LX Engineering (North) Limited - Limited company accounts 17.3

REGISTERED NUMBER: 07474326 (England and Wales)

Strategic Report, Report of the Directors and

Financial Statements for the Year Ended 31 March 2017

for

LX Engineering (North) Limited

Page

Company Information

1

Strategic Report

2

Report of the Directors

3

Report of the Independent Auditors

5

Statement of Comprehensive Income

7

Statement of Financial Position

8

Statement of Changes in Equity

9

Statement of Cash Flows

10

Notes to the Statement of Cash Flows

11

Notes to the Financial Statements

12

DIRECTORS:

T M Sadler

P Wainwright

M Womersley

REGISTERED OFFICE:

10 Hall Annex

Thorncliffe Park

Chapeltown

Sheffield

South Yorkshire

S35 2PH

REGISTERED NUMBER:

07474326 (England and Wales)

AUDITORS:

Sutton McGrath Hartley Ltd

Statutory Auditors & Chartered Accountants

5 Westbrook Court

Sharrowvale Road

Sheffield

South Yorkshire

S11 8YZ

SOLICITORS:

Lupton Fawcett

The Synergy Building

Belgrave House

47 Bank Street

Sheffield

South Yorkshire

S1 2DR

The directors present their strategic report for the year ended 31 March 2017.

REVIEW OF BUSINESS

The Directors are pleased with the progress made in the year to March 17, during which we successfully delivered a

variety of projects for a range of key clients. We have been encouraged to see an increase in the number of opportunities

available to us and, though the market continues to be competitive, we have been successful in many sectors securing

various high value projects, several of which will continue through to the end of 2019.

During the period we have continued to streamline costs, upgrade our software and accounting systems, and improve

efficiency across all areas of the business.

We believe that we have now stabilised the business, following the last two years of turmoil created by the former parent

company demise. The outlook remains extremely positive, and we are in a fortunate position of having a healthy order

book which gives us a strong foundation on which to build turnover and profit in the coming years.

PRINCIPAL RISKS AND UNCERTAINTIES

The principle risks faced by the company continue to be the unpredictable cyclic nature of the construction industry, the

uncertainties in the UK economy, and to a lesser degree the, yet to be seen, impact of the decision to leave the EU.

However, with a robust business strategy, clear objectives, and a dedicated workforce the business is well prepared to

meet with the challenges ahead.

The strategy to sustain repeat business with a select group of clients, whilst targeting the introduction of a new client

periodically, combined with maintaining a broad range of public and private sector workstreams, has been at the heart of

the success of the business.

KEY PERFORMANCE INDICATORS

Management monitor the performance of operations compared to budgeted figures and projections.

Key performance indicators monitored on a weekly / monthly basis are:

- Contract volume and value

- Contract margins

- Quality of the works completed

- Contract progress and completion estimates

- Contract returns and cash generation

- Cash flow forecasts

- Labour and subcontractor costs

- Health and safety reviews

- Forward team planning and staff utilisation

ON BEHALF OF THE BOARD:

T M Sadler - Director

16 November 2017

The directors present their report with the financial statements of the company for the year ended 31 March 2017.

PRINCIPAL ACTIVITY

The principal activity of the company in the year under review was that of providing building engineering services to the

construction industry.

DIVIDENDS

An interim dividend of £14.918 per share on the Ordinary £0.01 shares was paid on 31 March 2017. The directors recommend that no final dividend be paid on these shares.

No interim dividend was paid on the 'A' Ordinary £0.01 shares. The directors recommend that no final dividend be paid

on these shares.

No interim dividend was paid on the 'B' Ordinary £0.01 shares. The directors recommend that no final dividend be paid

on these shares.

The total distribution of dividends for the year ended 31 March 2017 will be £ 253,652 .

FUTURE DEVELOPMENTS

o Since 31st March 2017 we have continued to trade modestly, in line with our business plan, and anticipate a modest

increase in turnover and profit for the new financial year (FY March 18).

o We already have orders for secured works for the financial year to March 19 of around 87% against target, and remain

confident that we will achieve or surpass our target turnover for FY March 19.

o We continue to work with six or seven regular long-term clients, where we have high level relationships and enjoy a

significant level of repeat business.

o The outlook for the second half of the current financial year and FY March 19 is extremely positive, taking into

account the history and events of the last couple of years.

The measures introduced to reduce costs, restructure and stabilise the business for a return to profitability have been

successful and will remain in place as we return to profit and target sustainable growth.

DIRECTORS

The directors shown below have held office during the whole of the period from 1 April 2016 to the date of this report.

T M Sadler

P Wainwright

M Womersley

DISCLOSURE IN THE STRATEGIC REPORT

The directors have chosen to disclose in their strategic report information including a fair review of business for the year

alongside comments surrounding the financial risk management objectives and policies of the entity. This is also

accompanied by a detailed performance monitoring section identifying the KPI's the directors feel measure the entity

most accurately.

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), including Financial Reporting Standard 102 'The

Financial Reporting Standard applicable in the UK and Republic of Ireland'. Under company law the directors must not

approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the

company and of the profit or loss of the company for that period. In preparing these financial statements, the directors

are required to:

-	select suitable accounting policies and then apply them consistently;

-	make judgements and accounting estimates that are reasonable and prudent;

-	prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.

The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the

company's transactions and disclose with reasonable accuracy at any time the financial position of the company and

enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for

safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud

and other irregularities.

STATEMENT AS TO DISCLOSURE OF INFORMATION TO AUDITORS

So far as the directors are aware, there is no relevant audit information (as defined by Section 418 of the Companies Act

2006) of which the company's auditors are unaware, and each director has taken all the steps that he ought to have taken

as a director in order to make himself aware of any relevant audit information and to establish that the company's

auditors are aware of that information.

AUDITORS

Sutton McGrath Hartley Limited was appointed as auditors of the company and in accordance with section 485

Companies Act 2006 the auditors, Sutton McGrath Hartley Ltd, will be proposed for re-appointment at the forthcoming

Annual General Meeting.

ON BEHALF OF THE BOARD:

T M Sadler - Director

16 November 2017

We have audited the financial statements of LX Engineering (North) Limited for the year ended 31 March 2017 on

pages seven to eighteen. The financial reporting framework that has been applied in their preparation is applicable law

and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice), including

Financial Reporting Standard 102 'The Financial Reporting Standard applicable in the UK and Republic of Ireland'.

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.

Respective responsibilities of directors and auditors

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. Our responsibility is to audit and express an opinion on the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board's Ethical Standards for Auditors.

Scope of the audit of the financial statements

An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give

reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or error.

This includes an assessment of: whether the accounting policies are appropriate to the company's circumstances and

have been consistently applied and adequately disclosed; the reasonableness of significant accounting estimates made by

the directors; and the overall presentation of the financial statements. In addition, we read all the financial and

non-financial information in the Strategic Report and the Report of the Directors to identify material inconsistencies with

the audited financial statements and to identify any information that is apparently materially incorrect based on, or

materially inconsistent with, the knowledge acquired by us in the course of performing the audit. If we become aware of

any apparent material misstatements or inconsistencies we consider the implications for our report.

Opinion on financial statements

In our opinion the financial statements:

-	give a true and fair view of the state of the company's affairs as at 31 March 2017 and of its profit for the year then ended;

-	have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice, including Financial Reporting Standard 102 'The Financial Reporting Standard applicable in the UK and Republic of Ireland'; and

-	have been prepared in accordance with the requirements of the Companies Act 2006.

Opinion on other matter prescribed by the Companies Act 2006

In our opinion, based on the work undertaken in the course of our 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 has been prepared in accordance with applicable legal requirements. In the light of the

knowledge and understanding of the company and its environment, we have not identified any material misstatements in

the Strategic Report or the Report of the Directors.

Matters on which we are required to report by exception

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.

David Sutton FCA (Senior Statutory Auditor)

for and on behalf of Sutton McGrath Hartley Ltd

Statutory Auditors & Chartered Accountants

5 Westbrook Court

Sharrowvale Road

Sheffield

South Yorkshire

S11 8YZ

16 November 2017

TURNOVER

3

10,439,049

12,175,706

Cost of sales

9,260,051

10,847,817

GROSS PROFIT

1,178,998

1,327,889

Administrative expenses

796,690

1,208,912

382,308

118,977

Other operating income

32,421

19,772

OPERATING PROFIT and

PROFIT BEFORE TAXATION

5

414,729

138,749

Tax on profit

7

15,127

-

PROFIT FOR THE FINANCIAL YEAR

399,602

138,749

OTHER COMPREHENSIVE INCOME

-

-

TOTAL COMPREHENSIVE INCOME FOR THE YEAR

399,602

138,749

FIXED ASSETS

Tangible assets

9

6,384

9,528

CURRENT ASSETS

Stocks

10

1,147,372

410,380

Debtors

11

1,566,144

2,752,570

Cash at bank and in hand

10,000

1,578,272

2,723,516

4,741,222

CREDITORS

Amounts falling due within one year

12

2,571,186

4,737,986

NET CURRENT ASSETS

152,330

3,236

TOTAL ASSETS LESS CURRENT LIABILITIES

158,714

12,764

CAPITAL AND RESERVES

Called up share capital

15

200

200

Retained earnings

16

158,514

12,564

SHAREHOLDERS' FUNDS

158,714

12,764

The financial statements were approved by the Board of Directors on 16 November 2017 and were signed on its behalf by:

T M Sadler - Director

Called up

share

Retained

Total

capital

earnings

equity

£

£

£

Balance at 1 April 2015

200

(126,185

)

(125,985

)

Changes in equity

Total comprehensive income

-

138,749

138,749

Balance at 31 March 2016

200

12,564

12,764

Changes in equity

Dividends

-

(253,652

)

(253,652

)

Total comprehensive income

-

399,602

399,602

Balance at 31 March 2017

200

158,514

158,714

Cash flows from operating activities

Cash generated from operations

1

(1,646,881

)

1,572,518

Net cash from operating activities

(1,646,881

)

1,572,518

Cash flows from financing activities

Loan repayments in year

(36,000

)

-

Amount introduced by directors

277,832

-

Amount withdrawn by directors

(250,587

)

(7,482

)

Equity dividends paid

(253,652

)

-

Net cash from financing activities

(262,407

)

(7,482

)

(Decrease)/increase in cash and cash equivalents

(1,909,288

)

1,565,036

Cash and cash equivalents at beginning of year

2

1,578,272

13,236

Cash and cash equivalents at end of year

2

(331,016

)

1,578,272

1.	RECONCILIATION OF PROFIT FOR THE FINANCIAL YEAR TO CASH GENERATED FROM OPERATIONS

2017

2016

£

£

Profit for the financial year

399,602

138,749

Depreciation charges

3,144

4,693

Bad debts

-

6,116

Group debtor written off

-

(397,555

)

Taxation

15,127

-

417,873

(247,997

)

Increase in stocks

(736,992

)

(143,881

)

Decrease/(increase) in trade and other debtors

1,178,944

(697,964

)

(Decrease)/increase in trade and other creditors

(2,506,706

)

2,662,360

Cash generated from operations

(1,646,881

)

1,572,518

2.	CASH AND CASH EQUIVALENTS

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

these Statement of Financial Position amounts:

Year ended 31 March 2017

31/3/17

1/4/16

£

£

Cash and cash equivalents

10,000

1,578,272

Bank overdrafts

(341,016

)

-

(331,016

)

1,578,272

Year ended 31 March 2016

31/3/16

1/4/15

£

£

Cash and cash equivalents

1,578,272

13,236

1.	STATUTORY INFORMATION

LX Engineering (North) 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.

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.

Turnover

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

value added tax and other sales taxes.

Tangible fixed assets

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

Fixtures and fittings

-

33% on reducing balance

Computer equipment

-

33% on reducing balance

Stocks

Work in progress is valued at the lower of cost and net realisable value.

Cost is calculated using the first-in, first-out method and includes all purchase, transport, and handling costs in

bringing stocks to their present location and condition.

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.

Hire purchase and leasing commitments

Rentals paid under operating leases are charged to profit or loss on a straight line basis over the period of the

lease.

Pension costs and other post-retirement benefits

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

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

Long term contracts

Turnover on long term contracts is recognised according to the stage reached in the contract by reference to the

value of work done. A prudent estimate of the profit attributable to work completed is recognised once the

outcome of the contract can be assessed with reasonable certainty. Amounts recoverable on long term contracts,

which are included in debtors, are stated at the net sales value of the work done less amounts received as

progress payments on account. Excess progress payments are included in creditors as payments on account.

Cumulative costs incurred net of amounts transferred to cost of sales, less provision for contingencies and

anticipated future losses on contracts, are included as long term contract balances in stock.

3.

TURNOVER

The turnover and profit before taxation are attributable to the one principal activity of the company.

4.	EMPLOYEES AND DIRECTORS

2017

2016

£

£

Wages and salaries

960,595

1,622,322

Social security costs

87,226

173,503

Other pension costs

56,733

103,053

1,104,554

1,898,878

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

2017

2016

Management & Administration

16

24

Site workforce

6

7

22

31

2017

2016

£

£

Directors' remuneration

24,180

268,200

Directors' pension contributions to money purchase schemes

24,000

64,000

Compensation to director for loss of office

-

9,000

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

Money purchase schemes

2

2

5.	OPERATING PROFIT

The operating profit is stated after charging:

2017

2016

£

£

Hire of plant and machinery

124,711

150,767

Other operating leases

66,915

93,840

Depreciation - owned assets

3,144

4,693

Auditors' remuneration

8,000

8,000

6.	EXCEPTIONAL ITEMS

2017

2016

£

£

Group management charge

written off

-

397,555

7.

TAXATION

Analysis of the tax charge

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

2017

2016

£

£

Current tax:

UK corporation tax

15,127

-

Tax on profit

15,127

-

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:

2017

2016

£

£

Profit before tax

414,729

138,749

Profit multiplied by the standard rate of corporation tax in the UK of 20% (2016 - 20%)

82,946

27,750

Effects of:

Expenses not deductible for tax purposes

10,129

623

Depreciation in excess of capital allowances

457

729

Utilisation of tax losses

(78,405

)

(29,102

)

Total tax charge

15,127

-

8.

DIVIDENDS

2017

2016

£

£

Ordinary shares of £0.01 each

Interim

253,652

-

9.	TANGIBLE FIXED ASSETS

Fixtures

and

Computer

fittings

equipment

Totals

£

£

£

COST

At 1 April 2016

and 31 March 2017

4,343

32,188

36,531

DEPRECIATION

At 1 April 2016

3,599

23,404

27,003

Charge for year

246

2,898

3,144

At 31 March 2017

3,845

26,302

30,147

NET BOOK VALUE

At 31 March 2017

498

5,886

6,384

At 31 March 2016

744

8,784

9,528

10.

STOCKS

2017

2016

£

£

Stocks

-

84,150

Work-in-progress

1,147,372

326,230

1,147,372

410,380

11.

DEBTORS

2017

2016

£

£

Amounts falling due within one year:

Trade debtors

1,335,899

2,704,249

Other debtors

1,200

2,733

Directors' current accounts

-

7,482

Prepayments and accrued income

49,719

38,106

1,386,818

2,752,570

Amounts falling due after more than one year:

Trade debtors

179,326

-

Aggregate amounts

1,566,144

2,752,570

12.

CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR

2017

2016

£

£

Bank loans and overdrafts (see note 13)

341,016

-

Trade creditors

1,302,173

3,201,326

Amounts owed to group undertakings

-

36,000

Tax

15,127

-

Social security and other taxes

42,588

98,340

VAT

361,086

346,482

Other creditors

-

25,287

Directors' current accounts

19,763

-

Accruals and deferred income

489,433

1,030,551

2,571,186

4,737,986

13.

LOANS

An analysis of the maturity of loans is given below:

2017

2016

£

£

Amounts falling due within one year or on demand:

Bank overdrafts

341,016

-

14.	LEASING AGREEMENTS

Minimum lease payments under non-cancellable operating leases fall due as follows:

2017

2016

£

£

Within one year

21,308

36,518

Between one and five years

-

8,706

21,308

45,224

15.	CALLED UP SHARE CAPITAL

Allotted, issued and fully paid:

Number:

Class:

Nominal

2017

2016

value:

£

£

17,000

Ordinary

£0.01

170

170

2,000

'A' Ordinary

£0.01

20

20

1,000

'B' Ordinary

£0.01

10

10

200

200