Gunite (Eastern) Limited - Limited company accounts 23.2

REGISTERED NUMBER: 02702580 (England and Wales)

STRATEGIC REPORT, REPORT OF THE DIRECTORS AND

FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022

FOR

GUNITE (EASTERN) LIMITED

Page

Company Information

1

Strategic Report

2

Report of the Directors

3

Report of the Independent Auditors

4

Income Statement

8

Other Comprehensive Income

9

Balance Sheet

10

Statement of Changes in Equity

11

Cash Flow Statement

12

Notes to the Cash Flow Statement

13

Notes to the Financial Statements

14

DIRECTORS:

J F Otter

M Otter

Ms K F Otter

T Ellis

REGISTERED OFFICE:

409-411 Croydon Road

Beckenham

Kent

BR3 3PP

REGISTERED NUMBER:

02702580 (England and Wales)

AUDITORS:

Edwards Chartered Accountants

Statutory Auditor

409-411 Croydon Road

Beckenham

Kent

BR3 3PP

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

REVIEW OF BUSINESS

The company trades as a concrete, brick repair and refurbishment business working within the UK construction trade. It has a separate fire door and fire protection division, again in the UK construction trade. 2022 was seen as a solid year for the company.

PRINCIPAL RISKS AND UNCERTAINTIES

As the market remains uncertain, some main contractors buy contracts at uneconomic rates which they then try to pass onto the sub-contractor. A system of pre-contract review prior to acceptance of this subcontract is in operation to try and avoid loss-making contracts.

All contracts are reviewed on a fortnightly basis with fiscal analysis on a monthly basis.

Late payment and underpayment remains a high risk. Again, constant review and procedures are in operation to try to avoid these debts. Review of the clients and main contractors has managed to minimise bad debts from insolvencies.

As a company dependant on local authority expenditure, changes in government direction and policy also have a direct effect.

BUSINESS ENVIRONMENT

The UK construction market is a highly competitive market which over the last year has made modest recovery in the refurbishment market with a stronger recovery in new-build and housing.

Main contractors are still tendering on a very economic basis. Pressure is on staffing and rates. Poaching of operatives has become noticeable and rates for the site operatives are increasing.

STRATEGY

2022 saw focus remain on overheads with reductions where possible. This has continued into 2023.

Focus has also been on site management to ensure quality of product, together with liaison and records. Quality and delivery has resulted in repeat business from respected clients. This together with records has resulted in better account control and percentage recovery.

FUTURE DEVELOPMENTS

Whilst there has been growth in the UK construction market, we are guarded as to whether this will continue.

Investment in the London property market is again high and will continue to flourish. Hotels, flats/apartments and offices are a market that we will focus on for fire protection. For concrete and brickwork, sales focus will be on existing clients by improving delivery, quality and liaison.

The company will continue to look at new ventures that may present opportunities for growth.

ON BEHALF OF THE BOARD:

J F Otter - Director

17 August 2023

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

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.

J F Otter

M Otter

Ms K F Otter

T Ellis

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 or she ought to have taken as a director in order to make himself or herself aware of any relevant audit information and to establish that the company's auditors are aware of that information.

AUDITORS

The auditors, Edwards Chartered Accountants, will be proposed for re-appointment at the forthcoming Annual General Meeting.

ON BEHALF OF THE BOARD:

J F Otter - Director

17 August 2023

Opinion

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

In our opinion the financial statements:

-	give a true and fair view of the state of the 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 three, 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:

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 can detect irregularities, including fraud is detailed below:

Our approach was as follows:

a) We obtained an understanding of the legal and regulatory frameworks that are applicable to the entity and determined that the most significant are those that relate to include the Companies Act 2006, and relevant tax legislation. In addition, we have considered provisions of other laws and regulations that do not have a direct effect on the financial statements but compliance with which may be fundamental to the company's ability to operate or to avoid a material penalty.

b) We communicated identified laws and regulations and potential fraud risks to all engagement team members and remained alert to any indications of fraud or non-compliance with laws and regulations throughout the audit.

c) We examined the company's regulatory and legal correspondence and discussed with management any known or suspected instances of fraud or non-compliance with laws and regulations.

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

i) We considered the use of remuneration incentive schemes and performance targets for management and did not identify any additional fraud risks

ii) The audit team discussed whether there were any areas that were susceptible to misstatement as part of their fraud discussion.

iii) In addressing the risk of management override of controls, we tested the appropriateness of journal entries. We also challenged assumptions and judgements made by management in their significant accounting estimates and judgements.

iv) We incorporated an element of unpredictability in the selection of the nature, timing and extent of our audit procedures.

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

Designing audit procedures to address, for example:

a) The possibility of fraudulent or corrupt payments made through third parties.

b) The risk of bribery and corruption.

c) The opportunity to segregate duties within the entity.

Based on the results of our risk assessment we designed our audit procedures to identify non-compliance with such laws and regulations identified above.

Using our general commercial and sector experience and through discussions with management, we identified areas of laws and regulations that could reasonably be expected to have a material effect on the financial statements as well as those arising from management's own assessment of the risks that irregularities may occur either because of fraud or error.

The engagement partner considers the engagement team collectively had the appropriate competence and capabilities to identify or recognise non-compliance with laws and regulations.

Under ISA 240 (UK) there is a presumed risk that revenue may be misstated due to the improper recognition of revenue. To address this risk, we obtained an understanding of the company's revenue recognition policies and compared these to the accounting standard, performed a walkthrough to confirm our understanding of the processes and controls through which the business initiates, records, processes and reports revenue transactions.

We tested a sample of revenue transactions to supporting evidence and tested, on a sample basis, revenue related balances in the balance sheet.

We considered the extent to which the audit was considered capable of detecting irregularities: There are inherent limitations in the audit procedures described above and the further removed non-compliance with laws and regulations is from the events and transactions reflected in the financial statements, the less likely we would become aware of it. Also, the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one from error, as fraud may involve deliberate concealment by, for example, forgery or intentional misrepresentation, or through 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.

John Duggan (Senior Statutory Auditor)

for and on behalf of Edwards Chartered Accountants

Statutory Auditor

409-411 Croydon Road

Beckenham

Kent

BR3 3PP

17 August 2023

TURNOVER

15,731,718

13,760,386

Cost of sales

12,292,571

10,031,020

GROSS PROFIT

3,439,147

3,729,366

Administrative expenses

3,183,073

2,915,518

OPERATING PROFIT

4

256,074

813,848

Interest payable and similar expenses

5

26,902

9,341

PROFIT BEFORE TAXATION

229,172

804,507

Tax on profit

6

(13,783

)

197,048

PROFIT FOR THE FINANCIAL YEAR

242,955

607,459

PROFIT FOR THE YEAR

242,955

607,459

OTHER COMPREHENSIVE INCOME

-

-

TOTAL COMPREHENSIVE INCOME FOR THE YEAR

242,955

607,459

FIXED ASSETS

Tangible assets

7

31,006

49,489

CURRENT ASSETS

Stocks

8

137,333

222,870

Debtors

9

6,482,877

5,148,251

Cash at bank

-

628,829

6,620,210

5,999,950

CREDITORS

Amounts falling due within one year

10

3,034,676

2,455,815

NET CURRENT ASSETS

3,585,534

3,544,135

TOTAL ASSETS LESS CURRENT LIABILITIES

3,616,540

3,593,624

CREDITORS

Amounts falling due after more than one year

11

-

(216,667

)

PROVISIONS FOR LIABILITIES

13

(4,678

)

(8,050

)

NET ASSETS

3,611,862

3,368,907

CAPITAL AND RESERVES

Called up share capital

14

150

150

Retained earnings

15

3,611,712

3,368,757

SHAREHOLDERS' FUNDS

3,611,862

3,368,907

The financial statements were approved by the Board of Directors and authorised for issue on 17 August 2023 and were signed on its behalf by:

J F Otter - Director

Called up

share

Retained

Total

capital

earnings

equity

£

£

£

Balance at 1 January 2021

150

2,761,298

2,761,448

Changes in equity

Total comprehensive income

-

607,459

607,459

Balance at 31 December 2021

150

3,368,757

3,368,907

Changes in equity

Total comprehensive income

-

242,955

242,955

Balance at 31 December 2022

150

3,611,712

3,611,862

Cash flows from operating activities

Cash generated from operations

1

(611,224

)

385,465

Interest paid

(26,902

)

(9,341

)

Tax paid

(188,998

)

146,475

Net cash from operating activities

(827,124

)

522,599

Cash flows from investing activities

Purchase of tangible fixed assets

-

(5,000

)

Net cash from investing activities

-

(5,000

)

(Decrease)/increase in cash and cash equivalents

(827,124

)

517,599

Cash and cash equivalents at beginning of year

2

628,829

111,230

Cash and cash equivalents at end of year

2

(198,295

)

628,829

1.	RECONCILIATION OF PROFIT BEFORE TAXATION TO CASH GENERATED FROM OPERATIONS

2022

2021

£

£

Profit before taxation

229,172

804,507

Depreciation charges

18,483

18,220

Finance costs

26,902

9,341

274,557

832,068

Decrease/(increase) in stocks

85,537

(133,035

)

Increase in trade and other debtors

(1,463,735

)

(1,238,043

)

Increase in trade and other creditors

492,417

924,475

Cash generated from operations

(611,224

)

385,465

2.	CASH AND CASH EQUIVALENTS

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

Year ended 31 December 2022

31.12.22

1.1.22

£

£

Cash and cash equivalents

-

628,829

Bank overdrafts

(198,295

)

-

(198,295

)

628,829

Year ended 31 December 2021

31.12.21

1.1.21

£

£

Cash and cash equivalents

628,829

111,230

3.	ANALYSIS OF CHANGES IN NET FUNDS/(DEBT)

At 1.1.22

Cash flow

At 31.12.22

£

£

£

Net cash

Cash at bank

628,829

(628,829

)

-

Bank overdrafts

-

(198,295

)

(198,295

)

628,829

(827,124

)

(198,295

)

Debt

Debts falling due within 1 year

(33,333

)

33,333

-

Debts falling due after 1 year

(216,667

)

216,667

-

(250,000

)

250,000

-

Total

378,829

(577,124

)

(198,295

)

1.	STATUTORY INFORMATION

Gunite (Eastern) Limited is a private company, limited by shares , registered in England and Wales. The company's registered number and registered office address can be found on the Company Information page.

2.	ACCOUNTING POLICIES

Basis of preparing the financial statements

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

Turnover

Turnover, which is stated net of Value Added Tax, represents amounts invoiced to third parties, except in respect of long-term contracts, where turnover represents the sales value of work done in the year, including estimates in respect of amounts not invoiced.

Tangible fixed assets

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

Fixtures and fittings

-

20% on cost

Motor vehicles

-

25% on reducing balance

Computer equipment

-

25% on cost

Long term contracts and work in progress

Profit on long-term contracts is taken as the work is carried out if the final outcome can be assessed with reasonable certainty. The profit included is calculated on a prudent basis to reflect the proportion of the work carried out at the year end, by recording turnover and related costs as contract activity progresses. Turnover is calculated as that proportion of total contract value which costs incurred to date bear to total expected costs of that contract. Revenues derived from variations on contracts are recognised only when the customer has accepted them. Full provision is made for losses on all contracts in the year in which they are first foreseen.

Taxation

Taxation for the year comprises current and deferred tax. Tax is recognised in the Income Statement, except to the extent that it relates to items recognised in other comprehensive income or directly in equity.

Current or deferred taxation assets and liabilities are not discounted.

Current tax is recognised at the amount of tax payable using the tax rates and laws that have been enacted or substantively enacted by the balance sheet date.

Deferred tax

Deferred tax is recognised in respect of all timing differences that have originated but not reversed at the balance sheet date.

Timing differences arise from the inclusion of income and expenses in tax assessments in periods different from those in which they are recognised in financial statements. Deferred tax is measured using tax rates and laws that have been enacted or substantively enacted by the year end and that are expected to apply to the reversal of the timing difference.

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.

Hire purchase and leasing commitments

Rentals paid under operating leases are charged to profit or loss on a straight line basis over the period of the lease.

Pension costs and other post-retirement benefits

The company operates a defined contribution pension scheme. Contributions payable to the company's pension scheme are charged to profit or loss in the period to which they relate.

3.	EMPLOYEES AND DIRECTORS

2022

2021

£

£

Wages and salaries

1,522,422

1,481,102

Other pension costs

158,369

137,649

1,680,791

1,618,751

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

2022

2021

Administration and direct staff

85

73

2022

2021

£

£

Directors' remuneration

320,041

277,122

Information regarding the highest paid director is as follows:

2022

2021

£

£

Emoluments etc

170,500

136,000

4.	OPERATING PROFIT

The operating profit is stated after charging:

2022

2021

£

£

Hire of plant and machinery

578,238

480,691

Depreciation - owned assets

18,483

18,220

Auditor's remuneration

1,500

1,500

Auditor's remuneration for non audit work

12,141

11,350

5.

INTEREST PAYABLE AND SIMILAR EXPENSES

2022

2021

£

£

Other interest

22,683

9,341

Loan interest

4,219

-

26,902

9,341

6.

TAXATION

Analysis of the tax (credit)/charge

The tax (credit)/charge on the profit for the year was as follows:

2022

2021

£

£

Current tax:

UK corporation tax

(10,411

)

188,998

Deferred tax

(3,372

)

8,050

Tax on profit

(13,783

)

197,048

7.	TANGIBLE FIXED ASSETS

Fixtures

and

Motor

Computer

fittings

vehicles

equipment

Totals

£

£

£

£

COST

At 1 January 2022

and 31 December 2022

12,682

13,027

59,617

85,326

DEPRECIATION

At 1 January 2022

4,881

8,600

22,356

35,837

Charge for year

2,473

1,106

14,904

18,483

At 31 December 2022

7,354

9,706

37,260

54,320

NET BOOK VALUE

At 31 December 2022

5,328

3,321

22,357

31,006

At 31 December 2021

7,801

4,427

37,261

49,489

8.

STOCKS

2022

2021

£

£

Work-in-progress

137,333

222,870

9.

DEBTORS: AMOUNTS FALLING DUE WITHIN ONE YEAR

2022

2021

£

£

Trade debtors

3,012,863

1,955,368

Amounts owed by group undertakings

2,876,176

2,949,764

Other debtors

163,526

112,296

Tax

120,891

-

VAT

147,164

-

Prepayments and accrued income

162,257

130,823

6,482,877

5,148,251

10.

CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR

2022

2021

£

£

Bank loans and overdrafts (see note 12)

198,295

33,333

Trade creditors

1,739,047

866,371

Tax

110,480

188,998

Social security and other taxes

330,074

468,965

VAT

-

150,824

Other creditors

225,691

4,560

Accruals and deferred income

431,089

742,764

3,034,676

2,455,815

11.

CREDITORS: AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR

2022

2021

£

£

Bank loans (see note 12)

-

216,667

12.

LOANS

An analysis of the maturity of loans is given below:

2022

2021

£

£

Amounts falling due within one year or on demand:

Bank overdrafts

198,295

-

Bank loans

-

33,333

198,295

33,333

Amounts falling due between one and two years:

Bank loans - 1-2 years

-

216,667

Bank borrowings are secured by a fixed and floating charge over the assets of the company.

13.	PROVISIONS FOR LIABILITIES

2022

2021

£

£

Deferred tax

4,678

8,050

Deferred

tax

£

Balance at 1 January 2022

8,050

Accelerated capital allowances

(3,372

)

Balance at 31 December 2022

4,678