Francis Construction Limited - Limited company accounts 20.1

REGISTERED NUMBER: 00384619 (England and Wales)

STRATEGIC REPORT,

REPORT OF THE DIRECTORS AND

FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2021

FOR

FRANCIS CONSTRUCTION LIMITED

Page

Company Information

1

Strategic Report

2

Report of the Directors

5

Report of the Independent Auditors

7

Profit and loss account

11

Balance Sheet

12

Statement of Changes in Equity

13

Notes to the Financial Statements

14

DIRECTORS:

E M C Barrett

E W J Barrett

A Wooldridge

SECRETARY:

D W J Barrett

REGISTERED OFFICE:

Armour House

Colthrop Lane

Thatcham

Berkshire

RG19 4PD

REGISTERED NUMBER:

00384619 (England and Wales)

The directors present their strategic report for the year ended 31 December 2021.

REVIEW AND PERFORMANCE OF THE BUSINESS

Performance of the business in 2021 was positive with a gross margin of 7.9% (2020 - 6.8%) which continues the upward trend over the past 3 years. Coupled with strong development and good morale the team has strengthened further.

Turnover at £16.1m was 6% less than £17.2m reported for 2020; the reduction of revenue can directly be attributed to the impact of the coronavirus pandemic (COVID-19). Disruption affected secured project starts which led to a reduced or delayed turnover. Disruption affected secured project starts which led to a reduced or delayed turnover. Following the COVID pandemic construction activities continued successfully through 2021 with the directors' response to the crisis focusing on keeping staff and subcontractors safe and engaged, a focus on securing short term government backed projects and a programme of cost reduction. This strategy was successful in keeping the business operating and ready for the future; staff retention stays well above industry average at 97% and the business continues to invest in the team and look to the long term.

The business has no re-focused to its Vision 2025 objectives. Overhead efficiency remained a key focus to continue the profitable trajectory. Profitability increased in line with our targets. Other key business objectives were achieved and embedded in the business ready for the future. The business secured sufficient projects to achieve the target turnover of £25m however £10m of this turnover was delayed which ultimately led to the reduced turnover in 2021. However, this bolstered the start to 2022.

The company continues to focus on long term, repeat business client relationships and has strong opportunities moving forward.

Cashflow is essential to our business success. The company closely and prudently manages working capital to provide good liquidity to fund operations and ensure commitments are always met on time. Investment in working capital is funded without recourse to external finance and underpinned by retained earnings. The net current assets, a key indicator of liquidity, improved by £100,918 during the year to £404,891 and has further strengthened the balance sheet position.

A strategic priority during the pandemic was to keep the supply chain engaged with the business so that it was ready to respond as the situation improved. To do this we ensured payments were made ahead of terms to ensure liquidity throughout the wider supply chain team and continue good relationships we have worked hard to build over the years.

A further drive to understand and minimise harm to the environment continues with Scope 1 and 2 assessments being undertaken. Waste production and energy usage is class leading and is monitored to improve waste management performance and energy efficiency. The fleet is now 30% electric powered by renewable energy.

Further initiatives to drive the business towards carbon neutral delivery and operation remains a focus.

The company has maintained its ISO 9001 accreditation for Quality Management Systems, ISO 14001 accreditation for the Environmental Management Systems and ISO 45001 for Health & Safety Management.

The company has a strong commitment to develop and support its teams. The staffing structure of the business continues to develop with the result of a modern, robust, and strong main contracting business that has the appropriate number of technical and administration personnel. Our employees are central to our success and once again, the Directors would like to extend their thanks and gratitude for the efforts of all staff during the year.

PRINCIPAL RISKS AND UNCERTAINTIES

The activity of building and construction, by its very nature, presents a range of risks that can at times make outcomes difficult to predict. Key risks include financial and operational, including health and safety that require close management to ensure a successful conclusion to each contract. The company is a well-established and very experienced building main contractor, over the years it has developed cultural working practices, operating procedures and financial policies to manage all risks inherent in its activities. These continue to be developed and strengthened.

From the outset, tenders are fully assessed to ensure they reflect the specification of works required, the cost of carrying out the works and provide the company with a commercially viable return on capital. From inception of a successful tender and throughout the duration of works, the performance of each contract is continually tracked against budget and regularly scrutinised by management. Key relationship with the client principle are fostered to ensure project relationships and outcomes are strong.

The mid-term economic forecast is a focus for the directors whilst material and labour volatility continues although at a declining pace. Energy costs remain a concern and the business remains considered when planning for the future.

The key health and safety objectives are to provide a safe working environment where the delivery teams and subcontractors go home safely everyday. The business will minimise accidents and near misses and learn from these. The company has a fully compliant health and safety policy which includes training, monitoring, and reporting on site safety issues to promote the wellbeing of the workforce and public

PERFORMANCE OF THE BUSINESS

The three year financial performance of the business is summarised below:

2021

2020

2019

Turnover (£million)

£16.1m

£17.2m

£25.7m

Gross Margin %

7.9%

6.8%

4.0%

Pre-tax profit (£thousand)

£8k

£41k

£(311)k

Pre-tax margin %

0.05%

0.24%

(1.2)k

Net current assets (£thousand)

£405k

£304k

£222k

Net assets (£thousand)

£527k

£415k

£273k

FUTURE DEVELOPMENTS

The business has returned to a good level of productivity and the company continues to operate within its existing retained working capital investment. The directors are continually assessing the follow on impact of Covid-19, The Ukraine crisis and inflation on the operation of the company and other wider economic pressures. The market is changing rapidly in some areas and measures are taken to reduce the ultimate impact on the company, its customers, the team and suppliers.

For the current 2022 financial year, the company has secured turnover of £27m. Looking further ahead to 2023, construction contracts worth £10m have so far been secured with a current potential of a further £6m.

The outlook is positive, a secure order book of more than £37m allows re-investment in the business to develop the team and systems. The turnover security has allowed increased partnership with our clients and supply chain.

The business continues to work towards its pre-pandemic Vision 2025 of consolidating turnover at £25m, streamlining its processes to provide best value and best service to our long-term clients with focus on profitability, the people of the business and reinforcing the long-term working capital position of the company.

ON BEHALF OF THE BOARD:

E W J Barrett - Director

19 July 2022

The directors present their report with the financial statements of the company for the year ended 31 December 2021.

PRINCIPAL ACTIVITY

The principal activity of the company in the year under review was that of building contractors.

DIVIDENDS

No dividends will be distributed for the year ended 31 December 2021.

DIRECTORS

The directors shown below have held office during the whole of the period from 1 January 2021 to the date of this report.

E M C Barrett

E W J Barrett

Other changes in directors holding office are as follows:

J M Turpin - resigned 4 January 2021

A Wooldridge - appointed 21 October 2021

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;

-	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.

ON BEHALF OF THE BOARD:

E W J Barrett - Director

19 July 2022

Opinion

We have audited the financial statements of Francis Construction Limited (the 'company') for the year ended 31 December 2021 which comprise the Profit and loss account, Balance Sheet, Statement of Changes in Equity 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 31 December 2021 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

In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.

Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.

Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.

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 this gives rise to a material misstatement in the financial statements themselves. 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 page five, 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.

The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:

Our approach to identifying and assessing the risks of material misstatement in respect of irregularities, including fraud and non-compliance with laws and regulations, was as follows:

- the engagement partner ensured that the engagement team collectively had the appropriate competence, capabilities and skills to identify or recognise non-compliance with applicable laws and regulations;

- we identified the laws and regulations applicable to the company through discussions with directors and other management, and from our commercial knowledge and experience of the sector;

- we focused on specific laws and regulations which we considered may have a direct material effect on the financial statements or the operations of the company, including the Companies Act 2006, taxation legislation and data protection, anti-bribery, employment,and health and safety legislation;

- we assessed the extent of compliance with the laws and regulations identified above through making enquiries of management and inspecting legal correspondence; and

- identified laws and regulations were communicated within the audit team regularly and the team remained alert to instances of non-compliance throughout the audit.

We assessed the susceptibility of the company’s financial statements to material misstatement, including obtaining an understanding of how fraud might occur, by:

- making enquiries of management as to where they considered there was susceptibility to fraud, their knowledge of actual, suspected and alleged fraud; and

- considering the internal controls in place to mitigate risks of fraud and non-compliance with laws and regulations.

To address the risk of fraud through management bias and override of controls, we:

- performed analytical procedures to identify any unusual or unexpected relationships;

- tested journal entries to identify unusual transactions;

- assessed whether judgements and assumptions made in determining the accounting estimates were indicative of potential bias; and

- investigated the rationale behind significant or unusual transactions.

In response to the risk of irregularities and non-compliance with laws and regulations, we design procedures which included, but were not limited to:

- agreeing financial statement disclosures to underlying supporting documentation;

- reading the minutes of meetings of those charged with governance; and

- enquiring of management as to actual and potential litigation and claims.

There are inherent limitations in our audit procedures described above. The more removed that laws and regulations are from financial transactions, the less likely it is that we would become aware of non-compliance. Auditing standards also limit the audit procedures required to identify non-compliance with laws and regulations to enquiry of the directors and other management and the inspection of regulatory and legal correspondence, if any.

Material misstatements that arise due to fraud can be harder to detect than those that arise from error as they may involve deliberate concealment or collusion.

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.

Jason Pyke FCA (Senior Statutory Auditor)

for and on behalf of Vale & West Accountancy Services Limited

Chartered Accountants

Statutory Auditors

Victoria House

26 Queen Victoria Street

Reading

Berkshire

RG1 1TG

21 July 2022

TURNOVER

3

16,095,699

17,161,512

Cost of sales

14,823,402

16,000,037

GROSS PROFIT

1,272,297

1,161,475

Administrative expenses

1,364,945

1,330,343

(92,648

)

(168,868

)

Other operating income

4

100,545

210,074

OPERATING PROFIT and

PROFIT BEFORE TAXATION

7,897

41,206

Tax on profit

7

(103,793

)

(101,385

)

PROFIT FOR THE FINANCIAL YEAR

111,690

142,591

OTHER COMPREHENSIVE INCOME

-

-

TOTAL COMPREHENSIVE INCOME FOR THE YEAR

111,690

142,591

FIXED ASSETS

Tangible assets

8

122,394

111,620

CURRENT ASSETS

Debtors: amounts falling due within one year

9

2,864,821

2,633,521

Debtors: amounts falling due after more than one year

9

90,456

234,090

Cash at bank and in hand

1,849,202

1,812,605

4,804,479

4,680,216

CREDITORS

Amounts falling due within one year

10

4,399,588

4,376,241

NET CURRENT ASSETS

404,891

303,975

TOTAL ASSETS LESS CURRENT LIABILITIES

527,285

415,595

CAPITAL AND RESERVES

Called up share capital

12

10,000

10,000

Retained earnings

13

517,285

405,595

SHAREHOLDERS' FUNDS

527,285

415,595

The financial statements were approved by the Board of Directors and authorised for issue on 19 July 2022 and were signed on its behalf by:

E W J Barrett - Director

Called up

share

Retained

Total

capital

earnings

equity

£

£

£

Balance at 1 January 2020

10,000

263,004

273,004

Changes in equity

Total comprehensive income

-

142,591

142,591

Balance at 31 December 2020

10,000

405,595

415,595

Changes in equity

Total comprehensive income

-

111,690

111,690

Balance at 31 December 2021

10,000

517,285

527,285

1.	STATUTORY INFORMATION

Francis Construction Limited is a private company, limited by shares, registered in England and Wales. The registered office and principal place of business is Armour House, Colthrop Lane, Thatcham, Berkshire, RG19 4PD.

The principal activity of the company is that of building contractors within the United Kingdom.

The company is a subsidiary undertaking of Colthrop Holdings Limited, a limited company registered in England and Wales, and is included in the consolidated financial statements of Colthrop Holdings Limited which are publicly available from the registered office.

The financial statements are presented in Pound Sterling (£), which is also the functional currency of the company.

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.

Reduced disclosure exemptions

The company has taken advantage of the following disclosure exemptions in preparing these financial statements, as permitted by FRS 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland":

•

the requirements of Section 7 Statement of Cash Flows;

•

the requirements of paragraphs 11.42, 11.44, 11.45, 11.47, 11.48(a)(iii), 11.48(a)(iv), 11.48(b) and 11.48(c);

•

the requirement of paragraph 33.7.

The company is entitled to take advantage of the above disclosure exemptions on the basis that the company is a qualifying entity and equivalent disclosures are included in the consolidated financial statements of its parent undertaking, Colthrop Holdings Limited.

Related party exemption

The company has taken advantage of exemption available within FRS 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland", not to disclose related party transactions with wholly owned subsidiaries within the group.

The company discloses transactions with related parties which are not wholly owned within the same group. Where appropriate, transactions of a similar nature are aggregated unless separate disclosure is necessary to understand the effect of the transactions on the financial statements.

Significant judgements and estimates

In the application of the company’s accounting policies management is required to make judgements, estimates and assumptions about the carrying values of assets and liabilities that are not readily apparent from other sources. The estimates and underlying 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 if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.

The key sources of estimation uncertainty that have a significant effect on the amounts recognised in the financial statements are considered to be in respect of revenue recognition and amounts recoverable on construction contracts.

Where the outcome of a contract in progress can be measured with reasonable certainty, the company recognises both income and costs by reference to the percentage of completion of the contract. Construction contract progress is periodically determined by independent qualified building surveyors and the company recognises revenue evenly over the duration of the contract in accordance with the stage of completion of the contract.

Revenue recognition

Revenue (described as turnover) is measured at the fair value of the consideration received or receivable in respect of construction contracts. Turnover is reduced for customer rebates and other similar allowances.

Revenue from the sale of services is recognised gradually through the performance of a construction contract where:

(i) the company has transferred to the buyer the significant risks and rewards of the asset under construction;

(ii) the company retains no continuing involvement or control over the asset on completion of works;

(iii) the amount of revenue and associated costs can be measured reliably; and

(iv) it is probable that the economic benefits associated with the contract will flow to the company.

Tangible fixed assets

Tangible fixed assets are stated at cost less accumulated depreciation and accumulated impairment losses. Depreciation on tangible fixed assets is charged to profit or loss so as to write off their value, over their estimated useful lives, these are as follows for each class of fixed assets:

Plant and Machinery - 25% on reducing balance

Motor Vehicles - 25% on reducing balance

Computer equipment - 33% on cost

Taxation

Tax on profit represents the sum of the tax currently payable and deferred tax.

The tax currently payable is based on taxable profit for the year. Taxable profit differs from the profit as reported in the profit and loss account because of items of income or expense that are taxable or deductible in other years and 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 end of the year.

Deferred tax is recognised on timing differences between the carrying amounts of assets and liabilities and the corresponding tax bases used to compute taxable profit. Deferred tax liabilities are generally recognised for all taxable timing differences. Deferred tax assets are generally recognised for temporary differences to the extent that it is probable that taxable profits will be available to utilise the timing difference.

Deferred tax liabilities and assets are measured at tax rates that are expected to apply in the period the liability is settled or the asset realised. The measurement of deferred tax liabilities and assets reflects the tax consequences in which the company expects to recover or settle the underlying amount of its assets and liabilities.

Leased assets

Leases that do not transfer all the risks and rewards of ownership are classified as operating leases. Payments under operating leases are charged to the profit and loss account on a straight-line basis over the period of the lease.

Any incentives received to enter into an operating lease are credited to the profit and loss account, to reduce the lease expense, on a straight-line basis over the period of the lease.

Employee pension benefits

The obligation for contributions to defined contribution schemes are recognised as an expense as incurred. The assets of the scheme are held separately from those of the company in an independent administered fund.

Financial assets and liabilities

Trade and other debtors are initially recognised at transaction price and subsequently remeasured to amortised cost using the effective interest method, less impairment losses for bad and doubtful debts except where the effect of discounting would be immaterial. In such cases, the receivables are stated at cost less impairment losses for bad and doubtful debts.

Cash and cash equivalents comprise cash at bank and on hand, demand deposits with banks, other short-term highly liquid investments with original maturities of three months or less and bank overdrafts. Bank overdrafts, when applicable, are shown within current liabilities.

Trade and other creditors are initially recognised at transaction price and subsequently remeasured to amortised cost using the effective interest method unless the effect of discounting would be immaterial, in which case they are stated at cost.

Going concern

After reviewing the company's forecasts and projections, the directors have a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future. The company therefore continues to adopt the going concern basis in preparing its financial statements.

3.

TURNOVER

The turnover of the company for the year has been derived from its principal activity wholly undertaken in the UK.

4.	OTHER OPERATING INCOME

31.12.21

31.12.20

£

£

Sundry receipts

22,246

18,892

Management charges receivable

39,089

40,885

Government grants

39,210

150,297

100,545

210,074

5.	EMPLOYEES AND DIRECTORS

31.12.21

31.12.20

£

£

Wages and salaries

2,228,058

2,226,540

Social security costs

227,796

246,695

Other pension costs

59,478

77,860

2,515,332

2,551,095

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

31.12.21

31.12.20

Office and management

11

11

Supervisory and operative

32

37

43

48

31.12.21

31.12.20

£

£

Directors' remuneration

174,325

253,984

Directors' pension contributions to money purchase schemes

2,800

21,629

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

Money purchase schemes

2

2

6.	OPERATING PROFIT

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

31.12.21

31.12.20

£

£

Other operating leases

87,611

82,723

Depreciation - owned assets

43,230

29,311

Profit on disposal of fixed assets

(1,061

)

(5,541

)

Auditors' remuneration

20,500

18,500

Auditors' remuneration for non audit work

9,126

13,614

Operating lease for land and buildings

80,460

80,460

Bad debts and other losses

-

(6,536

)

7.

TAXATION

Analysis of the tax credit

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

31.12.21

31.12.20

£

£

Current tax:

R&D tax credits

(105,988

)

(113,965

)

Deferred tax

2,195

12,580

Tax on profit

(103,793

)

(101,385

)

UK corporation tax has been charged at 19% (2020 - 19%).

Reconciliation of total tax credit 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:

31.12.21

31.12.20

£

£

Profit before tax

7,897

41,206

Profit multiplied by the standard rate of corporation tax in the UK of 19% (2020 - 19%)

1,500

7,829

Effects of:

Expenses not deductible for tax purposes

1,038

1,649

Capital allowances in excess of depreciation

(2,195

)

(12,580

)

Enhanced deduction for R&D expenditure

(106,331

)

(110,863

)

Deferred tax movements

2,195

12,580

Total tax credit

(103,793

)

(101,385

)

Factors that may affect future tax charges

The company has recognised a deferred tax asset of £144,232 (2020 : £146,427) in respect of trade losses and other timing differences arising as at the balance sheet date. The directors anticipate the deferred tax asset will reverse in the next two financial periods as losses are relieved against trade profits.

Deferred Taxation

Trade

Accelerated

Total

losses

capital

allowances

£

£

£

At 1 January 2021

165,173

(18,746

)

146,427

Origination and reversal of timing differences

(2,195

)

(2,195

)

At 31 December 2021

165,173

(20,941

)

144,232

Deferred tax has been charged at 19% (2020 - 19%)

8.	TANGIBLE FIXED ASSETS

Plant and

Motor

Computer

machinery

vehicles

equipment

Totals

£

£

£

£

COST

At 1 January 2021

221,486

133,025

89,516

444,027

Additions

13,511

36,164

5,150

54,825

Disposals

-

(13,918

)

-

(13,918

)

At 31 December 2021

234,997

155,271

94,666

484,934

DEPRECIATION

At 1 January 2021

203,954

63,134

65,319

332,407

Charge for year

6,353

23,286

13,591

43,230

Eliminated on disposal

-

(13,097

)

-

(13,097

)

At 31 December 2021

210,307

73,323

78,910

362,540

NET BOOK VALUE

At 31 December 2021

24,690

81,948

15,756

122,394

At 31 December 2020

17,532

69,891

24,197

111,620

9.

DEBTORS

31.12.21

31.12.20

£

£

Amounts falling due within one year:

Trade debtors

1,488,599

1,095,691

Amounts owed by group undertakings

114,658

115,061

Amounts recoverable on contract

896,835

903,730

Other debtors

220,497

372,612

Deferred tax asset

144,232

146,427

2,864,821

2,633,521

Amounts falling due after more than one year:

Trade debtors

90,456

234,090

Aggregate amounts

2,955,277

2,867,611

10.

CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR

31.12.21

31.12.20

£

£

Trade creditors

1,798,262

2,593,196

Amounts owed to group undertakings

93,874

45,716

Social security and other taxes

824,903

408,340

Other creditors

247,766

352,923

Accruals and deferred income

43,204

70,103

Accrued contract costs

1,391,579

905,963

4,399,588

4,376,241

11.	LEASING AGREEMENTS

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

31.12.21

31.12.20

£

£

Within one year

58,140

54,425

Between one and five years

49,810

28,976

107,950

83,401