Allied Mechanical Holdings Limited - Limited company accounts 20.1

REGISTERED NUMBER: 10582636 (England and Wales)

Group Strategic Report, Report of the Directors and

Consolidated Financial Statements

for the Year Ended 31 March 2020

for

Allied Mechanical Services Holdings

Limited

Page

Company Information

1

Group Strategic Report

2

Report of the Directors

3

Report of the Independent Auditors

5

Consolidated Income Statement

7

Consolidated Other Comprehensive Income

8

Consolidated Balance Sheet

9

Company Balance Sheet

10

Consolidated Statement of Changes in Equity

11

Company Statement of Changes in Equity

12

Consolidated Cash Flow Statement

13

Notes to the Consolidated Cash Flow Statement

14

Notes to the Consolidated Financial Statements

15

DIRECTORS:

C D Carter

S Gandy

Mrs L Gandy

Ms S Harper

REGISTERED OFFICE:

Eldo House

Kempson Way

Suffolk Business Park

Bury St Edmunds

Suffolk

IP32 7AR

REGISTERED NUMBER:

10582636 (England and Wales)

AUDITORS:

Knights Lowe Limited

Eldo House

Kempson Way

Suffolk Business Park

Bury St Edmunds

Suffolk

IP32 7AR

The directors present their strategic report of the company and the group for the year ended 31 March 2020.

REVIEW OF BUSINESS

The trade of Allied Mechanical Services Limited is the primary trade within the group.

The results for the year and the financial position of the group are shown in the following financial statements. The directors consider the state of the company's affairs to be satisfactory.

The directors are confident that with continued investment in well qualified, experienced staff they can continue to fully meet the expectations of customers in the future which will ultimately improve the turnover and continue to improve profitability of the company going forward.

PRINCIPAL RISKS AND UNCERTAINTIES

The principal risks and uncertainties facing the company continue to be largely based around the competitive trading conditions which exist in the industry as well as the industry's reliance on the economic climate. However the directors are still confident that the company has the ability to continue to trade through difficult market conditions.

The directors have also identified key risks in relation to going concern and cash flow of the company going forward. This is explained further in note 1 of the financial statements.

Further to this, in note 1 of the financial statements, the directors have addressed the current approach and risks faced by the company due to the Covid-19 pandemic.

FUTURE DEVELOPMENTS

The directors are confident that the company's financial position will improve going forward as the outlook for the future year is strong with the aquisition of many new contracts. The directors believe that the company will continue to grow going forward and build upon its reputation of providing a quality service to customers.

ON BEHALF OF THE BOARD:

C D Carter - Director

18 December 2020

The directors present their report with the financial statements of the company and the group for the year ended 31 March 2020.

DIVIDENDS

Interim dividends per share were paid as follows:

Ordinary A Shares

£43.75

- 6 April 2019

£43.75

- 6 July 2019

£43.75

- 6 October 2019

£43.75

- 6 January 2020

£12.50

- 30 March 2020

£187.50

The directors recommend that no final dividend be paid on these shares.

Ordinary B Shares

£58.33

- 6 April 2019

£58.33

- 6 July 2019

£58.33

- 6 October 2019

£58.33

- 6 January 2020

£100.00

- 30 March 2020

£333.32

The directors recommend that no final dividend be paid on these shares

The total distribution of dividends for the period ended 31 March 2020 will be £216,666.

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

The directors shown below have held office during the whole of the period from 1 April 2019 to the date of this report.

C D Carter

S Gandy

Mrs L Gandy

Ms S Harper

STATEMENT OF DIRECTORS' RESPONSIBILITIES

The directors are responsible for preparing the Group 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). 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 or she ought to have taken as a director in order to make himself or herself aware of any relevant audit information and to establish that the group's auditors are aware of that information.

AUDITORS

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

ON BEHALF OF THE BOARD:

C D Carter - Director

18 December 2020

Opinion

We have audited the financial statements of Allied Mechanical Services Holdings Limited (the 'parent company') and its subsidiaries (the 'group') for the year ended 31 March 2020 which comprise the Consolidated Income Statement, Consolidated Other Comprehensive Income, Consolidated Balance Sheet, Company Balance Sheet, Consolidated Statement of Changes in Equity, Company Statement of Changes in Equity, Consolidated Cash Flow Statement and Notes to the Consolidated 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 group's and of the parent company affairs as at 31 March 2020 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 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.

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

-	the Group 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 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 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 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 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 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.

James Knights BSc ACA (Senior Statutory Auditor)

for and on behalf of Knights Lowe Limited

Eldo House

Kempson Way

Suffolk Business Park

Bury St Edmunds

Suffolk

IP32 7AR

18 December 2020

TURNOVER

4

8,323,015

10,530,604

Cost of sales

7,040,328

8,939,678

GROSS PROFIT

1,282,687

1,590,926

Administrative expenses

1,033,966

939,876

OPERATING PROFIT

6

248,721

651,050

Interest receivable and similar income

444

167

249,165

651,217

Interest payable and similar expenses

7

30,673

27,854

PROFIT BEFORE TAXATION

218,492

623,363

Tax on profit

8

(213,739

)

123,365

PROFIT FOR THE FINANCIAL YEAR

432,231

499,998

Profit attributable to:

Owners of the parent

432,231

499,998

PROFIT FOR THE YEAR

432,231

499,998

OTHER COMPREHENSIVE INCOME

-

-

TOTAL COMPREHENSIVE INCOME FOR THE YEAR

432,231

499,998

Total comprehensive income attributable to:

Owners of the parent

432,231

499,998

FIXED ASSETS

Intangible assets

11

1,644,024

1,878,884

Tangible assets

12

583,509

554,231

Investments

13

-

-

2,227,533

2,433,115

CURRENT ASSETS

Debtors

14

2,457,258

2,369,515

Cash at bank

141,523

575,405

2,598,781

2,944,920

CREDITORS

Amounts falling due within one year

15

3,233,375

4,305,362

NET CURRENT LIABILITIES

(634,594

)

(1,360,442

)

TOTAL ASSETS LESS CURRENT LIABILITIES

1,592,939

1,072,673

CREDITORS

Amounts falling due after more than one year

16

(518,159

)

(215,988

)

PROVISIONS FOR LIABILITIES

19

(24,243

)

(21,713

)

NET ASSETS

1,050,537

834,972

CAPITAL AND RESERVES

Called up share capital

20

1,000

1,000

Share premium

21

450,000

450,000

Retained earnings

21

599,537

383,972

SHAREHOLDERS' FUNDS

1,050,537

834,972

The financial statements were approved by the Board of Directors and authorised for issue on 18 December 2020 and were signed on its behalf by:

C D Carter - Director

S Gandy - Director

FIXED ASSETS

Intangible assets

11

-

-

Tangible assets

12

271,377

333,389

Investments

13

4,026,275

4,026,275

4,297,652

4,359,664

CURRENT ASSETS

Debtors

14

733,686

485,543

Cash at bank

-

7,555

733,686

493,098

CREDITORS

Amounts falling due within one year

15

4,115,269

4,042,194

NET CURRENT LIABILITIES

(3,381,583

)

(3,549,096

)

TOTAL ASSETS LESS CURRENT LIABILITIES

916,069

810,568

CREDITORS

Amounts falling due after more than one year

16

(139,251

)

(211,323

)

PROVISIONS FOR LIABILITIES

19

(24,243

)

(21,713

)

NET ASSETS

752,575

577,532

CAPITAL AND RESERVES

Called up share capital

20

1,000

1,000

Share premium

21

450,000

450,000

Retained earnings

21

301,575

126,532

SHAREHOLDERS' FUNDS

752,575

577,532

Company's profit for the financial year

391,709

309,402

The financial statements were approved by the Board of Directors and authorised for issue on 18 December 2020 and were signed on its behalf by:

C D Carter - Director

S Gandy - Director

Called up

share

Retained

Share

Total

capital

earnings

premium

equity

£

£

£

£

Balance at 1 April 2018

1,000

86,640

450,000

537,640

Changes in equity

Dividends

-

(202,666

)

-

(202,666

)

Total comprehensive income

-

499,998

-

499,998

Balance at 31 March 2019

1,000

383,972

450,000

834,972

Changes in equity

Dividends

-

(216,666

)

-

(216,666

)

Total comprehensive income

-

432,231

-

432,231

Balance at 31 March 2020

1,000

599,537

450,000

1,050,537

Called up

share

Retained

Share

Total

capital

earnings

premium

equity

£

£

£

£

Balance at 1 April 2018

1,000

19,796

450,000

470,796

Changes in equity

Dividends

-

(202,666

)

-

(202,666

)

Total comprehensive income

-

309,402

-

309,402

Balance at 31 March 2019

1,000

126,532

450,000

577,532

Changes in equity

Dividends

-

(216,666

)

-

(216,666

)

Total comprehensive income

-

391,709

-

391,709

Balance at 31 March 2020

1,000

301,575

450,000

752,575

Cash flows from operating activities

Cash generated from operations

1

(119,682

)

504,632

Interest paid

(4,797

)

(5,052

)

Interest element of hire purchase payments paid

(25,876

)

(22,802

)

Tax paid

69,105

(64,788

)

Net cash from operating activities

(81,250

)

411,990

Cash flows from investing activities

Purchase of tangible fixed assets

(39,265

)

(212,483

)

Sale of tangible fixed assets

134,644

833

Interest received

444

167

Net cash from investing activities

95,823

(211,483

)

Cash flows from financing activities

New loans in year

-

184,823

Capital repayments in year

(231,977

)

(103,038

)

Amount introduced by directors

188

147,451

Amount withdrawn by directors

-

(185,244

)

Equity dividends paid

(216,666

)

(202,666

)

Net cash from financing activities

(448,455

)

(158,674

)

(Decrease)/increase in cash and cash equivalents

(433,882

)

41,833

Cash and cash equivalents at beginning of year

2

575,405

533,572

Cash and cash equivalents at end of year

2

141,523

575,405

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

2020

2019

£

£

Profit before taxation

218,492

623,363

Depreciation charges

400,403

385,651

Profit on disposal of fixed assets

(12,915

)

(833

)

Finance costs

30,673

27,854

Finance income

(444

)

(167

)

636,209

1,035,868

(Increase)/decrease in trade and other debtors

(87,743

)

180,493

Decrease in trade and other creditors

(668,148

)

(711,729

)

Cash generated from operations

(119,682

)

504,632

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 31 March 2020

31.3.20

1.4.19

£

£

Cash and cash equivalents

141,523

575,405

Year ended 31 March 2019

31.3.19

1.4.18

£

£

Cash and cash equivalents

575,405

533,572

3.	ANALYSIS OF CHANGES IN NET FUNDS/(DEBT)

Other

non-cash

At 1.4.19

Cash flow

changes

At 31.3.20

£

£

£

£

Net cash

Cash at bank

575,405

(433,882

)

141,523

575,405

(433,882

)

141,523

Debt

Finance leases

(339,302

)

231,977

-

(384,610

)

(339,302

)

231,977

-

(384,610

)

Total

236,103

(201,905

)

-

(243,087

)

1.	GOING CONCERN

Covid-19 considerations

The Covid-19 pandemic has been seen to have a significant economic effect since the first lockdowns were imposed in March 2020. Like many businesses Allied Mechanical Services Limited were impacted initially due to site closures. During this difficult time the company has made use of the government Coronavirus Job Retention Scheme to fund the short term cash demand of site closures. However due to the implementation of new Covid-19 secure working practices the company is now back to full operational capacity and has been far less effected by secondary lockdowns for this reason. To further strengthen the financial position of the company and to deal with the challenges faced, in May 2020, the Group obtained a bank loan of £750,000. With the support of this additional finance and the strong inflow of future work the directors are confident that the company is now in a strong position to trade through the pandemic and grow going forward.

Further information regarding the going concern basis of these financial statements

As at 31 March 2020 the consolidated balance sheet of the group shows net assets of £1,050,537 (2019: £834,972) with net current liabilities of £634,594 (2019: £1,360,442). It can be seen that both of these positions have improved significantly since March 2019. The directors have considered the group's position in relation to going concern when identifying the basis on which the accounts should be prepared. The net current liabilities position means that the directors must consider whether the group is able to meet its cash requirements throughout the year to ensure current liabilities can be paid as they become due.

Having reviewed these uncertainties that may cause significant doubt on the group's ability to trade as a going concern the directors have concluded that the group's forecasts and projections, taking into account possible changes in trading performance, show that the group should be able to operate within the level of its current banking facilities and have a reasonable expectation that the group has adequate resources to continue in operational existence for the foreseeable future.

In making this conclusion, and therefore determining the appropriateness of this basis, the directors have considered the following:

A key consideration that the directors wish to highlight is the additional bank loan finance of £750,000 that has been obtained by the group in May 2020 to strengthen the financial position of the group and provide additional cash flow support to allow the group to continue to trade and grow going forward.

In addition to this the directors have effectively managed the cash flow of the group for the past four years during which time cash availability in the group has been restricted due to a change in business ownership, and during this time the net current liabilities position has improved significantly. The directors have achieved this through careful cash flow management involving detailed tracking of customer receipts as well as managing supplier payments/credit terms to ensure available cash is maintained so liabilities can be paid as they fall due. This careful management of cash flow is a focus of the directors who are confident that they can continue to manage this cash flow going forward to maintain the group's ability to trade.

The directors are confident that strong financial performance is set to continue with £6million of contracts already scheduled to be completed in the next 12 months, not including the company facilities management division, with further contracts in the pipeline. The directors believe that this flow of future income will provide adequate operating cash inflows to sustain the cash requirements of the group for the foreseeable future. Contract cash flows will be individually managed to ensure cash surplus is maintained throughout the life of the contract and therefore maintain positive cash movements going forward.

After considering the above points the directors conclude the going concern basis is the appropriate basis for these financial statements. Although the directors do accept there is always uncertainty when predicting future cash flows of the group, they are confident that cash and creditors can be managed in such a way as to sustain the group's ability to trade and allow the group to clear its net liability position over time through retained profit generation.