Kensa Group Limited - Limited company accounts 20.1

REGISTERED NUMBER: 05367753 (England and Wales)

GROUP STRATEGIC REPORT,

REPORT OF THE DIRECTORS AND

CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 APRIL 2021

FOR

KENSA GROUP LIMITED

Page

Company Information

1

Group Strategic Report

2

Report of the Directors

4

Report of the Independent Auditors

6

Consolidated Income Statement

9

Consolidated Other Comprehensive Income

10

Consolidated Balance Sheet

11

Company Balance Sheet

12

Consolidated Statement of Changes in Equity

13

Company Statement of Changes in Equity

14

Consolidated Cash Flow Statement

15

Notes to the Consolidated Cash Flow Statement

16

Notes to the Consolidated Financial Statements

17

DIRECTORS:

M Taylor

M Freeborn-Swan

S Lomax

M Adderley

C F Miles

A T Rendel

SECRETARY:

M Adderley

REGISTERED OFFICE:

Mount Wellington

Chacewater

TRURO

Cornwall

TR4 8RJ

REGISTERED NUMBER:

05367753 (England and Wales)

AUDITORS:

Lang Bennetts Audit Limited

The Old Carriage Works

Moresk Road

TRURO

Cornwall

TR1 1DG

SOLICITORS:

Tozers LLP

Broadwalk House

Southernhay West

EXETER

Devon

EX1 1UA

The directors present their strategic report of the company and the group for the year ended 30 April 2021.

REVIEW OF BUSINESS

KENSA GROUP LIMITED

The Kensa Group comprises Kensa Heat Pumps Limited, a business that designs and manufactures ground source heat pumps and related accessories; Kensa Contracting Limited, a specialist installation business which focuses on installation projects and Kensa Utilities Limited, a business set up to fund, own and maintain ground array assets and support the adoption of this concept by other stakeholders.

The Kensa Group experienced rapid revenue growth to £25.1m, an 82% increase on prior year of £13.8m, resulting in a profit of £620k. Growth was triggered by an ever-increasing interest in Ground Source Heat Pump technology and the need to complete some major projects prior to the end of the non-domestic Renewable Heat Incentive in March 2021.

Both manufacturing and contracting activity was hampered by the Coronavirus which triggered various lockdowns and compromised the ability to deliver per the original schedules. Fortunately, the opportunity to extend completion deadlines for selected NDRHI projects was available, so a significant volume of work was carried over into the year ending 30 April 2022 to underpin current year revenues.

The impact of Coronavirus was significant which makes the performance all the more impressive and reflective of the huge commitment from staff right across the business. Headcount increased to 111 (2020 - 83) and continues to grow and the excellent quality of new recruits reflects the Group's reputation in the sector. The Group continues to pursue a strategy whereby significant investment is committed to maximizing capability and capacity and the Group is well-placed to handle the ever-increasing volume of inbound enquiries for an ever-widening range of products.

Kensa Contracting established a new business focused on opportunities within the commercial building sector; handled a huge uplift in estimating activity from house builders looking to comply with emerging building regulations and, in some cases, planning conditions and delivered a record number of installations in to the social housing retrofit sector.

Kensa Heat Pumps continued to increase sales to the plumbing and heating sector; secured a major order from an installation contractor engaged in a major multi-year contract; grew the Research and Development function significantly; made encouraging progress on a number of major product developments and improved productivity in the new factory space.

Kensa Utilities secured over £6m of European Regional Development Fund grant support to underpin the 'Heat the Streets' project which will see ground source heat pumps delivered on a 'street-by-street' basis to an off-gas village in Cornwall using a 'split ownership' model which divorces the cost of the ground array from the purchase of the heat pump.

The Group is comfortable that Government is developing the next generation of support policy for heat pumps although the slow speed of delivery is not ideal. In late 2020, the Prime Minister did announce an intent for 600,000 heat pumps to be installed in 2028 but the Heat and Buildings Strategy has still to be published so it remains unclear how this significant uplift in volumes will be achieved. That said, an increasing number of reports, including those published by the Committee on Climate Change and National Grid as part of their Future Energy Scenarios have predicted an increasing proportion of heat pump deployment should be focused on ground source variants because of their superior efficiency and flexibility.

Throughout the year, the Kensa Group increased its commitment to educate many stakeholders about the appeal of ground source heat pumps especially when delivered on a 'street-by-street' basis using a 'split ownership' model. In addition, the Group developed an increasing number of opportunities where the source temperature in the underground shared ground loop infrastructure is bolstered by waste heat in order to further improve efficiencies and reduce running costs and carbon emissions. The impact of this improved efficiency, particularly on the coldest day, will have profound impacts on the scale and cost of necessary uplifts to electricity generating capacity and distribution systems. Many significant entities have expressed an interest to invest in this infrastructure in return for an annual standing charge imposed on the connected households.

Further, the Group benefitted from contacts provided by its investor, Legal and General Capital (LGC), and a number of projects are on-going with other companies owned or supported by LGC. In addition, work has taken place to create funding models which will allow house-builders and social landlords to embrace the technology with lower upfront costs. A particular focus is in new build housing when the Government's response to a Part L Building Regulations' consultation made clear that heat pumps were the expected technology to displace gas boilers after 2025. This announcement heightened interest and the Group is talking with many clients engaged in multi-year development programs which do not intend to embrace gas boilers at all.

Because of the lag from enquiry to order to contract to invoice and cash receipt remains lengthy, short-term profitability will be impacted, however, the Group remains confident that maintaining the strong market position (around 45-50% of all GSHPs installed in the UK in 2020) is the correct approach and the prime use of LGC's cash investment.

KENSA HEAT PUMPS LIMITED

The year ended 30 April 2021 saw considerable growth in revenue from £4.3m to £7.0m, delivered against a backdrop of COVID-19, 3 lockdowns, Brexit and the closure of the Non-Domestic Renewable Heat Incentive (NDRHI). Sales to Kensa Contracting Limited remained strong with sales to trade customers increasing substantially. Following a profitable trading year and cash invested by L&G Capital (via Kensa Group Limited), the Company had positive net assets of £1.1m at the end of the year.

During the year substantial resource was invested in existing staff and the Company's positive reserves will be utilised to further enhance the sales development team, appoint key staff and invest significantly in further product development; all with the purpose of being well prepared for the next phase of expected growth.

KENSA CONTRACTING LIMITED

The year ended 30 April 2021 saw considerable growth in revenue from £11.3m to £22.2m, delivered against a backdrop of COVID-19, 3 lockdowns, Brexit and the closure of the Non-Domestic Renewable Heat Incentive (NDRHI). Following a profitable trading year and cash invested by L&G Capital (via Kensa Group Limited), the Company had positive net assets of £1.5m at the end of the year.

During the year several key appointments including: four regional contracts managers, a sales team for non-domestic properties, a Quantity Surveyor and a full time Health and Safety manager were made. Further appointments will be made in the current year and the outlook for the next financial year looks healthy.

ON BEHALF OF THE BOARD:

M Adderley - Director

6 August 2021

The directors present their report with the financial statements of the company and the group for the year ended 30 April 2021.

PRINCIPAL ACTIVITY

The principal activity of the group in the year under review was that of the manufacture and contract installation of ground source heat pumps.

DIVIDENDS

No dividends have been distributed for the year ended 30 April 2021.

DIRECTORS

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

M Taylor

M Freeborn-Swan

S Lomax

M Adderley

Other changes in directors holding office are as follows:

C F Miles - appointed 1 September 2020

A T Rendel was appointed as a director after 30 April 2021 but prior to the date of this report.

J A Bromley ceased to be a director after 30 April 2021 but prior to the date of this report.

STATEMENT OF DIRECTORS' RESPONSIBILITIES

The directors are responsible for preparing the Group 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 the group and of the profit or loss of the group 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 and the group's transactions and disclose with reasonable accuracy at any time the financial position of the company and the group 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 the group 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 group'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 group's auditors are aware of that information.

AUDITORS

The auditors, Lang Bennetts Audit Limited, will be proposed for re-appointment at the forthcoming Annual General Meeting.

ON BEHALF OF THE BOARD:

M Adderley - Director

6 August 2021

Opinion

We have audited the financial statements of Kensa Group Limited (the 'parent company') and its subsidiaries (the 'group') for the year ended 30 April 2021 which comprise the Consolidated Income Statement, Consolidated Other Comprehensive Income, Consolidated Balance Sheet, Company Balance Sheet, Consolidated Statement of Changes in Equity, Company Statement of Changes in Equity, Consolidated Cash Flow Statement and Notes to the Consolidated Cash Flow Statement, 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 group's and of the parent company affairs as at 30 April 2021 and of the group's 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 group 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 group's and the parent 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 Group 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 Group 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 Group 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 group and the parent company and its environment obtained in the course of the audit, we have not identified material misstatements in the Group 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 by the parent company, or returns adequate for our audit have not been received from branches not visited by us; or

-	the parent company 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 four, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the directors are responsible for assessing the group's and the parent 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 group or the parent 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:

We obtained an understanding of the legal and regulatory frameworks that are applicable to the entity and determined

that the most significant are those that relate to health and safety, GDPR, financial compliance (for example HMRC and Companies House), relevant regulatory standards in the renewable sector, employment matters and laws and regulations concerned with UK government COVID-19 support schemes (for example, the Coronavirus Jobs Retention Scheme).

We assessed the risks of material misstatement in respect of fraud as follows:

We made enquiries of the directors and management of any non-compliance of laws and regulations, potential litigation and claims or any knowledge of actual, suspected or alleged fraud.

We discussed the procedure for the calculation of furlough claims and tested a sample within our audit work to ensure claims had not been made for staff that were still working.

We considered the risk of fraud through management override.

We considered the risk of fraud through revenue recognition, particularly with regard to the methods of quantifying contract income.

Based on the results of our risk assessment, we designed our audit procedures to identify and to address material misstatements in relation to fraud, as follows:

Legal fees were reviewed to identify any potential non-compliance of laws and regulations.

We reviewed material manual journal entries for evidence of management override or fraud.

We tested specific instances of contract revenue recognition, including that this was correctly applied as at the year end.

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.

Jonathan Mashen FCA (Senior Statutory Auditor)

for and on behalf of Lang Bennetts Audit Limited

The Old Carriage Works

Moresk Road

TRURO

Cornwall

TR1 1DG

10 August 2021

TURNOVER

3

25,139,100

13,806,355

Cost of sales

19,560,474

10,372,887

GROSS PROFIT

5,578,626

3,433,468

Administrative expenses

5,338,935

4,161,948

239,691

(728,480

)

Other operating income

396,498

222,488

OPERATING PROFIT/(LOSS)

5

636,189

(505,992

)

Interest receivable and similar income

632

127

636,821

(505,865

)

Interest payable and similar expenses

6

214

14,787

PROFIT/(LOSS) BEFORE TAXATION

636,607

(520,652

)

Tax on profit/(loss)

7

16,954

(68,058

)

PROFIT/(LOSS) FOR THE FINANCIAL YEAR

619,653

(452,594

)

Profit/(loss) attributable to:

Owners of the parent

619,653

(452,594

)

PROFIT/(LOSS) FOR THE YEAR

619,653

(452,594

)

OTHER COMPREHENSIVE INCOME

-

-

TOTAL COMPREHENSIVE INCOME FOR THE YEAR

619,653

(452,594

)

Total comprehensive income attributable to:

Owners of the parent

619,653

(452,594

)

FIXED ASSETS

Tangible assets

9

246,487

133,082

Investments

10

-

-

246,487

133,082

CURRENT ASSETS

Stocks

11

980,443

639,292

Debtors

12

4,908,096

3,556,687

Cash at bank and in hand

3,552,615

2,672,772

9,441,154

6,868,751

CREDITORS

Amounts falling due within one year

13

5,311,788

3,247,176

NET CURRENT ASSETS

4,129,366

3,621,575

TOTAL ASSETS LESS CURRENT LIABILITIES

4,375,853

3,754,657

CAPITAL AND RESERVES

Called up share capital

16

133,451

131,908

Share premium

17

-

3,839,076

Retained earnings

17

4,242,402

(216,327

)

SHAREHOLDERS' FUNDS

4,375,853

3,754,657

The financial statements were approved by the Board of Directors and authorised for issue on 6 August 2021 and were signed on its behalf by:

M Adderley - Director

FIXED ASSETS

Tangible assets

9

127,178

31,487

Investments

10

2,000,000

8

2,127,178

31,495

CURRENT ASSETS

Debtors

12

329,858

240,517

Cash at bank and in hand

1,560,269

3,664,198

1,890,127

3,904,715

CREDITORS

Amounts falling due within one year

13

191,840

115,757

NET CURRENT ASSETS

1,698,287

3,788,958

TOTAL ASSETS LESS CURRENT LIABILITIES

3,825,465

3,820,453

CAPITAL AND RESERVES

Called up share capital

16

133,451

131,908

Share premium

17

-

3,839,076

Retained earnings

17

3,692,014

(150,531

)

SHAREHOLDERS' FUNDS

3,825,465

3,820,453

Company's profit/(loss) for the financial year

3,469

(167,530

)

The financial statements were approved by the Board of Directors and authorised for issue on 6 August 2021 and were signed on its behalf by:

M Adderley - Director

Called up

share

Retained

Share

Total

capital

earnings

premium

equity

£

£

£

£

Balance at 1 May 2019

10,731

236,267

103,943

350,941

Changes in equity

Bonus issue of share capital

96,579

-

(96,579

)

-

Issue of share capital, net of

expenses

24,598

-

3,831,712

3,856,310

Total comprehensive income

-

(452,594

)

-

(452,594

)

Balance at 30 April 2020

131,908

(216,327

)

3,839,076

3,754,657

Changes in equity

Issue of share capital, net of

expenses

1,543

-

-

1,543

Capital reduction

-

3,839,076

(3,839,076

)

-

Total comprehensive income

-

619,653

-

619,653

Balance at 30 April 2021

133,451

4,242,402

-

4,375,853

Called up

share

Retained

Share

Total

capital

earnings

premium

equity

£

£

£

£

Balance at 1 May 2019

10,731

16,999

103,943

131,673

Changes in equity

Bonus issue of share capital

96,579

-

(96,579

)

-

Issue of share capital, net of

expenses

24,598

-

3,831,712

3,856,310

Total comprehensive income

-

(167,530

)

-

(167,530

)

Balance at 30 April 2020

131,908

(150,531

)

3,839,076

3,820,453

Changes in equity

Issue of share capital, net of

expenses

1,543

-

-

1,543

Capital reduction

-

3,839,076

(3,839,076

)

-

Total comprehensive income

-

3,469

-

3,469

Balance at 30 April 2021

133,451

3,692,014

-

3,825,465

Cash flows from operating activities

Cash generated from operations

1

713,559

(1,548,884

)

Interest paid

(214

)

(14,787

)

Tax paid

-

8,810

Net cash from operating activities

713,345

(1,554,861

)

Cash flows from investing activities

Purchase of tangible fixed assets

(143,975

)

(115,010

)

Interest received

632

127

Net cash from investing activities

(143,343

)

(114,883

)

Cash flows from financing activities

Share issue

1,543

3,856,310

Government grants

308,298

91,844

Net cash from financing activities

309,841

3,948,154

Increase in cash and cash equivalents

879,843

2,278,410

Cash and cash equivalents at beginning of year

2

2,672,772

394,362

Cash and cash equivalents at end of year

2

3,552,615

2,672,772

1.	RECONCILIATION OF PROFIT/(LOSS) BEFORE TAXATION TO CASH GENERATED FROM OPERATIONS

2021

2020

£

£

Profit/(loss) before taxation

636,607

(520,652

)

Depreciation charges

30,570

71,390

Government grants

(396,498

)

(222,488

)

Finance costs

214

14,787

Finance income

(632

)

(127

)

270,261

(657,090

)

Increase in stocks

(341,151

)

(185,272

)

Increase in trade and other debtors

(1,280,163

)

(1,356,934

)

Increase in trade and other creditors

2,064,612

650,412

Cash generated from operations

713,559

(1,548,884

)

2.	CASH AND CASH EQUIVALENTS

The amounts disclosed on the Cash Flow Statement in respect of cash and cash equivalents are in respect of these Balance Sheet amounts:

Year ended 30 April 2021

30/4/21

1/5/20

£

£

Cash and cash equivalents

3,552,615

2,672,772

Year ended 30 April 2020

30/4/20

1/5/19

£

£

Cash and cash equivalents

2,672,772

394,362

3.	ANALYSIS OF CHANGES IN NET FUNDS

At 1/5/20

Cash flow

At 30/4/21

£

£

£

Net cash

Cash at bank and in hand

2,672,772

879,843

3,552,615

2,672,772

879,843

3,552,615

Total

2,672,772

879,843

3,552,615

1.	STATUTORY INFORMATION

Kensa Group Limited is a private company, limited by shares , registered in England and Wales. The company's registered number and registered office address can be found on the General Information page.

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.

A subsidiary is an entity controlled by the company. Control is achieved where the company has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities.

The results of subsidiaries acquired or disposed of during the year are included in the Profit and Loss Account from the effective date of acquisition or up to the effective date of disposal, as appropriate. Where necessary, adjustments are made to the financial statement of subsidiaries to bring their accounting policies into line with those used by the group.

The purchase method of accounting is used to account for business combinations that result in the acquisition of subsidiaries by the group. The cost of a business combination is measured as the fair value of the assets given, equity instruments issued and liabilities incurred or assumed at the date of exchange, plus costs directly attributable to the business combination. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. Any excess of the cost of the business combination over the acquirers interest in the net fair value of the identifiable assets, liabilities and contingent liabilities recognised is recorded as goodwill.

Inter-company transactions, balances and unrealised gains on transaction between the company and it's subsidiaries, which are related parties, are eliminated in full.

Intra-group losses are also eliminated but may indicate an impairment that requires recognition in the consolidated financial statements.

Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the group. Non-controlling interests in the net assets of consolidated subsidiaries are identified separately from the group's equity therein. Non-controlling interests consist of the amount of those interests at the date of the original business combination and the non-controlling shareholders share of changes in equity since the date of the combination.

Financial Reporting Standard 102 - reduced disclosure exemptions

The group 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 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 requirements of paragraphs 12.26, 12.27, 12.29(a), 12.29(b) and 12.29A;

•

the requirement of paragraph 33.7.

Basis of consolidation

The consolidated financial statements consolidate the financial statements of the company and its subsidiary undertakings drawn up to 30 April 2021.

Significant judgements and estimates

Determination of stage of completion on incomplete contracts

Contract revenue and costs are determined by reference to surveys performed by project managers as well as cumulative historical data, extensive experience within the industry and knowledge of the contract in question.

Turnover

Turnover represents amounts chargeable, net of value added tax, in respect of the sale of goods and services to customers. Revenue is recognised when the group fulfills its contractual obligations for the supply of goods and services to customers and is included net of trade discounts, VAT and other sales related taxes.

Where revenue and costs in relation to contract work can be estimated reliably, both revenue and expenses are recognised by reference to the stage of completion of the contract activity at the end of the reporting period. If the outcome cannot be measured reliably, then all contract costs are expensed in the period in which they were incurred and revenue is only recognised to the extent that it is probable such costs are recoverable.

Tangible fixed assets

Depreciation is provided at the following annual rates in order to write off each asset over its estimated useful life.

Plant and machinery

-

15% on cost

Computer equipment

-

Straight line over 7 years

Government grants

Revenue grants are recognised as income so as to match the expenditure to which they relate.

Stocks

Stocks and work in progress are valued at the lower of cost and net realisable value, after making due allowance for obsolete and slow moving items.

Cost is calculated using the first-in, first-out method and includes all purchase, transport, and handling costs in bringing stocks to their present location and condition.

Financial instruments

The group holds the following financial instruments:

- Trade debtors and creditors.

- Other short term debtors and creditors.

- Cash and bank balances.

All of the above are classified as basic.

The company has elected to apply the principles of FRS102 for recognition and measurement of its financial instruments.

Financial instruments are recognised when the company becomes party to the contractual provisions of the instrument. Assets are derecognised when contractual rights to cash flows expire or substantially all the risks and rewards of ownership are transferred to another party. Liabiltiies are derecognised when the company's obligations are discharged, expire or are cancelled.

Financial instruments are initially measured at transaction price, including transaction costs, and are subsequently carried at the undiscounted amount of the cash or other consideration to be paid or received, after accounting for impairment adjustments. Financial assets are reviewed for impairment at each reporting date and would be impaired where there is evidence that, as a result of an event occurring after the initial recognition of the asset, estimated future cash flows have been affected. Such an impairment would be recognised in profit or loss.