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COMPANY REGISTRATION NUMBER:
03955554
Year ended 31 December 2023
Officers and professional advisers |
1 |
|
|
Independent auditor's report to the members |
9 |
|
|
Statement of comprehensive income |
14 |
|
|
Statement of financial position |
15 |
|
|
Statement of changes in equity |
16 |
|
|
Statement of cash flows |
17 |
|
|
Notes to the financial statements |
18 |
|
|
Officers and Professional Advisers |
|
The board of directors |
M A Cooper |
|
A O Smith |
|
P J W Jeapes |
|
J H Rogers |
|
|
Company secretary |
A O Smith |
|
|
Registered office |
50 Seymour Street |
|
London |
|
W1H 7JG |
|
|
Auditor |
Edmund Carr LLP |
|
Chartered accountants & statutory auditor |
|
146 New London Road |
|
Chelmsford |
|
Essex |
|
CM2 0AW |
|
|
Year ended 31 December 2023
The purpose of the Strategic report is to inform members of the company and help them assess how the Directors have performed their duty under section 172 Companies Act 2006.
Review of business
The company's principal activity continues to be that of contractors specialising in high class fit out and refurbishment work. We operate predominantly within the south and home counties and specialise in the London area. Our expertise is in the carefully considered planning, co-ordination, and management of the whole construction process from tender to project completion. The Management Team are now embedded into the business and their combined expertise and skillset provides the stability and opportunities for the long term success of the company. 2023 saw a continuation of a number of issues that arose during the previous 5 years, namely a cost-of-living crisis, a stagnant economy, high inflation and high interest rates. Whilst it is undeniable that price rises and interest rate rises have real impacts on the industry the ability of the business and its employees to adapt and remain flexible allowed us to remain at the forefront of the industry and to continue to thrive as a business. Whilst we are aware the market is going to continue changing over the next 5 years, we remain confident we have the foundations in place to adapt with the market and continue to provide a highly demanded product. With our broad range of Construction Management expertise across all industry and business sectors, we can provide clients with high-calibre teams for a wide range of projects. In addition, clients work alongside one of our dedicated Account Managers who are focused on building a lasting client relationship. We are already seeing the benefits of the Employee Ownership business model following the change in ownership structure in 2021 with high staff retention rates, especially amongst senior staff, repeat business from clients citing consistency of team and performance and stability over the business financials.
Results
The detailed results for the year and the financial position of the company are as shown in the financial statements. The financial results of 2023 reflect the strong business fundamentals put in place across the last 23 years, together with the careful market re-positioning that has taken place following the introduction of the new Management Team. The commitment to the long-term success of the business is also reflected in our ability to build back our net assets so quickly.
Business environment
The war in Ukraine, the cost-of-living crisis and the highest interest rates in 15 years have all combined to make the market increasingly difficult and increase uncertainty for decision. However, the results for 2023 demonstrate that even with these challenges Virtus is well placed and well equipped to deal with these challenges and prosper. Our financial stability and longstanding reputation within the industry makes us a more appealing choice for our clients and as they look to adapt to the new way of working our collaborative approach means we can help clients achieve their goals whilst keeping within their budgets. As a result, and even considering the uncertainty faced, we anticipate that 2024 will be another strong year. As the sector remains extremely competitive the Board has agreed that it is in the best interests of the company to only take on work which will achieve acceptable margins and allow their hands-on approach to continue which contributes positively to the management of client risks. The company has an established reputation in the market and the Board intends to reinforce and extend this reputation by maintaining its philosophy of portending. It will continue with the provision of a hands-on approach with all parties they meet as this results in a high client satisfaction rate, recommendations and repeat business and a continued profitable business. This is demonstrated primarily through its high volume of repeat business and recommendations from clients.
Strategy
The decision by the Directors to focus on fit-out opportunities in the market, that offer higher than general contracting margins with lower risk than the heavy refurbishment projects continues to prove successful as demonstrated in the profit margins on the company. It is the intention of the Directors to continue its focus on fit out opportunities. The company has maintained financial independence by having no debt, borrowings, or overdrafts. Cash flow remains strong to support the day-to-day activities which is achieved through good debtor management. This is passed on to the benefit of the loyal and supportive subcontractors and other creditors.
Future developments
The Directors are confident that if the company continues with the philosophies implemented in previous years it will maintain its activities at similar levels of revenue and profitability. To achieve the company's objectives a well-motivated workforce is essential, and the Board are pleased with the retention of good staff supplemented with high-calibre new recruits. Our Employee- Ownership business model ensures that staff remain motivated whilst providing them with the stability and assurances they need to focus on providing the highest quality results. Regular training and a good working environment are provided, and subcontractors are also monitored closely. Health and safety matters are taken seriously by all staff and the management team to ensure risks from day-to-day activities are managed effectively. Whilst we continue to see market fluctuations and supply chain issues we have taken a proactive and open approach to resolving these, securing materials as early as possible on projects to guarantee prices and providing for larger lead times on materials.
Principal risks and uncertainties
The company faces a number of business risks and uncertainties due to market trading conditions. The Directors monitor both financial and quality performance on a job-by-job basis throughout the life of each project to ensure proper performance. The key risks are: - Poor results from individual contracts - Subcontractor quality and financial stability - Clients' financial stability - Retention and recruitment of high-quality staff - Health and safety site risks These risks are mitigated by: - Financial and operational monitoring and reporting of projects - Monitoring of client financial position and debtor levels - Employee engagement with training and development opportunities and a good working environment- Investment risks are managed closely whilst most excess funds are retained as cash deposits Risks have also been identified from the effect of political uncertainty with the upcoming general election, together with the high interest rates and global unrest which can cause supply chain issues. The Directors continue to monitor the effect of these matters at both a macroeconomic level and on individual contracts and activities particularly the effects on the workforce.
Key performance indicators
The KPI's have been designed to support the overall objectives of the company as set out in the value statement. They are constantly revisited with a view of enhancing the company's ability to grow successfully and give management team the tools to manage the business more effectively and deliver substantial shareholder value. The key performance indicators used by the company for monitoring remain: Client satisfaction and retention Target profit before tax margin Company net asset position Cash balances Revenue growth Staff turnover Health and Safety issues For the year ending 31 December 2023 we can confirm that client satisfaction scores remained high, with our repeat business for the year accounting for over 70% of the total business of the business. Our profit before tax margin was above the national average for main contractors, which is where we set our KPI. Our Health and Safety scores from third party inspections all scored over our minimum 85% requirement and our staff turnover for 2023 was below 10%, demonstrating our ability to identify and keep the best talent in the industry.
This report was approved by the board of directors on 13 June 2024 and signed on behalf of the board by:
A O Smith |
Company Secretary |
|
Registered office: |
50 Seymour Street |
London |
W1H 7JG |
|
Year ended 31 December 2023
The directors present their report and the financial statements of the company for the year ended
31 December 2023
.
Principal activities
The company's principal activity continues to be that of main contractors specialising in high class fit out and refurbishment work.
Incorporation
The company is a limited liability company incorporated in England & Wales.
Directors
The directors who served the company during the year were as follows:
M A Cooper |
|
A O Smith |
|
A J Smith |
|
P J W Jeapes |
|
S R Austin |
(Resigned
1 August 2023) |
|
|
Dividends
The directors do not recommend the payment of a dividend.
Events after the end of the reporting period
Particulars of events after the reporting date are detailed in note 22 to the financial statements.
Other matters
Directors' Insurance and Indemnities
The directors have the benefit of the indemnity provisions contained in the company's Articles of Association ('Articles'), and the company has maintained throughout the year, directors' and officers liability insurance for the benefit of the company, the directors and its officers. The company has entered into qualifying third party indemnity arrangements for the benefit of all directors in a form and scope which comply with the requirements of the Companies Act 2006 and which were in force thorough the year and remain in force.
Other Matters
The directors have assessed the potential impact of the cost of living crisis, the Ukraine war and the UK economy on the company's business plan as detailed under business environment in the strategic report.
The directors recognise it is extremely challenging to predict the full extent and duration of the impact on company's businesses operations for future periods.
The directors have prepared budgets covering a period of 12 months from the date of approval of these financial statements which indicate that, taking account of severe but plausible downsides, the company will have sufficient funds to meet its liabilities as they fall due for that period. They have therefore prepared these financial statements on a going concern basis.
Disclosure of information in the strategic report
Certain matters required by regulation to be dealt with in the annual report have been dealt with in the strategic report, as above, rather than in the Directors Report.
Directors' responsibilities statement
The directors are responsible for preparing the strategic report, directors' report and the financial statements in accordance with applicable law and regulations. Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and 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 judgments and accounting estimates that are reasonable and prudent; - prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business. The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company's transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
Auditor
So far as the directors are aware, there is no relevant audit information (as defined by Section 418 of the Companies Act 2006) of which the company's auditors are unaware, and each director has taken all the steps that he ought to have taken as a director in order to make himself aware of any relevant audit information and to establish that the company's auditors are aware of that information.
This report was approved by the board of directors on
13 June 2024
and signed on behalf of the board by:
A O Smith |
Company Secretary |
|
Registered office: |
50 Seymour Street |
London |
W1H 7JG |
|
Independent Auditor's Report to the Members of
Virtus Contracts Limited |
|
Year ended 31 December 2023
Opinion
We have audited the financial statements of Virtus Contracts Limited (the 'company') for the year ended 31 December 2023 which comprise the statement of comprehensive income, statement of financial position, statement of changes in equity, statement of cash flows and the related notes, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice). In our opinion the financial statements: - give a true and fair view of the state of the company's affairs as at 31 December 2023 and of its profit for the year then ended; - have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; - have been prepared in accordance with the requirements of the Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the 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.
Other information
The other information comprises the information included in the annual report, other than the financial statements and our auditor’s report thereon. The directors are responsible for the other information. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the financial statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of the audit:
-
the information given in the strategic report and the directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
-
the strategic report and the directors' report have been prepared in accordance with applicable legal requirements.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identified material misstatements in the strategic report or the directors' report. We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion: - adequate accounting records have not been kept, 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 directors' remuneration specified by law are not made; or - we have not received all the information and explanations we require for our audit.
Responsibilities of directors
As explained more fully in the directors' responsibilities statement, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the directors are responsible for assessing the 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. 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: Our approach to identifying and assessing the risks of material misstatement in respect of irregularities, including fraud and non-compliance with laws and regulations, was as follows; - The engagement partner ensured that the engagement team collectively had the appropriate competence, capabilities and skills to identify or recognise non-compliance with applicable laws and regulations. - We focused on specific laws and regulations which we considered may have a direct material effect on the financial statements or the operations for the company, including the Companies Act 2006, tax legislation and data protection, anti-bribery, employment, environmental and health and safety legislation. - We assessed the extent of compliance with the laws and regulations identified above through making enquiries of management. - Identified laws and regulations were communicated with the audit team regularly and the team remained alert of instances of non-compliance throughout the audit. We assessed the susceptibility of the company's financial statements to material misstatement, including obtaining an understanding of how fraud might occur by; - Making enquiries of management as to where they considered there was susceptibility to fraud, their knowledge of actual, suspected and alleged fraud. - Considering the internal controls in place to mitigate the risks of fraud and non-compliance with laws and regulations To address the risk of fraud through management bias and override of controls, we; - Performed analytical procedures to identify any unusual or unexpected relationships - Tested journal entries to identify unusual transactions - Assessed whether judgements and assumptions made in determining the accounting estimates were indicative of potential bias. - Investigated the rationale behind significant or unusual transactions In response to the risk of irregularities and non-compliance with laws and regulations, we designed procedures which included, but were not limited to: - Agreeing financial statement disclosures to underlying supporting documentation - Enquiring of management as to actual and potential litigation and claims 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. This risk increases the more that compliance with a law or regulation is removed from the events and transactions reflected in the financial statements, as we will be less likely to become aware of instances of non-compliance. The risk is also greater regarding irregularities occurring due to fraud rather than error, as fraud involves intentional concealment, forgery, collusion, omission or misrepresentation. As part of an audit in accordance with ISAs (UK), we exercise professional judgment and maintain professional scepticism throughout the audit. We also: - Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. - Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the internal control. - Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors. - Conclude on the appropriateness of the directors' use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the company's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the company to cease to continue as a going concern. - Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation. We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
Use of our report
This report is made solely to the company's members, as a body, in accordance with chapter 3 of part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's members as a body, for our audit work, for this report, or for the opinions we have formed.
Thomas C York FCCA |
(Senior Statutory Auditor) |
|
For and on behalf of |
Edmund Carr LLP |
Chartered accountants & statutory auditor |
146 New London Road |
Chelmsford |
Essex |
CM2 0AW |
|
13 June 2024
Statement of Comprehensive Income |
|
Year ended 31 December 2023
|
2023 |
2022 |
Note |
£ |
£ |
Turnover |
4 |
27,315,452 |
23,288,651 |
|
|
|
|
Cost of sales |
22,546,108 |
18,935,199 |
|
-------------- |
-------------- |
Gross profit |
4,769,344 |
4,353,452 |
|
|
|
Administrative expenses |
3,966,427 |
3,576,988 |
|
|
------------ |
------------ |
Operating profit |
5 |
802,917 |
776,464 |
|
|
|
|
Fair value adjustments of financial assets |
8 |
– |
(
16,910) |
Other interest receivable and similar income |
9 |
16,031 |
2,841 |
Interest payable and similar expenses |
10 |
26 |
31 |
|
------------ |
------------ |
Profit before taxation |
818,922 |
762,364 |
|
|
|
|
Tax on profit |
11 |
67,002 |
(
120,210) |
|
---------- |
---------- |
Profit for the financial year and total comprehensive income |
751,920 |
882,574 |
|
---------- |
---------- |
|
|
|
|
All the activities of the company are from continuing operations.
Statement of Financial Position |
|
31 December 2023
Fixed assets
Property, Plant and Equipment |
12 |
|
9,409 |
9,115 |
|
|
|
|
|
Current assets
Debtors |
13 |
5,214,179 |
|
3,790,591 |
Financial Assets |
14 |
343 |
|
258,701 |
Cash at bank and in hand |
3,676,072 |
|
1,388,711 |
|
------------ |
|
------------ |
|
8,890,594 |
|
5,438,003 |
|
|
|
|
|
Creditors: amounts falling due within one year |
15 |
7,519,929 |
|
4,818,964 |
|
------------ |
|
------------ |
Net current assets |
|
1,370,665 |
619,039 |
|
|
------------ |
---------- |
Total assets less current liabilities |
|
1,380,074 |
628,154 |
|
|
------------ |
---------- |
Net assets |
|
1,380,074 |
628,154 |
|
|
------------ |
---------- |
|
|
|
|
|
Capital and reserves
Called up share capital |
17 |
|
71,288 |
71,288 |
Share premium account |
18 |
|
139,555 |
139,555 |
Capital redemption reserve |
18 |
|
2,000 |
2,000 |
Profit and loss account |
18 |
|
1,167,231 |
415,311 |
|
|
------------ |
---------- |
Shareholders funds |
|
1,380,074 |
628,154 |
|
|
------------ |
---------- |
|
|
|
|
|
These financial statements have been prepared in accordance with the provisions applicable to companies subject to the medium companies regime.
These financial statements were approved by the
board of directors
and authorised for issue on
13 June 2024
, and are signed on behalf of the board by:
Company registration number:
03955554
Statement of Changes in Equity |
|
Year ended 31 December 2023
|
Called up share capital |
Share premium account |
Capital redemption reserve |
Profit and loss account |
Total |
|
£ |
£ |
£ |
£ |
£ |
At 1 January 2022 |
71,288 |
139,555 |
2,000 |
(
203,263) |
9,580 |
|
|
|
|
|
|
Profit for the year |
|
|
|
882,574 |
882,574 |
|
-------- |
---------- |
------- |
---------- |
---------- |
Total comprehensive income for the year |
– |
– |
– |
882,574 |
882,574 |
|
|
|
|
|
|
Contribution to employee ownership trust. |
– |
– |
– |
(
264,000) |
(
264,000)
|
|
-------- |
---------- |
------- |
---------- |
---------- |
Total investments by and distributions to owners |
– |
– |
– |
(
264,000) |
(
264,000) |
|
|
|
|
|
|
At 31 December 2022 |
71,288 |
139,555 |
2,000 |
415,311 |
628,154 |
|
|
|
|
|
|
Profit for the year |
|
|
|
751,920 |
751,920 |
|
-------- |
---------- |
------- |
---------- |
---------- |
Total comprehensive income for the year |
– |
– |
– |
751,920 |
751,920 |
|
|
|
|
|
|
|
-------- |
---------- |
------- |
------------ |
------------ |
At 31 December 2023 |
71,288 |
139,555 |
2,000 |
1,167,231 |
1,380,074 |
|
-------- |
---------- |
------- |
------------ |
------------ |
|
|
|
|
|
|
Year ended 31 December 2023
Cash flows from operating activities
Profit for the financial year |
751,920 |
882,574 |
|
|
|
Adjustments for: |
|
|
Depreciation of property, plant and equipment |
8,855 |
7,249 |
Fair value adjustments of financial assets |
– |
16,910 |
Other interest receivable and similar income |
(
16,031) |
(
2,841) |
Interest payable and similar expenses |
26 |
31 |
Tax on profit |
67,002 |
(
120,210) |
Accrued expenses |
24,325 |
32,392 |
|
|
|
Changes in: |
|
|
Trade and other debtors |
(
1,423,588) |
(
1,715,770) |
Trade and other creditors |
2,608,485 |
643,353 |
|
------------ |
------------ |
Cash generated from operations |
2,020,994 |
(
256,312) |
|
|
|
Interest paid |
(
26) |
(
31) |
Interest received |
16,031 |
2,841 |
Capital Contributions to Employee Ownership Trust |
– |
(
264,000) |
Tax received/(paid) |
1,153 |
(
495) |
|
------------ |
---------- |
Net cash from/(used in) operating activities |
2,038,152 |
(
517,997) |
|
------------ |
---------- |
|
|
|
Cash flows from investing activities
Purchase of tangible assets |
(
9,149) |
(
9,628) |
Purchases of other investments |
– |
(
359,233)
|
Proceeds from sale of other investments |
258,358 |
359,233 |
|
------------ |
---------- |
Net cash from/(used in) investing activities |
249,209 |
(
9,628) |
|
------------ |
---------- |
|
|
|
Net increase/(decrease) in cash and cash equivalents |
2,287,361 |
(
527,625) |
Cash and cash equivalents at beginning of year |
1,388,711 |
1,916,336 |
|
------------ |
------------ |
Cash and cash equivalents at end of year |
3,676,072 |
1,388,711 |
|
------------ |
------------ |
|
|
|
Notes to the Financial Statements |
|
Year ended 31 December 2023
1.
General information
The company is a private company limited by shares, registered in England & Wales. The address of the registered office is 50 Seymour Street, London, W1H 7JG.
2.
Statement of compliance
These financial statements have been prepared in compliance with FRS 102, 'The Financial Reporting Standard applicable in the UK and the Republic of Ireland'.
3.
Accounting policies
Basis of preparation
The financial statements have been prepared under the historical cost convention. The financial statements are prepared in Sterling, which is the functional currency of the entity.
Current asset investment
Current asset investments are recognised initially at fair value which is normally the transaction price (but excludes any transaction costs, where the investment is subsequently measured at fair value through profit and loss). Subsequently, they 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.
If a reliable measure of fair value is no longer available, the equity instrument's fair value on the last date the instrument was reliably measurable is treated as the cost of the instrument.
Going concern
Having considered the projected financial situation of the company for the next twelve months the Directors are confident that there are no material uncertainties that cast any significant doubt on the company's ability to continue as a going concern and accordingly the financial statements have been prepared on the going concern basis.
Trade debtors
Trade debtors are amounts due from customers for services performed in the ordinary course of business. Trade debtors are recognised at the undiscounted amount of cash receivable, which is normally the invoice price, less any allowance for doubtful debts
Trade creditors
Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Trade creditors are recognised at the undiscounted amount owed to the supplier, which is normally the invoice price.
Cash and cash equivalents
Cash and cash equivalents in the balance comprise of cash at bank
Judgements and key sources of estimation uncertainty
In preparing these financial statements, the directors have made the following judgements: - The timing of revenue recognition on long-term contracts depends on the assessed stage of completion of contract activity at the balance sheet date. This assessment requires the expected total contract revenues and costs to be estimated based on the current progress of the contract. The directors recognise revenue in line with accounting policy stated. - Determine whether there are indicators of impairment of the company's tangible assets. Factors taken into consideration in reaching such a decision include the economic viability and expected future financial performance of the asset. - Tangible assets are depreciated over their useful lives taking into account residual values, where appropriate. The actual lives of the assets and residual values are assessed annually and may vary depending on a number of factors.
Research and development
Expenditure on research and activities is recognised in the profit and loss as incurred.
Development expenditure is capitalised only if the the expenditure can be measured reliably, the product or process is technically feasible, future economic are probable and the Company intend to and has sufficient resources to complete development and to use or sell the asset. Otherwise it is recognised in the profit and loss as incurred.
Revenue recognition
The turnover shown in the profit and loss account represents the value of work carried out in the year, exclusive of VAT. Revenue from construction contracts includes amounts initially agreed in contracts plus variations in contract work to the extent that it is probable that the variation will result in revenue that can be reliably measured. The revenue recognised reflects the value of the contract at the reporting date, with reference to a survey of work performed. The value of work carried out during the year includes amounts which have not yet been invoiced.
Income tax
The taxation expense represents the aggregate amount of current and deferred tax recognised in the reporting period. Tax is recognised in profit or loss, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case, tax is recognised in other comprehensive income or directly in equity, respectively. Current tax is recognised on taxable profit for the current and past periods. Current tax is measured at the amounts of tax expected to pay or recover using the tax rates and laws that have been enacted or substantively enacted at the reporting date.
Deferred tax is recognised in respect of all timing differences at the reporting date. Unrelieved tax losses and other deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Deferred tax is measured using the tax rates and laws that have been enacted or substantively enacted by the reporting date that are expected to apply to the reversal of the timing difference.
Operating leases
Rentals payable under operating leases are charged in the income statement on a straight line basis over the lease term. Lease incentives are recognised over the lease term on a straight line basis.
Tangible assets
Tangible assets are initially recorded at cost, and subsequently stated at cost less any accumulated depreciation and impairment losses. Any tangible assets carried at revalued amounts are recorded at the fair value at the date of revaluation less any subsequent accumulated depreciation and subsequent accumulated impairment losses. An increase in the carrying amount of an asset as a result of a revaluation, is recognised in other comprehensive income and accumulated in equity, except to the extent it reverses a revaluation decrease of the same asset previously recognised in profit or loss. A decrease in the carrying amount of an asset as a result of revaluation, is recognised in other comprehensive income to the extent of any previously recognised revaluation increase accumulated in equity in respect of that asset. Where a revaluation decrease exceeds the accumulated revaluation gains accumulated in equity in respect of that asset, the excess shall be recognised in profit or loss.
Depreciation
Depreciation is calculated so as to write off the cost or valuation of an asset, less its residual value, over the useful economic life of that asset as follows:
|
Equipment |
- |
33
% straight line |
|
|
|
|
Impairment of fixed assets
A review for indicators of impairment is carried out at each reporting date, with the recoverable amount being estimated where such indicators exist. Where the carrying value exceeds the recoverable amount, the asset is impaired accordingly. Prior impairments are also reviewed for possible reversal at each reporting date. For the purposes of impairment testing, when it is not possible to estimate the recoverable amount of an individual asset, an estimate is made of the recoverable amount of the cash-generating unit to which the asset belongs. The cash-generating unit is the smallest identifiable group of assets that includes the asset and generates cash inflows that largely independent of the cash inflows from other assets or groups of assets.
Construction contracts
Where the outcome of construction contracts can be reliably estimated, contract revenue and contract costs are recognised by reference to the stage of completion of the contract activity as at the period end. Where the outcome of construction contracts cannot be estimated reliably, revenue is recognised to the extent of contract costs incurred that it is probable will be recoverable, and contract costs are recognised as an expense in the period in which they are incurred. The entity uses the percentage of completion method to determine the amounts to be recognised in the period. The stage of completion is measured by reference to the contract costs incurred up to the end of the reporting period as a percentage of total estimated costs for each contract. Costs incurred for work performed to date do not include costs relating to future activity, such as for materials or prepayments.
Financial instruments
The company only enters into basic financial instruments transactions that result in the recognition of financial assets and liabilities like trade and other accounts receivable and payable. Debt instruments that are payable or receivable within one year, typically trade payables or receivables, are measured, initially and subsequently, at the undiscounted amount of the cash and other consideration, expected to be paid or received. However if the arrangements of a short-term instrument constitute a financing transaction, like the payment of a trade debt deferred beyond normal business terms of financed at a rate of interest that is not a market rate or in case of an out-right short-term loan not at market rate, the financial asset or liability is measured, initially, at the present value of the future cash flow discounted at a market rate of interest for a similar debt instrument and subsequently at amortised cost.
Defined contribution plans
The company operates a defined contribution pension plan for its employees. A defined contribution plan is a pension plan under which the company pays fixed contributions into a separate entity. Contributions to the company's pension scheme are charged to the profit or loss in the period to which they relate.
4.
Turnover
Turnover arises from:
|
2023 |
2022 |
|
£ |
£ |
Construction contracts |
27,315,452 |
23,288,651 |
|
-------------- |
-------------- |
|
|
|
The whole of the turnover is attributable to the principal activity of the company wholly undertaken in the United Kingdom.
5.
Operating profit
Operating profit or loss is stated after charging:
|
2023 |
2022 |
|
£ |
£ |
Depreciation of property, plant and equipment |
8,855 |
7,249 |
Impairment of trade debtors |
308,631 |
23,804 |
Fees payable for the audit of the financial statements |
9,000 |
8,750 |
|
---------- |
-------- |
|
|
|
6.
Staff costs
The average number of persons employed by the company during the year, including the directors, amounted to:
|
2023 |
2022 |
|
No. |
No. |
Production staff |
41 |
39 |
Administrative staff |
1 |
1 |
Management staff |
4 |
5 |
|
---- |
---- |
|
46 |
45 |
|
---- |
---- |
|
|
|
The aggregate payroll costs incurred during the year, relating to the above, were:
|
2023 |
2022 |
|
£ |
£ |
Wages and salaries |
3,159,235 |
3,061,547 |
Social security costs |
369,105 |
370,658 |
Other pension costs |
125,440 |
87,742 |
|
------------ |
------------ |
|
3,653,780 |
3,519,947 |
|
------------ |
------------ |
|
|
|
7.
Directors' remuneration
The directors' aggregate remuneration in respect of qualifying services was:
|
2023 |
2022 |
|
£ |
£ |
Remuneration |
577,814 |
643,647 |
Company contributions to defined contribution pension plans |
52,652 |
20,628 |
|
---------- |
---------- |
|
630,466 |
664,275 |
|
---------- |
---------- |
|
|
|
The number of directors who accrued benefits under company pension plans was as follows:
|
2023 |
2022 |
|
No. |
No. |
Defined contribution plans |
3 |
4 |
|
---- |
---- |
|
|
|
Remuneration of the highest paid director in respect of qualifying services:
|
2023 |
2022 |
|
£ |
£ |
Aggregate remuneration |
134,833 |
159,500 |
|
---------- |
---------- |
|
|
|
8.
Fair value adjustments of financial assets
|
2023 |
2022 |
|
£ |
£ |
(Loss)/Gain on fair value adjustment of financial assets at fair value through profit or loss |
– |
(16,910) |
|
---- |
-------- |
|
|
|
9.
Other interest receivable and similar income
|
2023 |
2022 |
|
£ |
£ |
Interest on cash and cash equivalents |
15,871 |
889 |
Dividends received |
160 |
1,952 |
|
-------- |
------- |
|
16,031 |
2,841 |
|
-------- |
------- |
|
|
|
10.
Interest payable and similar expenses
|
2023 |
2022 |
|
£ |
£ |
Other interest payable and similar charges |
26 |
31 |
|
---- |
---- |
|
|
|
11.
Tax on profit
Major components of tax expense/(income)
Current tax:
UK current tax expense |
67,002 |
540 |
Adjustments in respect of prior periods |
– |
(
120,750) |
|
-------- |
---------- |
Total current tax |
67,002 |
(
120,210) |
|
-------- |
---------- |
|
-------- |
---------- |
Tax on profit |
67,002 |
(
120,210) |
|
-------- |
---------- |
|
|
|
Reconciliation of tax expense/(income)
The tax assessed on the profit on ordinary activities for the year is lower than (2022: lower than) the
standard rate of corporation tax in the UK
of
23.52
% (2022:
19
%).
|
2023 |
2022 |
|
£ |
£ |
Profit on ordinary activities before taxation |
818,922 |
762,364 |
|
---------- |
---------- |
Profit on ordinary activities by rate of tax |
192,611 |
144,849 |
Adjustment to tax charge in respect of prior periods |
75 |
(
120,750) |
Effect of expenses not deductible for tax purposes |
6,427 |
4,530 |
Effect of capital allowances and depreciation |
(
69) |
(
151,681) |
Utilisation of tax losses |
(
132,042) |
– |
Non taxable income |
– |
2,842 |
|
---------- |
---------- |
Tax on profit |
67,002 |
(
120,210) |
|
---------- |
---------- |
|
|
|
12.
Property, plant and equipment
|
Equipment |
Total |
|
£ |
£ |
Cost |
|
|
At 1 January 2023 |
135,863 |
135,863 |
Additions |
9,149 |
9,149 |
|
---------- |
---------- |
At 31 December 2023 |
145,012 |
145,012 |
|
---------- |
---------- |
Depreciation |
|
|
At 1 January 2023 |
126,748 |
126,748 |
Charge for the year |
8,855 |
8,855 |
|
---------- |
---------- |
At 31 December 2023 |
135,603 |
135,603 |
|
---------- |
---------- |
Carrying amount |
|
|
At 31 December 2023 |
9,409 |
9,409 |
|
---------- |
---------- |
At 31 December 2022 |
9,115 |
9,115 |
|
---------- |
---------- |
|
|
|
13.
Debtors
|
2023 |
2022 |
|
£ |
£ |
Trade debtors |
2,804,163 |
2,565,634 |
Amounts owed by customers on construction contracts |
2,371,995 |
1,134,544 |
Prepayments and accrued income |
33,328 |
31,244 |
Corporation tax repayable |
– |
50,434 |
Other debtors |
4,693 |
8,735 |
|
------------ |
------------ |
|
5,214,179 |
3,790,591 |
|
------------ |
------------ |
|
|
|
14.
Financial assets
|
2023 |
2022 |
|
£ |
£ |
Other investments |
343 |
258,701 |
|
---- |
---------- |
|
|
|
To maximise the returns available to the company from surplus funds the Board approved an investment in a discretionary fund managed by a reputable investment house. This gives some exposure to the financial markets whilst minimising overall risk to the business without undue distraction for the Directors and providing excess returns on cash deposits.
15.
Creditors:
amounts falling due within one year
|
2023 |
2022 |
|
£ |
£ |
Trade creditors |
1,989,386 |
1,297,329 |
Accruals and deferred income |
105,913 |
81,588 |
Corporation tax |
68,155 |
– |
Social security and other taxes |
1,543,924 |
1,186,117 |
Amounts due to suppliers on construction contracts |
3,769,628 |
2,234,187 |
Other creditors |
42,923 |
19,743 |
|
------------ |
------------ |
|
7,519,929 |
4,818,964 |
|
------------ |
------------ |
|
|
|
16.
Employee benefits
Defined contribution plans
The amount recognised in profit or loss as an expense in relation to defined contribution plans was £
125,440
(2022: £
87,742
).
17.
Called up share capital
Issued, called up and fully paid
|
2023 |
2022 |
|
No. |
£ |
No. |
£ |
Ordinary shares of £ 1 each |
71,286 |
71,286 |
71,286 |
71,286 |
Preference shares of £ 1 each |
2 |
2 |
2 |
2 |
|
-------- |
-------- |
-------- |
-------- |
|
71,288 |
71,288 |
71,288 |
71,288 |
|
-------- |
-------- |
-------- |
-------- |
|
|
|
|
|
18.
Reserves
Profit and loss account - This reserve records retained earnings and accumulated losses.
19.
Analysis of changes in net debt
|
At 1 Jan 2023 |
Cash flows |
At 31 Dec 2023 |
|
£ |
£ |
£ |
Cash at bank and in hand |
1,388,711 |
2,287,361 |
3,676,072 |
Current asset investments |
258,701 |
(258,358) |
343 |
|
------------ |
------------ |
------------ |
|
1,647,412 |
2,029,003 |
3,676,415 |
|
------------ |
------------ |
------------ |
|
|
|
|
20.
Operating leases
The total future minimum lease payments under non-cancellable operating leases are as follows:
|
2023 |
2022 |
|
£ |
£ |
Not later than 1 year |
70,141 |
38,324 |
Later than 1 year and not later than 5 years |
163,825 |
191,620 |
|
---------- |
---------- |
|
233,966 |
229,944 |
|
---------- |
---------- |
|
|
|
21.
Charges on assets
M A Cooper
and P Green hold a fixed and a floating charge over the assets of the company.
22.
Events after the end of the reporting period
In March 2024 the company made a capital contribution of £492,114 to Virtus Contracts Trustees Limited.
Notes to the Financial Statements (continued) |
|
Year ended 31 December 2023
23.
Related party transactions
As directors of
Virtus Contracts Limited
and Virtus Contracts Trustees Limited, M A Cooper
and A O Smith
are considered related parties. The Ordinary shares of Virtus Contracts Limited
are registered in the name of Virtus Contracts Trustees Ltd on behalf of the Virtus Contracts Employee Ownership Trust.