Mechanical Services Limited - Accounts

Registered number

01894014

Mechanical Services Limited

Abbreviated Reports and Accounts

30 June 2015

Mechanical Services Limited
Abbreviated Reports and accounts
Contents
Page
Company information	1
Director's report	2
Strategic report	3
Statement of director's responsibilities	4
Independent auditors' report	5
Abbreviated profit and loss account	6
Abbreviated balance sheet	7
Cash flow statement	8
Notes to the abbreviated accounts	9-15

Mechanical Services Limited

Company Information

Director

G A Ivory

Secretary

M M Ivory

Auditors

Lloyd & Co

103/105 Brighton Road

Coulsdon

Surrey

CR5 2NG

Bankers

National Westminster Bank plc

159 Rushey Green

Catford

London

SE6 4BJ

Registered office

Merlin House

606 Purley Way

Croydon

Surrey

CR0 4RF

Registered number

01894014

Mechanical Services Limited
Director's Report
The director presents his report and accounts for the year ended 30 June 2015.
Principal activities
The company's principal activity during the year continued to be the installation of air conditioning and heating equipment.
Directors
The following served as director during the year:
	G A Ivory
Results and dividends
The profit for the year after taxation amounted to £763,303. Ordinary dividends of £250,000 have been paid in the year leaving reserves carried forward of £3,412,043.
Events since the balance sheet date
No material events have occurred since the balance sheet date that in the opinion of the director would effect the accounts or future prospects of the company.
Single european currency
The company's performance has not so far been adversely affected by the introduction of the single european currency. The director is confident that this will continue to be the case.
Disclosure of information to auditors

The director confirms that:
●	so far as he is aware, there is no relevant audit information of which the company's auditor is unaware; and
●	he 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 auditor is aware of that information.

Auditors

The auditors, Messrs Lloyd & Co, Chartered Accountants, are deemed to be reappointed in accordance with section 485 of the Companies Act 2006 by virtue of an elective resolution passed on 18 September 1992.

Approval of this report

This report was approved by the board on 24 November 2015 and signed by its order.

M M Ivory

Secretary

Mechanical Services Limited

Strategic Report

The company's results are very much in line with last year. The balance sheet remains sufficiently robust to enable the company to continue to manage its order book without the need for third party finance.

The following Key Performance Indicators have been selected as most relevant to enable comparison of the companys performance year on year and with other companies operating in the sector;

gross profit 26% (2014-24%); operating profit 4.1% (2014-4.4%); return on capital 22% (2014-26%)

In recent years the company has expanded and strengthened its management team. It is now well positioned to manage business and financial risks and uncertainties as they arise and to maintain market share by focussing on service levels, control of costs and maximising use of available resources. The director remains confident that this approach will enable the company to remain profitable. The principal risks and uncertainties facing the company are:

i) downward pressure on pricing experienced throughout the construction industry in recent years.

ii) the scarcity of skilled labour now that the sector and the construction industry generally has emerged from the recession.

iii) the risk of the economy returning to recession.

iv) the financial impact of ever more burdensome employment legislation.

Approval of this report

This report was approved by the board on 24 November 2015

G A Ivory

Director

Mechanical Services Limited

Statement of Director's Responsibilities

The director is responsible for preparing the report and accounts in accordance with applicable law and regulations.
Company law requires the director to prepare accounts for each financial year. Under that law the director has elected to prepare the accounts in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the director must not approve the accounts unless he is 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 accounts, the director is required to:
●	select suitable accounting policies and then apply them consistently;
●	make judgements and estimates that are reasonable and prudent;
●	prepare the accounts on the going concern basis unless it is inappropriate to presume that the company will continue in business.
The director is 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 him to ensure that the accounts comply with the Companies Act 2006. He is 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.

Mechanical Services Limited
Independent Auditors' Report
to Mechanical Services Limited
under section 449 of the Companies Act 2006
This report is made solely to the company in accordance with section 449 of the Companies Act 2006. Our work has been undertaken so that we might state to the company those matters we are required to state to them in an auditors' report on abbreviated accounts 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, for our work, for this report, or for the opinions we have formed.
Respective responsibilities of director and auditors
Opinion
Michael L Martin FCA	103/105 Brighton Road
(Senior Statutory Auditor)	Coulsdon
for and on behalf of	SURREY
Lloyd & Co	CR5 2NG
Chartered Accountants
Statutory Auditor
Dated 10 December 2015

Mechanical Services Limited
Abbreviated Profit and Loss Account
for the year ended 30 June 2015
Notes						2015		2014
£							£
Gross profit						5,791,399		5,380,733
Administrative expenses						(4,870,800)		(4,412,117)
Operating profit				3		920,599		968,616
Profit on the disposal of tangible fixed assets				4		19,355		3,089
						939,954		971,705
Rent receivable						15,000		15,000
Interest receivable						10,668		14,247
Interest payable				7		(58)		(11)
Profit on ordinary activities before taxation						965,564		1,000,941
Tax on profit on ordinary activities				8		(202,261)		(224,580)
Profit for the financial year				16		763,303		776,361
Continuing operations
None of the company's activities were acquired or discontinued during the above two financial years.
Statement of total recognised gains and losses
The company has no recognised gains or losses other than the profit for the above two financial years.

Mechanical Services Limited
Abbreviated Balance Sheet
as at 30 June 2015
Notes				2015			2014
£					£
Fixed assets
Tangible assets	9			233,691			275,370
Current assets
Work in progress	10		26,216			16,369
Debtors	11		3,174,561			2,518,300
Cash at bank and in hand			3,859,364			3,054,589
			7,060,141			5,589,258
Creditors: amounts falling due within one year	12		(3,826,465)			(2,912,393)
Net current assets				3,233,676			2,676,865
Total assets less current liabilities				3,467,367			2,952,235
Provisions for liabilities
Deferred taxation	14			(5,324)			(3,495)
Net assets				3,462,043			2,948,740
Capital and reserves
Called up share capital	15			50,000			50,000
Profit and loss account	16			3,412,043			2,898,740
Shareholders' funds	18			3,462,043			2,948,740
The Abbreviated accounts have been prepared in accordance with the special provisions in section 445(3) of the Companies Act 2006 relating to medium sized companies.
G A Ivory
Director
Approved by the board on 24 November 2015
Registered number:
1894014

Mechanical Services Limited
Cash Flow Statement
for the year ended 30 June 2015
Notes			2015		2014
£				£
Reconciliation of operating profit to net cash
inflow from operating activities
Operating profit			920,599		968,616
Depreciation			80,096		91,790
(Increase)/decrease in stocks			(9,847)		34,881
(Increase)/decrease in debtors			(656,261)		650,413
Increase/(decrease) in creditors			794,037		(419,669)
Net cash inflow from operating activities			1,128,624		1,326,031
CASH FLOW STATEMENT
Net cash inflow from operating activities			1,128,624		1,326,031
Returns on investments and servicing of finance	19		25,610		29,236
Taxation			(228,814)		(403,243)
Capital expenditure	19		(19,062)		(15,918)
			906,358		936,106
Equity dividends paid			(100,000)		(500,000)
			806,358		436,106
Financing	19		(1,583)		1,583
Increase in cash			804,775		437,689
Reconciliation of net cash flow to movement in net financing
Increase in cash in the period			804,775		437,689
Decrease/(increase) in debt and lease financing			1,583		(1,583)
Change in net financing	20		806,358		436,106
Net funds at 1 July			3,053,006		2,616,900
Net funds at 30 June			3,859,364		3,053,006

Mechanical Services Limited
Notes to the Abbreviated Accounts
for the year ended 30 June 2015
1	Accounting policies
	The principal accounting policies adopted by the company are as follows:
	Basis of preparation
	The accounts have been prepared under the historical cost convention and in accordance with applicable United Kingdom Accounting Standards.
	Turnover
	Turnover represents the value of goods supplied and services performed by the company in the year, net of value added tax and trade discounts.
	Tangible assets and depreciation
	Tangible fixed assets are stated at cost less depreciation.
	Depreciation is provided on all tangible fixed assets (with a full charge in the year of acquisition but no charge in the year of disposal), at rates calculated to write off the cost, less estimated residual value, of each asset evenly over its expected useful life, as follows:
	Short leasehold buildings			10% straight line method
	Plant and machinery			25% reducing balance method
	Work in progress
	Work in progress is valued at the lower of cost and net realisable value. It represents costs incurred on contracts prior to the point where an income entitlement arises.
	Deferred taxation
	Full provision is made for deferred taxation resulting from timing differences between the recognition of gains and losses in the accounts and their recognition for tax purposes. The deferred tax balance has not been discounted.
	Hire purchase contracts
	Tangible assets acquired under hire purchase contracts are capitalised at their estimated fair value at the date of inception of each contract. Obligations under such agreements are included in creditors net of interest allocated to future periods. Interest is charged to the Profit and Loss Account so as to produce a constant periodic rate of charge on the net obligation outstanding in each period.
	Operating leases
	Rentals applicable to operating leases where substantially all of the benefits and risks of ownership remain with the lessor are charged to the Profit and Loss Account as incurred.
	Pensions
	The company operates defined contribution pension schemes. Contributions are charged to the Profit and Loss Account as they become payable in accordance with the rules of the schemes.
2	Analysis of turnover					2015		2014
£							£
	By activity:
	Principal activity					22,245,748		22,091,410
	By geographical market:
	UK					22,245,748		22,091,410
3	Operating profit					2015		2014
£							£
	This is stated after charging:
	Depreciation of owned fixed assets					80,096		87,346
	Depreciation of assets held under hire purchase contracts					-		4,444
	Operating lease rentals - plant and machinery					47,928		21,019
	Operating lease rentals - land and buildings					128,500		128,500
	Auditors' remuneration for audit services					11,650		14,200
4	Profit on disposal of tangible fixed assets					2015		2014
£							£
	Profit on disposal of plant and machinery					19,355		3,089
5	Director's emoluments					2015		2014
£							£
	Emoluments					240,315		230,742
	Number of directors in company pension schemes:					2015		2014
Number							Number
	Defined contribution schemes					1		1
6	Staff costs					2015		2014
£							£
	Wages and salaries					6,151,725		5,516,537
	Social security costs					701,123		633,886
	Other pension costs					67,174		28,456
						6,920,022		6,178,879
	Average number of employees during the year					Number	Number
	Administration					50		48
	Site based					65		62
						115		110
7	Interest payable					2015		2014
£							£
	Hire purchase contracts					58		11
8	Taxation					2015		2014
£							£
	Analysis of charge in period
	Current tax:
	UK corporation tax on profits of the year					200,432		228,814
	Deferred tax:
	Origination and reversal of timing differences					1,829		(4,234)
	Tax on profit on ordinary activities					202,261		224,580
	Factors affecting tax charge for period
	The differences between the tax assessed for the period and the standard rate of corporation tax are explained as follows:
						2015		2014
£							£
	Profit on ordinary activities before tax					965,564		1,000,941
	Standard (effective) rate of corporation tax in the UK					20.751%		22.501%
£							£
	Profit on ordinary activities multiplied by the standard rate of corporation tax					200,363		225,222
	Effects of:
	Expenses not deductible for tax purposes					3,158		3,023
	Depreciation for year in excess of capital allowances					(2,096)		18,551
	Marginal rate relief					(993)		(2,939)
	Current tax charge for period					200,432		228,814
9	Tangible fixed assets
				Leasehold land and buildings		Plant and machinery		Total
£					£		£
	Cost
	At 1 July 2014			65,980		821,797		887,777
	Additions			-		102,866		102,866
	Disposals			-		(195,228)		(195,228)
	At 30 June 2015			65,980		729,435		795,415
	Depreciation
	At 1 July 2014			46,186		566,221		612,407
	Charge for the year			6,598		73,498		80,096
	On disposals			-		(130,779)		(130,779)
	At 30 June 2015			52,784		508,940		561,724
	Net book value
	At 30 June 2015			13,196		220,495		233,691
	At 30 June 2014			19,794		255,576		275,370
	Net book value of fixed assets included above held under hire purchase contracts					-		13,331
10	Work in progress					2015		2014
£							£
	Work in progress					26,216		16,369
11	Debtors					2015		2014
£							£
	Trade debtors					3,114,144		2,479,050
	Prepayments					60,417		39,250
						3,174,561		2,518,300
12	Creditors: amounts falling due within one year					2015		2014
£							£
	Hire purchase contracts					-		1,583
	Trade creditors					2,788,276		1,791,768
	Corporation tax					200,432		228,814
	Other taxes and social security costs					571,347		798,537
	Director's current account					150,000		-
	Other creditors					116,410		91,691
						3,826,465		2,912,393
13	Obligations under hire purchase contracts					2015		2014
£							£
	Amounts payable:
	Within one year					-		1,583
14	Deferred taxation					2015		2014
£							£
	Accelerated capital allowances					5,324		3,495
	Undiscounted provision for deferred tax					5,324		3,495
						2015		2014
£							£
	At 1 July					3,495		7,729
	Deferred tax (credit)/charge in profit and loss account					1,829		(4,234)
	At 30 June					5,324		3,495
15	Share capital	Nominal		2015		2015		2014
value			Number		£		£
	Allotted, called up and fully paid:
	Ordinary shares	£1 each		50,000		50,000		50,000
16	Profit and loss account					2015		2014
£							£
	At 1 July					2,898,740		2,622,379
	Profit for the financial year					763,303		776,361
	Dividends					(250,000)		(500,000)
	At 30 June					3,412,043		2,898,740
17	Dividends					2015		2014
£							£
	Dividends for which the company became liable during the year:
	Dividends paid					250,000		500,000
18	Reconciliation of movement in shareholders' funds					2015		2014
£							£
	At 1 July					2,948,740		2,672,379
	Profit for the financial year					763,303		776,361
	Dividends					(250,000)		(500,000)
	At 30 June					3,462,043		2,948,740
19	Gross cash flows					2015		2014
£							£
	Returns on investments and servicing of finance
	Rent received					15,000		15,000
	Interest received					10,668		14,247
	Interest element of hire purchase payments					(58)		(11)
						25,610		29,236
	Capital expenditure
	Payments to acquire tangible fixed assets					(102,866)		(39,428)
	Receipts from sales of tangible fixed assets					83,804		23,510
						(19,062)		(15,918)
	Financing
	Capital element of hire purchase payments					(1,583)		1,583
20	Analysis of changes in net financing
		At 1 Jul 2014		Cash flows		Non-cash changes		At 30 Jun 2015
£			£		£		£
	Cash at bank and in hand	3,054,589		804,775				3,859,364
	Hire purchase contracts	(1,583)		1,583				-
	Total	3,053,006		806,358		-		3,859,364
21	Pension commitments
	The company contributes to defined contribution pension schemes for the benefit of the director and certain employees and to workplace pension schemes for the benefit of all eligible jobholders having entitlement. The assets of the schemes are held separately from those of the company in independently managed funds. Contributions charged to the Profit and Loss Account amounted to £67,174(2014 - £28,456).
22	Other financial commitments
	At the year end the company had annual commitments under non-cancellable operating leases as set out below:
		Land and buildings		Land and buildings	Other		Other
		2015		2014		2015		2014
£			£		£		£
	Operating leases which expire:
	within one year	-		-		-		974
	within two to five years	32,500		32,500		53,808		27,402
	in over five years	96,000		96,000		3,189		3,189
		128,500		128,500		56,997		31,565
23	Related party transactions					2015		2014
£							£
	G A Ivory
	director/shareholder
	dividend paid (including family interest)					(250,000)		(500,000)
	G A Ivory and Mrs M M Ivory
	shareholders
	market rent for use of trading premises by the company					(96,000)		(96,000)
24	Ultimate controlling party
	Throughout the year the company was under the control of G A Ivory, the sole director who has an interest (including family interest) in the entire share capital.