WARDEN_CONSTRUCTION_LIMIT - Accounts
WARDEN_CONSTRUCTION_LIMIT - Accounts
The directors present the strategic report for the year ended 30 November 2018.
The principle activity of the company was that of the erection and alteration of industrial and commercial buildings.
2018 saw the Company turnover reach a record level of £22.6m, which was a significant increase on that of 2017 (£16.0m). This was in spite of delays to starts on several secured projects, which has enhanced the order book for 2019 and beyond. Whilst net profit has increased in 2018 compared to the level of 2017, it has still not returned to the consistent level of previous years. This is mainly due to the transition of the Company into different sector project and client types. This has meant changes throughout the business in order to adapt to changes in procurement methods. However, with this transition now complete, the outlook for 2019 is extremely positive and the structure of the business is such to take advantage of a construction industry that is still in transition.
2018 was a year of firsts for the Company; we won our first RICS regional award for the Galloways Project, we were appointed to build Lancashire’s first Porsche Car Dealership, we commenced a project to build Blackpool’s first 5 star hotel, completed our first projects on the Manchester Airport framework and we had our first team of runners successfully complete the London Marathon raising almost £8k in the process. Other notable highlights of the year included the successful completion of our first student accommodation project in Preston, and Considerate Construction Hoarding competition winner at our housing project in Barnton.
The varying amount of spend through construction frameworks that we have been appointed continues to be frustratingly sporadic. Some have a regular flow of projects while others have not yielded any work at all. The level of turnover from the University of Manchester has returned this year to a level that we have previously seen. It is reassuring that not only have we consistently had at least one project on site throughout 2018, we have a further 2 projects starting in 2019 and more projects in the pipeline to bid for next year. The Lancashire County Council framework has also yielded an improved amount of workload for 2018, and our bidding team are currently working on the final stage of the bidding process for the next LCC framework. The frameworks contribute to our strong order book which is at a record level, exceeding £30m for 2019 and a similar level already for 2020.
We were awarded three new framework contracts in 2018 and these demonstrate the diverse markets that we continue to operate in, and will offer some stability as different sectors are affected by wider economic factors:
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All of these have already either produced projects on site or tenders for our bidding team to work on. Procure Northwest framework in particular is opening doors with new local authorities, NHS and blue light services clients.
Projects ongoing and completed in 2018 have continued to attract excellent feedback from clients and more significantly have been recognised by a wider audience which have either lead to future potential work or award nominations. Notably, both the Canterbury Halls student accommodation project and the Stonyhurst College retreat have been nominated for LABC and RICS awards. The excellent progress and publicity of the Bowker Porsche contract has led to us being given the opportunity to bid on two further Porsche dealerships in Stockport and Cumbria. Canterbury Hall’s success has not only led to a larger scheme with the same client in Sheffield due to commence in January 2019 but also two further enquiries for similar student accommodation projects in Preston and Lancaster, with new clients that are currently at bid stage.
The directors consider the principal risks and uncertainties to be those commonly associated with the construction industry, in particular, economic uncertainties, health and safety and environmental issues. Such matters are at the forefront of the operations of the business. The directors are aware of the need to provide a quality service to the customer base at a competitive price.
The company makes little use of financial instruments other than an operational bank account so its exposure to price risk, credit risk, liquidity risk and cash flow risk is not material for the assessment of the assets, liabilities, financial position or profit or loss of the company.
The turnover in the company increased from £16.0m to £22.6m in the year (40.5% increase), whilst gross profit increased from £1.68m to £1.81m in the year (7.5% increase) as discussed in the fair review of the business section. Net assets increased from £2.24m to £2.45m.
The company's focus is on maintaining its reputation with existing customers and using this to develop repeat business and new relations.
Looking to the future, we are very encouraged by so many positive aspects within the business, but whilst there is a huge amount of political uncertainty, there is always a note of caution. We are confident that there will be significant opportunities for the Company to progress its current growth plan in 2019, 2020 and beyond. The record level client feedback KPI scores for 2018 are testament to the positive approach of the Company to complete quality projects on time.
On behalf of the board
The directors present their annual report and financial statements for the year ended 30 November 2018.
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
The results for the year are set out on page 8.
Ordinary dividends were paid amounting to £40,000. The directors do not recommend payment of a further dividend.
MHA Moore and Smalley were appointed as auditor to the company and in accordance with section 485 of the Companies Act 2006, a resolution proposing that they be re-appointed will be put at a General Meeting.
select suitable accounting policies and then apply them consistently; make judgements and accounting estimates that are reasonable and prudent; state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements; prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.
give a true and fair view of the state of the company's affairs as at 30 November 2018 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 Auditor's 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 included in the annual report, other than the financial statements and our auditor’s report 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 our audit:
the information given in the strategic report and the directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
the strategic report and the directors' report have been prepared in accordance with applicable legal requirements.
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.
As explained more fully in the directors' responsibilities statement, 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 is 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.
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 an auditor’s report 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: http://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.
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 an auditor's report 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.
The Profit And Loss Account has been prepared on the basis that all operations are continuing operations.
Warden Construction Limited is a private company limited by shares incorporated in England and Wales. The registered office is Damar House, Richard Street, Kirkham, Preston, PR4 2HU.
The companies principal activities and nature of its operations are disclosed in the Directors' Report.
These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006.
The financial statements are prepared in sterling, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £.
The financial statements have been prepared under the historical cost convention, modified to include the revaluation of freehold properties and to include investment properties and certain financial instruments at fair value. The principal accounting policies adopted are set out below.
This company is a qualifying entity for the purposes of FRS 102, being a member of a group where the parent of that group prepares publicly available consolidated financial statements, including this company, which are intended to give a true and fair view of the assets, liabilities, financial position and profit or loss of the group. The company has therefore taken advantage of exemptions from the following disclosure requirements:
Section 4 ‘Statement of Financial Position’ – Reconciliation of the opening and closing number of shares;
Section 7 ‘Statement of Cash Flows’ – Presentation of a statement of cash flow and related notes and disclosures;
Section 33 ‘Related Party Disclosures’ – Compensation for key management personnel.
The financial statements of the company are consolidated in the financial statements of Warden Holdings Limited. These consolidated financial statements are available from its registered office, Damar house, Richard Street, Kirkham, Preston, PR4 2HU.
At the time of approving the financial statements, the directors have a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future. Thus the directors continue to adopt the going concern basis of accounting in preparing the financial statements.
The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is credited or charged to profit or loss.
At each reporting period end date, the company reviews the carrying amounts of its tangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the company estimates the recoverable amount of the cash-generating unit to which the asset belongs.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.
Recognised impairment losses are reversed if, and only if, the reasons for the impairment loss have ceased to apply. Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.
At each reporting date, an assessment is made for impairment. Any excess of the carrying amount of stocks over its estimated selling price less costs to complete and sell is recognised as an impairment loss in profit or loss. Reversals of impairment losses are also recognised in profit or loss.
The “percentage of completion method” is used to determine the appropriate amount to recognise in a given period. The stage of completion is measured by the proportion of contract costs incurred for work performed to date compared to the estimated total contract costs. Costs incurred in the year in connection with future activity on a contract are excluded from contract costs in determining the stage of completion. These costs are presented as stocks, prepayments or other assets depending on their nature, and provided it is probable they will be recovered.
Basic financial assets, which include debtors and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised.
Other financial assets, including investments in equity instruments which are not subsidiaries, associates or joint ventures, are initially measured at fair value, which is normally the transaction price. Such assets are subsequently carried at fair value and the changes in fair value are recognised in profit or loss, except that investments in equity instruments that are not publicly traded and whose fair values cannot be measured reliably are measured at cost less impairment.
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the company transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the company after deducting all of its liabilities.
Basic financial liabilities, including creditors, bank loans, loans from fellow group companies and preference shares that are classified as debt, are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future payments discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.
Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.
Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Amounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.
Derivatives, including interest rate swaps and forward foreign exchange contracts, are not basic financial instruments. Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured at their fair value. Changes in the fair value of derivatives are recognised in profit or loss in finance costs or finance income as appropriate, unless hedge accounting is applied and the hedge is a cash flow hedge.
Debt instruments that do not meet the conditions in FRS 102 paragraph 11.9 are subsequently measured at fair value through profit or loss. Debt instruments may be designated as being measured at fair value though profit or loss to eliminate or reduce an accounting mismatch or if the instruments are measured and their performance evaluated on a fair value basis in accordance with a documented risk management or investment strategy.
Financial liabilities are derecognised when the company’s contractual obligations expire or are discharged or cancelled.
Equity instruments issued by the company are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the company.
In the application of the company’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.
The estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are as follows.
Profit on construction contracts is taken as the work is carried out, if the final outcome can be assessed with reasonable certainty, The profit is calculated on a prudent basis to reflect the proportion of work carried out by the year end by recording turnover and related costs as contract activity progresses.
Turnover is calculated as that proportion of total contract revenue which costs incurred to date bear to total expected costs for that contract. Revenue derived from the variations on contracts is only recognised when they have been accepted by the customers.
Full provision is made for losses on all contracts in the year in which they are foreseen.
Amounts recoverable on contracts are amounts not yet invoiced for which work has been completed but not yet certified.
Work in progress represents properties held for development. The directors believe that the current carrying value of these properties has not significantly changed in the last year.
The average monthly number of persons (including directors) employed by the company during the year was:
Their aggregate remuneration comprised:
The number of directors for whom retirement benefits are accruing under defined contribution schemes amounted to 4 (2017 - 4).
The Chancellor stated his intention to reduce the main rate of corporation tax from 19% to 17% from 1 April 2020. This change was substantively enacted on 6 September 2016.
The actual charge for the year can be reconciled to the expected charge for the year based on the profit or loss and the standard rate of tax as follows:
Land and buildings with a carrying amount of £101,523 (2017: £102,507) were revalued at 27 June 2018 by Eckersley Chartered Surveyors, independent valuers not connected with the company on the basis of market value. The valuation conforms to International Valuation Standards and was based on recent market transactions on arm's length terms for similar properties.
If revalued assets were stated on an historical cost basis rather than a fair value basis, the total amounts included would have been as follows:
Investment property comprises three buildings held by the company in Preston and Kirkham. The year end fair value of the investment properties has been arrived at on the basis of a valuation carried out by Eckersley Chartered Surveyors, who are not connected with the company. The valuation was made on an open market value basis by reference to market evidence of transaction prices for similar properties.
The unlisted investment relates to Fishergate Court Management Company Limited. The company owns 14.29% of the ordinary share capital of Fishergate Court Management Company Limited.
The following are the major deferred tax liabilities and assets recognised by the company and movements thereon:
The company operates a defined contribution pension scheme for all qualifying employees. The assets of the scheme are held separately from those of the company in an independently administered fund. At the year end there was £11,080 (2017: £6,791) outstanding.
The Ordinary shares and "A" Ordinary shares rank pari passu.
The share premium account represents consideration received for shares issued above their nominal value net of transaction costs.
There is an unlimited multilateral guarantee between Warden Holdings and Warden Construction Limited.
There is a first legal charge over unit 5, car parking spaces 9 & 10 at Fishergate , and over freehold property Railside House, and also floating charges over the assets of the company dated 18 January 1980.
There is a first legal charge dated 29 November 2018 over Freehold Property known as Land Buildings lying to the south of Richards Street.
There is a guarantee dated 12 February 2018 in favour of Weaver Vale Housing Trust Limited for £110,705, and a guarantee dated 27 July 2018 in favour of Community Gateway Association for £121,585.
At the reporting end date the company had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:
Dividends totalling £0 (2017 - £0) were paid in the year in respect of shares held by the company's directors.
During the year the company entered into the following transactions with related parties:
The following amounts were outstanding at the reporting end date:
The following amounts were outstanding at the reporting end date:
All of the companies above are related by common control by virtue of common directorships.
The company has taken advantage of the exemption permitted under Section 33 'Related Party Disclosures' paragraph 33.1A from disclosing transactions with the parent company.
For the whole of the current year and pervious year, the ultimate controlling party was Warden Holdings Limited, a company incorporated in Great Britain, which owns 100% of the issued share capital of Warden Construction Limited and for which group accounts have been prepared. Their financial statements are available from the company's registered office at Damar House, Richard Street, Kirkham, Preston, PR4 2HU or from Companies House, Crown Way, Maindy, Cardiff, CF14 3UZ.