The directors present the strategic report for the year ended 31 May 2024.
The principal activity of the company was consultancy services to the group and of the group was that of work place design and consultancy, fitting out offices and retailing office furniture.
The performance for the year was in line with expectations. Although the group's turnover was lower than in 2023 by 5.4%, it was still 33% higher when compared to 2022. Similarly profit before tax did not reach the level recorded in 2023, however the group's PBT was still 178% higher when compared to 2022.
The Key Performance Indicators shown below are for the trading group and exclude the results of the property development subsidiaries.
| 2024 | 2023 | 2022 |
|
|
|
|
Turnover (£m) | 151.04 | 159.67 | 113.60 |
Profit before taxation (£m) | 8.26 | 12.92 | 3.62 |
Profit before tax margin (%) | 5.5% | 8.1% | 2.6% |
Cash management remained a key focus with the group quick and current ratio being consistent with the values at 31 May 2023. Debtor days decreased to 28 days which is in line with expectation and the KPI stats prior to 2023. Creditors days remained high due to the timing of the year end suppliers payment run, which was paid in early June
| 2024 | 2023 | 2022 |
|
|
|
|
Quick ratio | 1.44 | 1.56 | 1.45 |
Current ratio | 1.47 | 1.58 | 1.48 |
Debtor days | 28 | 44 | 29 |
Creditors days | 49 | 49 | 49 |
The group generated cash of £4.6m (2023: £23.4m) from operating activities during the year, made loans and current asset investments of £5.8m (2022: £11.4), paid dividends of £3.2m (2023: £4.9) and repaid loans of £Nil (2023: £5.1m). Cash at bank at the reporting date was £20.1m (2023: £24.3m).
The directors are satisfied with these results.
RIDDOR Reportable incidents |
| 2024 |
|
| 2023 | 2022 |
|
|
|
|
|
|
|
Employees |
| 0 |
|
| 0 | 0 |
Subcontractors Third Party |
| 0 0 |
|
| 0 1 | 0 0 |
Our success and positive market reputation is built on our core business values of delighting clients, having a happy team and reaching our financial objectives. This has allowed us to further invest in the business during the year by attracting and retaining ‘best in class’ talent, and development of our business systems.
Operating and market risk
The group operates in a sector that is linked to the health of the wider economy. In particular, its performance depends predominantly on commercial property development in London and the South East. A slowdown in this activity would have an impact on the group. However, even in a suppressed property market the expansion and contraction of individual UK businesses creates potential opportunities for the group. The group's historic and future success has and will come from working to meet the goals and objectives of our clients. The group is constantly seeking to widen the number and range of new clients it works for to reduce its exposure to any one individual client or sector in the future.
Personnel risk
The group's continued success is dependent upon the skill and experience of its employees in maintaining existing clients, and winning and delivering key contracts. The group places great emphasis on the provision of support, training and welfare of its staff in order to maintain motivation, career satisfaction and loyalty.
Liquidity risk
The objective of the group in managing liquidity risk is to ensure that it can meet its financial obligations as and when they fall due. The group expects to meet its financial obligations through operating cash flows. Cash flow is monitored at an individual project level. In the event that the operating cash flows would not cover all the financial obligations, this would be forecast and the group would arrange additional credit facilities.
Customer credit exposure
The group is at risk to the extent that a customer may be unable to pay the amounts owed to the group. This risk is managed by the policies and procedures in place both pre and post contract as well as the strong on-going customer relationships.
This statement sets out how the group complies with the requirements of Section 172 Companies Act 2006, by considering the group’s purpose and values together with its strategic priorities. The group has a detailed process in place for decision making by the Board.
The directors delegate authority for all day-to-day management of the group affairs to the Management Team, they are committed to maintaining constructive dialogue with the directors and shareholders, engaging regularly to understand their perspectives and ensure these are considered during decision making.
The directors' primary responsibility is to promote the long-term success of the group by creating and delivering sustainable shareholder value as well as contributing to wider society. The directors, along with key personnel, annually review the budget and monitor the implementation throughout the year using detailed reports on operating and financial performance. There are considerations to external factors such as the economic, political and market conditions. They take the reputation of the group seriously which is not limited to operating and financial performance and has committed to diversity and inclusivity across its workforce.
Impact Report
The group has prepared an Impact Report that covers various aspects of the group's business including key figures in the group's people and main initiatives, its impact on the planet and steps to minimise that impact, corporate governance and how the group support and work with communities and charitable organisations. The complete Impact Report will be made available on the group’s website in due course.
The group reviews a range of financial and non-financial KPI on a regular basis covering the whole customer lifecycle: from activity based around business development, sales, design, programme management, through to client feedback gained through both delivery stage and post occupancy surveys. Real time information on project level cash flow and profitability is monitored constantly against pre-determined benchmarks to allow management the tools required to manage the business effectively and deliver substantial shareholder value.
Team members are reviewed quarterly against measures for aptitude as well as attitude, as determined by line managers. These measures have been designed to support the core values of the group.
The group has successfully been recertified to ISO 14001: 2015, ISO 9001: 2015 and ISO 45001: 2018 standards. The ISO 14001 is a standard to support organisations create an effective Environmental Management System, allowing the group to benchmark its current environmental performance and set out ways to improve it. ISO 9001 is a globally recognised Quality Management System, which is integral to our continued focus on improving the quality and consistency of service we offer to our clients. ISO 45001 is an international standard which specifies requirements for an occupational health and safety management system and guidance for its use, enabling the group to proactively improve its operational health and safety performance.
In addition, we have introduced an energy management system. This system, successfully accredited to ISO 50001 stages 1 and 2, monitors and reduces our energy emissions.
The group recognises its duties under the Health and Safety at Work Act 1974 and its stated policy of providing safe conditions of work for all employees, self-employed individuals and subcontractors.
The directors would like to thank all members of the I45 Limited team for their hard work, loyalty, dedication and energy during 2023-24.
On behalf of the board
The directors present their annual report and financial statements for the year ended 31 May 2024.
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
The results for the year are set out on page 12.
Interim ordinary dividends were paid during the year amounting to £21,246,634 (2023: £4,966,608). Further interim dividends of £200,000 (2023 - £1,217,546) have been paid after the year end.
Our investment in our bespoke business software allows the management team to constantly monitor the debtors and creditors to ensure that payment terms are adhered to. Dun and Bradstreet Credit reports are carried out on all potential clients to reduce the risk of bad debts. Major projects are undertaken through JCT (industry standard) contracts with fixed payment terms or regular valuations. Accrued and deferred income within the final accounts will be related to these signed contract terms and conditions. Creditors provisions in the year end accounts also reflect the cost of sales against the accrued income from JCT contracts.
Engagement with suppliers and customers
We pride ourselves with having strong supplier relationships which allows us to price competitively and also enables the group to agree supplier payment terms in line with client payment terms, so cashflow risk is mitigated. Our Supplier Code of Conduct reflects the company's ongoing focus on delivering operational resilience and meeting our Environmental, Social and Governance objectives, as well as improving performance throughout the supply chain
Delighting customers is one of our main business values. Client satisfaction and retention are key factors of our success and positive market reputation. This is achieved through building close relationship with clients from the very beginning of the project, where client needs and requirements are put at the very centre of our solution.
Increased levels of inflation
The group's projects typically run for 3 to 4 months which significantly reduces the entity's exposure to the risks associated with inflation. Normally on projects procurement is done at the beginning of the work, which mitigates further the inflation risk.
Although we still expect healthy competition in 2024-25 we are optimistic about the market. As a result of the continued inward investment, focus on our clients’ business outcomes, staff retention and attraction of best talent we believe the business is well placed for another successful trading year.
We have a very clear, 5 year strategic plan for the group, which will guide and drive the business growth. This will be achieved through expansion of our ever growing, loyal client base as well as other innovative business activities.
The group remains profitable. The directors are confident, following a review of the group's cash flow projections over the next twelve months that the group has sufficient resources to continue in operational existence for the foreseeable future. For this reason they continue to adopt the going concern basis in preparing the group's financial statements.
The information and data results provided below have been produced in a format which meet the mandatory requirements for Streamlined Energy and Carbon Reporting (SECR). Under the Companies (Directors’ report) and Limited Liability Partnerships (Energy and Carbon Report) Regulations 2018 we are required to disclose our UK energy use and associated greenhouse gas (GHG) emissions. Specifically, we are required to report these GHG emissions relating to natural gas, electricity and transport fuel, as well as an intensification ratio under the regulations.
Methodology
This report has been compiled in accordance with the requirements set out in the HM Government document – Environmental Reporting Guidelines: Including streamlined energy and carbon reporting guidance March 2019 and utilising the UK Government GHG conversion factors for company reporting, June 2023.
The above was in conjunction to the ESOS methodology (Energy Savings Opportunity Scheme version 7, February 2021). To assume that we achieve and deliver effective emissions control and management, we are utilizing recognized and robust methods. Accordingly, whilst no prescribed methodology is detailed in the regulations, we collect our data sets annually, and measure and calculate our carbon footprint using the relevant conversion factors issued by the Green House Gas Protocol
The Streamlined Energy and Carbon Reporting included in this report covers the year ended 31 May 2024.
Results
| Year ended 31 May 2024 | Year ended 31 May 2023
| ||
Scope | Usage | Emissions (Kg CO2e) | Usage | Emissions (Kg CO2e) |
Scope 1 – natural gas Scope 1 - natural gas |
14,150.6m3 |
28.8 | 80,147.5 KwH 2,924 m3 | 14.6 5.9 |
Scope 2 – electricity (location based) | 174,306.7KwH | 2.0 | 204,975.9 KwH | 8.9 |
Scope 3 – business travel | 565,046.6km | 81.5 | 681,204.9km | 92.2 |
Total |
| 112.3 |
| 121.6 |
| Year ended 31 May 2024 | Year ended 31 May 2023 |
Intensity ratio | Emissions (tCO2e) | Emissions (tCO2e) |
Tonnes of CO2e per £m revenue | 7.43 | 7.62 |
Tonnes of CO2e per full time headcount | 0.5 | 0.6 |
Energy efficiency measures
We remain steadfast in our commitment to reducing energy consumption and enhancing energy efficiency across the group wherever feasible. We recognise that climate change is a global threat, and in response, we have implemented a climate risk matrix to evaluate its impact on our business and all stakeholders.
Acknowledging our responsibility and accountability in reducing greenhouse gas emissions within our operations and community, we have introduced an energy management system. This system, successfully accredited to ISO 50001 stages 1 and 2, monitors and reduces our energy emissions.
In addition, our commitment to decarbonising our operations aligns with our mission to be a socially responsible and purpose-driven business. To further this commitment, we have established a dedicated Sustainability department tasked with creating an ESG strategy to identify and achieve key objectives. To lead these efforts, we have appointed a Head of Sustainability and Compliance and a Sustainability Coordinator. They will continue to drive our strategy, supporting our project teams and clients in their sustainability processes, and report directly to the group’s directors.
Examples of the projects and initiatives undertaken by the group are:
Supply Chain Partners:
All our supply chain partners undergo a rigorous vetting process to ensure full compliance with health and safety standards, corporate governance, and social and environmental responsibility. This compliance is verified through relevant documentation and a pre-qualification questionnaire. The questionnaire undergoes several approval stages, starting with Health & Safety, followed by Commercial and Procurement, Sustainability, Finance, and finally, the group’s COO signs off all new supply chain partners. Additionally, where practically possible, we influence our procurement choices for our clients to provide value for money, reduce the consumption of primary resources, utilize materials with lower environmental impact, and align our clients' goals with ours.
Training:
We ensure our teams have access to sustainability education from both internal and external sources, enabling them to lead their projects through the sustainability process for the entire project lifecycle. This includes certifications such as BREEAM, SKA, Fitwel, WELL, and the new addition of Nabers. Our goal is to integrate sustainability into our DNA, making it a default aspect of our design process.
Sustainable Material Library:
We regularly introduce sustainable products into our libraries and educate our teams on the benefits of future-thinking products, techniques, and technologies. This approach aims to create a robust resource for sustainable materials.
Technology:
We utilise 3D laser scan technology to promote forward-thinking, validate information, efficiency, and sustainability practices across the business. This technology helps reduce material waste and maximize space utilization and time.
We have audited the financial statements of I45 Limited (the 'parent company') and its subsidiaries (the 'group') for the year ended 31 May 2024 which comprise the group income statement, the group statement of comprehensive income, the group statement of financial position, the company statement of financial position, the group statement of changes in equity, the company statement of changes in equity, the group statement of cash flows and the notes to the financial statements, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including 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 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 directors are responsible for the other information. The other information comprises the information included in the annual report, other than the financial statements and our auditor's report thereon. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the financial statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of the audit:
the information given in the strategic report and the directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
the strategic report and the directors' report have been prepared in accordance with applicable legal requirements.
In the light of the knowledge and understanding of the group and the parent 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 where 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 statement of directors' responsibilities set out on page 5, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the group's and 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 group or 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 aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below.
The objectives of our audit in respect of fraud, are; to identify and assess the risks of material misstatement of the financial statements due to fraud; to obtain sufficient appropriate audit evidence regarding the assessed risks of material misstatement due to fraud, through designing and implementing appropriate responses to those assessed risks; and to respond appropriately to instances of fraud or suspected fraud identified during the audit. However, the primary responsibility for the prevention and detection of fraud rests with both management and those charged with governance of the company.
Our approach was as follows:
We obtained an understanding of the legal and regulatory requirements applicable to the company and considered that the most significant are the Companies Act 2006, UK financial reporting standards as issued by the Financial Reporting Council, and UK taxation legislation.
We obtained an understanding of how the company complies with these requirements by discussions with management and those charged with governance.
We assessed the risk of material misstatement of the financial statements, including the risk of material misstatement due to fraud and how it might occur, by holding discussions with management and those charged with governance.
We inquired of management and those charged with governance as to any known instances of non-compliance or suspected non-compliance with laws and regulations.
Based on this understanding, we designed specific appropriate audit procedures to identify instances of non-compliance with laws and regulations. This included making enquiries of management and those charged with governance and obtaining additional corroborative evidence as required.
There are inherent limitations in the audit procedures described above. We are less likely to become aware of instances of non-compliance with laws and regulations that are not closely related to events and transactions reflected in the financial statements. Also, the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery or intentional misrepresentations, or through collusion.
As part of an audit in accordance with ISAs (UK) we exercise professional judgement and maintain professional scepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purposes of expressing an opinion on the effectiveness of the group’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors.
Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the group’s or the parent company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the group or the parent company to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
Use of our report
This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken for no purpose other than to draw to the attention of the company’s members those matters which we are required to include in an auditor's report addressed to them. To the fullest extent permitted by law, we do not accept or assume responsibility to any party other than the company and company’s members as a body, for our 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 £354,126 (2023: £5,671,965 profit).
I45 Limited (“the company”) is a private limited company domiciled and incorporated in England and Wales. The registered office is 1 Bickenhall Mansions, Bickenhall Street, London, W1U 6BP.
The group consists of I45 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, modified to include certain financial instruments at fair value. The principal accounting policies adopted are set out below.
The consolidated financial statements incorporate those of I45 Limited and all of its subsidiaries (ie entities that the group controls through its power to govern the financial and operating policies so as to obtain economic benefits). Subsidiaries acquired during the year are consolidated using the purchase method. Their results are incorporated from the date that control passes. Subsidiaries that are disposed of during the year are incorporated until the date that control passes.
All financial statements are made up for a year to 31 May 2024. Nutley Dean Development Limited left the group on 31 May 2024, these consolidated accounts include its transactions up to that date. 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.
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.
Entities in which the group holds an interest and which are jointly controlled by the group and one or more other venturers under a contractual arrangement are treated as joint ventures. Entities other than subsidiary undertakings or joint ventures, in which the group has a participating interest and over whose operating and financial policies the group exercises a significant influence, are treated as associates.
Investments in joint ventures and associates are carried in the group statement of financial position at cost plus post-acquisition changes in the group’s share of the net assets of the entity, less any impairment in value. The carrying values of investments in joint ventures and associates include acquired goodwill.
If the group’s share of losses in a joint venture or associate equals or exceeds its investment in the joint venture or associate, the group does not recognise further losses unless it has incurred obligations to do so or has made payments on behalf of the joint venture or associate.
Unrealised gains arising from transactions with joint ventures and associates are eliminated to the extent of the group’s interest in the entity.
The group remains profitable. The directors are confident, following a review of the group's cash flow projections over the next twelve months, that the group has sufficient resources to continue in operational existence for the foreseeable future. For this reason they continue to adopt the going concern basis in preparing the group's financial statements.
Turnover represents the total invoice value, excluding value added tax, of sales made during the year and derives from the provision of goods and services falling within the company's ordinary activities.
In respect of services where a project has only been partially completed at the reporting date, turnover represents the value of those services provided to date based on the proportion of the total expected consideration at completion. Where amounts are invoiced in advance of services provided, such amounts are recorded as deferred income. Similarly, where services are invoiced in arrears, such amounts are recorded as accrued income and included within debtors falling due within one year.
Revenue from the sale of goods is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer (usually on dispatch of the goods), the amount of revenue can be measured reliably, it is probable that the economic benefits associated with the transaction will flow to the entity and the costs incurred or to be incurred in respect of the transaction can be measured reliably.
Retentions are invoiced in two stages, 50% at the time of practical completion of the project and 50% at the end of the defect period. However, income from Retentions is recognised based on the stage of completion of works completed.
Revenue from contracts for the provision of professional services are only recognised when invoiced.
Revenue from the sale of property is recognised when the contracts have been exchanged and legal title has passed to the purchaser.
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 recognised in the income statement.
Equity investments are measured at fair value through profit or loss, except for those equity investments that are not publicly traded and whose fair value cannot otherwise be measured reliably, which are recognised at cost less impairment until a reliable measure of fair value becomes available.
In the parent company financial statements, investments in subsidiaries, associates and jointly controlled entities 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.
An associate is an entity, being neither a subsidiary nor a joint venture, in which the company holds a long-term interest and where the company has significant influence. The group considers that it has significant influence where it has the power to participate in the financial and operating decisions of the associate.
Investments in associates are initially recognised at the transaction price (including transaction costs) and are subsequently adjusted to reflect the group’s share of the profit or loss, other comprehensive income and equity of the associate using the equity method. Any difference between the cost of acquisition and the share of the fair value of the net identifiable assets of the associate on acquisition is recognised as goodwill. Any unamortised balance of goodwill is included in the carrying value of the investment in associates.
Losses in excess of the carrying amount of an investment in an associate are recorded as a provision only when the company has incurred legal or constructive obligations or has made payments on behalf of the associate.
In the parent company financial statements, investments in associates are accounted for at cost less impairment.
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 any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the company estimates the recoverable amount of the cash-generating unit to which the asset belongs.
The carrying amount of the investments accounted for using the equity method is tested for impairment as a single asset. Any goodwill included in the carrying amount of the investment is not tested separately for impairment.
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 statement of financial position 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.
Basic financial assets, which include debtors and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised.
Other financial assets, including investments in equity instruments which are not subsidiaries, associates or joint ventures, are initially measured at fair value, which is normally the transaction price. Such assets are subsequently carried at fair value and the changes in fair value are recognised in profit or loss, except that investments in equity instruments that are not publicly traded and whose fair values cannot be measured reliably are measured at cost less impairment.
Financial assets, 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.
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the group transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the group after deducting all of its liabilities.
Basic financial liabilities, including creditors, bank loans, loans from fellow group companies and preference shares that are classified as debt, are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future payments discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.
Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.
Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Amounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.
Derivatives, including interest rate swaps and forward foreign exchange contracts, are not basic financial instruments. Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured at their fair value. Changes in the fair value of derivatives are recognised in profit or loss in finance costs or finance income as appropriate, unless hedge accounting is applied and the hedge is a cash flow hedge.
Debt instruments that do not meet the conditions in FRS 102 paragraph 11.9 are subsequently measured at fair value through profit or loss. Debt instruments may be designated as being measured at fair value through profit or loss to eliminate or reduce an accounting mismatch or if the instruments are measured and their performance evaluated on a fair value basis in accordance with a documented risk management or investment strategy.
Financial liabilities are derecognised when the group's contractual obligations expire or are discharged or cancelled.
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. Taxable profit differs from net profit as reported in the income statement 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 group’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 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 income statement, 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 if, and only if, there is 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.
Research and development tax credits
The group has made claims for tax credits for Research and Development work undertaken. These claims may be subject to HM Revenue and Customs review. The group does not recognise the tax credits as income until they are received.
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.
Payments to defined contribution retirement benefit schemes are charged as an expense in the period to which they relate.
The group also operates a defined benefit pension scheme for certain employees ("the Scheme"). An actuarial evaluation by a professionally qualified actuary is carried out annually. Deficits in the Scheme are recognised as a liability in the statement of financial position. Surpluses in the Scheme have no benefit to the group and are not recognised as assets. Changes in the asset/liability are written off in the income statement or statement of other comprehensive income as appropriate.
The group operates an unapproved option scheme which allows employees to acquire shares in certain subsidiary companies. The grant date fair value of share-based payment awards granted is recognised as an employee expense with a corresponding increase in equity, over the period that the employees become unconditionally entitled to the awards. The fair value of the options granted is measured using an option pricing model, taking into account the terms and conditions upon which the options were granted. The fair value will be charged as an expense in the income statement over the vesting period and the charge is adjusted each year to reflect the expected and actual level of vesting.
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.
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.
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 following judgements (apart from those involving estimates) have had the most significant effect on amounts recognised in the financial statements.
The estimation techniques used for revenue and profit recognition in respect of construction contracts require forecasts to be made of the outcome of long-term contracts which require assessments and judgements to be made on the recovery of pre-contract costs, changes in the scope of work, contract programmes, maintenance and defects liabilities, changes in costs and stages of completion.
The recoverability of trade and other receivables is regularly reviewed in the light of available economic information specific to each receivable and provisions are recognised for balances considered to be irrecoverable.
Provisions are liabilities of uncertain timing or amount and therefore in making a reliable estimate of the amount and timing of liabilities judgement is applied and re-evaluated at each reporting date.
The present value of the defined benefit pension and other post-employment benefit obligations depends on a number of factors that are determined on an actuarial basis using a number of assumptions. The assumptions used in determining the net cost (income) for pension and other post-employment benefits include the discount rate. Any changes in these assumptions will have an effect on the carrying amount of pension and other post-employment benefits.
After taking appropriate professional advice, group management determines the appropriate discount rate at the end of each reporting period. This is the interest rate that should be used to determine the present value of estimated future cash outflows expected to be required to settle the pension obligations. In determining the appropriate discount rate, consideration is given to the interest rates of high-quality corporate bonds that are denominated in the currency in which the benefits are to be paid and that have terms to maturity approximating the terms of the related pension liability.
Impairment of non-financial assets
Where there are indicators of impairment of individual assets, the company performs impairment tests based on fair value less costs to sell or a value in use calculation.
On 31 May 2024 the group disposed of its 50% holding in Nutley Dean Development Limited to C2MT Limited, a company under common control. Included in these financial statements are losses of £99,814 arising from the company's interests in Nutley Dean Development Limited up to the date of its disposal.
The average monthly number of persons (including directors) employed by the group and company during the year was:
Their aggregate remuneration comprised:
The actual charge for the year can be reconciled to the expected charge for the year based on the profit or loss and the standard rate of tax as follows:
Details of the company's subsidiaries at 31 May 2024 are as follows:
Until 31 May 2024 when the shares were disposed of, I45 Limited owned 50% of the share capital of Nutley Dean Development Limited and had the right to appoint a majority of the board members for Nutley Dean Development Limited. Nutley Dean Development Limited has been treated as a subsidiary company until its disposal.
All of the subsidiaries' registered offices are at 1 Bickenhall Mansions, Bickenhall Street, London W1U 6BP, except for Nutley Dean Development Limited whose Registered Office is at 23 Croydon Road, Reigate, Surrey, England, RH2 0LY.
On 31 May 2024 the group disposed of its 50% holding in Nutley Dean Development Limited to C2MT Limited, a company under common control. Included in these financial statements are losses of £99,814 arising from the company's interests in Nutley Dean Development Limited up to the date of its disposal.
The above financial assets are measured at amortised cost.
The above financial assets are measured at fair value.
The company has amounts contracted for but not provided in the financial statements in respect of unlisted investments of $4,134,855 and €1,312,359 (£4,365,060) (2023: $3,187,707 and €590,000 (£3,078,492)).
The above financial liabilities are measured at amortised cost.
The company had an open ended credit facility with one of its bankers. The facility ended on 30 April 2024. It was secured by a fixed charge over certain of the company's current asset investments. The charge has been satisfied after the year end. The facility was not in use at the year end.
The following are the major deferred tax liabilities and assets recognised by the group and company, and movements thereon:
The deferred tax liability set out above is expected to reverse and relates to the provision of a tax charge against recognised but unrealised gains on current asset investments and the recognition of a deferred tax asset in respect of losses carried forward to future periods. There is a further amount of £1,375,000 (2023: £395,000) in respect of a deferred tax asset on the unused losses that has not been recognised.
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 company has a defined benefit pension scheme that provides benefits in retirement to certain of the group's employees.
At the reporting date the Scheme's assets were predominately invested in a global equities fund. All investment decisions are made by unanimous agreement of the member trustees of the Scheme, who intend to continue to diversify the funds across a broad range of global equities.
Discretionary Benefits
The Company’s funding makes allowance for discretionary pension increases after retirement. The Company would be willing to award discretionary pension increases of up to 5% per annum if sufficient funding is available. The Members accept that the Company will not pay further contributions into the Scheme to support discretionary increases at any particular level where the funding turns out not to be sufficient. There is a constructive obligation to provide benefits in excess of the minimum up to the value of the assets held by the scheme, but no more than that. For the purposes of this report the valuation of the Scheme’s liabilities and service costs allows for discretionary pension increases after retirement. The assumption selected for the discretionary pension increases leads to the scheme assets exceeding the scheme liabilities at the year end. This is an assumption, which may vary in the future reflecting the funding position at that time. The company has no control over the excess in scheme assets and the surplus has not been recognised.
Assumed life expectations on retirement at age 55:
Amounts recognised in the income statement
Amounts taken to other comprehensive income
The amounts included in the statement of financial position arising from the company's obligations in respect of defined benefit plans are as follows:
Movements in the present value of defined benefit obligations
The defined benefit obligations arise from plans funded as follows:
Movements in the fair value of plan assets
Fair value of plan assets at the reporting period end
On 30 April 2024 3,000 £0.01 ordinary shares were converted to 3,000 £0.01 A ordinary shares.
The company has not granted any options over its shares.
Certain employees of the Group's subsidary companies, Oktra Limited and Oktra South Limited (formerly Oktra Regions Limited), have been granted unapproved options over shares in those companies as follows: -
750 of the options outstanding at 31 May 2024 are over Oktra Limited's ordinary shares, these options have an exercise price of £0.10.
500 options have a remaining contract life of 5 years and 8 months.
125 options have a remaining contract life of 6 years and 6 months.
125 options have a remaining contract life of 7 years.
30,928 of the options outstanding at 31 May 2023 were over Oktra South Limited (formerly Oktra Regions Limited)'s ordinary shares. The individuals who had been granted the options are no longer employees and as a result the options have lapsed.
The options are subject to a number of vesting conditions and are exercisable between the date of the grant and the end of the exercise period.
The options become exercisable following any of the following triggers: -
Admission (i.e. the first occasion on which ordinary shares in the capital of the company are admitted to the Official List of the UK Listing Authority or to trading on AIM or permission is given for them to be traded on any other share market approved for this purpose by the holders of a majority of the ordinary share capital);
An asset sale;
A company sale;
Any other circumstances at the discretion of the parent 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:
After the year end one group company has renewed the leases on its existing premises and another group company has has signed a lease for new premises.
Key management personnel are directors of the company and subsidiaries and members of the leadership team and have authority and responsibility for planning, directing and controlling the activities of the group and are considered to be key management personnel. The total remuneration of key management personnel is as follows.
Company and Group
The company received dividends of £3,420,288 (2023: £6,273,554) from subsidiary companies during the year.
The company charged management fees to subsidiary companies of £600,000 (2023: £2,398,354).
The company received interest from a subsidiary company of £Nil (2023: £107,145).
The company paid interest to a subsidiary company of £8,726 (2023: £Nil).
At the year end the company was owed £Nil (2023: £174,330) in aggregate by its subsidiaries.
At the year end the company owed £3,910,000 (2023: £Nil) in aggregate to its subsidiaries.
Other related parties
During the year, as shareholders of a group company, directors were credited with dividends of £1,089,859 (2023: £1,983,378).
At the year end the company owed £Nil (2023: £12,931,281) in aggregate to its directors.
I45i Limited is a company under common control and a shareholder in I45 Limited. At the year end I45i Limited owed £665,424 (2023: £Nil) to the company.
The controlling shareholder has a 50% holding in Chalk Lane Properties Limited. At the year end the company was owed £9,527,731 (2023: £7,666,044) by Chalk Lane Properties Limited. The development has been affected by various challenges and a provision of £3,650,000 (2023: £3,290,000) has been made against the loan during the year. The total provision made at the year end was £9,650,000 (2023: £6,000,000). This provision covers further loans made after the year end. No income is likely to arise from this loan and hence none has been accrued in these accounts.
G Essex is a joint venture partner of I45 Ltd's controlling shareholder. During the year I45 Limited recharged legal fees to G Essex of £1,590 (2023: £2,862) and also made loans of £70,000 (2023: £292,416) to G Essex. At the year end the company was owed £362,416 (2023: £292,416). A provision of £362,416 (2023: £Nil) has been made against the loan during the year.
G Essex controls Gage Properties (UK) Limited. During the year I45 Limited made loans of £159,857 (2023: £Nil) to Gage Properties (UK) Limited. At the year end the company was owed £159,857 (2023: £Nil). A provision of £180,584 (2023: £Nil) has been made against the loan during the year. This provision covers further loans made after the year end.
S Branton is a controlling shareholder of Virtue Property Group Limited, a joint venture partner of I45 Ltd's controlling shareholder. During the year I45 Limited recharged legal fees to S Branton of £4,500 (2023: £Nil) and also made loans to him of £745,840 (2023: £Nil). At the year end the company was owed £745,840 (2023: £Nil). A provision of £735,000 (2023: £Nil) has been made against the loan during the year.
In addition, during the year the company loaned Virtue Property Group Limited £Nil (2023: £260,000) in return for fees and interest of £Nil (2023: £27,500).
During the year, professional services amounting to £278,945 (2023: £212,125) were provided by Sanders Chartered Accountants, a business controlled by S Sanders, a director of the company.
Orchard Farm Developments Limited was a subsidiary company during the previous year until the disposal of its shares on 24 May 2023 to a related company. The controlling shareholder of I45 Limited continues to have an indirect 50% interest in the share capital of Orchard Farm Developments Limited. At the year end the company was owed £1,840,647 (2023: £1,188,211) by Orchard Farm Developments Limited. The development has been affected by various challenges and a total provision of £1,200,000 (2023: £Nil) had been made against the loan by the year end date.
Bradmore Way Developments Limited was a subsidiary company during the previous year until the disposal of its shares on 24 May 2023 to a related company. The controlling shareholder of I45 Limited continues to have an indirect 50% interest in the share capital of Bradmore Way Developments Limited. At the year end the company was owed £795,103 (2023: £566,199) by Bradmore Way Developments Limited. The development has been affected by various challenges and a total provision of £910,000 (2023: £Nil) had been made against the loan by the year end date. This provision covers further loans made after the year end.
At the year end, the group had loaned £30,000 (2023: £30,000) to Affinity Flooring Limited, a company under common control.
At the year end, the group had loaned £1,839 (2023: £Nil) to Affinity Construction Limited, a company under common control.
The group and Affinity Reach Limited are under common control. During the year, the group made sales of £7,508 (2023: £292,806) to Affinity Reach Limited and made purchases of £Nil (2023: £35,695) from Affinity Reach Limited. Also, during the year ended 31 May 2024 the group was charged £Nil (2023: £3,229) for Corporation Tax group relief by Affinity Reach Limited. At the year end the group owed £2,715 (2023: £3,229) to Affinity Reach Limited.
Pryor Wood Developments Limited is controlled by a director of a group company. During the year, the group purchased services of £16,942 (2023: £16,000) from Pryor Wood Developments Limited.