InstaGroup Limited - Limited company accounts 20.1

REGISTERED NUMBER: 01500228 (England and Wales)

Strategic Report, Report of the Directors and

Financial Statements for the Year Ended 30 June 2020

for

InstaGroup Limited

Page

Company Information

1

Strategic Report

2

Report of the Directors

3

Report of the Independent Auditors

5

Income Statement

7

Other Comprehensive Income

8

Balance Sheet

9

Statement of Changes in Equity

10

Cash Flow Statement

11

Notes to the Financial Statements

12

DIRECTORS:

B Milne

D F Robson

T Evans

J Reed

M P Pilkington

SECRETARY:

M P Pilkington

REGISTERED OFFICE:

Insta House

Ivanhoe Road

Hogwood Business Park

Wokingham

Berkshire

RG40 4PZ

REGISTERED NUMBER:

01500228 (England and Wales)

AUDITORS:

Chelepis Watson Limited

Chartered Accountants and

Statutory Auditor

67 Westow Street

Upper Norwood

London

SE19 3RW

The directors present their strategic report for the year ended 30 June 2020.

REVIEW OF BUSINESS

The principal activities of the company in the year under review were those of supplying materials and equipment for cavity wall, solid wall and loft insulation. The company also operates a contracting division supplying and fitting these materials in Central Southern England under government backed energy efficiency and fuel poverty schemes.

The company continued to operate its market leading nationwide installer network, the Snug Network, securing funding from the major UK Energy Supply companies under the grant programme, the Energy Company Obligation (ECO). In 2019/2020, the company continued to stabilise and remains well placed to benefit from expected growth in the insulation sector in 2020/21 as a result of the Government's COVID-19 Green Recovery programme.

Results and performance

Turnover in the year reduced from £20.1m to £17.4m, primarily as a result of the initial COVID-19 lockdown in March 2020. However, reported profit after taxation increased by 42% to £206k (2019 - £145k profit). EBITDA reduced from £449k to £302k. The Board continued to control costs, helping to maintain and improve performance in a challenging operating environment.

Cash increased in the year by £820k. At the year-end date the company's net assets were £10.9m (2019 - £11.7m).

Our Snug Network remains the country's leading network of insulation installers and is expected to grow in 2020/2021. The company continues to be regarded as a leading insulation system designer, focussed on delivering high quality systems to the market.

The outlook for the business remains encouraging and we expect to see steady growth in the coming years, as a number of new Government initiatives are rolled out. The Green Homes Grant will see an increase in activity in the retrofit insulation sector, alongside the existing Energy Company Obligation.

Activity remains steady in the new build housing market, where we have continued to increase market share as house builders become increasingly focussed on quality.

The board is pleased with the company's performance, in particular the resilience shown during the initial COVID-19 lockdown. Whilst this had a material impact on the business, the company mitigated its losses and was able to bounce back quickly to deliver a profit for the year. The board expect this recovery to continue in the coming financial year. We should like to thank our employees for their hard work and support throughout an unprecedented period.

PRINCIPAL RISKS AND UNCERTAINTIES

The principal financial risk faced by the company is interest rate risk and liquidity risk. These risks are detailed in the directors report.

ON BEHALF OF THE BOARD:

D F Robson - Director

18 December 2020

The directors present their report with the financial statements of the company for the year ended 30 June 2020.

DIVIDENDS

An interim dividend of £187 per share was paid on 18 June 2020. The directors recommend that no final dividend be paid.

The total distribution of dividends for the year ended 30 June 2020 will be £ 935,000 .

DIRECTORS

The directors shown below have held office during the whole of the period from 1 July 2019 to the date of this report.

B Milne

D F Robson

T Evans

J Reed

M P Pilkington

Other changes in directors holding office are as follows:

J J F Robson - resigned 30 June 2020

P F Robson ceased to be a director after 30 June 2020 but prior to the date of this report.

FINANCIAL RISK MANAGEMENT OBJECTIVE AND POLICIES

The principal financial risk faced by the company is interest rate risk and liquidity risk. Liquidity risk is managed by maintaining a balance between the continuity of funding and flexibility through the use of a group overdraft facility, of which interest is borne at a variable rate.

The company's principal financial instrument comprises of a bank overdraft.

The main purpose of the financial instruments is to maintain the company's operations.

EMPLOYMENT POLICY

The company employment policies are regularly reviewed and updated to ensure they remain effective. Our overall aim is to create and sustain a high-performing organisation by building the commitment of our people.

We aim to provide a common awareness amongst employees of the financial and economic factors affecting the performance of the business.

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). 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;

-	state whether applicable 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 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

The auditors, Chelepis Watson Limited, will be proposed for re-appointment at the forthcoming Annual General Meeting.

ON BEHALF OF THE BOARD:

M P Pilkington - Director

18 December 2020

Opinion

We have audited the financial statements of InstaGroup Limited (the 'company') for the year ended 30 June 2020 which comprise the Income Statement, Other Comprehensive Income, Balance Sheet, Statement of Changes in Equity, Cash Flow Statement and Notes to the Financial Statements, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 'The Financial Reporting Standard applicable in the UK and Republic of Ireland' (United Kingdom Generally Accepted Accounting Practice).

In our opinion the financial statements:

-	give a true and fair view of the state of the company's affairs as at 30 June 2020 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 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 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 in the Strategic Report and the Report of the Directors, but does not include the financial statements and our Report of the Auditors thereon.

Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether 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 the 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

-	the Strategic Report and the Report of the Directors have been prepared in accordance with applicable legal requirements.

Matters on which we are required to report by exception

In the light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identified material misstatements in the Strategic Report or the Report of the Directors.

We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion:

-	adequate accounting records have not been kept, 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.

Responsibilities of directors

As explained more fully in the Statement of Directors' Responsibilities set out on pages three and four, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the directors are responsible for assessing the 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.

Auditors' responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue a Report of the Auditors that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website at www.frc.org.uk/auditorsresponsibilities. This description forms part of our Report of the Auditors.

Use of our report

This report is made solely to the company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in a Report of the Auditors and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's members as a body, for our audit work, for this report, or for the opinions we have formed.

Georgios Georgiou (Senior Statutory Auditor)

For and on behalf of Chelepis Watson Limited

Chartered Accountants and

Statutory Auditor

67 Westow Street

Upper Norwood

London

SE19 3RW

18 December 2020

TURNOVER

4

17,413,502

20,108,206

Cost of sales

(13,069,013

)

(15,559,065

)

GROSS PROFIT

4,344,489

4,549,141

Distribution costs

(712,354

)

(714,590

)

Administrative expenses

(3,873,290

)

(3,647,557

)

(241,155

)

186,994

Other operating income

494,004

184,273

OPERATING PROFIT

7

252,849

371,267

Interest payable and similar expenses

8

(60,585

)

(146,257

)

PROFIT BEFORE TAXATION

192,264

225,010

Tax on profit

9

14,094

(79,916

)

PROFIT FOR THE FINANCIAL YEAR

206,358

145,094

PROFIT FOR THE YEAR

206,358

145,094

OTHER COMPREHENSIVE INCOME

-

-

TOTAL COMPREHENSIVE INCOME FOR THE YEAR

206,358

145,094

FIXED ASSETS

Tangible assets

11

289,254

110,133

Investments

12

200

200

289,454

110,333

CURRENT ASSETS

Stocks

13

385,169

378,089

Debtors

14

11,438,040

13,251,161

Cash at bank and in hand

1,771,598

951,368

13,594,807

14,580,618

CREDITORS

Amounts falling due within one year

15

(2,887,746

)

(3,021,828

)

NET CURRENT ASSETS

10,707,061

11,558,790

TOTAL ASSETS LESS CURRENT LIABILITIES

10,996,515

11,669,123

CREDITORS

Amounts falling due after more than one year

16

(56,034

)

-

NET ASSETS

10,940,481

11,669,123

CAPITAL AND RESERVES

Called up share capital

19

5,000

5,000

Retained earnings

20

10,935,481

11,664,123

SHAREHOLDERS' FUNDS

10,940,481

11,669,123

The financial statements were approved by the Board of Directors and authorised for issue on 18 December 2020 and were signed on its behalf by:

D F Robson - Director

B Milne - Director

Called up

share

Retained

Total

capital

earnings

equity

£

£

£

Balance at 1 July 2018

5,000

11,519,029

11,524,029

Changes in equity

Total comprehensive income

-

145,094

145,094

Balance at 30 June 2019

5,000

11,664,123

11,669,123

Changes in equity

Dividends

-

(935,000

)

(935,000

)

Total comprehensive income

-

206,358

206,358

Balance at 30 June 2020

5,000

10,935,481

10,940,481

Cash flows from operating activities

Cash generated from operations

25

1,963,402

2,088,906

Interest paid

(59,948

)

(145,062

)

Interest element of hire purchase payments paid

(637

)

(1,195

)

Tax paid

8,907

-

Net cash from operating activities

1,911,724

1,942,649

Cash flows from investing activities

Purchase of tangible fixed assets

(228,542

)

(10,245

)

Sale of tangible fixed assets

-

65,200

Net cash from investing activities

(228,542

)

54,955

Cash flows from financing activities

Capital repayments on HP contracts

72,048

(57,020

)

Equity dividends paid

(935,000

)

-

Net cash from financing activities

(862,952

)

(57,020

)

Increase in cash and cash equivalents

820,230

1,940,584

Cash and cash equivalents at beginning of year

26

951,368

(989,216

)

Cash and cash equivalents at end of year

26

1,771,598

951,368

1.	STATUTORY INFORMATION

InstaGroup 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.	STATEMENT OF COMPLIANCE

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.

3.	ACCOUNTING POLICIES

Basis of preparing the financial statements

These financial statements are prepared on a going concern basis, under the historical cost convention.

The preparation of financial statements in conformity with FRS 102 requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the company's accounting policies (see below).

The financial statements are prepared in Sterling which is the functional currency of the company.

Significant judgements and estimates

The preparation of the financial statements requires management to make judgements, estimates and assumptions that affect the amounts reported for assets and liabilities at the balance sheet date and the amounts reported for revenue and expenses during the year. However, the nature of estimation means that actual outcomes could differ from those estimates.

There are no significant judgements (apart from those involving estimates) which have had an effect on the accounts recognised in the financial statements.

Turnover

Turnover is measured at the fair value of the consideration received or receivable and represents the amount receivable for goods and services rendered, net of returns and discounts allowed by the company and value added taxes

Tangible fixed assets

Depreciation is provided at the following annual rates in order to write off each asset over its estimated useful life or, if held under a finance lease, over the lease term, whichever is the shorter.

Fixtures and fittings

-

20% on cost and 20% on reducing balance

Motor vehicles

-

25% on reducing balance

Investments in subsidiaries

Investments in subsidiary undertakings are recognised at cost.

Stocks

Stock is valued at the lower of cost and net realisable value. Work in progress is valued at cost plus a proportion of attributable overheads.

Taxation

Taxation for the year comprises current and deferred tax. Tax is recognised in the Income Statement, 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 balance sheet date.

Deferred tax

Deferred tax is recognised in respect of all timing differences that have originated but not reversed at the balance sheet 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.

Research and development

Expenditure on research and development is written off in the year in which it is incurred.

Hire purchase and leasing commitments

Assets obtained under finance leases are capitalised as tangible assets and depreciated over the shorter of the lease term and their useful lives. Assets held under hire purchase agreements are capitalised and depreciated over their useful economic lives. Finance leases are those where substantially all of the benefits and risks of ownership are assumed by the company. Obligations under such agreements are included in creditors net of the finance charge allocated to future periods. The finance element of the rental payment is charged to the profit and loss account so as to produce constant periodic rates of charge on the net obligations outstanding in each period.

Rentals payable under operating leases are charged against income on a straight line basis over the lease term.

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.

Financial instruments

The company has chosen to adopt sections 11 and 12 of FRS 102 in respect of financial instruments.

(i) Financial assets

Basic financial assets, including trade and other debtors, cash and bank balances and intra-group balances, are initially recognised at transaction price, 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.

Such assets are subsequently carried at amortised cost using the effective interest method.

At the end of each reporting period financial assets measured at cost and amortised cost are assessed for objective evidence of impairment. If objective evidence of impairment is found, an impairment loss is recognised in the Income Statement.

For financial assets measured at amortised costs, the impairment loss is measured as the difference between the asset's carrying amount and the present value of the estimated cash flow discounted at the asset's original effective interest rate.

(ii) Financial liabilities

Basic financial liabilities, including trade and other creditors, bank overdraft, intra-group balances and hire purchase contracts, 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 receipts discounted at a market rate of interest.

Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.

4.

TURNOVER

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

An analysis of turnover by class of business is given below:

30.6.20

30.6.19

£

£

Contracting

2,758,147

2,442,486

Materials and equipment

5,198,924

7,033,475

Consortium (managing agent)

9,456,431

10,632,245

17,413,502

20,108,206

Turnover is wholly attributable to UK market.

5.	EMPLOYEES AND DIRECTORS

30.6.20

30.6.19

£

£

Wages and salaries

2,054,097

2,010,981

Social security costs

237,062

261,673

Other pension costs

138,491

178,558

2,429,650

2,451,212

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

30.6.20

30.6.19

Employees

49

51

6.	DIRECTORS' EMOLUMENTS

30.6.20

30.6.19

£

£

Directors' remuneration

604,727

680,011

Directors' pension contributions to money purchase schemes

64,841

107,910

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

Money purchase schemes

4

5

Information regarding the highest paid director is as follows:

30.6.20

30.6.19

£

£

Emoluments etc

183,109

161,923

Pension contributions to money purchase schemes

20,737

-

7.	OPERATING PROFIT

The operating profit is stated after charging/(crediting):

30.6.20

30.6.19

£

£

Hire of plant and machinery

19,704

25,707

Other operating leases

190,330

182,492

Depreciation - owned assets

42,853

56,321

Depreciation - assets on hire purchase contracts

6,568

22,449

Profit on disposal of fixed assets

-

(1,261

)

Auditors' remuneration

31,000

31,000

Foreign exchange differences

154

(3

)

Research and development - expenditure in current year

-

2,905

8.

INTEREST PAYABLE AND SIMILAR EXPENSES

30.6.20

30.6.19

£

£

Bank interest

59,948

145,062

Hire purchase interest

637

1,195

60,585

146,257

9.

TAXATION

Analysis of the tax (credit)/charge

The tax (credit)/charge on the profit for the year was as follows:

30.6.20

30.6.19

£

£

Current tax:

Adjustment in respect of previous periods

(8,907

)

-

Deferred tax

(5,187

)

79,916

Tax on profit

(14,094

)

79,916

UK corporation tax was charged at 19%) in 2019.

Reconciliation of total tax (credit)/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:

30.6.20

30.6.19

£

£

Profit before tax

192,264

225,010

Profit multiplied by the standard rate of corporation tax in the UK of 19% (2019 - 19%)

36,530

42,752

Effects of:

Expenses not deductible for tax purposes

204

442

Capital allowances in excess of depreciation

(38,047

)

-

Depreciation in excess of capital allowances

-

7,477

Adjustments to tax charge in respect of previous periods

(8,907

)

-

Research and development tax relief

-

(5,317

)

Other timing differences

(39,840

)

38,489

Deferred taxation - origination and reversal of timing differences

34,653

(3,927

)

Taxation losses

1,313

-

Total tax (credit)/charge

(14,094

)

79,916

At the balance sheet date the company had £1,931,334 of unused tax losses which are to be carried forward and relieved against future taxable profits.

10.

DIVIDENDS

30.6.20

30.6.19

£

£

Ordinary shares of £1 each

Interim

935,000

-

11.	TANGIBLE FIXED ASSETS

Fixtures

and

Motor

fittings

vehicles

Totals

£

£

£

COST

At 1 July 2019

983,514

168,811

1,152,325

Additions

128,952

99,590

228,542

Disposals

(128,504

)

-

(128,504

)

At 30 June 2020

983,962

268,401

1,252,363

DEPRECIATION

At 1 July 2019

915,491

126,701

1,042,192

Charge for year

36,698

12,723

49,421

Eliminated on disposal

(128,504

)

-

(128,504

)

At 30 June 2020

823,685

139,424

963,109

NET BOOK VALUE

At 30 June 2020

160,277

128,977

289,254

At 30 June 2019

68,023

42,110

110,133

Fixed assets, included in the above, which are held under hire purchase contracts are as follows:

Motor

vehicles

£

COST

At 1 July 2019

55,311

Additions

99,390

At 30 June 2020

154,701

DEPRECIATION

At 1 July 2019

37,324

Charge for year

6,568

At 30 June 2020

43,892

NET BOOK VALUE

At 30 June 2020

110,809

At 30 June 2019

17,987