MITCHELLSON_FORMWORK_&_CI - Accounts

The directors present the strategic report for the year ended 31 May 2018.

The directors are pleased to report an increase in profit after tax to £6.1m compared to £2.1m in the previous year. We are also able to report a healthy order book with an anticipated turnover of £82m for the current year 2019 with a further £31m already secured for 2020.

The uncertainty surrounding the UK’s exit from the European Union continues to effect the Construction Industry. However, the directors have put in robust systems and procedures to mitigate any negative impact this may have on our company. In addition the company is in an excellent position to face any challenges ahead with a strong balance sheet and liquidity. The directors will continue to closely monitor any  changes in the construction industry   as a result of the UK’s exit from the European Union especially in terms of movement of labour and the availability and cost of raw materials.

The company continues to strengthen its relationships with our valued clients and with early project involvement we can offer added value through innovation, ensuring the project will be delivered safely, on target and within budget. The directors are continually striving to expand on our existing client base.

Principal risks and uncertainties

We operate in a risky industry, where a number of occurrences may influence the financial performance of the company not all of which are within our control. The uncertainty surrounding the UK’s exit from the European Union continues to effect the Construction Industry as explained above.

Contract monitoring is a continuing process throughout the year, dealt with through weekly meetings to monitor progress to budget, where any variation is reported to the project director. Our commercial teams produce monthly CVR reports on each project which is presented to the directors, the monthly performance of each project is analysed and each project director will state the main aims and goals for their project for the coming period.

Financial instruments

The company does not utilise complex financial instruments or hedging mechanism. Its principal financial instruments comprise of bank balances, bank overdraft facility, trade debtors and creditors. The main purpose of these instruments is to finance the company's operations.

Going concern

The directors are confident that the company has adequate resources to continue in operational existence for the foreseeable future. Thus they continue to adopt the going concern basis in preparing the financial statements.

Interest rate risk

The company has no bank borrowings.

Commercial risk

Contracts are continually reviewed for performance and risk to the company. The global economic position is well understood by the directors. Whilst the directors will monitor the market conditions closely the company is confident that it will secure sufficient workload on acceptable terms in the foreseeable future. Labour and raw material costs are regularly monitored, and by working proactively with our suppliers we strive to mitigate any consequences on our business.

Our clients are among market leaders within the industry, and the company does not have an over reliance on any one client.

The company is funded by retained profits and trade debtors including amount receivable on contracts less trade creditors. The company has strict procedures in place to manage its financial requirements striving to utilise its cash reserves to maximise income.

The biggest asset the company has are its people, and our staff are the backbone of our company, many of whom have been with us in excess of ten years. The directors wish to express their thanks and appreciation to them for their efforts in contributing to a successful year.

Credit risk arises from the possibility that customers will fail to meet their obligations to pay the contract value due. To manage this risk all customers have their credit worthiness assessed. Systems are also in place to monitor adherence to construction payment terms as appropriate. Trade debtors and creditors are monitored on a weekly basis to ensure that terms and conditions of agreements made are being adhered to by all parties and that funds are available to meet liabilities when they arise.

Employment of disabled persons

The company continues its policy regarding the employment of disabled persons and fair consideration is given to applications for employment by disabled persons having regard to their particular aptitudes and abilities.

Employee training

The company has implemented an in-house training system that allows the company to identify gaps in skill levels or technical knowledge and delivers the required training in a timely manner. The company has an in-house training facility at head office where training sessions for up to twenty employees can be held. The company also encourages and supports our employees to obtain external training where necessary to augment their current qualifications and skills. This system allows employees to monitor their own progress in improving their skills at any level or occupation.

Health, safety, environment and quality management

Our commitment to health, safety and the environment extends beyond words, and into actions and behaviours. We are accredited to many national and international standards including, Achilles, SpeCC, Construction Health & Safety (CHAS), SMAS Work Safe Contractor, ISO 14001, ISO 9001, OSHAS 18001, Freight Operators Registration Scheme (FORS GOLD), Program for Endorsement of Forest Certification (PEFC) and the Forest Stewardship Council (FSC). We also play a leading role within Construct, our trade federation organisation, as well as being members of the Construction Health and Safety Group (CHSG). Mitchellson are proud to hold these accreditations and memberships because it focuses heavily on excellence in systems and processes, but is underpinned consistently with a clear focus on the health, safety and wellbeing of our personnel. Our commitment to Health, Safety and Environment is set out in the Company policies and regular strategic reviews where we openly establish and set our targets with the overall target of achieving continual improvement.

We developed our own behavioural safety initiative called 'Stay Safe' the primary purpose of which is to help evolve attitudes towards health, safety and environment. This is achieved through the involvement of all employees from tradesmen, labourers, managers through to the owners of the organisation improving their awareness and understanding of both positive and negative consequence of the actions we all take. Stay Safe has helped towards our target of continual improvement. On-going monitoring and analysis of incidents has provided us with opportunities for continuous improvement and learning through the analysis and evaluation of trends. Visible leadership and the right approach at the top has enabled us to develop a strong culture of transparency and trust and a mutually beneficial working environment where all levels of our workforce can feel comfortable speaking up about issues that concern them or areas where they feel improvement can be made.

We explain our corporate policies to clients and our supply chain prior to any contract being awarded and its principles are adhered to in any work we undertake. We are working towards clearly identified environmental targets and in doing so are raising awareness of the need to achieve and continually sustain environmental best practice both at home and in the workplace.

Using natural materials from fully sustainable and renewable sources is a key area of focus for our business. All timber used by Mitchellson comes from approved plantation sources that are assessed for their ethical growing and harvesting policy. This, together with a robust recycling regime, led to Mitchellson being among the first reinforced concrete frame contractors in the UK to receive FSC and PEFC certification.

Approval

This report was approved by the board on 14 December 2018 and signed on its behalf by:

The directors present their annual report and financial statements for the year ended 31 May 2018.

The principal activities of the company continue to be those of specialist groundworks and reinforced concrete frame contractors.

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

The results for the year are set out on page 8.

Interim dividends of £1,000,000 (2017: £Nil) were paid during the year. The directors have not proposed a final dividend.

There are no significant events noted after the reporting date.

The auditors, Riordan O'Sullivan & Co, Chartered Certified Accountants and Statutory Auditors are deemed to be reappointed under section 487(2) of the Companies Act 2006.

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.

The company has chosen in accordance with Companies Act 2006, s. 414C(11) to set out in the company's strategic report information required by Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008, Sch. 7 to be contained in the directors' report. It has done so in respect of principal risks and uncertainties, financial instruments and future prospects.

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 auditors are 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 auditors are aware of that information.

Approval

This report was approved by the board on 14 December 2018 and signed on its behalf by:

We have audited the financial statements of Mitchellson Formwork & Civil Engineering Limited (the 'company') for the year ended 31 May 2018 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 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 FRS 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 May 2018 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

We have nothing to report in respect of the following matters in relation to which the ISAs (UK) require us to report to you where:

• the directors' use of the going concern basis of accounting in the preparation of the financial statements is not appropriate; or

• the directors have not disclosed in the financial statements any identified material uncertainties that may cast significant doubt about the company’s ability to continue to adopt the going concern basis of accounting for a period of at least twelve months from the date when the financial statements are authorised for issue.

Other information

The directors are responsible for the other information. The other information comprises the information included in the annual report, other than the financial statements and our auditor’s report 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 there is a material misstatement in the financial statements or a material misstatement of the other information. 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 and the directors' report.

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.

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.

A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council’s website at: http://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.

All amounts relate to continuing operations.

Mitchellson Formwork & Civil Engineering Limited is a private company limited by shares incorporated in England and Wales. The registered office is Mitchellson House, Stanwell Road, Horton, Slough, Berkshire, SL3 9PF.

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.

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

At the time of approving the financial statements, the directors have an 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.

Amounts recoverable on contracts, including work-in-progress, are shown within debtors and are stated at the net sales value of the work done after provisions for contingencies and anticipated future losses on contracts, less amounts received as progress payments on account. Turnover and related costs are recorded as contract activity progresses. An appropriate proportion of the anticipated contract profit or loss is recognised as the contract activity progresses commensurate with performance and anticipated final outcome. Excess progress payments are included in creditors as payments received on account.

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.

Stocks are stated at the lower of cost and estimated selling price less costs to complete and sell. Cost comprises direct materials and, where applicable, direct labour costs and those overheads that have been incurred in bringing the stocks to their present location and condition.

Stocks held for distribution at no or nominal consideration are measured at the lower of replacement cost and cost, adjusted where applicable for any loss of service potential.

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.

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 tax liabilities are generally recognised for all timing differences and deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Such assets and liabilities are not recognised if the timing difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.

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.

Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.

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.

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 total turnover of the company for the year has been derived from its principal activity of providing construction services wholly undertaken in the UK.

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

Their aggregate remuneration comprised:

The actual charge/(credit) for the year can be reconciled to the expected charge for the year based on the profit or loss and the standard rate of tax as follows:

Included in the above are retentions held by customers amounting to £3,647,761 (2017 - £1,627,446) of which £2,909,447 (2017 - £1,131,933) are due for settlement after more than 12 months.

The amounts due from associated undertakings are unsecured, interest free, and repayable on demand.

The amounts due to associated undertakings are unsecured, interest free, and payable on demand.

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

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

There were no events since the year end which materially affected the company.

The company is related to Mitchellson Plant Hire Limited, Horton Developments Limited, Three M's Harwich Limited and Mitchellson Rail Limited by virtue of being under common control. The company is also related to Arlesey Developments Partnership where the directors of Mitchellson Formwork & Civil Engineering Limited are the partners.

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

Hire of plant and equipment from Mitchellson Plant Hire Limited £12,421,466 (2017 - £4,656,001) and

Repairs and maintenance services provided to Arlesey Developments Partnership £38,000 (2017 - £45,000).

Rent payable to Horton Developments Limited £108,000 (2017 - £108,000) and Arlesey Developments Partnership £94,140 (2017 - £94,140).

At the balance sheet date the following amounts were owed by the associated undertakings:

Mitchellson Plant Hire Limited £219,981 (2017 - £709,529).

Three M's Harwich Limited £12,835 (2017 - £12,835).

Arlesey Developments Partnership £338,873 (2017 - £352,994).

At the balance sheet date the following amounts were owed to the associated undertakings:

Horton Developments Limited £Nil (2017 - £372,532).

Mitchellson Rail Limited £53,500 (2017 - £53,500)

By virtue of their shareholdings M L Masterson and C M Mitchell are the ultimate controllers of the company.