ARK_BUILD_PLC - Accounts

The directors present the strategic report for the year ended 31 October 2023.

We are pleased to report a 11% increase in turnover from the previous year. This is the first we have seen in the last 2 years since Covid we call it the Covid hangover which has affected the construction section and we have not been immune to this. This increase in turnover are the green shoots of growth that we hope to build on in the upcoming year. This increase should be considered a reflection of the hard work of the Ark Build team to increase turnover in what is still a difficult market place. However, we are also delighted to report that we were still able to remain profitable, unlike many of our peers in our sector. We still suffer with volatile pricing in the supply chain. However the period of uncertainty seems to be continuing to be lifting and we are now benefiting from this in terms of growth, the market is stabilizing, in fact the supply chain is actively looking for opportunities placing us in a good place going forward with a full order book for this upcoming year for both ourselves and our supply chain. We remain confident for performance in the upcoming year and confident we shall see more significant growth in the up coming year.

We have also managed to keep the Company’s liquidity strong with careful credit control measures, continuing to ensure clients pay on time.

We are also extremely grateful to our client base who continue to support us wherever possible throughout this difficult period.

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

Our forward order book currently stands at over £15 million for the next 12 months, a solid base from which to build our forecasted growth.

We have confidence that 2023/2024 will continue to be profitable.

Economic market

Although we can be in no doubt that the world wide economy is generally not in a great place and undoubtably has had an effect on the construction industry in the last 12 months, we are now experiencing record numbers of tender opportunities which gives us cause to be confident of the future.

We do believe that the next 12 months will certainly become more buoyant and opportunities will increase. Our solid portfolio of works completed and our proactive marketing strategy will undoubtedly enable us to make the most of these opportunities and allow the company to hopefully grow in these market conditions, although caution will be employed so as not to expose us to risk especially given the volatility issues previously mentioned.

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

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

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

Supply chain control procedures

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

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

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

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

Financially Insecure Clients

We are aware of the risks when taking on work and are very particular when dealing with clients. Credit checks and credit control enable us to feel comfortable with managing our debts. We also ensure that contracts are not undertaken with onerous payment terms.

We always provide contractors proposals/clarifications with our tenders to try and mitigate any risk items.

Our turnover for 2023 was £12,545,982 which is an increase over 2022 which was £11,186,300 but is in line with our revised expectations.

I would like to thank all the team at Ark Build PLC for all their hard work, they are a big part in enabling us to continue to ensure the company goes from strength to strength. It is testament to their determination and loyalty to Ark Build and the obvious pride they have in our company.

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

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

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

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

Suppliers were maintained with very little change in terms or delivery

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

On behalf of the board

The directors present their annual report and financial statements for the year ended 31 October 2023.

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

The results for the year are set out on page 10.

Ordinary dividends were paid amounting to £27,771. The directors do not recommend payment of a further dividend.

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

Our forward order book currently stands at over £15 million for the next 12 months, a solid base from which to build our forecasted growth in 2023/2024.

Following a period of stagnated trade which have christened the Covid Hangover, we have found the sector has picked up and we are confident of a seeing substantive growth in 2023/​2024. However we do need to be mindful as to the current volatility in the construction market and will only take on projects where we can be confident of returns.

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

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

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

So far as each person who was a director at the date of approving this report is aware, there is no relevant audit information of which the company’s auditor is unaware. Additionally, the directors individually have taken all the necessary steps that they ought to have taken as directors in order to make themselves aware of all relevant audit information and to establish that the company’s auditor is aware of that information.

The directors are responsible for preparing the annual report 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;

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

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

The 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.

We have audited the financial statements of Ark Build plc (the 'company') for the year ended 31 October 2023 which comprise the statement of comprehensive income, the balance sheet, the statement of changes in equity, the statement of cash flows and notes to the financial statements, including 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 October 2023 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 Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Conclusions relating to going concern

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 other information comprises the information included in the annual report other than the financial statements and our auditor's report thereon. The directors are responsible for the other information contained within the annual report. 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. 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 course of 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 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.

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 directors' report.

We have nothing to report in respect of the following matters in relation to which 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 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.

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

Based on our understanding of the company and industry, we identified that the principal risks of non-compliance with laws and regulations related to breaches of UK regulatory principles, such as those governed by the relevant construction authorities. We also considered the laws and regulations which have a direct impact on the financial statements such as the Companies Act 2006.

We evaluated management's incentives and opportunities for fraudulent manipulation of the financial statements (including the risk of override of controls), and determined that the principal risks were related to management bias in accounting estimates and judgmental areas of the financial statements.

Audit procedures performed by the audit engagement team included:

• Discussions with senior management, including consideration of known or suspected instances of noncompliance with laws and regulations or instances of fraud;

• Identifying and testing journal entries based on risk criteria;

• Designing audit procedures to incorporate unpredictability around the nature, timing or extent of our testing;

• Testing transactions entered into outside of the normal course of the company's business;

• Reviewing any potential litigation or claims against the entity which indicate any potential noncompliance issues.

There are inherent limitations in the audit procedures described above. We are less likely to become aware of instances of non-compliance with laws and regulations that are not closely related to events and transactions reflected in the financial statements. Also, the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery or intentional misrepresentations, or though collusion.

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 profit and loss account has been prepared on the basis that all operations are continuing operations.

Ark Build plc is a public company limited by shares incorporated in England and Wales. The registered office is Unit 12 Loughton Business Centre, Langston Road, Loughton, Essex, United Kingdom, IG10 3FL.

These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006.

The financial statements are prepared in sterling, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £.

The financial statements have been prepared under the historical cost convention. The principal accounting policies adopted are set out below.

Atruet the time of approving the financial statements, the directors have a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future. Thus the directors continue to adopt the going concern basis of accounting in preparing the financial statements.

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

Tangible fixed assets are initially measured at cost and subsequently measured at cost or valuation, net of depreciation and any impairment losses.

Depreciation is provided at the following annual rates in order to write off each asset over its estimated useful life or, if held under a finance lease, over the lease term, whichever is the shorter.

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. A provision is made for any impairment loss and taken to the profit and loss account.

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

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

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

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

The company only enters into basic financial instrument transactions.

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

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

Basic financial assets, which include debtors and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest.

Other financial assets, including investments in equity instruments which are not subsidiaries, associates or joint ventures, are initially measured at fair value, which is normally the transaction price. Such assets are subsequently carried at fair value and the changes in fair value are recognised in profit or loss, except that investments in equity instruments that are not publicly traded and whose fair values cannot be measured reliably are measured at cost less impairment.

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

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

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

Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the 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 creditors, bank loans, loans from fellow group companies and preference shares that are classified as debt, are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future payments discounted at a market rate of interest.

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.

Derivatives are initially recognised at fair value at the date a derivative contract is entered into and are subsequently remeasured to fair value at each reporting end date. The resulting gain or loss is recognised in profit or loss immediately unless the derivative is designated and effective as a hedging instrument, in which event the timing of the recognition in profit or loss depends on the nature of the hedge relationship.

A derivative with a positive fair value is recognised as a financial asset, whereas a derivative with a negative fair value is recognised as a financial liability.

The tax expense represents the sum of the tax currently payable and deferred tax.

The current tax liability is recognised for the tax payable on the taxable profit of the current and past periods. A current tax asset is recognised in respect of a tax loss that can be carried back to recover tax paid in a previous period.

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

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

The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received.

Termination benefits are recognised immediately as an expense when the company is demonstrably committed to terminate the employment of an employee or to provide termination benefits.

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

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

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

In the application of the 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 only key judgement and estimation in the year is the valuation of the works carried out as at the year end by surveyors.

An analysis of the company's turnover is as follows:

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

Their aggregate remuneration comprised:

The number of directors for whom retirement benefits are accruing under defined contribution schemes amounted to 2 (2022 - 5).

The actual (credit)/charge 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 net carrying value of tangible fixed assets includes the following in respect of assets held under finance leases or hire purchase contracts.

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

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

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

The company operates a defined contribution pension scheme for all qualifying employees. The assets of the scheme are held separately from those of the company in an independently administered fund.

The amount of pension contributions outstanding at the year end amounted to £12,487 (2022: £13,121).

The company has one class of ordinary shares which carry no right to fixed income. All shares rank equally for voting rights, dividend rights and for any distribution made on wind up of the company.

During the course of the year the company has entered into guarantees with some of their customers totalling £1,131,231.29 (2022: £1,507,696.94).

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 remuneration of key management personnel is as follows.

During the year the company entered into the following transactions with related parties:

The following amounts were outstanding at the reporting end date:

The following amounts were outstanding at the reporting end date:

Ark Build Executive Pension Scheme

During 2017 the company entered into a lease with the Ark Build Executive Pension Scheme. This is for the company's office. The amounts due on the lease are detailed in the operating lease commitment note. The lease term is from the 8th October 2017 for 10 years with a break clause on 7th October 2023.

The company has taken advantage of the exemption available under FRS 102 paragraph 33.1a whereby it has not disclosed transactions with the ultimate parent company or any wholly owned subsidiary undertaking of the group.

Dividends totalling £27,771 (2022 - £0) were paid in the year in respect of shares held by the company's directors.

The immediate and ultimate parent company is Ark Build (Holdings) Ltd (Company No, 12283081) which is a registered company in England and Wales. The registered office is Unit 12 Loughton Business Centre, Langston Road, Loughton, Essex, United Kingdom, IG10 3FL.

The ultimate controlling party is M J Finlay who is 100% shareholder of Ark Build (Holdings) Ltd.