The directors present the strategic report for the year ended 31 May 2024.
The performance for the year was ahead of expectations. Despite a small decrease in turnover the Profit before tax increased by 58% when compared to the previous financial year.
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| 2024 |
|
| 2023 | 2022 |
|
|
|
|
|
|
|
Turnover (£m) |
| 37.45 |
|
| 38.65 | 18.09 |
Profit before taxation (£m) |
| 4.04 |
|
| 2.55 | 0.18 |
Profit before tax margin (%) |
| 10.80% |
|
| 6.59% | 0.97% |
Cash management remained a key focus with all key KPIs improving on last year stats.
|
| 2024 |
|
| 2023 | 2022 |
|
|
|
|
|
|
|
Quick ratio |
| 1.42 |
|
| 1.28 | 1.16 |
Current ratio |
| 1.45 |
|
| 1.31 | 1.21 |
Debtor days |
| 31 |
|
| 46 | 38 |
Creditors days |
| 37
|
|
| 52 | 57 |
The company generated cash of £2.7m (2023: £4.3m) from operating activities during the year. The company has paid dividends of £2.0m (2023: £1.7m) during the year and had cash at bank at the reporting date of £5.9m (2023: £5.4m).
The directors are satisfied with these results.
RIDDOR Reportable incidents |
| 2024 |
|
| 2023 | 2022 |
|
|
|
|
|
|
|
Employees |
| 0 |
|
| 0 | 0 |
Subcontractors |
| 0 |
|
| 0 | 0 |
Third party |
| 0 |
|
| 1 | 0 |
Our success and positive market reputation is built on our core business values of delighting clients, having a happy team and reaching our financial objectives. This has allowed us to further invest in the business during the year by attracting and retaining ‘best in class’ talent, and development of our business systems.
Operating and Market risk
The company operates in a sector that is linked to the health of the wider economy. In particular, its performance depends predominantly on commercial property development throughout the country. A slowdown in this activity would have an impact on the company. However, even in a suppressed property market, the expansion and contraction of individual UK businesses creates potential opportunities for the company. The company's historic and future success has and will come from working to meet the goals and objectives of our clients. The company is constantly seeking to widen the number and range of new clients it works for to reduce its exposure to any one individual client or sector in the future.
Personnel risk
The company's continued success is dependent upon the skill and experience of its employees in maintaining existing clients, and winning and delivering key contracts. The company places great emphasis on the provision of support, training and welfare to its staff in order to maintain motivation, career satisfaction and loyalty.
Liquidity risk
The objective of the company in managing liquidity risk is to ensure that it can meet its financial obligations as and when they fall due. The company expects to meet its financial obligations through operating cash flows. Cash flow is monitored at an individual project level. In the event that the operating cash flows would not cover all the financial obligations, this would be forecasted, and the company would arrange credit facilities.
Customer credit exposure
The company is at risk to the extent that a customer may be unable to pay amounts owed to the Company. This risk is managed by the policies and procedures in place both pre and post contract as well as the strong on-going customer relationships.
Section 172(1) statement
This statement sets out how the Company complies with the requirements of Section 172 Companies Act 2006, by considering the Company’s purpose and values together with its strategic priorities. The Company has a detailed process in place for decision making by the Board.
The Directors delegate authority for all day-to-day management of the Company's affairs to the Management Team, they are committed to maintaining constructive dialogue with the directors and shareholders, engaging regularly to understand their perspectives and ensure these are considered during decision making.
The Directors' primary responsibility is to promote the long-term success of the Company by creating and delivering sustainable shareholder value as well as contributing to wider society. The directors, along with key personnel, annually review the budget and monitor the implementation throughout the year using detailed reports on operating and financial performance. There are considerations to external factors such as the economic, political and market conditions. They take the reputation of the Company seriously which is not limited to operating and financial performance and has committed to diversity and inclusivity across its workforce.
Impact Report
The company's parent has prepared an Impact Report that covers various aspects of the group's business including key figures in the group's people and main initiatives, its impact on the planet and steps to minimise that impact, corporate governance and how the group support and work with communities and charitable organisations. The complete Impact Report will be made available on the group’s website in due course.
The company reviews a range of financial and non-financial KPI on a regular basis covering the whole customer lifecycle: from activity based around business development, sales, design, programme management, through to client feedback gained through both delivery stage and post occupancy surveys. Real time information on project level cash flow and profitability is monitored constantly against pre-determined benchmarks to allow management the tools required to manage the business effectively and deliver substantial shareholder value.
Team members are reviewed regularly against measures for aptitude as well as attitude, as determined by line managers. These measures have been designed to support the core values of the company.
Oktra South has successfully been recertified to ISO 14001: 2015, ISO 9001: 2015 and ISO 45001: 2018 standards. The ISO 14001 is a standard to support organisations create an effective Environmental Management System, allowing Oktra South to benchmark its current environmental performance and set out ways to improve it. ISO 9001 is a globally recognised Quality Management System, which is integral to our continued focus on improving the quality and consistency of service we offer to our clients. ISO 45001 is an international standard which specifies requirements for an occupational health and safety management system and guidance for its use, enabling Oktra South to proactively improve its operational health and safety performance.
In addition, we have introduced an energy management system. This system, successfully accredited to ISO 50001 stages 1 and 2, monitors and reduces our energy emissions.
Oktra South recognises its duties under the Health and Safety at Work Act 1974 and its stated policy of providing safe conditions of work for all employees, self-employed individuals and subcontractors.
The directors would like to thank all members of the Oktra South team for their hard work, loyalty, dedication and energy during 2023-24.
On behalf of the board
The directors present their annual report and financial statements for the year ended 31 May 2024.
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
The total dividends paid for the year ended 31 May 2024 were £1,953,136 (2023: £1,709,621). Further interim dividends of £Nil (2023 - £842,744) have been paid after the year end.
Our investment in our bespoke business software allows the management team to constantly monitor the debtors and creditors to ensure that payment terms are adhered to. Dun and Bradstreet Credit reports are carried out on all potential clients to reduce the risk of bad debts. Major projects are undertaken through JCT (industry standard) contracts with fixed payment terms or regular valuations. Accrued and deferred income within the final accounts will be related to these signed contract terms and conditions. Creditors provisions in the year end accounts also reflect the cost of sales against the accrued income from JCT contracts.
Engagement with suppliers and customers
We pride ourselves with having strong supplier relationships which allows us to price competitively and also enables the company to agree supplier payment terms in line with client payment terms, so cashflow risk is mitigated. Our Supplier Code of Conduct reflects the company's ongoing focus on delivering operational resilience and meeting our Environmental, Social and Governance objectives, as well as improving performance throughout the supply chain
Delighting customers is one of our main business values. Client satisfaction and retention are key factors of our success and positive market reputation. This is achieved through building close relationship with clients from the very beginning of the project, where client needs and requirements are put at the very centre of our solution.
Increased levels of inflation
The company's projects typically run for 3 to 4 months which significantly reduces the entity's exposure to the risks associated with inflation. Normally on projects procurement is done at the beginning of the work, which mitigates the inflation risk.
Future developments
Although we still expect healthy competition in 2024-25 we are optimistic about the sector and our opportunities. As a result of the continued inward investment, focus on our clients’ business outcomes, staff retention and attraction of best talent we believe the business is well placed for another successful trading year.
We have a very clear, 5 year strategic plan for the group, which will guide and drive the business growth. This will be achieved through expansion of our ever growing, loyal client base as well as other innovative business activities.
The company's forecasts show that it will be profitable over the next 12 months, the company has no external debt. The directors are confident, following a review of the company's cash flow projections over the next twelve months that the company has sufficient resources to continue in operational existence for the foreseeable future. For this reason they continue to adopt the going concern basis in preparing the company's financial statements.
Basis for 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
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.
As explained more fully in the directors' responsibilities statement set out on page 5, 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.
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 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.
The objectives of our audit in respect of fraud, are; to identify and assess the risks of material misstatement of the financial statements due to fraud; to obtain sufficient appropriate audit evidence regarding the assessed risks of material misstatement due to fraud, through designing and implementing appropriate responses to those assessed risks; and to respond appropriately to instances of fraud or suspected fraud identified during the audit. However, the primary responsibility for the prevention and detection of fraud rests with both management and those charged with governance of the company.
Our approach was as follows:
We obtained an understanding of the legal and regulatory requirements applicable to the company and considered that the most significant are the Companies Act 2006, UK financial reporting standards as issued by the Financial Reporting Council, and UK taxation legislation.
We obtained an understanding of how the company complies with these requirements by discussions with management and those charged with governance.
We assessed the risk of material misstatement of the financial statements, including the risk of material misstatement due to fraud and how it might occur, by holding discussions with management and those charged with governance.
We inquired of management and those charged with governance as to any known instances of non-compliance or suspected non-compliance with laws and regulations.
Based on this understanding, we designed specific appropriate audit procedures to identify instances of non-compliance with laws and regulations. This included making enquiries of management and those charged with governance and obtaining additional corroborative evidence as required.
There are inherent limitations in the audit procedures described above. We are less likely to become aware of instances of non-compliance with laws and regulations that are not closely related to events and transactions reflected in the financial statements. Also, 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.
As part of an audit in accordance with ISAs (UK) we exercise professional judgement 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 purposes of expressing an opinion on the effectiveness of the company’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors.
Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the 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 for no purpose other than to draw to the attention of the company's members those matters which we are required to include in an auditor's report addressed to them. To the fullest extent permitted by law, we do not accept or assume responsibility to any party other than the company and the company's members as a body, for our work, for this report, or for the opinions we have formed.
The income statement has been prepared on the basis that all operations are continuing operations.
Oktra South Limited (Formerly Oktra Regions Limited) is a private company limited by shares incorporated in England and Wales. The registered office is 1 Bickenhall Mansions, Bickenhall Street, London, W1U 6BP.
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 company has taken advantage of exemptions available to subsidiaries whose results are consolidated into publicly available financial statements. As such, the company will not produce a cash flow statement.
The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is credited or charged to profit or loss.
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 are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the company transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.
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 company 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.
Derivatives, including interest rate swaps and forward foreign exchange contracts, are not basic financial instruments. Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured at their fair value. Changes in the fair value of derivatives are recognised in profit or loss in finance costs or finance income as appropriate, unless hedge accounting is applied and the hedge is a cash flow hedge.
Debt instruments that do not meet the conditions in FRS 102 paragraph 11.9 are subsequently measured at fair value through profit or loss. Debt instruments may be designated as being measured at fair value through profit or loss to eliminate or reduce an accounting mismatch or if the instruments are measured and their performance evaluated on a fair value basis in accordance with a documented risk management or investment strategy.
Financial liabilities are derecognised when the company’s contractual obligations expire or are discharged or cancelled.
Equity instruments issued by the company 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 company.
Research and development tax credits
The company has made claims for tax credits for Research and Development work undertaken. These claims may be subject to HM Revenue and Customs review. The company does not recognise the tax credits as income until they are received.
The company operated an unapproved option scheme which allowed employees to acquire shares in the company. The grant date fair value of share-based payment awards granted was recognised as an employee expense with a corresponding increase in equity, over the period that the employees become unconditionally entitled to the awards. The fair value of the options granted was measured using an option pricing model, taking into account the terms and conditions upon which the options were granted. The fair value was charged as an expense in the profit and loss account over the vesting period and the charge was adjusted each year to reflect the expected and actual level of vesting. The options of the last employee in the scheme lapsed during the year and the scheme was closed.
In the application of the company’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.
The following judgements (apart from those involving estimates) have had the most significant effect on amounts recognised in the financial statements.
The estimation techniques used for revenue and profit recognition in respect of construction contracts require forecasts to be made of the outcome of long-term contracts which require assessments and judgements to be made on the recovery of pre-contract costs, changes in the scope of work, contract programmes, maintenance and defects liabilities, changes in costs and stages of completion.
The recoverability of trade and other receivables is regularly reviewed in the light of available economic information specific to each receivable and provisions are recognised for balances considered to be irrecoverable.
Provisions are liabilities of uncertain timing or amount and therefore in making a reliable estimate of the amount and timing of liabilities judgement is applied and re-evaluated at each reporting date.
The total turnover of the company for the year has been derived from its principal activity, wholly undertaken in the UK.
The number of directors for whom retirement benefits are accruing under defined contribution schemes amounted to 4 (2023 - 3).
The average monthly number of persons (including directors) employed by the company during the year was:
Their aggregate remuneration comprised:
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:
Further interim dividends of £Nil (2023 - £842,744) have been paid after the year end.
The following are the major deferred tax liabilities and assets recognised by the company and movements thereon:
The deferred tax liability set out above is expected to reverse and relates to accelerated capital allowances.
The company operates a defined contribution pension scheme for all qualifying employees. The assets of the scheme are held separately from those of the company in an independently administered fund.
Certain employees of the company have been granted unapproved options over the company's ordinary shares as follows:
At the reporting end date the company had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:
After the year end the company has signed a lease for new premises.
Dividends
80% of the shares in the company are owned by Vensyn Group Limited.
During the year, dividends of £1,562,509 (2023: £1,367,697) and £390,627 (2023: £341,924) were paid to Vensyn Group Limited and to directors of the company, respectively.
Vensyn Group Limited
During the year, the company was charged management expenses by Vensyn Group Limited of £225,000 (2023: £323,000). During the year the company was charged £Nil (2023: £9,643) for Corporation Tax group relief by Vensyn Group Limited. At the reporting date £9,643 (2023: £9,643) was owed by the company.
Oktra Limited
100% of the shares of Oktra Limited are owned by Vensyn Group Limited.
During the year, the company made sales to Oktra Limited of £Nil (2023: £2,521). In addition, administrative expenses were recharged to the company of £1,838,041 (2023: £1,388,472) and the company charged £Nil (2023: £33,663) for Corporation Tax group relief to Oktra Limited. At the reporting date £190,815 (2023: 76,032) was owed by the company. A bad debt provision of £Nil (2023: £6,010) has been made against the trade debtor element of the intercompany balance.
Affinity Flooring Limited
The company and Affinity Flooring Limited are under common control.
During the year, the company bought services of £Nil (2023: £3,478) from Affinity Flooring Limited.
Affinity Reach Limited
The company and Affinity Reach Limited are under common control.
During the previous year, in respect of earlier years, the company charged £56,358 for Corporation Tax group relief to Affinity Reach Limited. During the year the company was charged £Nil (2023: £3,229) for Corporation Tax group relief by Affinity Reach Limited. At the reporting date £3,229 (2023: £53,129 was owed to the company) was owed by the company.