L.S. Transmission Consultancy Limited - Limited company accounts 22.3

REGISTERED NUMBER: 04191630 (England and Wales)

L.S. Transmission Consultancy Limited

Group Strategic Report, Report of the Directors and

Consolidated Financial Statements for the Year Ended 30th June 2022

Page

Company Information

1

Group Strategic Report

2

Report of the Directors

4

Report of the Independent Auditors

6

Consolidated Statement of Comprehensive Income

9

Consolidated Balance Sheet

10

Company Balance Sheet

11

Consolidated Statement of Changes in Equity

12

Company Statement of Changes in Equity

13

Consolidated Cash Flow Statement

14

Notes to the Consolidated Cash Flow Statement

15

Notes to the Consolidated Financial Statements

16

DIRECTORS:

N Minns

M J Straker

P Papanastasiou

J R Shipley

R A K Salter

J Crew

K Marawanyika

SECRETARY:

J R Shipley

REGISTERED OFFICE:

Yorkshire House

York Road

Little Driffield

Driffield

East Yorkshire

YO25 5XA

REGISTERED NUMBER:

04191630 (England and Wales)

AUDITORS:

Baines Jewitt Limited

Statutory Auditor

Barrington House

41-45 Yarm Lane

Stockton on Tees

TS18 3EA

The directors present their strategic report of the company and the group for the year ended 30th June 2022.

The group's principal business activity is to provide engineering professional services to the electricity sector. Its focus is on the design and survey of overhead lines, underground cables and substation systems from low voltage to extra high voltage in the UK and internationally.

REVIEW OF BUSINESS

2022 was a year of further consolidation and growth for the group as systems and processes were enhanced and two new directors were appointed to the senior management team resulting in improved efficiencies and output. Trading performance increased significantly with turnover for the group increasing by 36.3% to £10.5m, this was in part driven by specific projects involving subcontracted work. Whilst efficiencies were made, changes in the mix of work and internal structure resulted in a reduced gross profit margins at 26% (2021: 31.5%) and operating profit margin decreasing to 15% (2021: 20%).

During the year, a new management team was formed to take the business forward together with existing members of management. On 30 June 2022, LSTC Group Limited, a company formed by the management team, acquired the entire issued share capital of the company via a Management Buy-Out.

Key Performance Indicators

The group tightly manages its cash flow and working capital and uses several KPI's to further monitor its performance. These include a range of financial and operational ratios as follows:

- Gross profit/turnover

- Operating profit/turnover

- Debtor days

- Work in progress days

- Cash balance

- Staff utilisation

- Order book profile

The operational performance indicators are commercially sensitive and have not been disclosed.

PRINCIPAL RISKS AND UNCERTAINTIES

The directors are aware of the various risks inherent in the business and meet regularly to consider them. The key business risks are:

Competition risk:

The business is impacted by the supply of professional services into the electricity sector. The risk is mitigated by the relationships in place at all levels with the major suppliers to the sector and offering an extensive range of engineer services.

Credit risk:

The group operates a strict policy of credit checking and reviewing all new and existing commercial customers.

Staff risk:

The group could be exposed to a lack of supply of skilled labour and mitigates this risk by providing a clear career plan and training programme for all levels of staff from graduates through to directors. The management buyout has also helped with retention of key employees.

Brexit risk:

The group is aware of the uncertainty caused across the business community by the Brexit process. Having assessed the situation it has been concluded that the specific Brexit related risks to the group are relatively low because most of its business is generated in the UK. The situation will continue to be closely monitored.

Impact of COVID-19:

Whilst the continuing pandemic still presents some uncertainties, the directors have successfully managed the impact up to the date of this report and are confident in the continued success of the company and the group.

FUTURE DEVELOPMENTS

The group is constantly looking to enhance its service offering to enable it to generate increased revenue

opportunities.

RESEARCH AND DEVELOPMENT ACTIVITIES

With the implementation of greater loads, expectations of the network, the drive toward electricity being the key to green energies tackling climate change and achieving Net Zero by 2050, the group is continually working on projects to upgrade capabilities for delivering electricity through the network of structures, conductors, and components which, at the moment, are undefined and, once delivered, can be adopted by the industry and used going forward to future proof the network.

BANK FACILITIES

We continue to be well supported by HSBC Bank plc, with the management buyout in part funded through medium term borrowing with them.

ON BEHALF OF THE BOARD:

R A K Salter - Director

30th March 2023

The directors present their report with the financial statements of the company and the group for the year ended 30th June 2022.

PRINCIPAL ACTIVITIES

The principal activities of the group in the year under review were those of engineering related scientific and technical consultancy.

DIVIDENDS

The directors recommend a final dividend of £Nil for the year ended 30th June 2022. The total distribution of dividends for the year ended 30th June 2022 will be £Nil.

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 1st July 2021 to the date of this report.

N Minns

M J Straker

P Papanastasiou

J R Shipley

R A K Salter

Other changes in directors holding office are as follows:

J Crew and K Marawanyika were appointed as directors after 30th June 2022 but prior to the date of this report.

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 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, Baines Jewitt Limited, will be proposed for re-appointment at the forthcoming Annual General Meeting.

ON BEHALF OF THE BOARD:

R A K Salter - Director

30th March 2023

Opinion

We have audited the financial statements of L.S. Transmission Consultancy Limited (the 'parent company') and its subsidiaries (the 'group') for the year ended 30th June 2022 which comprise the Consolidated Statement of 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 30th June 2022 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

In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.

Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the group's and the parent company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.

Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.

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 this gives rise to a material misstatement in the financial statements themselves. 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.

The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:

Based on our understanding of the company and industry, we identified that the principal risks of non-compliance with laws and regulations related to Health & Safety and Employment law, and we considered the extent to which non-compliance might have a material effect on the financial statements. We also considered those laws and regulations that have a direct impact on the preparation of the financial statements such as the Companies Act 2006.

We evaluated management's opportunities for fraudulent manipulation of the financial statements (including the risk of override of controls). Audit procedures performed by the engagement team included:

-

discussions with management, including consideration of known or suspected instances of non-compliance with laws and regulation and fraud;

-

evaluation and testing of the operating effectiveness of management's controls designed to prevent and detect irregularities;

-

challenging assumptions and judgements made by management in their significant accounting estimates; and

-

identifying and testing journal entries, in particular any journal entries posted with unusual account combinations or posted by senior management.

There are inherent limitations in the audit procedures described above and the further removed noncompliance with laws and regulations is from the events and transactions reflected in the financial statements, the less likely we would become aware of it. Also, the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery or intentional misrepresentations, or through collusion.

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.

Donald Adams FCA (Senior Statutory Auditor)

for and on behalf of Baines Jewitt Limited

Statutory Auditor

Barrington House

41-45 Yarm Lane

Stockton on Tees

TS18 3EA

30th March 2023

TURNOVER

3

10,463,390

7,676,210

Cost of sales

7,742,886

5,258,134

GROSS PROFIT

2,720,504

2,418,076

Administrative expenses

1,223,283

956,241

1,497,221

1,461,835

Other operating income

78,826

74,906

OPERATING PROFIT

5

1,576,047

1,536,741

Interest receivable and similar income

42,418

19,195

1,618,465

1,555,936

Gain/loss on revaluation of investment property

22,517

-

1,640,982

1,555,936

Interest payable and similar expenses

6

1,020

2,164

PROFIT BEFORE TAXATION

1,639,962

1,553,772

Tax on profit

7

(46,661

)

152,514

PROFIT FOR THE FINANCIAL YEAR

1,686,623

1,401,258

OTHER COMPREHENSIVE INCOME

-

-

TOTAL COMPREHENSIVE INCOME FOR THE YEAR

1,686,623

1,401,258

Profit attributable to:

Owners of the parent

1,683,191

1,398,622

Non-controlling interests

3,432

2,636

1,686,623

1,401,258

Total comprehensive income attributable to:

Owners of the parent

1,683,191

1,398,622

Non-controlling interests

3,432

2,636

1,686,623

1,401,258

FIXED ASSETS

Intangible assets

10

444,721

540,018

Tangible assets

11

330,163

275,705

Investments

12

-

-

Investment property

13

192,517

170,000

967,401

985,723

CURRENT ASSETS

Stocks

14

3,520

1,233

Debtors

15

7,203,487

2,755,396

Cash at bank and in hand

527,162

2,870,254

7,734,169

5,626,883

CREDITORS

Amounts falling due within one year

16

1,377,469

949,429

NET CURRENT ASSETS

6,356,700

4,677,454

TOTAL ASSETS LESS CURRENT LIABILITIES

7,324,101

5,663,177

PROVISIONS FOR LIABILITIES

20

-

23,699

NET ASSETS

7,324,101

5,639,478

CAPITAL AND RESERVES

Called up share capital

21

300

300

Revaluation reserve

22

22,918

22,918

Fair value reserve

22

22,848

5,000

Retained earnings

22

7,251,853

5,588,010

SHAREHOLDERS' FUNDS

7,297,919

5,616,228

NON-CONTROLLING INTERESTS

23

26,182

23,250

TOTAL EQUITY

7,324,101

5,639,478

The financial statements were approved by the Board of Directors and authorised for issue on 30th March 2023 and were signed on its behalf by:

R A K Salter - Director

J R Shipley - Director

FIXED ASSETS

Intangible assets

10

-

-

Tangible assets

11

314,599

255,435

Investments

12

1,797,721

1,797,721

Investment property

13

192,517

170,000

2,304,837

2,223,156

CURRENT ASSETS

Stocks

14

3,520

1,233

Debtors

15

6,694,260

2,362,990

Cash at bank and in hand

336,156

2,681,628

7,033,936

5,045,851

CREDITORS

Amounts falling due within one year

16

2,025,615

1,610,797

NET CURRENT ASSETS

5,008,321

3,435,054

TOTAL ASSETS LESS CURRENT LIABILITIES

7,313,158

5,658,210

PROVISIONS FOR LIABILITIES

20

-

24,638

NET ASSETS

7,313,158

5,633,572

CAPITAL AND RESERVES

Called up share capital

21

300

300

Revaluation reserve

22

22,918

22,918

Fair value reserve

22

22,848

5,000

Retained earnings

22

7,267,092

5,605,354

SHAREHOLDERS' FUNDS

7,313,158

5,633,572

Company's profit for the financial year

1,679,586

1,406,527

The financial statements were approved by the Board of Directors and authorised for issue on 30th March 2023 and were signed on its behalf by:

R A K Salter - Director

J R Shipley - Director

Called up

share

Retained

Revaluation

capital

earnings

reserve

£

£

£

Balance at 1st July 2020

300

4,372,021

22,918

Changes in equity

Dividends

-

(182,633

)

-

Total comprehensive income

-

1,398,622

-

Balance at 30th June 2021

300

5,588,010

22,918

Changes in equity

Transfer to non-controlling interests

-

(1,500

)

-

Total comprehensive income

-

1,665,343

-

Balance at 30th June 2022

300

7,251,853

22,918

Fair

value

Non-controlling

Total

reserve

Total

interests

equity

£

£

£

£

Balance at 1st July 2020

5,000

4,400,239

25,614

4,425,853

Changes in equity

Dividends

-

(182,633

)

(5,000

)

(187,633

)

Total comprehensive income

-

1,398,622

2,636

1,401,258

Balance at 30th June 2021

5,000

5,616,228

23,250

5,639,478

Changes in equity

Transfer to non-controlling interests

-

(1,500

)

1,500

-

Dividends

-

-

(2,000

)

(2,000

)

Total comprehensive income

17,848

1,683,191

3,432

1,686,623

Balance at 30th June 2022

22,848

7,297,919

26,182

7,324,101

Called up

Fair

share

Retained

Revaluation

value

Total

capital

earnings

reserve

reserve

equity

£

£

£

£

£

Balance at 1st July 2020

300

4,381,460

22,918

5,000

4,409,678

Changes in equity

Dividends

-

(182,633

)

-

-

(182,633

)

Total comprehensive income

-

1,406,527

-

-

1,406,527

Balance at 30th June 2021

300

5,605,354

22,918

5,000

5,633,572

Changes in equity

Total comprehensive income

-

1,661,738

-

17,848

1,679,586

Balance at 30th June 2022

300

7,267,092

22,918

22,848

7,313,158

Cash flows from operating activities

Cash generated from operations

1

(2,068,715

)

964,767

Tax paid

(78,008

)

(80,000

)

Taxation refunds/credits

-

12,146

Net cash from operating activities

(2,146,723

)

896,913

Cash flows from investing activities

Purchase of tangible fixed assets

(233,498

)

(180,067

)

Sale of tangible fixed assets

29,516

42,658

Interest received

42,418

19,195

Net cash from investing activities

(161,564

)

(118,214

)

Cash flows from financing activities

Loan repayments in year

(31,785

)

(41,435

)

Interest paid

(1,020

)

(2,164

)

Equity dividends paid

-

(182,633

)

Dividends paid to minority interests

(2,000

)

(5,000

)

Net cash from financing activities

(34,805

)

(231,232

)

(Decrease)/increase in cash and cash equivalents

(2,343,092

)

547,467

Cash and cash equivalents at beginning of year

2

2,870,254

2,322,787

Cash and cash equivalents at end of year

2

527,162

2,870,254

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

2022

2021

£

£

Profit before taxation

1,639,962

1,553,772

Depreciation charges

161,632

139,071

Profit on disposal of fixed assets

(12,107

)

(37,370

)

Gain on revaluation of fixed assets

(22,517

)

-

Goodwill amortisation

95,297

95,297

Finance costs

1,020

2,164

Finance income

(42,418

)

(19,195

)

1,820,869

1,733,739

Increase in stocks

(2,287

)

(233

)

Increase in trade and other debtors

(4,347,122

)

(831,427

)

Increase in trade and other creditors

459,825

62,688

Cash generated from operations

(2,068,715

)

964,767

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 30th June 2022

30.6.22

1.7.21

£

£

Cash and cash equivalents

527,162

2,870,254

Year ended 30th June 2021

30.6.21

1.7.20

£

£

Cash and cash equivalents

2,870,254

2,322,787

3.	ANALYSIS OF CHANGES IN NET FUNDS

At 1.7.21

Cash flow

At 30.6.22

£

£

£

Net cash

Cash at bank and in hand

2,870,254

(2,343,092

)

527,162

2,870,254

(2,343,092

)

527,162

Debt

Debts falling due within 1 year

(31,785

)

31,785

-

(31,785

)

31,785

-

Total

2,838,469

(2,311,307

)

527,162