D M W Environmental Safety Ltd - Limited company accounts 18.2

REGISTERED NUMBER: 03576012 (England and Wales)

Strategic Report, Report of the Directors and

Audited Financial Statements for the Year Ended 30 June 2019

for

SGS DMW Environmental Safety Ltd

Previously known as

DMW Environmental Safety Ltd

Page

Company Information

1

Strategic Report

2

Report of the Directors

4

Report of the Independent Auditors

6

Statement of Income and Retained Earnings

8

Balance Sheet

9

Cash Flow Statement

10

Notes to the Cash Flow Statement

11

Notes to the Financial Statements

12

DIRECTORS:

M Boyd

J McGurk

SECRETARY:

Mrs C A Aldag

REGISTERED OFFICE:

SGS United Kingdom Limited

Inward Way

Ellesmere Port

Cheshire

CH65 3EN

BUSINESS ADDRESS:

Unit 4 Calibre Industrial Park

Four Ashes

Wolverhampton

West Midlands

WV10 7DZ

REGISTERED NUMBER:

03576012 (England and Wales)

AUDITORS:

Haslehursts Ltd

Statutory Auditor

88 Hill Village Road

Four Oaks

Sutton Coldfield

West Midlands

B75 5BE

SOLICITORS:

George Green LLP

19 Waterloo Road

Wolverhampton

WV1 4DY

The directors present their strategic report for the year ended 30 June 2019.

REVIEW OF BUSINESS

Principal Activity

The principal activity of the company in the year under review was that of environmental safety and compliance

consultants.

Overview

The company is an established building compliance services consultancy, the core business is the high growth area of

asbestos risk management including asbestos surveys, asbestos analysis, air monitoring, asbestos awareness training and

project management. Much of the company's work is underpinned by long - standing preferred supplier relationships

with a host of blue chip customers from social housing derived from the EU / UK Governments "decent housing"

initiative which has sustained the Company for many years. Such long-term agreements provide a great visibility of

income and are increasingly favoured by clients who require high performing suppliers in their supply chain.

There has also been significant growth in the commercial sector for surveys and removal work from the commercial and

retail sectors where landlords are obligated by law to have their buildings free from deleterious materials and keep the

public fully protected by complying with health and safety regulations in this area.

In recent years, the company has developed a core competency in workplace compliance - the closely related areas of

health & safety consultancy including water hygiene and fire risk assessments working a niche market offering UK

national coverage.

The business model is built around the company's high value added testing services which produces margin

contributions of around 80% which are required to cover the high fixed costs required by the business, mainly in the

payroll and related areas such as motor vehicles and travel. In recent years the business has grown by extending its

client and geographic reach and delivering a pro-active tailored service for its services.

Sales increased from £5,843k in the FY 2018 to £6,915 in FY 2019 which represents an increase of 18%. There were

proportionate increases in direct and administration costs, mainly wages and subcontract charges, which followed the

increase in turnover.

The company currently operates a very high customer retention rate and with little or no marketing is still showing

continued growth which could be further enhanced by a targeted marketing campaign.

Administration expenses increased from £1,980k in FY 2018 to £2,291k in FY 2019, an increase of 16% which roughly

reflects the higher turnover achieved during the year. Major items of increased spend were payroll and related items as

well as professional costs.

PRINCIPAL RISKS AND UNCERTAINTIES

The company operates in a mature market with other local business competing for the same work where prices are being

driven down in the competitive market place whilst overheads are increasing such as salaries therefore reducing profit

margins.

On January 30, 2020, the World Health Organization (WHO) declared an international health emergency due to the

outbreak of coronavirus. Since March 11, 2020 the WHO has characterised the spread of the coronavirus as a pandemic.

The continuing spread of the coronavirus and the impact on the business development of the SGS Group, including the

Company, is being continually monitored. Based on current developments, the SGS Group expects that the increasing

spread of the coronavirus and the necessary containment measures will have a negative impact on our TIC services in

most of sales markets. To assess the negative economic consequences and the measures that the SGS Group needs to

take, a detailed contingency plan has thus been compiled to cover all global businesses. The actions to protect the health

of SGS employees and the related cost-cutting measures to protect profitability and ensure sufficient liquidity level have

been initiated without delay.

Management considers the spread of the coronavirus, the resulting actions by governments globally to contain the

spread, and the resulting direct impact on SGS to constitute a non-adjusting subsequent event. SGS group management

is conducting regular global assessments and regularly updating the assumptions for the financial year 2020 forecasts

and determining the appropriate measures and actions to be implemented in each affiliate including the Company.

However, given the uncertainty regarding the spread of this coronavirus and the risk of a second lockdown, the related

financial impact for the financial year 2020 cannot be reasonably estimated at this time.

In addition, following an analysis of different possible scenarios, SGS group management and the SGS SA Board of

Directors concluded that sufficient reserves are available in respect of the liquidity and also the equity base of the SGS

group to guarantee continuity of the group for a period of not less than 12 months from signing these financial

statements.

FINANCIAL KEY PERFORMANCE INDICATORS

The company measures its periodic performance on the following KPI's;

1. Sales generated per direct employee

2. Profits generated per direct employee

3. Periodic sales and profit levels measured against moving annual totals

4. Debtor collection rates and overdue balance levels

5. Cash generation and cash balances

The company also measures its performance against peer competitors in the industry through subscribing to "Plimsol"

sector reports and through networking via its membership of professional bodies and trade association.

ON BEHALF OF THE BOARD:

M Boyd - Director

29 May 2020

The directors present their report with the financial statements of the company for the year ended 30 June 2019.

CHANGE OF NAME

The company passed a special resolution on 1 August 2019 changing its name from DMW Environmental Safety Ltd to SGS DMW Environmental Safety Ltd.

DIVIDENDS

The total dividends paid during the year was £83,246.

EVENTS SINCE THE END OF THE YEAR

Information relating to events since the end of the year is given in the notes to the financial statements.

DIRECTORS

M Boyd and J McGurk were appointed as directors after 30 June 2019 but prior to the date of this report.

G Williams , N Williams and W J Williams ceased to be directors after 30 June 2019 but prior to the date of this report.

POLITICAL DONATIONS AND EXPENDITURE

The amounts appearing in the financial statements are donations made to local charities and good causes. There were no

political donations made during the year.

DIRECTORS' RESPONSIBILITIES STATEMENT

The directors are responsible for preparing the Strategic Report, the Report of the Directors 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), including Financial Reporting Standard 102 'The

Financial Reporting Standard applicable in the UK and Republic of Ireland'. 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;

-	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.

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 company'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 company's

auditors are aware of that information.

AUDITORS

The auditors, Haslehursts Ltd, were appointed during the year will be re-appointed as auditors at the AGM.

ON BEHALF OF THE BOARD:

M Boyd - Director

29 May 2020

Opinion

We have audited the financial statements of SGS DMW Environmental Safety Ltd (the 'company') for the year ended

30 June 2019 which comprise the Statement of Income and Retained Earnings, Balance Sheet, Cash Flow Statement and

Notes to the Cash Flow Statement, 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 company's affairs as at 30 June 2019 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.

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 company in accordance with the ethical

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

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

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

Conclusions relating to going concern

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

you where:

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

-

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

Other information

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

Report and the Report of the Directors, 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.

Opinion 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 Strategic Report and the Report of the Directors for the financial year for which the financial statements are prepared is consistent with the financial statements; and

-	the Strategic Report and the Report of the Directors 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 company and its environment obtained in the course of the audit,

we have not identified material misstatements in the Strategic Report or the Report of the Directors.

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, 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 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 Directors' Responsibilities Statement set out on page four, 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 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.

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.

Stuart Penfold (Senior Statutory Auditor)

for and on behalf of Haslehursts Ltd

Statutory Auditor

88 Hill Village Road

Four Oaks

Sutton Coldfield

West Midlands

B75 5BE

3 June 2020

REVENUE

6,915,314

5,843,439

Cost of sales

3,191,989

2,662,467

GROSS PROFIT

3,723,325

3,180,972

Administrative expenses

2,290,703

1,980,089

OPERATING PROFIT

6

1,432,622

1,200,883

Cost of UK Tax Settlement

7

-

(1,254,549

)

Associated Taxation Credit

7

(4,877

)

238,068

1,427,745

184,402

Interest receivable and similar income

8

7,508

4,562

PROFIT BEFORE TAXATION

1,435,253

188,964

Tax on profit

9

259,782

215,709

PROFIT/(LOSS) FOR THE FINANCIAL YEAR

1,175,471

(26,745

)

Retained earnings at beginning of year

4,642,753

4,873,766

Dividends

10

(83,246

)

(204,268

)

RETAINED EARNINGS AT END OF YEAR

5,734,978

4,642,753

FIXED ASSETS

Property, plant and equipment

11

274,387

543,562

CURRENT ASSETS

Debtors

12

1,744,284

1,165,022

Cash at bank

4,935,921

4,755,026

6,680,205

5,920,048

CREDITORS

Amounts falling due within one year

13

1,173,177

1,742,391

NET CURRENT ASSETS

5,507,028

4,177,657

TOTAL ASSETS LESS CURRENT LIABILITIES

5,781,415

4,721,219

PROVISIONS FOR LIABILITIES

15

46,136

78,165

NET ASSETS

5,735,279

4,643,054

CAPITAL AND RESERVES

Called up share capital

16

300

300

Capital redemption reserve

17

1

1

Retained earnings

17

5,734,978

4,642,753

SHAREHOLDERS' FUNDS

5,735,279

4,643,054

The financial statements were approved by the Board of Directors on 29 May 2020 and were signed on its behalf by:

M Boyd - Director

Cash flows from operating activities

Cash generated from operations

1

254,973

1,669,906

Tax paid

(38,963

)

(563,245

)

Net cash from operating activities

216,010

1,106,661

Cash flows from investing activities

Purchase of tangible fixed assets

(65,997

)

(119,240

)

Sale of tangible fixed assets

106,620

17,999

Interest received

7,508

4,562

Net cash from investing activities

48,131

(96,679

)

Cash flows from financing activities

Equity dividends paid

(83,246

)

(204,268

)

Net cash from financing activities

(83,246

)

(204,268

)

Increase in cash and cash equivalents

180,895

805,714

Cash and cash equivalents at beginning of year

2

4,755,026

3,949,312

Cash and cash equivalents at end of year

2

4,935,921

4,755,026

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

30.6.19

30.6.18

£

£

Profit before taxation

1,435,253

188,964

Depreciation charges

272,366

251,334

Profit on disposal of fixed assets

(43,813

)

(3,111

)

Finance income

(7,508

)

(4,562

)

1,656,298

432,625

(Increase)/decrease in trade and other debtors

(579,262

)

130,792

(Decrease)/increase in trade and other creditors

(822,063

)

1,106,489

Cash generated from operations

254,973

1,669,906

2.	CASH AND CASH EQUIVALENTS

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

Balance Sheet amounts:

Year ended 30 June 2019

30.6.19

1.7.18

£

£

Cash and cash equivalents

4,935,921

4,755,026

Year ended 30 June 2018

30.6.18

1.7.17

£

£

Cash and cash equivalents

4,755,026

3,949,312

1.	STATUTORY INFORMATION

SGS DMW Environmental Safety Ltd 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 Company Information page.

2.	STATEMENT OF COMPLIANCE

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.

3.	ACCOUNTING POLICIES

Basis of preparing the financial statements

The financial statements have been prepared under the historical cost convention.

Turnover

Revenue is measured at the fair value of the consideration received or receivable, excluding discounts, rebates,

value added tax and other sales taxes.

The following criteria must also be met before turnover is recognised:

Rendering of services

Turnover from a contract to provide services is recognised in the period in which the services are provided in

accordance with the stage of completion of the contract when all of the following conditions are satisfied:

- The amount of turnover can be measured reliably;

- It is probable that the company will receive the consideration due under the contract;

- The stage of completion of the contract at the end of the reporting period can be measured reliably; and

- The costs incurred and the costs to complete the contract can be measured reliably.

Tangible fixed assets

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

Short leasehold

-

at varying rates on cost

Plant and machinery

-

25% on cost

Fixtures and fittings

-

25% on cost

Motor vehicles

-

25% on cost

Computer equipment

-

25% on cost

Taxation

Taxation for the year comprises current and deferred tax. Tax is recognised in the Income Statement, 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 balance sheet date.

Deferred tax

Deferred tax is recognised in respect of all timing differences that have originated but not reversed at the balance

sheet date.

Timing differences arise from the inclusion of income and expenses in tax assessments in periods different from

those in which they are recognised in financial statements. Deferred tax is measured using tax rates and laws that

have been enacted or substantively enacted by the year end and that are expected to apply to the reversal of the

timing difference.

Unrelieved tax losses and other deferred tax assets are recognised only to the extent that it is probable that they

will be recovered against the reversal of deferred tax liabilities or other future taxable profits.

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

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

4.	EMPLOYEES AND DIRECTORS

30.6.19

30.6.18

£

£

Wages and salaries

2,778,374

2,354,025

Social security costs

240,980

212,311

Other pension costs

54,869

82,783

3,074,223

2,649,119

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

30.6.19

30.6.18

Directors

3

3

Administration

29

28

Direct

82

68

114

99

5.	DIRECTORS' EMOLUMENTS

30.6.19

30.6.18

£

£

Directors' remuneration

25,200

25,200

Directors' pension contributions to money purchase schemes

4,400

55,500

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

Money purchase schemes

1

2

6.	OPERATING PROFIT

The operating profit is stated after charging/(crediting):

30.6.19

30.6.18

£

£

Other operating leases

38,173

35,799

Depreciation - owned assets

272,365

251,334

Profit on disposal of fixed assets

(43,813

)

(3,111

)

Auditors' remuneration

7,000

-

7.	EXCEPTIONAL ITEMS

30.6.19

30.6.18

£

£

Cost of UK Tax Settlement

-

(1,254,549

)

Associated Taxation Credit

(4,877

)

238,068

(4,877

)

(1,016,481

)

8.

INTEREST RECEIVABLE AND SIMILAR INCOME

30.6.19

30.6.18

£

£

Deposit account interest

7,508

4,562

9.

TAXATION

Analysis of the tax charge

The tax charge on the profit for the year was as follows:

30.6.19

30.6.18

£

£

Current tax:

UK corporation tax

299,351

239,277

Adjustment for Prior Years Tax

(7,539

)

-

Total current tax

291,812

239,277

Deferred tax

(32,030

)

(23,568

)

Tax on profit

259,782

215,709

UK corporation tax has been charged at 19% (2018 - 19%).

Reconciliation of total tax charge included in profit and loss

The tax assessed for the year is lower than the standard rate of corporation tax in the UK. The difference is

explained below:

30.6.19

30.6.18

£

£

Profit before tax

1,435,253

188,964

Profit multiplied by the standard rate of corporation tax in the UK of 19% (2018 - 19%)

272,698

35,903

Effects of:

Expenses not deductible for tax purposes

1,335

2,615

Capital allowances in excess of depreciation

-

(3,840

)

Adjustments to tax charge in respect of previous periods

(7,539

)

(12,085

)

Tax settlement disallowed for current UK CT Charge of £1,016,481 at 19%

933

193,116

R&D Tax Credit

(7,645

)

-

Total tax charge

259,782

215,709

10.

DIVIDENDS

30.6.19

30.6.18

£

£

Ordinary shares of £1 each

Interim

-

107,510

A Ordinary Management shares of £1 each

Interim

25,056

38,866

B Ordinary Management shares of £1 each

Interim

58,190

57,892

83,246

204,268

11.	PROPERTY, PLANT AND EQUIPMENT

Fixtures

Short

Plant and

and

leasehold

machinery

fittings

£

£

£

COST

At 1 July 2018

371,999

93,888

143,042

Additions

2,495

1,785

-

At 30 June 2019

374,494

95,673

143,042

DEPRECIATION

At 1 July 2018

259,948

70,143

141,930

Charge for year

69,915

11,452

677

Eliminated on disposal

-

-

-

At 30 June 2019

329,863

81,595

142,607

NET BOOK VALUE

At 30 June 2019

44,631

14,078

435

At 30 June 2018

112,051

23,745

1,112

Motor

Computer

vehicles

equipment

Totals

£

£

£

COST

At 1 July 2018

807,690

477,259

1,893,878

Additions

15,127

46,590

65,997

Disposals

(452,483

)

-

(452,483

)

At 30 June 2019

370,334

523,849

1,507,392

DEPRECIATION

At 1 July 2018

507,553

370,742

1,350,316

Charge for year

143,691

46,630

272,365

Eliminated on disposal

(389,676

)

-

(389,676

)

At 30 June 2019

261,568

417,372

1,233,005

NET BOOK VALUE

At 30 June 2019

108,766

106,477

274,387

At 30 June 2018

300,137

106,517

543,562

12.

DEBTORS: AMOUNTS FALLING DUE WITHIN ONE YEAR

30.6.19

30.6.18

£

£

Trade debtors

1,504,400

1,284,502

Bad Debt Provision

(76,844

)

(194,464

)

Other debtors

118,076

-

Prepayments and accrued income

198,652

74,984

1,744,284

1,165,022