WALKER_CONSTRUCTION_(U.K. - Accounts

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

This year, Walker Construction (UK) Limited celebrates 56 years of successful business, during which time we have made a significant contribution to the built environment across the South East and more recently into the Midlands.

Walker Construction (UK) Limited is a multi-disciplined construction company delivering building, civil and rail projects across a diverse range of sectors including commercial, industrial, education, leisure, heritage, retail, healthcare, government departments, local authorities, train operating companies and Network Rail.

We understand our clients' needs and expectations on every project we deliver, whilst using our experience and professional design and build services with technical innovation and sustainable construction solutions. Environmental considerations are rightly being given more credence nowadays, which is something that the directors are pleased about. Having been an ISO14001 accredited company for many years, we are acutely aware of the environmental impact of the construction industry and we use our best endeavours to ensure that this impact is kept to a minimum and where possible we look to enhance the credentials of existing infrastructure.

We aim to be the preferred construction contractor of choice for our clients assured by the delivery of excellence, quality of service and by carefully selecting new opportunities with clients aligned to our core beliefs and objectives.

Following the business upturn in the year ending March 2020, the directors were forecasting 2021 to be a significant year of growth for the company as the order book was looking healthy and margins were on the increase. Initial forecasts were expectant of growth in turnover to over £59m and a consistent increase in both gross and net profits in line with this. However, just as the financial year began COVID started to bite and within two weeks over 80% of the company’s sites were shut down. By the end of April 2020 sites started opening back up again but the impact of having to manage COVID risk was felt largely throughout the year and the uncertainty within the industry caused significant delays in contract awards and programmes. This ultimately resulted in turnover for the year reducing by 18% to £46m from £56m in 2020. The additional costs of managing the COVID risk and the reduction in productive output as a result caused a reduction in gross profit ratio from 10% in 2020 to 7.3%. Towards the end of the year, we started to see a return to profitable working but it was not sufficient to bring the year back into profit.

The construction industry has largely adapted now to working with COVID and, despite current material shortages, the market remains very competitive and the directors continue to seek new opportunities to build on existing expertise within the company.

At 31 March 2021, borrowings by the company as a percentage of total assets increased slightly to 5.5% (2020: 5.3%), and at 31 March 2021, the company's net assets were £2,919,087 (2020: £2,800,391).

With a strong balance sheet, a varied range of activities and clients and a loyal workforce, the directors are confident that the company is in a strong position to achieve its vision of becoming the preferred construction contractor of choice in the diverse market in which it operates.

The continued success of the company depends on the ability to management to identify and manage risks which are inherent in the type of business in which we are engaged.

The company has identified the following specific risks all of which have the potential to impact on its success.

Financial risk

The principal financial risks are associated with the company's ability to properly estimate the costs of performing the contracts in which we engage, the risk of properly incurring and controlling those costs, the ability to recover costs under the payment terms of all contracts, the financial standing of our clients, subcontractors and suppliers in terms of their ability to discharge their obligations to us.

Credit risk

The company carries out credit checks of all new clients before entering into contracts and continuously reviews the credit risks and performance of existing clients.

Insurance

The company holds credit insurance for contracts undertaken in excess of £10,000.

Contractual risk

The company is exposed to a variety of contractual risks according to the type of contract undertaken. Such risks include adverse weather, price inflation of material costs, unknown ground conditions and completion of the contract within the tender price and to the clients’ requirements.

Health and safety

The company recognises the importance of the health and safety of all those employed in its offices and sites as well as the general public. In recent years the company has won various International Safety Awards with merit from the British Safety Council in recognition of its commitment to keeping its workers and workplaces healthy and safe, and in 2019 won the prestigious Princess Royal Training Award. The advent of COVID-19 meant that many award ceremonies did not take place during 2020, however the company still managed to win for People Development at Constructing Excellence SECBE Awards.

The company measures its financial performance against a selected group of competitor companies.

The Key Performance Indicators used include the Current Ratio, Quick Assets Ratio (Acid Test), Gross Profit Ratio, Net Profit Margin, Gearing and Net Worth.

For the year ended 31 March 2021, the Current Ratio increased slightly to 1.16 (2020: 1.15) but the Gross Profit Ratio decreased to 7.3% (2020: 10%). However, the Net Profit Margin took a swing to -0.72% (2020: 0.75%).

At 31 March 2021, the net current assets of the company were £2,084,227 (2020: £2,075,485). Shareholders’ Funds had increased by 4.2% to £2,919,087 (2020: £2,800,391) and the debt ratio had increased slightly to 5.5% compared to 5.3% for the previous year.

Non-Financial: The company also measure, its performance using non-financial indicators. These non-financial indicators measured include:

Performance: New orders won on a monthly and cumulative basis.

Health and Safety: Accident Incidence Rate and Accident Frequency Rate.

Environment: Environmental Incidents, Co2 emissions and reduction of Carbon Footprint, Waste Production, Office Water Usage and Recycled Aggregate Usage.

Client Satisfaction: Quality of Work, Completion on Time, Teamwork, Savings and Innovation.

Health and safety

The company operates an Integrated Management System which incorporates safety, quality and environmental policies. This System is accredited to ISO 9001, ISO 14001 and OHSAS 18001 standards (carried out by National Quality Assurance Limited - UKAS accredited). Policy review is annual or triggered by changes of legislation affecting the nature of our business, and/or where accidents or occurrences indicate a procedural insufficiency.

We are members of the British Safety Council. We subscribe to Croners and Envirowise and are registered with CITB. We are able to obtain advice and assistance from these sources and also from the Rail Safety Standards Board as part of our Network Rail Principal Contractors Licence.

Quality assurance

We are continually evolving our policies and procedures ahead of expectations and legal requirements. Together with our training commitment, we are confident that the quality of our projects, staff, systems and procedures will improve, one step ahead of our competitors.

The reputation of Walker Construction (UK) Limited is built on the trust and confidence of those with whom we deal. The company aims to maintain high ethical standards in the conduct of its business and will not tolerate any behaviour or practice which compromises its integrity.

The company is Quality Assured to BS ISO 9001, Environmental Accreditation ISO 14001 and Safety Accreditation OHSAS 18001, further details regarding monitoring and review are shown in the Health & Safety section above.

Walker Construction (UK) Limited has an accepted Principal Contractor Licence sponsored through Network Rail and is an RISQS approved contractor. The company is committed to collaborative business relationship management within the construction industry through formal partnering relationships, both internal and external, achieved by transparent consultation, joint collaborations and a considerate approach to all aspects of management.

Sub-contractors require Construction line membership to qualify for our database.

Sub-contractors require RISQS approval, formerly known as Achilles Link-up, to qualify for our Rail database.

Corporate social responsibility

We strive to maintain a productive and open dialogue with all parties who may have an interest in our activities including shareholders, customers, suppliers and employees. We have an established investor relations programme, work closely with our customers, monitor supplier performance end actively encourage feedback from our employees.

We are an equal opportunities employer and aim to recruit locally at all times. All employees are provided with basic training regarding Health & Safety and Environmental Awareness, which is refreshed and enhanced on a regular basis. Our training policy ensures that all employees receive the correct level of skills training required for the roles, tasks and responsibilities undertaken.

Our environmental policy outlines our effort to use natural local resources where ever possible and, where at all possible, recycle and reuse materials and incorporate into projects, in order to cut down on transport related carbon emissions. We hold a waste carrier’s licence and, via our waste management policy, ensure all waste is properly segregated on site and, where unable to be recycled, is disposed of correctly.

It is our desire to work collaboratively with stakeholders to ensure we fully deliver on time, within budget, safely, and meeting if not exceeding client and end user requirements.

We support local communities via sponsorship, mentoring and visiting schools to provide an insight into the construction industry, as a regular adopter of the Considerate Constructors Scheme.

We facilitate apprenticeships and run graduate training schemes to benefit individuals and enhance the long-term potential for communities we work with, offering professional progression and assisting local development of growth and prosperity.

We expect the same ethos to be adopted via our subcontractors and suppliers alike.

Walker Construction Trust

The Walker Construction Trust, which was formed in 2018, funds individuals, not-for-profit organisations and registered charities with causes close to the hearts of our employees and the communities in which we operate.

The aim of the Trust is to run a sustainable foundation committed to providing support and assistance to individuals and causes within local communities where Walker Construction (UK) Limited operates.

Since inception to the date of these accounts the Trust has raised over £50,000, mainly due to the voluntary efforts of employees, and made grants in excess of £41,000 to numerous worthy causes.

On behalf of the board

The directors present their annual report and financial statements for the year ended 31 March 2021.

The principal activity of the company continued to be that of civil engineering and rail contractors.

The directors who held office during the year and up to the date of signature of the financial statements were as follows:

The results for the year are set out on page 10.

No ordinary dividends were paid. The directors do not recommend payment of a final dividend.

The company has chosen to set out information in respect of principal risks and uncertainties, financial instruments and future developments in the Strategic Report.

Beavis Morgan Audit Limited were appointed as auditor to the company and in accordance with section 485 of the Companies Act 2006, a resolution proposing that they be re-appointed will be put at a General Meeting.

The directors are responsible for preparing the annual 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 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 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 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.

So far as each person who was a director at the date of approving this report is aware, there is no relevant audit information of which the company’s auditor is unaware. Additionally, the directors individually have taken all the necessary steps that they ought to have taken as directors in order to make themselves aware of all relevant audit information and to establish that the company’s auditor is aware of that information.

We have audited the financial statements of Walker Construction (U.K.) Limited (the 'company') for the year ended 31 March 2021 which comprise the profit and loss account, the statement of comprehensive income, the balance sheet, the statement of changes in equity, the statement of cash flows and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including FRS 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 March 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 Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

The impact of economic uncertainties on our audit

Our audit of the financial statements requires us to obtain an understanding of all relevant uncertainties, including those arising as a consequence of the effects of uncertainties that relate to the economy as a whole such as COVID-19 and Brexit. All audits assess and challenge the reasonableness of estimates made by the directors and the related disclosures and the appropriateness of the going concern basis of preparation of the financial statements. All of these depend on assessments of the future economic environment and the company’s future prospects and performance. COVID-19 and Brexit are amongst the most significant economic events currently faced by the UK, and at the date of this report their effects are subject to unprecedented levels of uncertainty, with the full range of possible outcomes and their impacts unknown. We considered such matters in response to these uncertainties when assessing the company’s future prospects and performance. However, no audit should be expected to predict the unknowable factors or all possible future implications for a company associated with these particular events.

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 other information comprises the information included in the annual report other than the financial statements and our auditor's report thereon. The directors are responsible for the other information contained within the annual report. 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. 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 course of 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 our audit:

• the information given in the strategic report and the directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and

• the strategic report and the directors' report have been prepared in accordance with applicable legal requirements.

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 and the directors' report.

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 remuneration specified by law are not made; or

•     we have not received all the information and explanations we require for our audit.

As explained more fully in the directors' responsibilities statement, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the directors are responsible for assessing the company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.

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

Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below.

Discussions with and enquiries of management and those charged with governance were held with a view to identifying those laws and regulations that could be expected to have a material impact on the financial statements. During the engagement team briefing, the outcomes of these discussions and enquiries were shared with the team, as well as consideration as to where and how fraud may occur in the entity.

The following laws and regulations were identified as being of significance to the entity:

• Those laws and regulations considered to have a direct effect on the financial statements include UK financial reporting standards, company law, tax and pensions legislation, and distributable profits legislation.

• Those laws and regulations for which non-compliance may be fundamental to the operating aspects of the business and therefore may have a material effect on the financial statements include building and planning regulations, local council byelaws, employment law and health and safety legislation.

Audit procedures undertaken in response to the potential risks relating to irregularities (which include fraud and non-compliance with laws and regulations) comprised of: inquiries of management and those charged with governance as to whether the entity complies with such laws and regulations; enquiries with the same concerning any actual or potential litigation or claims; inspection of relevant legal correspondence; review of board minutes; testing the appropriateness of journal entries; and the performance of analytical review to identify unexpected movements in account balances which may be indicative of fraud.

No instances of material non-compliance were identified. However, the likelihood of detecting irregularities, including fraud, is limited by the inherent difficulty in detecting irregularities, the effectiveness of the entity’s controls, and the nature, timing and extent of the audit procedures performed. Irregularities that result from fraud might be inherently more difficult to detect than irregularities that result from error. As explained above, there is an unavoidable risk that material misstatements may not be detected, even though the audit has been planned and performed in accordance with ISAs (UK).

A further description of our responsibilities is available on the Financial Reporting Council’s website at: https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.

Use of our report

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

The profit and loss account has been prepared on the basis that all operations are continuing operations.

Walker Construction (U.K.) Limited is a private company limited by shares incorporated in England and Wales. The registered office is Inca House, Trinity Road, Eureka Science Park, Ashford, Kent, TN25 4AB.

These financial statements have been prepared under the historical cost convention and in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006.

The financial statements are prepared in sterling, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £.

Atruet the time of approving the financial statements, the directors have a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future. Thus the directors continue to adopt the going concern basis of accounting in preparing the financial statements.

Turnover represents the invoiced value of goods and services supplied during the year, excluding Value Added Tax and trade discounts, together with the value of contracting work executed during the year as measured by quantity surveyors in accordance with the stage of completion.

Research expenditure is written off against profits in the year in which it is incurred. Development expenditure is written off against profits unless or until it is demonstrated that future probable economic benefits will flow to the company. The total value of research and development expenditure written off against profits during the year is estimated to be £497,297 (2020: £1,219,993).

Any corporation tax credit in respect of the company's R&D expenditure is only recognised in the financial statements once there is reasonable assurance that the amount will be received from HM Revenue & Customs.

Tangible fixed assets are initially measured at cost and subsequently measured at cost or valuation, net of depreciation and any impairment losses.

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:

The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is credited or charged to profit or loss.

At each reporting period end date, the company reviews the carrying amounts of its tangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the company estimates the recoverable amount of the cash-generating unit to which the asset belongs.

Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.

If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.

Recognised impairment losses are reversed if, and only if, the reasons for the impairment loss have ceased to apply. Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.

Where the outcome of a construction contract can be estimated reliably, revenue and costs are recognised by reference to the stage of completion of the contract activity at the reporting end date. Variations in contract work, claims and incentive payments are included to the extent that the amount can be measured reliably and its receipt is considered probable.

When it is probable that total contract costs will exceed total contract turnover, the expected loss is recognised as an expense immediately.

Where the outcome of a construction contract cannot be estimated reliably, contract revenue is recognised to the extent of contract costs incurred where it is probable that they will be recoverable. Contract costs are recognised as expenses in the period in which they are incurred. When costs incurred in securing a contract are recognised as an expense in the period in which they are incurred, they are not included in contract costs if the contract is obtained in a subsequent period.

The “percentage of completion method” is used to determine the appropriate amount to recognise in a given period. The stage of completion is measured by the proportion of contract costs incurred for work performed to date compared to the estimated total contract costs. Costs incurred in the year in connection with future activity on a contract are excluded from contract costs in determining the stage of completion. These costs are presented as stocks, prepayments or other assets depending on their nature, and provided it is probable they will be recovered.

Cash and cash equivalents are basic financial assets and include cash in hand and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities.

The company has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ of FRS 102 to all of its financial instruments.

Financial instruments are recognised in the company's balance sheet when the company becomes party to the contractual provisions of the instrument.

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 settle the liability simultaneously.

Basic financial assets, which include debtors and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised.

Financial assets, other than those held at fair value through profit and loss, are assessed for indicators of impairment at each reporting end date.

Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected. If an asset is impaired, the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset’s original effective interest rate. The impairment loss is recognised in profit or loss.

If there is a decrease in the impairment loss arising from an event occurring after the impairment was recognised, the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been, had the impairment not previously been recognised. The impairment reversal is recognised in profit or loss.

Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the company transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.

Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the company after deducting all of its liabilities.

Basic financial liabilities, including creditors, are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future payments discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.

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

Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Amounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.

Financial liabilities are derecognised when the company’s contractual obligations expire or are discharged or cancelled.

Equity instruments issued by the company are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the company.

The tax expense 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 net profit as reported in the profit and loss account 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.

The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the profit and loss account.

The costs of short-term employee benefits are recognised as a liability and an expense. The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received.

Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due. The assets of the schemes are held separately from those of the company in independently administered funds.

Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessees. All other leases are classified as operating leases.

Assets held under finance leases are recognised as assets at the lower of the assets fair value at the date of inception and the present value of the minimum lease payments. The related liability is included in the balance sheet as a finance lease obligation. Lease payments are treated as consisting of capital and interest elements. The interest is charged to profit or loss so as to produce a constant periodic rate of interest on the remaining balance of the liability.

Rentals payable under operating leases, including any lease incentives received, are charged to profit or loss on a straight line basis over the term of the relevant lease.

Government grants are recognised at the fair value of the asset received or receivable when there is reasonable assurance that the grant conditions will be met and the grants will be received. Where a grant does not specify performance conditions it is recognised in income when the proceeds are received or receivable.

In the application of the company’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.

The following judgements, estimates and assumptions have the most significant effect on amounts recognised in the financial statements.

A significant portion of the company's activities are undertaken through long term construction contracts. The directors are required to make judgements and estimates regarding the stage of completion for each individual project and the appropriate revenue and costs to recognise in the financial statements. These estimates may depend upon the outcome of future events and may need to be revised as circumstances change.

The average monthly number of persons (including directors) employed by the company during the year was:

Their aggregate remuneration comprised:

The number of directors for whom retirement benefits are accruing under defined contribution schemes amounted to 5 (2020: 6).

Investment income includes the following:

The actual (credit)/charge for the year can be reconciled to the expected (credit)/charge for the year based on the profit or loss and the standard rate of tax as follows:

The net carrying value of tangible fixed assets includes the following in respect of assets held under finance leases or hire purchase contracts.

The company's investment at the balance sheet date in the share capital of companies include the following:

Invvu Limited

Registered office: The Barn,Otterpool Manor Farm, Otterpool Lane, Sellindge, Ashford, Kent TN25 6DB

Nature of Business : Dormant company

%

Class of share:                    Holding

Ordinary shares of £1 each            100.00

The company has remained dormant since its incorporation on 18 September 2017.

Finance lease payments represent rentals payable by the company for certain items of plant and machinery. Leases include purchase options at the end of the lease period, and no restrictions are placed on the use of the assets. The average lease term is 3 years. All leases are on a fixed repayment basis and no arrangements have been entered into for contingent rental payments.

The following are the major deferred tax liabilities and assets recognised by the company and movements thereon:

The deferred tax balance is recognised on the difference between the net book value of the company's tangible fixed assets and the written down value of those assets for corporation tax purposes.

The deferred tax asset is regarded as recoverable to the extent that, on the basis of all available evidence, it can be regarded as more likely than not that there will be suitable taxable profits from which the future reversal of the underlying timing differences can be deducted.

The company operates a defined contribution pension scheme for all qualifying employees. The assets of the scheme are held separately from those of the company in an independently administered fund.

At 31 March 2021, there were contingent liabilities amounting to £1,722,160 (2020: £2,016,198) in respect of performance bonds given by the company's insurers with recourse to Walker Construction (U.K.) Limited.

At the reporting end date the company had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows: