Francis Construction Limited - Limited company accounts 23.1

REGISTERED NUMBER: 00384619 (England and Wales)

STRATEGIC REPORT,

REPORT OF THE DIRECTORS AND

FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2022

FOR

FRANCIS CONSTRUCTION LIMITED

Page

Company Information

1

Strategic Report

2

Report of the Directors

6

Report of the Independent Auditors

8

Profit and loss account

12

Balance Sheet

13

Statement of Changes in Equity

14

Notes to the Financial Statements

15

DIRECTORS:

E M C Barrett

E W J Barrett

A Wooldridge

B T Ramsay

SECRETARY:

D W J Barrett

REGISTERED OFFICE:

Armour House

Colthrop Lane

Thatcham

Berkshire

RG19 4PD

REGISTERED NUMBER:

00384619 (England and Wales)

The directors present their strategic report for the year ended 31 December 2022.

REVIEW AND PERFORMANCE OF THE BUSINESS

Performance of the Company in 2022 was positive with an increased turnover of £24.8m (2021 - £16.1m), gross profit of £1.7m (2021 - £1.3m) and operating profit of £241k (2021 - £8k). The Company has continued its upward trend over the recent years and coupled with strong teamwork and good morale the business has strengthened further.

The results are in line with targets and back up to expected levels following the disruption caused by the pandemic. Construction activities continued successfully through 2022 building on the Directors' focus for repeat business with key clients, high performing teams, and developments in the Health and Defence sectors. In the wider world, economic factors - Ukraine War, political uncertainty, and rising prices - caused short term turbulence in the construction market. This resulted in some hesitancy with clients giving the green light for projects go ahead.

The Company continues its Vision 2025 objectives to deliver strong results in all areas of its critical success factors from service, people, financial and environmental performance.

The Company remains focused on building long term relationships with clients and in doing so has developed strong opportunities for both new and repeat business. This has been bolstered through successful participation in framework bids, strong performance in new sectors and promoting ethical business practices. 97% of our clients want to work with us again or recommend us.

Cashflow is the lifeblood of our business success. The Company closely and prudently manages working capital to provide good liquidity to fund operations and ensure commitments are always met on time. Investment in working capital funding is underpinned by retained earnings. The net current assets - a key indicator of liquidity - improved by £398k during the year to £803,229 (2021 - £404,891) and has further strengthened the balance sheet position. The Company remains in a strong position without any debt.

Keeping our supply chain engaged is a key focus. Our collaborative approach and prompt payment policies continue to promote liquidity and good relationships with the wider supply chain.

Our carbon emission assessments (Scopes 1 and 2) show an improving trend towards reducing our carbon footprint. Waste production and energy usage is class leading and is monitored to improve waste management performance and energy efficiency. Our fleet of vehicles fleet is now 47% electric and 100% powered by renewable energy. Further initiatives to drive the business towards carbon neutral delivery and operation remains a key focus.

The Company has maintained its ISO 9001 accreditation for Quality Management Systems, ISO 14001 accreditation for the Environmental Management Systems and ISO 45001 for Health & Safety Management. There have been no environmental incidents of note and our mantra of looking after the environment and sending people home safely from work continues. The Company is proud to continue its environmental success in diverting more than 98% of its waste from landfill. Our CyberEssentials accreditation was maintained for work in secure and sensitive environments.

REVIEW AND PERFORMANCE OF THE BUSINESS (continued)

The Company has a strong commitment to develop and support its teams. The staffing structure of the business continues to develop with the result of a modern, robust, and strong main contracting company that has the appropriate number of technical and administration personnel to deliver our vision of being the regional contractor of choice, delivering a personal touch. Staff retention stays well above industry average at 97% (2021 - 97%) and the business continues to invest in the long-term development of the team. Our employees are central to our success and once again, the Directors would like to extend their thanks and gratitude for the efforts of all the team during the year.

The Company recognises it cannot be successful without supporting communities we work and live in and have been proud to donate 369 hours in the year to support stakeholders and promote the construction industry.

The Company is proud to have received two Sanctuary Awards for delivery of sustainable projects by the MOD and a Constructing Excellence Award for delivery of the first Net Zero facility for Portsmouth Naval Base. Family Business United also named Francis Construction as family business of the year in the Property and Construction sector.

PRINCIPAL RISKS AND UNCERTAINTIES

The activity of building and construction, by its very nature, presents a range of risks that can at times make outcomes difficult to predict. Key risks include financial and operational, including health and safety that require close management to ensure a successful conclusion to each contract. The Company is a well-established and very experienced building main contractor, over the years it has developed cultural working practices, operating procedures, and financial policies to manage all risks inherent in its activities. These continue to be developed and strengthened.

From the outset, tenders are fully assessed to ensure they reflect the specification of works required, the cost of carrying out the works and provide the Company with a commercially viable return on capital. From inception of a successful tender and throughout the duration of works, the performance of each contract is continually tracked against budget and regularly scrutinised by management. Key relationship with the client principle is fostered to ensure project relationships and outcomes are strong.

The Directors are aware of the knock-on volatility caused by uncertainties in the wider economic world have an impact on the building and construction market. Whilst the Company is not immune to market volatility this risk is managed to an extent through our partnerships with stakeholders and a personal approach that helps keep us informed across our business sectors.

Inflationary pressures are a key risk and for the foreseeable future, energy prices will continue to impact on energy intensive supply chain costs. We work closely with our supply chain and clients to identify inflationary pinch points and to minimise impact of rising prices.

The key health and safety objectives are to provide a safe working environment where the delivery teams and subcontractors go home safely every day. The business will minimise accidents and near misses and learn from these. The Company has a fully compliant health and safety policy which includes training, monitoring, and reporting on site safety issues to promote the wellbeing of the workforce and public

PERFORMANCE OF THE BUSINESS

The three year financial performance of the business is summarised below:

2022

2021

2020

Turnover (£million)

£24.7m

£16.1m

£17.2m

Gross Margin %

7.0%

7.9%

6.8%

Pre-tax profit (£thousand)

£241k

£8k

£41k

Pre-tax margin %

0.97%

0.05%

0.24%

Net current assets (£thousand)

£804k

£405k

£304k

Net assets (£thousand)

£965k

£527k

£415k

FUTURE DEVELOPMENTS

The business continues at a similar level of activity and productivity and to operate within the retained working capital investment. For 2023, the Company has secured turnover of £25 million and the order book for 2024 currently stands at £12 million. A healthy pipeline and cashflow gives us greater certainty and confidence looking forwards.

Significant investment and training have taken place in the upgrade of our information technology systems which sees a roll out of a new collaborative digital platform during 2023.

The Company remains committed to reduce its carbon footprint and is working with clients and supply chain partners to improve understanding and achieve best practice in this area.

The business continues to work towards its Vision 2025 to consolidate turnover at £25m, streamline processes to provide best value and best service to our long-term clients with focus on profitability, the people of the business and maintain the long-term working capital position of the Company.

ON BEHALF OF THE BOARD:

E W J Barrett - Director

4 August 2023

The directors present their report with the financial statements of the company for the year ended 31 December 2022.

PRINCIPAL ACTIVITY

The principal activity of the company in the year under review was that of building contractors.

DIVIDENDS

No dividends will be distributed for the year ended 31 December 2022.

DIRECTORS

The directors shown below have held office during the whole of the period from 1 January 2022 to the date of this report.

E M C Barrett

E W J Barrett

A Wooldridge

Other changes in directors holding office are as follows:

B T Ramsay was appointed as a director after 31 December 2022 but prior to the date of this report.

STATEMENT OF DIRECTORS' RESPONSIBILITIES

The directors are responsible for preparing the Strategic Report, the Report of the Directors and the financial statements in accordance with applicable law and regulations.

Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period. In preparing these financial statements, the directors are required to:

-	select suitable accounting policies and then apply them consistently;

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

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

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

STATEMENT AS TO DISCLOSURE OF INFORMATION TO AUDITORS

So far as the directors are aware, there is no relevant audit information (as defined by Section 418 of the Companies Act 2006) of which the company's auditors are unaware, and each director has taken all the steps that he ought to have taken as a director in order to make himself aware of any relevant audit information and to establish that the company's auditors are aware of that information.

ON BEHALF OF THE BOARD:

E W J Barrett - Director

4 August 2023

Opinion

We have audited the financial statements of Francis Construction Limited (the 'company') for the year ended 31 December 2022 which comprise the Profit and loss account, Balance Sheet, Statement of Changes in Equity and Notes to the Financial Statements, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 'The Financial Reporting Standard applicable in the UK and Republic of Ireland' (United Kingdom Generally Accepted Accounting Practice).

In our opinion the financial statements:

-	give a true and fair view of the state of the company's affairs as at 31 December 2022 and of its profit for the year then ended;

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

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

Basis for opinion

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

Conclusions relating to going concern

In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.

Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.

Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.

Other information

The directors are responsible for the other information. The other information comprises the information in the Strategic Report and the Report of the Directors, but does not include the financial statements and our Report of the Auditors thereon.

Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

Opinions on other matters prescribed by the Companies Act 2006

In our opinion, based on the work undertaken in the course of the audit:

-	the information given in the Strategic Report and the Report of the Directors for the financial year for which the financial statements are prepared is consistent with the financial statements; and

-	the Strategic Report and the Report of the Directors have been prepared in accordance with applicable legal requirements.

Matters on which we are required to report by exception

In the light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identified material misstatements in the Strategic Report or the Report of the Directors.

We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion:

-	adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or

-	the financial statements are not in agreement with the accounting records and returns; or

-	certain disclosures of directors' remuneration specified by law are not made; or

-	we have not received all the information and explanations we require for our audit.

Responsibilities of directors

As explained more fully in the Statement of Directors' Responsibilities set out on page six, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the directors are responsible for assessing the company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.

Auditors' responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue a Report of the Auditors that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:

Our approach to identifying and assessing the risks of material misstatement in respect of irregularities, including fraud and non-compliance with laws and regulations, was as follows:

- the engagement partner ensured that the engagement team collectively had the appropriate competence, capabilities and skills to identify or recognise non-compliance with applicable laws and regulations;

- we identified the laws and regulations applicable to the company through discussions with directors and other management, and from our commercial knowledge and experience of the sector;

- we focused on specific laws and regulations which we considered may have a direct material effect on the financial statements or the operations of the company, including the Companies Act 2006, taxation legislation and data protection, anti-bribery, employment,and health and safety legislation;

- we assessed the extent of compliance with the laws and regulations identified above through making enquiries of management and inspecting legal correspondence; and

- identified laws and regulations were communicated within the audit team regularly and the team remained alert to instances of non-compliance throughout the audit.

We assessed the susceptibility of the company’s financial statements to material misstatement, including obtaining an understanding of how fraud might occur, by:

- making enquiries of management as to where they considered there was susceptibility to fraud, their knowledge of actual, suspected and alleged fraud; and

- considering the internal controls in place to mitigate risks of fraud and non-compliance with laws and regulations.

To address the risk of fraud through management bias and override of controls, we:

- performed analytical procedures to identify any unusual or unexpected relationships;

- tested journal entries to identify unusual transactions;

- assessed whether judgements and assumptions made in determining the accounting estimates were indicative of potential bias; and

- investigated the rationale behind significant or unusual transactions.

In response to the risk of irregularities and non-compliance with laws and regulations, we design procedures which included, but were not limited to:

- agreeing financial statement disclosures to underlying supporting documentation;

- reading the minutes of meetings of those charged with governance; and

- enquiring of management as to actual and potential litigation and claims.

There are inherent limitations in our audit procedures described above. The more removed that laws and regulations are from financial transactions, the less likely it is that we would become aware of non-compliance. Auditing standards also limit the audit procedures required to identify non-compliance with laws and regulations to enquiry of the directors and other management and the inspection of regulatory and legal correspondence, if any.

Material misstatements that arise due to fraud can be harder to detect than those that arise from error as they may involve deliberate concealment or collusion.

A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website at www.frc.org.uk/auditorsresponsibilities. This description forms part of our Report of the Auditors.

Use of our report

This report is made solely to the company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in a Report of the Auditors and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's members as a body, for our audit work, for this report, or for the opinions we have formed.

Jason Pyke FCA (Senior Statutory Auditor)

for and on behalf of Vale & West Accountancy Services Limited

Chartered Accountants

Statutory Auditors

Victoria House

26 Queen Victoria Street

Reading

Berkshire

RG1 1TG

4 August 2023

TURNOVER

4

24,778,830

16,095,699

Cost of sales

23,039,692

14,823,402

GROSS PROFIT

1,739,138

1,272,297

Administrative expenses

1,611,063

1,364,945

128,075

(92,648

)

Other operating income

5

112,494

100,545

OPERATING PROFIT and

PROFIT BEFORE TAXATION

240,569

7,897

Tax on profit

8

(197,495

)

(103,793

)

PROFIT FOR THE FINANCIAL YEAR

438,064

111,690

OTHER COMPREHENSIVE INCOME

-

-

TOTAL COMPREHENSIVE INCOME FOR THE YEAR

438,064

111,690

FIXED ASSETS

Tangible assets

9

161,120

122,394

CURRENT ASSETS

Debtors: amounts falling due within one year

10

3,625,387

2,864,821

Debtors: amounts falling due after more than one year

10

302,769

90,456

Cash at bank and in hand

2,720,346

1,849,202

6,648,502

4,804,479

CREDITORS

Amounts falling due within one year

11

5,844,273

4,399,588

NET CURRENT ASSETS

804,229

404,891

TOTAL ASSETS LESS CURRENT LIABILITIES

965,349

527,285

CAPITAL AND RESERVES

Called up share capital

13

10,000

10,000

Retained earnings

14

955,349

517,285

SHAREHOLDERS' FUNDS

965,349

527,285

The financial statements were approved by the Board of Directors and authorised for issue on 4 August 2023 and were signed on its behalf by:

E W J Barrett - Director

Called up

share

Retained

Total

capital

earnings

equity

£

£

£

Balance at 1 January 2021

10,000

405,595

415,595

Changes in equity

Total comprehensive income

-

111,690

111,690

Balance at 31 December 2021

10,000

517,285

527,285

Changes in equity

Total comprehensive income

-

438,064

438,064

Balance at 31 December 2022

10,000

955,349

965,349

1.	STATUTORY INFORMATION

Francis Construction Limited is a private company, limited by shares, registered in England and Wales. The registered office and principal place of business is Armour House, Colthrop Lane, Thatcham, Berkshire, RG19 4PD.

The principal activity of the company is that of building contractors within the United Kingdom.

The company is a subsidiary undertaking of Colthrop Holdings Limited, a limited company registered in England and Wales, and is included in the consolidated financial statements of Colthrop Holdings Limited which are publicly available from the registered office.

The financial statements are presented in Pound Sterling (£), which is also the functional currency of the company.

2.	ACCOUNTING POLICIES

Basis of preparing the financial statements

These financial statements have been prepared in accordance with Financial Reporting Standard 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland" and the Companies Act 2006. The financial statements have been prepared under the historical cost convention.

In preparing the financial statements, advantage has been taken of the following disclosure exemptions under FRS 102 and the Companies Act 2006:

- No cash flow statement has been presented.

- Certain disclosures in respect of the company's financial instruments have not been presented as these are are included in the disclosures made in respect of the group.

- No disclosure has been given in respect of the company's aggregate remuneration of key management personnel as these are included in the disclosures made in respect if the group.

- No disclosure if related party transactions entered into between two or more wholly owned members if a group has been given.

Turnover

Turnover on construction contracts is measured at the fair value of consideration receivable and ascertained in a manner appropriate to the stage of completion and the anticipated final value of the contract.

Turnover from the supply of services represents the value of services provided under contracts to the extent that there is a right to consideration and is measured at the fair value of consideration received or receivable.

All turnover is stated net of VAT.

Construction contracts

Turnover and profit on construction contracts is ascertained in a manner appropriate to the stage of completion of the contract.

The Company uses an percentage of completion method to measure progress for construction contracts where turnover is recognised over time. The stage of completion is measured by the proportion of contract costs incurred for work performed to date compared to estimated total contract costs. However, where the Company considers that this may not be representative of the stage of completion, for example it is distorted by a significant change in the value of a supply chain package, an assessment of costs incurred on individual works packages is made. If this determines turnover considered to be more reliably measured than the calculation of costs in total, then this method of estimation is used.

Profit on contracts is only recognised when the Company is satisfied that the risks on a contract have been mitigated to a suitable level so that the outcome of work under the contract can be assessed with reasonable certainty. This can mean that a greater proportion of profit is recognised towards the end of a contract when it is successfully delivered and final accounts are agreed.

When it is probable that total contract costs will exceed total contract turnover, the expected loss is recognised as an expense immediately and an associated liability recorded.

Variations and claims are recognised once it is probable that they will be received, and the amount can be measured reliably.

Amounts recoverable on contracts represent the excess of the value of surveyed work over amounts invoiced or certified at the balance sheet date. Where amounts invoiced or certified at the balance sheet date exceed the amount of work completed, the excess is included within payments on account.

Tangible fixed assets

Tangible fixed assets are stated at cost less accumulated depreciation and accumulated impairment losses. Depreciation on tangible fixed assets is charged to profit or loss so as to write off their value, over their estimated useful lives, these are as follows for each class of fixed assets:

Plant and Machinery - 25% on reducing balance

Motor Vehicles - 25% on reducing balance

Computer equipment - 33% on cost

Government grants

Government grants are recognised based on the accrual model and are measured at the fair value where there is reasonable assurance that the grant will be received. Amounts received are recognised over the period in which the related costs are recognised. This is shown within Other Operating Income.

Taxation

Tax on profit represents the sum of the tax currently payable and deferred tax.

The tax currently payable is based on taxable profit for the year. Taxable profit differs from the profit as reported in the profit and loss account because of items of income or expense that are taxable or deductible in other years and items that are never taxable or deductible. The company's liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the end of the year.

Deferred tax is recognised on timing differences between the carrying amounts of assets and liabilities and the corresponding tax bases used to compute taxable profit. Deferred tax liabilities are generally recognised for all taxable timing differences. Deferred tax assets are generally recognised for temporary differences to the extent that it is probable that taxable profits will be available to utilise the timing difference.

Deferred tax liabilities and assets are measured at tax rates that are expected to apply in the period the liability is settled or the asset realised. The measurement of deferred tax liabilities and assets reflects the tax consequences in which the company expects to recover or settle the underlying amount of its assets and liabilities.

The Company participates in the UK government's Research and Development tax relief scheme for small and medium enterprises. Tax credits arising in respect R&D claims are included within tax on profit/(loss) for the period and amounts receivable are included on the balance sheet within the corporation tax receivable balance or as a reduction in the corporation tax payable balance, as appropriate.

Research and development

Research and development expenditure is expensed to the profit and loss account as it is incurred.

Provisions

On contracts that have achieved practical completion but are still within the defects liability period, provisions are recognised when the Company has a present legal or constructive obligation as a result of a past event, it is probable that an outflow will be required to settle the obligation and the amount can be reliably estimated.

Provisions are measured at the present value of best estimate of the consideration required to settle the present obligation at the balance sheet date, taking into account the risks and uncertainties surrounding the obligation.

Leased assets

Leases that do not transfer all the risks and rewards of ownership are classified as operating leases. Payments under operating leases are charged to the profit and loss account on a straight-line basis over the period of the lease.

Any incentives received to enter into an operating lease are credited to the profit and loss account, to reduce the lease expense, on a straight-line basis over the period of the lease.

Employee pension benefits

The obligation for contributions to defined contribution schemes are recognised as an expense as incurred. The assets of the scheme are held separately from those of the company in an independent administered fund.

Financial assets and liabilities

Trade and other debtors are initially recognised at transaction price and subsequently remeasured to amortised cost using the effective interest method, less impairment losses for bad and doubtful debts except where the effect of discounting would be immaterial. In such cases, the receivables are stated at cost less impairment losses for bad and doubtful debts.

Cash and cash equivalents comprise cash at bank and on hand, demand deposits with banks, other short-term highly liquid investments with original maturities of three months or less and bank overdrafts. Bank overdrafts, when applicable, are shown within current liabilities.

Trade and other creditors are initially recognised at transaction price and subsequently remeasured to amortised cost using the effective interest method unless the effect of discounting would be immaterial, in which case they are stated at cost.

Going concern

After reviewing the company's forecasts and projections, the directors have a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future. The company therefore continues to adopt the going concern basis in preparing its financial statements.

3.	SIGNIFICANT ACCOUNTING JUDGEMENTS AND ESTIMATES

The preparation of accounts under FRS 102 requires management to make judgements, estimates and assumptions that affect the value of the turnover and profit reported in the profit and loss statement for the financial year and the value of assets and liabilities recorded in the balance sheet.

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

The areas requiring a higher degree of judgement or where assumptions and estimates are significant to the accounts are outlined below.

Construction contracts

Recognition of turnover and profit on construction contracts requires management judgement regarding the anticipated final outcome of individual contracts and of the proportion of works completed at the balance sheet date. Management undertakes detailed reviews on a monthly basis in order to exercise judgement over the outcome of each contract and associated risks and opportunities.

The value of work completed at the balance sheet date is calculated by undertaking surveys and completing internal assessments on each element of works packages completed and in progress. Regular management reviews of contract progress include a comparison of internal assessments of costs to the applications made by subcontractors and external valuations completed on behalf of customers. Any material variances are investigated and updates made where appropriate.

The estimation of the final contract value includes assessment of the recovery variations which have yet to be agreed with the customer, compensation events and claims that are probable to be agreed.

The age, nature and recoverability of all debtors and amounts recoverable on construction contracts are reviewed regularly by management and provisions made where appropriate.

Procedures, internal financial controls, and management processes are in place to ensure that estimates are applied and results determined on a consistent basis.

Provisions and recoveries

In the normal course of trading, claims may arise on contracts within their defects liability period that require judgement on the likely outcome of the claim. This requires an assessment of the contractual obligations and on the likely conclusion of any on-going discussions.

Where it is deemed probable that costs will be incurred, judgement is needed to estimate the provision required for obligations existing at the balance sheet date. Where applicable, these estimates are regularly review by management and derived from a combination of internal valuations, third party quotes and independent expert advice.

In considering whether recovery of costs from third parties are virtually certain, and therefore recognisable as a separate asset, it is also necessary for management to assess contractual arrangements, insurance policies, formal correspondence with relevant parties and professional advice received. Consideration is also given to the financial strength of the third party in meeting their obligations to the company.

4.

TURNOVER

The turnover of the company for the year has been derived from its principal activity wholly undertaken in the UK.

5.	OTHER OPERATING INCOME

31.12.22

31.12.21

£

£

Sundry receipts

63,917

22,246

Management charges receivable

48,577

39,089

Government grants

-

39,210

112,494

100,545

6.	EMPLOYEES AND DIRECTORS

31.12.22

31.12.21

£

£

Wages and salaries

2,525,174

2,228,058

Social security costs

269,795

227,796

Other pension costs

64,142

59,478

2,859,111

2,515,332

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

31.12.22

31.12.21

Office and management

10

11

Supervisory and operative

38

32

48

43

31.12.22

31.12.21

£

£

Directors' remuneration

225,570

174,325

Directors' pension contributions to money purchase schemes

2,808

2,800

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

Money purchase schemes

1

2

Information regarding the highest paid director for the year ended 31 December 2022 is as follows:

31.12.22

£

Emoluments etc

116,907

Pension contributions to money purchase schemes

2,808

7.	OPERATING PROFIT

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

31.12.22

31.12.21

£

£

Other operating leases

78,649

87,611

Depreciation - owned assets

50,206

43,230

Profit on disposal of fixed assets

(3,280

)

(1,061

)

Auditors' remuneration

22,587

20,500

Auditors' remuneration for non audit work

5,526

9,126

Operating lease for land and buildings

80,460

80,460

Bad debts and claims

166,305

-

8.

TAXATION

Analysis of the tax credit

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

31.12.22

31.12.21

£

£

Current tax:

UK corporation tax

(3,733

)

-

R&D tax credits

(158,079

)

(105,988

)

Total current tax

(161,812

)

(105,988

)

Deferred tax

(35,683

)

2,195

Tax on profit

(197,495

)

(103,793

)

UK corporation tax has been charged at 19% (2021 - 19%).

Reconciliation of total tax credit included in profit and loss

The tax assessed for the year is lower than the standard rate of corporation tax in the UK. The difference is explained below:

31.12.22

31.12.21

£

£

Profit before tax

240,569

7,897

Profit multiplied by the standard rate of corporation tax in the UK of 19% (2021 - 19%)

45,708

1,500

Effects of:

Expenses not deductible for tax purposes

297

1,038

Capital allowances in excess of depreciation

(8,230

)

(2,195

)

Utilisation of tax losses

(199,587

)

(106,331

)

Deferred tax movement

(35,683

)

2,195

Total tax credit

(197,495

)

(103,793

)

Factors that may affect future tax charges

The company has recognised a deferred tax asset of £179,915 (2021 : £144,232) in respect of trade losses and other timing differences arising as at the balance sheet date. The directors anticipate the deferred tax asset will reverse in the next two financial periods as losses are relieved against trade profits.

Deferred Taxation

Trade

Accelerated

Total

losses

capital

allowances

£

£

£

At 1 January 2022

165,173

(20,941

)

144,232

Origination and reversal of timing differences

52,160

(16,477

)

35,683

At 31 December 2022

217,333

(37,418

)

179,915

Deferred tax has been charged at 25% (2021 - 19%)

9.	TANGIBLE FIXED ASSETS

Plant and

Motor

Computer

machinery

vehicles

equipment

Totals

£

£

£

£

COST

At 1 January 2022

234,997

155,271

94,666

484,934

Additions

41,008

43,833

6,359

91,200

Disposals

-

(6,000

)

-

(6,000

)

At 31 December 2022

276,005

193,104

101,025

570,134

DEPRECIATION

At 1 January 2022

210,307

73,323

78,910

362,540

Charge for year

8,110

30,122

11,974

50,206

Eliminated on disposal

-

(3,732

)

-

(3,732

)

At 31 December 2022

218,417

99,713

90,884

409,014

NET BOOK VALUE

At 31 December 2022

57,588

93,391

10,141

161,120

At 31 December 2021

24,690

81,948

15,756

122,394

10.

DEBTORS

31.12.22

31.12.21

£

£

Amounts falling due within one year:

Trade debtors

1,236,319

1,488,599

Amounts owed by group undertakings

383,320

114,658

Amounts recoverable on contract

1,503,153

896,835

Other debtors

322,680

220,497

Deferred tax asset

179,915

144,232

3,625,387

2,864,821

Amounts falling due after more than one year:

Trade debtors

302,769

90,456

Aggregate amounts

3,928,156

2,955,277