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Registered number: 02765630









MARLBOROUGH HIGHWAYS LIMITED









ANNUAL REPORT AND FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2022

 
MARLBOROUGH HIGHWAYS LIMITED
 
 
COMPANY INFORMATION


Directors
J Woolf 
M J Revell 
W D Blostone 
J A Revell 




Registered number
02765630



Registered office
Woolf House 15 Regiment Business Park
Eagle Way

Little Waltham

Chelmsford

England

CM3 3FY




Independent auditors
Barnes Roffe LLP
Chartered Accountants & Statutory Auditor

1st Floor

73 - 81 Southwark Bridge Road

London

SE1 0NQ




Bankers
National Westminister Bank PLC
403 Bethnal Green Road

London

E2 0AF





 
MARLBOROUGH HIGHWAYS LIMITED
 

CONTENTS



Page
Strategic report
 
1 - 2
Directors' report
 
3 - 4
Independent auditors' report
 
5 - 8
Statement of comprehensive income
 
9
Statement of financial position
 
10
Statement of changes in equity
 
11
Notes to the financial statements
 
12 - 28


 
MARLBOROUGH HIGHWAYS LIMITED
 
 
STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2022

Introduction
 
The directors present their strategic report for the year ended 31 December 2022.
Principal activity and review of business
The principal activity of the company in the year under review was that of building, civil engineering and road surfacing.
Marlborough Highways Limited continued to build its work profile with a number of Local Authorities and national companies including: London Borough of Hackney, London Borough of Barking and Dagenham, London Borough of Haringey, London Borough of Havering, Southend-on-Sea Borough Council, London Borough of Enfield, Essex Highways and London Borough of Brent. 
Marlborough has continued to invest significant capital on a new satellite office and employee welfare facilities, which became operational in July 2022.  Marlborough also continues to invest heavily in plant, equipment and vehicles.  This investment has enabled the organisation to attract high calibre staff from across the industry, enabling future organic growth and business development, as well as ensuring Marlborough continue to meet its target of driving down emissions and reducing its carbon footprint.

Principal risks and uncertainties
 
The principal risk and uncertainty are the dangers posed by rising prices of raw materials, fuel and energy, Brexit and the potential impact to delivery of the contracts, including availability of materials and equipment.        
Financial risk
The company uses various financial instruments to measure and monitor performance, which include cash, trade debtors, amounts recoverable on contracts and trade creditors that arise directly from its operations. The main purpose of these financial metrics is to optimise finance for the company's operations. The existence of financial challenges, which are monitored by management, exposes the company to a number of financial risks, which are described in more detail below.
The company undertakes the vast majority of their work as Principal Contractor for Local Authorities. As such, their work is dependent on client budgets.
Credit risk
The company's principal financial assets are cash, trade debtors and amounts recoverable on contracts. The associated credit risk is limited as the company's clients are predominantly public sector entities, all of whom have strong credit ratings supported by short term borrowings from the United Kingdom government.
In order to manage credit risk, the financial controller and directors regularly review the debtors position and the finance department works to finalise procedures for dealing with customers.
Liquidity risk
The company seeks to manage financial risk to ensure sufficient liquidity is available to meet foreseeable need and to invest cash in assets both safely and profitably.
The company's policy throughout the year has been to achieve this objective through senior management's day-to-day involvement in business decision rather than through setting maximum or minimum liquidity ratio.

Page 1

 
MARLBOROUGH HIGHWAYS LIMITED
 

STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022

Financial key performance indicators
 
The company board sets financial targets and monitor performance by reviewing monthly management accounts.
We consider that our key financial performance indicators are those that communicate the financial performance and strength of the company as a whole, these being turnover, gross and net profit percentage. In addition, each of the contracts have both service and financial related KPI's related specifically to the contract which are monitored and reviewed on a regular basis with our clients.
Given the uncomplicated nature of business, the company's directors analysis using KPI's are as follows:
The gross profit and net profit margins performed as expected with results of 17.7% and 1.7% respectively 
(2021 - 17.4% and 3.0%). Liquidity ratios also performed as expected with a current ratio of 1.06 (2021 - 1.23) and quick ratio of 0.99 (2021 - 1.17).
Although it must be recognised that during the period of review trading conditions have remained particularly challenging. In light of the uncertainty caused by Brexit and political instability the directors remain satisfied that the company has been able to continue developing  and generating profits.

Health, safety and the environment
 
Safety is the company's number one strategy. The company's policy is to ensure the safety of its employees and any others who's health and safety may be affected by our operation. The company has won a number of awards including ROSPA Gold and ROSPA Fleet safety.
The company has integrated their health, safety, environmental and quality management systems, which are externally accredited to ISO:45001:2018, ISO:14001 and ISO:9001 respectively, in with those of McDonald Highway Services Limited to form a consistent group policy across the whole business.

Future developments
 
The directors believe that the integrated highway service market will continue to develop and evolve in future years and that with a stable financial position, the company will be well placed to continue to grow the business.
Marlborough Highways Limited has strong relationships with supply chain partners and the group has long term contracts with strategic clients. One of the key objectives of the company will be to continue to work with our clients on these strategic contracts to ensure we deliver the objectives of each contract while also looking to both broaden and deepen the services that we offer to those clients. Simultaneously we will continue to explore further innovative ways to deliver our service in a more effective and efficient way.
We will continue to look for further opportunities to grow the business over the coming years, through a continued focus on achieving the company's objectives, it is anticipated that the company will continue to deliver sustainable profits in future years.


This report was approved by the board on 29 September 2023 and signed on its behalf.





M J Revell
Director

Page 2

 
MARLBOROUGH HIGHWAYS LIMITED
 
 
 
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 DECEMBER 2022

The directors present their report and the financial statements for the year ended 31 December 2022.

Directors' responsibilities statement

The directors are responsible for preparing the Strategic report, the Directors' 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 applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice), including Financial Reporting Standard 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland'. 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 for the Company's financial statements and then apply them consistently;

make judgments 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 to enable them to ensure that the financial statements comply with the Companies Act 2006They 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.

Results and dividends

The profit for the year, after taxation, amounted to £1,474,560 (2021 - £2,328,580).

Dividends paid for the year amounted to £620,000 (2021: £1,540,000).

Directors

The directors who served during the year were:

J Woolf 
M J Revell 
W D Blostone 
J A Revell 

Indemnification of directors

Qualifying third party indemnity provisions (as defined in section 234 of the Companies Act 2006) are in force for directors who held office during the year.

Page 3

 
MARLBOROUGH HIGHWAYS LIMITED
 
 
 
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022

Engagement with employees

The company takes employee involvement seriously to ensure that any concerns that employees raise are dealt with by the management team. 

Disclosure of information to auditors

Each of the persons who are directors at the time when this Directors' report is approved has confirmed that:
 
so far as the director is aware, there is no relevant audit information of which the Company's auditors are unaware, and

the director has taken all the steps that ought to have been taken as a director in order to be aware of any relevant audit information and to establish that the Company's auditors are aware of that information.

Each of the persons who are directors at the time when this Directors' report is approved has confirmed that:
 - so far as the director is aware, there is no relevant audit information of which the company's auditors are unaware, and
 - the director has taken all the steps that ought to have been taken as a director in order to be aware of any relevant audit information and to establish that the company's auditors are aware of that information.

Post balance sheet events

During the year and since the Balance Sheet date the company has continued to deal with the coronavirus pandemic and the associated measures that governments, customers, suppliers and finance providers put in place to deal with it.  While the company will undoubtedly suffer adverse impacts from this in the short term, the directors are confident that we can work through the disruption and that business plans are robust even in the current situation.  On the basis of the above the accounts have been prepared on the going concern basis

Auditors

The auditorsBarnes Roffe LLPwill be proposed for reappointment in accordance with section 485 of the Companies Act 2006.

This report was approved by the board on 29 September 2023 and signed on its behalf.
 





M J Revell
Director

Page 4

 
MARLBOROUGH HIGHWAYS LIMITED
 
 
 
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF MARLBOROUGH HIGHWAYS LIMITED
 

Opinion


We have audited the financial statements of Marlborough Highways Limited (the 'Company') for the year ended 31 December 2022, which comprise the Statement of comprehensive income, the Statement of financial position, the Statement of changes in equity and the related notes, including a summary of significant accounting policiesThe 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 United Kingdom, including the Financial Reporting Council'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.


Page 5

 
MARLBOROUGH HIGHWAYS LIMITED
 
 
 
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF MARLBOROUGH HIGHWAYS LIMITED (CONTINUED)


Other information


The other information comprises the information included in the Annual Report other than the financial statements and our Auditors' report thereon. The directors are responsible for the other information contained within the Annual ReportOur 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.


Opinion 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 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.


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 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 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 Directors' responsibilities statement set out on page 3, 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.


Page 6

 
MARLBOROUGH HIGHWAYS LIMITED
 
 
 
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF MARLBOROUGH HIGHWAYS LIMITED (CONTINUED)


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 an Auditors' 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. 
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 extend to which our procedures are capable of detecting irregularities, including fraud is detailed below: 
Our approach to identifying and assessing the risks of material misstatement in respect of irregularities, including fraud and non-compliance with law and regulations, was as follows: 
• The engagement partner ensured that the engagement team collectively had the appropriate competence, capabilities and skills to identify or recognise non-compliance with applicable laws and regulations
• We identified the laws and regulations applicable to the company through discussion with directors and 
other management, and from our commercial knowledge and experience of the sector that the company operates in;
• The specific laws and regulations which we considered may have a direct material effect on the financial  statements or the operations of the company, are as follows;
  o Companies Act 2006.
  o FRS102
  o Health and Safety legislation.
  o Employment legislation
  o Tax legislation
  o Modern Slavery Act 2015
  o Construction Design and Management Regulations 2015 
• We assessed the extent of compliance with the laws and regulations identified above through making enquiries of management, reviewing board minutes, relevant correspondence and certificates held; and
• Laws and regulations were communicated within the audit team at the planning meeting, and during the audit as any further laws and regulation were identified. The audit team remained alert to instances of non compliance throughout the audit. 
We assessed the susceptibility of the company’s financial statements to material misstatement, including obtaining an understanding of how fraud might occur by: 
• Making enquires of management and the board as to where they consider there was susceptibility to fraud along with their knowledge of actual, suspected and alleged fraud; 
• Considering the internal controls in place to mitigate risks of fraud and non-compliance with laws and regulations; and
• Our review of financial statements and testing the disclosures against supporting documentation. 
 
Page 7

 
MARLBOROUGH HIGHWAYS LIMITED
 
 
 
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF MARLBOROUGH HIGHWAYS LIMITED (CONTINUED)


To address the risk of fraud through management bias and override of controls we:
• Performed analytical procedures to identify any unusual or unexpected trends or anomalies;
• Inspected and tested journal entries to identify unusual or unexpected transactions;
• Assessed whether judgement and assumptions made in determining significant accounting estimates, including revaluations of tangible fixed assets and the useful economic life of tangible fixed assets, were indicative of management bias; and
• Investigated the rationale behind significant transactions, or transactions that are unusual or outside the company’s usual course of business. 
Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading to a material misstatement in the financial statements or non-compliance with regulation.  This risk increases the more that compliance with a law or regulation is removed from the events and transactions reflected in the financial statements, as we will be less likely to become aware of instances of non-compliance. The risk is also greater regarding irregularities occurring due to fraud rather than error, as fraud involves intentional concealment, forgery, collusion, omission or misrepresentation.


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 2006Our 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 Auditors' 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.





Duncan Stannett (Senior Statutory Auditor)
for and on behalf of
Barnes Roffe LLP
Chartered Accountants & Statutory Auditor
1st Floor
73 - 81 Southwark Bridge Road
London
SE1 0NQ

 
Date: 
29 September 2023
Page 8

 
MARLBOROUGH HIGHWAYS LIMITED
 
 
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2022

2022
2021
Note
£
£

  

Turnover
 4 
87,947,652
77,502,814

Cost of sales
  
(72,384,840)
(64,014,821)

Gross profit
  
15,562,812
13,487,993

Distribution costs
  
(2,176,806)
(1,450,807)

Administrative expenses
  
(11,035,536)
(9,091,472)

Operating profit
 5 
2,350,470
2,945,714

Interest payable and similar expenses
 9 
(280,768)
(193,376)

Profit before tax
  
2,069,702
2,752,338

Tax on profit
 10 
(595,142)
(423,758)

Profit for the financial year
  
1,474,560
2,328,580

There were no recognised gains and losses for 2022 or 2021 other than those included in the statement of comprehensive income.

There was no other comprehensive income for 2022 (2021:£NIL).

The notes on pages 12 to 28 form part of these financial statements.

Page 9

 
MARLBOROUGH HIGHWAYS LIMITED
REGISTERED NUMBER: 02765630

STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2022

2022
2021
Note
£
£

Fixed assets
  

Tangible assets
 11 
7,180,597
6,167,694

Current assets
  

Stocks
 12 
1,289,687
765,295

Debtors: amounts falling due within one year
 13 
17,528,622
9,998,906

Cash at bank and in hand
 14 
605,690
4,619,723

  
19,423,999
15,383,924

Creditors: amounts falling due within one year
 15 
(18,331,498)
(12,479,023)

Net current assets
  
 
 
1,092,501
 
 
2,904,901

Total assets less current liabilities
  
8,273,098
9,072,595

Creditors: amounts falling due after more than one year
 16 
(1,311,415)
(3,884,981)

Provisions for liabilities
  

Deferred tax
 19 
(1,125,850)
(566,341)

Other provisions
 20 
(710,000)
(350,000)

  
 
 
(1,835,850)
 
 
(916,341)

Net assets
  
5,125,833
4,271,273


Capital and reserves
  

Called up share capital 
 21 
201
201

Profit and loss account
  
5,125,632
4,271,072

  
5,125,833
4,271,273


The financial statements were approved and authorised for issue by the board and were signed on its behalf on 29 September 2023.




M J Revell
Director

The notes on pages 12 to 28 form part of these financial statements.

Page 10

 
MARLBOROUGH HIGHWAYS LIMITED
 

STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2022


Called up share capital
Profit and loss account
Total equity

£
£
£

At 1 January 2022
201
4,271,072
4,271,273



Profit for the year
-
1,474,560
1,474,560

Dividends
-
(620,000)
(620,000)


At 31 December 2022
201
5,125,632
5,125,833



STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2021


Called up share capital
Profit and loss account
Total equity

£
£
£

At 1 January 2021
201
3,482,492
3,482,693



Profit for the year
-
2,328,580
2,328,580

Dividends
-
(1,540,000)
(1,540,000)


At 31 December 2021
201
4,271,072
4,271,273


The notes on pages 12 to 28 form part of these financial statements.

Page 11

 
MARLBOROUGH HIGHWAYS LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022

1.


General information

Marlborough Highways Limited is a private company limited by shares and incorporated in England and Wales. The address of the registered office is Woolf House, 15 Regiment Business Park, Eagle Way, Little Waltham, Chelmsford, CM3 3FY. The Company's principal activity continues to be that of construction of roads and motorways.

2.Accounting policies

 
2.1

Basis of preparation of financial statements

The financial statements have been prepared under the historical cost convention unless otherwise specified within these accounting policies and in accordance with Financial Reporting Standard 102, the Financial Reporting Standard applicable in the UK and the Republic of Ireland and the Companies Act 2006.

The preparation of financial statements in compliance with FRS 102 requires the use of certain critical accounting estimates. It also requires management to exercise judgment in applying the Company's accounting policies (see note 3).

The following principal accounting policies have been applied:

 
2.2

Financial Reporting Standard 102 - reduced disclosure exemptions

The Company has taken advantage of the following disclosure exemptions in preparing these financial statements, as permitted by the FRS 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland":
the requirements of Section 7 Statement of Cash Flows;
the requirements of Section 3 Financial Statement Presentation paragraph 3.17(d);
the requirements of Section 33 Related Party Disclosures paragraph 33.7.

This information is included in the consolidated financial statements of Marlborough Highways Group Limited as at 31 December 2022 and these financial statements may be obtained from Companies House.

Page 12

 
MARLBOROUGH HIGHWAYS LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022

2.Accounting policies (continued)

 
2.3

Revenue

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured. Revenue is measured at the fair value of the consideration received or receivable and represents amounts receivable for services rendered stated net of discounts, other sales taxes and value added tax.
Revenue arises from an increase in the value of work performed on construction contracts and on the value of service provided during the year. Where the outcome of a long term contract can be estimated reliably and it is probable that the contract will be profitable, revenue and costs are recognised to the stage of completion of the contract activity at the statement of financial position date.  Stage of completion is assessed by reference to the applications made and subsequently certified by the customers.   
A variation is an instruction by the customer for a change in the scope of the work to be performed under the contract. Variations are included in contract revenue when it is probable that the customer will approve the variation and the related adjustment to the contract price can be measured reliably.
A claim is an amount that the contractors seek to collect from the customer as reimbursement for costs whose inclusion in the contract price is disputed, and may arise from, for example, delays caused by the customer, errors in specification or design and disputed variations in contract work. Claims are included in contract revenue when negotiations with the customer have reached an advanced stage such that it is probable that the customer will accept the claim and the amount of the claim can be measured reliably.
When it is probable that total contract costs will exceed total contract revenue, the expected loss is recognised as an expense immediately.
Construction work in progress comprises the cost incurred on contracts plus an appropriate proportion of overheads and attributable profit. Profit is recognised on a percentage completion basis when the outcome of a contract or project can be reasonably foreseen. Where the outcome of a contract cannot be reasonably foreseen, profit is taken on completion. Remedial provisions are made in full for any anticipated remediation work.

 
2.4

Tangible fixed assets

Tangible fixed assets under the cost model are stated at historical cost less accumulated depreciation and any accumulated impairment losses. Historical cost includes expenditure that is directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management.

Page 13

 
MARLBOROUGH HIGHWAYS LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022

2.Accounting policies (continued)


2.4
Tangible fixed assets (continued)

Depreciation is charged so as to allocate the cost of assets less their residual value over their estimated useful lives, using the straight-line method.

Depreciation is provided on the following bases:

Long-term leasehold property
-
12.5% straight line
Plant and machinery
-
25% straight line
Motor vehicles
-
25% straight line
Fixtures and fittings
-
25% straight line

The assets' residual values, useful lives and depreciation methods are reviewed, and adjusted prospectively if appropriate, or if there is an indication of a significant change since the last reporting date.

Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised in profit or loss.

  
2.5

Impairment of assets

At each reporting date, the Company reviews the carrying value of its assets to determine whether there is any indication that those assets may have suffered an impairment loss. If any indication of impairment exists, the recoverable amount of the asset is estimated in order to determine if there is any impairment loss.
The recoverable amount of an asset is the higher or fair value less costs to sell and value in use. Value in use is the present value of the future cash flows exceed to be derived from the asset or cash generating unit. The present values calculation involves estimating the future cash inflows and outflows to be derived from continuing use of the asset and from its ultimate disposal, applying an appropriate discount rate to those future cash flows.
Where the recoverable amount of an asset is less than carrying amount, an impairment loss is recognised immediately in profit or loss. An impairment loss recognised for all assets is reversed in a subsequent period if, and only if, the reasons for the impairment loss have ceased to apply. Impairment losses are charged to profit or loss.

 
2.6

Stocks and work in progress

Stocks are stated at the lower of cost and net realisable value, being the estimated selling price less costs to complete and sell. Cost is based on the cost of purchase on a first in, first out basis. Work in progress and finished goods include labour and attributable overheads.

At each reporting date, stocks are assessed for impairment. If stock is impaired, the carrying amount is reduced to its selling price less costs to complete and sell. The impairment loss is recognised immediately in profit or loss.

Page 14

 
MARLBOROUGH HIGHWAYS LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022

2.Accounting policies (continued)

 
2.7

Current and deferred taxation

The tax expense for the year comprises current and deferred tax. Tax is recognised in profit or loss except that a charge attributable to an item of income and expense recognised as other comprehensive income or to an item recognised directly in equity is also recognised in other comprehensive income or directly in equity respectively.

The current income tax charge is calculated on the basis of tax rates and laws that have been enacted or substantively enacted by the reporting date in the countries where the Company operates and generates income.

Deferred tax balances are recognised in respect of all timing differences that have originated but not reversed by the reporting date, except that:
The recognition of deferred tax assets is limited to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits; and
Any deferred tax balances are reversed if and when all conditions for retaining associated tax allowances have been met.

Deferred tax balances are not recognised in respect of permanent differences except in respect of business combinations, when deferred tax is recognised on the differences between the fair values of assets acquired and the future tax deductions available for them and the differences between the fair values of liabilities acquired and the amount that will be assessed for tax. Deferred tax is determined using tax rates and laws that have been enacted or substantively enacted by the reporting date.

 
2.8

Operating leases: the Company as lessee

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

Benefits received and receivable as an incentive to sign an operating lease are recognised on a straight-line basis over the lease term, unless another systematic basis is representative of the time pattern of the lessee's benefit from the use of the leased asset.

 
2.9

Pensions

Defined contribution pension plan

The Company operates a defined contribution plan for its employees. A defined contribution plan is a pension plan under which the Company pays fixed contributions into a separate entity. Once the contributions have been paid the Company has no further payment obligations.

The contributions are recognised as an expense in profit or loss when they fall due. Amounts not paid are shown in accruals as a liability in the Statement of financial position. The assets of the plan are held separately from the Company in independently administered funds.

 
2.10

Financial instruments

The Company has elected to apply the provisions of Section 11 “Basic Financial Instruments” of FRS 102 to all of its financial instruments.

The Company has elected to apply the recognition and measurement provisions of IFRS 9 Financial Instruments (as adopted by the UK Endorsement Board) with the disclosure requirements of Sections
Page 15

 
MARLBOROUGH HIGHWAYS LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022

2.Accounting policies (continued)


2.10
Financial instruments (continued)

11 and 12 and the other presentation requirements of FRS 102.

Financial instruments are recognised in the Company's Statement of financial position 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

Basic financial assets, which include trade and other receivables, cash and bank balances, are initially measured at their transaction price including transaction costs and are subsequently carried at their amortised cost using the effective interest method, less any provision for impairment, 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.

Discounting is omitted where the effect of discounting is immaterial. The Company's cash and cash equivalents, trade and most other receivables due with the operating cycle fall into this category of financial instruments.

Other financial assets

Other financial assets, which includes investments in equity instruments which are not classified as subsidiaries, associates or joint ventures, are initially measured at fair value, which is normally the recognised transaction price. Such assets are subsequently measured at fair value with the changes in fair value being recognised in the profit or loss. Where other financial assets are not publicly traded, hence their fair value cannot be measured reliably, they are measured at cost less impairment.

Impairment of financial assets

Financial assets are assessed for indicators of impairment at each reporting date. 

Financial assets are impaired when events, subsequent to their initial recognition, indicate the estimated future cash flows derived from the financial asset(s) have been adversely impacted. The impairment loss will be the difference between the current carrying amount and the present value of the future cash flows at the asset(s) original effective interest rate.

If there is a favourable change in relation to the events surrounding the impairment loss then the impairment can be reviewed for possible reversal. The reversal will not cause the current carrying amount to exceed the original carrying amount had the impairment not been recognised. The impairment reversal is recognised in the profit or loss.

Financial liabilities

Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instruments any contract that evidences a residual interest in the assets of the Company after the deduction of all its liabilities.

Basic financial liabilities, which include trade and other payables, bank loans and other loans are
Page 16

 
MARLBOROUGH HIGHWAYS LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022

2.Accounting policies (continued)


2.10
Financial instruments (continued)

initially measured at their transaction price after transaction costs. When this constitutes a financing transaction, whereby the debt instrument is measured at the present value of the future receipts discounted at a market rate of interest. Discounting is omitted where the effect of discounting is immaterial.

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

Trade payables are obligations to pay for goods and services that have been acquired in the ordinary course of business from suppliers. Trade payables are classified as current liabilities if the payment is due within one year. If not, they represent non-current liabilities. Trade payables are initially recognised at their transaction price and subsequently are measured at amortised cost using the effective interest method. Discounting is omitted where the effect of discounting is immaterial.

Other financial instruments

Derivatives, including forward exchange contracts, futures contracts and interest rate swaps, are not classified as basic financial instruments. These are initially recognised at fair value on the date the derivative contract is entered into, with costs being charged to the profit or loss. They are subsequently measured at fair value with changes in the profit or loss.

Debt instruments that do not meet the conditions as set out in FRS 102 paragraph 11.9 are subsequently measured at fair value through the profit or loss. This recognition and measurement would also apply to financial instruments where the performance is evaluated on a fair value basis as with a documented risk management or investment strategy.

Derecognition of financial instruments

Derecognition of financial assets

Financial assets are derecognised when their contractual right to future cash flow expire, or are settled, or when the Company transfers the asset and substantially all the risks and rewards of ownership to another party. If significant risks and rewards of ownership are retained after the transfer to another party, then the Company will continue to recognise the value of the portion of the risks and rewards retained.

Derecognition of financial liabilities

Financial liabilities are derecognised when the Company's contractual obligations expire or are discharged or cancelled.

 
2.11

Cash and cash equivalents

Cash and cash equivalents in the balance sheet comprise cash at banks and in hand less bank overdrafts. Bank overdrafts, when applicable, are shown within borrowings in current liabilities.

Page 17

 
MARLBOROUGH HIGHWAYS LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022

2.Accounting policies (continued)

 
2.12

Finance costs

Finance costs are charged to profit or loss over the term of the debt using the effective interest method so that the amount charged is at a constant rate on the carrying amount. Issue costs are initially recognised as a reduction in the proceeds of the associated capital instrument.

 
2.13

Borrowing costs

All borrowing costs are recognised in profit or loss in the year in which they are incurred.

 
2.14

Debtors

Short-term debtors are measured at transaction price, less any impairment. Loans receivable are measured initially at fair value, net of transaction costs, and are measured subsequently at amortised cost using the effective interest method, less any impairment.

 
2.15

Creditors

Short-term creditors are measured at the transaction price. Other financial liabilities, including bank loans, are measured initially at fair value, net of transaction costs, and are measured subsequently at amortised cost using the effective interest method.

 
2.16

Provisions for liabilities

Provisions are made where an event has taken place that gives the Company a legal or constructive obligation that probably requires settlement by a transfer of economic benefit, and a reliable estimate can be made of the amount of the obligation.
Provisions are charged as an expense to profit or loss in the year that the Company becomes aware of the obligation, and are measured at the best estimate at the reporting date of the expenditure required to settle the obligation, taking into account relevant risks and uncertainties.
When payments are eventually made, they are charged to the provision carried in the Statement of financial position.

 
2.17

Dividends

Equity dividends are recognised when they become legally payable. Interim equity dividends are recognised when paid. Final equity dividends are recognised when approved by the shareholders at an annual general meeting.

Page 18

 
MARLBOROUGH HIGHWAYS LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022

3.


Judgments in applying accounting policies and key sources of estimation uncertainty

The preparation of financial statements in conformity with FRS 102 requires that use of certain critical accounting estimates and assumptions concerning the future. It also requires management to exercise their judgement in process of applying the Company's accounting policies.
Application of accounting policies in the preparation of the financial statements requires the Board of Directors to make judgements, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources.
The directors have made key assumptions regarding the stage of completion, future costs to complete and collectability of billings of some contracts. 


4.


Turnover

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


5.


Operating profit

The operating profit is stated after charging:

2022
2021
£
£

Hire of Plant and machinery
1,693,810
1,679,489

Rent
647,617
691,324

Depreciation of owned assets
160,095
100,782

Depreciation of assets on hire purchase contracts
1,398,898
1,008,068


6.


Auditors' remuneration

During the year, the Company obtained the following services from the Company's auditors and their associates:


2022
2021
£
£

Fees payable to the Company's auditors and their associates for the audit of the Company's financial statements
23,800
23,800

The Company has taken advantage of the exemption not to disclose amounts paid for non-audit services as these are disclosed in the consolidated accounts of the parent Company.

Page 19

 
MARLBOROUGH HIGHWAYS LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022

7.


Employees

Staff costs, including directors' remuneration, were as follows:


2022
2021
£
£

Wages and salaries
17,594,559
13,838,499

Pension costs
38,605
32,160

17,633,164
13,870,659


The average monthly number of employees, including the directors, during the year was as follows:


        2022
        2021
            No.
            No.







Administration
4
4


8.


Directors' remuneration

2022
2021
£
£

Directors' emoluments
2,800
2,400

Company contributions to defined contribution pension schemes
-
2,520

2,800
4,920


During the year retirement benefits were accruing to no directors (2021 - 1) in respect of defined contribution pension schemes.


9.


Interest payable and similar expenses

2022
2021
£
£


Bank interest payable
153,973
110,364

Finance leases and hire purchase contracts
126,266
83,012

Other interest payable
529
-

280,768
193,376

Page 20

 
MARLBOROUGH HIGHWAYS LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022

10.


Taxation


2022
2021
£
£

Corporation tax


Current tax on profits for the year
35,633
292,508

Adjustments in respect of previous periods
-
(3,096)


Total current tax
35,633
289,412

Deferred tax


Origination and reversal of timing differences
559,509
134,346

Total deferred tax
559,509
134,346


Tax on profit
595,142
423,758

Factors affecting tax charge for the year

The tax assessed for the year is higher than (2021 - higher than) the standard rate of corporation tax in the UK of 19% (2021 - 19%). The differences are explained below:

2022
2021
£
£


Profit on ordinary activities before tax
2,069,702
2,752,338


Profit on ordinary activities multiplied by standard rate of corporation tax in the UK of 19% (2021 - 19%)
393,243
522,944

Effects of:


Expenses not deductible for tax purposes
38,642
64,058

Capital allowances for year in excess of depreciation
(396,252)
(278,711)

Adjustments to tax charge in respect of prior periods
-
(3,096)

Group relief
-
(15,783)

Deferred tax
559,509
134,346

Total tax charge for the year
595,142
423,758


Factors that may affect future tax charges

UK corporate tax rate is increasing from 19% to 25% (effective 1 April 2023). The increase will
therefore increase future tax charges accordingly.

Page 21

 
MARLBOROUGH HIGHWAYS LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022

11.


Tangible fixed assets





Long-term leasehold property
Plant and machinery
Motor vehicles
Fixtures and fittings
Total

£
£
£
£
£



Cost or valuation


At 1 January 2022
948,981
3,077,143
4,845,383
636,992
9,508,499


Additions
-
916,401
1,754,948
113,754
2,785,103


Disposals
-
(65,000)
(314,624)
-
(379,624)



At 31 December 2022

948,981
3,928,544
6,285,707
750,746
11,913,978



Depreciation


At 1 January 2022
47,161
1,599,492
1,363,044
331,108
3,340,805


Charge for the year on owned assets
129,855
56,427
-
69,345
255,627


Charge for the year on financed assets
10,905
295,964
1,009,482
-
1,316,351


Disposals
-
(48,750)
(130,652)
-
(179,402)



At 31 December 2022

187,921
1,903,133
2,241,874
400,453
4,733,381



Net book value



At 31 December 2022
761,060
2,025,411
4,043,833
350,293
7,180,597



At 31 December 2021
901,820
1,477,651
3,482,339
305,884
6,167,694

Page 22

 
MARLBOROUGH HIGHWAYS LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022

           11.Tangible fixed assets (continued)

The net book value of assets held under finance leases or hire purchase contracts, included above, are as follows:


2022
2021
£
£



Land and buildings
62,703
73,607

Plant and machinery
1,305,964
1,008,390

Motor vehicles
3,968,342
3,396,417

Furniture, fittings and equipment
27,180
27,016

5,364,189
4,505,430


12.


Stocks

2022
2021
£
£

Inventories
1,289,687
765,295

1,289,687
765,295



13.


Debtors

2022
2021
£
£


Trade debtors
9,649,784
5,820,614

Amounts owed by group undertakings
5,226,234
3,678,256

Other debtors
2,432,662
285,637

Prepayments
219,942
214,399

17,528,622
9,998,906


Page 23

 
MARLBOROUGH HIGHWAYS LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022

14.


Cash and cash equivalents

2022
2021
£
£

Cash at bank and in hand
605,690
4,619,723

605,690
4,619,723



15.


Creditors: Amounts falling due within one year

2022
2021
£
£

Bank loans
2,500,000
-

Trade creditors
8,464,082
4,926,140

Amounts owed to group undertakings
2,192,594
2,956,933

Corporation tax
-
142,508

Other taxation and social security
25,069
57,589

Obligations under finance lease and hire purchase contracts
1,880,831
1,577,666

Other creditors
36
471,010

Accruals and deferred income
3,268,886
2,347,177

18,331,498
12,479,023



16.


Creditors: Amounts falling due after more than one year

2022
2021
£
£

Bank loans
-
2,500,000

Net obligations under finance leases and hire purchase contracts
1,311,415
1,384,981

1,311,415
3,884,981


Secured assets
The bank has a debenture including a fixed and floating charge over the undertaking and all property and assets, both present and future dated 13 June 2016.
The net obligations under finance leases and hire purchase contracts are secured against the assets to which they relate.

Page 24

 
MARLBOROUGH HIGHWAYS LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022

17.


Loans


Analysis of the maturity of loans is given below:


2022
2021
£
£

Amounts falling due within one year

Bank loans
2,500,000
-

Amounts falling due 2-5 years

Bank loans
-
2,500,000

2,500,000
2,500,000



18.


Hire purchase and finance leases


Minimum lease payments under hire purchase fall due as follows:

2022
2021
£
£


Within one year
1,877,940
1,577,666

Between 1-5 years
1,311,415
1,384,981

3,189,355
2,962,647


19.


Deferred taxation




2022
2021


£

£






At beginning of year
566,341
431,995


Charged to profit or loss
559,509
134,346



At end of year
1,125,850
566,341

Page 25

 
MARLBOROUGH HIGHWAYS LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
 
19.Deferred taxation (continued)

The provision for deferred taxation is made up as follows:

2022
2021
£
£


Accelerated capital allowances
1,125,850
566,341

1,125,850
566,341


20.


Provisions




Health & safety provision

£





At 1 January 2022
350,000


Charged to profit or loss
360,000



At 31 December 2022
710,000

A specific provision has been made for costs of meeting site health and safety requirements and claims settlements.


21.


Share capital

2022
2021
£
£
Allotted, called up and fully paid



170 (2021 - 170) Ordinary 'A' shares of £1.00 each
170
170
1 (2021 - 1) Ordinary 'B' share of £1.00
1
1
30 (2021 - 30) Ordinary 'D' shares of £1.00 each
30
30

201

201

The ordinary 'B' shares rank pari passu with the ordinary 'A' and 'D' shares except that they carry no voting rights.


Page 26

 
MARLBOROUGH HIGHWAYS LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022

22.


Contingent liabilities

A guarantee exists in favour of the group's bankers to cover bank borrowings of certain companies. At 31 December 2022 the net potential exposure in respect of this guarantee was £1,962,039 (2021: £2,065,631). The figure is in respect of the gross borrowings and does not take into account the underlying assets of the respective group companies.
In note 20, a specific provision has been made for costs of meeting site health and safety requirements and claims settlements. The provision represents directors' current best estimate which lies as a median within the legally advised range of £300,000 to £1,500,000. However, the exact outcome of the claim will not be known until June 2024. 


23.


Pension commitments

The Company operates a defined contributions pension scheme. The assets of the scheme are held separately from those of the company in an independently administered fund. The pension cost charge represents contributions payable by the Company to the fund and amounted to £38,605 (2021 - £32,160).


24.


Commitments under operating leases

At 31 December 2022 the Company had future minimum lease payments due under non-cancellable operating leases for each of the following periods:

2022
2021
£
£


Not later than 1 year
325,500
325,500

Later than 1 year and not later than 5 years
1,302,000
1,302,000

Later than 5 years
244,125
569,625

1,871,625
2,197,125


25.


Related party transactions

IIn accordance with FRS 102 Section 33 the Company has taken advantage of the exemption from the disclosure of transactions with the other wholly owned members of the group. The Company’s results form part of the consolidated financial statements prepared by its ultimate parent, Marlborough Highways Group Limited. The consolidated financial statements can be obtained from the Company at Woolf House, 15 Regiment Business Park, Eagle Way, Chelmsford, Essex, CM3 3FY.
At the year end £1,767,231
 (2021: £Nil) is owed from Londono M&M Limited, a company which has common directors and shareholders.
At the year end £176,000 (2021: £Nil) is owed from Lamy Enterprises Ltd, a company which has common directors and shareholders.


26.


Post balance sheet events

On 30 June 2023 bank loans, amounting to £2,500,000, were repaid in full.

Page 27

 
MARLBOROUGH HIGHWAYS LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022

27.


Ultimate parent undertaking and controlling party

Marlborough Highways Group Limited is regarded by the directors as being the company's ultimate parent company.  Marlborough Highways Group Limited is controlled by M J Revell.
 
Page 28