Company registration number 02858544 (England and Wales)
KEVIN WATSON CONSTRUCTION LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
KEVIN WATSON CONSTRUCTION LIMITED
COMPANY INFORMATION
Directors
K Watson
C Ward
S Watson
Secretary
S Watson
Company number
02858544
Registered office
5 Beauchamp Court
Victors Way
Barnet
London
EN5 5TZ
Auditor
Evans Mockler Limited
5 Beauchamp Court
Victors Way
Barnet
London
EN5 5TZ
KEVIN WATSON CONSTRUCTION LIMITED
CONTENTS
Page
Strategic report
1 - 2
Directors' report
3
Directors' responsibilities statement
4
Independent auditor's report
5 - 7
Statement of comprehensive income
8
Balance sheet
9
Statement of changes in equity
10
Statement of cash flows
11
Notes to the financial statements
12 - 24
KEVIN WATSON CONSTRUCTION LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2023
- 1 -

The directors present the strategic report for the year ended 31 December 2023.

Fair review of the business

The principal activity of the company is that of residential property construction, particularly the construction of social housing.

 

The company has a strong pipeline of projects with housing associations in the year ahead and the directors expect the company to continue to be profitable throughout this period.

Principal risks and uncertainties

The company’s strategy is to follow an appropriate risk strategy, which effectively manages exposures related to the achievement of its business objectives.

 

Health and safety risk

 

The company is committed to ensuring a safe working environment for all its employees and sub-contractors that work on its sites.

 

The directors strongly promote this health and safety culture and have introduced well defined health and safety policies and procedures.

 

Environmental risk

 

The business recognises its corporate responsibility to carry out its operations whilst minimising environmental impacts. The directors’ continued aim is to comply with all applicable environmental legislation and to remain best in class in respect of all environmental practices.

 

Liquidity risk

 

The business actively maintains a mixture of long term and short term finance that is designed to ensure the business has sufficient available funds for operations.

 

Particular focus has been given to the exceptional inflationary pressures that have impacted on the economy in general and the market in which the company operates and the directors are confident that the strategies that they have put in place will manage this risk.

 

Credit risk

 

The company monitors credit risk closely and considers that its current policies meet its objectives of managing exposure to credit risk.

 

Price risk

 

Price risk is considered at project level as part of the tender process. The company has established procedures in pricing individual construction projects to identify and assess potential risks.

 

Interest rate risk

 

The business has interest bearing liabilities which relate to bank overdrafts and loans and hire purchase obligations and finance lease agreements. The business debt is primarily maintained at variable rates although it also utilises a fixed rate loan.

KEVIN WATSON CONSTRUCTION LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 2 -
Development and performance

The company reported an operating profit in the year of £234,444 (2022: £120,893) on a turnover of £15,037,925 (2022: £26,112,466). At the year end the business had net assets of £3,126,808 (2022: £2,700,192).

 

The directors are satisfied with the company’s performance during the year despite tough market conditions.

 

Due to the increase in costs and inflation the directors expect 2024 to be a challenging year. However, due to the nature of the contracts that the company has in place with local housing associations and the other steps that the company has taken to mitigate these risks the directors remain confident that the company’s activities in 2024 will realise a similar level of turnover as that achieved in 2023.

Key performance indicators

The business’ financial key performance indicators are as follows:

 

Gross profit margin: 10.1% (2022: 4.5%)

Operating profit margin: 1.6% (2022: 0.4%)

On behalf of the board

K Watson
Director
25 September 2024
KEVIN WATSON CONSTRUCTION LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 DECEMBER 2023
- 3 -

The directors present their annual report and financial statements for the year ended 31 December 2023.

Principal activities
The principal activity of the company continued to be that of contracting in the construction industry.
Results and dividends

The results for the year are set out on page 8.

No ordinary dividends were paid. The directors do not recommend payment of a final dividend.

Preference dividends were paid amounting to £3,000.

Directors

The directors who held office during the year and up to the date of signature of the financial statements were as follows:

K Watson
C Ward
S Watson
Future developments

The company continues to closely monitor the economic situation in Northern Ireland and the rest of the UK and takes all necessary measures to ensure the company adapts to meet the needs of the market, details of which are set out in the strategic report.


Since the balance sheet date inflationary pressures have continued to have an impact on operations. However, whilst the directors expect the global and national economic environments to continue to impact on the construction sector, they believe the company is well placed to achieve its objectives of maintaining activity and increasing profitability through good revenue visibility, tight cost controls and a strong project pipeline that is focused on the social housing market in Northern Ireland.

Auditor

The directors confirm the reappointment of the company's auditors, Evans Mockler Limited, for the forthcoming year.

Statement of disclosure to auditor

So far as each person who was a director at the date of approving this report is aware, there is no relevant audit information of which the company’s auditor is unaware. Additionally, the directors individually have taken all the necessary steps that they ought to have taken as directors in order to make themselves aware of all relevant audit information and to establish that the company’s auditor is aware of that information.

Medium-sized companies exemption

This report has been prepared in accordance with the provisions applicable to companies entitled to the medium-sized companies exemption.

On behalf of the board
K Watson
Director
25 September 2024
KEVIN WATSON CONSTRUCTION LIMITED
DIRECTORS' RESPONSIBILITIES STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2023
- 4 -

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 of 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 judgements and accounting estimates that are reasonable and prudent;

- state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements;

- 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.

KEVIN WATSON CONSTRUCTION LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF KEVIN WATSON CONSTRUCTION LIMITED
- 5 -
Opinion

We have audited the financial statements of Kevin Watson Construction Limited (the 'company') for the year ended 31 December 2023 which comprise the statement of comprehensive income, the balance sheet, the statement of changes in equity, the 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).

In our opinion the financial statements:

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 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:

KEVIN WATSON CONSTRUCTION LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF KEVIN WATSON CONSTRUCTION LIMITED (CONTINUED)
- 6 -
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:

 

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.

Extent to which the audit was capable of detecting irregularities, including fraud

 

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:

 

KEVIN WATSON CONSTRUCTION LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF KEVIN WATSON CONSTRUCTION LIMITED (CONTINUED)
- 7 -

Our audit procedures were designed to respond to risks of material misstatement in the financial statements, recognising that 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, misrepresentations or through collusion. There are inherent limitations in the audit procedures performed 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 are to become aware of it.

 

A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Councils website at: 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.

Mark Cook
Senior Statutory Auditor
For and on behalf of Evans Mockler Limited
25 September 2024
Chartered Certified Accountants
Statutory Auditor
5 Beauchamp Court
Victors Way
Barnet
London
EN5 5TZ
KEVIN WATSON CONSTRUCTION LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2023
- 8 -
2023
2022
Notes
£
£
Turnover
3
15,037,925
26,112,466
Cost of sales
(13,524,605)
(24,932,557)
Gross profit
1,513,320
1,179,909
Administrative expenses
(1,272,582)
(1,084,572)
Other operating income
-
0
25,556
Exceptional item
4
(6,293)
-
0
Operating profit
5
234,445
120,893
Interest payable and similar expenses
8
(129,735)
(83,441)
Profit before taxation
104,710
37,452
Tax on profit
9
321,906
(5,315)
Profit for the financial year
426,616
32,137

The profit and loss account has been prepared on the basis that all operations are continuing operations.

KEVIN WATSON CONSTRUCTION LIMITED
BALANCE SHEET
AS AT
31 DECEMBER 2023
31 December 2023
- 9 -
2023
2022
Notes
£
£
£
£
Fixed assets
Tangible assets
11
108,612
216,414
Current assets
Debtors
12
9,513,445
8,161,063
Cash at bank and in hand
179,242
-
0
9,692,687
8,161,063
Creditors: amounts falling due within one year
13
(6,342,594)
(5,191,161)
Net current assets
3,350,093
2,969,902
Total assets less current liabilities
3,458,705
3,186,316
Creditors: amounts falling due after more than one year
14
(331,744)
(445,005)
Provisions for liabilities
Deferred tax liability
17
27,153
41,119
(27,153)
(41,119)
Net assets
3,099,808
2,700,192
Capital and reserves
Called up share capital
19
503,240
527,240
Profit and loss reserves
2,596,568
2,172,952
Total equity
3,099,808
2,700,192

These financial statements have been prepared in accordance with the provisions relating to medium-sized companies.

The financial statements were approved by the board of directors and authorised for issue on 25 September 2024 and are signed on its behalf by:
K Watson
Director
Company registration number 02858544 (England and Wales)
KEVIN WATSON CONSTRUCTION LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2023
- 10 -
Share capital
Profit and loss reserves
Total
Notes
£
£
£
Balance at 1 January 2022
576,440
2,146,815
2,723,255
Year ended 31 December 2022:
Profit and total comprehensive income
-
32,137
32,137
Dividends
10
-
(6,000)
(6,000)
Redemption of shares
19
(49,200)
-
0
(49,200)
Balance at 31 December 2022
527,240
2,172,952
2,700,192
Year ended 31 December 2023:
Profit and total comprehensive income
-
426,616
426,616
Dividends
10
-
(3,000)
(3,000)
Redemption of shares
19
(24,000)
-
0
(24,000)
Balance at 31 December 2023
503,240
2,596,568
3,099,808
KEVIN WATSON CONSTRUCTION LIMITED
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2023
- 11 -
2023
2022
Notes
£
£
£
£
Cash flows from operating activities
Cash generated from/(absorbed by) operations
21
348,973
(276,285)
Interest paid
(129,735)
(83,441)
Income taxes refunded/(paid)
341,250
(34,506)
Net cash inflow/(outflow) from operating activities
560,488
(394,232)
Investing activities
Purchase of tangible fixed assets
(2,329)
(57,267)
Proceeds from disposal of tangible fixed assets
50,000
14,999
Net cash generated from/(used in) investing activities
47,671
(42,268)
Financing activities
Redemption of shares
(24,000)
(49,200)
Repayment of bank loans
(71,170)
(129,020)
Payment of finance leases obligations
(60,830)
(21,382)
Dividends paid
(3,000)
(6,000)
Net cash used in financing activities
(159,000)
(205,602)
Net increase/(decrease) in cash and cash equivalents
449,159
(642,102)
Cash and cash equivalents at beginning of year
(269,917)
372,185
Cash and cash equivalents at end of year
179,242
(269,917)
Relating to:
Cash at bank and in hand
179,242
-
0
Bank overdrafts included in creditors payable within one year
-
0
(269,917)
KEVIN WATSON CONSTRUCTION LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
- 12 -
1
Accounting policies
Company information

Kevin Watson Construction Limited is a private company limited by shares incorporated in England and Wales. The registered office is 5 Beauchamp Court, Victors Way, Barnet, London, EN5 5TZ.

1.1
Accounting convention

These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006.

The financial statements are prepared in sterling, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £.

The financial statements have been prepared under the historical cost convention, modified to include the revaluation of freehold properties and to include investment properties and certain financial instruments at fair value. The principal accounting policies adopted are set out below.

1.2
Going concern

Atruet the time of approving the financial statements, the directors have a reasonable expectation that the company 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.

1.3
Turnover

Where the outcome of a construction contract can be estimated reliably, revenue and costs are recognised by reference to the stage of completion of the contract activity at the reporting end date. Variations in contract work, claims and incentive payments are included to the extent that the amount can be measured reliably and its receipt is considered probable.

 

When it is probable that total contract costs will exceed total contract turnover, the expected loss is recognised as an expense immediately.

 

Where the outcome of a construction contract cannot be estimated reliably, contract revenue is recognised to the extent of contract costs incurred where it is probable that they will be recoverable. Contract costs are recognised as expenses in the period in which they are incurred. When costs incurred in securing a contract are recognised as an expense in the period in which they are incurred, they are not included in contract costs if the contract is obtained in a subsequent period.

1.4
Tangible fixed assets

Tangible fixed assets are initially measured at cost and subsequently measured at cost or valuation, net of depreciation and any impairment losses.

Depreciation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:

Plant and machinery
20% on cost
Fixtures, fittings & equipment
20% on cost
Motor vehicles
33% reducing balance

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.

KEVIN WATSON CONSTRUCTION LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 13 -
1.5
Cash and cash equivalents

Cash and cash equivalents are basic financial assets and include cash in hand, deposits held at call with banks, other short-term liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities.

1.6
Financial instruments

The company 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 company's balance sheet when the company becomes party to the contractual provisions of the instrument.

 

Financial assets and liabilities are offset, with the net amounts presented in the financial statements, when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.

Basic financial assets

Basic financial assets, which include debtors and cash and bank balances, are measured at transaction price including transaction costs.

Other financial assets

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.

Impairment of financial assets

Financial assets, other than those held at fair value through profit and loss, are assessed for indicators of impairment at each reporting end date.

 

Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected. If an asset is impaired, the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset’s original effective interest rate. The impairment loss is recognised in profit or loss.

 

If there is a decrease in the impairment loss arising from an event occurring after the impairment was recognised, the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been, had the impairment not previously been recognised. The impairment reversal is recognised in profit or loss.

Derecognition of financial assets

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.

Classification of financial liabilities

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.

KEVIN WATSON CONSTRUCTION LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 14 -
Basic financial liabilities

Basic financial liabilities, including creditors, bank loans, loans from fellow group companies and preference shares that are classified as debt, are 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.

 

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.

Other financial liabilities

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.

Derecognition of financial liabilities

Financial liabilities are derecognised when the company’s contractual obligations expire or are discharged or cancelled.

1.7
Equity instruments

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.

1.8
Derivatives

Derivatives are initially recognised at fair value at the date a derivative contract is entered into and are subsequently remeasured to fair value at each reporting end date. The resulting gain or loss is recognised in profit or loss immediately unless the derivative is designated and effective as a hedging instrument, in which event the timing of the recognition in profit or loss depends on the nature of the hedge relationship.

 

A derivative with a positive fair value is recognised as a financial asset, whereas a derivative with a negative fair value is recognised as a financial liability.

1.9
Taxation

The tax expense represents the sum of the tax currently payable and deferred tax.

Current tax

The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the profit and loss account because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The company’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.

KEVIN WATSON CONSTRUCTION LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 15 -
Deferred tax

Deferred tax liabilities are generally recognised for all timing differences and deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Such assets and liabilities are not recognised if the timing difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.

 

The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the profit and loss account, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset when the company has a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.

1.10
Employee benefits

The costs of short-term employee benefits are recognised as a liability and an expense, unless those costs are required to be recognised as part of the cost of stock or fixed assets.

 

The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received.

 

Termination benefits are recognised immediately as an expense when the company is demonstrably committed to terminate the employment of an employee or to provide termination benefits.

1.11
Retirement benefits
The pension costs charged in the financial statements represent the contributions payable by the company during the year in accordance with FRS 17.
1.12
Leases

Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessees. All other leases are classified as operating leases.

 

Assets held under finance leases are recognised as assets at the lower of the assets fair value at the date of inception and the present value of the minimum lease payments. The related liability is included in the balance sheet as a finance lease obligation. Lease payments are treated as consisting of capital and interest elements. The interest is charged to profit or loss so as to produce a constant periodic rate of interest on the remaining balance of the liability.

1.13
Foreign exchange

Transactions in currencies other than pounds sterling are recorded at the rates of exchange prevailing at the dates of the transactions. At each reporting end date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the reporting end date. Gains and losses arising on translation in the period are included in profit or loss.

KEVIN WATSON CONSTRUCTION LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 16 -
2
Judgements and key sources of estimation uncertainty

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.

3
Turnover and other revenue

An analysis of the company's turnover is as follows:

2023
2022
£
£
Turnover analysed by class of business
Sales
15,037,786
26,110,526
Other income
139
1,940
15,037,925
26,112,466
4
Exceptional item
2023
2022
£
£
Expenditure
Related party debt forgiven
6,293
-

During the year, the Company agreed to forgive the debt of £4,923 owed by Kevin Watson Contracts Ltd, an associated company,

 

During the year, the Company agreed to forgive the debt of £1,370 owed by Kevin Watson Group Ltd, an associated company

5
Operating profit
2023
2022
Operating profit for the year is stated after charging/(crediting):
£
£
Exchange differences apart from those arising on financial instruments measured at fair value through profit or loss
43
610
Fees payable to the company's auditor for the audit of the company's financial statements
16,000
18,025
Depreciation of owned tangible fixed assets
103,531
139,298
Depreciation of tangible fixed assets held under finance leases
72,180
54,121
Profit on disposal of tangible fixed assets
(43,400)
(11,667)
KEVIN WATSON CONSTRUCTION LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 17 -
6
Employees

The average monthly number of persons (including directors) employed by the company during the year was:

2023
2022
Number
Number
Directors
3
3
Cost of sales
41
42
Administrative
5
6
Total
49
51

Their aggregate remuneration comprised:

2023
2022
£
£
Wages and salaries
1,660,526
1,812,597
Social security costs
112,950
137,384
Pension costs
48,037
40,674
1,821,513
1,990,655
7
Directors' remuneration
2023
2022
£
£
Remuneration for qualifying services
238,000
216,750
Company pension contributions to defined contribution schemes
4,043
5,320
242,043
222,070
Remuneration disclosed above include the following amounts paid to the highest paid director:
2023
2022
£
£
Remuneration for qualifying services
117,500
70,000
KEVIN WATSON CONSTRUCTION LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 18 -
8
Interest payable and similar expenses
2023
2022
£
£
Interest on financial liabilities measured at amortised cost:
Interest on bank overdrafts and loans
87,957
50,535
Other finance costs:
Interest on finance leases and hire purchase contracts
33,078
31,513
Other interest
8,700
1,393
129,735
83,441
9
Taxation
2023
2022
£
£
Current tax
UK corporation tax on profits for the current period
53,425
20,115
Adjustments in respect of prior periods
(361,365)
-
0
Total current tax
(307,940)
20,115
Deferred tax
Origination and reversal of timing differences
(13,966)
(14,800)
Total tax (credit)/charge
(321,906)
5,315

The actual (credit)/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:

2023
2022
£
£
Profit before taxation
104,710
37,452
Expected tax charge based on the standard rate of corporation tax in the UK of 25.00% (2022: 19.00%)
26,178
7,116
Tax effect of expenses that are not deductible in determining taxable profit
(7,150)
1,464
Tax effect of income not taxable in determining taxable profit
-
0
(2,217)
Adjustments in respect of prior years
(361,365)
-
0
Effect of change in corporation tax rate
(3,361)
-
0
Permanent capital allowances in excess of depreciation
-
0
(12,714)
Depreciation on assets not qualifying for tax allowances
37,757
26,466
Deferred tax movement in the year
(13,965)
(14,800)
Taxation (credit)/charge for the year
(321,906)
5,315
KEVIN WATSON CONSTRUCTION LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 19 -
10
Dividends
2023
2022
£
£
Interim paid
3,000
6,000
11
Tangible fixed assets
Plant and machinery
Fixtures, fittings & equipment
Motor vehicles
Total
£
£
£
£
Cost
At 1 January 2023
694,922
202,323
212,298
1,109,543
Additions
-
0
2,329
-
0
2,329
Disposals
-
0
(98,000)
-
0
(98,000)
At 31 December 2023
694,922
106,652
212,298
1,013,872
Depreciation and impairment
At 1 January 2023
609,305
161,044
122,780
893,129
Depreciation charged in the year
52,250
28,902
22,379
103,531
Eliminated in respect of disposals
-
0
(91,400)
-
0
(91,400)
At 31 December 2023
661,555
98,546
145,159
905,260
Carrying amount
At 31 December 2023
33,367
8,106
67,139
108,612
At 31 December 2022
85,617
41,279
89,518
216,414

The net carrying value of tangible fixed assets includes the following in respect of assets held under finance leases or hire purchase contracts.

2023
2022
£
£
Plant and machinery
28,040
76,230
Motor vehicles
53,703
71,604
81,743
147,834
KEVIN WATSON CONSTRUCTION LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 20 -
12
Debtors
2023
2022
Amounts falling due within one year:
£
£
Trade debtors
2,816,574
3,034,844
Gross amounts owed by contract customers
6,009,895
4,703,124
Other debtors
500,373
293,961
Prepayments and accrued income
186,603
129,134
9,513,445
8,161,063
13
Creditors: amounts falling due within one year
2023
2022
Notes
£
£
Bank loans and overdrafts
15
71,170
337,055
Obligations under hire purchase
16
198,899
221,670
Trade creditors
3,000,896
3,959,235
Corporation tax
53,425
20,115
Other taxation and social security
465,095
202,331
Other creditors
1,574,535
420,370
Accruals and deferred income
978,574
30,385
6,342,594
5,191,161
14
Creditors: amounts falling due after more than one year
2023
2022
Notes
£
£
Bank loans and overdrafts
15
203,475
278,677
Obligations under hire purchase
16
128,269
166,328
331,744
445,005
15
Loans and overdrafts
2023
2022
£
£
Bank loans
274,645
345,815
Bank overdrafts
-
0
269,917
274,645
615,732
Payable within one year
71,170
337,055
Payable after one year
203,475
278,677

The bank loans are secured by fixed charges over the company's assets.

KEVIN WATSON CONSTRUCTION LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 21 -
16
Hire purchase obligations
2023
2022
Future minimum repayments due under hire purchase agreements:
£
£
Within one year
198,899
238,578
In two to five years
128,269
149,420
327,168
387,998

Hire purchase payments represent repayments payable by the company for certain items of plant and machinery.

17
Deferred taxation

The following are the major deferred tax liabilities and assets recognised by the company and movements thereon:

Liabilities
Liabilities
2023
2022
Balances:
£
£
Accelerated capital allowances
27,153
41,119
2023
Movements in the year:
£
Liability at 1 January 2023
41,119
Credit to other comprehensive income
(13,966)
Liability at 31 December 2023
27,153
18
Retirement benefit schemes
2023
2022
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
48,037
40,674

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.

19
Share capital
2023
2022
2023
2022
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Ordinary Shares of £1 each
100
100
100
100
KEVIN WATSON CONSTRUCTION LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
19
Share capital
(Continued)
- 22 -
2023
2022
2023
2022
Preference share capital
Number
Number
£
£
Issued and fully paid
Redeemable Preference Shares of £1 each
200,000
200,000
200,000
200,000
Preference Shares of £1 each
303,140
327,140
303,140
327,140
503,140
527,140
503,140
527,140
Preference shares classified as equity
503,140
527,140
Total equity share capital
503,240
527,240

The Redeemable Preference shares are non voting and non-participating. The company may redeem all shares 10 years from the date of issue, 13 December 2010. The holders of the shares are not entitled to payment of a dividend and may not vote at any general meeting of the company. On winding-up, the non-voting, non participating Redeemable shares in issue carry priority over the ordinary shares to the extent of capital paid up.

 

The Preference shares are redeemable at the company's option only, are non interesting bearing, non participating and the holders thereof are only entitled to payment of a dividend at the company's option. Upon winding up of the company, to the extent of the paid up capital, the Preference shares will be entitled to a return of capital at their par value only and will have priority over the ordinary shares.

 

 

KEVIN WATSON CONSTRUCTION LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 23 -
20
Related party transactions
Transactions with related parties

During the year the company entered into the following transactions with related parties:

Purchases
2023
2022
£
£
Other related parties
-
60,000

The following amounts were outstanding at the reporting end date:

2023
2022
Amounts due to related parties
£
£
Other related parties
1,602,427
125,926

The following amounts were outstanding at the reporting end date:

2023
2022
Amounts due from related parties
£
£
Other related parties
-
268,179
Other information

All loan balances are repayable on demand.

21
Cash generated from/(absorbed by) operations
2023
2022
£
£
Profit for the year after tax
426,616
32,137
Adjustments for:
Taxation (credited)/charged
(321,906)
5,315
Finance costs
129,735
83,441
Gain on disposal of tangible fixed assets
(43,400)
(11,667)
Depreciation and impairment of tangible fixed assets
103,531
139,298
Movements in working capital:
Increase in debtors
(1,352,382)
(1,359,794)
Increase in creditors
1,406,779
834,985
Cash generated from/(absorbed by) operations
348,973
(276,285)
KEVIN WATSON CONSTRUCTION LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 24 -
22
Analysis of changes in net debt
1 January 2023
Cash flows
New hire purchase leases
31 December 2023
£
£
£
£
Cash at bank and in hand
-
179,242
-
179,242
Bank overdrafts
(269,917)
269,917
-
-
0
(269,917)
449,159
-
0
179,242
Borrowings excluding overdrafts
(345,815)
71,170
-
(274,645)
Obligations under hire purchase
(387,998)
77,582
(16,752)
(327,168)
(1,003,730)
597,911
(16,752)
(422,571)
2023-12-312023-01-01falseCCH SoftwareCCH Accounts Production 2024.200K WatsonC WardS WatsonS Watsonfalsefalse028585442023-01-012023-12-3102858544bus:Director12023-01-012023-12-3102858544bus:Director22023-01-012023-12-3102858544bus:CompanySecretaryDirector12023-01-012023-12-3102858544bus:CompanySecretary12023-01-012023-12-3102858544bus:Director32023-01-012023-12-3102858544bus:RegisteredOffice2023-01-012023-12-31028585442023-12-31028585442022-01-012022-12-3102858544core:Exceptional12023-01-012023-12-3102858544core:Exceptional12022-01-012022-12-3102858544core:RetainedEarningsAccumulatedLosses2022-01-012022-12-3102858544core:RetainedEarningsAccumulatedLosses2023-01-012023-12-31028585442022-12-3102858544core:PlantMachinery2023-12-3102858544core:FurnitureFittings2023-12-3102858544core:MotorVehicles2023-12-3102858544core:PlantMachinery2022-12-3102858544core:FurnitureFittings2022-12-3102858544core:MotorVehicles2022-12-3102858544core:CurrentFinancialInstrumentscore:WithinOneYear2023-12-3102858544core:CurrentFinancialInstrumentscore:WithinOneYear2022-12-3102858544core:Non-currentFinancialInstrumentscore:AfterOneYear2023-12-3102858544core:Non-currentFinancialInstrumentscore:AfterOneYear2022-12-3102858544core:CurrentFinancialInstruments2023-12-3102858544core:CurrentFinancialInstruments2022-12-3102858544core:Non-currentFinancialInstruments2023-12-3102858544core:Non-currentFinancialInstruments2022-12-3102858544core:ShareCapital2023-12-3102858544core:ShareCapital2022-12-3102858544core:RetainedEarningsAccumulatedLosses2023-12-3102858544core:RetainedEarningsAccumulatedLosses2022-12-3102858544core:ShareCapital2021-12-3102858544core:RetainedEarningsAccumulatedLosses2021-12-3102858544core:ShareCapital2022-01-012022-12-3102858544core:ShareCapital2023-01-012023-12-310285854412023-01-012023-12-310285854412022-01-012022-12-31028585442022-12-31028585442021-12-3102858544core:WithinOneYear2023-12-3102858544core:WithinOneYear2022-12-3102858544core:PlantMachinery2023-01-012023-12-3102858544core:FurnitureFittings2023-01-012023-12-3102858544core:MotorVehicles2023-01-012023-12-3102858544core:UKTax2023-01-012023-12-3102858544core:UKTax2022-01-012022-12-310285854422023-01-012023-12-310285854422022-01-012022-12-3102858544core:PlantMachinery2022-12-3102858544core:FurnitureFittings2022-12-3102858544core:MotorVehicles2022-12-3102858544core:BetweenTwoFiveYears2023-12-3102858544core:BetweenTwoFiveYears2022-12-3102858544bus:OrdinaryShareClass12022-01-012022-12-3102858544bus:PrivateLimitedCompanyLtd2023-01-012023-12-3102858544bus:FRS1022023-01-012023-12-3102858544bus:Audited2023-01-012023-12-3102858544bus:FullAccounts2023-01-012023-12-31xbrli:purexbrli:sharesiso4217:GBP