DOMIS_CONSTRUCTION_LIMITE - Accounts
DOMIS_CONSTRUCTION_LIMITE - Accounts
The directors present the strategic report for the year ended 30 April 2021.
The company is engaged in building construction and development.
The company is a wholly owned subsidiary of Domis Property Group Limited.
The Directors are delighted to be able to report another profitable year for the company, with profit before tax increasing year on year, despite a slight reduction in turnover. This result is very pleasing considering the major disruption caused by the COVID-19 pandemic and the subsequent national lockdown, as well as the economic uncertainty linked to this and Brexit. Whilst the impact of COVID-19 caused some operational challenges in the early part of the financial year, we were able to adapt our working practices to ensure that progress on all our projects could continue, whilst keeping our employees safe. During the year we successfully completed several projects, namely, The Crescent, Ingersley Vale, Insignia & No.1 Old Trafford. In addition to this, we were live on site at 6 other projects, with several others being planned to start early in the new financial year.
We are continually developing and improving our bespoke boutique operating model supported by a workforce which totalled 130 staff at the end of the year. We continue to partner with flexible, committed and responsive subcontractors and suppliers, which has been particularly important in recent months given the constraints around the availability of materials and the subsequent increase in the price of materials. We are continually investing in IT, plant and equipment (both in this company and through the fellow group company, Domis Plant Limited).
The company continues to operate in a competitive marketplace and the Directors and Senior Management team are committed to maintain and enhance customer service and satisfaction levels. Underpinned by an entrepreneurial culture the business continues to actively seek out ways to disrupt the market through innovative working practices and continued commitment to research and development. This will ensure that new efficiencies are created, current efficiencies are enhanced, and that we continue to ensure that our customers’ requirements are fulfilled. Certainty in delivery, quality and value for money are at the heart of everything we do.
The Directors are extremely pleased to post a very satisfactory set of accounts in our fourth year of trading. Turnover was £84.9m and profit before tax was £5.8m.
The Directors are pleased to report the trading activities and results thereon have resulted in a positive level of cash conversion.
The company undertakes regular business assessments as part of its director reporting protocols. The company has put in place mitigation plans for any risks identified.
The principal risks and uncertainties facing the company include the general economic climate in the UK, heightened by the effects of COVID-19 and specifically that in the construction industry. In addition, the recent shortage of certain materials and the associated price increases have been identified as a risk, but we continue to work closely with our supply chain to ensure any impact is mitigated. The business continually looks at its performance against budget and carefully appraises new work quoted for.
The key performance indicators (KPI’s) that the company regards as important are:
a. gross profit margin;
b. the ratio of administrative expenses to turnover;
c. the ratio of operating profit to turnover; and
d. earnings before interest, tax, depreciation, impairment charge and amortisation (EBITDA). For the year under review, those Key Performance Indicators were:
| 2021 | 2020 |
Gross margin | 10.3% | 7.3% |
Administrative expenses to turnover | 3.1% | 2.9% |
Operating profit to turnover | 7.1% | 4.3% |
Earnings before interest, tax, depreciation and amortisation | £6,171,275 | £4,693,807 |
The outlook remains very positive with several construction projects that have started since the year end as well as others that are due to start over the next few months. We currently have £445m of secured work which will continue to generate revenue to September 2024. In addition to this, we have over £200m of work in the pipeline which is likely to be secured and this will generate additional revenue between May 2022 and January 2026. There are also other projects that are being considered.
Our strategy will continue to develop, with the evaluation of new markets to complement our success in core areas. Our ultimate aim remains a simple one, to be the best-in-class contractor of choice within the markets in which we operate.
This is an overview of how Directors performed their duty to promote the success of the company under section 172 of the Companies Act 2006.
Duty to promote the success of the Company
In executing our strategy, Directors must act in accordance with a set of general duties detailed in section 172 of the Companies Act 2006. These general duties include a duty to promote the success of the Company, and specifically, to act in a way that the Director considers, in good faith, would be most likely to promote the success of the Company for the benefit of its shareholders as a whole and, in doing so, having regard (amongst other matters) to the:
• likely consequences of any decisions in the long-term.
• interests of the Company's employees.
• need to foster the Company's business relationships with suppliers, customers, and others.
• impact of the Company's operations on the community and environment.
• desirability of the Company maintaining a reputation for high standards of business conduct; and
• need to act fairly between shareholders of the Company.
This statement has been prepared in accordance with the requirements of The Companies (Miscellaneous Reporting) Regulations 2018, which require the Company to describe how the Directors have had regard to the matters set out in section 172 of the Companies Act 2006 during the financial year under review. It is noted that the Directors have always acted in accordance with such duties in their decision making and they will continue to do so. Considering the additional disclosure requirements, we have set out in the strategic report how the Directors have fulfilled their duties during the year ended 30 April 2021
Having regard to the likely consequences of any decisions in the long-term
The Board cultivates strong relationships with key stakeholders so that it is well placed and sufficiently informed to take their considerations into account when making decisions and assessing any likely long-term impact of those decisions. Domis Property Group’s core strategy is to provide a bespoke boutique operating model and be the best-in-class contractor of choice and this core strategy underpins all Board decisions and the creation of long-term value for all stakeholders.
Having regard to the interest of the Company’s employees
The Board understands that the Group’s employees are fundamental to its long-term success. The health, safety and well-being of the employees are of paramount importance alongside the provision of an ethical workplace. The Group engages in an active way with its employees. Many of the staff work on site and senior management regularly complete site visits to maintain timely interaction.
Having regard to the need to foster the Company's business relationships with suppliers, customers, and others.
Fostering positive business relationships with key stakeholders, such as suppliers and customers is also important to the success of the Group’s businesses. As a result of Domis’ model, engagement with customers is a matter that is largely delegated to the management teams, who know their customers best. The Board has been and continues to be, available to support the business in this area as and when required and will continue to maintain the relationships with key suppliers and customers. Our business has heavily invested in their relationships with suppliers and customers throughout the year ended 30 April 2021.
Having regard to the impact of the Company’s operations on the community and environment
In their decision making, the Directors need to have regard to the impact of the Company’s operations on the community and environment. The Board plays a constructive role in tackling issues through engagement and investment.
It is important for the long-term future of our business that we protect and enhance the environment. Climate change will affect how much non-renewable energy is available, and the stakeholders are rightly concerned about the resilience of supplies and are looking to companies to adapt and take the necessary steps to reduce their climate change risk. We are committed to reducing our carbon footprint and contribution to climate change where economically viable.
Having regards to the desirability of the Company maintaining a reputation for high standards of business conduct
Customer fulfilment and customer satisfaction are essential for us to consistently deliver a high-quality service. The Board recognises that culture, values, and standards are key contributors to how a company creates and sustains value over the longer-term, to enable it to maintain a reputation for high standards of business conduct which guide and assist in the Board’s decision making, and in doing so, help promote the Company’s success, recognising, amongst other things, the likely consequences of any decision in the long-term and wider stakeholder considerations.
The standards set by the Board mandate certain requirements and behaviours with regards to the activities of the Directors, the Group’s employees and others associated with the Group.
Having regard to the need to act fairly between shareholders of the Company
The Company has one class of ordinary shares, which have the same rights as regards voting, distributions and on a liquidation. Management are shareholders in the Company. On this basis the Board feels that the executive Directors are fully aligned with the shareholders.
On the basis of the above, the members of the Board consider, both individually and together, that they have acted in the way they consider, in good faith, would be most likely to promote the success of the Company for the benefit of its members as a whole (having regard to the stakeholders and matters set out in s172(1)(a-f) of the Companies Act 2006) in the decisions taken during the year ended 30 April 2021.
On behalf of the board
The directors present their annual report and financial statements for the year ended 30 April 2021.
The results for the year are set out on page 12.
No ordinary dividends were paid. The directors do not recommend payment of a final dividend.
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
The auditor, Cowgill Holloway LLP, is deemed to be reappointed under section 487(2) of the Companies Act 2006.
Following the change in reporting requirements, this is our first report on energy consumption and greenhouse gas emissions.
We have followed the 2019 HM Government Environmental Reporting Guidelines: Including streamlines energy and carbon reporting guidance. We have used the 2019 UK Government’s Conversion Factors for Company Reporting.
The chosen intensity measurement ratio is total gross emissions in metric tonnes CO2e per £100,000 of turnover, the recommended ratio for the sector.
In the year ended 30 April 2021, the company has relocated the Head Office from Birchwood to Salford which has meant that all employees working in the Head Office are much closer to most of the sites that we are working on. This has reduced the carbon emissions produced as travel time for meetings has been reduced. Our sites have continued to use compactors on some sites which offers a more environmentally friendly way of removing waste from sites as well as reducing the frequency of visits to our sites from skip and bin companies.
The following energy saving measures have been implemented post year end or are currently being considered.
Considering offering electric cars to our employees as an alternative to car allowances.
Looking to install electric vehicle charge points on our car parks and on any car parking spaces within sites we are constructing to encourage more use of electric vehicles.
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.
give a true and fair view of the state of the company's affairs as at 30 April 2021 and of its profit for the year then ended; have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and have been prepared in accordance with the requirements of the Companies Act 2006.
Basis for opinion
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
Other information
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of our audit:
the information given in the strategic report and the directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
the strategic report and the directors' report have been prepared in accordance with applicable legal requirements.
adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or the financial statements are not in agreement with the accounting records and returns; or certain disclosures of remuneration specified by law are not made; or we have not received all the information and explanations we require for our audit.
As explained more fully in the directors' responsibilities statement, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the directors are responsible for assessing the company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below.
We identified areas of laws and regulations that could reasonably be expected to have a material effect on the financial statements from our general commercial and sector experience, and through discussions with the directors (as required by auditing standards) and discussed with the directors the policies and procedures regarding compliance with laws and regulations. We communicated identified laws and regulations throughout our team and remained alert to any indications of non-compliance throughout the audit. The potential effect of these laws and regulations on the financial statements varies considerably.
Firstly, the company is subject to laws and regulations that directly affect the financial statements including financial reporting legislation and taxation legislation. We assessed the extent of compliance with these laws and regulations as part of our procedures on the related financial statement items.
Secondly, the company is subject to many other laws and regulations where the consequences of non-compliance could have a material effect on amounts or disclosures in the financial statements, for instance through the imposition of fines or litigation or the loss of the company's license to operate. We identified the following areas as those most likely to have such an effect: laws related to health and safety, construction, the nature of the company's activities and the regulated nature of the company's activities.
Auditing standards limit the required audit procedures to identify non-compliance with these laws and regulations to enquiry of the directors and inspection of regulatory and legal correspondence, if any. Through these procedures we did not become aware of any actual or suspected non-compliance
Owing to the inherent limitations of an audit, there is an unavoidable risk that we may not have detected some material misstatements in the financial statements, even though we have properly planned and performed our audit in accordance with auditing standards. For example, the further removed non-compliance with laws and regulations (irregularities) is from the events and transactions reflected in the financial statements, the less likely the inherently limited procedures required by auditing standards would identify it. In addition, as with any audit, there remained a higher risk of non-detection of irregularities, as these may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal controls. We are not responsible for preventing non-compliance and cannot be expected to detect non-compliance with all laws and regulations.
We design procedures in line with our responsibilities, outlined below to detect material misstatement due to fraud:
Matters are discussed amongst the audit engagement team regarding how and where fraud might occur in the financial statements and any potential indicators of fraud
Identifying and assessing the design and effectiveness of controls that management have in place to prevent and detect fraud
Detecting and responding to the risks of fraud following discussions with management and enquiring as to whether management have knowledge of any actual, suspected or alleged fraud;
A further description of our responsibilities is available on the Financial Reporting Council’s website at: https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.
Use of our report
This report is made solely to the company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's members, as a body, for our audit work, for this report, or for the opinions we have formed.
The income statement has been prepared on the basis that all operations are continuing operations.
Domis Construction Limited is a private company limited by shares incorporated in England and Wales. The registered office is Unit 2, Block C, 14 Hulme Street, Salford, M5 4ZG.
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 gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is credited or charged to profit or loss.
At each reporting period end date, the company reviews the carrying amounts of its tangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the company estimates the recoverable amount of the cash-generating unit to which the asset belongs.
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.
The “percentage of completion method” is used to determine the appropriate amount to recognise in a given period. The stage of completion is measured by the proportion of contract costs incurred for work performed to date compared to the estimated total contract costs. Costs incurred in the year in connection with future activity on a contract are excluded from contract costs in determining the stage of completion. These costs are presented as stocks, prepayments or other assets depending on their nature, and provided it is probable they will be recovered.
Basic financial assets, which include trade and other receivables 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 are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the company transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the company after deducting all of its liabilities.
Basic financial liabilities, including trade and other payables, 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 payables 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 payables 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 company’s contractual obligations expire or are discharged or cancelled.
Equity instruments issued by the company are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the company.
In the application of the company’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.
The estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are as follows.
In line with accounting standards for construction contracts, the company recognises revenue and profit based on the stage of completion and costs to complete. In doing so, management must make certain estimations. The management review all contracts on a monthly basis and assess financial and operational performance versus budget as well as physically inspecting the work to corroborate the stage of completion.
Turnover in the year was £84,862,262 (2020: £105,927,794). All turnover was generated from the principal activity in the United Kingdom.
The average monthly number of persons employed by the company during the year was:
Their aggregate remuneration comprised:
Investment income includes the following:
The actual charge/(credit) for the year can be reconciled to the expected charge for the year based on the profit or loss and the standard rate of tax as follows:
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.
At the reporting end date the company had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:
The company is a wholly owned subsidiary of Domis Property Group Limited, which is registered in
England and Wales. Domis Property Group Limited prepares group accounts of which this company is a member. The registered office address of Domis Property Group Limited is Unit 2, Block C, 14 Hulme
Street, Salford, M5 4ZG.
There is no ultimate controlling party for this company.