Company Registration No. SC082685 (Scotland)
BANCON CONSTRUCTION LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2024
BANCON CONSTRUCTION LIMITED
COMPANY INFORMATION
Directors
K J McColgan
A H Tweedie
J Adamson
P Lumsden
Company number
SC082685
Registered office
Banchory Business Centre
Burn O' Bennie Road
Banchory
Aberdeenshire
AB31 5ZU
Auditor
Johnston Carmichael LLP
Bishop's Court
29 Albyn Place
Aberdeen
AB10 1YL
BANCON CONSTRUCTION LIMITED
CONTENTS
Page
Strategic report
1
Directors' report
2
Directors' responsibilities statement
3
Independent auditor's report
4 - 7
Statement of income and retained earnings
8
Balance sheet
9
Notes to the financial statements
10 - 21
BANCON CONSTRUCTION LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 31 MARCH 2024
The directors present the strategic report and financial statements for the year ended 31 March 2024.  The company was part of the Bancon Developments Holdings Limited group ("the group") throughout the year.
Review of the business
The principal activities of the company are providing building and construction services and delivering social homes refurbishment.
The company delivered a strong result in the year with Operating Profit 38% ahead of the previous year.  The strategy of driving activity in the key areas of Land Led Affordable Housing and Retrofit continued to deliver good margins in the year whilst reducing the earnings volatility and risk associated with more traditional main contracting type work.
Turnover of £47.2m (2023: £58.1m) was 19% down on the previous year as the business continues to focus on better margin workstreams and securing longer-term contracts with an acceptable risk profile. With margins being tightly controlled and ahead of the previous year, Gross Profit was in line with previous year at £2.7m (2023: £2.8m).
Cost savings delivered in the year, due to the reduced number of contracts being operated, drove a reduction in Administrative Expenses, to £1.4m (2023: £1.8m).  Operating profit of £1.4m was therefore ahead of the previous year (2023: £1.0m).
Profit Before Tax was suppressed by having incurred one-off costs in the year in relation to a loss making contract and restructuring costs as the business implements its strategy of placing increased focus on Land Led Affordable Housing and Retrofit going forward.  Full year Profit Before Tax was therefore £0.4m (2023: £1.0m).  This drove an improvement in Net Assets to £1.6m at 31 March 2024 (2023: £1.2m).
The business is well positioned moving forward, with a positive pipeline of work moving into 2024/25 and beyond.  Turnover in excess of £39m had already been secured coming into the new financial year and current contracts continue to perform well.  There is also a strong pipeline of opportunities developing across both the Land Led Affordable Housing and Retrofit business streams and the directors are highly optimistic regarding future prospects and growth potential in these areas.
Principal risks and uncertainties
The management of the business and the execution of the company's strategy are subject to a number of risks.
Key business risk and uncertainties affecting the company are considered to relate to the continuing uncertainty within the economy, including the potential for further business interruption as a result of a pandemic, raw material availability and price increases, and the effect of spending cut backs on capital projects.
Economic uncertainty and reduced spend on capital projects could impact overall activity levels and profitability. The company constantly assesses the latest market and economic data to ensure service offerings reflect the current market conditions and remain competitive in mitigation of this risk.  Regarding the pandemic and similar risks, the business has contingency plans in place to mitigate against potential disruptions to activities.
Raw material availability and price increases in addition to commodity price dynamics could have an impact on margins.  To mitigate this risk the company will, under certain conditions, forward buy raw material and will, where appropriate, seek to incorporate price increases into contracts.
Key Performance indicators
The directors of Bancon Construction Limited review detailed management reports on a monthly basis and consider the key performance indicators to be turnover, gross profit, profit before tax, and net assets which are discussed in the business review section above.
On behalf of the board
..............................
A H Tweedie
Director
12/07/2024
- 1 -
BANCON CONSTRUCTION LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 MARCH 2024
The directors present their report and financial statements for the year ended 31 March 2024.
Directors
The following directors have held office since 1 April 2023 unless otherwise stated:
K J McColgan                                                  (appointed 29 September 2023)
A H Tweedie
J Adamson                                                       (appointed 4 July 2023)
P Lumsden                                                      (appointed 11 January 2024)
J C Irvine                                                         (resigned 29 September 2023)
A J Clow                                                          (resigned 4 July 2023)
Results and dividends
The results for the year are set out on page 8. The directors do not recommend payment of a dividend (2023: £nil).
Financial risk management
The company's activities expose it to liquidity and credit risks. The company does not use derivatives to manage financial risk or for speculative purposes.
Liquidity risk
In order to maintain liquidity to ensure that sufficient funds are available for ongoing operations and future projects, the company has access to bank debt which is agreed on a group wide basis. These debt facilities are linked to the base rate and therefore the company is not significantly exposed to interest rate risk, with intragroup borrowings being interest free.
Credit risk
The company has implemented policies that require appropriate credit checks on potential customers before contracts are concluded.  During a project, credit control procedures are in place to minimise any credit risk to the business.  A high proportion of the company's work is with the public sector, which significantly reduces the credit risk, with intragroup borrowings being interest free.
Future developments
The directors are confident that changes enacted in the business will allow the business to continue to progress positively going forward.
The outlook for 2024/25 is that construction activity in the markets in which we operate will continue to be positive. Controlled geographic expansion, a tightened strategic focus, and a strong forward orderbook should ensure that the company delivers a positive return going forward.
Reappointment of auditor
Johnston Carmichael LLP have indicated their willingness to be reappointed for another term and appropriate arrangements have been put in place for them to be deemed reappointed as auditor in the absence of an Annual General Meeting.
Statement of disclosure to auditor
So far as the directors are aware, there is no relevant audit information of which the company's auditor is unaware. Additionally, the directors 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.
On behalf of the board
..............................
A H Tweedie
Director
12/07/2024
2024-07-12
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BANCON CONSTRUCTION LIMITED
DIRECTORS' RESPONSIBILITIES STATEMENT
FOR THE YEAR ENDED 31 MARCH 2024
The directors are responsible for preparing the Strategic Report, Directors' Report and the financial statements in accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period. In preparing these financial statements, the directors are required to:
select suitable accounting policies and then apply them consistently;
make judgements and accounting estimates that are reasonable and prudent; and
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company's transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
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BANCON CONSTRUCTION LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF BANCON CONSTRUCTION LIMITED
Opinion
We have audited the financial statements of Bancon Construction Limited (‘the company') for the year ended 31 March 2024, which comprise the Statement of Income and Retained Earnings, Statement of Financial Position, 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 March 2024 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.
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 responsibilities for the audit of the financial statements section of our report. We are independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC's Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the Directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the Directors with respect to going concern are described in the relevant sections of this report.
Other information
The other information comprises the information included in the Annual Report other than the financial statements and our auditor's report thereon. The Directors are responsible for the other information contained within the Annual Report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated.  If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves.  If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of 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.
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BANCON CONSTRUCTION LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF BANCON CONSTRUCTION LIMITED
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identified material misstatements in the Strategic Report or the Directors' Report.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:
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 Directors' remuneration specified by law are not made; or
We have not received all the information and explanations we require for our audit.
Responsibilities of directors
As explained more fully in the Directors' Responsibilities Statement set out on page 3, the Directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the Directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the Directors are responsible for assessing the company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.
Auditor 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.
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website at: http://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.
Extent to which the audit is considered capable of detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations.  We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud.  The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below.
We assessed whether the engagement team collectively had the appropriate competence and capabilities to identify or recognise non-compliance with laws and regulations by considering their experience, past performance and support available.
All engagement team members were briefed on relevant identified laws and regulations and potential fraud risks at the planning stage of the audit. Engagement team members were reminded to remain alert to any indications of fraud or non-compliance with laws and regulations throughout the audit.
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BANCON CONSTRUCTION LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF BANCON CONSTRUCTION LIMITED
Extent to which an audit is considered capable of detecting irregularities, including fraud (continued)
We obtained an understanding of the legal and regulatory frameworks that are applicable to the company and the sector in which it operates, focusing on those provisions that had a direct effect on the determination of material amounts and disclosures in the financial statements. The most relevant frameworks we identified include:
Companies Act 2006;
Health and Safety legislation
UK Tax legislation; and
UK Generally Accepted Accounting Practice.
We gained an understanding of how the company is complying with these laws and regulations by making enquiries of management and those charged with governance. We corroborated these enquiries through our review of submitted returns, external inspections, relevant correspondence with regulatory bodies and board meeting minutes.
We assessed the susceptibility of the financial statements to material misstatement, including how fraud might occur, by meeting with management and those charged with governance to understand where it was considered there was susceptibility to fraud. This evaluation also considered how management and those charged with governance were remunerated and whether this provided an incentive for fraudulent activity. We considered the overall control environment and how management and those charged with governance oversee the implementation and operation of controls. In areas of the financial statements where the risks were considered to be higher, we performed procedures to address each identified risk. We identified a heightened fraud risk in relation to:
Management override of controls
Margin recognition on contracts
Revenue recognition
In addition to the above, the following procedures were performed to provide reasonable assurance that the financial statements were free of material fraud or error:
Reviewing minutes of meetings of those charged with governance for reference to: breaches of laws and regulation or for any indication of any potential litigation and claims; and events or conditions that could indicate an incentive or pressure to commit fraud or provide an opportunity to commit fraud;
For a sample of construction contracts, we verified work completed to date and appropriateness of revenue raised in line with contract progress.
For a sample of contract margins, we verified costs and revenue to source documentation to confirm actual margins achieved and for a sample of developments across the year end, we enquired with management as to their outlook amd reviewed post-year end financial performance to ensure no erosion of margin recognised;
Review of Internal Health & Safety register for evidence of incidents or potential and actual legislation;
Reviewing the level of and reasoning behind the company's procurement of legal and professional services;
Performing audit procedures over the risk of management override of controls, including testing of journal entries and other adjustments for appropriateness, evaluating the business rationale of significant transactions outside the normal course of business and reviewing judgements made by management in their calculation of accounting estimates for potential management bias;
Completion of appropriate checklists and use of our experience to assess the company's compliance with the Companies Act 2006; and
Agreement of the financial statement disclosures to supporting documentation.
Our audit procedures were designed to respond to the risk of material misstatements in the financial statements, recognising that the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve intentional concealment, forgery, collusion, omission or misrepresentation. 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.
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BANCON CONSTRUCTION LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF BANCON CONSTRUCTION LIMITED
Use of our report
This report is made solely to the company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's members as a body, for our audit work, for this report, or for the opinions we have formed.
16/07/2024
2024-07-16
Stephen McIlwaine (Senior Statutory Auditor)
…………………..
for and on behalf of Johnston Carmichael LLP
Chartered Accountants
Statutory Auditor
Bishop's Court
29 Albyn Place
Aberdeen
AB10 1YL
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BANCON CONSTRUCTION LIMITED
STATEMENT OF INCOME AND RETAINED EARNINGS
FOR THE YEAR ENDED 31 MARCH 2024
2024
2023
£'000
£'000
Turnover
3
47,202
58,118
Cost of sales
(44,468)
(55,296)
Gross profit
2,734
2,822
Administrative expenses
(1,387)
(1,845)
Operating profit
5
1,347
977
Exceptional items
4
(991)
-
Profit before tax
356
            977
Taxation
7
-
-
Profit / total comprehensive income for the financial year
356
977
Retained earnings at 1 April 2023
1,227
250
Retained earnings at 31 March 2024
1,583
1,227
The Statement of Income and Retained Earnings has been prepared on the basis that all operations are continuing operations.
There are no recognised gains and losses other than those passing through the statement of income and retained earnings and as such no separate statement of comprehensive income is presented.
Profit / total comprehensive income for the financial year are attributable to the shareholder.
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BANCON CONSTRUCTION LIMITED
BALANCE SHEET
AS AT
31 MARCH 2024
31 March 2024
2024
2023
Notes
£'000
£'000
£'000
£'000
Fixed assets
Tangible assets
8
36
64
Current assets
Debtors
9
10,869
13,575
Cash at bank and in hand
2,356
2,990
13,225
16,565
Creditors: amounts falling due within one year
10
(10,515)
(14,140)
Net current assets
2,710
2,425
Total assets less current liabilities
2,746
2,489
Creditors: amounts falling due after more than one year
11
(1,163)
             (1,262)
Net assets
1,583
1,227
Capital and reserves
Called up share capital
-
14
-
Capital redemption reserve
15
-
-
Profit and loss reserves
15
1,583
1,227
Total equity
1,583
1,227
12/07/2024
2024-07-12
The financial statements were approved by the board of directors and authorised for issue on ......................... and are signed on its behalf by:
..............................
..............................
K J McColgan
A H Tweedie
Director
Director
Company Registration No. SC082685
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BANCON CONSTRUCTION LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2024
1
Accounting policies
Company information
Bancon Construction Limited ("the company") is a private company limited by shares, incorporated and domiciled in Scotland. The principal activities of the company and the nature of the operations are set out in the Strategic Report on page 1. The company's trading address is Burnett House, Burn O'Bennie Road, Banchory, AB31 5ZU.
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 thousand pounds, unless otherwise indicated.
The financial statements have been prepared under the historical cost convention. The principal accounting policies adopted are set out below.
The company has taken advantage of the exemption available in accordance with Section 33 of FRS 102 "Related Party Disclosures" not to disclose transactions entered into between two or more wholly owned members of a group.
FRS 102 reduced disclosure framework
The company is a qualifying entity for the purposes of FRS 102, being a member of a group where the ultimate parent of that group prepares publicly available consolidated financial statements, including this company, which are intended to give a true and fair view of the assets, liabilities, financial position and profit or loss of the group. The company's ultimate parent company is Bancon Developments Holdings Limited and the company has taken advantage of the following disclosure exemptions under FRS102:
The requirements of Section 7 Statement of Cash Flows and Section 3 Financial Statement Presentation paragraph 3.17 (d);
The requirement of Section 11 Basic Financial Instruments paragraphs 11.42, 11.44, 11.45, 11.47, 11.48(a)(iii), 11.48(a)(iv), 11.48(b) and 11.48(c); and
The requirement of Section 33 Related Party Disclosures paragraph 33.7.
1.2
Going concern
While approving these financial statements the directors have performed an assessment of the company's ability to continue as a going concern. When performing this assessment the directors have considered a period of at least twelve months from the date of approving the financial statements. During this going concern basis period the directors have had regard to the company's future order book, the strength of activity in its core sector and the expected cashflows from those activities. The directors have also considered the potential impact on the business and its cashflows of reasonably plausible downside risks. Based on these analyses the directors are satisfied it is appropriate to continue to adopt the going concern basis of accounting in preparing the financial statements.
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BANCON CONSTRUCTION LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2024
1
Accounting policies (continued)
1.3
Turnover
Turnover is stated net of VAT and trade discounts and is only recognised on a construction contract where the outcome can be estimated reliably. Variations to, and claims arising in respect of, construction contracts are included in revenue to the extent that they have been agreed with the customer. Turnover and costs are recognised by reference to the stage of completion of contract activity at the balance sheet date. This is normally measured by surveys of work performed to date. An estimate of the profit attributable to work completed is recognised once the outcome of the contract can be assessed with reasonable certainty. When it is probable that the total costs on a construction contract will exceed total contract revenue, the expected loss is recognised as an expense in the profit and loss account immediately.
Amounts recoverable on construction contracts are included in trade receivables and stated at cost plus attributable profit less any foreseeable losses. The costs on contracts not yet taken to the profit and loss account less related foreseeable losses and payments on account are shown in stocks as work in progress. Payments received in excess of amounts recoverable on construction contracts are included in payments on account within creditors.
1.4
Tangible fixed assets
Tangible fixed assets are initially measured at cost and subsequently measured at cost, 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:
Land and buildings freehold
10 years
Plant and machinery
7 years
Fixtures and fittings
5 years
Motor vehicles
4 years
IT Equipment
  4 years
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 the profit and loss account.
Expenditure incurred after the asset is put to use, such as repairs and maintenance costs, are expensed in the period incurred, while other expenses that are expected to generate future economic benefits are capitalised.
1.5
Impairment of fixed assets
At each reporting period end date, the company 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) by comparing this to the asset's carrying value. The recoverable amount of the asset is the higher of the fair value less costs to sell and value in use. Value in use is defined as the present value of future cash flows before interest and tax, obtained as a result of the asset's continued use.
1.6
Stocks
Stock and work in progress is stated at the lower of cost and net realisable value, Cost comprises raw materials, consumables and direct labour plus attributable overheads based on a normal level of activity. Net realisable value is based on the estimated selling price less anticipated costs to completion and disposal. Provision is made for all foreseeable losses.
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 the profit and loss account.
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BANCON CONSTRUCTION LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2024
1
Accounting policies (continued)
1.7
Construction contracts
Amounts recoverable on long term contracts, which are included in debtors, are stated at the net sales value of the work done after provision for contingencies and anticipated future losses on contracts less amounts received as progress payments on account.
The “percentage of completion method” is used to determine the appropriate amount to recognise in a given period. The stage of completion is measured by the proportion of contract costs incurred for work performed to date compared to the estimated total contract costs. Costs incurred in the year in connection with future activity on a contract are excluded from contract costs in determining the stage of completion.  These costs are presented as stocks, prepayments or other assets depending on their nature, and provided it is probable they will be recovered.
1.8
Cash and cash equivalents
Cash and cash equivalents are basic financial assets and include cash in hand, other short-term liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities.
1.9
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.
Basic financial assets
Basic financial assets, which include trade and other receivables, amounts due from group undertakings 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. The effective interest rate is the rate that exactly discounts estimated future cash receipts/payments through the expected life of the investment to the net carrying amount on initial recognition. Financial assets classified as receivable within one year are not amortised.
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BANCON CONSTRUCTION LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2024
1
Accounting policies (continued)
Impairment of financial assets
Financial assets, 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 the profit and loss account.
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.
Basic financial liabilities
Basic financial liabilities, including trade and other payables and amounts due to group undertakings, 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.
Basic financial instruments are subsequently carried at amortised cost, using the effective interest rate method.
Derecognition of financial liabilities
Financial liabilities are derecognised when the company's contractual obligations expire or are discharged or cancelled.
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.
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BANCON CONSTRUCTION LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2024
1
Accounting policies (continued)
Deferred tax
Deferred tax is provided, using the full liability method, on temporary differences arising between the tax base of assets and liabilities and their carrying amounts in the financial statements. The deferred tax position is calculated using the rates enacted or substantially enacted at the balance sheet date. Tax losses are surrendered or claimed in the form of group relief with consideration being received or paid accordingly. The group relief amount is recorded separately within the debtors and creditors amounts in the balance sheet, as applicable, and is calculated by applying the tax rate enacted or substantively enacted at the balance sheet date to the profit and loss amount.
1.11
Employee benefits
The cost of any unused holiday entitlement is recognised in the period in which the employee's services 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.
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.
Differences between contributions payable in the year and contributions actually paid are shown as either accruals or prepayments in the balance sheet.
1.13
Leasing
Rentals payable under operating leases, including any lease incentives received, are charged to income 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 lease asset are consumed.
1.14
Exceptional items
Exceptional items comprise costs which the directors consider as material to the statement of income and retained earnings, that their separate disclosure is necessary for an appropriate understanding of the company's financial performance.
2
Judgements and key sources of estimation uncertainty
In the application of the company's accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.
The following are considered to be either judgements that have had the most significant effect on amounts recognised in the financial statements, or estimates that are dependent upon the assumptions which could change in the next financial year and have a material effect on the carrying amounts of assets and liabilities recognised at the balance sheet date:
Deferred tax asset
The recognition of deferred tax assets is dependent upon estimation of future taxable profits that will be available against which carried forward trading losses can be utilised. The directors and management are therefore required to assess the timing of the utilisation of provisions for tax purposes and whether sufficient taxable profits will be available to enable the asset to be recovered. In the event that actual taxable profits are different, such differences may impact the carrying value of deferred tax assets in future years. At 31 March 2024 the directors and management are satisfied with the recoverability of the deferred tax asset recognised, considering estimated future taxable profits and their predicted utilisation.  The deferred tax asset as at 31 March 2024 is £373k (2023: £373k).
- 14 -
BANCON CONSTRUCTION LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2024
2
Judgements and key sources of estimation uncertainty (continued)
Long term contracts - construction contracts
Long term contract accounting impacts a number of significant account balances within the company's financial statements. Turnover, cost and ultimately profit recognition in respect of construction contracts require the directors and management to make estimations on the outcome of long term contracts which require assessments and judgements to be made. These include the stage of completion of the individual construction contracts based on percentage of completion methodology, the recoverability of construction costs, any variations in the construction contract, any changes in contract costs and the level of recoverability on retentions. All of the factors have been considered by the directors and management in concluding on the appropriate profit and loss presentation of long-term contracts for the year ended 31 March 2024.
The recoverability of amounts recoverable on construction contracts and other receivables, including retentions, are regularly reviewed in light of available economic information specific to each receivable and provisions are recognised for balances considered to be irrecoverable. At 31 March 2024, the directors and management concluded their reviews and are satisfied that amounts recoverable on construction contracts and other receivables are appropriately stated within the financial statements.
With respect to stock and work in progress, key judgements and estimates in determining the appropriateness of its carrying value are:
An estimation of costs to complete; and
An estimation of the remaining revenues.
The assessments include a degree of uncertainty and therefore if the key judgements and estimates change unfavourably, write-downs of stock and work in progress may be necessary. At 31 March 2024, the directors and management concluded their reviews and are satisfied that the stock and work in progress are appropriately stated within the financial statements.
The directors consider that there are no other judgements, estimates and underlying assumptions which have a significant risk of causing material adjustment to the carrying amounts of the assets and liabilities.
3
Turnover
The directors believe that the company has one class of business, which is the provision of building and construction services. Turnover consists of revenue originated and delivered in the United Kingdom.
- 15 -
BANCON CONSTRUCTION LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2024
4       Exceptional items
2024
2023
£'000
£'000
Restructuring costs
248
-
Loss on contract
743
-
991
-
Restructuring costs in the year were to align the company structure with its forward strategy.
Loss on contract in the year represents the loss on a Construction contract entered into at the point of peak cost inflation and of a type that is not part of the businesses forward strategy.
5
Operating profit
2024
2023
Operating profit for the year is stated after charging / (crediting):
£'000
£'000
Depreciation of owned tangible fixed assets
28
29
Profit on disposal of tangible fixed assets
-
(4)
Operating lease charges
41
15
The audit fee has been borne by the ultimate parent company Bancon Developments Holdings Limited in the current and prior years. For the current year, the portion of the group audit fee relating to this company's audit was £20k (2023: £17k).
6
Employees
The average monthly number of persons (including directors) employed by the company during the year was:
2024
2023
Number
Number
Directors and management
19
27
Administration staff
3
4
Production staff
20
22
42
53
- 16 -
BANCON CONSTRUCTION LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2024
6
Employees (continued)
Their aggregate remuneration comprised:
2024
2023
£'000
£'000
Wages and salaries
2,237
2,804
Social security costs
237
320
Pension costs
109
140
2,583
3,264
The directors are remunerated for their services through other group companies.
7
Taxation
2024
2023
£'000
£'000
Current tax
Group relief receivable
   -
-
The actual charge/(credit) for the year can be reconciled to the expected (credit)/ charge for the year based on the profit or loss and the standard rate of tax as follows:
2024
2023
£'000
£'000
Profit before taxation
356
977
Expected tax charge based on the standard rate of corporation tax in the UK of 25.00% (2022: 19.00%):
89
186
Fixed asset differences
2
2
Tax effect of expenses that are not deductible in determining taxable profit
1
-
Deferred tax movement not recognised
(92)
(248)
Effects of changes in tax rates and laws
-
60
Taxation credit for the year
-
                   -
There has been no movement in deferred tax during the year (note 12).
- 17 -
BANCON CONSTRUCTION LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2024
8
Tangible Assets
Land and buildings freehold
Plant and machinery
Motor vehicles
Fixtures & Fittings
IT
Total
Equipment
£'000
£'000
£'000
£'000
£'000
£'000
At 1 April 2023
7
230
144
152
19
552
At 31 March 2024
7
230
144
152
19
552
Depreciation and impairment
At 1 April 2023
3
216
113
152
4
488
Depreciation charged in the year
2
8
14
-
4
28
At 31 March 2024
5
224
127
152
8
516
Net Book Value
At 31 March 2024
2
6
17
-
11
36
At 31 March 2023
4
14
31
-
15
64
- 18 -
BANCON CONSTRUCTION LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2024
9
Debtors
2024
2023
Amounts falling due within one year:
£'000
£'000
Trade debtors
386
930
Amounts recoverable on contracts
1,040
4,676
Amounts due from fellow group undertakings
6,399
4,416
Other debtors
42
35
Prepayments and accrued income
1,036
1,788
8,903
11,845
2024
2023
Amounts falling due after more than one year:
£'000
£'000
'
Trade debtors retentions
627
624
Amounts due from group undertakings
966
733
Deferred tax asset (note 12)
373
373
1,966
1,730
Total debtors
10,869
13,575
Amounts due from fellow group undertakings are unsecured, have no fixed repayment terms and do not bear interest. The balance of £966k (2023 - £733k) relates to retentions.
10
Creditors: amounts falling due within one year
2024
2023
£'000
£'000
Trade creditors
3,725
4,053
Amounts owed to group undertakings
1,752
2,675
Corporation tax
-
-
Other taxation and social security
365
172
Other creditors
12
857
Accruals and deferred income
4,661
6,383
10,515
14,140
Amounts due to group undertakings are unsecured have no fixed repayment terms and do not bear interest.
11
Creditors: amounts falling due after more than one year
2024
2023
£'000
£'000
Trade creditors retentions
1,163
1,262
- 19 -
BANCON CONSTRUCTION LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2024
12
Deferred taxation
The deferred tax asset (included in debtors, note 9) is made up as follows:
Assets
Assets
2024
2024
Balances:
£'000
£'000
Decelerated capital allowances
28
28
Tax losses
345
345
373
373
13
Retirement benefit schemes
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. The pension cost charge represents contributions payable by the company to the fund and is disclosed at note 6. At the Balance Sheet date £10k (2023: £18k) was payable by the company to the fund and included within creditors.
14
Share capital
2024
2023
£
£
Ordinary share capital
Issued and fully paid
200 ordinary shares of 50p each
100
100
100
100
          The share capital account records the nominal value of shares issued. The ordinary shares carry equal voting
          rights and no right to fixed income.
15
Reserves
The company's profit and loss reserve represents the cumulative historic profits and losses, net of dividends and other adjustments.
The capital redemption reserve represents a non-distributable reserve following the redemption of own shares.
The capital redemption reserve balance is £18 as at 31 March 2024 and 31 March 2023.
- 20 -
BANCON CONSTRUCTION LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2024
16
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:
2024
2023
£'000
£'000
Within one year
31
68
Between two and five years
50
37
81
105
17
Financial commitments, guarantees and contingent liabilities
All group companies are party to a cross-company guarantee in respect of bank facilities offered to Bancon Developments Holdings Limited group.
18
Controlling party
The company's immediate parent company is Bancon Group Limited, which is registered in Scotland. The ultimate parent undertaking is Bancon Developments Holdings Limited, a company registered in Scotland, and is both the largest and smallest group of undertakings to which the results of the company are consolidated into. A copy of its financial statements may be obtained from UK Companies House.
The directors regard J C A Burnett of Leys and his family to be the ultimate controlling party by virtue of their individual shareholdings in Bancon Developments Holdings Limited.
- 21 -
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