Company registration number 03653041 (England and Wales)
S & R CONSTRUCTION LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 OCTOBER 2023
S & R CONSTRUCTION LIMITED
COMPANY INFORMATION
Director
Mr S Sankey
Company number
03653041
Registered office
The Premier Industrial Estate The Leys
Brockmoor
Brierley Hill
West Midlands
DY5 3UP
Auditor
BK Plus Audit Limited
Azzurri House
Walsall Road
Aldridge
Walsall
England
WS9 0RB
S & R CONSTRUCTION LIMITED
CONTENTS
Page
Strategic report
1 - 2
Director's report
3
Director's responsibilities statement
4
Independent auditor's report
5 - 7
Profit and loss account
8
Statement of comprehensive income
9
Balance sheet
10
Statement of changes in equity
11
Statement of cash flows
12
Notes to the financial statements
13 - 24
S & R CONSTRUCTION LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 31 OCTOBER 2023
- 1 -
The director presents the strategic report for the year ended 31 October 2023.
Review of the business
S & R Construction is a family-owned utility services provider based in the West Midlands, specializing in affordable and sustainable gas, water, and electricity solutions. Serving both the private and public sectors, we deliver high-quality operations with a strong commitment to safety, backed by industry accreditations including GIRS, NERS, WIRS, CHAS, and Gas Safe.
Our expertise spans new installations, utility replacements, reinstatement, and meter services, with capabilities in comprehensive utility infrastructure, including pipework, multi-utility pipes, and cabling for complex site requirements. Guided by our health and safety policies and a dedicated team, we aim to foster long-term growth through quality-driven client satisfaction and excellence in service.
Company growth
S & R Construction Ltd has achieved substantial growth and operational expansion this year, resulting revenue increasing by 47% to £45,287,620 from that achieved in the previous financial year.
Key factors driving this increase include securing major new contracts, expanding our divisional capabilities, and achieving recognition in multi-utility services. Each strategic development has strengthened our position within the industry, setting a foundation for sustained long-term success.
Key drivers of growth
New Severn Trent Water Contract
The Severn Trent Water contract has been a pivotal addition, providing a reliable revenue stream through a high-value, long-term agreement with a major utility provider.
This contract leverages our core expertise and reputation in utility services & also enhances our portfolio, positioning us as a preferred partner for future contracts with large utility companies.
Consistent delivery and maintaining high standards for this contract may lead to contract extensions, additional contracts, and potential new business from other utility companies.
New Highways Contract
The addition of a new highways contract has allowed us to penetrate a previously underrepresented sector in our portfolio. This contract aligns well with our capabilities in infrastructure and complements our existing utility services.
This venture into highway services has significantly contributed to our turnover by expanding our client base and service offerings. It also diversifies our revenue sources, reducing reliance on a single sector and providing additional stability to our business model.
Successful execution of this contract will open doors to further opportunities in the public and private sectors for road and infrastructure projects. Additionally, our performance will be instrumental in building our reputation for handling diverse, large-scale infrastructure projects.
S & R CONSTRUCTION LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2023
- 2 -
New Groundworks Division
The establishment of the Groundworks Division marks a strategic move to bring in-house capabilities to our construction and infrastructure projects, reducing dependency on external subcontractors and increasing operational efficiency.
This division has already contributed significantly to revenue growth, providing cost savings and greater control over project timelines and quality. By owning the groundwork phase, we improve the profitability of each project and enhance our ability to deliver on complex, multi-phase projects.
As our groundworks division matures, we anticipate securing stand-alone groundworks projects and establishing a competitive edge in our bids for complex infrastructure projects. This division also offers scalability potential as we aim to further streamline operations.
Increased Recognition in Multi-Utility Services
Our team has received multiple awards for excellence in multi-utility services this year, establishing us as a leader in the field and enhancing our reputation within the industry.
These awards not only validate our team’s capabilities but also attract new business opportunities. Industry recognition provides greater trust and credibility, giving us a competitive edge in bids for large, high-value contracts. This recognition has translated into direct financial gains through new contract awards, contributing to the doubling of our turnover.
Awards and recognition create momentum, enhancing our marketability to potential clients and partners. We anticipate this reputation will facilitate future bids and enable us to expand our multi-utility services footprint.
Conclusion and strategic outlook
In summary, the company has experienced significant growth this year due to strategic contract wins, expansion into complementary service areas, and increased industry recognition. This growth has not only amplified our revenue but also diversified our service offerings and fortified our industry position.
Looking forward, we plan to build on these achievements by:
1. Leveraging our expanded capabilities to pursue additional contracts across water, highways, and utility services.
2. Continuing to invest in operational efficiencies within the Groundworks Division.
3. Pursuing targeted growth opportunities in multi-utility services, particularly those that align with our core competencies.
This strategic approach will enable sustained growth and further solidify our role as a leader in infrastructure, utility, and multi-service delivery.
Mr S Sankey
Director
7 November 2024
S & R CONSTRUCTION LIMITED
DIRECTOR'S REPORT
FOR THE YEAR ENDED 31 OCTOBER 2023
- 3 -
The director presents his annual report and financial statements for the year ended 31 October 2023.
Principal activities
The principal activity of the company continued to be that of construction specialists.
Results and dividends
The results for the year are set out on page 8.
Ordinary dividends were paid amounting to £535,000. The director does not recommend payment of a final dividend.
Director
The director who held office during the year and up to the date of signature of the financial statements was as follows:
Mr S Sankey
Mr C Sankey
(Resigned 15 July 2024)
Auditor
BK Plus Audit Limited were appointed as auditor to the company and in accordance with section 485 of the Companies Act 2006, a resolution proposing that they be re-appointed will be put at a General Meeting.
Statement of disclosure to auditor
So far as each person who was a director at the date of approving this report is aware, there is no relevant audit information of which the company’s auditor is unaware. Additionally, the directors individually have taken all the necessary steps that they ought to have taken as directors in order to make themselves aware of all relevant audit information and to establish that the company’s auditor is aware of that information.
Medium-sized companies exemption
This report has been prepared in accordance with the provisions applicable to companies entitled to the medium-sized companies exemption.
On behalf of the board
Mr S Sankey
Director
7 November 2024
S & R CONSTRUCTION LIMITED
DIRECTOR'S RESPONSIBILITIES STATEMENT
FOR THE YEAR ENDED 31 OCTOBER 2023
- 4 -
The director is responsible for preparing the annual report and the financial statements in accordance with applicable law and regulations.
Company law requires the director to prepare financial statements for each financial year. Under that law the director has elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the director must not approve the financial statements unless he is satisfied that they give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period. In preparing these financial statements, the director is required to:
select suitable accounting policies and then apply them consistently;
make judgements 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 company 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 enable them to ensure that the financial statements comply with the Companies Act 2006. He is also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
S & R CONSTRUCTION LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF S & R CONSTRUCTION LIMITED
- 5 -
Opinion
We have audited the financial statements of S & R Construction Limited (the 'company') for the year ended 31 October 2023 which comprise the profit and loss account, the statement of comprehensive income, the balance sheet, the statement of changes in equity, the statement of cash flows and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).
In our opinion the financial statements:
give a true and fair view of the state of the company's affairs as at 31 October 2023 and of its profit for the year then ended;
have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
have been prepared in accordance with the requirements of the Companies Act 2006.
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the 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 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 auditor's 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.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of our audit:
the information given in the strategic report and the director's report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
the strategic report and the director's report have been prepared in accordance with applicable legal requirements.
S & R CONSTRUCTION LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF S & R CONSTRUCTION LIMITED (CONTINUED)
- 6 -
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identified material misstatements in the strategic report or the director's report.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:
adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or
the financial statements are not in agreement with the accounting records and returns; or
certain disclosures of remuneration specified by law are not made; or
we have not received all the information and explanations we require for our audit.
Responsibilities of director
As explained more fully in the director's responsibilities statement, the director is 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 director determines 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 director is responsible for assessing the company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the director either intends to liquidate the company or to cease operations, or has no realistic alternative but to do so.
Auditor's responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
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.
From the preliminary stages of the audit, we ensure our understanding of the entity is up to date. This includes, but is not limited to, current knowledge of their activities, the business and control environments, and their compliance with the applicable legal and regulatory frameworks. This information supports our risk identification and the subsequent design of audit procedures to mitigate those risks; ensuring that the audit evidence obtained is sufficient and appropriate to support our opinion.
In response to the risks identified, specific to this entity, we designed procedures which included, but were not limited to:
Enquiry of management and those charged with governance around actual and potential litigation and claims;
Reviewing minutes of meetings of those charged with governance, where available;
Reviewing financial statement disclosures and testing to supporting documentation to assess compliance with applicable laws and regulations;
Auditing the risk of management override of controls, including through testing journal entries and other adjustments for appropriateness, and evaluating the business rationale for significant transactions outside the normal course of business.
A further description of our responsibilities is available on the Financial Reporting Council’s website at: https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.
S & R CONSTRUCTION LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF S & R CONSTRUCTION LIMITED (CONTINUED)
- 7 -
Other matters which we are required to address
This is a first year audit engagement and as such, the comparative figures are unaudited, and we provide no assurance over them. Sufficient opening balance work has been performed to enable an unqualified opinion over the current year figures.
This report is made solely to the company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's members as a body, for our audit work, for this report, or for the opinions we have formed.
Christopher Hession C.A.
Senior Statutory Auditor
For and on behalf of BK Plus Audit Limited
7 November 2024
Chartered Certified
Statutory Auditor
Azzurri House
Walsall Road
Aldridge
Walsall
England
WS9 0RB
S & R CONSTRUCTION LIMITED
PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 31 OCTOBER 2023
- 8 -
2023
2022
Notes
£
£
Turnover
3
45,287,622
30,879,513
Cost of sales
(37,090,792)
(25,641,156)
Gross profit
8,196,830
5,238,357
Distribution costs
(1,958,816)
(1,602,601)
Administrative expenses
(3,596,522)
(2,326,895)
Operating profit
4
2,641,492
1,308,861
Interest receivable and similar income
7
1,882
Interest payable and similar expenses
8
(173,677)
(147,740)
Profit before taxation
2,467,815
1,163,003
Tax on profit
9
(660,437)
(138,387)
Profit for the financial year
1,807,378
1,024,616
The profit and loss account has been prepared on the basis that all operations are continuing operations.
S & R CONSTRUCTION LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 OCTOBER 2023
- 9 -
2023
2022
£
£
Profit for the year
1,807,378
1,024,616
Other comprehensive income
-
-
Total comprehensive income for the year
1,807,378
1,024,616
S & R CONSTRUCTION LIMITED
BALANCE SHEET
AS AT
31 OCTOBER 2023
31 October 2023
- 10 -
2023
2022
Notes
£
£
£
£
Fixed assets
Tangible assets
11
5,896,720
1,938,008
Current assets
Stocks
12
3,089,153
4,156,816
Debtors
13
1,886,975
2,627,085
Cash at bank and in hand
4,915,066
1,257,568
9,891,194
8,041,469
Creditors: amounts falling due within one year
14
(9,050,316)
(5,678,750)
Net current assets
840,878
2,362,719
Total assets less current liabilities
6,737,598
4,300,727
Creditors: amounts falling due after more than one year
15
(2,063,384)
(1,097,991)
Provisions for liabilities
Deferred tax liability
17
680,231
481,131
(680,231)
(481,131)
Net assets
3,993,983
2,721,605
Capital and reserves
Called up share capital
19
200
200
Profit and loss reserves
3,993,783
2,721,405
Total equity
3,993,983
2,721,605
These financial statements have been prepared in accordance with the provisions relating to medium-sized companies.
The financial statements were approved by the board of directors and authorised for issue on 7 November 2024 and are signed on its behalf by:
Mr S Sankey
Director
Company registration number 03653041 (England and Wales)
S & R CONSTRUCTION LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 OCTOBER 2023
- 11 -
Share capital
Profit and loss reserves
Total
Notes
£
£
£
Balance at 1 November 2021
200
1,708,789
1,708,989
Year ended 31 October 2022:
Profit and total comprehensive income
-
1,024,616
1,024,616
Dividends
10
-
(12,000)
(12,000)
Balance at 31 October 2022
200
2,721,405
2,721,605
Year ended 31 October 2023:
Profit and total comprehensive income
-
1,807,378
1,807,378
Dividends
10
-
(535,000)
(535,000)
Balance at 31 October 2023
200
3,993,783
3,993,983
S & R CONSTRUCTION LIMITED
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 OCTOBER 2023
- 12 -
2023
2022
Notes
£
£
£
£
Cash flows from operating activities
Cash generated from operations
22
7,662,497
2,161,135
Interest paid
(173,677)
(147,740)
Income taxes paid
(62,322)
(93,580)
Net cash inflow from operating activities
7,426,498
1,919,815
Investing activities
Purchase of tangible fixed assets
(5,087,791)
(668,692)
Proceeds from disposal of tangible fixed assets
108,333
13,394
Repayment of loans
431,522
(442,844)
Interest received
1,882
Net cash used in investing activities
(4,547,936)
(1,096,260)
Financing activities
Payment of finance leases obligations
1,313,936
(308,703)
Dividends paid
(535,000)
(12,000)
Net cash generated from/(used in) financing activities
778,936
(320,703)
Net increase in cash and cash equivalents
3,657,498
502,852
Cash and cash equivalents at beginning of year
1,257,568
754,716
Cash and cash equivalents at end of year
4,915,066
1,257,568
S & R CONSTRUCTION LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 OCTOBER 2023
- 13 -
1
Accounting policies
Company information
S & R Construction Limited is a private company limited by shares incorporated in England and Wales. The registered office is The Premier Industrial Estate The Leys, Brockmoor, Brierley Hill, West Midlands, DY5 3UP.
1.1
Accounting convention
These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006.
The financial statements are prepared in sterling, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £.
The financial statements have been prepared under the historical cost convention. The principal accounting policies adopted are set out below.
1.2
Going concern
Atruet the time of approving the financial statements, the director has a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future. Thus the director continues to adopt the going concern basis of accounting in preparing the financial statements.
1.3
Turnover
Turnover is recognised at the fair value of the consideration received or receivable for goods and services provided in the normal course of business, and is shown net of VAT and other sales related taxes. The fair value of consideration takes into account trade discounts, settlement discounts and volume rebates.
When cash inflows are deferred and represent a financing arrangement, the fair value of the consideration is the present value of the future receipts. The difference between the fair value of the consideration and the nominal amount received is recognised as interest income.
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.
Revenue from contracts for the provision of professional services is recognised by reference to the stage of completion when the stage of completion, costs incurred and costs to complete can be estimated reliably. The stage of completion is calculated by comparing costs incurred, mainly in relation to contractual hourly staff rates and materials, as a proportion of total costs. Where the outcome cannot be estimated reliably, revenue is recognised only to the extent of the expenses recognised that it is probable will be recovered.
1.4
Tangible fixed assets
Tangible fixed assets are initially measured at cost and subsequently measured at cost or valuation, net of depreciation and any impairment losses.
Depreciation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:
Freehold land and buildings
2% straight line
Plant and equipment
20% straight line
Fixtures and fittings
20% straight line
Computers
33.33% straight line
Motor vehicles
20% straight line
S & R CONSTRUCTION LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2023
1
Accounting policies
(Continued)
- 14 -
The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is credited or charged to profit or loss.
1.5
Impairment of fixed assets
At each reporting period end date, the company reviews the carrying amounts of its tangible 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.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.
Recognised impairment losses are reversed if, and only if, the reasons for the impairment loss have ceased to apply. Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.
1.6
Stocks
Stocks are stated at the lower of cost and estimated selling price less costs to complete and sell. Cost comprises direct materials and, where applicable, direct labour costs and those overheads that have been incurred in bringing the stocks to their present location and condition.
Stocks held for distribution at no or nominal consideration are measured at the lower of cost and replacement cost, adjusted where applicable for any loss of service potential.
At each reporting date, an assessment is made for impairment. Any excess of the carrying amount of stocks over its estimated selling price less costs to complete and sell is recognised as an impairment loss in profit or loss. Reversals of impairment losses are also recognised in profit or loss.
1.7
Cash and cash equivalents
Cash and cash equivalents are basic financial assets and include cash in hand, deposits held at call with banks, other short-term liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities.
S & R CONSTRUCTION LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2023
1
Accounting policies
(Continued)
- 15 -
1.8
Financial instruments
The company has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.
Financial instruments are recognised in the company's balance sheet when the company becomes party to the contractual provisions of the instrument.
Financial assets and liabilities are offset, with the net amounts presented in the financial statements, when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.
Basic financial assets
Basic financial assets, which include debtors and cash and bank balances, are 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
Other financial assets, including investments in equity instruments which are not subsidiaries, associates or joint ventures, are initially measured at fair value, which is normally the transaction price. Such assets are subsequently carried at fair value and the changes in fair value are recognised in profit or loss, except that investments in equity instruments that are not publicly traded and whose fair values cannot be measured reliably are measured at cost less impairment.
Impairment of financial assets
Financial assets, other than those held at fair value through profit and loss, are assessed for indicators of impairment at each reporting end date.
Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected. If an asset is impaired, the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset’s original effective interest rate. The impairment loss is recognised in profit or loss.
If there is a decrease in the impairment loss arising from an event occurring after the impairment was recognised, the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been, had the impairment not previously been recognised. The impairment reversal is recognised in profit or loss.
Derecognition of financial assets
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the company transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.
Classification of financial liabilities
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the company after deducting all of its liabilities.
S & R CONSTRUCTION LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2023
1
Accounting policies
(Continued)
- 16 -
Basic financial 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.
Other financial liabilities
Debt instruments that do not meet the conditions in FRS 102 paragraph 11.9 are subsequently measured at fair value through profit or loss. Debt instruments may be designated as being measured at fair value through profit or loss to eliminate or reduce an accounting mismatch or if the instruments are measured and their performance evaluated on a fair value basis in accordance with a documented risk management or investment strategy.
Derecognition of financial liabilities
Financial liabilities are derecognised when the company’s contractual obligations expire or are discharged or cancelled.
1.9
Equity instruments
Equity instruments issued by the company are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the company.
1.10
Taxation
The tax expense represents the sum of the tax currently payable and deferred tax.
Current tax
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the profit and loss account because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The company’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.
S & R CONSTRUCTION LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2023
1
Accounting policies
(Continued)
- 17 -
Deferred tax
Deferred tax liabilities are generally recognised for all timing differences and deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Such assets and liabilities are not recognised if the timing difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.
The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the profit and loss account, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset when the company has a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.
1.11
Employee benefits
The costs of short-term employee benefits are recognised as a liability and an expense, unless those costs are required to be recognised as part of the cost of stock or fixed assets.
The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received.
Termination benefits are recognised immediately as an expense when the company is demonstrably committed to terminate the employment of an employee or to provide termination benefits.
1.12
Retirement benefits
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
1.13
Leases
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessees. All other leases are classified as operating leases.
Assets held under finance leases are recognised as assets at the lower of the assets fair value at the date of inception and the present value of the minimum lease payments. The related liability is included in the balance sheet as a finance lease obligation. Lease payments are treated as consisting of capital and interest elements. The interest is charged to profit or loss so as to produce a constant periodic rate of interest on the remaining balance of the liability.
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 leases asset are consumed.
2
Judgements and key sources of estimation uncertainty
In the application of the company’s accounting policies, the director is 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.
S & R CONSTRUCTION LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2023
- 18 -
3
Turnover and other revenue
2023
2022
£
£
Turnover analysed by geographical market
United Kingdom
45,287,622
30,879,513
2023
2022
£
£
Other revenue
Interest income
-
1,882
4
Operating profit
2023
2022
Operating profit for the year is stated after charging/(crediting):
£
£
Fees payable to the company's auditor for the audit of the company's financial statements
25,000
Depreciation of owned tangible fixed assets
712,909
612,273
Depreciation of tangible fixed assets held under finance leases
326,587
-
Profit on disposal of tangible fixed assets
(18,750)
(13,394)
Operating lease charges
60,000
60,000
5
Employees
The average monthly number of persons (including directors) employed by the company during the year was:
2023
2022
Number
Number
50
41
Their aggregate remuneration comprised:
2023
2022
£
£
Wages and salaries
1,859,898
2,268,242
Social security costs
196,673
239,852
Pension costs
35,037
32,851
2,091,608
2,540,945
6
Director's remuneration
2023
2022
£
£
Remuneration for qualifying services
27,462
S & R CONSTRUCTION LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2023
- 19 -
7
Interest receivable and similar income
2023
2022
£
£
Interest income
Interest on bank deposits
28
Other interest income
1,854
Total income
1,882
2023
2022
Investment income includes the following:
£
£
Interest on financial assets not measured at fair value through profit or loss
28
8
Interest payable and similar expenses
2023
2022
£
£
Other finance costs:
Interest on finance leases and hire purchase contracts
171,005
144,547
Other interest
2,672
3,193
173,677
147,740
9
Taxation
2023
2022
£
£
Current tax
UK corporation tax on profits for the current period
657,060
232,380
Adjustments in respect of prior periods
(195,723)
Total current tax
461,337
232,380
Deferred tax
Origination and reversal of timing differences
199,100
10,734
Adjustment in respect of prior periods
(104,727)
Total deferred tax
199,100
(93,993)
Total tax charge
660,437
138,387
S & R CONSTRUCTION LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2023
9
Taxation
(Continued)
- 20 -
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:
2023
2022
£
£
Profit before taxation
2,467,815
1,163,003
Expected tax charge based on the standard rate of corporation tax in the UK of 25.00% (2022: 19.00%)
616,954
220,971
Tax effect of expenses that are not deductible in determining taxable profit
205,074
139,683
Under/(over) provided in prior years
(195,723)
(73,393)
Deferred tax movement
199,099
10,734
Capital allowances
(92,539)
(159,608)
Changes in tax rate
(72,428)
Taxation charge for the year
660,437
138,387
10
Dividends
2023
2022
£
£
Interim paid
535,000
12,000
S & R CONSTRUCTION LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2023
- 21 -
11
Tangible fixed assets
Freehold land and buildings
Plant and equipment
Fixtures and fittings
Computers
Motor vehicles
Total
£
£
£
£
£
£
Cost
At 1 November 2022
41,088
2,321,708
73,460
42,265
1,310,018
3,788,539
Additions
2,810,361
1,813,635
250
12,198
451,347
5,087,791
Disposals
(8,333)
(20,000)
(175,000)
(203,333)
At 31 October 2023
2,843,116
4,115,343
73,710
54,463
1,586,365
8,672,997
Depreciation and impairment
At 1 November 2022
1,317,251
45,187
9,806
478,287
1,850,531
Depreciation charged in the year
18,614
702,783
10,461
15,091
292,547
1,039,496
Eliminated in respect of disposals
(113,750)
(113,750)
At 31 October 2023
18,614
2,020,034
55,648
24,897
657,084
2,776,277
Carrying amount
At 31 October 2023
2,824,502
2,095,309
18,062
29,566
929,281
5,896,720
At 31 October 2022
41,088
1,004,457
28,273
32,459
831,731
1,938,008
The net carrying value of tangible fixed assets includes the following in respect of assets held under finance leases or hire purchase contracts.
2023
2022
£
£
Plant and equipment
1,806,339
872,154
Motor vehicles
636,449
731,954
2,442,788
1,604,108
12
Stocks
2023
2022
£
£
Work in progress
3,017,061
4,156,816
Finished goods and goods for resale
72,092
3,089,153
4,156,816
S & R CONSTRUCTION LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2023
- 22 -
13
Debtors
2023
2022
Amounts falling due within one year:
£
£
Trade debtors
908,695
1,301,951
Corporation tax recoverable
195,723
171,798
Other debtors
673,162
1,009,333
Prepayments and accrued income
109,395
144,003
1,886,975
2,627,085
14
Creditors: amounts falling due within one year
2023
2022
Notes
£
£
Obligations under finance leases
16
832,405
483,862
Trade creditors
6,348,552
4,362,358
Corporation tax
655,320
232,380
Other taxation and social security
192,713
204,603
Other creditors
24,423
23,925
Accruals and deferred income
996,903
371,622
9,050,316
5,678,750
15
Creditors: amounts falling due after more than one year
2023
2022
Notes
£
£
Obligations under finance leases
16
2,063,384
1,097,991
16
Finance lease obligations
2023
2022
Future minimum lease payments due under finance leases:
£
£
Within one year
832,404
483,862
In two to five years
2,063,385
1,097,991
2,895,789
1,581,853
Finance lease payments represent rentals payable by the company for certain items of plant and machinery, some of which include purchase options at the end of the lease period.
S & R CONSTRUCTION LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2023
- 23 -
17
Deferred taxation
The following are the major deferred tax liabilities and assets recognised by the company and movements thereon:
Liabilities
Liabilities
2023
2022
Balances:
£
£
Accelerated capital allowances
680,231
481,131
2023
Movements in the year:
£
Liability at 1 November 2022
481,131
Charge to profit or loss
199,100
Liability at 31 October 2023
680,231
The deferred tax liability set out above is expected to reverse over a period of time and relates to accelerated capital allowances that are expected to mature within the same period.
18
Retirement benefit schemes
2023
2022
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
35,037
32,851
The company operates a defined contribution pension scheme for all qualifying employees. The assets of the scheme are held separately from those of the company in an independently administered fund.
19
Share capital
2023
2022
2023
2022
Ordinary share capital
Number
Number
£
£
Issued and fully paid
of £1 each
200
200
200
200
S & R CONSTRUCTION LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2023
- 24 -
20
Operating lease commitments
Lessee
At the reporting end date the company had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:
2023
2022
£
£
Within one year
249,633
Between two and five years
698,318
947,951
21
Contingent liabilities
Contingent liabilities totalling £760k are present at the reporting date, as estimated by management in relation to future claims against the company. These claims are being contested by the Company therefore the timing of the settlement is unsure and final settlement amounts are estimated at this stage.
22
Cash generated from operations
2023
2022
£
£
Profit for the year after tax
1,807,378
1,024,616
Adjustments for:
Taxation charged
660,437
138,387
Finance costs
173,677
147,740
Investment income
(1,882)
Gain on disposal of tangible fixed assets
(18,750)
(13,394)
Depreciation and impairment of tangible fixed assets
1,039,496
612,273
Movements in working capital:
Decrease/(increase) in stocks
1,067,663
(3,202,333)
Decrease/(increase) in debtors
332,513
(672,650)
Increase in creditors
2,600,083
4,128,378
Cash generated from operations
7,662,497
2,161,135
23
Analysis of changes in net funds/(debt)
1 November 2022
Cash flows
31 October 2023
£
£
£
Cash at bank and in hand
1,257,568
3,657,498
4,915,066
Obligations under finance leases
(1,581,853)
(1,313,936)
(2,895,789)
(324,285)
2,343,562
2,019,277
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