ARK_BUILD_(HOLDINGS)_LTD - Accounts

The director presents the strategic report for the year ended 31 October 2020.

The group acquired the shares of Ark Build Plc in December 2019 in a share for share exchange and purchase via loan notes which effectively meant no change of control for the company.

We are pleased to report that, despite the effects of Covid over the last 6 months, it has been a strong trading year with only a minimal decrease in turnover and profit compared to last year of Ark Build Plc. We began to feel a strong recovery, back to pre-covid levels, by September 2020 - too late for improvement on last year’s figures but the trajectory is heading in the right direction.

We have also managed to increase the group’s liquidity by honing back overheads wherever possible and utilising any down time created by the March 2020 lockdown to settle outstanding accounts and chasing down retentions due etc.

We are also extremely grateful to our client base who have supported us wherever possible throughout this Covid period.

We have continued to build our relationships with our existing client’s and it is very pleasing to see the level of repeat business increase year on year. In addition, extending our client base has also been key to providing additional opportunities for tendering and securing work. We will maintain this strategy which we believe will be instrumental in maintaining the growth of the company.

Our forward order book currently stands at over £18 million for the next 18 months, a solid base from which to build our forecasted growth in 2020/2021.

Given the recovery that we have experienced since September 2020 and that this recovery has been maintained in the first quarters of the new financial year, we are very hopeful of a substantive growth in 2020/2021.

Economic market

Although we can be in no doubt that Covid has had an effect on the construction industry since March 2020, we have now adapted to the new working arrangements and, with the reopening of the sites, efficiency levels have improved and this we believe is the main reason for the recovery in the last quarter of this year.

We believe that, with the roll out of vaccines and a general improvement in living with Covid, there is a massive backlog of schemes ready to be procured and delivered when the market conditions improve. The cautious approach that clients have taken to date will lift, so that new schemes held up since March 2020 will recommence and this will create a massive demand for the construction market in 2021 and beyond.

The Government has already voiced an opinion that the UK construction market will be one of the driving forces to reboot the economy and nurse the economic wellbeing of the UK’s economy back to where it should be. This provides a phenomenal opportunity for us going forward.

We therefore believe that the next 12 months will certainly become more buoyant and opportunities will increase. Our solid portfolio of works completed and our proactive marketing strategy will undoubtedly enable us to make the most of these opportunities and allow the company to grow in these market conditions.

Our risks and uncertainties are much harder to gauge and close monitoring of price fluctuations are required to maintain our commercial edge. Tendering is still subject to highly competitive pricing but we continue to look for efficiencies to keep us ahead of competition. This is underpinned by an ethos to win repeat business and partner with existing and new clients at every opportunity, which we continue to do. The group is becoming more involved in the two-stage tendering process with our client base and having a more cautious approach to de-risking our projects by adopting a “share the pain and share the gain” mentality with our clients. An understanding from day one of where the risk exists on the projects and who ultimately takes ownership of this, allows us to plan and manage the project as a whole to minimise the risks.

Financially insecure clients are a risk and therefore due diligence around any new clients is imperative.

Our client base continues to grow and is made up of almost exclusively blue-chip companies and Government bodies with excellent covenants. This minimises our financial risk in the critical period between the execution of work and payment.

Supply chain control procedures

We have a robust procurement process in place to ensure vigilance when choosing our suppliers and subcontractors in order to maintain competitiveness and quality.

We monitor how much business is being given to any particular part of our supply chain to ensure they do not become overwhelmed with orders.

We routinely monitor the financial assets and quality performance of our sub-contractors and suppliers to marginalise our risk and maintain the quality and delivery expected of us by our exacting clients. This also enables us to forecast with greater accuracy and adjudicate against tenders and future contracts.

Group governance risks are a constant agenda item and are formally and regularly reviewed by the board with appropriate processes in place to monitor and mitigate them.

COVID-19

We have, of course, like every business in the world been affected by the Covid 19 pandemic. We did close our head office for a period of time but gave all of our team the necessary IT to be able function efficiently whilst working from home.

We then put in place all the covid measures following Government guidelines, The Construction Leadership Council and the HSE advice for “safe operating procedures” thereby allowing our head office to reopen in a limited capacity by the beginning of May 2020 and all of our sites reopening by June 2020.

We unfortunately had to furlough some operational and trades skilled staff that could not work from home. Thankfully this was for only a matter of weeks and not months. We risk assessed all our activities on site and put into place all necessary arrangements to allow us to reopen the majority of the sites, as stated from May 2020.

We appreciate going forward “distant working” rules are going to remain a challenge and will undoubtedly lead to a reduction in productivity and likely an increase in fixed costs. The majority of our clients have responded well to the action we have taken during this pandemic and have assisted wherever possible during this difficult time to help and support us whilst we re-mobilise and we must thank them all sincerely for this support.

We are now well used to working with Covid and, under the new normal, we have seen our productivity levels get back to near normal since August 2020 whilst still working safely. We continue to monitor Government advice and are prepared to adapt as required. We do remain hopeful that, with the roll out of the vaccine, circumstances will continue to improve and this hopefully will get us back to old normal as soon as safe and possible.

Financially Insecure Clients

We are aware of the risks when taking on work and are very particular when dealing with clients. Credit checks and credit control enable us to feel comfortable with managing our debts. We also ensure that contracts are not undertaken with onerous payment terms as has happened in the past leading to difficulties in the last 17 months. We also have the added comfort of the support and knowledge of our associated company Ark MEP Plc. We are also making good headway into carrying out works directly for local and central Government clients.

Our turnover for 2020 was £14,436,443.

I would like to thank all the team at Ark Build PLC for all their hard work in handling the Covid crisis and getting the company back to strength so quickly. It is testament to their determination and loyalty to Ark Build and the obvious pride they have in our company.

Our aim continues to be producing quality projects and work collaboratively with our clients which will sustain growth and profitability for the business going forward.

The stakeholder being Michael Finlay who is also the Managing Director ensured that any key decisions made during would not be detrimental to either himself or the business as a whole.

There were no major changes that would affect the Company made and it continued on the same path.

Decisions taken during the year were to try and maintain the profitability of the Company during COVID. Consideration was also given to keeping all employees, be it on furlough or as direct working.

No major changes were made during the year in respect of the company’s current or future position within the industry

Suppliers were maintained with very little change in terms or delivery

The company also maintained its position with its clients and kept them informed of any problems that arose due to COVID.

On behalf of the board

The director presents his annual report and financial statements for the year ended 31 October 2020.

The principal activity of the company and group continued to be that of construction contractors.

The results for the year are set out on page 11.

No ordinary dividends were paid. The director does not recommend payment of a further dividend.

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

The impact on the group subsequent to the balance sheet date as a result of the steps taken by the Government throughout 2020, and the start of 2021, to control the Covid-19 pandemic is uncertain. This is the case for the majority of businesses in the UK and around the World.

The Directors do not consider that the Covid-19 pandemic has had a material impact on the company's financial position at the balance sheet date and thus no adjustments have been made to the carrying values of the group's assets and liabilities as at 31 October 2020.

Our forward order book currently stands at over £18 million for the next 18 months, a solid base from which to build our forecasted growth in 2020/2021.

Given the recovery that we have experienced since September 2020 and that this recovery has been maintained in the first quarters of the new financial year, we are very hopeful of a substantive growth in 2020/2021.

Our primary strategy remains to build relationships with existing and prospective clients and secure repeat work therefore maximising profitability.

We will maintain the financial strength of the business by retaining a healthy cash position which will give us the flexibility to pursue exceptional business opportunities as they arise.

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

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 auditor of the company 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 auditor of the company is aware of that information.

The director is responsible for preparing the Annual Report and the financial statements in accordance with applicable law and regulations.

Company law requires the director to prepare financial statements for each financial year. Under that law the director has 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 director must not approve the financial statements unless he is satisfied that they give a true and fair view of the state of affairs of the group and company, and of the profit or loss of the group for that period. In preparing these financial statements, the director is required to:

•     select suitable accounting policies and then apply them consistently;

•     make judgements and accounting estimates that are reasonable and prudent;

•     state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements;

•     prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.

The director is responsible for keeping adequate accounting records that are sufficient to show and explain the group’s and company’s transactions and disclose with reasonable accuracy at any time the financial position of the group and company and enable them to ensure that the financial statements comply with the Companies Act 2006. He is also responsible for safeguarding the assets of the group and company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

We have audited the financial statements of Ark Build (Holdings) Ltd (the 'parent company') and its subsidiaries (the 'group') for the year ended 31 October 2020 which comprise the group profit and loss account, the group statement of comprehensive income, the group balance sheet, the company balance sheet, the group statement of changes in equity, the company statement of changes in equity, the group statement of cash flows, the company statement of cash flows 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 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 group's and the parent company's affairs as at 31 October 2020 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 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

We have nothing to report in respect of the following matters in relation to which the ISAs (UK) require us to report to you where:

• the director's use of the going concern basis of accounting in the preparation of the financial statements is not appropriate; or

• the director has not disclosed in the financial statements any identified material uncertainties that may cast significant doubt about the group's or the parent company’s ability to continue to adopt the going concern basis of accounting for a period of at least twelve months from the date when the financial statements are authorised for issue.

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 director is responsible for the other information. 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 there is a material misstatement in the financial statements or a material misstatement of the other information. 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 director's report for the financial year for which the financial statements are prepared is consistent with the financial statements; and

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

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 strategic report and the director's 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 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.

As explained more fully in the director's responsibilities statement, the director is 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 director determines 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 director is responsible for assessing 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 director either intends to liquidate the company or to cease operations, or has 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.

A further description of our responsibilities for the audit of the financial statements is located 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.

As permitted by s408 Companies Act 2006, the company has not presented its own profit and loss account and related notes. The company’s profit for the year was £36,061.

Ark Build (Holdings) Ltd (“the company”) is a private limited company domiciled and incorporated in England and Wales. The registered office is Unit 12 Loughton Business Centre, Langston Road, Loughton, Essex, United Kingdom, IG10 3FL.

The group consists of Ark Build (Holdings) Ltd and all of its subsidiaries.

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, modified to include the revaluation of freehold properties and to include investment properties and certain financial instruments at fair value. The principal accounting policies adopted are set out below.

In the parent company financial statements, the cost of a business combination is the fair value at the acquisition date of the assets given, equity instruments issued and liabilities incurred or assumed, plus costs directly attributable to the business combination. The excess of the cost of a business combination over the fair value of the identifiable assets, liabilities and contingent liabilities acquired is recognised as goodwill. The cost of the combination includes the estimated amount of contingent consideration that is probable and can be measured reliably, and is adjusted for changes in contingent consideration after the acquisition date. Provisional fair values recognised for business combinations in previous periods are adjusted retrospectively for final fair values determined in the 12 months following the acquisition date. Investments in subsidiaries, joint ventures and associates are accounted for at cost less impairment.

Deferred tax is recognised on differences between the value of assets (other than goodwill) and liabilities recognised in a business combination accounted for using the purchase method and the amounts that can be deducted or assessed for tax, considering the manner in which the carrying amount of the asset or liability is expected to be recovered or settled. The deferred tax recognised is adjusted against goodwill or negative goodwill.

The consolidated group financial statements consist of the financial statements of the parent company Ark Build (Holdings) Ltd together with all entities controlled by the parent company (its subsidiaries) and the group’s share of its interests in joint ventures and associates.

All financial statements are made up to 31 October 2020. Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with those used by other members of the group.

All intra-group transactions, balances and unrealised gains on transactions between group companies are eliminated on consolidation. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.

Subsidiaries are consolidated in the group’s financial statements from the date that control commences until the date that control ceases.

Entities in which the group holds an interest and which are jointly controlled by the group and one or more other venturers under a contractual arrangement are treated as joint ventures. Entities other than subsidiary undertakings or joint ventures, in which the group has a participating interest and over whose operating and financial policies the group exercises a significant influence, are treated as associates.

Investments in joint ventures and associates are carried in the group balance sheet at cost plus post-acquisition changes in the group’s share of the net assets of the entity, less any impairment in value. The carrying values of investments in joint ventures and associates include acquired goodwill.

If the group’s share of losses in a joint venture or associate equals or exceeds its investment in the joint venture or associate, the group does not recognise further losses unless it has incurred obligations to do so or has made payments on behalf of the joint venture or associate.

Unrealised gains arising from transactions with joint ventures and associates are eliminated to the extent of the group’s interest in the entity.

The directors have considered the impact of COVID-19 in relation to their assessment of going concern and in their opinion have taken all reasonable steps to mitigate these factors. As at the point of authorising the accounts, and for the foreseeable future, the directors consider the going concern assumption to still be appropriate. The directors acknowledge that given the currently rapidly changing business and social environment, there are likely to be significant unknown factors which may present themselves. Such factors are considered by the directors to represent a general inherent level of risk in relation to the going concern assumption albeit not quantifiable at this time.

As the group is in the construction industry and haven't been impacted by any of the Government restrictions post year end the directors do not believe there is any increased risk.

Turnover represents net invoiced sales of services, excluding value added tax. Revenue is recognised over the project as completed based on valuations by quantity surveyors on a project by project basis. Where part of the project has been completed but not invoiced this is included in accrued income.

Goodwill represents the excess of the cost of acquisition of a business over the fair value of net assets acquired. It is initially recognised as an asset at cost and is subsequently measured at cost less accumulated amortisation and accumulated impairment losses. Goodwill is considered to have a finite useful life and is amortised on a systematic basis over its expected life, which is 10 years.

For the purposes of impairment testing, goodwill is allocated to the cash-generating units expected to benefit from the acquisition. Cash-generating units to which goodwill has been allocated are tested for impairment at least annually, or more frequently when there is an indication that the unit may be impaired. If the recoverable amount of the cash-generating unit is less than the carrying amount of the unit, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro-rata on the basis of the carrying amount of each asset in the unit.

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 recognised in the profit and loss account.

Equity investments are measured at fair value through profit or loss, except for those equity investments that are not publicly traded and whose fair value cannot otherwise be measured reliably, which are recognised at cost less impairment until a reliable measure of fair value becomes available.

In the parent company financial statements, investments in subsidiaries, associates and jointly controlled entities are initially measured at cost and subsequently measured at cost less any accumulated impairment losses.

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

An associate is an entity, being neither a subsidiary nor a joint venture, in which the company holds a long-term interest and where the company has significant influence. The group considers that it has significant influence where it has the power to participate in the financial and operating decisions of the associate.

Investments in associates are initially recognised at the transaction price (including transaction costs) and are subsequently adjusted to reflect the group’s share of the profit or loss, other comprehensive income and equity of the associate using the equity method. Any difference between the cost of acquisition and the share of the fair value of the net identifiable assets of the associate on acquisition is recognised as goodwill. Any unamortised balance of goodwill is included in the carrying value of the investment in associates.

Losses in excess of the carrying amount of an investment in an associate are recorded as a provision only when the company has incurred legal or constructive obligations or has made payments on behalf of the associate.

In the parent company financial statements, investments in associates are accounted for at cost less impairment.

Entities in which the group has a long term interest and shares control under a contractual arrangement are classified as jointly controlled entities.

At each reporting period end date, the group reviews the carrying amounts of its tangible and intangible 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.

The carrying amount of the investments accounted for using the equity method is tested for impairment as a single asset. Any goodwill included in the carrying amount of the investment is not tested separately for impairment.

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

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

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

Cash and cash equivalents are basic financial assets and include cash in hand, deposits held at call with banks, other short-term liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities.

The group has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.

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

Financial assets and liabilities are offset and the net amounts presented in the financial statements when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.

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

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

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

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

Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the group 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 group after deducting all of its liabilities.

Basic financial liabilities, including creditors, bank loans, loans from fellow group companies and preference shares that are classified as debt, 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.

Derivatives, including interest rate swaps and forward foreign exchange contracts, are not basic financial instruments. Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured at their fair value. Changes in the fair value of derivatives are recognised in profit or loss in finance costs or finance income as appropriate, unless hedge accounting is applied and the hedge is a cash flow hedge.

Debt instruments that do not meet the conditions in FRS 102 paragraph 11.9 are subsequently measured at fair value through profit or loss. Debt instruments may be designated as being measured at fair value through profit or loss to eliminate or reduce an accounting mismatch or if the instruments are measured and their performance evaluated on a fair value basis in accordance with a documented risk management or investment strategy.

Financial liabilities are derecognised when the group's contractual obligations expire or are discharged or cancelled.

Equity instruments issued by the group 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 group.

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 group’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.

Deferred tax liabilities are generally recognised for all timing differences and deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Such assets and liabilities are not recognised if the timing difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.

The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the profit and loss account, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset if, and only if, there is a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.

The costs of short-term employee benefits are recognised as a liability and an expense, unless those costs are required to be recognised as part of the cost of stock or fixed assets.

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.

Rentals payable under operating leases, including any lease incentives received, are charged to profit or loss on a straight line basis over the term of the relevant lease except where another more systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed.

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.

Transactions in currencies other than pounds sterling are recorded at the rates of exchange prevailing at the dates of the transactions. At each reporting end date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the reporting end date. Gains and losses arising on translation in the period are included in profit or loss.

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

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

The following judgements (apart from those involving estimates) have had the most significant effect on amounts recognised in the financial statements.

During the year the company issues interest free loan notes to be repaid over 10 years. Under FRS 102 these need to be recorded at their present value. As these are interest free with no mention of interest rate in the agreement then the directors have had to use their judgement to apply a market rate of interest to the loan notes.

The directors reviewed the loan obtained in the subsidiary in the prior year and used the same rate of interest as this appeared to be still at a market rate.

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

Their aggregate remuneration comprised:

Following the Spring 2021 Budget announcement on 3 March 2021 the main rates of corporation rates were set out. Corporation tax rates are expected to remain at 19% until 1 April 2023 where they will increase to 25%. Closing deferred tax balances have been valued at the rate of 19%.

The deferred tax asset is expected to reverse before 1 April 2023.

The actual charge for the year can be reconciled to the expected charge/(credit) 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.

Details of the company's subsidiaries at 31 October 2020 are as follows:

The obligations under finance leases are secured against the asset to which it relates.

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

During the year the company issued £350,000 loan notes. The loan notes are interest free, unsecured and due for repayment by 2029.

The loan notes have been discounted to their present value at a rate of 2.75% per annum. The Balance Sheet liability as at 31 October 2020 is at the discounted value.

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

The deferred tax asset set out above is expected to reverse within 12 months and relates to the timing differences arising on fixed assets and the capital allowances claimed that are expected to mature within the same period.

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 amount of pension contributions outstanding at the year end amounted to £10,765 (2019: £10,105).

The company has one class of shares which carry no rights to fixed income. These shares do carry voting rights.

During the year the company issues 999 £1 ordinary shares on incorporation at nominal value.

The company then entered into a share for share exchange which involved issuing a single £1 ordinary share in exchange for shares in Ark Build Plc.

During the year the company purchases the share capital of Ark Build Plc part of which was through a share for share exchange. The value of the investment was considered at the fair value of the investment with the difference between fair value and nominal value of the shares going to the merger reserve as per the Companies Act.

On 4 December 2019 the group acquired 100% of the issued capital of Ark Build Plc.

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

The impact on the group subsequent to the balance sheet date as a result of the steps taken by the Government throughout 2020, and the start of 2021, to control the Covid-19 pandemic is uncertain. This is the case for the majority of businesses in the UK and around the World.

The Director does not consider that the Covid-19 pandemic has had a material impact on the group's financial position at the balance sheet date and thus no adjustments have been made to the carrying values of the group's assets and liabilities as at 31 October 2020.

Advances or credits have been granted by the group to its directors as follows: