The director presents the strategic report for the year ended 31 October 2023.
The director can summarise the group's main objectives as follows:- - Sustaining its trading growth and profitability - Achieving growth and profits by demonstrating high level compliance with health and safety and environmental regulations - Maintaining a strong industry reputation - Continuing to deliver services to a high degree of quality from its strong training and fleet safety programs. - Continuing to offer a comprehensive range of Haulage services and plant provision at competitive prices - Seeking to operate as efficiently as possible - Maximising the re-cycling of materials and products
The group has adopted strategies to ensure that it is achieving its objectives and these are reviewed regularly by the director and key management; these are:- - The group maintains a strong industry networking relationship system that allows it to maintain its level of sales - It purposefully seeks to trade with reputable organisations carrying out detailed profile research procedures prior to acting for customers - The group continually updates its plant and equipment to hold the most up to date and highest quality items - It constantly seeks out synergies with its haulage and recycling activities - It strives to deliver a high quality service to its customers providing a combination of experienced drivers and a reliable fleet. - It retains a core of key personnel for the long term who play a central role in the operations of the company in areas such as customer and supplier relationships and staff management - It continually reviews the way that it operates its trading activities to identify improvements to efficiency
The director has identified the following Key performance indicators to assist in his measurement of the group's performance and progress:
Turnover £32,471,594; 2022: £34,052,387; 2021: £30,467,423; Gross profit £12,739,104; 2022: £11,664,302; 2021: £11,194,131; Gross profit % 39.2%; 2022: 34.2%; 2021: 36.7%; Growth in sales (4.6%); 2022: 11.76%; 2021: 20.9% Net profit percentage 18.2%; 2022: £23.6% 2021: 25.9%; Net current assets £39,826,259; 2022: £32,489,277: 2021: £27,773,321; 2020: £23,004,021;
The director is pleased with the trading results and financial position for the year. Although turnover slightly reduced the group managed to achieve an increase in gross profits and GP percentage. It is also satisfying to achieve these results and increase its net assets value with the continued high prices of fuel and energy costs since the early part of 2022, and operating in a very competitive industry market throughout the year. The group has continued to trade with a very wide and varied client base which has mitigated effects from strong levels of competition that are faced. The group invested heavily in its lorries, plant and equipment during the 2022 year and so did not need to do so this year, but continued with a program of high levels of maintenance so as to operate with plant and vehicles of the highest quality. The group has invested for a third year in its job management systems which are making the flow of operating and financial data far more efficient and accurate with the group's core activities. The director is confident that the group will continue to trade profitably into the future. |
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The director considers that the principal risks and uncertainties that are relevant to the group's operation and strategy are credit risk, liquidity risk, operating regulation, the economy and competition.
The group's principal financial instruments are hire purchase and finance lease contracts that are used to purchase its fleet of vehicles and plant and equipment. These are all short term fixed interest agreements that the group has the financial resources to comfortably manage. The group has various other financial assets and liabilities predominantly trade receivables and supplier payables which are, again, well maintained and controlled. The group uses credit insurance for a large amount of its sales to customers on credit and looks into each new customer carefully before the offer of credit is made which mitigates a high proportion of risks associated with bad debts. Currently, the group does not have any other interest bearing debt finance with banks or other finance institutions.
The group predominantly conducts its business within the UK and therefore it has very little foreign exchange rate fluctuations risks.
The group has a good level of cash assets and manages its finance aided purchases closely. The group does not use aggressive or high risk growth strategies concentrating on more targeted and careful customer and product choice. Therefore it does not view liquidity risk as a major concern.
The group takes health and safety and the environment very seriously and has specifically allocated a manager to oversee compliance. It has accreditation with such bodies as 'FORS', (at gold level), and CHAS. It carries out extensive staff and driver training on health safety and has developed procedures to risk assess each project that it is to work on. The group therefore feels that it fully mitigates any risks associated with health and safety and the environment.
The director recognises that competitors and the state of the economy form a risk to the level of demand for the group's products. The director believes that the continual update of the most advanced vehicles and plant, the group's long established track record and its high levels of quality in respect of health and safety and environmental policies can counter this risk effectively.
Reducing the environmental impact of waste, repurposing as much waste as possible and playing its part in the circular economy drive is a key part of the group's objectives and strategy. The group has been able to achieve this via its own 'Environmental Agency' permitted recycling facility and by the use of other highly reputable recycling tip sites.
Its own site uses a state of the art washing and recycling facility that enables the group to produce Wrap approved materials, an action programme that aids working towards a circular economy and reducing waste. The company uses up to date testing of all materials that pass through its facility. The water used in the washing process is recycled to ensure the minimum environmental impact and a bespoke drainage system has been installed to store surface and rain water that can be used in the washing process.
Via its own facility and from the use of environmentally approved external tip sites the group has been able to divert from Landfill over 95% of all waste received, allowing it to be re-used in land restoration projects and building & construction work. The group has been certified by BSI with 'BES 6001 certification' in respect of Responsibility Sourcing of Products which underpins its supply chain management and control of the environmental effect of its operations.
On behalf of the board
The director presents his annual report and financial statements for the year ended 31 October 2023.
The director who held office during the year and up to the date of signature of the financial statements was as follows:
The results for the year are set out on page 9.
In accordance with the company's articles, a resolution proposing that Bruton Charles be reappointed as auditor of the group will be put at a General Meeting.
We have audited the financial statements of Thames Materials Holdings Limited (the 'parent company') and its subsidiaries (the 'group') for the year ended 31 October 2023 which comprise the group profit and loss account, the group statement of comprehensive income, the group balance sheet, the company balance sheet, the group statement of changes in equity, the company statement of changes in equity, the group statement of cash flows, the company 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).
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the group and parent 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 director's 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 and 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 director with respect to going concern are described in the relevant sections of this report.
Other information
The other information comprises the information included in the annual report other than the financial statements and our auditor's report thereon. The director is 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 director's report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
the strategic report and the director's report have been prepared in accordance with applicable legal requirements.
In the light of the knowledge and understanding of the group and the parent company and their environment obtained in the course of the audit, we have not identified material misstatements in the strategic report or the director's 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.
As explained more fully in the director's responsibilities statement, the director is 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 director determines 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 director is responsible for assessing 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 director either intends to liquidate the parent company or to cease operations, or has no realistic alternative but to do so.
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatement in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below.
As a result of the activities of the group and the industry in which the group operates, we identified the following arears of laws and regulations as the most likely to have a material impact on the financial statements: Health and Safety; Employment law (including the Working Time Directive); DVSA legislation; environmental laws in respect of recycling, including hazardous waste. Based on this knowledge we identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. This includes consideration of the risk of how the group has operated that may be contrary to applicable laws and regulations and an evaluation of management's incentives and opportunities for fraudulent manipulation of the financial statements (including the risk of override of controls).
Audit procedures performed as part of our audit included:
- Enquiry of management and those charged with governance around actual and potential litigation and claims.
- Reviewing the group's accounting systems and applicable controls in place to prevent and detect irregularities.
- Reviewing minutes of meetings of those charged with governance.
- Reviewing financial statement disclosures and testing to supporting documentation to assess compliance with applicable laws and regulations.
- Auditing the risk of management override of controls, including through testing journal entries and other adjustments for appropriateness, and evaluating the business rationale of significant transactions outside the normal course of business.
Because of the inherent limitations of an audit there is a risk that we will not detect all irregularities, including those leading to a material misstatement in the financial statements or non-compliance with regulation. The risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from an error, as fraud may involve deliberate concealment or though collusion. Additionally, the further removed non-compliance is from the events and transactions reflected in the financial statements , the less likely the auditor is to become aware of it or to recognise the non-compliance.
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.
Use of our report
This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company’s members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company’s members as a body, for our audit work, for this report, or for the opinions we have formed.
The profit and loss account has been prepared on the basis that all operations are continuing operations.
As permitted by s408 Companies Act 2006, the company has not presented its own profit and loss account and related notes. The company’s profit for the year was £2,990,615 (2022 - £3,315,156 profit).
Thames Materials Holdings Limited (“the company”) is a private limited company domiciled and incorporated in England and Wales. The registered office is .
The group consists of Thames Materials Holdings Limited and all of its subsidiaries.
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.
The consolidated group financial statements consist of the financial statements of the parent company Thames Materials Holdings Limited together with all entities controlled by the parent company (its subsidiaries) and the group’s share of its interests in joint ventures and associates.
All financial statements are made up to 31 October 2023. Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with those used by other members of the group.
All intra-group transactions, balances and unrealised gains on transactions between group companies are eliminated on consolidation. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.
The basis of consolidation for the parent company and its subsidiary Thames Materials Limited is stated above as a business combination. In respect of Thames Materials Property Holdings Limited the group has applied the acquisition method of accounting. This subsidiary was acquired on its incorporation when the fair value of net assets was only its share capital. Profits or losses and other comprehensive income of this subsidiary are recognised from the effective date of acquisition, so in this case all of these will be recognised by the group.
At the time of approving the financial statements, the director has a reasonable expectation that the group has adequate resources to continue in operational existence for the foreseeable future. Thus the director continues to adopt the going concern basis of accounting in preparing the financial statements.
Turnover 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.
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 recognised in the profit and loss account.
Equity investments are measured at fair value through profit or loss, except for those equity investments that are not publicly traded and whose fair value cannot otherwise be measured reliably, which are recognised at cost less impairment until a reliable measure of fair value becomes available.
In the parent company financial statements, investments in subsidiaries, associates and jointly controlled entities are initially measured at cost and subsequently measured at cost less any accumulated impairment losses.
A subsidiary is an entity controlled by the group. Control is the power to govern the financial and operating policies of the entity so as to obtain benefits from its activities.
An associate is an entity, being neither a subsidiary nor a joint venture, in which the company holds a long-term interest and where the company has significant influence. The group considers that it has significant influence where it has the power to participate in the financial and operating decisions of the associate.
Investments in associates are initially recognised at the transaction price (including transaction costs) and are subsequently adjusted to reflect the group’s share of the profit or loss, other comprehensive income and equity of the associate using the equity method. Any difference between the cost of acquisition and the share of the fair value of the net identifiable assets of the associate on acquisition is recognised as goodwill. Any unamortised balance of goodwill is included in the carrying value of the investment in associates.
Losses in excess of the carrying amount of an investment in an associate are recorded as a provision only when the company has incurred legal or constructive obligations or has made payments on behalf of the associate.
In the parent company financial statements, investments in associates are accounted for at cost less impairment.
Entities in which the group has a long term interest and shares control under a contractual arrangement are classified as jointly controlled entities.
At each reporting period end date, the group reviews the carrying amounts of its tangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the company estimates the recoverable amount of the cash-generating unit to which the asset belongs.
The carrying amount of the investments accounted for using the equity method is tested for impairment as a single asset. Any goodwill included in the carrying amount of the investment is not tested separately for impairment.
The group 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 group's balance sheet when the group becomes party to the contractual provisions of the instrument.
Financial assets and liabilities are offset and the net amounts presented in the financial statements when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.
Basic financial assets, which include debtors and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised.
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.
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.
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the group 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.
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the group after deducting all of its liabilities.
Basic financial liabilities, including creditors, 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 creditors 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 creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.
Financial liabilities are derecognised when the group's contractual obligations expire or are discharged or cancelled.
Equity instruments issued by the group are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the group.
The tax expense represents the sum of the tax currently payable and deferred tax.
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the profit and loss account 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 group’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.
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 profit and loss account, 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 if, and only if, there is 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.
The costs of short-term employee benefits are recognised as a liability and an expense, unless those costs are required to be recognised as part of the cost of stock or fixed assets.
The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received.
Termination benefits are recognised immediately as an expense when the company is demonstrably committed to terminate the employment of an employee or to provide termination benefits.
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessees. All other leases are classified as operating leases.
Assets held under finance leases are recognised as assets at the lower of the assets fair value at the date of inception and the present value of the minimum lease payments. The related liability is included in the balance sheet as a finance lease obligation. Lease payments are treated as consisting of capital and interest elements. The interest is charged to profit or loss so as to produce a constant periodic rate of interest on the remaining balance of the liability.
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 leased asset are consumed.
Rental income from operating leases is recognised on a straight line basis over the term of the relevant lease. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised on a straight line basis over the lease term.
The exceptional item above represents a provision made for the settlement of PAYE and NIC in respect of previous year's tax schemes.
An analysis of the group's turnover is as follows:
The average monthly number of persons (including directors) employed by the group and company during the year was:
Their aggregate remuneration comprised:
Investment income includes the following:
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:
The net carrying value of tangible fixed assets includes the following in respect of assets held under finance leases or hire purchase contracts.
As a result of a regular program of maintenance and repairs that is carried out, in the opinion of the director, the market value of freehold land and buildings is greater than the carrying value, and so no provision for depreciation on freehold land and buildings has been provided for.
Details of the company's subsidiaries at 31 October 2023 are as follows:
Finance lease payments represent rentals payable by the company or group for certain items of plant and machinery. Leases include purchase options at the end of the lease period, and no restrictions are placed on the use of the assets. The average finance term is 4 years. All leases are on a fixed repayment basis and no arrangements have been entered into for contingent rental payments.
The following are the major deferred tax liabilities and assets recognised by the group and company, and movements thereon:
A defined contribution pension scheme is operated for all qualifying employees. The assets of the scheme are held separately from those of the group in an independently administered fund.
At the reporting end date the group had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:
During the year £200,000 (2022 : £200,000) of rent was paid to a connected company in respect of the group's main business premises and yard at Harefield. The shareholder of this connected company is Martin Clarke. At 31 October 2023 £Nil (2022: £Nil) was owed to this company in respect of this rental.
During the year £400,000 (2022: £400,000) was paid to a connected company in respect of the yard at Northolt used in the course of the business. The shareholder of this connected company is Martin Clarke . At 31 October 2023 £Nil (2021: £Nil) was owed to this company in respect of this rental.
Included within other debtors is a directors loan amounting to £7,126,545 due from M Clarke, (2022: £1,791,568).
During the year the group provided loan finance to a number of companies commonly owned by M Clarke. The resulting balances were £6,195,173 (2022: £3,883,311), £500,000 (2022: £500,000), £Nil (2022: £91,489), £Nil (2022: £893,563), £763,837 (2022: £745,093), £771,898 (2022: £771,898), £1,984,357 (2022: £1,213,600), £1,777,699 (2022: £1,777,699) and £2,372,213 (2022: £1,872,213) respectively. These amounts were owed to the group as at the year end and are disclosed within other debtors.