The directors present the strategic report for the year ended 31 December 2023.
Masterfix GB Limited (the company), trading since 2009, specialises in delivering exceptional property care to owners, occupiers and managers of a diverse range of residential and commercial properties.
Driven to provide the highest service quality, the company delivers property maintenance and allied services to three key market sectors, retail & hospitality, residential & commercial and insurance reinstatement works specifically to the insurance market. All three have long term growth potential with a high incidence of repeat revenues.
The last financial year saw overall revenues fall slightly to £15,890,421 with Insurance Services accounting for 46% of revenue, Building Services 28% and Technical Services 26%.
Cost pressure from clients that became prevalent in the latter part of 2022 continued throughout 2023 and to present time.
Despite the changes in market conditions, we continued with our investment in underpinning the structure within the business and expanding the range of services that we offer :-
Notable developments :-
The extension in the range of services that we provide to the insurance market, to now include drying and mould remediation and leak detection. We believe that this single source solution will accelerate our growth and financial performance in that sector.
The search for new office premises to find one larger London office that facilitates the entire team being in one location. Cost savings are also expected to be achieved as a result of this.
The expansion of our service offering to include Fire & Security. This will be achieved via a combination of organic growth and an acquisition (expected Q4 2024).
The ongoing expansion of our primary Mechanical & Electrical Services to the London residential market, with this supported by the intended appointment of a Technical Head of Operations.
Overall and despite the hardening market conditions, the directors remain satisfied with the performance of the company for the year ended 31 December 2023 and optimistic for growth during 2024.
Principal risks and uncertainties
Strengths
Long standing customer relationships offering high levels of repeat and recurring revenues.
Unique platform of scale in the attractive London market.
Genuine one stop shop solutions for professional property owners and managers.
High quality employees.
Acquisition strategy and appropriate levels of funding to support this.
A wide range of services that provide us with resilience to market changes.
Weaknesses
General economic uncertainty
An increase in debtor days
On-going pressure and rates and charges arising from market conditions
A lack of progress in entering the Build to Rent and Student accommodation markets
Opportunities
Growth in the London Residential Market, particularly across Multi Dwelling Units in the high-net-worth sector/ demographic.
The ongoing expansion of the company's insurance reinstatement department in both London and Scotland, including direct supply arrangements with insurance companies.
A growth in the range of our services supported by our Acquisition Strategy, resulting in an increase in the “wallet share” of sales from existing clients.
Further expansion of our fire safety offering, extending our passive fire offering to include active fire services. The opportunities in this sector remain strong driven by changes in legislation (Fire Safety Act).
Threats
High interest rates.
Rising material costs.
A slowdown in consumer spending is particularly affecting our activity in the Retail & Hospitality sectors.
Rising interest rates, particularly affecting the Residential, private landlord sector.
Future Developments
Business Performance- 2024 Objectives
The company’s financial plan for the forthcoming year predicts a sales increase of around 10%. The company’s strategy for business growth is set out below.
Insurance Reinstatement works - Insurance will be a key growth area for the company and further enhanced by extending our offering to include drying and remediation alongside leak detection services.
Residential Sector - An on-going focus on Technical Services with a specific focus on the company's Mechanical & Electrical Services.
The Growth of Intelligent Homes offering following the successful acquisition of MDFX Limited.
Strategic appointments - The directors have identified that a number of key appointments are critical to the continued success and growth of the company.
Head of Operations for Technical Services.
General Manager for Fire & Security & Passive Fire.
Sustainability -
We recognize the need to change by making sustainability an integral part of our behavior, our service delivery and the advice we give.
In 2023, we engaged with Grain Sustainability Consultancy who, having completed our materiality assessment and benchmarking, will continue to support us in developing our sustainability strategy with associated goals, targets, and KPIs.
Acquisition Strategy update - With the full support of our investor we will continue to identify and secure acquisition targets that will complement our organic growth. As stated, it is our intention to acquire a company that offers Fire & Security Services, as well as companies who are involved in Building Efficiency.
Growth Strategy
Broadly this is consistent with our Growth strategy formulated in 2021 but with the very specific objective to increase our activity in the Insurance & Residential Sectors, dilute activity in the retail and hospitality sectors and extend our Fire & Security Offering.
Financial instruments
The company considers the company has a normal level of exposure to liquidity and interest rate risk arising from its trading activities.
Credit risk
At 31 December 2023 the company had a bank loan of £777,778 repayable over a six year term at 5.75% over base rate. The above loan was advanced in September 2022. It is due for repayment in August 2028 by way of equal monthly instalments.
Liquidity
The company has credit facilities with its bankers that enables it to draw funds against unpaid sales invoices, this facility is available should the company require short term liquidity.
Cash flow
The company generated in the year to 31 December 2023 £635,237 from its operations, after deducting additions to tangible fixed assets of £75,443. Cash balances increased by £90,957 from £107,782 to £198,739.
Group
At 31 December 2023 included in debtors is £1,871,472 due from Carlo Bidco Limited. This balance arise from Carlo Bidco Limited's purchase of shares in Masterfix GB Limited and the payment of interest on redeemable loan notes used by Carlo Bidco Limited to purchase the shares. The company is responsible for the continued financial support of Carlo Bidco Limited.
The company's vision is to become a household name in the residential and commercial property management sectors, delivering exceptional building maintenance services all in support of long-term client relationships built on trust and reliability.
We aim to deliver on our promise of exceptional property care to residential and commercial clients who choose best value over lowest cost. The company does this through carefully selected engineers and service partners whose communication skills and service principles match their technical excellence.
The company will continue to reinforce its key values, considered critical in promoting its ethos of “Exceptional Property Care”.
• Safety – the safety of clients, the public and employees will not be compromised.
• Quality – all work will be delivered to the highest possible appropriate standards.
• Reliability & Punctuality – the company's entire team will strive to deliver, on time every time.
• Communication – the company will actively promote timely and effective service led information.
• Honesty & Fairness – maintaining trust through total service cost transparency.
• Value for Money – the company will establish a demonstrable link between service and cost.
• Courtesy – the company will at all times be respectful and thoughtful in all of our dealings.
• The Environment – the company will comply fully with all regulations and codes of practice.
• Professional Advice – the company will offer professional advice, not personal opinion.
On behalf of the board
The directors present their annual report and financial statements for the year ended 31 December 2023.
The results for the year are set out on page 10.
No ordinary dividends were paid. The directors do not recommend payment of any dividend.
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
FMCB were appointed as auditor to the group and in accordance with section 485 of the Companies Act 2006, a resolution proposing that they be re-appointed will be put at a General Meeting.
We have audited the financial statements of Carlo Topco Limited (the 'parent company') and its subsidiaries (the 'group') for the year ended 31 December 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 directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the group's 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 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 contained within the annual report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of our audit:
the information given in the strategic report and the directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
the strategic report and the directors' report have been prepared in accordance with applicable legal requirements.
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 directors' report.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:
adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received from branches not visited by us; or
the parent company financial statements are not in agreement with the accounting records and returns; or
certain disclosures of directors' remuneration specified by law are not made; or
we have not received all the information and explanations we require for our audit.
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 parent company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the parent 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 the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below.
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.
In identifying and assessing risks of material misstatement in respect of irregularities, including fraud and non-compliance with laws and regulations, we considered information including the following:
the nature of the industry and sector, control environment and business performance;
results of our enquiries of management regarding identification and assessment of the risks of irregularities;
the internal controls and company procedures established to detect and mitigate risks of fraud or non-compliance with laws and regulations;
the legal and regulatory framework that the company operates in which includes in this context the Companies Act and tax legislation;
consideration of factors that do not have a direct effect on the financial statements but compliance with which may be fundamental to the company’s ability to operate.
As a result of considering the above we use audit procedures to respond to any potential risks. Procedures used include the following:
reviewing the financial statement disclosures and testing supporting documentation to assess compliance with provisions of relevant laws and regulations described as having a direct effect on the financial statements;
performing analytical procedures to identify any unusual or unexpected relationships that may indicate risks of material misstatement due to fraud;
reading minutes of meetings of those charged with governance;
enquiring of management to obtain an understanding of any provisions and testing the appropriateness of journal entries and other adjustments;
evaluating the business rationale of any significant transactions that are unusual or outside the normal course of business.
In addition to the above procedures the engagement team remained alert to any indications of fraud or non-compliance with laws and regulations throughout the audit.
There are inherent limitations in the audit procedures described above and, the further removed non-compliance with laws and regulations is from the events and transactions reflected in the financial statements, the less likely we would become aware of it.
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.
As permitted by s408 Companies Act 2006, the company has not presented its own profit and loss account and related notes. The company’s loss for the year was £9,595 (2022 - £7,000 loss).
These financial statements have been prepared in accordance with the provisions relating to medium-sized companies.
Carlo Topco Limited (“the company”) is a private limited company domiciled and incorporated in England and Wales. The registered office is Five Kings House, Queens Street Place, London, EC4A 1QS.
The group consists of Carlo Topco 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. The principal accounting policies adopted are set out below.
The consolidated group financial statements consist of the financial statements of the parent company Carlo Topco 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 December 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.
Subsidiaries are consolidated in the group’s financial statements from the date that control commences until the date that control ceases.
At the time of approving the financial statements, the directors have a reasonable expectation that the group has adequate resources to continue in operational existence for the foreseeable future. Thus the directors continue to adopt the going concern basis of accounting in preparing the financial statements.
Turnover is measured at the fair value of the consideration received or receivable and represents amounts for services provided in the normal course of business, net of discounts, VAT and other sales related taxes. Revenue from the provision of services is recognised when those services have been performed.
In the parent company financial statements, investments in subsidiaries 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.
At each reporting period end date, the group reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If a material impairment loss arises then it is recognised in the profit and loss account or against the revaluation reserve if the asset has been revalued.
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.
Financial assets include debtors, cash and bank balances. Debtors, cash and bank balances which are basic financial assets are measured at transaction price less any impairment. Financial assets are assessed for indicators of impairment at each reporting end date. Any changes in value are recognised in the profit or loss. account.
Financial liabilities includes creditors, bank loans and borrowings. creditors, bank loans and borrowings which are basic financial liabilities are measured at transaction price. Any changes in value are recognised in the profit or loss account.
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. The company’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 recognised in respect of all timing differences that have originated but not reversed at the balance sheet date.
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.
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.
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.
In the application of the group’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 estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are as follows.
The charge for depreciation is derived after determining an estimate of an asset’s expected useful life and the expected residual value at the end of its life. Increasing an asset’s expected life or its residual value would result in a reduced depreciation charge in the profit and loss account. The useful lives and residual values of the assets are determined by management at the time the asset is acquired and reviewed annually for appropriateness. The lives are based on historical experience with similar assets as well as anticipation of future events which may impact their life. Depreciation charged in the year was £88,885 (2022: £114,676).
Cost of sales includes accruals for unrecorded costs. These are determined by management who review each project. Accruals are based upon contract income, value of work done and expected gross profit margins. Accruals includes £375,167 (2022: £321,710) for unrecorded costs.
The average monthly number of persons (including directors) employed by the group and company during the year was:
Their aggregate remuneration comprised:
The actual (credit)/charge for the year can be reconciled to the expected credit for the year based on the profit or loss and the standard rate of tax as follows:
Details of the company's subsidiaries at 31 December 2023 are as follows:
Master Facilities Management Limited was dissolved on 16 August 2022.
Amounts falling due within one year include £1,781,577 (2022:£1,501,343) secured over the assets of the company.
Loans of £1,922,800 are owed to Coniston I LP and are secured by a fixed and floating charges over the assets of the company.
The bank loan was advanced in September 2022. It is due for repayment in August 2028 by way of equal monthly instalments. Interest is charged at 5.75% over base rate.
Loans from related parties include the following:
Secured 10% loan notes of £2,081,928 redeemable in 2026.
Unsecured 8% loan notes of £2,279,925 redeemable in 2026.
The loan note holders are shareholders in the company's parent undertaking, Carlo Topco Limited.
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.
The A Shares, B Shares and C Shares have the rights and restrictions set out below.
A and B Shares shall receive equal distributions of profits but the C Shares shall not receive any dividends.
A, B and C Shares shall receive an equal distribution where there is a return of capital.
A and B Shares shall have equal voting rights when there is a Default Notice in force in which case the A Shares shall have 75% of the voting rights. The conditions for the issue of a Default Notice are set out in the company's Memorandum of Association.
Holders of C Shares shall not have the right to receive notice of and attend and speak at any general meeting and shall not have any right to vote on any written resolution.
The A and C Shares were issued for cash. The B Shares were issued in exchange for redeemable loan notes in Carlo Bidco Limited.
Coniston I LP is a shareholder in Carlo Topco Limited, the company's parent undertaking. There are debentures and guarantees registered at Companies House in favour of Coniston I LP for the company and its subsidiaries. Coniston I LP has a fixed and floating charge over the assets of the company and the group. There is also a debenture and guarantee registered at Companies House in favour of Arbuthnot Commercial Asset Based Lending Limited has a fixed and floating charge over the assets of the company.
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:
Borrowings of £5,139,631 are comprised of the following:
Secured 10% loan notes of £2,081,928 redeemable in 2026 issued for cash.
Unsecured 8% loan notes of £2,279,925 redeemable in 2026 issued in exchange for the share capital of Masterfix GB Limited.
Bank loan of £777,778