FOR THE YEAR ENDED 31 OCTOBER 2023
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SANDBANKS GROUP HOLDINGS LIMITED
COMPANY INFORMATION
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SANDBANKS GROUP HOLDINGS LIMITED
CONTENTS
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SANDBANKS GROUP HOLDINGS LIMITED
GROUP STRATEGIC REPORT
FOR THE YEAR ENDED 31 OCTOBER 2023
Sandbanks Group (the Company) acts a holding company for Roadform Civil Engineering Ltd which operates within the Civil Engineering and Construction Industry providing services including groundworks, road construction and surfacing, building substructures, and drainage, principally for the new housing and Commercial Civils market. The majority of our customers are tier one main contractors and blue-chip plc national housebuilders operating in the South West of England.
Since all trading in the group relates to Roadform Civil Engineering Limited, the trading performance in this report relates to that entity.
Sales in 2023 were 11.0% lower than 2022 at £27.9 million. Net Income however in 2023 was a profit of £3.0 million, compared to a loss of £1.3 million in 2022, resulting in a £4.2 million turnaround.
A prior year adjustment of £463k was required to correct the audited accounts of 2022 to reflect the full recording of retentions. In previous years the Company had been unable to track and fully record retentions. With a process now in place the Company will be able to recover retentions when due, usually after 12 months, and improve cash flow. Sandbanks Holdings acquired Roadform in November 2022. During the year all supplier payments were met. In 2024 the Company has been able to further increase its credit limits with major suppliers. Several significant loss-making contracts were ended in 2023 and therefore no longer have a negative impact on the business. In early 2023 the Directors implemented a new sales process with a forward-thinking focus on client facing business development and ‘best-in-class’ quality assurance. This has resulted in several new projects being awarded in late 2023 and early 2024, In the last 8 months, the Company has received orders in excess of £30 million. Delays in starting these projects has led to some of that new revenue expected in 2024 being delayed until 2025. New markets beyond the housebuilding sector have successfully been opened. The Company fully expects a substantial growth in turnover and profitability in the year to October 2025. Projections indicate revenue to increase to £41 million with gross profit increasing by a further 6% points. Of the £41 million revenue projected for 2025, 62% is made up of either confirmed or recurring projects. The Company has responded to tenders in excess of £100 million in the past 12 months. For 2024 revenue should exceed £29 million. The Company invested £1.4 million in improved plant and equipment in 2023. The Company has revalued its head office adding £694k to its Balance Sheet value. In total the Company has decreased the Balance Sheet net worth by £1.5 million to £3.0 million as at October 2023, due to the negative goodwill recognised when aquiring Roadform. The Company’s enhanced operational performance, strengthened customer relationships and rigorous cost management have laid a solid foundation for sustainable growth and profitability in the years ahead. The management team have a strong vision and 10-year plan to be the leading Civil Engineering firm in the South West. The turnaround, driven by increased customer projects, improved customer relationships, and a tighter cost management will show fully in the Company’s financial results in 2025.
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SANDBANKS GROUP HOLDINGS LIMITED
GROUP STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2023
Operational Achievements
Since the installation of the new management team, the Company has experienced a notable increase in customer projects and strengthened customer relationships. This growth is a testament to the team's strategic direction and ability to deliver value to clients, thereby driving customer confidence and the company's overall business expansion. The Company has increased its client-base, to include more well known national and international brands within the Construction, Commercial, Retail, Renewables and Utility sectors. In May 2024 the Company obtained ISO 14001 and 45001 status adding to the already obtained ISO 9001, becoming one of the only groundworks/civil engineering companies in the South West to have this accreditation. The Company has successfully tightened control over its plant hire, fuel costs, and labour expenses. This proactive approach has resulted in improved operational efficiency and cost savings. The implementation of a new time recording software, fuel cards and site fuel management processes in late 2023 will continue to have significant impact in 2024.
Increased mortgage interest rates were expected to slow demand for new houses and as a result housebuilders would delay development of existing projects. However, this does not appear to have happened with our client-base. The change of government is likely to increase house building and consequently demand for the Company’s services.
Agreed contract revenue could be delayed if housebuilders decide to slow the release of new build houses on to the market. Applications for payment can be delayed by customers tying up large amounts of working capital while being obliged to pay for related supplies and labour more rapidly. Contracts may not be delivered as cost effectively as envisaged in the original tenders. The Company has now implemented monthly detailed Cost Valuation Report reviews to ensure that the loss-making contracts like those that occurred in 2022 and 2021 are not repeated. Errors can be made in tender pricing leading to loss making contracts. The company has used AI-derived technology and software, resulting in considerably reducing that risk. For example the Company is implementing a bespoke software platform designed to seamlessly transition from initial tender estimating through to the complete commercial aspects of a project and finally onto the Company’s accounting systems. The growth in revenue may result in difficulties in obtaining the necessary skilled labour. The Company does not carry any bank debt, it is therefore not exposed to higher market interest rate risk. In addition, only 53% of fixed assets are HP financed. The Company is reliant on maintaining good credit ratings to obtain materials from suppliers.
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SANDBANKS GROUP HOLDINGS LIMITED
GROUP STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2023
The Directors monitor the Company’s progress against its strategic objectives and the financial performance of the Company’s operations on a regular basis, producing monthly management accounts.
For the year ended 31 October 2023, turnover was £27,889k (2022 - £31,400k), this represents a 11.0% decrease on the previous year. This decrease was primarily due to a number of projects completing, whilst the Company’s key focus for 2023 was to increase efficiencies post takeover and in readiness for increased turnover and profit for 2024 and beyond. Gross profit % for the year ended 31 October 2023 was 6.4% (2022 – 6.5%). The Company forecasts an improvement of 5% points in the year to 2024 as a result of the Operational Achievements noted above. The proportion of applications outstanding from previous months was 70% at the end of October 2022. This had been reduced to 64% at the end of October 2023. As at Q2 2024, this has reduced to 24% whilst our target is to reduce and maintain this to 20% by the end of 2024. The Company is forecasting a turnover of £29 million in 2024 and gross profit of 10%, with a considerable growth of 41% to £41 million for the year ended 31 October 2025. The Company exited a number of loss-making contracts in 2023 and relaunched the sales and marketing process which has added over £20 million of further new contracts.
This report was approved by the board on 30 October 2024 and signed on its behalf.
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SANDBANKS GROUP HOLDINGS LIMITED
DIRECTOR'S REPORT
FOR THE YEAR ENDED 31 OCTOBER 2023
The Director presents his report and the financial statements for the year ended 31 October 2023.
The Director is responsible for preparing the Group strategic report, the Director's report and the consolidated financial statements in accordance with applicable law and regulations.
In preparing these financial statements, the Director is required to:
∙select suitable accounting policies for the Group's financial statements and then apply them consistently;
∙make judgments and accounting estimates that are reasonable and prudent;
∙prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group will continue in business.
The Director is 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 the Group and to enable him to ensure that the financial statements comply with the Companies Act 2006. He is also responsible for safeguarding the assets of the Company and the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
The profit for the year, after taxation, amounted to £3,091,419 (2022: £NIL).
The Director who served during the year was:
As a result of the growth in revenue and the resulting need for working capital, Roadform decided to increase its share capital has allotted 1,500 shares for a subscription price of £600,000, representing 15% of the voting rights to a new investor, Simon Almond. Thus, the Company now holds 85% of the shares in Roadform. In addition, Roadform raised a mortgage of £800,000 against the head office property in Newton Abbot for the same purpose.
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SANDBANKS GROUP HOLDINGS LIMITED
DIRECTOR'S REPORT (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2023
The auditors, Bishop Fleming LLP, will be proposed for reappointment in accordance with section 485 of the Companies Act 2006.
This report was approved by the board and signed on its behalf.
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SANDBANKS GROUP HOLDINGS LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF SANDBANKS GROUP HOLDINGS LIMITED
We have audited the financial statements of Sandbanks Group Holdings Limited (the 'parent Company') and its subsidiaries (the 'Group') for the year ended 31 October 2023, which comprise the Consolidated statement of comprehensive income, the Consolidated Statement of Financial Position, the Company Statement of Financial Position, the Consolidated Statement of Cash Flows, the Consolidated Statement of Changes in Equity, the Company Statement of Changes in Equity, the Consoliudated Analysis of Net Debt and the related notes, 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).
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 Auditors' 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 United Kingdom, including the Financial Reporting Council'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.
In auditing the financial statements, we have concluded that the Director's use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the Group's or the parent Company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the Director with respect to going concern are described in the relevant sections of this report.
The other information comprises the information included in the Annual Report other than the financial statements and our Auditors' report thereon. The Director is 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.
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SANDBANKS GROUP HOLDINGS LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF SANDBANKS GROUP HOLDINGS LIMITED (CONTINUED)
In our opinion, based on the work undertaken in the course of the audit:
∙the information given in the Group strategic report and the Director's report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
∙the Group strategic report and the Director's 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 Group strategic report or the Director's report.
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SANDBANKS GROUP HOLDINGS LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF SANDBANKS GROUP HOLDINGS LIMITED (CONTINUED)
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 Auditors' 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 Group 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:
In identifying and assessing risks of material misstatement in respect of irregularities, including fraud and non-compliance with laws and regulations, we considered the following:
∙the nature of the sector, control environment and the company’s performance;
∙results of our enquiries of management and the Directors, about their own identification and assessment of the risks of irregularities;
∙any matters we identified having obtained and reviewed the company’s documentation of their policies and procedures relating to: identifying, evaluating and complying with laws and regulations and whether they were aware of any instances of non compliance; detecting and responding to the risks of fraud and whether they have knowledge of any actual, suspected or alleged fraud; the internal controls established to mitigate risks of fraud or non compliance with laws and regulations; and
∙the matters discussed among the audit engagement team regarding how and where fraud might occur in the financial statements and any potential indicators of fraud.
As a result of these procedures, we have considered the opportunities and incentives that may exist within the organisation for fraud and identified the highest area of risk to be in relation to revenue recognition, with a particular risk in relation to year end cut off and long term contract accounting. In common with all audits under ISAs (UK), we are also required to perform specific procedures to respond to the risk of management override.
We identified and obtained an understanding of the laws and regulations that are of significance to the company by discussions with directors and by updating our understanding of the sector in which the company operated in. Laws and regulations that are of direct significance to the company, and of which non compliance could result in material misstatement, are considered to be the UK Companies Act, FRS 102 and UK tax legislation.
In addition, we considered provisions of other laws and regulations that do not have a direct effect on the financial statements but compliance with which may be fundamental to the company’s ability to operate or to avoid a material penalty. These included data protection, health and safety, employment legislation, contract law, building regulations.
Our procedures to respond to risks identified in the parent company and subsidiary included the following:
∙reviewing the financial statement disclosures and testing to supporting documentation to assess compliance with provisions of relevant laws and regulations described as having a direct effect on the financial statements;
∙reviewing the financial statement disclosures and testing to supporting documentation to assess the recognition of revenue;
∙Considering the valuation of accruals and work in progress and testing to supporting documentation.
∙Challenging assumptions and judgements made by management in their significant accounting estimates.
∙enquiring of Directors and management concerning actual and potential litigation and claims;
∙performing procedures to confirm material compliance with the requirements of the above regulations;
∙performing analytical procedures to identify any unusual or unexpected relationships that may indicate risks of material misstatement due to fraud; and
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SANDBANKS GROUP HOLDINGS LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF SANDBANKS GROUP HOLDINGS LIMITED (CONTINUED)
∙in addressing the risk of fraud through management override of controls, testing the appropriateness of journal entries and other adjustments; and assessing whether the judgements made in making accounting estimates are indicative of a potential bias.
We also communicated relevant identified laws and regulations and potential fraud risks to all engagement team members and remained alert to any indications of fraud or non compliance with laws and regulations throughout the audit.
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 an 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 would become aware of it.
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our Auditors' 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 Auditors' 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.
for and on behalf of
Chartered Accountants
Statutory Auditors
2nd Floor Stratus House
Emperor Way
Exeter Business Park
EX1 3QS
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SANDBANKS GROUP HOLDINGS LIMITED
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 OCTOBER 2023
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SANDBANKS GROUP HOLDINGS LIMITED
REGISTERED NUMBER:13669673
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 31 OCTOBER 2023
The financial statements were approved and authorised for issue by the board and were signed on its behalf by:
The notes on pages 18 to 38 form part of these financial statements.
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SANDBANKS GROUP HOLDINGS LIMITED
REGISTERED NUMBER:13669673
COMPANY STATEMENT OF FINANCIAL POSITION
AS AT 31 OCTOBER 2023
The financial statements were approved and authorised for issue by the board and were signed on its behalf by:
The notes on pages 18 to 38 form part of these financial statements.
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SANDBANKS GROUP HOLDINGS LIMITED
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 OCTOBER 2023
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SANDBANKS GROUP HOLDINGS LIMITED
COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 OCTOBER 2023
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SANDBANKS GROUP HOLDINGS LIMITED
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 OCTOBER 2023
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SANDBANKS GROUP HOLDINGS LIMITED
CONSOLIDATED STATEMENT OF CASH FLOWS (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2023
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SANDBANKS GROUP HOLDINGS LIMITED
CONSOLIDATED ANALYSIS OF NET DEBT
FOR THE YEAR ENDED 31 OCTOBER 2023
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SANDBANKS GROUP HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 OCTOBER 2023
Sandbanks Group Holdings Limited (company registration number 13669673) is a private company, limited by shares, incorporated in the United Kingdom under the Companies Act 2006 and is registered in England and Wales. The address of the Company's registered office is 1 Old Rydon Lane, Exeter, England EX2 7RR.
2.Accounting policies
The financial statements have been prepared under the historical cost convention unless otherwise specified within these accounting policies and in accordance with Financial Reporting Standard 102, the Financial Reporting Standard applicable in the UK and the Republic of Ireland and the Companies Act 2006.
The preparation of financial statements in compliance with FRS 102 requires the use of certain critical accounting estimates. It also requires Group management to exercise judgment in applying the Group's accounting policies (see note 3).
The Company has taken advantage of the exemption allowed under section 408 of the Companies Act 2006 and has not presented its own Statement of comprehensive income in these financial statements.
The following principal accounting policies have been applied:
The consolidated financial statements present the results of the Company and its own subsidiaries ("the Group") as if they form a single entity. Intercompany transactions and balances between group companies are therefore eliminated in full.
The consolidated financial statements incorporate the results of business combinations using the purchase method. In the Statement of financial position, the acquiree's identifiable assets, liabilities and contingent liabilities are initially recognised at their fair values at the acquisition date. The results of acquired operations are included in the Consolidated statement of comprehensive income from the date on which control is obtained. They are deconsolidated from the date control ceases. The subsidiary was acquired on 15 November 2022 and the Consolidated statement of comprehensive income reflect the period from the date of acquisition.
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SANDBANKS GROUP HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 OCTOBER 2023
2.Accounting policies (continued)
The Directors are confident that the return to profitability will be continued into 2024 and 2025 and the business is on a substantial growth curve. This is clearly indicated in the detailed revenue forecast for 2024 and 2025.
The directors prepare both budgets and revenue forecasts for a minimum of 12 months from approval of these financial statements and they are satisfied that those forecasts provide a reasonable and realistic expectation that the Company can continue for the foreseeable future. As such, the directors have concluded that the Company is a going concern and the financial statements have been prepared on this basis. This assumes that the Company will be able to realise its assets and discharge its liabilities in the normal course of business. The forecasts prepared take account of current market conditions including the impact of interest rates and inflation, post year end trading performance, secured revenue, confirmed and recurring contracts as well as tendered projects with a carefully calculated estimate of success. The directors have also considered the amount by which turnover is required to fall such that the business may not be able to meet its liabilities as they fall due. Based on post year end trading to date, the current order book and market expectations, it is considered that the chance of such a significant fall in turnover to be remote. The Company regularly reviews credit terms offered to customers and outstanding balances are updated monthly with strict credit control processes in place. When making this assessment, the directors have also considered the existence of a contingent liability to HMRC for incorrect IR35 and Employment Status treatment of workers that occurred prior to 2023 (see Note 27). Since April 2024 the Demibourne principle has legislated for IR35 as well as Employment Status liabilities to be netted against what has already been paid by the worker. The net liability, the difference between the maximum liability and the amount already paid by the workers via their CIS filings with HMRC cannot be accurately determined. The Company has taken advice in this respect and has notified HMRC. It is expected that given the time taken to agree with HMRC, probably over 12 months, and the likelihood of extended payment terms, this liability will not need to be fully settled within the next 24 months. The result of these reviews is that the directors are satisfied that the Company can meet its liabilities as they fall due for a period of at least 12 months from approval of the financial statements and therefore it is appropriate to prepare the financial statements on a going concern basis.
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SANDBANKS GROUP HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 OCTOBER 2023
2.Accounting policies (continued)
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SANDBANKS GROUP HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 OCTOBER 2023
2.Accounting policies (continued)
Intangible assets consist of negative goodwill arising on Negative goodwill is initially recognised at cost, being the cost of investment less the fair value of assets acquired. After recognition, negative goodwill is measured at cost less any accumulated amortisation and any accumulated impairment.
The negative goodwill is amortised relative to the life of the assets acquired up to a maximum of 10 years. The amortisation period is 3-10 years.
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SANDBANKS GROUP HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 OCTOBER 2023
2.Accounting policies (continued)
Depreciation is charged so as to allocate the cost of assets less their residual value over their estimated useful lives, on a reducing balance basis.
Depreciation is provided on the following basis:
The assets' residual values, useful lives and depreciation methods are reviewed, and adjusted prospectively if appropriate, or if there is an indication of a significant change since the last reporting date.
Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised in profit or loss.
Fair values are determined from market based evidence normally undertaken by professionally qualified valuers.
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SANDBANKS GROUP HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 OCTOBER 2023
2.Accounting policies (continued)
Provisions are measured as the best estimate of the amount required to settle the obligation, taking into account the related risks and uncertainties.
The Group has elected to apply the provisions of Section 11 “Basic Financial Instruments” 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.
Basic financial assets
Basic financial assets, which include trade and other receivables, cash and bank balances, are initially measured at their transaction price including transaction costs and are subsequently carried at their amortised cost using the effective interest method, less any provision for impairment, 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.
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SANDBANKS GROUP HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 OCTOBER 2023
2.Accounting policies (continued)
Discounting is omitted where the effect of discounting is immaterial. The Group's cash and cash equivalents, trade and most other receivables due with the operating cycle fall into this category of financial instruments.
Impairment of financial assets
Financial assets are assessed for indicators of impairment at each reporting date.
Financial assets are impaired when events, subsequent to their initial recognition, indicate the estimated future cash flows derived from the financial asset(s) have been adversely impacted. The impairment loss will be the difference between the current carrying amount and the present value of the future cash flows at the asset(s) original effective interest rate.
If there is a favourable change in relation to the events surrounding the impairment loss then the impairment can be reviewed for possible reversal. The reversal will not cause the current carrying amount to exceed the original carrying amount had the impairment not been recognised. The impairment reversal is recognised in the profit or loss.
Financial liabilities
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instruments any contract that evidences a residual interest in the assets of the Group after the deduction of all its liabilities.
Basic financial liabilities, which include trade and other payables, bank loans, other loans and loans due to fellow group companies are initially measured at their transaction price after transaction costs. When this constitutes a financing transaction, whereby the debt instrument is measured at the present value of the future receipts discounted at a market rate of interest. Discounting is omitted where the effect of discounting is immaterial.
Debt instruments are subsequently carried at their amortised cost using the effective interest rate method.
Trade payables are obligations to pay for goods and services that have been acquired in the ordinary course of business from suppliers. Trade payables are classified as current liabilities if the payment is due within one year. If not, they represent non-current liabilities. Trade payables are initially recognised at their transaction price and subsequently are measured at amortised cost using the effective interest method. Discounting is omitted where the effect of discounting is immaterial.
Derecognition of financial instruments
Derecognition of financial assets
Financial assets are derecognised when their contractual right to future cash flow expire, or are settled, or when the Group transfers the asset and substantially all the risks and rewards of ownership to another party. If significant risks and rewards of ownership are retained after the transfer to another party, then the Group will continue to recognise the value of the portion of the risks and rewards retained.
Derecognition of financial liabilities
Financial liabilities are derecognised when the Group's contractual obligations expire or are discharged or cancelled.
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SANDBANKS GROUP HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 OCTOBER 2023
Impairment of stocks The management calculates impairments by conisdering the nature and condition of the inventory and applies assumptions around anticipated saleability of finished goods and future usage of raw materials, overaheads and labour. Impairment of trade debtors-recoverable on contract On a monthly basis, mangement makes an estimation of the recoverability of trade debtors and sums recoverable on contracts. Management makes such estimations based on the credit rating of debtors, the ageing profile, and historical experience. Long term contract accounting Revenue for long term contracts is recognised based on the stage of completion of the contract. The stage of completion is calculated based on costs incurred as a proportion of estimated total costs and as such includes an element of estimation and uncertainty. IR 35 Liabilities The Company is subject to liabilities in respect of historic incorrect treatment of subcontractors. Since the value of these balances cannot be reliably estimated until such time as HMRC makes a determination of the final amounts due, the Directors consider the value of the total potential liability to be uncertain and as such it has been treated as a contingent liability, see note 21.
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SANDBANKS GROUP HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 OCTOBER 2023
Page 26
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SANDBANKS GROUP HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 OCTOBER 2023
Page 27
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SANDBANKS GROUP HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 OCTOBER 2023
11.Taxation (continued)
There were no factors that may affect the future tax charges.
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SANDBANKS GROUP HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 OCTOBER 2023
Page 29
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SANDBANKS GROUP HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 OCTOBER 2023
Page 30
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SANDBANKS GROUP HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 OCTOBER 2023
Page 31
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SANDBANKS GROUP HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 OCTOBER 2023
Page 32
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SANDBANKS GROUP HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 OCTOBER 2023
Page 33
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SANDBANKS GROUP HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 OCTOBER 2023
Page 34
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SANDBANKS GROUP HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 OCTOBER 2023
Page 35
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SANDBANKS GROUP HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 OCTOBER 2023
Profit and loss account
Page 36
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SANDBANKS GROUP HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 OCTOBER 2023
26.Business combinations (continued)
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SANDBANKS GROUP HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 OCTOBER 2023
Following the acquisition of the company’s shares on 15th November 2022 the new owners had a review undertaken of the employment status of the workers and the application of the Off Payroll Working legislation. The result of that review is different to the previous owner’s original determination and it is believed that a number of workers should have been treated as employees, rather than self-employed, and that a number of limited companies fell within the Off Payroll Working legislation. The company has disclosed this to HMRC. Since this review, the relevant individuals and limited companies have been processed through payroll in which tax and national insurance has been deducted at source.
Where the workers have correctly submitted self assessment tax returns or corporation tax returns, any tax and national insurance paid by the worker can be offset against the liability due under the employment status and ff payroll working legislation. The net liability to HMRC will therefore be the difference between the maximum liability if the worker was treated as an employee and the amount already paid by the workers via their self assessment or corporation tax filings. If the workers have correctly filed their tax returns, the liability could be close to zero. As it is currently unknown what the workers have declared, the exact liability cannot be reliably measured and it is thus considered contingent. The maximum liability if no earnings have been declared by the worker is £425,463 for workers operating via personal service companies and £497,016 for self employed workers. It is expected that given the time taken to agree with HMRC, and the likelihood of extended payment terms, any liability will not need to be fully settled within the next 18 months.
The Group operates a defined contributions pension scheme. The assets of the scheme are held separately from those of the Group in an independently administered fund. The pension cost charge represents contributions payable by the Group to the fund and amounted to £97,348 (2022: £Nil) . Contributions totalling £8,868 (2022: £Nil) were payable to the fund at the reporting date and are included in creditors.
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