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 a final 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 company 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.
This report has been prepared in accordance with the provisions applicable to companies entitled to the medium-sized companies exemption.
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 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.
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.
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.
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 member 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 member those matters we are required to state to the member 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 member, for our audit work, for this report, or for the opinions we have formed.
The profit and loss account has been prepared on the basis that all operations are continuing operations.
Carlo Bidco Limited is a private company limited by shares incorporated in England and Wales. The registered office is Five Kings House, Queen Street Place, London, EC4R 1QS.
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 £.
This company is a qualifying entity for the purposes of FRS 102, being a member of a group where the parent of that group prepares publicly available consolidated financial statements, including this company, which are intended to give a true and fair view of the assets, liabilities, financial position and profit or loss of the group. The company has therefore taken advantage of exemptions from the following disclosure requirements:
Section 7 ‘Statement of Cash Flows’: Presentation of a statement of cash flow and related notes and disclosures;
Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instrument Issues: Interest income/expense and net gains/losses for financial instruments not measured at fair value; basis of determining fair values; details of collateral, loan defaults or breaches, details of hedges, hedging fair value changes recognised in profit or loss and in other comprehensive income;
Section 26 ‘Share based Payment’: Share-based payment expense charged to profit or loss, reconciliation of opening and closing number and weighted average exercise price of share options, how the fair value of options granted was measured, measurement and carrying amount of liabilities for cash-settled share-based payments, explanation of modifications to arrangements;
Section 33 ‘Related Party Disclosures’: Compensation for key management personnel.
Financial assets include debtors. Debtors 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.
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 includes creditors, loans from fellow group companies and debt instruments. Creditors, loans from fellow group companies and debt instruments which are basic financial liabilities are measured at transaction price. Any changes in value are recognised in the profit or loss account.
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.
The average monthly number of persons (including directors) employed by the company during the year was:
The actual 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 subsidiary at 31 December 2023 are as follows:
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.
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.
Coniston I LP is a shareholder in Carlo Topco Limited, the company's parent undertaking. There is a debenture and guarantee registered at Companies House in favour of Coniston I LP. Coniston I LP has a fixed and floating charge over the assets of the company. 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.