Registered number:
FOR THE YEAR ENDED 31 DECEMBER 2022
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SPRITESTORE LIMITED
COMPANY INFORMATION
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SPRITESTORE LIMITED
CONTENTS
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SPRITESTORE LIMITED
GROUP STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2022
The directors present the group strategic report for the year ended 31st December 2022.
We are pleased to report that despite the continuation of uncertainty during 2022 following the Coronavirus pandemic the year marked a full recovery to pre-pandemic trading levels and provided a firm growth platform for the future.
As part of an ongoing strategic review of the business, focused on positioning the business toward future opportunities, implementation of the succession plan of the operating board continued. This year’s results and performance, more than ever, justify the strength of our relationships with our clients and supply chain and the quality, professionalism and commitment of our staff to accept and adapt their working environments during the challenges of the year. Construction costs were impacted by inflation pressures, largely driven by material price increases, a product of Brexit, covid, the market turmoil following political uncertainty in 2022 and the war in the Ukraine. All of this had an impact on margins realised on previously secured work. Working closely and collaboratively with our client teams enabled us to work continuously through the year and deliver quality schemes to agreed timescales on budget. Health and Safety of our staff and supply chain remains very focused and at the forefront of what we do as part of our business ethics and this helped us navigate the new rules and guidelines for operating on our projects and maintained an excellent record during the period.
Economic uncertainty remains the single biggest risk within the construction sector and we manage these risks through robust systems and procedures. We have a healthy forward order book for repeat order clients through 2023 into 2024 and continue to build our reputation and client list through our proven delivery record.
Additionally, the speed and extent of economic recovery from the Coronavirus pandemic continued to impact on our sector through inflationary pressures and instability within the supply chain. We continue to monitor closely our supply chain and clients to manage risks on new and existing projects. We have adapted the way we operate our business and have continued to work with our clients to manage the risks on both existing and new projects, to ensure that there is no detrimental effect on the business’s ability to continue to trade. We have and continue to work hard to insulate the business from exposure to the inflation pressures mention previously to ensure that we achieve a recovery of margins to normal levels.
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SPRITESTORE LIMITED
GROUP STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
Some of the key performance indicators are as follows:
2022 2021 £’000s £’000s Turnover 223,412 156,669 Profit before tax 1,276 862 Profit after tax 2,287 591 Net assets 15,859 12,921 The policy of controlling costs and turnover whilst carefully managing cash flow are at the core of our financial success. We maintain a healthy shareholders fund which has proven our stability and consistency. 2022 saw trading levels recovering to pre-pandemic levels. Profits were impacted by the repositioning of the business strategy. We also successfully completed our new office development in Doncaster, which was fully funded by the business. A loan facility made by the business in a previous year expired post year end and has now been repaid (final payment 31st July 2023).
Client satisfaction, supply chain satisfaction and staff retention are all other key performance indicators along with continued achievements in environmental, quality and health and safety compliance confirmed by awards secured by our teams.
The principal activity of the Company continued to be that of a holding company. The principal trading activity of
the Group continued to be that of the management and delivery of construction projects as the principal main contractor.
The directors consider that the decisions taken during the financial year comply with the requirements of s172(1) of the Companies Act 2006.
Who we are and what we do Spritestore Limited, is the ulltimate parent company of the RG Group's trading company, RGCM Limited, which is one of the UK’s leading, privately held limited construction companies, with all directors being the ultimate sole shareholders and having a close day to day involvement in the management and operation of our business, which performs a wide range of construction projects in the UK.
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SPRITESTORE LIMITED
GROUP STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
The Role of the Board The Board’s primary responsibility is to promote the long-term success of the Group by delivering projects that meet the client’s expectations including on time, on budget and safely and to the highest quality standards so as to maintain the Group’s financial viability. This is affected by setting out our strategy with the ongoing performance monitoring. The Board holds Board meetings monthly to review the main aspects of our business, including financial reviews and forecasts, resources, internal controls, performance, opportunities and risks. All directors are directly responsible for and involved in all projects with day-to-day management carried out by senior management and must act in the way he/she considers, in good faith, would be most likely to promote the success of the Group for the benefit of its members as a whole, and in doing so have regard to key issues including the interests of the stakeholders in both the short and long term. 1. The likely consequence of any decision in the long-term A short and long term plans are prepared and monitored by the Board, based on financial and operating performance against key strategies and objectives, and amended as necessary, with an annual review. Key issues in preparing and reviewing the strategic plans are the economic climate, market conditions, retention of existing clients, new opportunities, competition and construction industry performance, construction industry market trends both short term and long term. The consequences of both short term and long-term strategies and decisions are carefully balanced to ensure that all decisions made are for the long-term benefit, whilst recognising any short-term constraints and implications. 2. The interest of the Group’s employees The Directors understand the importance of our employees to the long-term success of the business and being closely involved in the day to day operations of the business are familiar with each employee and thus able to assess their performance and provide guidance and further training as necessary. We aim to recruit & retain motivated and competent people and we believe in promotion from within as reward for performance and dedication, and to demonstrate a clear path for progression. Over the years many employees have been promoted to senior positions in the Group. Ongoing training and personal development are key strategies in our HR principles and the Group communicates to our employees via internal group-wide emails, presentations, and news posts. The Group has a well-developed intranet allowing our employees to easily access any information that they need, both on a project and corporate basis, and social media channels are developing to enhance communication and employee feedback. Regular meetings are held between the Directors and senior management to review projects and project finances, time and quality performance, resources and any other issues that could impact on the satisfactory delivery and completion of projects.
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SPRITESTORE LIMITED
GROUP STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
3. The need to foster the Group’s business relationships with suppliers, customers and others The Group has always believed that good business relationships with Clients and suppliers, including specialist contractors, is key to our ongoing success, and the Directors develop close relationships with them to ensure that we fully understand each other’s strategies and objectives and are able to support each other in achieving them. It is considered essential that all clients and suppliers have direct access to the relevant director, and feedback is encouraged so that lessons can be learned and any necessary improvements implemented. 4. The impact of the Group’s operations on the community and environment Our overriding objective is to have minimal impact on the local communities and environment on all of our construction projects. The Group has a well- developed Environmental Policy with stringent targets, and as a carbon neutral Group is committed to protecting the environment. We acknowledge that the pursuit of economic growth and respect for the environment must be closely linked, with sustainable development being an integral part of our business philosophy and processes. We work on the basis that compliance with environmental legislation, and other requirements, is the very minimum that will apply to our activities and services and we are committed to continual environmental performance improvement, the prevention of pollution and having a positive impact on the environment. We work closely with our clients and suppliers, encouraging and educating our employees and supply chain to recognise their responsibilities regarding protecting the environment and achieving our environmental objectives and targets and communicating and consulting with all stakeholders as appropriate. Our policy is periodically reviewed to ensure its continuing suitability, has been communicated to all RG staff and is made available to interested parties. It is endorsed by the Group’s Directors and Management Team who take responsibility for the delivery of its aspirations and key objectives, which include: Risk Assessment: an Environmental Risk Assessment is carried out for every project and office to identify the issues and to set any specific objectives and targets, including for minimising waste and energy use, Biodiversity and Conservation, responsible sourcing and local community engagement. We engage with the local community on all large contracts, and host local community events to engage with local stakeholders, including local supply chain partners. 5. The desirability of the Group maintaining a reputation for high standards of business conduct The Group set high standards in the way we run our business and deal with all stakeholders, and our commitment to being the best have been key to or ongoing success and repeat business from many blue chips clients. Key to this is the experience and ongoing professionalism and commitment of our employees and we continually strive to make our Group a place where all enjoy their work and have the opportunity to progress. We have a Policy of promoting continual improvement and the setting of quality objectives and improvement programmes within the Group. These are decided on and prioritised by the analysis of gathered data from our intranet system RG Hub and our board and quality reports in line with the framework laid down within the ISO 9001:2015 Standard. These objectives address the risks and opportunities within the Group, as determined by Senior Management, and we believe that Quality is critical to the success of our business, and base our approach on the key quality
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SPRITESTORE LIMITED
GROUP STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
principles of customer focus, leadership, engagement of people, process approach, improvement and relationship management.
6. The need to act fairly as between members of the Group Strategy and decisions by the Board are carefully considered in both the short and long term and the Directors are fully aware of the need to take into account all relevant factors to achieve a fair balance between members of the Group. The overriding objective is to ensure that the Group maintains its reputation for quality and integrity so as to continue as a successful and sustainable business for the long-term benefit of the members.
This report was approved by the board on 2 October 2023 and signed on its behalf.
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SPRITESTORE 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.
The profit for the year, after taxation, amounted to £2,287,042 (2021 - £590,863).
During the year dividends of £nil (2021: £1,255,286) were paid.
The directors who served during the year were:
The directors are responsible for preparing the Group Strategic Report, the Directors' Report and the consolidated 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 the Group and of the profit or loss of the Group for that period.
In preparing these financial statements, the directors are required to:
∙select suitable accounting policies for the Group's financial statements 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 Group 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 the Group and to 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 the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
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SPRITESTORE LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
Credit risk
Investments of cash surpluses and borrowings are made through banks and companies which must fulfil credit rating criteria approved by the Board. All customers who wish to trade on credit terms are subject to formal credit control procedures which include the timely chasing of outstanding debt. Liquidity risk The directors review the liquidity position on a regular basis and are confident that the business has sufficient cash resources to meet its trading needs. Price risk The Company is subject to commodity price and other cost inflationary risks and manages these risks by entering into, where possible, fix pricing arrangements with its supply chains and subcontractors.
The information has been included in the group strategic report.
RG Group has appointed Carbon Footprint Ltd, a leading carbon and energy management company, to independently assess its Greenhouse Gas (GHG) emissions in accordance with the UK Government’s ‘Environmental Reporting Guidelines: Including Streamlined Energy and Carbon Reporting Guidance’.
The GHG emissions have been assessed following the ISO 14064-1:2018 standard and has used the 2021 emission conversion factors published by Department for Environment, Food and Rural Affairs (Defra) and the Department for Business, Energy & Industrial Strategy (BEIS). The assessment follows the location-based approach for assessing Scope 2 emissions from electricity usage. The financial control approach has been used
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SPRITESTORE LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
The table below summarises the GHG emissions for reporting year: 1st January 2022 to 31st December 2022. As a business we have been assessing our carbon emissions since 2011.
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SPRITESTORE LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
During the last year we also completed a detailed Energy Savings Opportunity Scheme (ESOS) energy audit of our energy use, and have a number of recommendations we are now in the process of implementing. During the last year we realised a 12% reduction in carbon emissions on the previous year. We have also offset 1,366 tonnes of CO2 through investing in a number of Gold Standard VER and Verified Carbon Standard Projects and planted hundreds of trees in the UK, to help sequester more carbon dioxide from the atmosphere. Our business has therefore maintained Net Zero Carbon. By achieving this RG Group has qualified to use the Carbon Footprint Standard branding. This can be used on all marketing materials, including website and customer tender documents, to demonstrate your carbon management achievements.
The following information has been included in the group strategic report:
- A business review - Principal risks and uncertainties - Financial and other key performance indicators - The principal activity of the Company and Group
Our strategy of diversification in commercial, retail and living space projects continues, and the directors are seeking to consolidate on the new business acquired.
The company was a close company within the provisions of the Income and Corporation Taxes Act 1988 and
this position has not changed since the end of the year.
There have been no significant events affecting the Group since the year end.
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SPRITESTORE LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
The auditors, Simmons Gainsford LLP, will be proposed for reappointment in accordance with section 485 of the Companies Act 2006.
This report was approved by the board on
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SPRITESTORE LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF SPRITESTORE LIMITED
We have audited the financial statements of Spritestore Limited (the 'parent company') and its subsidiaries (the 'Group') for the year ended 31 December 2022, which comprise the Consolidated Statement of Comprehensive Income, the Consolidated Balance Sheet, the Company Balance Sheet, the Consolidated Statement of Cash Flows, the Consolidated Statement of Changes in Equity, the Company Statement of Changes in Equity and the related notes, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland' (United Kingdom Generally Accepted Accounting Practice).
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 Group 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.
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 Group's or the parent 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.
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SPRITESTORE LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF SPRITESTORE LIMITED (CONTINUED)
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 Report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
In our opinion, based on the work undertaken in the course of the audit:
∙the information given in the Group 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 Group 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 Group and the parent company and its environment obtained in the course of the audit, we have not identified material misstatements in the Group Strategic Report or the Directors' Report.
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SPRITESTORE LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF SPRITESTORE LIMITED (CONTINUED)
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 Group financial statements.
Extent to which the audit was considered capable of detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below. Based on our understanding of the Group and industry, we identified and assessed the risks of material misstatements, including fraud and non-compliance with laws and regulations that could be expected to have a material impact on the financial statements. We also enquired of management and those charged with governance about their own identification and assessment of the risks of irregularities. During the engagement team briefing, the outcomes of these discussions and enquiries were shared with the team, as well as consideration as to where and how fraud may occur. We obtained an understanding of the legal and regulatory frameworks that the Group and the parent company operates in, focusing on provisions of those laws and regulations that had a direct effect on the determination of material amounts and disclosures in the financial statements. These included but were not limited to, UK Companies Act, UK financial reporting standards and taxation legislation. In addition, we considered provisions of other laws and regulations that do not have a direct effect on the financial statements but compliance with which may be fundamental to the Group’s and parent company's ability to operate or to avoid a material penalty. These included but were not limited to, legislations relating to health and safety. As a result of performing the above, we considered the opportunities and incentives that may exist within the organisation for fraud and identified the greatest potential for fraud in relation to revenue and profit recognition. We also evaluated management’s incentives and opportunities for fraudulent manipulation of the financial statements (including the risk of override of controls). Audit procedures undertaken in response to the potential risks relating to irregularities (which include fraud and non-compliance with laws and regulations) comprised: enquiries of management and those charged with governance as to whether the entity complies with such laws and regulations; enquiries with the same concerning any actual or potential litigation or claims; review of board minutes; testing the appropriateness of entries in the nominal ledger, including journal entries; reviewing transactions around the end of the reporting period; and the performance of analytical procedures to identify unexpected movements in account balances which may be indicative of fraud. No instances of material non-compliance were identified. However, the likelihood of detecting irregularities, including fraud, is limited by the inherent difficulty in detecting irregularities, the effectiveness of the entity’s controls, and the nature, timing and extent of the audit procedures performed. Irregularities that result from fraud might be inherently more difficult to detect than irregularities that result from error. As explained above, there is an unavoidable risk that material misstatements may not be detected, even though the audit has been planned and performed in accordance with ISAs (UK).
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SPRITESTORE LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF SPRITESTORE LIMITED (CONTINUED)
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our Auditors' Report.
This report is made solely to the company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in an 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.
for and on behalf of
Chartered Accountants
Statutory Auditors
14th Floor
33 Cavendish Square
W1G 0PW
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SPRITESTORE LIMITED
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2022
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SPRITESTORE LIMITED
REGISTERED NUMBER: 03360940
CONSOLIDATED BALANCE SHEET
AS AT 31 DECEMBER 2022
The financial statements were approved and authorised for issue by the board and were signed on its behalf on 2 October 2023.
The notes on pages 22 to 38 form part of these financial statements.
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SPRITESTORE LIMITED
REGISTERED NUMBER: 03360940
COMPANY BALANCE SHEET
AS AT 31 DECEMBER 2022
The financial statements were approved and authorised for issue by the board and were signed on its behalf on
The notes on pages 22 to 38 form part of these financial statements.
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SPRITESTORE LIMITED
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2022
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SPRITESTORE LIMITED
COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2022
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SPRITESTORE LIMITED
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2022
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SPRITESTORE LIMITED
CONSOLIDATED ANALYSIS OF NET DEBT
FOR THE YEAR ENDED 31 DECEMBER 2022
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SPRITESTORE LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
The Company is a private company limited by shares and is incorporated in England and Wales. The address of its registered office is 4 Abbey Wood Road, Kings Hill, West Malling, Kent, ME19 4AB.
2.Accounting policies
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 financial statements are prepared in sterling, which is the functional currency of the Group. Monetary amounts in these financial statements are rounded to the nearest £.
The preparation of financial statements in compliance with FRS 102 requires the use of certain critical accounting estimates. It also requires Group management to exercise judgement in applying the Group's accounting policies (see note 3).
Parent company disclosure exemptions
In preparing the separate financial statements of the parent company, advantage has been taken of
the following disclosure exemptions available to qualifying entities:
∙No cash flow statement or net debt reconciliation has been presented for the parent company.
The following principal accounting policies have been applied:
The consolidated financial statements present the results of the company and its own subsidiaries ("the Group") as if they form a single entity. Intercompany transactions and balances between group companies are therefore eliminated in full.
The consolidated financial statements incorporate the results of business combinations using the purchase method. In the Statement of Financial Position, the acquiree's identifiable assets, liabilities and contingent liabilities are initially recognised at their fair values at the acquisition date. The results of acquired operations are included in the Consolidated Statement of Comprehensive Income from the date on which control is obtained. They are deconsolidated from the date control ceases.
At the time of approving the financial statements, the directors have a reasonable expectation that the Company and the Group have adequate resources to continue in operational existence for the foreseeable future. Therefore, the directors continue to adopt the going concern basis of accounting in preparing the financial statements.
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SPRITESTORE LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
2.Accounting policies (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 basis:
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.
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SPRITESTORE LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
2.Accounting policies (continued)
The Group has elected to apply the provisions of Section 11 “Basic Financial Instruments” of FRS 102 to all of its financial instruments.
Financial instruments are recognised in the Group's Balance Sheet when the Group 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 Group's cash and cash equivalents, trade and most other receivables due with the operating cycle fall into this category of financial instruments.
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 Group after the deduction of all its liabilities.
Basic financial liabilities, which include trade and other payables, bank loans, other loans and loans due to fellow group companies are 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.
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 Group 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 Group will continue to recognise the value of the portion of the
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SPRITESTORE LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
2.Accounting policies (continued)
risks and rewards retained.
Derecognition of financial liabilities
Financial liabilities are derecognised when the Group's contractual obligations expire or are discharged or cancelled.
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 Group is demonstrably committed to terminate the employment of an employee or to provide termination benefits.
Government grants are recognised based on the accrual model and are measured at the fair value where there is reasonable assurance that the grant will be received. Amounts received are recognised over the period in which the related costs are recognised.
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SPRITESTORE LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
2.Accounting policies (continued)
Provisions are charged as an expense to profit or loss in the year that the Group becomes aware of the obligation, and are measured at the best estimate at the balance sheet 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 Balance Sheet.
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SPRITESTORE LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
2.Accounting policies (continued)
When the outcome of a contract can be measured reliably, the entity will recognise both turnover and
costs by reference to the percentage of completion of the contract. The turnover recognised is based on certified client valuations, however, in the event of the valuation being mid-month, there is a prorata estimation of the percentage completion using a linear approach based on number of days between the previous and next valuation. Variations in contract work, claims and incentive payments are included to the extent that the amount can be measured reliably, and its receipt is considered probable. If the outcome cannot be reliably measured, all costs are expensed and revenue is only recognised to the extent that it is probable that costs are recoverable. When it is probable that a loss will occur on a contract, this is recognised in full immediately as an onerous contract provision. Fair values are determined from market based evidence normally undertaken by professionally qualified valuers. current market rents and investment property yields for comparable real estate, adjusted if necessary for any difference in the nature, location or condition of the specific asset. No depreciation is provided. Changes in fair value are recognised in profit or loss.
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SPRITESTORE LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. The nature of estimation and judgement means that actual result may differ and may result in a material adjustment to carrying amount of the asset or liability affected in future periods. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next year financial year are addressed below. Revenue and profit recognition The revenue recognition and profit recognition policies, which are set out in note 2.4 and 2.18 respectively, are central to how group values the work it has carried out in each year. These policies require forecasts to be made of the outcomes of long term construction services and support services contracts, which require assessments and judgements to be made on recovery of pre-contract costs, changes in the scope of work, contract programmes, maintenance and defects liabilities and changes in costs. Estimation uncertainty will exist with regard to the gross profit being recognised at the year end. The progress of all current projects is tracked by the Company using a bespoke system which allows for up to date reporting on the status of each project. Valuation of freehold property Freehold properties are valued annually by directors who are considered to have adequate knowledge and expertise in this area, using a yield methodology. This uses market rental values capitalised at a market capitalisation rate but there is an inevitable degree of judgement involved in that each property is unique and value can only ultimately be reliably tested in the market itself. Deferred tax The carrying amounts of deferred tax assets or liabilities are reviewed at each balance sheet date and a judgement made over the probability of there being sufficient taxable profits arising in the future to allow all or part of the asset to be recovered. Provisions Provisions are made for known legal claims, investigations and legal actions relating to the Group which are considered more likely than not to result in an outflow of economic benefit. The assessment of the cost is based on best estimates made by experienced senior management, on an individual contract basis and with reference to relevant contract provisions and insurance excess premiums. If directors considers that a claim, investigation or action relating to the Group is unlikely to succeed, no provision is made. If the Directors cannot make a reliable estimate of a potential, material obligation, no provision is made but details of claim are disclosed as contingent liabilities. At 31 December 2022, the Group had no contingent liabilities in relation to claims (2021: £nil).
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SPRITESTORE LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
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SPRITESTORE LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
Page 30
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SPRITESTORE LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
Page 31
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SPRITESTORE LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
11.Taxation (continued)
The Finance Act 2021, which received Royal Assent in June 2021, will result in the applicable rate being held at 19% until April 2023, increasing to 25% from 1 April 2023 for companies with profits over £250,000. As at 31 December 2022, all deferred tax assets and liabilities are recognised at a rate of 25%.
The company has taken advantage of the exemption allowed under section 408 of the Companies Act 2006 and has not presented its own Statement of Comprehensive Income in these financial statements. The profit after tax of the parent company for the year was £nil (2021 - £
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SPRITESTORE LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
The property was valued in April 2022 by an independent valuer using current market rents and investment property yields for comparable real estate, adjusted if necessary for any difference in the nature, location or condition of the specific asset. Directors do not consider valuation to be materially different to the value at the year end date.
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SPRITESTORE LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
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SPRITESTORE LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
Page 35
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SPRITESTORE LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
Page 36
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SPRITESTORE LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
Revaluation reserve
which are revalued to fair value at each reporting date.
Profit and loss account
Page 37
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SPRITESTORE LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
The group operates a defined contributions pension scheme. The assets of the scheme are held separately from those of the group in an independently administered fund. The pension cost charge represents contributions payable by the group to the fund and amounted to £621,358 (2021: £538,256).
Contributions totalling £74,422 (2021: £73,152) were payable to the fund at the reporting date and are included in creditors.
25.Other financial commitments
The group has no financial commitments (2021: £430,762) in relation to the development of the Doncaster office building.
The Group has no ultimate controlling party.
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