Company Registration No. 03167858 (England and Wales)
LOGAN CONSTRUCTION (SOUTH EAST) LTD
ANNUAL REPORT AND AUDITED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
LOGAN CONSTRUCTION (SOUTH EAST) LTD
COMPANY INFORMATION
Directors
Mr W P Logan Snr
Mr W P Logan Jnr
Mrs S E Bunyan
Mr A D Kemp
Mr J D Thorp
Secretary
Ms M M Logan
Company number
03167858
Registered office
Unit 7 Business Park
238 Green Lane
Eltham
London
SE9 3TL
Auditor
Charcroft Baker LLP
5 West Court
Enterprise Road
Maidstone
Kent
ME15 6JD
LOGAN CONSTRUCTION (SOUTH EAST) LTD
CONTENTS
Page
Strategic report
1 - 4
Directors' report
5
Directors' responsibilities statement
6
Independent auditor's report
7 - 10
Income statement
11
Statement of comprehensive income
12
Statement of financial position
13
Statement of changes in equity
14
Statement of cash flows
15
Notes to the financial statements
16 - 27
LOGAN CONSTRUCTION (SOUTH EAST) LTD
STRATEGIC REPORT
FOR THE YEAR ENDED 30 JUNE 2023
- 1 -
The directors present the strategic report for the year ended 30 June 2023.
Business Review
The Company continued to perform well and demonstrate its resilience, resources, agility, and capabilities to manage changing and evolving market and construction risk activities during FYE 2023. The Directors are satisfied with the results for the year and the Company’s financial position at the year end.
The Company has continued to expand and grow its Framework opportunities by securing new positions on several high-profile Government Procurement Framework Agreements along with a continued ethos to promote and generate repeat business through existing Frameworks.
The Company maintained its approach in continuing to deliver projects in a non-adversarial and open book approach with specific attention remaining on strong and transparent communication forums with both clients and supply chain partners to mitigate the risks of contractual disputes arising from potential delays to progress of works primarily due to the fractured supply chains, market volatility and cost inflation issues which continue to be prevalent throughout the Construction Industry as a whole.
The Company maintained a disciplined credit control focus on new business opportunities within our selected market sectors and robust risk profiling and allowances when bidding for work. Our operational performance continued to be supported and underpinned through ongoing accreditation to ISO 9001, 14001 & 18001 standards which continued to audit governance and retain strong compliance. The Business remains well positioned and agile to capitalize or adjust to prevailing market and economic conditions.
Financial Performance
The Company maintains a strong focus and procedural control on internal financial monitoring and performance along with continuous risk profiling and management of obligations across the business portfolio.
2023 2022
Revenue (000’s) £45,426 £37,452
Gross Profit (000’s) £6,656 £7,139
Net Profit After Tax (000’s) £1,803 £1,922
LOGAN CONSTRUCTION (SOUTH EAST) LTD
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
- 2 -
Revenue increased by 21%, from £37.4M in FYE 2022 to £45.4M in FYE 2023. The increase in revenue was in line with Company expectations and was primarily driven by targeting higher value Contracts in line with our business model.
GPM dropped 4.5% to 14.6% for FYE 2023 compared to 19.1% for FYE 2022. This was in line with expectations and primarily driven by inflationary pressures on fixed price contracts over the period. The Directors are satisfied this is a measured reflection of the operating discipline and cost control structure within the business.
The Company posted expected profit levels for FYE 2023
Principle Risks & Uncertainties
The Company retains a focus and diligence on analysing and risk mitigation to support a sustainable and profitable business. Whilst the business does retain aspirations and a business plan to continue profitable growth it is an important factor that the Directors are not influenced by external shareholders, pressures or revenue targets and therefore strategic and operational decisions are taken with a rounded and informed view on opportunities and the current business climate. The Company will retain its focus to sticking to what it is good at and understanding where the business creates and adds value for its clients and employees. Some of the ongoing key risks to the business include:
Supply Chain Health & Viability
The Construction Industry is experiencing the aftermath of Covid and Inflation cost pressures that are resulting in an upward trend of insolvencies across the industry supply chains at all levels. Whilst we are confident with our approach to supporting our valued supply chain with prompt payments and fair assessments it is prevalent that they may have exposures elsewhere that we cannot control. We have increased our focus on working closely with our supply chains to understand their businesses and ensure we manage our respective exposure and risk appropriately to ensure our supply chain remain viable and suitably positioned to fulfil their project requirements for us.
Market Price Volatility and Inflation
The Company has encountered significant pressures with fixed price and term contracts during the FYE 2023 which has impacted our margins. We have seen promising signs that the unprecedented price volatility and inflation costs have eased and are settling but we must remain vigilant that these may come back into play in the future. We continue to adapt our risk profiling of individual tender bid opportunities to encompass and mitigate these risks and we will not engage with unreasonable or unquantifiable risk transfer in our contractual obligations we undertake. We continue to closely monitor labour & material resources along with our associated projected cost base of such against ongoing project opportunities.
LOGAN CONSTRUCTION (SOUTH EAST) LTD
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
- 3 -
Economic Uncertainty
The Company is not immune to prevailing macro-economic conditions, but we are well positioned financially to mitigate any short- and medium-term impacts. We retain diligent management of our pipeline opportunities and along with an informed understanding of our fixed cost base we are confident of our Company’s resilience and agility to adapt accordingly to prevailing economic conditions outside of our control.
Contract Performance
The Company continues to diligently monitor individual Contract performance, client feedback and delivery/commercial risk. The Company continues to promote a non-adversarial, collaborative approach to openly and transparently managing our client expectations and requirements, but it remains key that we will not engage in unreasonable unquantifiable risk transfer.
The Company continues to diligently and timely monitor and manage our fixed and variable cost base alongside current budget plans and contract performance reports and will implement changes as and when they become apparent and required.
The Company employs a structured and independent Client Feedback process whereby we can monitor and report against our KPI’s to ensure that we are achieving the delivery goals of our Clients.
Financial
The Company retains a strong financial base and balance sheet supported by strong liquidity and cash reserves that the Directors are confident will continue to support and protect the business going forward along with offering our clients the confidence and security they require when procuring their projects.
Health & Safety
The Company continues to invest heavily in new innovative technology and training to enhance our culture and performance in Health & Safety excellence. We have driven the high standards expected down through our approved supply chain business partners and often collaborate to bring them into training and awareness schemes.
Social Values
The Company continues to embrace our aspirations to generate long-term positive impacts for the local communities and areas in which we work. We are working with a number of our clients and various Social Value Portals to establish, monitor, record and report the tangible benefits and enhancements our Project deliveries are achieving in fulfilling our ambitions to make a positive difference to society.
Net Zero Carbon
The Company has published its Carbon Reduction Plan committing to net zero emissions covering scopes 1, 2 & 3 in line with Government guidelines. We have implemented training and reporting across our business to integrate capturing the data required to establish our baseline and move forward with measuring and reporting against our objectives. We are committed to the reduction of our carbon footprint and look forward to reporting against our success with this in the coming years.
Delivery Risk
We contract to deliver our Projects on time, on budget and to the level of quality expected. Continuous monitoring and evaluation of our project deliveries is informally and formally undertaken continuously by the Company to ensure our clients expectations are managed and delivered. We continue to promote clear and transparent communication of project delivery risks outside of our control so that our clients remain informed and retain the ability to make key decisions as required.
LOGAN CONSTRUCTION (SOUTH EAST) LTD
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
- 4 -
Tendering/Pricing
The Company enforces a structured settlement and tendering process which aligns with our risk profiling and business strategy as referenced above. We have invested in new resources and software to manage and monitor our bidding process along with improving the brand continuity and high-quality standards of our complete bid submissions to meet client requirements.
Future Developments
The Company remains well positioned to capitalize on future opportunities that may present themselves but is sensitive to the current economic uncertainty and the prevailing public sector spend and procurement route provisions. The Company has selected a partner to take forward the digitalization of our workflow processes and we are excited with the planned implementation of our CDE in 2024
To support our future business and succession plans the Company’s current shareholders have progressed introducing the foundations of a new shareholder structure to bring internal valued employees into the shareholder structure to incentivise profitable future growth whilst maintaining control of the business with no provision for external shareholder influences.
Mr W P Logan Jnr
Director
19 February 2024
LOGAN CONSTRUCTION (SOUTH EAST) LTD
DIRECTORS' REPORT
FOR THE YEAR ENDED 30 JUNE 2023
- 5 -
The directors present their annual report and financial statements for the year ended 30 June 2023.
Principal activities
The primary activity of the company during the year remained as Principal Contractor undertaking construction and restoration works predominantly for public sector clients across the Health & Science, Education, Community and other Public Service sectors.
Directors
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
Mr W P Logan Snr
Mr W P Logan Jnr
Mrs S E Bunyan
Mr A D Kemp
Mr J D Thorp
Results and dividends
The results for the year are set out on page 11.
No ordinary dividends were paid. The directors do not recommend payment of a final dividend.
Statement of disclosure to auditor
So far as each person who was a director at the date of approving this report is aware, there is no relevant audit information of which the company’s auditor is unaware. Additionally, the directors individually have taken all the necessary steps that they ought to have taken as directors in order to make themselves aware of all relevant audit information and to establish that the company’s auditor is aware of that information.
On behalf of the board
Mr W P Logan Jnr
Director
19 February 2024
LOGAN CONSTRUCTION (SOUTH EAST) LTD
DIRECTORS' RESPONSIBILITIES STATEMENT
FOR THE YEAR ENDED 30 JUNE 2023
- 6 -
The directors are responsible for preparing the annual report and the financial statements in accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period. In preparing these financial statements, the directors are required to:
select suitable accounting policies and then apply them consistently;
make judgements and accounting estimates that are reasonable and prudent;
state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements;
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company’s transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
The directors are responsible for the maintenance and integrity of the corporate and financial information included on the company's website.
LOGAN CONSTRUCTION (SOUTH EAST) LTD
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF LOGAN CONSTRUCTION (SOUTH EAST) LTD
- 7 -
Opinion
We have audited the financial statements of Logan Construction (South East) Ltd (the 'company') for the year ended 30 June 2023 which comprise the income statement, the statement of comprehensive income, the statement of financial position, the statement of changes in equity, the statement of cash flows and notes to the financial statements, including 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).
In our opinion the financial statements:
give a true and fair view of the state of the company's affairs as at 30 June 2023 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.
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Conclusions relating to Going Concern
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.
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 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.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of our audit:
the information given in the strategic report and the directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
the strategic report and the directors' report have been prepared in accordance with applicable legal requirements.
LOGAN CONSTRUCTION (SOUTH EAST) LTD
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF LOGAN CONSTRUCTION (SOUTH EAST) LTD
- 8 -
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 and the directors' report.
We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion:
adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or
the financial statements are not in agreement with the accounting records and returns; or
certain disclosures of 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 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.
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.
The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below.
Extent to which the audit was considered capable of detecting irregularities, including fraud.
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.
LOGAN CONSTRUCTION (SOUTH EAST) LTD
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF LOGAN CONSTRUCTION (SOUTH EAST) LTD
- 9 -
Identifying and assessing potential risks related to irregularities
In identifying and assessing risks of material misstatement in respect of irregularities, including fraud and non-compliance with laws and regulations, we considered the following:
- the nature of the company’s activities and sector, control environment and performance including the design of the remuneration policies, key drivers for remuneration, bonus levels and performance targets;
- results of our enquiries of management about their own identification and assessment of the risks of irregularities;
- any matters we identified having enquired into the policies and procedures relating to:
- identifying, evaluating and complying with laws and regulations and whether they were aware of any instances of non-compliance;
- detecting and responding to the risks of fraud and whether they have knowledge of any actual, suspected or alleged fraud;
- the internal controls established to mitigate risks of fraud or non-compliance with laws and regulations;
- the matters discussed among the audit engagement team regarding how and where fraud might occur in the financial statements and any potential indicators of fraud.
As a result of these procedures, we considered the opportunities and incentives that may exist within the organisation for fraud and identified the greatest potential for fraud was in relation to revenue recognition, accrued income, accrued expenditure and safe guarding of assets.
We are also required to perform specific procedures to respond to the risk of management override.
We also obtained an understanding of the legal and regulatory frameworks that the 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. The key laws and regulations we considered in this context included FRS102, the UK Companies Act 2006 and local tax 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 company’s ability to operate or to avoid a material penalty. These included compliance with laws and regulations concerned with UK government COVID-19 support schemes.
LOGAN CONSTRUCTION (SOUTH EAST) LTD
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF LOGAN CONSTRUCTION (SOUTH EAST) LTD
- 10 -
Audit response to risks identified
As a result of performing the above, we identified revenue recognition as a key audit matter related to the potential risk of irregularity including fraud. We assessed the company’s policy for recognising revenue in accordance with FRS102. We substantively tested the source data and challenged assumptions used to recognise revenue ensuring consistent treatment.
Our procedures to respond to risks identified included the following:
- reviewing the financial statement disclosures and testing to supporting documentation to assess compliance with provisions of relevant laws and regulations described as having a direct effect on the financial statements;
- enquiring of management concerning actual and potential litigation and claims;
- performing analytical procedures to identify any unusual or unexpected relationships that may indicate risks of material misstatement due to fraud;
- in addressing the risk of fraud through management override of controls, testing the appropriateness of journal entries and other adjustments; assessing whether the judgements made in making accounting estimates are indicative of a potential bias; and evaluating the business rationale of any significant transactions that are unusual or outside the normal course of business.
We also communicated relevant identified laws and regulations and potential fraud risks to all engagement team members and remained alert to any indications of fraud or noncompliance with laws and regulations throughout the audit.
A further description of our responsibilities is available on the Financial Reporting Council’s website at: https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.
Michael Baker FCA (Senior Statutory Auditor)
For and on behalf of Charcroft Baker LLP
19 February 2024
Chartered Certified Accountants
Statutory Auditor
5 West Court
Enterprise Road
Maidstone
Kent
ME15 6JD
LOGAN CONSTRUCTION (SOUTH EAST) LTD
INCOME STATEMENT
FOR THE YEAR ENDED 30 JUNE 2023
- 11 -
2023
2022
Notes
£
£
Revenue
3
45,426,213
37,451,666
Cost of sales
(38,769,891)
(30,312,580)
Gross profit
6,656,322
7,139,086
Administrative expenses
(4,582,644)
(4,804,392)
Other operating income
73,707
4,144
Operating profit
4
2,147,385
2,338,838
Investment income
7
118,615
2,986
Profit before taxation
2,266,000
2,341,824
Tax on profit
8
(462,610)
(420,246)
Profit for the financial year
1,803,390
1,921,578
The income statement has been prepared on the basis that all operations are continuing operations.
LOGAN CONSTRUCTION (SOUTH EAST) LTD
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2023
- 12 -
2023
2022
£
£
Profit for the year
1,803,390
1,921,578
Other comprehensive income
-
-
Total comprehensive income for the year
1,803,390
1,921,578
LOGAN CONSTRUCTION (SOUTH EAST) LTD
STATEMENT OF FINANCIAL POSITION
- 13 -
2023
2022
Notes
£
£
£
£
Non-current assets
Property, plant and equipment
10
105,717
37,425
Current assets
Inventories
11
7,484
500
Trade and other receivables
12
10,864,163
6,416,176
Investments
13
4,074,432
Cash and cash equivalents
8,269,252
7,894,741
23,215,331
14,311,417
Current liabilities
14
(14,244,119)
(7,089,860)
Net current assets
8,971,212
7,221,557
Total assets less current liabilities
9,076,929
7,258,982
Provisions for liabilities
Deferred tax liability
15
21,668
7,111
(21,668)
(7,111)
Net assets
9,055,261
7,251,871
Equity
Called up share capital
17
3,000
3,000
Retained earnings
9,052,261
7,248,871
Total equity
9,055,261
7,251,871
These financial statements have been prepared in accordance with the provisions relating to medium-sized companies.true
The financial statements were approved by the board of directors and authorised for issue on 19 February 2024 and are signed on its behalf by:
Mr W P Logan Jnr
Director
Company registration number 03167858 (England and Wales)
LOGAN CONSTRUCTION (SOUTH EAST) LTD
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2023
- 14 -
Share capital
Retained earnings
Total
Notes
£
£
£
Balance at 1 July 2021
3,000
7,327,294
7,330,294
Year ended 30 June 2022:
Profit and total comprehensive income for the year
-
1,921,578
1,921,578
Dividends
9
-
(2,000,000)
(2,000,000)
Balance at 30 June 2022
3,000
7,248,871
7,251,871
Year ended 30 June 2023:
Profit and total comprehensive income for the year
-
1,803,390
1,803,390
Balance at 30 June 2023
3,000
9,052,262
9,055,262
LOGAN CONSTRUCTION (SOUTH EAST) LTD
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2023
- 15 -
2023
2022
Notes
£
£
£
£
Cash flows from operating activities
Cash generated from operations
21
4,844,338
4,326,938
Income taxes (paid)/refunded
(433,000)
715,606
Net cash inflow from operating activities
4,411,338
5,042,544
Investing activities
Purchase of property, plant and equipment
(97,410)
Proceeds on disposal of property, plant and equipment
16,400
Purchase of investments
(4,074,432)
Interest received
118,615
2,986
Net cash (used in)/generated from investing activities
(4,036,827)
2,986
Financing activities
Dividends paid
(2,000,000)
Net cash used in financing activities
(2,000,000)
Net increase in cash and cash equivalents
374,511
3,045,530
Cash and cash equivalents at beginning of year
7,894,741
4,849,211
Cash and cash equivalents at end of year
8,269,252
7,894,741
LOGAN CONSTRUCTION (SOUTH EAST) LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
- 16 -
1
Accounting policies
Company information
Logan Construction (South East) Ltd is a private company limited by shares incorporated in England and Wales. The registered office is Unit 7 Business Park, 238 Green Lane, Eltham, London, SE9 3TL.
1.1
Accounting convention
These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006.
The financial statements are prepared in sterling, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £.
The financial statements have been prepared under the historical cost convention, [modified to include the revaluation of freehold properties and to include investment properties and certain financial instruments at fair value]. The principal accounting policies adopted are set out below.
1.2
Going concern
Atruet the time of approving the financial statements, the Directors have a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future. Thus the Directors continue to adopt the going concern basis of accounting in preparing the financial statements.
1.3
Revenue
Revenue is recognised at the fair value of the consideration received or receivable for goods and services provided in the normal course of business, and is shown net of VAT and other sales related taxes. The fair value of consideration takes into account trade discounts, settlement discounts and volume rebates.
When cash inflows are deferred and represent a financing arrangement, the fair value of the consideration is the present value of the future receipts. The difference between the fair value of the consideration and the nominal amount received is recognised as interest income.
Revenue from the sale of goods is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer (usually on dispatch of the goods), the amount of revenue can be measured reliably, it is probable that the economic benefits associated with the transaction will flow to the entity and the costs incurred or to be incurred in respect of the transaction can be measured reliably.
Revenue from construction contracts is recognised by reference to the stage of completion when the stage of completion, costs incurred and costs to complete can be estimated reliably. The stage of completion is calculated by comparing costs incurred, mainly in relation to contractual hourly staff rates and materials, as a proportion of total costs. Where the outcome cannot be estimated reliably, revenue is recognised only to the extent of the expenses recognised that it is probable will be recovered.
1.4
Property, plant and equipment
Property, plant and equipment are initially measured at cost and subsequently measured at cost or valuation, net of depreciation and any impairment losses.
Depreciation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:
Plant and equipment
25% straight line
Motor vehicles
25% reducing balance, 25% straight line
The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is credited or charged to profit or loss.
LOGAN CONSTRUCTION (SOUTH EAST) LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
1
Accounting policies
(Continued)
- 17 -
1.5
Inventories
Inventories are stated at the lower of cost and estimated selling price less costs to complete and sell. Cost comprises direct materials and, where applicable, direct labour costs and those overheads that have been incurred in bringing the inventories to their present location and condition.
Inventories held for distribution at no or nominal consideration are measured at the lower of cost and replacement cost, adjusted where applicable for any loss of service potential.
At each reporting date, an assessment is made for impairment. Any excess of the carrying amount of inventories over its estimated selling price less costs to complete and sell is recognised as an impairment loss in profit or loss. Reversals of impairment losses are also recognised in profit or loss.
1.6
Cash and cash equivalents
Cash and cash equivalents are basic financial assets and include cash in hand, deposits held at call with banks, other short-term liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities.
1.7
Financial instruments
The company has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.
Financial instruments are recognised in the company's 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.
Other financial assets
Other financial assets, including investments in equity instruments which are not subsidiaries, associates or joint ventures, are initially measured at fair value, which is normally the transaction price. Such assets are subsequently carried at fair value and the changes in fair value are recognised in profit or loss, except that investments in equity instruments that are not publicly traded and whose fair values cannot be measured reliably are measured at cost less impairment.
Impairment of financial assets
Financial assets, other than those held at fair value through profit and loss, are assessed for indicators of impairment at each reporting end date.
Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected. If an asset is impaired, the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset’s original effective interest rate. The impairment loss is recognised in profit or loss.
If there is a decrease in the impairment loss arising from an event occurring after the impairment was recognised, the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been, had the impairment not previously been recognised. The impairment reversal is recognised in profit or loss.
LOGAN CONSTRUCTION (SOUTH EAST) LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
1
Accounting policies
(Continued)
- 18 -
Derecognition of financial assets
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the company transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.
Basic financial liabilities
Basic financial liabilities, including trade and other payables, bank loans, loans from fellow group companies and preference shares that are classified as debt, are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future payments discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.
Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.
Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Amounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade payables are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.
Other financial liabilities
Derivatives, including interest rate swaps and forward foreign exchange contracts, are not basic financial instruments. Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured at their fair value. Changes in the fair value of derivatives are recognised in profit or loss in finance costs or finance income as appropriate, unless hedge accounting is applied and the hedge is a cash flow hedge.
Debt instruments that do not meet the conditions in FRS 102 paragraph 11.9 are subsequently measured at fair value through profit or loss. Debt instruments may be designated as being measured at fair value through profit or loss to eliminate or reduce an accounting mismatch or if the instruments are measured and their performance evaluated on a fair value basis in accordance with a documented risk management or investment strategy.
Derecognition of financial liabilities
Financial liabilities are derecognised when the company’s contractual obligations expire or are discharged or cancelled.
Changes in the fair value of derivatives that are designated and qualify as fair value hedges are recognised in profit or loss immediately, together with any changes in the fair value of the hedged asset or liability that are attributable to the hedged risk.
1.8
Taxation
The tax expense represents the sum of the tax currently payable and deferred tax.
Current tax
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the income statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The company’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.
LOGAN CONSTRUCTION (SOUTH EAST) LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
1
Accounting policies
(Continued)
- 19 -
Deferred tax
Deferred tax liabilities are generally recognised for all timing differences and deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Such assets and liabilities are not recognised if the timing difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.
The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the income statement, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset when the company has a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.
1.9
Provisions
Provisions are recognised when the company has a legal or constructive present obligation as a result of a past event, it is probable that the company will be required to settle that obligation and a reliable estimate can be made of the amount of the obligation.
The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the reporting end date, taking into account the risks and uncertainties surrounding the obligation. Where the effect of the time value of money is material, the amount expected to be required to settle the obligation is recognised at present value. When a provision is measured at present value, the unwinding of the discount is recognised as a finance cost in profit or loss in the period in which it arises.
1.10
Employee benefits
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 non-current assets.
The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received.
Termination benefits are recognised immediately as an expense when the company is demonstrably committed to terminate the employment of an employee or to provide termination benefits.
1.11
Retirement benefits
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
LOGAN CONSTRUCTION (SOUTH EAST) LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
1
Accounting policies
(Continued)
- 20 -
1.12
Leases
Rentals payable under operating leases, including any lease incentives received, are charged to profit or loss on a straight line basis over the term of the relevant lease except where another more systematic basis is more representative of the time pattern in which economic benefits from the leases asset are consumed.
1.13
Government grants
Government grants are recognised at the fair value of the asset received or receivable when there is reasonable assurance that the grant conditions will be met and the grants will be received.
A grant that specifies performance conditions is recognised in income when the performance conditions are met. Where a grant does not specify performance conditions it is recognised in income when the proceeds are received or receivable. A grant received before the recognition criteria are satisfied is recognised as a liability.
2
Judgements and key sources of estimation uncertainty
In the application of the company’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.
3
Revenue
2023
2022
£
£
Revenue analysed by class of business
Contract revenue
45,426,214
37,451,666
2023
2022
£
£
Other significant revenue
Interest income
118,615
2,986
Grants received
-
4,075
2023
2022
£
£
Revenue analysed by geographical market
UK
45,426,214
37,451,666
LOGAN CONSTRUCTION (SOUTH EAST) LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
- 21 -
4
Operating profit
2023
2022
Operating profit for the year is stated after charging/(crediting):
£
£
Government grants
-
(4,075)
Fees payable to the company's auditor for the audit of the company's financial statements
10,000
9,500
Depreciation of owned property, plant and equipment
28,870
32,412
Profit on disposal of property, plant and equipment
(16,152)
-
Operating lease charges
230,507
228,552
5
Employees
The average monthly number of persons (including directors) employed by the company during the year was:
2023
2022
Number
Number
Professional and administration
40
38
Project managers
1
2
Site managers
18
19
Tradesmen
6
6
Labourers
5
5
Driver
1
1
Total
71
71
Their aggregate remuneration comprised:
2023
2022
£
£
Wages and salaries
4,453,410
4,302,817
Social security costs
513,013
511,630
Pension costs
144,142
118,022
5,110,565
4,932,469
The pension costs recognised in the profit and loss account during the year were £144,142 (2022 - £118,022). The amount outstanding at the end of the year was £26,126 (2022 - £27,173).
6
Directors' remuneration
2023
2022
£
£
Remuneration for qualifying services
275,616
529,450
Company pension contributions to defined contribution schemes
16,830
16,830
LOGAN CONSTRUCTION (SOUTH EAST) LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
6
Directors' remuneration
(Continued)
- 22 -
The number of directors for whom retirement benefits are accruing under defined contribution schemes amounted to 3 (2022 - 3).
Remuneration disclosed above include the following amounts paid to the highest paid director:
2023
2022
£
£
Remuneration for qualifying services
150,000
306,836
Company pension contributions to defined contribution schemes
7,500
7,500
The directors are considered to be the company's key management personnel.
7
Investment income
2023
2022
£
£
Interest income
Interest on bank deposits
44,183
2,706
Other interest income
74,432
280
Total income
118,615
2,986
2023
2022
Investment income includes the following:
£
£
Interest on financial assets not measured at fair value through profit or loss
44,183
2,706
8
Taxation
2023
2022
£
£
Current tax
UK corporation tax on profits for the current period
448,053
426,404
Deferred tax
Origination and reversal of timing differences
14,557
(6,158)
Total tax charge
462,610
420,246
LOGAN CONSTRUCTION (SOUTH EAST) LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
8
Taxation
(Continued)
- 23 -
The actual charge for the year can be reconciled to the expected charge for the year based on the profit or loss and the standard rate of tax as follows:
2023
2022
£
£
Profit before taxation
2,266,000
2,341,824
Expected tax charge based on the standard rate of corporation tax in the UK of 20.50% (2022: 19.00%)
464,437
444,947
Tax effect of expenses that are not deductible in determining taxable profit
(2,336)
(18,543)
Tax effect of income not taxable in determining taxable profit
(14,048)
Permanent capital allowances in excess of depreciation
14,557
(6,158)
Taxation charge for the year
462,610
420,246
The tax charge was based on the standard rate of corporation tax of 19% for the period up to 31st March 2023. The tax charge for the remaining period up to 30 June 2023 was based on the standard rate of corporation tax of 25%.
9
Dividends
2023
2022
£
£
Interim paid
2,000,000
LOGAN CONSTRUCTION (SOUTH EAST) LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
- 24 -
10
Property, plant and equipment
Plant and equipment
Motor vehicles
Total
£
£
£
Cost
At 1 July 2022
102,514
170,343
272,857
Additions
97,410
97,410
Disposals
(12,139)
(12,139)
At 30 June 2023
102,514
255,614
358,128
Depreciation and impairment
At 1 July 2022
84,455
150,977
235,432
Depreciation charged in the year
10,154
18,716
28,870
Eliminated in respect of disposals
(11,891)
(11,891)
At 30 June 2023
94,609
157,802
252,411
Carrying amount
At 30 June 2023
7,905
97,812
105,717
At 30 June 2022
18,059
19,366
37,425
11
Inventories
2023
2022
£
£
Raw materials and consumables
7,484
500
12
Trade and other receivables
2023
2022
Amounts falling due within one year:
£
£
Trade receivables
5,975,430
2,525,939
Other receivables
600
1,319
Prepayments and accrued income
4,888,133
3,888,918
10,864,163
6,416,176
13
Current asset investments
2023
2022
£
£
Other investments
4,074,432
Other investments comprises treasury fixed term deposits with a maturity of 12 months purchased throughout the year.
LOGAN CONSTRUCTION (SOUTH EAST) LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
- 25 -
14
Current liabilities
2023
2022
£
£
Trade payables
11,434,324
5,791,813
Corporation tax
141,913
126,860
Other taxation and social security
2,430,129
946,520
Other payables
41,798
102,239
Accruals and deferred income
195,955
122,428
14,244,119
7,089,860
15
Deferred taxation
The following are the major deferred tax liabilities and assets recognised by the company and movements thereon:
Liabilities
Liabilities
2023
2022
Balances:
£
£
Accelerated capital allowances
21,668
7,111
2023
Movements in the year:
£
Liability at 1 July 2022
7,111
Charge to profit or loss
14,557
Liability at 30 June 2023
21,668
16
Retirement benefit schemes
2023
2022
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
144,142
118,022
The company operates a defined contribution pension scheme for all qualifying employees. The assets of the scheme are held separately from those of the company in an independently administered fund.
LOGAN CONSTRUCTION (SOUTH EAST) LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
- 26 -
17
Share capital
2023
2022
2023
2022
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Ordinary of 1p each
269,900
269,900
2,699
2,699
A Ordinary of 1p each
100
100
1
1
Growth shares of 1p each
30,000
30,000
300
300
300,000
300,000
3,000
3,000
On 2 December 2019 the 3,000 Ordinary shares of £1 each were subdivided into 300,000 Ordinary shares of £0.01 share. On the same date 100 1p Ordinary shares were reclassified as A Ordinary shares and 30,000 Ordinary shares were reclassified as Growth shares.
Each Ordinary and A Ordinary share are entitled to one vote in any circumstances; each share is also entitled to dividends and any other distribution. The Growth shares are not entitled to vote; they are entitled to dividends and other distributions. All shares can be redeemed at the option of the company.
18
Operating lease commitments
Lessee
At the reporting end date the company had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:
2023
2022
£
£
Within one year
172,947
172,947
Between two and five years
260,591
433,538
433,538
606,485
LOGAN CONSTRUCTION (SOUTH EAST) LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
- 27 -
19
Related party transactions
During the year, rent totalling £172,947 (2022 - £176,201) and management charges totalling £2,426,999 (2022 - £2,502,825) have been charged from Logan Management Services Limited, a company incorporated in England and Wales and related to Logan Construction (South East) Limited through common ownership. The amount due from Logan Management Services Limited at 30 June 2023 included within trade receivables was £57,667 (2022 - £433,798 due to Logan Management Services Limited). This is unsecured, interest free and repayable on demand.
20
Directors' transactions
Dividends totalling £nil (2022 - £2,000,000) were paid in the year in respect of shares held by the company's directors.
At 30/06/23, the sum of £3,360 was due to Mr W P Logan Snr (2022 - £3,360).
21
Cash generated from operations
2023
2022
£
£
Profit for the year after tax
1,803,390
1,921,578
Adjustments for:
Taxation charged
462,610
420,246
Investment income
(118,615)
(2,986)
Gain on disposal of property, plant and equipment
(16,152)
-
Depreciation and impairment of property, plant and equipment
28,870
32,412
Movements in working capital:
Increase in inventories
(6,984)
(Increase)/decrease in trade and other receivables
(4,447,987)
3,038,517
Increase/(decrease) in trade and other payables
7,139,206
(1,082,829)
Cash generated from operations
4,844,338
4,326,938
22
Analysis of changes in net funds
1 July 2022
Cash flows
30 June 2023
£
£
£
Cash at bank and in hand
7,894,741
374,511
8,269,252
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