JOHN_MCASLAN_&_PARTNERS_L - Accounts

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

John McAslan & Partners group ("JMP") is a solution driven international architectural practice, which prides itself on providing innovative solutions to complex issues globally which result in buildings that improve people's lives and surroundings.

A review of the year’s activities is included in the Chairman’s Statement on page 3.

Key Performance Indicators (KPI)

The practice measures its performance against numerous financial and non-financial key performance indicators. The main areas that we monitor are:

Turnover

EBITDA

Cash balances

Secured future income

The practice continues to operate a low-risk financial strategy taking measured risks into new markets; we also sublet under-utilised space within our premises to reduce net rental costs. The practice maintains a robust business continuity plan which has enabled us to react seamlessly throughout the global pandemic.

Trade debtors and creditors are strongly managed in respect of credit and cash flow risk. Full due diligence is undertaken on all new clients, along with rigorous sanctions and world compliance checks.

Future Developments

The future developments of the practice are outlined in our Chairman’s Statement on page 3.

Other matters

JMP’s corporate social responsibility policy is firmly embedded in everything we do, and over recent years has opened numerous possibilities for staff involvement through community engagement, resulting in JMP staff members contributing to this endeavour in a proactive way across numerous initiatives.

During 2020/21 we have continued to build on our R&D work in respect of transportable homeless accommodation with a series of research projects in London to see how we might create opportunities to build emergency temporary accommodation (a tenure of accommodation that does not currently have standards or legislation) in collaboration with charities, developers, architects, cost consultants, people in the built environment sector / generating research, articles and think pieces and talks.

We have continued to undertake R&D and focused attention on affordable care homes. The care home initiative started April 2020 at beginning of lockdown 1 after the alarming reports of the number of deaths in care homes in Scotland. JMP launched a design ideas competition to invoke a design ideas response. We have now gained support and a small amount of funding which will enable us to develop our research into an affordable care home module to be aimed at the local authority market in rural areas of Scotland. The model is currently being developed with the University of Edinburgh’s Medical School and care experts from NHS Lothian. The first stage of the project aims to design a model care home close to the Medical School and Infirmary, which can be used as a test bed to undertake research into what make a future care home.

In 2021 JMP establish the Environmental Ethics Group with the objective of reviewing JMP design and operational sustainability policies, objectives, and targets. The core purpose of the group is to bring forward JMP sustainability commitments to respond to the current global climate and biodiversity emergency in alignment with the United Nations Race to Zero campaign.

Early this year JMP made the SME Climate Commitment to help measure, act and report on our carbon emissions. Our commitment includes to halve the emissions by 2030, achieve net zero by 2050, and report on our progress yearly.

We are now in the process of reviewing our design and operational emissions with the purpose of delineating a more robust sustainability action plan to be implemented in the coming months.

On behalf of the board

The principal activity of the company continues to be that of a successful, international architectural practice delivering architectural, master planning, landscape and heritage consultancy services across multiple sectors. Expertise ranges from large scale infrastructure projects through to complex and technically challenging cultural and educational projects; many requiring adaptive re-use of existing buildings.

The results for the year are set out on page 9.

Ordinary dividends were paid amounting to £1,000,000. The directors do not recommend payment of a final dividend.

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

In accordance with the company's articles, a resolution proposing that Beavis Morgan Audit Limited be reappointed as auditor of the company will be put at a General Meeting.

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.

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;

•     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.

We have audited the financial statements of John McAslan & Partners Limited (the 'company') for the year ended 31 October 2021 which comprise the statement of income and retained earnings, the balance sheet, 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 October 2021 and of its loss for the year then ended;

•     have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and

•     have been prepared in accordance with the requirements of the Companies Act 2006.

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Conclusions relating to going concern

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.

• 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 environmental regulations 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.

John McAslan & Partners Limited is a company limited by shares incorporated in England and Wales. The registered office is 82 St John Street, London, EC1M 4JN.

The principal place of business is 7-9 William Road, London, NW1 3ER.

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

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

The financial statements have been prepared under the historical cost convention.

The company has taken advantage of the exemption under section 400 of the Companies Act 2006 not to prepare consolidated accounts. The financial statements present information about the company as an individual entity and not about its group.

John McAslan & Partners Limited is a wholly owned subsidiary of Caledonia Limited and the results of John McAslan & Partners Limited are included in the consolidated financial statements of Caledonia Limited which are available from 7-9 William Road, London, NW1 3ER.

As at the balance sheet date, the company had net assets of £1.78m, including £0.3m of cash at bank, which the directors believe will enable the company to meet its financial obligations and working capital requirements for the ensuing accounting period. Moreover, the directors expect the company to continue benefitting from the restructuring of the cost base in the foreseeable future.true

Uncertain trading difficulties in overseas operations have increased exposure to certain risks in relation to ongoing and future projects. The Directors continue to monitor and track turnover predications carefully and have taken action where necessary to limit risk exposure. The directors are satisfied that the company is in a sound position to move forward through 2022 and into 2023.

Accordingly, the directors consider it appropriate to prepare the accounts on a going concern basis.

Turnover represents amounts receivable for architectural services net of VAT. Income is recognised when revenue of a project can be estimated reliably by reference to the stage of completion of the transaction at the end of the reporting date. This exercise is performed on all ongoing projects at the end of the reporting date.

In the instance of a loss making project whereby contract costs exceeds project revenue. The expected loss is recognised as an expense immediately.

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

Depreciation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:

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.

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

The company has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ 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, cash at bank and in hand, and amounts advanced to fellow group members are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised.

Other financial assets, including investments in equity instruments which are not subsidiaries, associates or joint ventures, are initially measured at fair value, which is normally the transaction price. Such assets are subsequently carried at fair value and the changes in fair value are recognised in profit or loss, except that investments in equity instruments that are not publicly traded and whose fair values cannot be measured reliably are measured at cost less impairment.

Financial assets are 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, bank loans, obligations under finance leases, and loans from fellow group companies, 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.

Provisions are recognised when the company has a legal or constructive present obligation as a result of a past event, it is probable that the company will be required to settle that obligation and a reliable estimate can be made of the amount of the obligation.

The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the reporting end date, taking into account the risks and uncertainties surrounding the obligation. Where the effect of the time value of money is material, the amount expected to be required to settle the obligation is recognised at present value. When a provision is measured at present value, the unwinding of the discount is recognised as a finance cost in profit or loss in the period in which it arises.

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.

Termination benefits are recognised immediately as an expense when the company is demonstrably committed to terminate the employment of an employee or to provide termination benefits.

Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.

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.

Rental income from operating leases is recognised on a straight line basis over the term of the relevant lease. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised on a straight line basis over the lease term.

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

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.

A grant that specifies performance conditions is recognised in income when the performance conditions are met. Where a grant does not specify performance conditions it is recognised in income when the proceeds are received or receivable. A grant received before the recognition criteria are satisfied is recognised as a liability.

Monetary assets and liabilities denominated in foreign currencies are translated into sterling at the rates of exchange ruling at the balance sheet date. Transactions in foreign currencies are recorded at the rate ruling at the date of the transaction. All differences are taken to the profit and loss account.

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. These would be in respect of depreciation, provision for bad debts, appraisal of work in progress, accruals of subcontracts and provisions.

An analysis of the company's turnover is as follows:

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

Their aggregate remuneration comprised:

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.

Included within prepayments and accrued income is £177,073 (2020: £181,185) for accrued income as part of accounting for long term contracts.

After the reporting period, certain trade debtors are unlikely to be recovered due to sanctions imposed on Russia from the ongoing war in Ukraine. The total exposure to the company is £41,715.

Included within deferred income is £69,959 (2020: £92,478) relating deferred income as part of accounting for long term contracts and £42,640 (2020: £27,932) for provision for losses on contracts as part of accounting for long term contracts.

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 three years. All leases are on a fixed repayment basis and no arrangements have been entered into for contingent rental payments.

The bank loan is a bounce back loan where the lender is backed by a government guarantee. The amount is repayable by monthly instalments within 6 years and has a 2.5% interest rate.

The amounts above relate to the excess of professional indemnity insurance payable for probable claims and estimated costs to reinstate the current place of business to the original state at the end of the tenancy.

Deferred tax assets and liabilities are offset where the company has a legally enforceable right to do so. The following is the analysis of the deferred tax balances (after offset) for financial reporting purposes:

The deferred tax rate applied is 25% (2020: 19%). There is no net movement in deferred tax after the reduction of accelerated capital allowances liabilities and the increase in deferred tax rate.

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.

The parent company's bankers hold certain guarantees and debentures to secure the banking facilities of the group. This is in regards of an interest rate swap agreement held by the parent company that terminates on 6 February 2023. To this effect, a limited guarantee of £1,000,000 (2020: £1,000,000) given by the company existed at the balance sheet date.

A guarantee has been given by John McAslan & Partners Limited over the interest rate swap in the parent company. The guarantee is limited to £3,000,000 (2020: £3,000,000).

There is a cross guarantee and debenture between the group members.

Barclays Bank Plc holds a fixed and floating charge over all assets of John McAslan & Partners Limited and the parent company, Caledonia Limited. The charges are held as security over all amounts owed to Barclays Bank Plc. The amounts owed by the parent company to Barclays Bank Plc at year end were £48,333 (2020: £50,000).

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:

The company has taken advantage of the exemption available in FRS 102 "Related party disclosures" and has not disclosed transactions with the parent company or other group members.

At the balance sheet date, an aggregated balance of £926,846 (2020: £1,160,451) was owed from the parent company and other group members. A balance of £12,884 (2020: £3,519) was also owed from John McAslan Architecture NY D.P.C, a company controlled by J McAslan CBE.

At the balance sheet date the company owed the following amounts to directors, which are included in creditors: J McAslan CBE £3,405 (2020: £1,292), A Potter £139 (2020: £312) and N Manzaroli £1,100 (2020: £235 owed by).

The immediate and ultimate parent company is Caledonia Limited, a company registered in England and Wales.

The ultimate controlling party is John McAslan CBE.

Prior period adjustment relates to the reclassification of finance leases to trade creditors in relation to certain expenses purchased on finance.