Smoke Control Services Limited - Limited company accounts 20.1

REGISTERED NUMBER: 02776224 (England and Wales)

STRATEGIC REPORT, REPORT OF THE DIRECTORS AND

AUDITED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 MARCH 2020

FOR

SMOKE CONTROL SERVICES LIMITED

T/A

SCS GROUP

Page

Company Information

1

Strategic Report

2

Report of the Directors

6

Report of the Independent Auditors

8

Statement of Comprehensive Income

10

Statement of Financial Position

11

Statement of Changes in Equity

13

Notes to the Financial Statements

14

DIRECTORS:

C A Jones

S Inwood

M J Card

REGISTERED OFFICE:

T2 Capital Business Park

Parkway

Cardiff

CF3 2PZ

REGISTERED NUMBER:

02776224 (England and Wales)

AUDITORS:

Graham Paul Limited

(Statutory Auditor)

Court House

Court Road

Bridgend

CF31 1BE

The directors present their strategic report for the year ended 31 March 2020.

BUSINESS REVIEW AND FUTURE DEVELOPMENTS

2020 (£'000

)

2019 (£'000

)

Change (%

)

Sales

12,704

11,799

7.67%

Operating Profit

895

712

25.70%

Profit after tax

793

642

23.52%

Equity shareholders' funds

3,060

2,266

35.04%

Average number of employees

54

53

1.92%

The company achieved £12.7 million revenue.

Turnover increased by 7.67% during the year, which was consistent with previous year, however this was lower than originally forecasted due to Covid-19 effecting the sales within the last quarter of 2020.

Although the turnover was lower than originally forecasted, the directors are satisfied with the yearly turnover achieved despite the lower than predicted last quarter, during the start of the Covid-19 pandemic. Stable profits have been maintained and Shareholders' funds have increased by 35.04%

The contract orderbook at the 31st March 2020 was £13.4m

The Company has delivered several high-profile projects during the last financial year including:

- JLR Churchil

- Plots 6&7 Central Square - Cardiff

- Lillie Square - Phase 2

In addition to the existing order book, the following projects have been secured and will be delivered over the coming financial years.

- Old war office

- Nine Elms Parkside

- Zone T - Kings cross

- Cardiff University - Maths & Science

- Brunel Street Works

The Company was a finalist in the specialist contractor of the Building awards 2019.

PRINCIPAL RISKS AND UNCERTAINTIES

The principal risks and uncertainties facing the group are broadly grouped as - competitive, legislative and financial instrument risk.

Competitive Risk

The Company operates in the competitive tender marketplace, however a high percentage of turnover is from repeat business.

Being successful in the tender of these contracts is uncertain and based on financial and performance criteria.

Legislative Risk

In the UK, the equipment must be manufactured to EU standards. These standards are subject to continuous revision and any new Directive may have a material impact on the ability of the Company to manufacture and supply products at a profit. In addition, compliance imposes costs and failure to comply with the standards could materially affect the Company's ability to operate.

Financial Instrument Risk

The Company has maintained a risk and financial management framework whose primary objectives are to protect the Company from events that hinder the achievement of the Company's performance objectives.

The objectives aim to limit undue counterparty exposure, ensure sufficient working capital exists and monitor the management of risk at a business unit level.

FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES

The Company/Group has a varied mix of financial instruments such as cash, leases, loans, trade payable and trade receivables in order to raise finance for its operations. The existence of these instruments exposes the Company to financial risks which are detailed below.

Liquidity risk / Cash Flow Risk

The Company seeks to manage financial risk by ensuring sufficient cash balances are available to meet its obligations as they fall due and to invest cash assets safely and profitably. The Company monitors cash flow using forecasting techniques to ensure that all obligations can be met as they fall due.

Interest Risk

The Company monitors its banking facilities and compliance against covenants as required. Company monies are also monitored to ensure that the minimum interest charges are paid with regards to charges.

Credit Risk

The principal credit risk for the Company arises from its trade receivables. In order to manage credit risk, the Directors have incorporated a range of credit control procedures to monitor bad debt levels, and to ensure that any debts are collected as they fall due. Aged debtors are reviewed by senior management monthly basis. In addition, the Company pays an annual premium for Credit Insurance to protect against any potential bad debts.

Capital Management

The Company's objectives when managing capital are to safeguard its ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders, and to maintain an optimal capital structure to minimise the cost of capital.

Foreign Exchange Risk

The Company uses forward foreign currency contracts to reduce exposure to the variability of foreign exchange rates by fixing the rate of any material payments in a foreign currency.

GOING CONCERN

The Company's business activities, together with the factors likely to affect is future development, its financial position, financial risk management objectives, details of its financial instruments and derivative activities, and its exposures to price, credit, liquidity and cash flow risk are described in the Strategic Report.

The Company has considerable financial resources together with long-term contracts with a number of customers and suppliers across difference geographic areas. Consequently, the directors believe that the Company is well placed to manage its business risks successfully despite the current uncertain economic outlook that the Covid-19 virus has created. As such the Directors have a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future. Accordingly, they continue to adopt the going concern basis in preparing the annual report and accounts.

EMPLOYEES

The Company is committed to providing employment practices and policies which recognise the diversity of our workforce and ensure equality for employees regardless of sex, race, disability, age, sexual orientations or religious belief.

Employees are kept closely informed of major changes affecting them through such measures as team meetings, briefings and internal communications. There are well established procedures to ensure that the views of employees are considered in reaching decision, and ongoing training is provided when required.

Full and fair consideration is given to all applications for employment.

HEALTH AND SAFETY

The Company has defined procedures to ensure compliance with health and safety regulations. In addition, there is regular communication with employee on safety matters.

ENVIRONMENT

The Company is committed to the protection of the environment and aims to minimise the impact of its business activities by ensuring the effective environmental management and compliance with all relevant laws and regulations. Management review environmental considerations as part of the decision-making process and will strive to improve performance by minimising waste and maximising recycling whenever possible. Management communicates with interested parties on environmental issues and provide training where appropriate.

ON BEHALF OF THE BOARD:

C A Jones - Director

26 March 2021

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

PRINCIPAL ACTIVITY

The principal activity of the company in the year under review was that of the supply and installation of smoke control systems and the design and manufacture of switch gears, control panels and other electrical equipment.

DIVIDENDS

No dividends will be distributed for the year ended 31 March 2020.

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 A Jones

S Inwood

M J Card

STATEMENT OF DIRECTORS' RESPONSIBILITIES

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). 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, Graham Paul Limited, will be proposed for re-appointment at the forthcoming Annual General Meeting.

ON BEHALF OF THE BOARD:

C A Jones - Director

26 March 2021

Opinion

We have audited the financial statements of Smoke Control Services Limited (the 'company') for the year ended 31 March 2020 which comprise the Statement of Comprehensive Income, Statement of Financial Position, Statement of Changes in Equity and 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 31 March 2020 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.

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 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 Statement of Directors' Responsibilities set out on page six, 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.

Nigel Williams BCOM FCA (Senior Statutory Auditor)

for and on behalf of Graham Paul Limited

(Statutory Auditor)

Court House

Court Road

Bridgend

CF31 1BE

26 March 2021

TURNOVER

12,703,554

11,799,453

Cost of sales

9,223,055

8,787,229

GROSS PROFIT

3,480,499

3,012,224

Administrative expenses

2,585,568

2,300,169

OPERATING PROFIT

5

894,931

712,055

Interest receivable and similar income

-

32

PROFIT BEFORE TAXATION

894,931

712,087

Tax on profit

6

101,534

70,529

PROFIT FOR THE FINANCIAL YEAR

793,397

641,558

OTHER COMPREHENSIVE INCOME

-

-

TOTAL COMPREHENSIVE INCOME FOR THE YEAR

793,397

641,558

FIXED ASSETS

Tangible assets

7

69,932

57,939

Investments

8

1

1

69,933

57,940

CURRENT ASSETS

Stocks

9

432,615

327,561

Debtors

10

6,430,328

5,255,575

Cash at bank

36,001

296,687

6,898,944

5,879,823

CREDITORS

Amounts falling due within one year

11

3,896,338

3,660,904

NET CURRENT ASSETS

3,002,606

2,218,919

TOTAL ASSETS LESS CURRENT LIABILITIES

3,072,539

2,276,859

PROVISIONS FOR LIABILITIES

15

12,872

10,589

NET ASSETS

3,059,667

2,266,270

CAPITAL AND RESERVES

Called up share capital

16

50,698

50,698

Share premium

17

57,930

57,930

Capital redemption reserve

17

65

65

Retained earnings

17

2,950,974

2,157,577

SHAREHOLDERS' FUNDS

3,059,667

2,266,270

The financial statements were approved by the Board of Directors and authorised for issue on 26 March 2021 and were signed on its behalf by:

C A Jones - Director

Called up

Capital

share

Retained

Share

redemption

Total

capital

earnings

premium

reserve

equity

£

£

£

£

£

Balance at 1 April 2018

50,698

1,516,019

57,930

65

1,624,712

Changes in equity

Total comprehensive income

-

641,558

-

-

641,558

Balance at 31 March 2019

50,698

2,157,577

57,930

65

2,266,270

Changes in equity

Total comprehensive income

-

793,397

-

-

793,397

Balance at 31 March 2020

50,698

2,950,974

57,930

65

3,059,667

1.	STATUTORY INFORMATION

Smoke Control Services 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 Company Information page.

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

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.

Financial Reporting Standard 102 - reduced disclosure exemptions

The company has taken advantage of the following disclosure exemptions in preparing these financial statements, as permitted by FRS 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland":

•

the requirements of Section 7 Statement of Cash Flows;

•

the requirement of paragraph 33.7.

Preparation of consolidated financial statements

The financial statements contain information about Smoke Control Services Limited as an individual company and do not contain consolidated financial information as the parent of a group. The company is exempt under Section 400 of the Companies Act 2006 from the requirements to prepare consolidated financial statements as it and its subsidiary undertaking are included by full consolidation in the consolidated financial statements of its parent, SCS Engineering Limited, T2 Capital Business park, Parkway, Cardiff, Wales CF3 2PZ.

Turnover

Turnover comprises the invoice value of goods supplied by the company, exclusive of trade discounts and value added tax.

Turnover is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer, usually on dispatch of the goods, the amounts of revenue can be measured reliably, it is probable that the economic benefits associated with the transaction will flow to the entity and the costs incurred or to be incurred in respect of the transaction can be measured reliably.

Turnover in relation to contracts is recognised by reference to the stage of completion.

Tangible fixed assets

Tangible fixed assets are stated at cost less accumulated depreciation and accumulated impairment losses. Cost includes the original purchase price, plus any costs directly attributable to bringing the asset to its working condition for intended use.

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

Leasehold improvements

- Over the life of the lease

Plant and machinery

- 25% on cost

Fixtures, fittings and equipment

- 33% on cost and 25% on cost

Motor vehicles

- 25% on cost

Investments in subsidiaries

Investments in subsidiary undertakings are recognised at cost.

Stocks

Stocks are valued at the lower of cost and net realisable value after making due allowance for slow moving and obsolete items.

Cost includes all direct expenditure incurred in the normal course of business in bringing stocks to their present location and condition and an appropriate proportion of fixed and variable overheads.

Net realisable value comprises actual or estimated selling price (net of trade discounts) less all further costs to completion or to be incurred in marketing and selling.

Financial instruments

The company has basic financial instruments comprising cash & cash equivalents such as cash at bank and in hand along with short term debtors and creditors. Cash & cash equivalents are recorded at transaction price including any related transaction costs.

Debtors and creditors are recorded initially at transaction price including transaction costs and subsequently measured at the expected settlement amount less any allowances for uncollectibility.

Taxation

Taxation for the year comprises current and deferred tax. Tax is recognised in the 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 statement of financial position date.

Deferred tax

Deferred tax is recognised in respect of all timing differences that have originated but not reversed at the statement of financial position 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.

Research and development

Expenditure on research and development is written off in the year in which it is incurred.

Foreign currencies

Assets and liabilities in foreign currencies are translated into sterling at the rates of exchange ruling at the statement of financial position date. Transactions in foreign currencies are translated into sterling at the rate of exchange ruling at the date of transaction. The resulting exchange differences are dealt with in the profit and loss accounts and so are taken into account in arriving at the operating result.

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.

Amounts recoverable under contracts

Profit is recognised on long-term contracts, if the final outcome can be assessed with reasonable certainty, by including in the profit and loss account turnover and related costs as contract activity progresses. Turnover is recognised by reference to the stage of completion of a contract.

Investments

Investments held as fixed assets are stated at cost less provision for any permanent diminution in value. Income from investments, together with any related tax credit is recognised in the profit and loss account in the year in which it is receivable.

3.	EMPLOYEES AND DIRECTORS

2020

2019

£

£

Wages and salaries

2,620,773

2,342,183

Social security costs

135,040

127,715

Other pension costs

110,866

87,024

2,866,679

2,556,922

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

2020

2019

Management

4

4

Pre-Construction

7

6

Project Management

12

15

Factory

7

9

Commissioning

4

8

Service

6

2

Install Team

2

6

Support

6

3

Easivent

6

-

54

53

4.	DIRECTORS' EMOLUMENTS

2020

2019

£

£

Directors' remuneration

332,700

326,277

Directors' pension contributions to money purchase schemes

19,750

19,156

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

Money purchase schemes

3

3

Information regarding the highest paid director is as follows:

2020

2019

£

£

Emoluments etc

127,200

127,200

Pension contributions to money purchase schemes

5,000

5,000

Key management personnel the authority and responsibility for planning, directing and controlling the activities of the company. Key management personnel include all Directors.

5.	OPERATING PROFIT

The operating profit is stated after charging:

2020

2019

£

£

Depreciation - owned assets

21,234

46,597

Auditors' remuneration

5,850

14,000

Auditors' remuneration for non audit work

1,815

500

Included in the above pension costs are unpaid outstanding contributions of £16,035 (2019: £16,035).

6.

TAXATION

Analysis of the tax charge

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

2020

2019

£

£

Current tax:

UK corporation tax

99,251

69,755

Prior period tax adjustment

-

1,025

Total current tax

99,251

70,780

Deferred tax

2,283

(251

)

Tax on profit

101,534

70,529

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:

2020

2019

£

£

Profit before tax

894,931

712,087

Profit multiplied by the standard rate of corporation tax in the UK of 19% (2019 - 19%)

170,037

135,297

Effects of:

Expenses not deductible for tax purposes

2,564

5,894

Capital allowances in excess of depreciation

(2,354

)

-

Depreciation in excess of capital allowances

-

424

Adjustments to tax charge in respect of previous periods

-

1,025

Research & development enhanced deduction

(36,462

)

(28,817

)

Group relief

(34,534

)

(43,043

)

Deferred tax movement

2,283

(251

)

Total tax charge

101,534

70,529

7.	TANGIBLE FIXED ASSETS

Fixtures,

fittings

Leasehold

Plant and

and

Motor

improvements

machinery

equipment

vehicles

Totals

£

£

£

£

£

COST

At 1 April 2019

85,009

22,931

438,610

6,058

552,608

Additions

-

255

32,972

-

33,227

At 31 March 2020

85,009

23,186

471,582

6,058

585,835

DEPRECIATION

At 1 April 2019

85,009

19,798

383,804

6,058

494,669

Charge for year

-

1,659

19,575

-

21,234

At 31 March 2020

85,009

21,457

403,379

6,058

515,903

NET BOOK VALUE

At 31 March 2020

-

1,729

68,203

-

69,932

At 31 March 2019

-

3,133

54,806

-

57,939