ACCOUNTS - Final Accounts preparation
ACCOUNTS - Final Accounts preparation
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Company Registration No.
FOR THE YEAR ENDED 31 AUGUST 2019
Riordan O'Sullivan & Co
Chartered Certified Accountants and Statutory Auditors
40 Chamberlayne Road
London
NW10 3JE
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COMPANY INFORMATION
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CONTENTS
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STRATEGIC REPORT
FOR THE YEAR ENDED 31 AUGUST 2019
The directors present the strategic report of the company for the year ended 31 August 2019.
The principal activity of the company continued to be that of carpentry fit-out specialists.
The key financial highlights of the company for the last four years are as follows:
The full profit & loss account of the company for the year is set out on page 11. The results were in line with the expectations of the directors.
Our key performance indicators above continue to show consistent profitability and balance sheet growth.
The company had another successful year achieving profit of £2.5 million after tax on turnover of £31.2 million as against profit of £2.3 million after tax from turnover of £42.2 million the previous year. We continued our significant investment in health and safety, training and IT, and we further increased our already strong and liquid balance sheet which strengthened from £8.0 million to £10.0 million. Our construction activities progressed smoothly, with our projects being completed and handed over on time during the year and our on-going contracts are progressing according to programme. Pricing remained challenging in a very competitive market and costs continue to rise, especially so in tradesmen's wages and management salaries, but nevertheless the directors consider a 8.14% profit margin after tax to be satisfactory.
Profit margins in the current year continued at a satisfactory level up to the outbreak of the Covid-19 pandemic which has significantly disrupted our business activities and we do not know how long this slowdown will last or what damaging effect it will have. A trade deal with the EU has yet to be negotiated but the directors believe that this and Covid-19 uncertainties will be overcome and that confidence will be maintained in the UK construction sector and in the UK economy as a place to do business.
Our turnover is projected to be in excess of £40 million this year but the directors are unable to estimate the financial effect of Covid-19 at this stage. However, we continue to expect the strength of our company with its strong and liquid balance sheet and our dedicated and experienced team and reputation in our sector to continue to deliver a consistent, timely and quality service to our valued customers and to generate reasonable profit and positive cashflow.
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STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 AUGUST 2019
We have been trading successfully since 2001 but our origins date back to 1980, when Getjar Limited, our fellow group company was incorporated. We have the resources and financial strength of a larger construction company yet we strive to retain a hands-on culture with our family and other directors actively involved with our clients and projects on a day-to-day basis. We adopt a modern approach based on traditional values and have a proud record of contracts completed on time, to the highest possible engineering standards, within budget and with safe working practices. We work hard to maintain our reputation for consistency, quality, expertise and reliability and timely delivery, to be the contractor of choice and to continue the long term relationships with our customer base by focusing on our core activities. We concentrate on our long standing team and in-house resources and capabilities by bringing new innovations to our building methods and by working closely with our customers and suppliers
Construction is a competitive sector and there are a number of uncertainties which could have an impact on the company's performance and could cause results to differ substantially from historical profit and future projections. However, as we enter our 20th year in business we have well established systems and procedures in place to help avoid or minimise risks to the company.
The principal risks inherent in the company's business model, include the following: Credit risk The company's credit risks are mainly attributable to the trade debtors and amounts receivable from its customers. Our policy remains to have a good mix of long standing blue chip customers and we operate a modern and efficient financial and management reporting system that monitors our customers and our debtor book on a day to day basis. Liquidity risk The company finances its operations through a mixture of cash reserves in the bank, trade debtors including amounts receivable on contracts less trade creditors. The company does not have any complex financial instruments or hedging products and neither does it have any loans, overdrafts or other borrowing or asset finance, lease purchase or finance purchase liabilities. Therefore the directors are confident that they will meet their obligations as they fall due. Health and safety risk Construction is a higher risk activity. Health and safety remains at the top of our business management principles. Further details set out below. Our in-house team The success of the company is dependent on recruiting and retaining skilled management, tradesmen and support staff and our employment policy is designed to attract, train and provide a rewarding and challenging career that retains the best people throughout their working life. Covid-19 Construction activity is currently significantly reduced due to Covid-19 and we do not know how long this slowdown will last or what damaging effect it will have. But, the Directors believe that the company's strong and liquid balance sheet and its long standing and experienced team should see us through the business disruption caused by this pandemic. The economy The state of the economy and related global activity are issues on which every business sector depends and which can have a significant impact on our longer term performance and success. A trade deal with the EU has yet to be negotiated but the directors believe that this and Covid-19 uncertainties will be overcome satisfactorily and that confidence will be maintained in the UK construction sector and in the UK economy as a place to do business. Our policy therefore remains to maintain a strong and liquid balance sheet capable of funding our activities and meeting our obligations as they fall due.
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STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 AUGUST 2019
The company has a £10.0 million balance sheet with strong liquidity and consistent profits. We have a satisfactory order book from well-established customers. The directors are confident that once we get over Covid-19 that the company will resume its trading activities successfully and continue to provide an excellent and reliable service to our customers for the forseeable future. Thus they continue to adopt the going concern basis in preparing the financial statements.
The directors believe that the long term interests of the company, its employees and its customers are best served by acting in a corporate social manner. As such, the company ensures that high standards are maintained throughout its activities. During the year, the company and its employees have supported many worthy causes and charities. In conjunction with our clients, we continue to offer employment and apprenticeships to local tradesmen and support staff in our areas of operation.
The company’s success is attributable to our team of skilled, experienced and dedicated directors, management, tradesmen and support staff, of whom we are proud and most of whom are long term and committed employees of Atlantic Contracts Limited.
The company continues to invest in the life-long training and development of our staff from apprentices through to their retirement. We offer a career path that helps retain and enhance the skills, talents and experience required to deliver best service to our valued customers. We offer the challenge, training, motivation and career development expected by the best employees throughout their working life. Our in-house training centre is approved by CSkills and CITB. We continue to employ and sponsor trainees in the various disciplines in our sector. We work with a number of Councils and Training Providers to offer a range of Apprenticeships across our company, many of whom have successfully graduated and continued into full time employment with us. We have also recently undertaken further Vocational training with our Senior site-based staff to help them gain higher educational qualifications commensurate to their management responsibilities. The company acknowledges that it is our employees that will ensure the continuing success of our business into the future. Our short chain of command keeps us in constant dialogue with our employees and keeps them abreast of group activity, performance, quality control, training, health and safety, environmental issues, planning and future prospects. We remain an equal opportunity employer without reference to age, ethnicity or gender and we are opposed to all forms of discrimination. We continue our policy regarding the employment of disabled persons and fair consideration is given to applications for employment by disabled persons where the requirements of the job can be adequately fulfilled by a handicapped person. I extend my sincere thanks to all our staff for their continuing dedication and commitment and I hope they continue to work on developing a life-long and rewarding career where they feel valued and respected and a part of the on-going success of Atlantic Contracts Limited.
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STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 AUGUST 2019
The directors, led by our dedicated health and safety director and senior managers and aided by our in-house health and safety professionals continue to strive to embed best health and safety policies, practices and awareness throughout our operations. We wish that all our workers work in a safe and accident free working environment and that they go home safely at the end of every working day. The training and expenditure necessary to further enhance our excellent safety performance remains our top priority.
We operate our own in-house health and safety training centre dedicated to the health and safety education of our workers. Our health and safety policies and performance is kept under constant review. Part of our health and safety at work training is to impress upon every worker that it is their duty to take care of their own and their work colleague's safety and to suggest any improvement that could enhance our procedures. We maintained the accreditations that the company has been affiliated to for many years – examples being OHSAS 18001, the Contractors Health and Safety Assessment Scheme (CHAS), CSCS and CPCS. We continue to receive recognition for our health and safety policies. We continue to promote Mental Health Awareness at Work and have trained a number of Mental Health First Aiders across the company to help and support any worker in need. We have also rolled out an advertising campaign across our sites and company publications promoting the help we can offer and highlighting the additional help that is available.
We recognise the significant impact the construction industry has on the environment. Our HSQE team aided by our directors and managers and site teams continually promote sustainable resourcing of building materials, reducing emissions and the efficient use of energy. We continue to minimise site waste and re-use it wherever possible and we work closely with modern waste management recycling companies.
We operate within and hold full accreditation to quality standards ISO 9001 Quality Management Systems: ISO 14001 the internationally recognised environmental standard; Achilles Approved Constructors Scheme; FSC certification; the Considerate Contractors Scheme; CARES and CONSTRUCT. We are working on attaining BS EN ISO 18001. Quality management is central to our day to day operations and helps us deliver value and efficiency and meet or exceed our customer's requirements.
We constantly assess and monitor the strong links we have with our suppliers who are a crucial part of our successful business. Our policy remains to pay our suppliers at the end of the month following month of delivery and this applies to the vast majority of our transactions. Where different terms are agreed in certain circumstances we endeavour to adhere to our side of such agreements.
The company holds 'low-risk' status accreditation from HM Revenue & Customs Large & Complex Framework Division in recognition of our modern and efficient financial management systems and procedures.
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STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 AUGUST 2019
The Board looks forward with confidence to continue the success of the company into the future.
This report was approved by the board on 27 April 2020 and signed on its behalf.
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DIRECTORS' REPORT
FOR THE YEAR ENDED 31 AUGUST 2019
The directors present their report and the financial statements for the year ended 31 August 2019.
The directors are responsible for preparing the Strategic Report, the Directors' Report 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 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'. 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 for the Company's financial statements 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.
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 to 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.
The profit for the year, after taxation, amounted to £2,538,681 (2018 - £2,307,395).
Ordinary dividends were paid to the parent company amounting to £500,000 (2018 : £500,000). The directors do not recommend payment of a further dividend.
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
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DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 AUGUST 2019
The company has chosen in accordance with Companies Act 2006, S414C(11) to set out in the company's strategic report information required by Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008, Sch. 7 to be contained in the directors' report. It has done so in respect of principal risks and uncertainties, financial instruments and future prospects.
Each of the persons who are directors at the time when this Directors' Report is approved has confirmed that:
The auditors, Riordan O'Sullivan & Co, Chartered Certified Accountants and Statutory Auditors are deemed to be reappointed under Section 487 (2) of the Companies Act 2006.
This report was approved by the board on
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INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF ATLANTIC CONTRACTS LIMITED
We have audited the financial statements of Atlantic Contracts Limited (the 'Company') for the year ended 31 August 2019, which comprise the Statement of Income and Retained Earnings, the Balance Sheet, the Statement of Cash Flows and the related notes, 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:
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditors' responsibilities for the audit of the financial statements section of our report. We are independent of the Company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the United Kingdom, including the Financial Reporting Council'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.
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.
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 Auditors' 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
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INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF ATLANTIC CONTRACTS LIMITED (CONTINUED)
required to report that fact.
We have nothing to report in this regard.
In our opinion, based on the work undertaken in the course of the 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.
In the light of the knowledge and understanding of the Company and its environment obtained in the course of the audit, we have not identified material misstatements in the Strategic Report or the Directors' Report.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:
As explained more fully in the Directors' Responsibilities Statement on page 6, 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 Auditors' 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: www.frc.org.uk/auditorsresponsibilities. This description forms part of our Auditors' Report.
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INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF ATLANTIC CONTRACTS LIMITED (CONTINUED)
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 Auditors' 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.
Patrick McNamara (Senior Statutory Auditor)
Chartered Certified Accountants and Statutory Auditors
40 Chamberlayne Road
NW10 3JE
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STATEMENT OF INCOME AND RETAINED EARNINGS
FOR THE YEAR ENDED 31 AUGUST 2019
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BALANCE SHEET
AS AT 31 AUGUST 2019
The financial statements were approved and authorised for issue by the board and were signed on its behalf on
The notes on pages 14 to 20 form part of these financial statements.
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STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 AUGUST 2019
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 AUGUST 2019
Atlantic Contracts Limited is a private company limited by shares incorporated in England and Wales. The registered office is Atlantic House, 7 Stirling Way, Borehamwood, Hertfordshire, WD6 2BT.
2.Accounting policies
The financial statements have been prepared under the historical cost convention unless otherwise specified within these accounting policies and in accordance with Financial Reporting Standard 102, the Financial Reporting Standard applicable in the UK and the Republic of Ireland and the Companies Act 2006.
The financial statements are prepared in sterling, which is the functional currency of the company.
The preparation of financial statements in compliance with FRS 102 requires the use of certain critical accounting estimates. It also requires management to exercise judgement in applying the Company's accounting policies (see note 3).
The following principal accounting policies have been applied:
The Strategic Report sets out the company's business activities, and highlights the factors which may impact on its financial performance, market position and future prospects. The Strategic Report also provides information in relation to the company's healthy financial position, cashflow and liquidity as well as its risks and uncertainties.
The company has considerable financial resources without the need to resort to bank or any other form of borrowing and it has a substantial order book for the twelve months from the date of approval of these financial statements. As a consequence, the directors believe that the company is well placed to manage its business risks successfully and continue in operational existence for the foreseeable future. Thus they continue to adopt the going concern basis of accounting in preparing these financial statements.
Turnover represents the amount derived from the provision of services falling within the company's ordinary activities and excluding value added tax.
In the case of long term contracts where the outcome can be reasonably assessed turnover is recognised as the value of work progresses. Provision is made for losses and for expected losses. Amounts due from contracts at the reporting end date is shown under trade and other receivables as amounts recoverable on contracts.
Cash and cash equivalents are basic financial assets and include cash in hand, deposits held at call with banks, other short-term liquid investments with original maturities of three months or less.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 AUGUST 2019
2.Accounting policies (continued)
Financial assets and liabilities are offset, with the net amounts presented in the financial statements, when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and liability simultaneously.
Equity dividends are recognised when they become legally payable. Interim equity dividends are recognised when paid. Final equity dividends are recognised when approved by the shareholders at the annual general meeting.
Current tax The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the income statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The company’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date. Deferred tax liabilities are generally recognised for all timing differences and deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Such assets and liabilities are not recognised if the timing difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.
The Company operates a defined contribution plan for its employees. A defined contribution plan is a pension plan under which the Company pays fixed contributions into a separate entity. Once the contributions have been paid the Company has no further payment obligations.
The contributions are recognised as an expense in the Statement of Income and Retained Earnings when they fall due. Amounts not paid are shown in accruals as a liability in the Balance Sheet. The asets of the plan are held separately from the Company in independently administered funds.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 AUGUST 2019
The preparation of financial statements under FRS 102 requires the directors to make judgements, estimates and assumptions about the carrying amount of assets and liabilities at the balance sheet date that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered relevant. Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis and revisions are recognised in the accounts in the period in which the estimate is changed.
Significant judgements The following judgements have the most significant effect on amounts recognised in the financial statements: Performance on long term contracts Recognised amounts of construction contract revenue and related receivables reflect the director's best estimate of the outcome and stage of completion of long term contracts. This includes the assessment of the profitability or otherwise of the long-term contracts. Costs to complete and contract profitability are subject to significant estimation uncertainty. When it is deemed probable that total contract costs to complete exceeds revenue the expected loss is recognised immediately.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 AUGUST 2019
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 AUGUST 2019
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 AUGUST 2019
The Company operates a defined contributions pension scheme for all qualifying employees. The assets of the scheme are held separately from those of the company in an independently administered fund. The pension cost charge to the profit or loss in respect of defined contribution schemes amounted to £39,175 (2018 - £22,661).
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 AUGUST 2019
There are contingent liabilities in respect of contract idemnity and performance bonds, issued in the normal course of business, amounting to £536,000 (2018 - £946,673). No claims are expected to arise in this respect.
Currently, the business activities are adversely affected due to Covid-19 and we do not know how long this slowdown will last or what damaging effect it will have. Therefore, the directors are unable to estimate the financial effect of Covid-19 at this stage. But, the Directors believe that the company's strong and liquid balance sheet and its long standing and experienced team should see us through the business disruption caused by this pandemic.
The group parent company is Masterson Holdings Limited which owns the entire share capital of Atlantic Contracts Limited. Michael Masterson and Mona Masterson, by virtue of their personal shareholding in Masterson Holdings Limited and in their capacity as trustees are the ultimate controllers.
The consolidated accounts of the parent company Masterson Holdings Limited can be obtained from Companies House, Crown Way, Cardiff, CF14 3UZ.
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