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COMPANY REGISTRATION NUMBER: 07818412
Watkins M & E Group Ltd
Financial Statements
31 March 2023
Watkins M & E Group Ltd
Financial Statements
Year ended 31 March 2023
Contents
Page
Strategic report
1
Directors' report
3
Independent auditor's report to the members
5
Consolidated statement of comprehensive income
9
Consolidated statement of financial position
10
Company statement of financial position
11
Consolidated statement of changes in equity
12
Company statement of changes in equity
13
Consolidated statement of cash flows
14
Notes to the financial statements
15
Watkins M & E Group Ltd
Strategic Report
Year ended 31 March 2023
The directors present below their strategic report for the year ended 31 March 2023. Business Review The group continues to benefit from the excellent service it provides to its customers and as such continue to pick up new contracts with existing customers whilst its reputation is also allowing it to attract new customers as well. It was a difficult year for the group and some projects were not as profitable as expected. The year saw the group posting a profit before tax of £257,315 down from £2,007,181 in 2022. Key Performance Indicators The following Key Performance Indicators show how the group is managing to maintain strong performance levels: Gross profit margin 18.1% (2022: 22.2%) The gross profit margin has decreased on the previous year due to unexpected costs incurred to ensure completion of a small number of jobs. Trade creditor days 35.2 (2022: 40.8) Following fluctuations over the last three years due to the implementation of a new controls system, the trade creditor days have started to decrease, seeing them return to be back in line with historic figures. Risks and Uncertainties The following are the group's financial risk management objectives and policies: The group have considered the risks attached to providing work on contracts to customers on credit, however having built up strong relationships over time are confident they are able to mitigate the risks of default due to the clear payment terms they have implemented. The directors are aware of the significant risks attached to long term contracts and the potential detrimental impact to cash flow of these however as a result of considerable industry expertise are able to minimise these risks when quoting for and managing contracts. The group has also managed to build up a very healthy level of historical cash reserves that allow for the continuing expansion of the business. Overall the directors are of the opinion that the risks that are applicable to the business are managed in such a way that they do not have a significant impact on the business. Future Developments Looking forward Watkins M & E Group Ltd is expecting to increase levels of turnover for 2024, with some high value contracts in the pipeline. Overall the directors are hopeful that profit margins will improve.
This report was approved by the board of directors on 18 October 2023 and signed on behalf of the board by:
M G Watkins
Director
Registered office:
Watkins House
Leigh Road
Haine Industrial Park
Ramsgate
Kent
CT12 5EU
Watkins M & E Group Ltd
Directors' Report
Year ended 31 March 2023
The directors present their report and the financial statements of the group for the year ended 31 March 2023 .
Directors
The directors who served the company during the year were as follows:
M G Watkins
R Watkins
Dividends
Particulars of recommended dividends are detailed in note 13 to the financial statements.
Directors' responsibilities statement
The directors are responsible for preparing the strategic report, 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 United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the group and the company and the profit or loss of the group for that period. In preparing these financial statements, the directors are required to: - select suitable accounting policies and then apply them consistently; - make judgments and accounting estimates that are reasonable and prudent; - prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business. The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company's transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
Auditor
Each of the persons who is a director at the date of approval of this report confirms that:
- so far as they are aware, there is no relevant audit information of which the group and the company's auditor is unaware; and - they have taken all steps that they ought to have taken as a director to make themselves aware of any relevant audit information and to establish that the group and the company's auditor is aware of that information. The auditor is deemed to have been re-appointed in accordance with section 487 of the Companies Act 2006.
This report was approved by the board of directors on 18 October 2023 and signed on behalf of the board by:
M G Watkins
Director
Registered office:
Watkins House
Leigh Road
Haine Industrial Park
Ramsgate
Kent
CT12 5EU
Watkins M & E Group Ltd
Independent Auditor's Report to the Members of Watkins M & E Group Ltd
Year ended 31 March 2023
Opinion
We have audited the financial statements of Watkins M & E Group Ltd (the 'parent company') and its subsidiaries (the 'group') for the year ended 31 March 2023 which comprise the consolidated statement of comprehensive income, consolidated statement of financial position, company statement of financial position, consolidated statement of changes in equity, company statement of changes in equity, consolidated statement of cash flows 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 FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice). In our opinion the financial statements: - give a true and fair view of the state of the group's and of the parent company's affairs as at 31 March 2023 and of the group's profit for the year then ended; - have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; - have been prepared in accordance with the requirements of the Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the group in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the 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.
Other information
The other information comprises the information included in the annual report, other than the financial statements and our auditor’s report thereon. The directors are responsible for the other information. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the financial statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of 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 group and the parent 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 by the parent company, or returns adequate for our audit have not been received from branches not visited by us; or - the parent company 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, 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 group's and the parent 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 group or the parent company or to cease operations, or have no realistic alternative but to do so.
Auditor's 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 auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. 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: We identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and then design and perform audit procedures responsive to those risks, including obtaining audit evidence that is sufficient and appropriate to provide a basis for our opinion. In identifying and assessing risks of material misstatement in respect of irregularities, including fraud and non-compliance with laws and regulations, we have considered; the nature of the industry, control environment and business performance. We also consider the results of our enquiries of management and the Audit Committee, relating to their own identification and assessment of the risks of irregularities and possible related fraud. This includes reviewing available documentation on their policies and procedures and performing tests of controls to evidence their effectiveness. Throughout the audit testing we are considering the incentives that may exist within the organisation for fraud. Key areas include timing of recognising income around the year end, posting of unusual journals and manipulating the Company's performance measures to meet remuneration targets and bank covenants. In common with all audits under ISAs (UK), we are also required to perform specific procedures to respond to the risk of management override. We ensure we have an understanding of the relevant laws and regulations and remain alert to possible non-compliance throughout the audit. Despite proper planning and audit work in accordance with auditing standards there are inherent limitations and unavoidable risk that we may not detect some irregularities and material misstatements in the financial statements. We are not responsible for preventing non-compliance and cannot be expected to detect non-compliance with all laws and regulations. As part of an audit in accordance with ISAs (UK), we exercise professional judgment and maintain professional scepticism throughout the audit. We also: - Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. - Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the group's internal control. - Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors. - Conclude on the appropriateness of the directors' use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the group's or the parent company's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the group or the parent company to cease to continue as a going concern. - Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation. - Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion. We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. Use of our report
This report is made solely to the company's members, as a body, in accordance with chapter 3 of part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's members as a body, for our audit work, for this report, or for the opinions we have formed.
Colin Reid
(Senior Statutory Auditor)
For and on behalf of
Burgess Hodgson LLP
Chartered accountants & statutory auditor
Camburgh House
27 New Dover Road
Canterbury
Kent
CT1 3DN
31 October 2023
Watkins M & E Group Ltd
Consolidated Statement of Comprehensive Income
Year ended 31 March 2023
2023
2022
Note
£
£
Turnover
4
36,711,763
39,078,183
Cost of sales
30,054,076
30,394,137
-------------
-------------
Gross profit
6,657,687
8,684,046
Administrative expenses
6,435,497
6,690,417
Other operating income
5
742
------------
------------
Operating profit
6
222,190
1,994,371
Other interest receivable and similar income
10
35,489
12,810
Interest payable and similar expenses
11
364
------------
------------
Profit before taxation
257,315
2,007,181
Tax on profit
12
58,641
398,242
---------
------------
Profit for the financial year and total comprehensive income
198,674
1,608,939
---------
------------
All the activities of the group are from continuing operations.
Watkins M & E Group Ltd
Consolidated Statement of Financial Position
31 March 2023
2023
2022
Note
£
£
Fixed assets
Intangible assets
14
1
1
Tangible assets
15
1,052,423
728,238
------------
---------
1,052,424
728,239
Current assets
Stocks
17
6,053,224
7,224,083
Debtors
18
9,416,744
9,791,297
Cash at bank and in hand
2,288,066
5,527,170
-------------
-------------
17,758,034
22,542,550
Creditors: amounts falling due within one year
19
5,372,920
10,081,789
-------------
-------------
Net current assets
12,385,114
12,460,761
-------------
-------------
Total assets less current liabilities
13,437,538
13,189,000
Creditors: amounts falling due after more than one year
20
60,984
Provisions
Taxation including deferred tax
22
119,330
30,450
-------------
-------------
Net assets
13,257,224
13,158,550
-------------
-------------
Capital and reserves
Called up share capital
26
1,000
1,000
Profit and loss account
27
13,256,224
13,157,550
-------------
-------------
Shareholders funds
13,257,224
13,158,550
-------------
-------------
These financial statements have been prepared in accordance with the provisions applicable to companies subject to the medium companies regime.
These financial statements were approved by the board of directors and authorised for issue on 18 October 2023 , and are signed on behalf of the board by:
M G Watkins
Director
Company registration number: 07818412
Watkins M & E Group Ltd
Company Statement of Financial Position
31 March 2023
2023
2022
Note
£
£
Fixed assets
Investments
16
1,100
1,100
Current assets
Debtors
18
5,207,413
3,817,448
Cash at bank and in hand
1,242,667
2,750,803
------------
------------
6,450,080
6,568,251
Creditors: amounts falling due within one year
19
23,868
24,145
------------
------------
Net current assets
6,426,212
6,544,106
------------
------------
Total assets less current liabilities
6,427,312
6,545,206
------------
------------
Net assets
6,427,312
6,545,206
------------
------------
Capital and reserves
Called up share capital
26
1,000
1,000
Profit and loss account
27
6,426,312
6,544,206
------------
------------
Shareholders funds
6,427,312
6,545,206
------------
------------
The loss for the financial year of the parent company was £ 17,894 (2022: £ 1,502,915 profit).
These financial statements have been prepared in accordance with the provisions applicable to companies subject to the medium companies regime.
These financial statements were approved by the board of directors and authorised for issue on 18 October 2023 , and are signed on behalf of the board by:
M G Watkins
Director
Company registration number: 07818412
Watkins M & E Group Ltd
Consolidated Statement of Changes in Equity
Year ended 31 March 2023
Called up share capital
Profit and loss account
Total
£
£
£
At 1 April 2021
1,000
12,340,611
12,341,611
Profit for the year
1,608,939
1,608,939
-------
-------------
-------------
Total comprehensive income for the year
1,608,939
1,608,939
Dividends paid and payable
13
( 792,000)
( 792,000)
-------
-------------
-------------
Total investments by and distributions to owners
( 792,000)
( 792,000)
At 31 March 2022
1,000
13,157,550
13,158,550
Profit for the year
198,674
198,674
-------
-------------
-------------
Total comprehensive income for the year
198,674
198,674
Dividends paid and payable
13
( 100,000)
( 100,000)
----
---------
---------
Total investments by and distributions to owners
( 100,000)
( 100,000)
-------
-------------
-------------
At 31 March 2023
1,000
13,256,224
13,257,224
-------
-------------
-------------
Watkins M & E Group Ltd
Company Statement of Changes in Equity
Year ended 31 March 2023
Called up share capital
Profit and loss account
Total
£
£
£
At 1 April 2021
1,000
5,833,291
5,834,291
Profit for the year
1,502,915
1,502,915
-------
------------
------------
Total comprehensive income for the year
1,502,915
1,502,915
Dividends paid and payable
13
( 792,000)
( 792,000)
-------
------------
------------
Total investments by and distributions to owners
( 792,000)
( 792,000)
At 31 March 2022
1,000
6,544,206
6,545,206
Loss for the year
( 17,894)
( 17,894)
-------
------------
------------
Total comprehensive income for the year
( 17,894)
( 17,894)
Dividends paid and payable
13
( 100,000)
( 100,000)
----
---------
---------
Total investments by and distributions to owners
( 100,000)
( 100,000)
-------
------------
------------
At 31 March 2023
1,000
6,426,312
6,427,312
-------
------------
------------
Watkins M & E Group Ltd
Consolidated Statement of Cash Flows
Year ended 31 March 2023
2023
2022
£
£
Cash flows from operating activities
Profit for the financial year
198,674
1,608,939
Adjustments for:
Depreciation of tangible assets
341,643
211,075
Government grant income
( 742)
Other interest receivable and similar income
( 35,489)
( 12,810)
Interest payable and similar expenses
364
Gains on disposal of tangible assets
( 30,875)
( 36,285)
Tax on (loss)/profit
58,641
398,242
Accrued income
( 731,172)
( 261,501)
Changes in:
Stocks
1,170,859
( 4,810,227)
Trade and other debtors
374,553
( 401,711)
Trade and other creditors
( 3,896,598)
407,865
------------
------------
Cash generated from operations
( 2,549,400)
( 2,897,155)
Interest received
35,489
12,810
Tax paid
( 116,320)
( 508,089)
------------
------------
Net cash used in operating activities
( 2,630,231)
( 3,392,434)
------------
------------
Cash flows from investing activities
Purchase of tangible assets
( 593,681)
( 213,922)
Proceeds from sale of tangible assets
89,648
74,750
------------
------------
Net cash used in investing activities
( 504,033)
( 139,172)
------------
------------
Cash flows from financing activities
Government grant income
742
Payments of finance lease liabilities
( 4,840)
Dividends paid
( 100,000)
( 792,000)
------------
------------
Net cash used in financing activities
( 104,840)
( 791,258)
------------
------------
Net decrease in cash and cash equivalents
( 3,239,104)
( 4,322,864)
Cash and cash equivalents at beginning of year
5,527,170
9,850,034
------------
------------
Cash and cash equivalents at end of year
2,288,066
5,527,170
------------
------------
Watkins M & E Group Ltd
Notes to the Financial Statements
Year ended 31 March 2023
1. General information
The company is a private company limited by shares, registered in United Kingdom. The address of the registered office is Watkins House, Leigh Road, Haine Industrial Park, Ramsgate, Kent, CT12 5EU.
2. Statement of compliance
These financial statements have been prepared in compliance with FRS 102, 'The Financial Reporting Standard applicable in the UK and the Republic of Ireland'.
3. Accounting policies
Basis of preparation
The financial statements have been prepared on the historical cost basis, as modified by the revaluation of certain financial assets and liabilities and investment properties measured at fair value through profit or loss.
The financial statements are prepared in sterling, which is the functional currency of the entity.
Disclosure exemptions
The parent company satisfies the criteria of being a qualifying entity as defined in FRS 102. As such, advantage has been taken of the following reduced disclosures available under FRS 102:
(a) Disclosures in respect of each class of share capital have not been presented.
(b) No cash flow statement has been presented for the company.
(c) Disclosures in respect of financial instruments have not been presented.
(d) No disclosure has been given for the aggregate remuneration of key management personnel.
Consolidation
The financial statements consolidate the financial statements of Watkins M & E Group Ltd and all of its subsidiary undertakings.
The results of subsidiaries acquired or disposed of during the year are included from or to the date that control passes.
The parent company has applied the exemption contained in section 408 of the Companies Act 2006 and has not presented its individual profit and loss account.
Judgements and key sources of estimation uncertainty
The preparation of the financial statements requires management to make judgements, estimates and assumptions that affect the amounts reported. These estimates and judgements are continually reviewed and are based on experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. Significant judgements The judgements (apart from those involving estimations) that management has made in the process of applying the entity's accounting policies and that have the most significant effect on the amounts recognised in the financial statements are as follows: Leases Determine whether leases entered into by the company either as a lessor or a lessee are operating or finance leases. These decisions depend on an assessment of whether the risks and rewards of ownership have been transferred from the lessor to the lessee on a lease by lease basis. Key sources of estimation uncertainty Accounting estimates and assumptions are made concerning the future and, by their nature, will rarely equal the related actual outcome. The key assumptions and other sources of estimation uncertainty that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are as follows: Allowance for doubtful debts The Company makes allowance for doubtful debts based on an assessment of the recoverability of receivables. Allowances are applied to receivables where events or changes in circumstances indicate that the carrying amounts may not be recoverable. Tangible fixed assets Tangible fixed assets are depreciated over their useful lives taking into account residual values, where appropriate. The actual lives of the assets and residual values are assessed annually and may vary depending on a number of factors. In re-assessing asset lives, factors such as technological innovation, product life cycles and maintenance programmes are taken into account. Residual value assessments consider issues such as future market conditions, the remaining life of the asset and projected disposal values. Work in progress Work in progress is calculated based on the percentage completion of a contract based on the costs incurred and the total expected costs of a contract. The total value of the contract is then multiplied by this percentage to give a current value representing revenue. Work in progress is estimated to be this value less amounts paid to date and any provisions deemed required by management.
Revenue recognition
Turnover is measured at the fair value of the consideration received or receivable for goods supplied and services rendered, net of discounts and Value Added Tax. Revenue from the sale of goods is recognised when the significant risks and rewards of ownership have transferred to the buyer (usually on despatch of the goods); the amount of revenue can be measured reliably; it is probable that the associated economic benefits will flow to the entity; and the costs incurred or to be incurred in respect of the transactions can be measured reliably.
Income tax
The taxation expense represents the aggregate amount of current and deferred tax recognised in the reporting period. Tax is recognised in profit or loss, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case, tax is recognised in other comprehensive income or directly in equity, respectively. Current tax is recognised on taxable profit for the current and past periods. Current tax is measured at the amounts of tax expected to pay or recover using the tax rates and laws that have been enacted or substantively enacted at the reporting date.
Deferred tax is recognised in respect of all timing differences at the reporting date. Unrelieved tax losses and other deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Deferred tax is measured using the tax rates and laws that have been enacted or substantively enacted by the reporting date that are expected to apply to the reversal of the timing difference.
Goodwill
Goodwill arises on business acquisitions and represents the excess of the cost of the acquisition over the company's interest in the net amount of the identifiable assets, liabilities and contingent liabilities of the acquired business. Goodwill is measured at cost less accumulated amortisation and accumulated impairment losses. It is amortised on a straight-line basis over its useful life. Where a reliable estimate of the useful life of goodwill or intangible assets cannot be made, the life is presumed not to exceed ten years.
Amortisation
Amortisation is calculated so as to write off the cost of an asset, less its estimated residual value, over the useful life of that asset as follows:
Goodwill
-
10% straight line
If there is an indication that there has been a significant change in amortisation rate, useful life or residual value of an intangible asset, the amortisation is revised prospectively to reflect the new estimates.
Tangible assets
Tangible assets are initially recorded at cost, and subsequently stated at cost less any accumulated depreciation and impairment losses.
Depreciation
Depreciation is calculated so as to write off the cost or valuation of an asset, less its residual value, over the useful economic life of that asset as follows:
Land and buildings
-
2 - 10% straight line
Plant and machinery
-
15% reducing balance
Fixtures, fittings and equipment
-
25% reducing balance
Motor vehicles
-
25% reducing balance
Land is not depreciated.
Investments
Fixed asset investments are initially recorded at cost, and subsequently stated at cost less any accumulated impairment losses.
Stocks
Stocks are are carried at the lower of cost and net realisable value. The cost of finished goods and work-in-progress comprises raw materials, direct labour, other direct costs and related production overheads (based on normal operating capacity) but excludes borrowing costs.
Finance leases and hire purchase contracts
Assets held under finance leases and hire purchase contracts are recognised in the statement of financial position as assets and liabilities at the lower of the fair value of the assets and the present value of the minimum lease payments, which is determined at the inception of the lease term. Any initial direct costs of the lease are added to the amount recognised as an asset. Lease payments are apportioned between the finance charges and reduction of the outstanding lease liability using the effective interest method. Finance charges are allocated to each period so as to produce a constant rate of interest on the remaining balance of the liability.
Government grants
Government grants are recognised using the accrual model. Under the accrual model, government grants relating to revenue are recognised on a systematic basis over the periods in which the company recognises the related costs for which the grant is intended to compensate. Grants that are receivable as compensation for expenses or losses already incurred or for the purpose of giving immediate financial support to the entity with no future related costs are recognised in income in the period in which it it becomes receivable.
Provisions
Provisions are recognised when the entity has an obligation at the reporting date as a result of a past event, it is probable that the entity will be required to transfer economic benefits in settlement and the amount of the obligation can be estimated reliably. Provisions are recognised as a liability in the statement of financial position and the amount of the provision as an expense.
Financial instruments
Financial instruments are classified and accounted for, according to the substance of the contractual arrangements entered into. Debtors and creditors with no stated interest rate and receivable or payable within one year are recorded at transaction price. Any losses arising from impairment are recognised in the profit and loss account in other administrative expenses. Loans and borrowings are initially recognised at the transaction price including transaction costs. Subsequently, they are measured at amortised cost using the effective interest rate method, less impairment. If an arrangement constitutes a finance transaction it is measured at present value.
Defined contribution plans
Contributions to defined contribution plans are recognised as an expense in the period in which the related service is provided. Prepaid contributions are recognised as an asset to the extent that the prepayment will lead to a reduction in future payments or a cash refund.
4. Turnover
Turnover arises from:
2023
2022
£
£
Construction contracts
36,711,763
39,078,183
-------------
-------------
The whole of the turnover is attributable to the principal activity of the group wholly undertaken in the United Kingdom.
5. Other operating income
2023
2022
£
£
Government grant income
742
----
----
6. Operating loss
Operating profit or loss is stated after charging/crediting:
2023
2022
£
£
Depreciation of tangible assets
341,643
211,075
Gains on disposal of tangible assets
( 30,875)
( 36,285)
Impairment of trade debtors
55,152
(30,000)
---------
---------
7. Auditor's remuneration
2023
2022
£
£
Fees payable for the audit of the financial statements
9,690
8,815
-------
-------
Fees payable to the company's auditor and its associates for other services:
Audit-related assurance services
13,215
12,135
Taxation advisory services
4,050
--------
--------
13,215
16,185
--------
--------
8. Staff costs
The average number of persons employed by the group during the year, including the directors, amounted to:
2023
2022
No.
No.
Production staff
108
108
Administrative staff
77
75
Management staff
5
5
----
----
190
188
----
----
The aggregate payroll costs incurred during the year, relating to the above, were:
2023
2022
£
£
Wages and salaries
9,052,634
9,358,963
Social security costs
1,071,431
1,048,592
Other pension costs
265,256
154,092
-------------
-------------
10,389,321
10,561,647
-------------
-------------
9. Directors' remuneration
The directors' aggregate remuneration in respect of qualifying services was:
2023
2022
£
£
Remuneration
317,939
1,130,096
Company contributions to defined contribution pension plans
43,963
5,559
---------
------------
361,902
1,135,655
---------
------------
The number of directors who accrued benefits under company pension plans was as follows:
2023
2022
No.
No.
Defined contribution plans
3
----
----
Remuneration of the highest paid director in respect of qualifying services:
2023
2022
£
£
Aggregate remuneration
102,844
693,338
Company contributions to defined contribution pension plans
1,321
---------
---------
104,165
693,338
---------
---------
10. Other interest receivable and similar income
2023
2022
£
£
Interest on cash and cash equivalents
35,489
12,810
--------
--------
11. Interest payable and similar expenses
2023
2022
£
£
Interest on banks loans and overdrafts
364
----
----
12. Tax on (loss)/profit
Major components of tax (income)/expense
2023
2022
£
£
Current tax:
UK current tax (income)/expense
( 30,189)
382,365
Adjustments in respect of prior periods
( 50)
928
--------
---------
Total current tax
( 30,239)
383,293
--------
---------
Deferred tax:
Origination and reversal of timing differences
88,880
14,949
--------
---------
Tax on (loss)/profit
58,641
398,242
--------
---------
Reconciliation of tax expense
The tax assessed on the profit on ordinary activities for the year is higher than (2022: higher than) the standard rate of corporation tax in the UK of 19 % (2022: 19 %).
2023
2022
£
£
Profit on ordinary activities before taxation
257,315
2,007,181
---------
------------
Profit on ordinary activities by rate of tax
48,890
381,414
Adjustment to tax charge in respect of prior periods
( 50)
928
Effect of expenses not deductible for tax purposes
4,083
5,325
Effect of capital allowances and depreciation
8,914
17,469
Unused tax losses
2,670
Loss/(Profit) on dispoal of fixed assets
( 5,866)
( 6,894)
---------
------------
Tax on (loss)/profit
58,641
398,242
---------
------------
13. Dividends
Dividends paid during the year (excluding those for which a liability existed at the end of the prior year):
2023
2022
£
£
Dividends on Ordinary shares
100,000
792,000
---------
---------
14. Intangible assets
Group
Goodwill
Other intangible assets
£
£
Cost
At 1 April 2022 and 31 March 2023
1,000,000
------------
----
Amortisation
At 1 April 2022 and 31 March 2023
999,999
------------
----
Carrying amount
At 1 April 2022 and 31 March 2023
1
------------
----
At 31 March 2022
1
------------
----
The company has no intangible assets.
15. Tangible assets
Group
Land and buildings
Plant and machinery
Fixtures, fittings and equipment
Motor vehicles
Total
£
£
£
£
£
Cost
At 1 April 2022
536,203
40,430
216,418
1,252,920
2,045,971
Additions
5,255
92,326
627,020
724,601
Disposals
( 257,969)
( 257,969)
---------
--------
---------
------------
------------
At 31 March 2023
536,203
45,685
308,744
1,621,971
2,512,603
---------
--------
---------
------------
------------
Depreciation
At 1 April 2022
341,541
6,920
204,639
764,633
1,317,733
Charge for the year
38,704
6,429
28,710
267,800
341,643
Disposals
( 199,196)
( 199,196)
---------
--------
---------
------------
------------
At 31 March 2023
380,245
13,349
233,349
833,237
1,460,180
---------
--------
---------
------------
------------
Carrying amount
At 31 March 2023
155,958
32,336
75,395
788,734
1,052,423
---------
--------
---------
------------
------------
At 31 March 2022
194,662
33,510
11,779
488,287
728,238
---------
--------
---------
------------
------------
The company has no tangible assets.
16. Investments
The group has no investments.
Company
Shares in group undertakings
£
Cost
At 1 April 2022 and 31 March 2023
1,100
-------
Impairment
At 1 April 2022 and 31 March 2023
-------
Carrying amount
At 1 April 2022 and 31 March 2023
1,100
-------
At 31 March 2022
1,100
-------
Subsidiaries, associates and other investments
Details of the investments in which the parent company has an interest of 20% or more are as follows:
Class of share
Percentage of shares held
Subsidiary undertakings
C Watkins Plumbing Limited
Ordinary
100
A Ordinary
100
Watkins Mechanical Ltd
Ordinary
100
17. Stocks
Group
Company
2023
2022
2023
2022
£
£
£
£
Raw materials and consumables
11,583
9,696
Work in progress
6,041,641
7,214,387
------------
------------
----
----
6,053,224
7,224,083
------------
------------
----
----
18. Debtors
Group
Company
2023
2022
2023
2022
£
£
£
£
Trade debtors
978,681
469,657
Amounts owed by group undertakings
1,860,929
Prepayments and accrued income
149,048
178,575
Corporation tax repayable
217,081
901
Contract retentions
4,480,508
5,025,949
Other debtors
3,591,426
4,117,116
3,345,583
3,817,448
------------
------------
------------
------------
9,416,744
9,791,297
5,207,413
3,817,448
------------
------------
------------
------------
19. Creditors: amounts falling due within one year
Group
Company
2023
2022
2023
2022
£
£
£
£
Trade creditors
2,179,523
3,287,324
Accruals and deferred income
407,901
1,139,073
4,750
4,750
Corporation tax
146,559
901
Social security and other taxes
443,813
434,435
Obligations under finance leases and hire purchase contracts
65,460
Director loan accounts
19,118
19,118
19,118
19,118
Other creditors
2,257,105
5,055,280
( 624)
------------
-------------
--------
--------
5,372,920
10,081,789
23,868
24,145
------------
-------------
--------
--------
20. Creditors: amounts falling due after more than one year
Group
Company
2023
2022
2023
2022
£
£
£
£
Obligations under finance leases and hire purchase contracts
60,984
--------
----
----
----
21. Finance leases and hire purchase contracts
The total future minimum lease payments under finance leases and hire purchase contracts are as follows:
Group
Company
2023
2022
2023
2022
£
£
£
£
Not later than 1 year
70,649
Later than 1 year and not later than 5 years
65,808
---------
----
----
----
136,457
---------
----
----
----
22. Provisions
Group
Deferred tax (note 23)
£
At 1 April 2022
30,450
Additions
88,880
---------
At 31 March 2023
119,330
---------
The company does not have any provisions.
23. Deferred tax
The deferred tax included in the statement of financial position is as follows:
Group
Company
2023
2022
2023
2022
£
£
£
£
Included in provisions (note 22)
119,330
30,450
---------
--------
----
----
The deferred tax account consists of the tax effect of timing differences in respect of:
Group
Company
2023
2022
2023
2022
£
£
£
£
Accelerated capital allowances
119,330
30,450
---------
--------
----
----
24. Employee benefits
Defined contribution plans
The amount recognised in profit or loss as an expense in relation to defined contribution plans was £ 265,256 (2022: £ 154,092 ).
25. Government grants
The amounts recognised in the financial statements for government grants are as follows:
Group
Company
2023
2022
2023
2022
£
£
£
£
Recognised in other operating income:
Government grants recognised directly in income
742
----
----
----
----
26. Called up share capital
Issued, called up and fully paid
2023
2022
No.
£
No.
£
'A' Ordinary shares of £ 1 each
1
1
1
1
Ordinary shares of £ 1 each
999
999
999
999
-------
-------
-------
-------
1,000
1,000
1,000
1,000
-------
-------
-------
-------
27. Reserves
Called up share capital - This reserve records the amount paid for shares at their nominal value. Profit and loss account - This reserve records retained earnings and accumulated losses.
28. Analysis of changes in net debt
At 1 Apr 2022
Cash flows
At 31 Mar 2023
£
£
£
Cash at bank and in hand
5,527,170
(3,239,104)
2,288,066
Debt due within one year
(19,118)
(65,460)
(84,578)
Debt due after one year
(60,984)
(60,984)
------------
------------
------------
5,508,052
( 3,365,548)
2,142,504
------------
------------
------------
Watkins M & E Group Ltd
Notes to the Financial Statements (continued)
Year ended 31 March 2023
29. Operating leases
The total future minimum lease payments under non-cancellable operating leases are as follows:
Group
Company
2023
2022
2023
2022
£
£
£
£
Not later than 1 year
36,000
36,000
Later than 1 year and not later than 5 years
36,000
72,000
--------
---------
----
----
72,000
108,000
--------
---------
----
----
30. Related party transactions
Group
The group was under the control of M G Watkins throughout the current and previous year. During the year rent of £36,000 (2022: £33,000) was paid to M G Watkins. During the year rent of £14,400 (2022: £14,400) was paid to a company related by common directorship. During the year management charges of £200,000 (2022: £nil) were paid to a company related by common directorship. At the year end the group was due £3,343,583 (2022: £1,500,000) from companies related by common directorship.
Company
At the year end the company owed £19,118 (2022: £19,118) to M G Watkins. At the year end the company was due £3,343,583 (2022: £2,044,000) from companies related by common directorship.