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 2020

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

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 2020.

REVIEW AND PERFORMANCE OF THE BUSINESS

Turnover at £17.2m was 33% less than £25.7m reported for 2019. The reduction of revenue can directly be attributed to the impact of the coronavirus pandemic (COVID-19).

Following the Government imposed national lockdown in late March 2020, construction activities were curtailed because of temporary site closures and supply chain delays. As restrictions eased over the summer months activity gathered pace although it remained below pre-lockdown levels for the remainder of the year.

The directors responded to the coronavirus crisis with a contingency plan in three parts - keeping staff and subcontractors safe and engaged, a focus on securing short term projects and a programme of cost reduction.

To keep staff safe and engaged, work was paused in April whilst COVID-19 safe working measures were assessed and implemented. The workforce returned in May with a better than expected productivity. During this period, the furlough scheme was used to help support staff costs.

The company targeted short term contracts with local authorities and other public funded bodies. The nature of such projects offers a lower contractual risk but with secure funding that has helped maintain the operational capacity of the business.

The programme of cost reduction included staff restructure together with an ongoing programme of overhead rationalisation. Overall cost savings estimated at between 10% and 15% were achieved in 2020 although the full effect of the savings is expected to arise in 2021.

As a consequence of the restructure and overhead rationalisation, the company made some significant cash flow savings with a knock-on improvement in profit and profitability. The profit for the year of £142,284 (2019 - Loss £50,992) has been retained to improve the balance sheet net asset position to £415,288 at year end (2019 - £273,004).

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

The company has maintained its ISO 9001 accreditation for Quality Management Systems and ISO 14001 accreditation for our Environmental Management Systems. Waste production and energy usage is class leading and is monitored to improve waste management performance and energy efficiency.

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, before tenders are submitted they 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.

The key health and safety objectives are to provide a COVID-19 safe working environment, minimise accidents and near misses. 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:

2018

2019

2020

Turnover (£million)

£19.7m

£25.7m

£17.2m

Gross Margin %

5.9%

4.0%

6.8%

Pre-tax profit (£thousand)

£(31)k

£(311)k

£41k

Pre-tax margin %

(0.16)%

(1.2)%

0.24%

Net current assets (£thousand)

£299k

£222k

£304k

Net assets (£thousand)

£357k

£273k

£415k

FUTURE DEVELOPMENTS

The directors are continually assessing the impact of Covid-19 on the operation of the company. The situation is changing frequently and it is not possible at this stage to determine the ultimate impact on the company, its customers, employees and suppliers. The business has however returned to a good level of productivity and the company continues to operate within its existing retained working capital investment.

For the current 2021 financial year, the company expects sales revenue of £20m. Looking further ahead to 2022, construction contracts worth £7.6m have so far been secured with a current potential of a further £9.2m.

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

ON BEHALF OF THE BOARD:

E W J Barrett - Director

16 July 2021

The directors present their report with the financial statements of the company for the year ended 31 December 2020.

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 2020.

DIRECTORS

The directors shown below have held office during the whole of the period from 1 January 2020 to the date of this report.

E M C Barrett

E W J Barrett

Other changes in directors holding office are as follows:

C R Anderson - resigned 30 October 2020

J M Turpin ceased to be a director after 31 December 2020 but prior to the date of this report.

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

16 July 2021

Opinion

We have audited the financial statements of Francis Construction Limited (the 'company') for the year ended 31 December 2020 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 2020 and of its profit for the year then ended;

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

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

Basis for opinion

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

Conclusions relating to going concern

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.

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:

The extent to which the audit was considered capable of detecting irregularities including fraud

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 designed 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 ACA (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

16 July 2021

TURNOVER

3

17,161,512

25,745,894

Cost of sales

16,000,037

24,706,263

GROSS PROFIT

1,161,475

1,039,631

Administrative expenses

1,330,343

1,397,107

(168,868

)

(357,476

)

Other operating income

4

210,074

45,908

OPERATING PROFIT/(LOSS) and

PROFIT/(LOSS) BEFORE TAXATION

41,206

(311,568

)

Tax on profit/(loss)

7

(101,385

)

(260,576

)

PROFIT/(LOSS) FOR THE FINANCIAL YEAR

142,591

(50,992

)

OTHER COMPREHENSIVE INCOME

-

-

TOTAL COMPREHENSIVE INCOME/(LOSS) FOR THE YEAR

142,591

(50,992

)

FIXED ASSETS

Tangible assets

8

111,620

50,690

CURRENT ASSETS

Debtors: amounts falling due within one year

9

2,633,521

3,209,481

Debtors: amounts falling due after more than one year

9

234,090

428,606

Cash at bank and in hand

1,812,605

1,556,799

4,680,216

5,194,886

CREDITORS

Amounts falling due within one year

10

4,376,241

4,972,572

NET CURRENT ASSETS

303,975

222,314

TOTAL ASSETS LESS CURRENT LIABILITIES

415,595

273,004

CAPITAL AND RESERVES

Called up share capital

12

10,000

10,000

Retained earnings

13

405,595

263,004

SHAREHOLDERS' FUNDS

415,595

273,004

The financial statements were approved by the Board of Directors and authorised for issue on 16 July 2021 and were signed on its behalf by:

E W J Barrett - Director

Called up

share

Retained

Total

capital

earnings

equity

£

£

£

Balance at 1 January 2019

10,000

313,996

323,996

Changes in equity

Total comprehensive loss

-

(50,992

)

(50,992

)

Balance at 31 December 2019

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

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

Government grants

Government grants are recognised in the income and expenditure account so as to match them with expenditure they are intended to contribute. To the extent that a grant is made as a contribution towards expenditure on a fixed asset, the grant is deferred and written off to match the amortisation charge of the fixed asset.

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

The directors have responded to the coronavirus crisis with a contingency plan and are continually assessing the impact of Covid-19 on the operation of the company. The situation is changing frequently and it is not possible at this stage to determine the ultimate impact on the company, its customers, employees and suppliers. Post year end, the company has however seen no negative impact on trade and trading performance is steadily improving.

Cash flow forecasts prepared for the next 12 months indicate that the company will continue to operate within its existing working capital investment without a need for external sources of finance.

Having regard to the company's contingency plan for Covid-19, the cash flow forecast for the next twelve months and the availability of the working capital finance, the directors have concluded that despite the uncertainties presented by the coronavirus pandemic, the company will continue as a going concern.

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

31.12.20

31.12.19

£

£

Sundry receipts

18,892

17,948

Management charges receivable

40,885

27,960

Government grants

150,297

-

210,074

45,908

5.	EMPLOYEES AND DIRECTORS

31.12.20

31.12.19

£

£

Wages and salaries

2,226,540

2,489,151

Social security costs

246,695

265,895

Other pension costs

77,860

63,506

2,551,095

2,818,552

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

31.12.20

31.12.19

Office and management

11

11

Supervisory and operative

37

42

48

53

31.12.20

31.12.19

£

£

Directors' remuneration

253,984

261,834

Directors' pension contributions to money purchase schemes

21,629

7,313

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

Money purchase schemes

2

2

Information regarding the highest paid director is as follows:

31.12.20

31.12.19

£

£

Emoluments etc

91,780

94,040

Pension contributions to money purchase schemes

17,400

2,417

6.	OPERATING PROFIT/(LOSS)

The operating profit (2019 - operating loss) is stated after charging/(crediting):

31.12.20

31.12.19

£

£

Other operating leases

82,723

103,060

Depreciation - owned assets

29,311

20,665

Profit on disposal of fixed assets

(5,541

)

-

Auditors' remuneration

18,500

19,700

Auditors' remuneration for non audit work

13,614

16,218

Operating lease for land and buildings

80,460

80,460

Bad debts and other losses

(6,536

)

54,130

7.

TAXATION

Analysis of the tax credit

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

31.12.20

31.12.19

£

£

Current tax:

R&D tax credits

(113,965

)

(243,094

)

Group relief tax credits

-

(16,356

)

Total current tax

(113,965

)

(259,450

)

Deferred tax

12,580

(1,126

)

Tax on profit/(loss)

(101,385

)

(260,576

)

UK corporation tax has been charged at 19% (2019 - 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:

31.12.20

31.12.19

£

£

Profit/(loss) before tax

41,206

(311,568

)

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

7,829

(59,198

)

Effects of:

Expenses not deductible for tax purposes

1,649

4,613

Capital allowances in excess of depreciation

(12,580

)

-

Depreciation in excess of capital allowances

-

845

Utilisation of tax losses

3,102

53,740

Research and development tax credits

(113,965

)

(243,094

)

Group tax relief

-

(16,356

)

Deferred tax movements

12,580

(1,126

)

Total tax credit

(101,385

)

(260,576

)

Factors that may affect future tax charges

The company has recognised a deferred tax asset of £146,427 (2019 : £159,007) 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 2020

165,173

(6,166

)

159,007

Origination and reversal of timing differences

-

(12,580

)

(12,580

)

At 31 December 2020

165,173

(18,746

)

146,427

Deferred tax has been charged at 19% (2019 - 19%)

8.	TANGIBLE FIXED ASSETS

Plant and

Motor

Computer

machinery

vehicles

equipment

Totals

£

£

£

£

COST

At 1 January 2020

214,486

94,791

62,550

371,827

Additions

7,000

60,734

26,966

94,700

Disposals

-

(22,500

)

-

(22,500

)

At 31 December 2020

221,486

133,025

89,516

444,027

DEPRECIATION

At 1 January 2020

198,305

68,907

53,925

321,137

Charge for year

5,649

12,268

11,394

29,311

Eliminated on disposal

-

(18,041

)

-

(18,041

)

At 31 December 2020

203,954

63,134

65,319

332,407

NET BOOK VALUE

At 31 December 2020

17,532

69,891

24,197

111,620

At 31 December 2019

16,181

25,884

8,625

50,690

9.

DEBTORS

31.12.20

31.12.19

£

£

Amounts falling due within one year:

Trade debtors

1,095,691

842,332

Amounts owed by group undertakings

115,061

141,695

Amounts recoverable on contract

903,730

1,748,161

Other debtors

372,612

318,286

Deferred tax asset

146,427

159,007

2,633,521

3,209,481

Amounts falling due after more than one year:

Trade debtors

234,090

428,606

Aggregate amounts

2,867,611

3,638,087

10.

CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR

31.12.20

31.12.19

£

£

Trade creditors

2,593,196

3,372,159

Amounts owed to group undertakings

45,716

39,955

Social security and other taxes

408,340

70,198

Other creditors

352,923

71,923

Accruals and deferred income

70,103

71,575

Accrued contract costs

905,963

1,346,762

4,376,241

4,972,572

11.	LEASING AGREEMENTS

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

31.12.20

31.12.19

£

£

Within one year

54,425

79,245

Between one and five years

28,976

56,620

83,401

135,865