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REALM CONSTRUCTION LIMITED
DIRECTORS' REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 AUGUST 2023

 
REALM CONSTRUCTION LIMITED
 

COMPANY INFORMATION


Directors
Mr R Purvis 
Mr G Wight 
Mr C R Purvis 
Mr S Brown 




Registered number
SC110359



Registered office
New Thistle House
The Avenue

Lochgelly

Fife

KY5 9HG




Independent auditors
Sumer Auditco Limited, Statutory Auditor
Chartered Accountants

Pentland House

Saltire Centre

Glenrothes

Fife

KY6 2AH





 
REALM CONSTRUCTION LIMITED
 

CONTENTS



Page
Group strategic report
 
 
1 - 2
Directors' report
 
 
3 - 4
Independent auditors' report
 
 
5 - 8
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
Consolidated analysis of net debt
 
 
15
Notes to the financial statements
 
 
16 - 34


 
REALM CONSTRUCTION LIMITED
 

GROUP STRATEGIC REPORT
FOR THE YEAR ENDED 31 AUGUST 2023

Introduction
 
The directors have pleasure in presenting their strategic report for the year ended 31 August 2023.

Business review
 
The principal activity of the Group during the period continued to be that of groundworks and building
construction contracts.
In view of the fact that the construction sector remains challenging, the directors are pleased to report a successful year with strong profits and a marked improvement in the Group's overall financial position.
The directors consider the key performance indicators to be turnover, operating profit and working capital management.
Turnover has increased by 31.9% from £17,354,477 to £22,893,373. An operating profit of £2,170,319 was achieved compared to £927,085 in the previous year. Net current assets increased from £4,534,787 to £5,143,177 and net bank balances increased by £2,741,600 during the year to 31 August 2023.
The directors are confident that results will remain positive in the year ahead with high demand for the Group's services and the strategic management of contract delivery.  Despite ongoing optimism the directors are mindful of worldwide economic and political factors which could potentially impact on the Group's trading.

Principal risks and uncertainties
 
In line with other businesses connected to the construction industry, the Group's main commercial risks are the level of construction and house building on-going at any time to generate a requirement for its services. 
There is the continuing pressure on pricing and the risk associated with the loss of customers to be managed. Those risks which the Group finds itself exposed to are managed by a strong board of directors.
The Group's principal financial instruments comprise bank balances, bank overdrafts and loans, hire purchase agreements. The main purpose of these financial instruments is to finance Group operations.
Due to the nature of the financial instruments used by the Group there is no exposure to price risk. The Group's approach to managing other risks applicable to the financial instruments concerned is detailed below.
In respect of bank balances, the liquidity risk is managed by maintaining such flexibility through the use of overdrafts at floating rates of interest.
In respect of loans, these comprise inter-group loans, loans with other related companies, and also loans from financial institutions. The interest rate on the loans from the financial institutions is variable. The Group manages the liquidity risk by ensuring there are sufficient funds to meet the payments.
In respect of hire purchase assets, the liquidity risk in respect of these is managed to ensure sufficient funds are available to meet repayments.

Page 1

 
REALM CONSTRUCTION LIMITED
 

GROUP STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 AUGUST 2023

Safety and health, environment and quality
 
The Group recognises the importance of, and has policies and procedures in place to ensure its environmental, health and safety requirements are met at all times.


This report was approved by the board on 5 March 2024 and signed on its behalf.





Mr R Purvis
Director

Page 2

 
REALM CONSTRUCTION LIMITED
 

 
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 AUGUST 2023

The directors present their report and the financial statements for the year ended 31 August 2023.

Directors' responsibilities statement

The directors are responsible for preparing the Group strategic report, the Directors' report and the consolidated financial statements in accordance with applicable law and regulations.
 
Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice), including Financial Reporting Standard 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland'. Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Company and the Group and of the profit or loss of the Group for that period.

 In preparing these financial statements, the directors are required to:


select suitable accounting policies for the Group's financial statements and then apply them consistently;

make 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 Group will continue in business.

The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Company and the Group and to enable them to ensure that the financial statements comply with the Companies Act 2006They are also responsible for safeguarding the assets of the Company and the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

Results and dividends

The profit for the year, after taxation, amounted to £1,709,963 (2022 - £753,110).

Particulars of dividends paid are detailed in the notes to the financial statements.

Directors

The directors who served during the year were:

Mr R Purvis 
Mr G Wight 
Mr C R Purvis 
Mr S Brown 

Page 3

 
REALM CONSTRUCTION LIMITED
 

 
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 AUGUST 2023


Disclosure of information to auditors

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

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

Post balance sheet events

There have been no significant events affecting the Group since the year end.

This report was approved by the board on 5 March 2024 and signed on its behalf.
 





Mr R Purvis
Director

Page 4

 
REALM CONSTRUCTION LIMITED
 

 
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF REALM CONSTRUCTION LIMITED
 

Opinion


We have audited the financial statements of Realm Construction Limited (the 'parent Company') and its subsidiaries (the 'Group') for the year ended 31 August 2023, which comprise the Consolidated statement of comprehensive income, the Consolidated statement of financial position, the Company statement of financial position, the Consolidated statement of cash flows, the Consolidated statement of changes in equity, the Company statement of changes in equity and the related notes, including a summary of significant accounting policiesThe financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland' (United Kingdom Generally Accepted Accounting Practice).


In our opinion the financial statements:


give a true and fair view of the state of the Group's and of the parent Company's affairs as at 31 August 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; and
have been prepared in accordance with the requirements of the Companies Act 2006.


Basis for opinion


We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditors' responsibilities for the audit of the financial statements section of our report. We are independent of the Group in accordance with the ethical requirements that are relevant to our audit of the financial statements in the United Kingdom, including the Financial Reporting Council's Ethical Standard and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.


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.


Page 5

 
REALM CONSTRUCTION LIMITED
 

 
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF REALM CONSTRUCTION LIMITED (CONTINUED)


Other information


The other information comprises the information included in the Annual Report other than the financial statements and our Auditors' report thereon. The directors are responsible for the other information contained within the Annual ReportOur opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.


We have nothing to report in this regard.


Opinion on other matters prescribed by the Companies Act 2006
 

In our opinion, based on the work undertaken in the course of the audit:


the information given in the Group strategic report and the Directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
the Group strategic report and the Directors' report have been prepared in accordance with applicable legal requirements.


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 Group 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 set out on page 3, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.


In preparing the financial statements, the directors are responsible for assessing the 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.


Page 6

 
REALM CONSTRUCTION LIMITED
 

 
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF REALM CONSTRUCTION LIMITED (CONTINUED)


Auditors' responsibilities for the audit of the financial statements
 

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an Auditors' report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these Group 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 gained an understanding of the legal and regulatory framework applicable to the company and the industry in which it operates, and considered the risk of acts by the company that were contrary to applicable laws and regulations, including fraud. We designed audit procedures to respond to the risk, recognising that the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery or intentional misrepresentations, or through collusion.
We focused on laws and regulations which could give rise to a material misstatement in the financial statements, including, but not limited to, the Companies Act 2006 and UK tax legislation. Our tests included agreeing the financial statement disclosures to underlying supporting documentation, enquiries with management and enquiries of legal counsel. There are inherent limitations in the audit procedures described above and, the further removed non-compliance with laws and regulations is from the events and transactions reflected in the financial statements, the less likely we would become aware of it. We did not identify any key audit matters relating to irregularities, including fraud. As in all our audits, we also addressed the risk of management override of internal controls, including testing journals and evaluating whether there was evidence of bias by the directors that represented a risk of material misstatement due to fraud.


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


Page 7

 
REALM CONSTRUCTION LIMITED
 

 
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF REALM CONSTRUCTION LIMITED (CONTINUED)


Use of our report
 

This report is made solely to the Company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006Our audit work has been undertaken so that we might state to the Company's members those matters we are required to state to them in an Auditors' report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company's members, as a body, for our audit work, for this report, or for the opinions we have formed.





MARK GIBSON (Senior statutory auditor)
for and on behalf of
Sumer Auditco Limited, Statutory Auditor
Chartered Accountants
Pentland House
Saltire Centre
Glenrothes
Fife
KY6 2AH

5 March 2024
Page 8

 
REALM CONSTRUCTION LIMITED
 

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 AUGUST 2023

2023
2022
£
£

  

Turnover
 4 
22,893,373
17,354,477

Cost of sales
  
(19,553,052)
(15,421,929)

Gross profit
  
3,340,321
1,932,548

Administrative expenses
  
(1,296,373)
(1,127,119)

Other operating income
 5 
126,371
121,656

Operating profit
 6 
2,170,319
927,085

Interest receivable and similar income
 9 
69,909
5,138

Interest payable and similar expenses
 10 
(27,779)
(10,554)

Profit before taxation
  
2,212,449
921,669

Tax on profit
 11 
(502,486)
(168,559)

Profit for the financial year
  
1,709,963
753,110

Profit for the year attributable to:
  

Owners of the parent Company
  
1,709,963
753,110

  
1,709,963
753,110

There were no recognised gains and losses for 2023 or 2022 other than those included in the consolidated statement of comprehensive income.

There was no other comprehensive income for 2023 (2022:£NIL).

The notes on pages 16 to 34 form part of these financial statements.

Page 9

 
REALM CONSTRUCTION LIMITED
REGISTERED NUMBER: SC110359

CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 31 AUGUST 2023

2023
2022
£
£

Fixed assets
  

Tangible assets
 14 
1,659,931
852,247

Investment property
 15 
930,000
930,000

  
2,589,931
1,782,247

Current assets
  

Debtors: amounts falling due within one year
 17 
5,611,324
5,097,275

Cash at bank and in hand
 18 
4,958,634
2,217,034

  
10,569,958
7,314,309

Creditors: amounts falling due within one year
 19 
(5,426,781)
(2,779,522)

Net current assets
  
 
 
5,143,177
 
 
4,534,787

Total assets less current liabilities
  
7,733,108
6,317,034

Creditors: amounts falling due after more than one year
 20 
(93,791)
(168,810)

Provisions for liabilities
  

Deferred taxation
 24 
(303,308)
(69,678)

  
 
 
(303,308)
 
 
(69,678)

Net assets
  
7,336,009
6,078,546


Capital and reserves
  

Called up share capital 
 25 
211,000
211,000

Investment property reserve
 26 
293,869
293,869

Profit and loss account
 26 
6,831,140
5,573,677

  
7,336,009
6,078,546


The financial statements were approved and authorised for issue by the board and were signed on its behalf on 5 March 2024.




Mr R Purvis
Mr G Wight
Director
Director

The notes on pages 16 to 34 form part of these financial statements.

Page 10

 
REALM CONSTRUCTION LIMITED
REGISTERED NUMBER: SC110359

COMPANY STATEMENT OF FINANCIAL POSITION
AS AT 31 AUGUST 2023

2023
2022
£
£

Fixed assets
  

Tangible assets
 14 
1,217,707
468,986

Investments
 16 
50,000
50,000

Investment property
 15 
930,000
930,000

  
2,197,707
1,448,986

Current assets
  

Debtors: amounts falling due within one year
 17 
4,749,493
4,207,451

Cash at bank and in hand
 18 
4,105,628
1,664,504

  
8,855,121
5,871,955

Creditors: amounts falling due within one year
 19 
(4,908,146)
(2,559,444)

Net current assets
  
 
 
3,946,975
 
 
3,312,511

Total assets less current liabilities
  
6,144,682
4,761,497

  

Creditors: amounts falling due after more than one year
 20 
(79,406)
(100,258)

Provisions for liabilities
  

Deferred taxation
 24 
(253,861)
(39,115)

  
 
 
(253,861)
 
 
(39,115)

Net assets
  
5,811,415
4,622,124


Capital and reserves
  

Called up share capital 
 25 
211,000
211,000

Investment property reserve
 26 
293,869
293,869

Profit and loss account
 26 
5,306,546
4,117,255

  
5,811,415
4,622,124


The financial statements were approved and authorised for issue by the board and were signed on its behalf on 5 March 2024.


Mr R Purvis
Mr G Wight
Director
Director

The notes on pages 16 to 34 form part of these financial statements.

Page 11

 
REALM CONSTRUCTION LIMITED
 

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 AUGUST 2023


Called up share capital
Investment property revaluation reserve
Profit and loss account
Equity attributable to owners of parent Company
Total equity

£
£
£
£
£

At 1 September 2022
211,000
293,869
5,573,677
6,078,546
6,078,546



Profit for the year
-
-
1,709,963
1,709,963
1,709,963

Dividends: Equity capital
-
-
(452,500)
(452,500)
(452,500)


At 31 August 2023
211,000
293,869
6,831,140
7,336,009
7,336,009


The notes on pages 16 to 34 form part of these financial statements.


CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 AUGUST 2022


Called up share capital
Investment property revaluation reserve
Profit and loss account
Equity attributable to owners of parent Company
Total equity

£
£
£
£
£

At 1 September 2021
211,000
293,869
5,147,567
5,652,436
5,652,436



Profit for the year
-
-
753,110
753,110
753,110

Dividends: Equity capital
-
-
(327,000)
(327,000)
(327,000)


At 31 August 2022
211,000
293,869
5,573,677
6,078,546
6,078,546


The notes on pages 16 to 34 form part of these financial statements.

Page 12

 
REALM CONSTRUCTION LIMITED
 

COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 AUGUST 2023


Called up share capital
Investment property revaluation reserve
Profit and loss account
Total equity

£
£
£
£

At 1 September 2022
211,000
293,869
4,117,255
4,622,124



Profit for the year
-
-
1,641,791
1,641,791

Dividends: Equity capital
-
-
(452,500)
(452,500)


At 31 August 2023
211,000
293,869
5,306,546
5,811,415


The notes on pages 16 to 34 form part of these financial statements.


COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 AUGUST 2022


Called up share capital
Investment property revaluation reserve
Profit and loss account
Total equity

£
£
£
£

At 1 September 2021
211,000
293,869
3,546,945
4,051,814



Profit for the year
-
-
897,310
897,310

Dividends: Equity capital
-
-
(327,000)
(327,000)


At 31 August 2022
211,000
293,869
4,117,255
4,622,124


The notes on pages 16 to 34 form part of these financial statements.

Page 13

 
REALM CONSTRUCTION LIMITED
 

CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 AUGUST 2023

2023
2022
£
£

Cash flows from operating activities

Profit for the financial year
1,709,963
753,110

Adjustments for:

Depreciation of tangible assets
334,248
277,725

Loss on disposal of tangible assets
(76,332)
(22,095)

Interest paid
27,779
10,554

Interest received
(69,909)
(5,138)

Taxation charge
502,486
168,559

(Increase)/decrease in debtors
(314,049)
378,577

Increase in creditors
2,184,763
556,481

Corporation tax (paid)
(77,250)
(47,651)

Net cash generated from operating activities

4,221,699
2,070,122


Cash flows from investing activities

Purchase of tangible fixed assets
(1,147,158)
(590,711)

Sale of tangible fixed assets
81,558
93,402

Interest received
69,909
5,138

HP interest paid
(26,051)
(9,211)

Net cash from investing activities

(1,021,742)
(501,382)

Cash flows from financing activities

Repayment of loans
(9,167)
(10,000)

Repayment of/new finance leases
5,038
329,887

Dividends paid
(452,500)
(327,000)

Interest paid
(1,728)
(1,343)

Net cash used in financing activities
(458,357)
(8,456)

Net increase in cash and cash equivalents
2,741,600
1,560,284

Cash and cash equivalents at beginning of year
2,217,034
656,750

Cash and cash equivalents at the end of year
4,958,634
2,217,034


Cash and cash equivalents at the end of year comprise:

Cash at bank and in hand
4,958,634
2,217,034

4,958,634
2,217,034


The notes on pages 16 to 34 form part of these financial statements.

Page 14

 
REALM CONSTRUCTION LIMITED
 

CONSOLIDATED ANALYSIS OF NET DEBT
FOR THE YEAR ENDED 31 AUGUST 2023





At 1 September 2022
Cash flows
New finance leases
At 31 August 2023
£

£

£

£

Cash at bank and in hand

2,217,034

2,741,600

-

4,958,634

Debt due after 1 year

(29,167)

9,167

-

(20,000)

Debt due within 1 year

(10,000)

-

-

(10,000)

Finance leases

(377,105)

330,529

(335,567)

(382,143)


1,800,762
3,081,296
(335,567)
4,546,491

The notes on pages 16 to 34 form part of these financial statements.

Page 15

 
REALM CONSTRUCTION LIMITED
 

 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 AUGUST 2023

1.


General information

Realm Construction Limited is a company limited by shares, incorporated in Scotland. Its registered office is New Thistle House, The Avenue, Lochgelly, Fife, KY5 9HG.
The principal activity of the group was that of groundworks and building construction contracts.
The financial statements are presented in sterling which is the functional currency of the Company and rounded to the nearest £. 

2.Accounting policies

 
2.1

Basis of preparation of financial statements

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

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

The Company has taken advantage of the exemption allowed under section 408 of the Companies Act 2006 and has not presented its own Statement of comprehensive income in these financial statements.

The following principal accounting policies have been applied:

 
2.2

Basis of consolidation

The consolidated financial statements present the results of the Company and its own subsidiaries ("the Group") as if they form a single entity. Intercompany transactions and balances between group companies are therefore eliminated in full.
The consolidated financial statements incorporate the results of business combinations using the purchase method. In the Statement of financial position, the acquiree's identifiable assets, liabilities and contingent liabilities are initially recognised at their fair values at the acquisition date. The results of acquired operations are included in the Consolidated statement of comprehensive income from the date on which control is obtained. They are deconsolidated from the date control ceases.

Page 16

 
REALM CONSTRUCTION LIMITED
 

 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 AUGUST 2023

2.Accounting policies (continued)

 
2.3

Turnover

Turnover is recognised to the extent that it is probable that the economic benefits will flow to the Group and the turnover can be reliably measured. Turnover is measured as the fair value of the consideration received or receivable, excluding discounts, rebates, value added tax and other sales taxes. The following criteria must also be met before turnover is recognised:

Sale of goods

Turnover from the sale of goods is recognised when all of the following conditions are satisfied:
the Group has transferred the significant risks and rewards of ownership to the buyer;
the Group retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold;
the amount of turnover can be measured reliably;
it is probable that the Group will receive the consideration due under the transaction; and
the costs incurred or to be incurred in respect of the transaction can be measured reliably.

Rendering of services

Turnover from a contract to provide services is recognised in the period in which the services are provided in accordance with the stage of completion of the contract when all of the following conditions are satisfied:
the amount of turnover can be measured reliably;
it is probable that the Group will receive the consideration due under the contract;
the stage of completion of the contract at the end of the reporting period can be measured reliably; and
the costs incurred and the costs to complete the contract can be measured reliably.

 
2.4

Tangible fixed assets

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

Land is not depreciated. Depreciation on other assets is charged so as to allocate the cost of assets less their residual value over their estimated useful lives, using the straight-line method.

Depreciation is provided on the following basis:

Leasehold property improvements
-
20% straight line
Plant and machinery
-
20% straight line
Motor vehicles
-
25% straight line
Office equipment
-
15% and 25% straight line

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

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

Page 17

 
REALM CONSTRUCTION LIMITED
 

 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 AUGUST 2023

2.Accounting policies (continued)

 
2.5

Investment property

Investment property is carried at fair value determined annually by directors or external valuers and derived from the current market rents and investment property yields for comparable real estate, adjusted if necessary for any difference in the nature, location or condition of the specific asset. No depreciation is provided. Changes in fair value are recognised in profit or loss.

 
2.6

Valuation of investments

Investments in subsidiaries are measured at cost less accumulated impairment.

 
2.7

Debtors

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

 
2.8

Cash and cash equivalents

Cash is represented by cash in hand and deposits with financial institutions repayable without penalty on notice of not more than 24 hours. Cash equivalents are highly liquid investments that mature in no more than three months from the date of acquisition and that are readily convertible to known amounts of cash with insignificant risk of change in value.

In the Consolidated statement of cash flows, cash and cash equivalents are shown net of bank overdrafts that are repayable on demand and form an integral part of the Group's cash management.

Page 18

 
REALM CONSTRUCTION LIMITED
 

 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 AUGUST 2023

2.Accounting policies (continued)

 
2.9

Financial instruments

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

Financial instruments are recognised in the Group's Statement of financial position when the Group becomes party to the contractual provisions of the instrument.

Financial assets and liabilities are offset, with the net amounts presented in the financial statements, when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.

 
2.10

Creditors

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

 
2.11

Government grants

Grants are accounted under the accruals model as permitted by FRS 102. Grants relating to expenditure on tangible fixed assets are credited to profit or loss at the same rate as the depreciation on the assets to which the grant relates. The deferred element of grants is included in creditors as deferred income.
Grants of a revenue nature are recognised in the Consolidated statement of comprehensive income in the same period as the related expenditure.

 
2.12

Finance costs

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

 
2.13

Dividends

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

 
2.14

Operating leases: the Group as lessee

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

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

Page 19

 
REALM CONSTRUCTION LIMITED
 

 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 AUGUST 2023

2.Accounting policies (continued)

 
2.15

Leased assets: the Group as lessee

Assets obtained under hire purchase contracts and finance leases are capitalised as tangible fixed assets. Assets acquired by finance lease are depreciated over the shorter of the lease term and their useful lives. Assets acquired by hire purchase are depreciated over their useful lives. Finance leases are those where substantially all of the benefits and risks of ownership are assumed by the company. Obligations under such agreements are included in creditors net of the finance charge allocated to future periods. The finance element of the rental payment is charged to profit or loss so as to produce a constant periodic rate of charge on the net obligation outstanding in each period.

 
2.16

Pensions

Defined contribution pension plan

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

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

 
2.17

Interest income

Interest income is recognised in profit or loss using the effective interest method.

 
2.18

Borrowing costs

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

 
2.19

Provisions for liabilities

Provisions are recognised when an event has taken place that gives rise to a legal or constructive obligation, a transfer of economic benefits is probable and a reliable estimate can be made.
Provisions are measured as the best estimate of the amount required to settle the obligation, taking into account the related risks and uncertainties.
 
Increases in provisions are generally charged as an expense to profit or loss.

Page 20

 
REALM CONSTRUCTION LIMITED
 

 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 AUGUST 2023

2.Accounting policies (continued)

 
2.20

Current and deferred taxation

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

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

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

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


3.


Judgments in applying accounting policies and key sources of estimation uncertainty

The most significant estimation within the Group's financial statements relates to work in progress. The directors review work in progress levels on a monthly basis to ensure that all work carried out on ongoing contracts is reflected in the Group's financial statements.
The directors also review depreciation rates on a regular basis to ensure that the policy rates remain appropriate.
The directors also require to exercise judgement in assessing the recoverability of trade debtors, and make appropriate provisions where their credit control procedures indicate that trade debtors balances may not be fully recoverable.


4.


Turnover

The whole of the turnover is attributable to construction services.


2023
2022
£
£

Construction services
22,893,373
17,354,477


All turnover arose within the United Kingdom.

Page 21

 
REALM CONSTRUCTION LIMITED
 

 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 AUGUST 2023

5.


Other operating income

2023
2022
£
£

Other operating income
13,178
11,261

Rents receivable
113,193
110,395

126,371
121,656



6.


Operating profit

The operating profit is stated after charging:

2023
2022
£
£

Depreciation of tangible fixed assets
334,248
277,725

Fees payable to the Group's auditor and its associates for the audit of the Group's annual financial statements
11,550
10,400

Other operating lease rentals
2,299,040
2,225,022


7.


Employees

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


Group
Group
Company
Company
2023
2022
2023
2022
£
£
£
£


Wages and salaries
3,429,971
3,121,715
2,333,249
2,158,223

Social security costs
365,589
338,751
246,595
233,884

Cost of defined contribution scheme
151,798
123,720
118,871
95,089

3,947,358
3,584,186
2,698,715
2,487,196


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


        2023
        2022
            No.
            No.







Number of production staff
76
74



Number of administrative staff
3
3



Number of management staff
9
9

88
86

Page 22

 
REALM CONSTRUCTION LIMITED
 

 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 AUGUST 2023

8.


Directors' remuneration

2023
2022
£
£

Directors' emoluments
155,305
94,747

Group contributions to defined contribution pension schemes
44,300
29,300

199,605
124,047


During the year retirement benefits were accruing to 2 directors (2022 - 1) in respect of defined contribution pension schemes.




9.


Interest receivable

2023
2022
£
£


Bank interest receivable
69,909
5,138


10.


Interest payable and similar expenses

2023
2022
£
£


Bank interest payable
1,728
1,343

Finance leases and hire purchase contracts
26,051
9,211

27,779
10,554

Page 23

 
REALM CONSTRUCTION LIMITED
 

 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 AUGUST 2023

11.


Taxation


2023
2022
£
£

Corporation tax


Current tax on profits for the year
268,856
78,670


268,856
78,670


Total current tax
268,856
78,670

Deferred tax


Origination and reversal of timing differences
233,630
96,271

Prior year adjustment/rate change
-
(6,382)

Total deferred tax
233,630
89,889


Taxation on profit on ordinary activities
502,486
168,559

Factors affecting tax charge for the year

The tax assessed for the year is higher than (2022 - the same as) the standard rate of corporation tax in the UK of 21.51506% (2022 - 19%). The differences are explained below:

2023
2022
£
£


Profit on ordinary activities before tax
2,212,449
921,669


Profit on ordinary activities multiplied by standard rate of corporation tax in the UK of 21.51506% (2022 - 19%)
476,010
175,117

Effects of:


Expenses not deductible for tax purposes, other than goodwill amortisation and impairment
3,034
3,277

Additional super-deduction capital allowances
(9,127)
(26,558)

Adjustments to tax charge in respect of prior periods
-
(6,382)

Changes in tax rates leading to an increase (decrease) in the tax charge
32,569
23,105

Total tax charge for the year
502,486
168,559


Factors that may affect future tax charges

In the Spring Budget 2021, the UK government announced an increase in the main corporation tax rate from 19% to 25% for profits above £250,000 with effect from 1 April 2023.

Page 24

 
REALM CONSTRUCTION LIMITED
 

 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 AUGUST 2023

12.


Dividends

2023
2022
£
£


Equity dividends on ordinary shares
452,500
327,000


13.


Parent company profit for the year

The Company has taken advantage of the exemption allowed under section 408 of the Companies Act 2006 and has not presented its own Statement of comprehensive income in these financial statements. The profit after tax of the parent Company for the year was £1,641,791 (2022 - £897,310).

Page 25

 
REALM CONSTRUCTION LIMITED
 

 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 AUGUST 2023

14.


Tangible fixed assets

Group






Leasehold property improve-ments
Plant and machinery
Motor vehicles
Office equipment
Total

£
£
£
£
£



Cost or valuation


At 1 September 2022
170,870
776,637
1,224,764
4,577
2,176,848


Additions
-
601,893
545,265
-
1,147,158


Disposals
-
-
(350,134)
-
(350,134)



At 31 August 2023

170,870
1,378,530
1,419,895
4,577
2,973,872



Depreciation


At 1 September 2022
34,174
418,990
866,860
4,577
1,324,601


Charge for the year on owned assets
34,174
96,147
203,927
-
334,248


Disposals
-
-
(344,908)
-
(344,908)



At 31 August 2023

68,348
515,137
725,879
4,577
1,313,941



Net book value



At 31 August 2023
102,522
863,393
694,016
-
1,659,931



At 31 August 2022
136,696
357,647
357,904
-
852,247

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


2023
2022
£
£



Plant and machinery
204,156
263,156

Motor vehicles
451,051
201,248

655,207
464,404

Page 26

 
REALM CONSTRUCTION LIMITED
 

 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 AUGUST 2023

Company






Leasehold property improve-ments
Plant and machinery
Motor vehicles
Total

£
£
£
£

Cost or valuation


At 1 September 2022
131,583
230,407
953,632
1,315,622


Additions
-
558,143
393,786
951,929


Disposals
-
-
(276,282)
(276,282)



At 31 August 2023

131,583
788,550
1,071,136
1,991,269



Depreciation


At 1 September 2022
26,317
189,506
630,813
846,636


Charge for the year on owned assets
26,317
13,122
158,543
197,982


Disposals
-
-
(271,056)
(271,056)



At 31 August 2023

52,634
202,628
518,300
773,562



Net book value



At 31 August 2023
78,949
585,922
552,836
1,217,707



At 31 August 2022
105,266
40,901
322,819
468,986






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


2023
2022
£
£



Motor vehicles
331,559
201,248

331,559
201,248

Page 27

 
REALM CONSTRUCTION LIMITED
 

 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 AUGUST 2023

15.


Investment property

Group


Freehold investment property

£



Valuation


At 1 September 2022
930,000



At 31 August 2023
930,000

The directors consider the valuations to be reasonable based on open market value for existing use and have updated the valuations as at 31 August 2023 based on current rental income and appropriate investment property yields.






Company





Freehold investment property

£



Valuation


At 1 September 2022
930,000



At 31 August 2023
930,000

The directors consider the valuations to be reasonable based on open market value for existing use and have updated the valuations as at 31 August 2023 based on current rental income and appropriate investment property yields.

Page 28

 
REALM CONSTRUCTION LIMITED
 

 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 AUGUST 2023

16.


Fixed asset investments

Company





Investments in subsidiary companies

£



Cost or valuation


At 1 September 2022
50,000



At 31 August 2023
50,000





Subsidiary undertaking


The following was a subsidiary undertaking of the Company:

Name

Registered office

Class of shares

Holding

Duncan-Pryde (Contractors) Limited
New Thistle House, The Avenue, Lochgelly, Fife, KY5 9HG
Ordinary
100%


17.


Debtors

Group
Group
Company
Company
2023
2022
2023
2022
£
£
£
£


Trade debtors
1,257,525
2,049,788
932,114
1,767,188

Other debtors
978,777
332,882
797,020
100,000

Prepayments and accrued income
56,204
46,568
40,398
27,370

Amounts recoverable on long-term contracts
3,318,818
2,668,037
2,979,961
2,312,893

5,611,324
5,097,275
4,749,493
4,207,451


Page 29

 
REALM CONSTRUCTION LIMITED
 

 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 AUGUST 2023

18.


Cash and cash equivalents

Group
Group
Company
Company
2023
2022
2023
2022
£
£
£
£

Cash at bank and in hand
4,958,634
2,217,034
4,105,628
1,664,504

4,958,634
2,217,034
4,105,628
1,664,504



19.


Creditors: Amounts falling due within one year

Group
Group
Company
Company
2023
2022
2023
2022
£
£
£
£

Bank loans
10,000
10,000
10,000
10,000

Trade creditors
3,009,204
1,802,702
2,441,516
1,171,367

Amounts owed to group undertakings
-
-
304,583
408,127

Other taxation and social security
728,488
199,141
697,075
167,253

Net obligations under hire purchase creditors
308,352
237,462
170,063
104,712

Other creditors
23,405
761
22,285
-

Accruals and deferred income
1,347,332
529,456
1,262,624
697,985

5,426,781
2,779,522
4,908,146
2,559,444


Secured loans
Net obligations under hire purchase creditors are secured over the relevant assets.


20.


Creditors: Amounts falling due after more than one year

Group
Group
Company
Company
2023
2022
2023
2022
£
£
£
£

Bank loans
20,000
29,167
20,000
29,167

Net obligations under hire purchase creditors
73,791
139,643
59,406
71,091

93,791
168,810
79,406
100,258


Secured loans
Net obligations under hire purchase creditors are secured over the relevant assets.



Page 30

 
REALM CONSTRUCTION LIMITED
 

 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 AUGUST 2023

21.


Loans


Analysis of the maturity of loans is given below:


Group
Group
Company
Company
2023
2022
2023
2022
£
£
£
£

Amounts falling due within one year

Bank loans
10,000
10,000
10,000
10,000

Amounts falling due 1-2 years

Bank loans
10,000
10,000
10,000
10,000

Amounts falling due 2-5 years

Bank loans
10,000
19,167
10,000
19,167


30,000
39,167
30,000
39,167



22.


Hire purchase and finance leases


Minimum lease payments under hire purchase fall due as follows:

Group
Group
Company
Company
2023
2022
2023
2022
£
£
£
£

Within one year
308,352
237,462
170,063
104,712

Between 1-5 years
73,791
139,643
59,406
71,091

382,143
377,105
229,469
175,803

Page 31

 
REALM CONSTRUCTION LIMITED
 

 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 AUGUST 2023

23.


Financial instruments

Group
Group
Company
Company
2023
2022
2023
2022
£
£
£
£

Financial assets

Financial assets measured at fair value through profit or loss
4,958,634
2,217,034
4,105,628
1,664,504

Financial assets that are debt instruments measured at amortised cost
2,540,885
2,790,797
1,729,134
1,867,188

7,499,519
5,007,831
5,834,762
3,531,692


Financial liabilities

Financial liabilities measured at amortised cost
(3,629,623)
(2,559,310)
(2,922,526)
(1,794,464)


Financial assets measured at fair value through profit or loss comprise cash at bank and in hand.


Financial assets measured at amortised cost comprise trade debtors, other debtors and loans.


Financial liabilities measured at amortised cost comprise trade creditors, other creditors and loans.


24.


Deferred taxation


Group



2023


£






At beginning of year
(69,678)


Charged to profit or loss
(233,630)



At end of year
(303,308)

Page 32

 
REALM CONSTRUCTION LIMITED
 

 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 AUGUST 2023
 
24.Deferred taxation (continued)

Company


2023


£






At beginning of year
(39,115)


Charged to profit or loss
(214,746)



At end of year
(253,861)

The provision for deferred taxation is made up as follows:

Group
Group
Company
Company
2023
2022
2023
2022
£
£
£
£

Accelerated capital allowances
(274,092)
(40,462)
(224,645)
(9,899)

Gain on revaluation
(29,216)
(29,216)
(29,216)
(29,216)

(303,308)
(69,678)
(253,861)
(39,115)


25.


Share capital

2023
2022
£
£
Allotted, called up and fully paid



203,150 (2022 - 203,250) A Ordinary shares of £1.00 each
203,150
203,250
7,250 (2022 - 7,250) B Ordinary shares of £1.00 each
7,250
7,250
100 (2022 - 100) C Ordinary shares of £1.00 each
100
100
100 (2022 - 100) D Ordinary shares of £1.00 each
100
100
100 (2022 - 100) E Ordinary shares of £1.00 each
100
100
100 (2022 - 100) F Ordinary shares of £1.00 each
100
100
100 (2022 - 100) G Ordinary shares of £1.00 each
100
100
100 (2022 - Nil) H Ordinary shares of £1.00 each
100
-

211,000

211,000


During the year, 100 of the 203,250 issued A Ordinary shares of £1 each were redesignated as 100 H Ordinary shares of £1 each. All shares rank pari passu in all respects other than dividends which can be voted to specific classes of share.


Page 33

 
REALM CONSTRUCTION LIMITED
 

 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 AUGUST 2023

26.


Reserves

Investment property revaluation reserve

Investment property revaluation reserve includes amounts relating to the revaluation of investment property. These reserves are non-distributable.

Profit and loss account

The profit and loss account includes all current and prior period retained profits and losses.


27.


Capital commitments




At 31 August 2023 the Group and Company had capital commitments as follows:


Group
Group
2023
2022
£
£

Contracted for but not provided in these financial statements
-
70,490


28.


Pension commitments

The Group operates a defined contributions pension scheme. The assets of the scheme are held separately from those of the Group in an independently administered fund. The pension cost charge represents contributions payable by the Group to the fund and amounted to £151,798 (2022 - £123,720). Contributions totaling £nil (2022 - £nil) were payable to the fund at the reporting date.


29.


Commitments under operating leases

The Group and the Company had no commitments under non-cancellable operating leases at the reporting date.


30.


Related party transactions

During the year the Group entered into the following transactions with other related parties:


2023
2022
£
£

Sales to other related parties other than group companies
281,596
200,925
Purchases from other related parties other than group companies
8,078,323
6,995,880
Net trading balances due from/(to) other related parties other than group companies
(993,420)
(870,804)
Amounts due from/(to) other related parties other than group companies
495,000
200,000


31.


Controlling party

The Group was under the control of Mr R Purvis throughout the current and previous year. Mr R Purvis is the managing director and majority shareholder.

Page 34