881,014

13,064,401

Cost of sales

2,674,795

2,437,738

GROSS PROFIT

11,206,219

10,626,663

Administrative expenses

11,082,758

10,383,237

123,461

243,426

Other operating income

50,000

-

OPERATING PROFIT

5

173,461

243,426

Income from fixed asset investments

(9,343

)

6,245

Interest receivable and similar income

6

3,567

378

(5,776

)

6,623

PROFIT BEFORE TAXATION

167,685

250,049

Tax on profit

7

42,224

50,707

PROFIT FOR THE FINANCIAL YEAR

125,461

199,342

Retained earnings at beginning of year

402,362

203,020

RETAINED EARNINGS FOR THE GROUP AT END OF YEAR

527,823

402,362

Profit attributable to:

Owners of the parent

125,461

199,342

FIXED ASSETS

Intangible assets

10

8,091

17,063

Tangible assets

11

301,719

301,990

Investments

12

-

-

309,810

319,053

CURRENT ASSETS

Debtors

13

713,749

343,028

Investments

14

37,008

48,578

Cash at bank and in hand

3,527,067

3,363,228

4,277,824

3,754,834

CREDITORS

Amounts falling due within one year

15

4,049,811

3,661,525

NET CURRENT ASSETS

228,013

93,309

TOTAL ASSETS LESS CURRENT LIABILITIES

537,823

412,362

CAPITAL AND RESERVES

Called up and paid share capital

18

10,000

10,000

Retained earnings

19

527,823

402,362

SHAREHOLDERS' FUNDS

537,823

412,362

The financial statements were approved by the Board of Directors on 26 September 2019 and were signed on its behalf

by:

Mrs L Callaby - Director

Mr E Blundell - Director

FIXED ASSETS

Intangible assets

10

-

-

Tangible assets

11

-

-

Investments

12

2,120,007

2,120,007

2,120,007

2,120,007

CURRENT ASSETS

Debtors

13

240,229

-

Cash at bank

205

662

240,434

662

CREDITORS

Amounts falling due within one year

15

1,199,140

959,277

NET CURRENT LIABILITIES

(958,706

)

(958,615

)

TOTAL ASSETS LESS CURRENT LIABILITIES

1,161,301

1,161,392

CAPITAL AND RESERVES

Called up and paid share capital

18

10,000

10,000

Retained earnings

19

1,151,301

1,151,392

SHAREHOLDERS' FUNDS

1,161,301

1,161,392

Company's loss for the financial year

(91

)

(122

)

The financial statements were approved by the Board of Directors on 26 September 2019 and were signed on its behalf by:

Mrs L Callaby - Director

Mr E Blundell - Director

Cash flows from operating activities

Cash generated from operations

1

405,434

200,030

Tax paid

(50,673

)

(67,227

)

Net cash from operating activities

354,761

132,803

Cash flows from investing activities

Purchase of intangible fixed assets

(936

)

-

Purchase of tangible fixed assets

(52,214

)

(86,641

)

Interest received

3,567

378

Dividends received

2,227

2,284

Net cash from investing activities

(47,356

)

(83,979

)

Cash flows from financing activities

Loans to associated companies

(130,000

)

(22,000

)

Amount introduced by directors

652,000

635,000

Amount withdrawn by directors

(665,566

)

(879,000

)

Net cash from financing activities

(143,566

)

(266,000

)

Increase/(decrease) in cash and cash equivalents

163,839

(217,176

)

Cash and cash equivalents at beginning of year

2

3,363,228

3,580,404

Cash and cash equivalents at end of year

2

3,527,067

3,363,228

1.	RECONCILIATION OF PROFIT BEFORE TAXATION TO CASH GENERATED FROM OPERATIONS

2018

2017

£

£

Profit before taxation

167,685

250,049

Depreciation charges

62,177

65,238

Loss on disposal of fixed assets

216

15,419

Finance income

5,776

(6,623

)

235,854

324,083

Increase in trade and other debtors

(240,721

)

(8,280

)

Increase/(decrease) in trade and other creditors

410,301

(115,773

)

Cash generated from operations

405,434

200,030

2.	CASH AND CASH EQUIVALENTS

The amounts disclosed on the Statement of Cash Flows in respect of cash and cash equivalents are in respect

of these Statement of Financial Position amounts:

Year ended 31 December 2018

31.12.18

1.1.18

£

£

Cash and cash equivalents

3,527,067

3,363,228

Year ended 31 December 2017

31.12.17

1.1.17

£

£

Cash and cash equivalents

3,363,228

3,580,404

1.	STATUTORY INFORMATION

L.E.M Limited is a private company, limited by shares , registered in England and Wales. The company's

registered number and registered office address can be found on the General Information page.

2.	ACCOUNTING POLICIES

Basis of preparing the financial statements

These financial statements have been prepared in accordance with Financial Reporting Standard 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland" and the Companies Act 2006. The financial statements have been prepared under the historical cost convention.

The presentational currency of the financial statements is the Pound Sterling (£).

Financial Reporting Standard 102 - reduced disclosure exemptions

FRS 102 allows a qualifying entity certain disclosure exemptions. The company has taken advantage of the

following available exemptions:

1 - the requirement to prepare a statement of cash flows;

2 - financial instruments disclosures, including categories of financial instruments; and

3 - the disclosure of key management personnel remuneration in total.

Basis of consolidation

The consolidated financial statements consolidate the financial statements of the company and its subsidiary

undertakings drawn up to 31 December 2018.

A subsidiary is an entity controlled by the company. Control is achieved where the company has the power to

govern the financial and operating policies of an entity so as to obtain benefits from its activities.

The results of subsidiaries acquired or disposed of during the year are included in profit or loss from the

effective date of acquisition or up to the effective date of disposal, as appropriate. Where necessary,

adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with

those used by the group.

The purchase method of accounting is used to account for business combinations that result in the acquisition

of subsidiaries by the group. The cost of a business combination is measured as the fair value of assets given,

equity instruments issued and liabilities incurred or assumed at the date of exchange, plus costs directly

attributable to the business combination. Identifiable assets acquired and liabilities and contingent liabilities

assumed in a business combination are measured initially at their fair values at the acquisition date. Any

excess of the cost of the business combination over the acquirers interest in the net fair value of the identifiable

assets, liabilities and contingent liabilities recognised is recorded as goodwill.

Inter-company transactions, balances and unrealised gains on transactions between the company and its

subsidiaries, which are related parties, are eliminated in full.

Intra-group losses are also eliminated but may indicate an impairment that requires recognition in the

consolidated financial statements. Accounting policies of subsidiaries have been changed where necessary to

ensure consistency with the policies adopted by the group. Non-controlling interest in the net assets of

consolidated subsidiaries are identified separately from the group's equity therein.

Related party exemption

The company has taken advantage of exemption, under the terms of Financial Reporting Standard 102 'The

Financial Reporting Standard applicable in the UK and Republic of Ireland', not to disclose related party

transactions with wholly owned subsidiaries within the group.

Transactions between group entities which have been eliminated on consolidation are not disclosed within the

financial statements.

Significant judgements and estimates

The preparation of financial statements in conformity with FRS 102 requires the use of certain critical

accounting estimates. It also requires management to exercise its judgement in the process of applying the

company's accounting policies. For the year under review there were no specific areas involving a higher

degree of judgement or complexity, or areas where assumptions and estimates had a material bearing on the

financial statements.

Turnover

Turnover represents commissions and fees received in respect of insurance services provided in the ordinary

course of the group's activities. Turnover is recognised in the period to which the income relates.

Goodwill

Goodwill arising on the acquisition of an entity represents the excess of the cost of acquisition over the group's

interest in the net fair value of the identifiable assets, liabilities and contingent liabilities of the entity recognised

at the date of acquisition. Goodwill is initially recognised as an asset at cost and is subsequently measured at

cost less accumulated amortisation and accumulated impairment losses. Goodwill is amortised over its useful

life, which shall not exceed ten years if a reliable estimate of the useful life cannot be made.

Intangible assets

Separately acquired computer software is shown at historical cost.

Computer software has a finite useful life and is carried at cost less accumulated amortisation and any

accumulated impairment losses.

Tangible fixed assets

Tangible assets are stated in the statement of financial position at cost, less any subsequent accumulated

depreciation and subsequent accumulated impairment losses.

The cost of tangible assets includes directly attributable incremental costs incurred in their acquisition and

installation.

Depreciation is provided at the following annual rates in order to write off each asset over its estimated useful

life.

Improvements to property - 10% on cost

Motor vehicles - 25% on cost

Computer equipment - 15% on reducing balance

Financial instruments

Financial instruments are classified and accounted for as financial assets, financial liabilities or equity

instruments, according to the substance of the contractual arrangement. Equity instruments are those that

entitle the holder to a residual interest in the company's assets after deducting all of its liabilities.

Basic financial instruments are recognised at amortised cost, except for investments in non-convertible

preference and non-puttable ordinary shares which are measured at fair value, with changes recognised in

profit or loss. Derivative financial instruments are initially recorded at cost and thereafter at fair value with

changes recognised in profit or loss.

Taxation

Taxation for the year comprises current and deferred tax. Tax is recognised in the Consolidated Statement of

Comprehensive Income, except to the extent that it relates to items recognised in other comprehensive income

or directly in equity.

Current or deferred taxation assets and liabilities are not discounted.

Current tax is recognised at the amount of tax payable using the tax rates and laws that have been enacted or

substantively enacted by the date of the statement of financial position.

Trade debtors

Trade debtors are amounts due from customers for services performed in the ordinary course of business.

Trade debtors are recognised initially at the transaction price. They are subsequently measured at amortised

cost using the effective interest method, less provision for impairment. A provision for the impairment of trade

debtors is established when there is objective evidence that the company will not be able to collect all amounts

due according to the original terms of the receivables.

Trade creditors

Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of

business from suppliers. Trade creditors are recognised initially at the transaction price and subsequently at

amortised cost using the effective interest method.

Hire purchase and leasing commitments

Rentals paid under operating leases are charged to profit or loss on a straight line basis over the period of the

lease.

Pension costs and other post-retirement benefits

The group operates a defined contribution pension scheme. Contributions payable to the group's pension

scheme are charged to profit or loss in the period to which they relate.

Clients' accounts

The company operates, what are called in the industry, client accounts. The company has entered into risk

transfer agreements with the insurers which means that the insurers take on the risk of the policy from the date

of purchase by the customer. Therefore, the cash held by the company in the client account is held in trust for

the insurers and is not monies held on behalf of the company's customers.

Current asset investments

Investments are recorded in the statement of financial position at market value, with any gains or losses

realised through profit or loss.

3.

TURNOVER

Turnover for the year from continuing operations all arose in the UK and related to the provision of services.

4.	EMPLOYEES AND DIRECTORS

2018

2017

£

£

Wages and salaries

2,424,546

2,230,973

Social security costs

185,204

164,840

Other pension costs

68,444

49,874

2,678,194

2,445,687

The average number of employees during the year was as follows:

2018

2017

Directors

2

2

Management

17

17

Support

94

91

113

110

2018

2017

£

£

Directors' remuneration

24,898

26,378

Directors' pension contributions to money purchase schemes

124

132

The number of directors to whom retirement benefits were accruing was as follows:

Money purchase schemes

2

2

5.	OPERATING PROFIT

The operating profit is stated after charging:

2018

2017

£

£

Hire of plant and machinery

16,255

18,989

Other operating leases

84,000

134,851

Depreciation - owned assets

52,269

55,415

Loss on disposal of fixed assets

216

15,419

Computer software amortisation

9,908

9,823

Auditors' remuneration

8,425

8,350