| Optimum Drywall Systems Limited |
| Strategic Report |
|
| The directors present their strategic report for the Year ended 31st March 2021. |
|
| Review of the business |
| Optimum Drywall Systems Ltd fulfils the needs of its Construction Client Base through Drylining and Firestopping services. Our success is predominantly founded on the skills and loyalty of our staff, whom ensure we win repeat business by their ability to develop relationships with our client’s work force. This has been evidenced by the number of 15-year service awards we have celebrated in 2021. |
|
| During 2021 a level of unprecedented volatility has been experienced within our sector, demonstrated by the rising cost of public liability and credit insurance premiums across the industry. We have also been affected by the difficulties our supply chain has experienced with material and labour rises coupled with availability issues. |
|
| Despite the difficult conditions our sector has, and is enduring we have managed to navigate our way to an 8th successive year of profitability, despite a reduction in turnover due to COVID. We have been shortlisted for a prestigious award relating to project we completed during COVID and which was used to support our NHS during their most challenging year for decades. |
|
| We still have significant work in progress to realise on three of highest valued projects we have ever undertaken and secured projects for 2022 with new clients to ensure our strategy of reducing client concentration risk is achieved during a potentially turbulent year ahead. |
|
| Principal risks and uncertainties |
| The success of our business is dependent on our reputation to deliver a great service to our Clients. |
|
| Reputational Risk is managed by promoting our business successes through social media communications whilst ensuring our integrity and credibility is maintained. During 2021 we have increased our social media output and appointed an external marketing professional to keep up with the frequency of our activity. |
|
| IT/Security Risk is a risk we face as in all companies and individuals alike. We are minimising this risk by retaining an In - House IT Specialist and investing continuously in the most up to date security software. We have expanded the additional layer of security for remote access across the business and to all applications to further improve security. |
|
| Health and Safety has a huge impact on our business and carries significant risks. By maintaining our exceptional H and S standards we prioritise the protection of our contractors and employees. We invest in regular H and S training and implement a very robust and unforgiving H and S culture. |
|
| Succession planning for our employee skill base has been identified as a risk in our industry and we mitigate this by providing our workforce with the necessary skills to provide the service we want to deliver. We continue to offer training programmes and have promoted within our workforce this year demonstrating our commitment to our staff that we are passionate about personal development. |
|
| Political and Policy changes create uncertainty globally, especially after Brexit and during covid. Our aim is to spot potential legislative changes early, monitor the risks for our business and develop contingency plans internally, consulting with third party organisations if necessary. We have ensured our transition to IR35 and Vat Reversal has been regularly communicated to those internally and externally affected and we have mitigated risk by taking advice prior to implementation. |
|
| Development and performance |
| We have seen significant growth for our firestopping arm for the 4th consecutive year, and this positive contribution to reported retained profit has been notably rewarding for the team. During the year our firestopping workforce have gained valuable technical experience, having had exposure to an array of firestopping complexities on both small standalone projects and sizeable Drylining projects. One of these has been crowned as the biggest firestopping project in the South West and Wales, which we are immensely proud to be part of. Our investment in the retention, recruitment and training of firestopping specialists has been visually successful as we have grown our team significantly in 2021. |
|
| Optimum has been successful in its strategy to expend laterally within the industry and were appointed Principal Contractor during 2021 on the refurbishment and construction of a 60 bed care home. Having had such a positive experience in this role it has reenforced our belief in our capabilities to expand our main contractor provision over the next three to five years. |
|
| Our Welsh Division has continued to thrive during 2021 and it is our plan to grow our Drylining presence in Wales. We had already invested in a Welsh office but to further our desire to see growth in this department we have replicated the internal hire initiative which had reduced hire costs for the company over the years. The Welsh Office have recruited locally to manage, control and deliver their own plant and are looking to expand their premises next year. |
|
| Financial key performance indicators |
| To promote confidence and manage liquidity risk within the Company and with its stakeholders we maintain appropriate bank reserves. We manage our credit and cash flow risk by monitoring the cash position daily and this is considered a financial strength of the company as a whole. |
|
| In order to realise its strategic aims, the company has identified areas of strategic focus and has put in place Key Performance Indicators (KPI's) to measure and assess progress. |
|
| Turnover for the year has decreased by 23% (£3.85m), which are back to levels seen in 2017/18, however, despite competitive market conditions gross margins have increased from 15.6% in the previous year to 17.7% in 2020/21. |
|
| Working capital as a percentage of turnover increased to 7.4% from 5.3% in the previous year. |
|
| The accident rate in 2021 was 6.3, compared to 2.4 in 2020. The index is calculated by the number of reportable incidents by 100,000 hours worked. |
|
| Whilst these KPI's are helpful in measuring the Company's performance, it should be stressed that they are not exhaustive and that many additional performance measures are used to monitor progress. |
|
| This report was approved by the board on 20th December 2021 and signed on its behalf. |
|
|
|
| Mr S. Britton |
| Director |
|
|
| Basis of 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. |
|
| Other matters |
| The financial statements for the previous period were unaudited. |
|
| 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 directors' use of the going concern basis of accounting in the preparation of the financial statements is not appropriate; or |
| ● |
the directors have not disclosed in the financial statements any identified material uncertainties that may cast significant doubt about the 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 report and financial statements, other than the financial statements and our auditor's report thereon. The directors are 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 the audit: |
| ● |
the information given in the strategic report and the directors’ report for the financial year for which the financial statements are prepared is consistent with the financial statements; and |
| ● |
the strategic report and the directors’ report have been prepared in accordance with applicable legal requirements. |
|
| Matters on which we are required to report by exception |
|
|
Stocks |
|
Stocks are measured at the lower of cost and estimated selling price less costs to complete and sell. Cost is determined using the first in first out method. The carrying amount of stock sold is recognised as an expense in the period in which the related revenue is recognised. |
|
|
Debtors |
|
Short term debtors are measured at transaction price (which is usually the invoice price), less any impairment losses for bad and doubtful debts. Loans and other financial assets are initially recognised at transaction price including any transaction costs and subsequently measured at amortised cost determined using the effective interest method, less any impairment losses for bad and doubtful debts. |
|
|
Creditors |
|
Short term creditors are measured at transaction price (which is usually the invoice price). Loans and other financial liabilities are initially recognised at transaction price net of any transaction costs and subsequently measured at amortised cost determined using the effective interest method. |
|
|
Taxation |
|
A current tax liability is recognised for the tax payable on the taxable profit of the current and past periods. A current tax asset is recognised in respect of a tax loss that can be carried back to recover tax paid in a previous period. Deferred tax is recognised in respect of all timing differences between the recognition of income and expenses in the financial statements and their inclusion in tax assessments. Unrelieved tax losses and other deferred tax assets are recognised only to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Deferred tax is measured using the tax rates and laws that have been enacted or substantively enacted by the reporting date and that are expected to apply to the reversal of the timing difference, except for revalued land and investment property where the tax rate that applies to the sale of the asset is used. Current and deferred tax assets and liabilities are not discounted. |
|
|
Provisions |
|
Provisions (ie liabilities of uncertain timing or amount) are recognised when there is an obligation at the reporting date as a result of a past event, it is probable that economic benefit will be transferred to settle the obligation and the amount of the obligation can be estimated reliably. |
|
|
Leased assets |
|
A lease is classified as a finance lease if it transfers substantially all the risks and rewards incidental to ownership. All other leases are classified as operating leases. The rights of use and obligations under finance leases are initially recognised as assets and liabilities at amounts equal to the fair value of the leased assets or, if lower, the present value of the minimum lease payments. Minimum lease payments are apportioned between the finance charge and the reduction in the outstanding liability using the effective interest rate method. The finance charge is allocated to each period during the lease so as to produce a constant periodic rate of interest on the remaining balance of the liability. Leased assets are depreciated in accordance with the company's policy for tangible fixed assets. If there is no reasonable certainty that ownership will be obtained at the end of the lease term, the asset is depreciated over the lower of the lease term and its useful life. Operating lease payments are recognised as an expense on a straight line basis over the lease term. |
|
|
Pensions |
|
Contributions to defined contribution plans are expensed in the period to which they relate. Amounts not paid are shown in accruals as a liability in the Statement of financial position. |
|
|
Going Concern |
|
Management have assessed all available information about the future of its business and are satisfied that it is appropriate that these accounts have been prepared on the going concern basis. |
|
|
Financial Instruments |
|
The Company only enters into basic financial instruments transactions that result in the recognition of financial asses and liabilities like trade and other debtors and creditors, loans from banks and other third parties and loans to related parties. |
|
|
Debt instruments (other than those wholly repayable or receivable within one year), including loans and other accounts receivable and payable, are initially measured at present value of the future cash flows and subsequently at amortised cost using the effective interest method. Debt instruments that are payable or receivable within one year, typically trade debtors and creditors, are measured, initially and subsequently, at the undiscounted amount of the cash or other consideration expected to be paid or received. However, if the arrangements of a short-term instrument constitute a financing transaction, like the payment of a trade debt deferred beyond normal business terms or financed at a rate of interest that is not a market rate or in case of an out-right short-term loan not at market rate the financial asset or liability is measured, initially, at the present value of the future cash flow discounted t a market rate of interest for a similar debt instrument and subsequently at amortised cost. |
|
|
Financial assets that are measured at cost and amortised cost are assessed at the end of each reporting period for objective evidence of impairment. If objective evidence of impairment is found, an impairment loss is recognised in the Statement of Comprehensive Income. |
|
|
For financial assets measured at amortised cost, the impairment loss is measured as the difference between an asset's carrying amount and the present value of estimated cash flows discounted at the asset's original effective interest rate. If a financial asset has a variable interest rate, the discounted rate for measuring any impairment loss is the current effective interest rate determined under the contract. |
|
|
For financial assets measured at cost less impairment, the impairment loss is measured as the difference between an asset's carrying amount and best estimate of the recoverable amount, which is an approximation of the amount that the Company would receive for the asset if it were to be sold at the reporting date. |
|
|
Financial assets and liabilities are offset and the net amount reported in the Statement of Financial Position when there is an 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. |
|
|
| 2 |
Analysis of turnover |
2021 |
|
2020 |
| £ |
£ |
|
|
Revenue from construction contracts |
12,750,120 |
|
16,604,778 |
|
|
|
|
|
|
|
|
|
|
By geographical market: |
|
|
UK |
12,750,120 |
|
16,604,778 |
|
|
|
|
|
|
|
|
|
|
| 3 |
Operating profit |
2021 |
|
2020 |
| £ |
£ |
|
This is stated after charging: |
|
|
Depreciation of owned fixed assets |
55,011 |
|
57,573 |
|
Operating lease rentals |
28,493 |
|
35,220 |
|
Auditors' remuneration for audit services |
5,150 |
|
5,025 |
|
|
|
|
|
|
|
|
|
|
| 4 |
Directors' emoluments |
2021 |
|
2020 |
| £ |
£ |
|
|
Emoluments |
330,180 |
|
277,279 |
|
Company contributions to defined contribution pension plans |
42,819 |
|
79,708 |
|
|
|
|
|
|
372,999 |
|
356,987 |
|
|
|
|
|
|
|
|
|
|
| 5 |
Staff costs |
2021 |
|
2020 |
| £ |
£ |
|
|
Wages and salaries |
1,050,736 |
|
1,088,538 |
|
Social security costs |
102,314 |
|
99,824 |
|
Other pension costs |
55,040 |
|
93,952 |
|
|
|
|
|
|
1,208,090 |
|
1,282,314 |
|
|
|
|
|
|
|
|
|
|
|
Average number of employees during the year |
Number |
Number |
|
|
Administration |
29 |
|
29 |
|
Operational |
41 |
|
41 |
|
|
|
|
|
|
70 |
|
70 |
|
|
|
|
|
|
|
|
|
|
| 6 |
Government grants |
|
|
During the year other operating income of £211,613 was received from the government under the job retention scheme. The amount of grants recognised in the financial statements was £211,613 (2020: £Nil). |
|
|
| 7 |
Interest payable |
2021 |
|
2020 |
| £ |
£ |
|
|
Bank loans and overdrafts |
4,887 |
|
6,241 |
|
|
|
|
|
|
|
|
|
|
| 8 |
Taxation |
2021 |
|
2020 |
| £ |
£ |
|
Analysis of charge in period |
|
Current tax: |
|
UK corporation tax on profits of the period |
121,600 |
|
144,882 |
|
|
|
|
|
|
|
|
|
|
Deferred tax: |
|
Origination and reversal of timing differences |
(599) |
|
1,883 |
|
|
|
|
|
|
|
|
|
|
|
Tax on profit on ordinary activities |
121,001 |
|
146,765 |
|
|
|
|
|
|
|
|
|
|
|
Factors affecting tax charge for period |
|
The differences between the tax assessed for the period and the standard rate of corporation tax are explained as follows: |
|
|
|
|
|
|
|
2021 |
|
2020 |
| £ |
£ |
|
Profit on ordinary activities before tax |
655,580 |
|
639,589 |
|
|
|
|
|
|
|
|
|
|
Standard rate of corporation tax in the UK |
19% |
|
19% |
|
| £ |
£ |
|
Profit on ordinary activities multiplied by the standard rate of corporation tax |
|
124,560 |
|
121,522 |
|
|
Effects of: |
|
Expenses not deductible for tax purposes |
(4,773) |
|
24,653 |
|
Capital allowances for period in excess of depreciation |
1,813 |
|
(1,293) |
|
|
Current tax charge for period |
121,600 |
|
144,882 |
|
|
|
|
|
|
|
|
|
|
|
Factors that may affect future tax charges |
|
|
|
| 9 |
Tangible fixed assets |
|
|
Land and buildings |
|
Plant and machinery |
|
Motor Vehicles |
|
Total |
|
|
At cost |
|
At cost |
|
At cost |
| £ |
£ |
£ |
£ |
|
Cost or valuation |
|
At 1 April 2020 |
447,087 |
|
170,900 |
|
100,295 |
|
718,282 |
|
Additions |
- |
|
10,908 |
|
37,200 |
|
48,108 |
|
Disposals |
- |
|
(6,126) |
|
(26,900) |
|
(33,026) |
|
At 31 March 2021 |
447,087 |
|
175,682 |
|
110,595 |
|
733,364 |
|
|
|
|
|
|
|
|
|
|
Depreciation |
|
At 1 April 2020 |
166,503 |
|
112,460 |
|
62,491 |
|
341,454 |
|
Charge for the year |
13,638 |
|
27,158 |
|
14,215 |
|
55,011 |
|
On disposals |
- |
|
(5,556) |
|
(26,900) |
|
(32,456) |
|
At 31 March 2021 |
180,141 |
|
134,062 |
|
49,806 |
|
364,009 |
|
|
|
|
|
|
|
|
|
|
Carrying amount |
|
At 31 March 2021 |
266,946 |
|
41,620 |
|
60,789 |
|
369,355 |
|
At 31 March 2020 |
280,584 |
|
58,440 |
|
37,804 |
|
376,828 |
|
|
|
|
|
|
|
|
|
|
|
| 10 |
Stocks |
2021 |
|
2020 |
| £ |
£ |
|
|
Raw materials and consumables |
13,071 |
|
12,662 |
|
|
|
|
|
|
|
|
|
|
| 11 |
Debtors |
2021 |
|
2020 |
| £ |
£ |
|
|
Other debtors |
170,195 |
|
104,216 |
|
Construction contract debtors |
2,950,348 |
|
2,174,165 |
|
|
|
|
|
|
3,120,543 |
|
2,278,381 |
|
|
|
|
|
|
|
|
|
|
| 12 |
Creditors: amounts falling due within one year |
2021 |
|
2020 |
| £ |
£ |
|
|
Bank overdrafts |
- |
|
69,281 |
|
Bank loans |
58,034 |
|
7,638 |
|
Trade creditors |
1,792,743 |
|
1,229,298 |
|
Other taxes and social security costs |
206,865 |
|
294,041 |
|
Other creditors |
425,353 |
|
335,827 |
|
|
|
|
|
|
2,482,995 |
|
1,936,085 |
|
|
|
|
|
|
|
|
|
|
| 13 |
Creditors: amounts falling due after one year |
2021 |
|
2020 |
| £ |
£ |
|
|
Bank loans |
102,338 |
|
110,772 |
|
|
|
|
|
|
|
|
|
|
| 14 |
Loans |
2021 |
|
2020 |
| £ |
£ |
|
Loans not wholly repayable within five years: |
|
Loan 1 Variable rate loan maturing January 2032 |
54,504 |
|
58,545 |
|
Loan 2 Fixed rate loan maturing January 2032 at 5.45% |
55,867 |
|
59,865 |
|
Loan 3 Paid back during 2021/22 |
50,000 |
|
- |
|
|
|
|
|
|
160,371 |
|
118,410 |
|
|
|
|
|
|
|
|
|
|
Analysis of maturity of debt: |
|
Within one year or on demand |
58,034 |
|
7,638 |
|
Between one and two years |
8,404 |
|
8,009 |
|
Between two and five years |
27,625 |
|
26,320 |
|
After five years |
66,308 |
|
76,443 |
|
|
|
|
|
|
160,371 |
|
118,410 |
|
|
|
|
|
|
|
|
|
|
The bank loans and overdrafts are secured on the property and other assets of the company. |
|
|
| 15 |
Deferred taxation |
2021 |
|
2020 |
| £ |
£ |
|
|
Accelerated capital allowances |
33,240 |
|
33,839 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2021 |
|
2020 |
| £ |
£ |
|
|
At 1 April |
33,839 |
|
31,956 |
|
(Credited)/charged to the profit and loss account |
(599) |
|
1,883 |
|
|
At 31 March |
33,240 |
|
33,839 |
|
|
|
|
|
|
|
|
|
|
|
| 16 |
Share capital |
Nominal |
|
2021 |
|
2021 |
|
2020 |
| value |
Number |
£ |
£ |
|
Allotted, called up and fully paid: |
|
Ordinary shares |
£1 each |
|
80 |
|
80 |
|
80 |
|
B Ordinary shares |
£1 each |
|
20 |
|
20 |
|
20 |
|
|
|
|
|
|
100 |
|
100 |
|
|
|
|
|
|
|
|
|
|
| 17 |
Profit and loss account |
2021 |
|
2020 |
| £ |
£ |
|
|
At 1 April |
1,113,389 |
|
985,956 |
|
Profit for the financial year |
534,579 |
|
492,824 |
|
Dividends |
(474,369) |
|
(365,391) |
|
|
At 31 March |
1,173,599 |
|
1,113,389 |
|
|
|
|
|
|
|
|
|
|
| 18 |
Dividends |
2021 |
|
2020 |
| £ |
£ |
|
|
Dividends on ordinary shares (note 17) |
474,369 |
|
365,391 |
|
|
|
|
|
|
|
|
|
|
|
| 19 |
Other financial commitments |
|
|
Total future minimum lease payments under non-cancellable operating leases: |
|
|
|
Other |
|
Other |
|
|
2021 |
|
2020 |
| £ |
£ |
|
Falling due: |
|
within one year |
35,377 |
|
41,426 |
|
within two to five years |
14,695 |
|
19,006 |
|
|
50,072 |
|
60,432 |
|
|
|
|
|
|
| 20 |
Related party transactions |
|
Optimum Combined Services Limited |
|
Mr S Britton and Mr M S Davies are also directors and shareholders in Optimum Combined Services Limited. The company traded with Optimum Combined Services Limited during the year with arms length commercial transactions, including a management charge between the two companies for £50,000 per annum (2020: £60,000). At the balance sheet date the company owed £9,893 (2020: £nil) to Optimum Combined Services Limited, by way of trade creditor and £nil (2020: £nil) by way of a interest free loan, repayable on demand. As at the balance sheet date the company owed £50,000 (2020: The company was owed £2,000) by Optimum Combined Services Ltd. |
|
BCD Partnership |
|
Mr and Mrs Britton and Mr and Mrs Davies are also partners of BCD Partnership. At the balance sheet date the company was owed £32,696 from BCD Partnership (2020: The company owed £64,466). |
|
Mr and Mrs Britton (Directors) |
|
Mr and Mrs Britton own the property at Unit 7A, East Park Trading Estate, which is leased to the company. Annual rent payments amount to £18,000 (2020: £18,000). Lettings are assessed at arms length. At the balance sheet date £6,300 (2020: Nil) is owed to Mr and Mrs Britton. |
|
Mr Matthew Davies (Director) |
|
The directors loan account of Mr Davies was overdrawn at the year by £24,467, which was paid within 9 months of the year end. |
|
|
| 21 |
Controlling party |
|
|
The company is under the control of Mr S and Mrs J Britton by virtue of their majority shareholding. |
|
|
| 22 |
Presentation currency |
|
|
The financial statements are presented in Sterling. |
|
|
| 23 |
Legal form of entity and country of incorporation |
|
|
Optimum Drywall Systems Limited is a private company limited by shares and incorporated in England. |
|
|
| 24 |
Principal place of business |
|
|
The address of the company's principal place of business and registered office is: |
|
|
Unit 7A, Eastpark Trading Estate |
|
Gordon Road, |
|
Fishponds, |
|
Bristol. |
|
BS5 7DR |
