LOCKWOODS_CONSTRUCTION_(L - Accounts

The directors of the company have elected not to include a copy of the profit and loss account within the financial statements.true

For the financial year ended 31 March 2017 the company was entitled to exemption from audit under section 477 of the Companies Act 2006.

The directors acknowledge their responsibilities for complying with the requirements of the Act with respect to accounting records and the preparation of financial statements.

The members have not required the company to obtain an audit of its financial statements for the year in question in accordance with section 476.

These financial statements have been prepared and delivered in accordance with the provisions applicable to companies subject to the small companies' regime.

Lockwoods Construction (Liverpool) Limited is a private company limited by shares incorporated in England and Wales. The registered office is 3 Bridle Way, Bootle, Liverpool, L30 4UJ.

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 as applicable to companies subject to the small companies regime. The disclosure requirements of section 1A of FRS 102 have been applied other than where additional disclosure is required to show a true and fair view.

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, modified to include the revaluation of freehold properties and to include investment properties and certain financial instruments at fair value. The principal accounting policies adopted are set out below.

These financial statements for the year ended 31 March 2017 are the first financial statements of Lockwoods Construction (Liverpool) Limited prepared in accordance with FRS 102, The Financial Reporting Standard applicable in the UK and Republic of Ireland. The date of transition to FRS 102 was 1 April 2015. An explanation of how transition to FRS 102 has affected the reported financial position and financial performance is given in note 21.

Turnover represents the sales value of contracts completed during the year together with, in the case of long-term contracts, increases during the year in the certified values of those contracts, net of Value Added Tax.

Long-Term Contracts are assessed on a contract by contract basis and are reflected in the profit and loss account by recording turnover and related costs as contract activity progresses. Attributable profit on a long-term contract is ascertained as the difference between turnover and related costs for that contract.

When it is probable that a loss will occur on a contract, this is recognised in full immediately as an onerous contract provision.

Service charges are recognised on a straight-line basis over the specified period where those services are performed.

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

Depreciation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:

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.

Investment property, which is property held to earn rentals and/or for capital appreciation, is initially recognised at cost, which includes the purchase cost and any directly attributable expenditure. Subsequently it is measured at fair value at the reporting end date. The surplus or deficit on revaluation is recognised in the profit and loss account.

Where fair value cannot be achieved without undue cost or effort, investment property is accounted for as tangible fixed assets.

At each reporting period end date, the company reviews the carrying amounts of its tangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the company estimates the recoverable amount of the cash-generating unit to which the asset belongs.

Stocks are stated at the lower of cost and estimated selling price. Cost comprises the direct purchase of land.

Cash at bank and in hand 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 has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.

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. Financial assets classified as receivable within one year are not amortised.

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. Financial liabilities classified as payable within one year are not amortised.

Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.

Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Amounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.

Equity instruments issued by the company are recorded at the proceeds received, net of direct issue costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the company.

The tax expense 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 net profit as reported in the profit and loss account because it excludes items of income or expense that are taxable or deductible in other years and it further excludes 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 reporting end date.

Deferred taxation is provided at appropriate rates on all timing differences using the liability method only to the extent that, in the opinion of the directors, there is a reasonable probability that a liability or asset will crystallise in the foreseeable future.

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.

a. The company operates a number of defined contribution schemes for selected employees. Contributions are charged to the profit and loss account in the period to which they relate.

b. The company operates a funded defined benefit scheme. Contributions to the scheme are therefore charged to the profit and loss account in the period in which they are made.

The net defined benefit pension liability in the balance sheet comprises the total present value of payments due at the year end under an agreed recovery plan.

Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessees. All other leases are classified as operating leases.

Assets held under finance leases are recognised as assets at the lower of the assets fair value at the date of inception and the present value of the minimum lease payments. The related liability is included in the balance sheet as a finance lease obligation. Lease payments are treated as consisting of capital and interest elements. The interest is charged to the profit and loss account so as to produce a constant periodic rate of interest on the remaining balance of the liability.

Rentals payable under operating leases, including any lease incentives received, are charged to income 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 lease asset are consumed.

Government grants are recognised at the fair value of the asset received or receivable when there is reasonable assurance that the grant conditions will be met and the grants will be received.

A grant that specifies performance conditions is recognised in income when the performance conditions are met. Where a grant does not specify performance conditions it is recognised in income when the proceeds are received or receivable. A grant received before the recognition criteria are satisfied is recognised as a liability.

Other income

Other income, which includes rent from the company's leasehold premises, is recognised on an accruals basis.

The average monthly number of persons (including directors) employed by the company during the year was 34 (2016 - 36).

The leasehold building (including the investment property portion) with a carrying amount of £125,073 was revalued at £420,000 on 30 March 2017 by James Kristian independent valuers not connected with the company on the basis of current market value. The valuation conforms to International Valuation Standards and was based on recent market transactions on arm's length terms for similar properties.

Part of this property is rented out to third parties within the Lockwoods group and this proportion has been treated in the accounts as an investment property (note 5).

If the revalued assets were stated on an historical cost basis rather than a fair value basis, the total amounts included would have been as follows (excluding the Investment property proportion):

The revaluation surplus is disclosed in note 17.

The leasehold building (including the Investment property portion) with a carrying amount of £420,000 (2016 - £125,073) has been pledged to secure borrowings of the company. The company is not allowed to pledge these assets as security for other borrowings or to sell them to another entity.

The fair value of the investment property has been arrived at on the basis of a valuation carried out at 30 March 2017 by James Kristian independent valuers not connected with the company on the basis of current market value. The valuation conforms to International Valuation Standards and was based on recent market transactions on arm's length terms for similar properties.

The bank overdraft is secured by a fixed and floating charges over the leasehold land and buildings and other assets.

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

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 company, as principal employer operates a defined benefit scheme for qualifying employees of Lockwoods Construction (Liverpool) Limited and Lockwoods Electrical Services Limited, the participating employer.

On 28 June 2017, Lockwoods Electrical Services Limited entered a creditors voluntary liquidation and is in the process of being wound up.

The companies in the scheme were unable to identify their respective shares in the underlying scheme assets and liabilities. Contributions are charged to the profit and loss in the period to which they relate. The companies in the scheme were each responsible for their fair proportion of any surplus or deficit in the scheme. Lockwoods Construction (Liverpool) Limited are currently paying all the recovery plan payments.

Under the scheme the employees are entitled to retirement benefits of 1/60th of Final Pensionable Salary for each year of Pensionable Service. The scheme also provides for benefits on death after retirement and benefits on death in service before retirement.

The most recent actuarial valuations of plan assets and the present value of the defined benefit obligation were carried out as at 31 March 2016 by George Whitaker (Fellow of the Institute of Actuaries) of H&C Consulting Actuaries LLP. The present value of the defined benefit obligation, the related current service cost and past service cost were measured using the projected unit credit method.

The main actuarial assumptions were:            

(i) pensionable salaries will not increase;            

(ii) the rate of return on existing assets will be 6% per annum;            

(iii) pensions in payment will increase at 2.9% per annum.    

The charge to profit or loss in respect of defined benefit schemes was £9,512 (2016 - £11,208).        

In the Actuarial Valuation report on 31 March 2016, members' contributions were to remain unchanged at 7.5% of pensionable earnings, with the employers' contribution reducing to 13.7% (previously 18.4%) of pensionable earnings.

Defined benefit deficit

The Actuarial Valuation report on 31 March 2016 calculates the funding deficit at that date to be £165,000.

The Scheme's trustees and the employers agreed that the previous deficit funding contribution of £11,000 per annum should be reduced to £8,000 per annum by monthy instalment from 1 July 2017 to June 2027 based on various assumptions regarding the future growth in value of the fund. This will be reviewed at the next actuarial valuation

The net defined benefit pension liability in the balance sheet comprises the total present value of payments due at the year end under an agreed recovery plan.

Fair value of plan assets at the reporting period end

At the reporting end date the company had outstanding commitments for future minimum lease payments under non-cancellable operating leases, as follows:

Development Partnership Merseyside Limited

Mr J S Maddock, a director, holds 50% of the shares in Development Partnership Merseyside Limited. Mr C E J Maddock also holds a 16.67% interest in that company.

The company has undertaken construction works for Development Partnership Merseyside Limited on normal trading terms. A loan has been made to Development Partnership Merseyside Limited in order to assist with the financing of this development project. Due to the economic downturn, the site works have been suspended following substantial completion of Phase I only of the project. In view of the above, the directors have decided to forego any further interest on the outstanding loan until such time as the development is further advanced.

The outstanding balance, shown above, is unsecured and payable on demand.

Lockwoods Enterprises of Liverpool Limited

The company has made an interest free loan to Lockwoods Enterprises of Liverpool Limited .

The outstanding balance, shown above, is unsecured and payable on demand.

In accordance with the requirements of FRS102 the pension funding deficit plan arising from the actuarial valuations undertaken as at 31 March 2013 and 2016, has been provided for in the balance sheet as at the transition date, 1 April 2015. The balances have also been calculated as at 31 March 2016 and 31 March 2017 and the subsequent movements charged to the statement of comprehensive income.

The potential deferred tax liability arising on the pension deficit plan, has been provided for in the balance sheet as at the transition date, 1 April 2015. The balances have also been calculated as at 31 March 2016 and 31 March 2017 and the subsequent movements charged to the statement of comprehensive income.

In accordance with the requirements of FRS102 the part of the property occupied by other companies has been reclassified as investment property as at the transition date, 1 April 2015. The balances have also been calculated as at 31 March 2016 and 31 March 2017 and the subsequent movements charged to the profit and loss account.