The directors present the strategic report for the year ended 31 August 2024.
The year ended 31 August 2024 marked another milestone in the continued growth and success of Vascroft Holdings Limited and its subsidiaries. Turnover for the year rose to £53.41m, a 18% increase from £45.27m in 2023, reflecting increased client acquisition and retention. Operating profit grew to £8.82m (2023: £6.97m), highlighting improved operational efficiencies and strategic cost management. The group’s net assets at year-end stood at £31.33m, a notable 8% improvement over the prior year’s £28.84m. These results align closely with the board’s strategic goals and expectations.
As we slowly approach our 50th year anniversary, the group continues to demonstrate excellence across the construction sector. This year, we secured several high-value projects in core sectors such as hotels, residential and commercial developments, reinforcing our reputation as a trusted contractor. Through a blend of innovative construction solutions and a client-centric approach, Vascroft continues to expand its market presence while maintaining high standards of quality, sustainability, and efficiency. The group also retained its long-standing ISO 9001 and ISO 14001 certifications, reaffirming our commitment to quality management and environmental stewardship.
The group uses various financial instruments including loans, cash and various items which arise directly from its operations such as trade debtors, trade creditors and bank loans. The main purpose of these are to raise working capital and carry out business operations.
The main risks arising from these financial instruments are market risk, liquidity risk, cash flow risk, interest rate risk and credit risk. The directors review and agree policies for managing each of these risks and they are summarised below.
Market risk
Market risk encompasses two types of risk being interest rate risk and price risk.
Interest rate
The group finances its operations through a mixture of retained profits and bank overdraft facility. The overdraft bear interest at a floating rate and the interest expense is therefore affected by movements in interest rates.
Price risk
Price risk mainly arises from the time delay between the start of a tendering process for any materials to when they are actually purchased. This risk is mitigated by factoring inflation rate into tender prices for any project. Any increase in the price of materials is notified to the group by our specialist buyer and suppliers in advance.
Liquidity risk
The group seeks to manage financial risk by ensuring sufficient liquidity is available through an overdraft facility to meet foreseeable needs at any given point. The directors review weekly cash reports which enable them to plan accordingly for any significant expenditure.
Credit risk
The principal financial assets are debtors and the principal credit risk arises from these debtors. In order to manage credit risk the directors have introduced a credit checking facility by subscribing to an independent agency. This provides all financial details and trading history needed to consider the risk associated with new clients and especially with fast track projects e.g. restaurants. On larger projects invoices are raised on a monthly basis and collection made accordingly. The group also seeks deposits upfront for some projects.
The group’s key performance indicators are revenue, gross margin and net assets. These allow the directors and the management to monitor the growth as well as the profitability of the group. Turnover for the year generated from the principal business activities amounted to £53m (2023: £45m) whilst our headline gross margin was £16.3m (2023: £10.8m). The net assets position as at the year-end was £31.3m (2023: £29m). Our focus remains of not chasing higher turnover levels with compromised margins and as such the performance is in line with the expectations as set by the board. The directors consider these performance indicators to be satisfactory. The group maintains a satisfactory order book that entails all current secured jobs which is used as an indicator of future business activity levels.
The key non-financial performance indicators of the group are timely and quality delivery of the provision of construction services as per agreements with customers, and stakeholder relationships.
The directors are of the belief that the monitoring of the above-mentioned indicators is an effective aspect of business performance review.
The group’s strategic focus is to enhance its market position, to invest in and to continue developing its core strengths across the hotel, residential, commercial and community sectors. It continues to see challenging turbulent conditions predominate across the industry, with competitive pressures impacting on margins and profitability. Despite the macro-economic conditions, the group’s track record on deliverance and integrated offer of design, construction, boutique, and be-spoke solutions has enabled it to secure significant projects.
Our people remain at the heart of our business. They have shown great resilience and dedication during the construction industry's prolonged period of adverse conditions.
Vision, mission and values
Our vision is exciting and ambitious. We aim to target profitable growth, build business within our key markets and with our existing clients, whilst also exploring further opportunities to broaden our client base and pursue new markets. We will also build on our considerable success and expertise to provide a truly integrated service for our clients.
Mission — To be the contractor of choice for all our clients and to continue to build positive relationships to deliver excellence.
Values - The guiding principles behind the growth of Vascroft Holdings Ltd & its subsidiaries have been to provide quality, value, experience, partnership, service excellence and consistency. Living and working by these principles, is at the heart of our success. Our team of dedicated professionals are enhanced with continuous professional developments through various mediums of training. Coupled with our commitment to putting our clients’ needs first, we derive great pleasure in exceeding their expectations. We continue to build on the principles of being accountable, with a can-do approach to deliver as one integrated team.
We strive to offer an unbeatable range of advisory, construction and refurbishment services and thrill at taking on challenges that have defeated others. Providing a truly integrated one stop shop solution for clients, our approach to all of these challenges has remained consistent over the decades.
A team of approximately 100 professionals is also integral to our success. Our staff are undoubtedly our greatest assets. They are committed to putting our customers’ needs first and all share a passion for the group. Many of them have been with us for years and they know it’s more important to do what’s right rather than what's easy. We know it’s important to employ the best because, that way, we deliver the best. We provide continuous staff development through training, seminars and exhibitions. This ensures our staff are up to date with current legislation, technological changes and modern methods of construction.
The directors, in good faith and in line with their duties have complied with the requirements of s172 of the Companies Act 2006, in promoting the long-term success of the group for the benefit of all stakeholders. The following disclosure describes how the directors have had regard to the matters set out in section 172(1)(a) to (f) and forms the directors’ statement required under section 414CZA of The Companies Act 2006.
Engagement with stakeholders
The directors consider its shareholders, employees, clients, suppliers, sub-contractors and local communities to be its core stakeholder groups. We are committed to effective engagement with all our stakeholders. We are mindful that success depends on our ability to engage effectively, work together constructively, and to take all stakeholder views into account. We engage regularly with our stakeholders and address matters which concern them.
Shareholder
The group is headed by Vascroft Holdings Ltd. We create value for the Group by generating strong and sustainable results that translate into dividends. We discuss our performance in management meetings. The directors routinely engage with the Group on the performance of the business and develop a clear understanding of their needs and assess their perspectives through regular dialogue.
Employees
In line with group’s ethos, protecting the health, safety and wellbeing of everyone who engages with our business is our number one priority. It continues to be our core focus, and we have sought to promote health and safety awareness updates to our employees and other stakeholders. This has also involved extensive training programs as well as an expansion of our health and safety team. Furthermore, we are committed to a diverse and inclusive work environment and helping our employees gain skills that support their personal ambitions and drive the business forward. The group is conscious of the need to ensure effective training for employees and has developed various training initiatives inclusive of apprenticeships programs and supply chain CPD seminars of product and processes. All new employees attend a formal induction from our HR team, which includes a presentation on the group’s vision, mission and values.
Clients
We aim to develop long-term relationships with our clients by retaining their business as well as obtaining new clients through recommendations and tendering. Our order book remains resilient with secured projects to the value of £51m. Our mission statement is ‘to be the contractor of choice for all our clients and to continue to build positive relationships to deliver excellence’. We have a dedicated ‘After care’ department that specifically provides aftercare support to enhance client experience and ensure our projects are delivered to the highest possible standard.
Suppliers and Subcontractors
Our suppliers and subcontractors are critical to our operations, and we take a long-term collaborative approach to working with them. They take pride in representing our brand in the market. In addition to operating tender processes for a fair selection, we also strive to ensure payments are done in a timely manner to our supply chain and have continued doing so throughout the current challenging times.
As well as working on community projects such as temples, we also proactively engage with the local communities impacted by our projects to alleviate any concerns they may have. We engage with the local communities close to where we work in a number of ways, including regular project updates through letters and newsletters as well as visits to and from local schools and universities to build engagement. We encourage people to get in touch with us if they have any concerns.
Principal decisions
We define principal decisions as those that are material to the group and those that are significant to our stakeholders. The Directors have considered the outcomes from our stakeholder engagement as well as the need to maintain the group’s reputation for high standards of business conduct and to act fairly. As stated above, a significant amount of our workload is undertaken for existing and retained clients. As part of the procurement process for securing these projects there is normally a lot of emphasis on how we engage with our employers, suppliers, sub-contractors and the local communities we work in.
This report was approved by the board and signed on its behalf.
The directors present their annual report and financial statements for the year ended 31 August 2024.
The results for the year are set out on page 12.
Ordinary dividends were paid amounting to £4,874,744. The directors do not recommend payment of a further dividend.
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
The auditor, KLSA LLP, is deemed to be reappointed under section 487(2) of the Companies Act 2006.
As per the requirements of the Companies (Directors’ Report and Limited Liability Partnerships (Energy and Carbon Report) Regulations 2018 which came into force on 1 April 2019, the group is required to present the carbon footprint of its operations and measures introduced to improve efficiency.
The group has followed the 2019 HM Government Environmental Reporting Guidelines. The group has also used the GHG Reporting Protocol – Corporate Standard and have used the 2020 UK Government’s Conversion Factors for Company Reporting
The chosen intensity measurement ratio is total gross emissions in metric Kg CO2e per £ Turnover, the recommended ratio for the sector.
Data Assumptions
• Assumption made that fleet and company owned vehicles are all medium engine sized.
• Sites excluded in this report are energy consumption controlled by Client.
We have implemented the policies below for the purpose of increasing energy efficiency.
LED Lighting and motion sensors for Office usage.
Upgraded laptops to more energy efficient ones.
Policy among staff to reduce plug load end of the day.
Increased availability and encouraged use of video conferencing by introduction of Microsoft Teams.
Reduce travel costs by using public transport to sites where possible instead of fleet cars.
Reduced travel costs by reducing number of in person meetings with external stake holders.
Use of Hybrid cars for site visits.
Joinery upgraded to Energy efficient Gas heaters.
We are committed to responsible energy management and will practice energy efficiency throughout our organization, wherever it is cost effective. We recognize that climate change is one of the most serious environmental challenges currently threatening the global community and we understand we have a role to play in reducing greenhouse gas emissions. Company operates to ISO 14001:2015 Environment Management System and promotes sustainability in built environment design.
The directors are responsible for the maintenance and integrity of the company website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.
We have audited the financial statements of Vascroft Holdings Limited (the 'parent company') and its subsidiaries (the 'group') for the year ended 31 August 2024 which comprise the group income statement, the group statement of comprehensive income, the group statement of financial position, the company statement of financial position, the group statement of changes in equity, the company statement of changes in equity, the group statement of cash flows, the company 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).
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the group and parent 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.
Emphasis of matter
External valuation with material valuation uncertainty
We draw attention to Note 11 and 12 in the financial statements which describes material valuation uncertainly clause in the external valuation report. The property valuation in investment property of £5.66m and property, plant and equipment of £9.75m which cumulatively represents 25% of total assets, is fundamental to the user’s understandability of the financial statements as the one of the activity of the group is to lease out its properties for rental income. Our opinion is not modified in respect of this matter.
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 group's and parent company’s ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report. However, because not all future events or conditions can be predicted, this statement is not a guarantee as to the group's ability to continue as going concern.
Other information
The other information comprises the information included in the annual report other than the financial statements and our auditor's report thereon. The directors are responsible for the other information contained within the annual report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of our audit:
the information given in the strategic report and the directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
the strategic report and the directors' report have been prepared in accordance with applicable legal requirements.
In the light of the knowledge and understanding of the group and the parent company and their 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 by the parent company, or returns adequate for our audit have not been received from branches not visited by us; or
the parent company financial statements are not in agreement with the accounting records and returns; or
certain disclosures of directors' remuneration specified by law are not made; or
we have not received all the information and explanations we require for our audit.
As explained more fully in the directors' responsibilities statement, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the directors are responsible for assessing the parent company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the parent company or to cease operations, or have no realistic alternative but to do so.
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below.
To identify risks of material misstatement due to any irregularities, including fraud and non-compliance with laws and regulations, we assessed events or conditions that could indicate an incentive or pressure to commit fraud or provide an opportunity to commit fraud. Our risk assessment procedures included:
the engagement partner ensured that the engagement team collectively had the appropriate competence, capabilities and skills to identify or recognise non-compliance with applicable laws and regulations;
we identified the laws and regulations applicable to the parent company and group through discussions with directors and other management, and from our commercial knowledge and experience of the sector; and
we focused on specific laws and regulations which we considered may have a direct material effect on the operations of the parent company and group financial statements or the operations of the company, including the Companies Act 2006, taxation legislation and data protection, employment, health and safety legislation and The Building Regulations 2010.
We assessed the susceptibility of the group's financial statements to material misstatement, including obtaining an understanding of how fraud might occur, by:
making enquiries of management as to where they considered there was susceptibility to fraud, their knowledge of actual, suspected and alleged fraud; and
considering the internal controls in place to mitigate risks of fraud and non-compliance with laws and regulations.
To address the risk of fraud through management bias and override of controls, we:
performed analytical procedures to identify any unusual or unexpected relationships;
tested journal entries to identify unusual transactions;
assessed whether judgements and assumptions made in determining the accounting estimates set out in note 2 were indicative of potential bias; and
investigated the rationale behind significant or unusual transactions.
To address the risk of non-compliance with laws and regulations, we communicated identified laws and regulations throughout our team and remained alert to any indications of non-compliance throughout the audit. The potential effect of these laws and regulations on the financial statements varies considerably.
Firstly, the group is subject to laws and regulations that directly affect the financial statements including financial reporting legislation (including related companies legislation) and taxation legislation (including payroll taxes) and we assessed the extent of compliance with these laws and regulations as part of our procedures on the related financial statements items.
Secondly, the group is subject to many other laws and regulations where the consequences of non-compliance could have a material effect on amounts or disclosures in the financial statements, for instance through the imposition of fines or litigation or the loss of the subsidiary company’s license to operate. We identified the following areas as those most likely to have such an effect: Buildings Regulations, 2010 and healthcare and safety legislation regulations. Auditing standards limit the required audit procedures to identify non-compliance with these laws and regulations to enquiry of the Directors and other management and inspection of regulatory and legal correspondence, if any. Therefore, if a breach of operational regulations is not disclosed to us or evident from relevant correspondence, an audit will not detect that breach.
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.
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.
As permitted by s408 Companies Act 2006, the company has not presented its own income statement and related notes. The company’s profit for the year was £5,485,864 (2023 - £4,607,162 profit).
Vascroft Holdings Limited (“the company”) is a private limited company domiciled and incorporated in England and Wales. The registered office is Vascroft Estate, 861 Coronation Road, Park Royal, London, NW10 7PT.
The group consists of Vascroft Holdings Limited and all of its subsidiaries.
These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006.
The financial statements are prepared in sterling, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £.
The financial statements have been prepared under the historical cost convention, modified to include the revaluation of freehold properties and investment properties at fair value. The principal accounting policies adopted are set out below.
The consolidated financial statements incorporate those of Vascroft Holdings Limited and all of its subsidiaries (ie entities that the group controls through its power to govern the financial and operating policies so as to obtain economic benefits).
All financial statements are made up to 31 August 2024. Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with those used by other members of the group.
All intra-group transactions, balances and unrealised gains on transactions between group companies are eliminated on consolidation. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.
At the time of approving the financial statements, the directors have a reasonable expectation that the group has adequate resources to continue in operational existence for the foreseeable future. Thus the directors continue to adopt the going concern basis of accounting in preparing the financial statements.
The directors have a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future and so continue to prepare to prepare these financial statements on the going concern basis. They believe the company has sufficient funding to be able to meet its liabilities as and when they fall due for the foreseeable future, being a period of not less than twelve months from the date of approval of these financial statements.
Turnover is recognised to the extent that is possible that the economic benefits will flow to the company and the turnover can be reliably measured. Turnover is measured as the fair value of the consideration received or receivable, excluding discounts, rebates, value added tax and other sales taxed. The following criteria must also be met before turnover is recognised:
Rendering of services
In respect of long-term contracts, turnover represents the value of the work done in the year, including estimates of amounts not invoiced and is recognised by reference to the stage of completion of each contract, once their outcome can be assessed with reasonable certainty. The profit recognised reflects the proportion of work completed to the balance sheet date of each project. Full provision is made for losses estimated by the directors on all contracts in the year in which the loss is first foreseen. Such estimates are based upon the directors' experience and relevant professional advice.
Turnover in respect of rental income from investment properties is recognised on straight line basis over the period of the lease.
Interest income is recognised when it is probable that the economic benefits will flow to the company and the amount of revenue can be measured reliably. Interest income is recognised on receipt as per contractual terms.
The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is recognised in the income statement.
Equity investments are measured at fair value through profit or loss, except for those equity investments that are not publicly traded and whose fair value cannot otherwise be measured reliably, which are recognised at cost less impairment until a reliable measure of fair value becomes available. Where merger relief is applicable, the cost of the investment in a subsidiary undertaking is measured at the nominal value of the shares issues together with the fair value of any additional consideration paid.
In the parent company financial statements, investments in subsidiaries are initially measured at cost and subsequently measured at cost less any accumulated impairment losses.
A subsidiary is an entity controlled by the group. Control is the power to govern the financial and operating policies of the entity so as to obtain benefits from its activities.
At each reporting period end date, the group reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the company estimates the recoverable amount of the cash-generating unit to which the asset belongs.
The carrying amount of the investments accounted for using the equity method is tested for impairment as a single asset. Any goodwill included in the carrying amount of the investment is not tested separately for impairment.
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.
The group has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.
Financial instruments are recognised in the group's statement of financial position when the group becomes party to the contractual provisions of the instrument.
Financial assets and liabilities are offset and the net amounts presented in the financial statements when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.
Basic financial assets, which include trade and other receivables 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.
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 profit or loss.
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the group transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.
Financial liabilities are classified according to the substance of the contractual arrangements entered into.
Basic financial liabilities, including trade and other payables, bank loans and loans from fellow group companies 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 payables 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 payables are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.
Financial liabilities are derecognised when the group's contractual obligations expire or are discharged or cancelled.
Equity instruments issued by the group are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the group.
The tax expense represents the sum of the tax currently payable and deferred tax.
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the income statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The group’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.
Deferred tax liabilities are generally recognised for all timing differences and deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Such assets and liabilities are not recognised if the timing difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.
The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the income statement, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset if, and only if, there is a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.
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 non-current assets.
A liability is recognised to the extent of any unused holiday pay entitlement which is accrued at the statement of financial position date and carried forward to the future periods. This is measured at the undiscounted salary cost of the future holiday entitlement so accrued at the statement of financial position date.
Termination benefits are recognised immediately as an expense when the group is demonstrably committed to terminate the employment of an employee or to provide termination benefits.
The group operates a defined contribution plan for its employees. A defined contribution plan is a pension plan under which the group pays fixed contributions into a separate entity. Once the contributions have been paid the group has no further payment obligations.
The contributions are recognised as an expense in the consolidated statement of comprehensive income when they fall due. Amounts not paid are shown in the accruals as a liability in the statement of financial position. The assets of the plan are held separately from the group in independently administered funds.
Rental income from operating leases is recognised on a straight line basis over the term of the relevant lease. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised on a straight line basis over the lease term.
Finance cost
Finance cost are charged to the Consolidated statement of comprehensive income over the term of the debt using the effective interest method so that the amount charged is at a constant rate on the carrying amount. Issue costs are initially recognised as a reduction in the proceeds of the associated capital instrument.
Government grants
Government grants are recognised at the fair value of the asset received or receivable when there is reasonable assurance that the grant conditions will be met and the grants will be received.
A grant that specifies performance conditions is recognised in income when the performance conditions are met. Where a grant does not specify performance conditions it is recognised in income when the proceeds are received or receivable. A grant received before the recognition criteria are satisfied is recognised as a liability.
Construction contracts
Where the outcome of a construction contract can be estimated reliably, revenue and costs are recognised by reference to the stage of completion of the contract activity at the reporting end date. Variations in contract work, claims and incentive payments are included to the extent that the amount can be measured reliably and its receipt is considered probable.
When it is probable that total contract costs will exceed total contract turnover, the expected loss is recognised as an expense immediately.
The Group provides a one-year warranty covering defects specific to its portion of contracts on construction projects, and accrues future estimated expenses against current operations.
The stage of completion of each contract is measured by work done which is certified by the internal and external valuers so that the appropriate amount is recognise in a given period.
In the application of the group’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.
The following judgements (apart from those involving estimates) have had the most significant effect on amounts recognised in the financial statements.
Where outstanding customer debt from 31 August 2021 has still to be wholly or partially recovered by the date of the approval of these financial statements, management have exercised judgment in providing for any bad or doubtful debt. Management has individually considered each outstanding remaining debt in terms of payment history, the status of the current commercial relationship and any future committed business in reaching their decision of the appropriate level of provision to make for each customer.
In respect of long-term contracts, turnover represents the value of the work done in the year, including estimates of amounts not invoiced and is recognised by reference to the stage of completion of each contract, once their outcome can be assessed with reasonable certainty. The profit recognised reflects the proportion of work completed to the Statement of Financial Position date on each project.
Full provision is made for losses estimated by the directors on all contracts in the year in which the loss is first foreseen. Such estimates are based upon the directors' experience and relevant professional advice.
Management reviews the useful lives, depreciation methods and residual values of the items of intangible assets, property, plant and equipment and investment property on a regular basis. During the financial year, the directors determined no significant changes in the useful lives and residual values. The carrying amounts of intangible assets, property, plant and equipment and investment property are disclosed in note 10, 11 and 12 respectively.
Investment properties and revalued freehold properties are carried at fair value and revalued amounts respectively. Fair value is ascertained through review of a number of factors and information flows, including market knowledge, recent market movements, recent sales of similar properties, historical experience and rent levels and flows of cash for the respective investment property. There is an inevitable degree of judgement involved and value can only be reliably tested ultimately in the market itself. Given the property market knowledge and expertise of the directors valuations are carried out by a mixture of external independent valuers and internal specialists.
The stage of completion of each contract is measured by work done which is certified by the internal valuers so that the appropriate amount is recognise in a given period.
An analysis of the group's revenue is as follows:
The average monthly number of persons (including directors) employed by the group and company during the year was:
Their aggregate remuneration comprised:
The actual charge for the year can be reconciled to the expected charge for the year based on the profit or loss and the standard rate of tax as follows:
The investment property was valued during the previous year at £9,750,000 by Bellevue Mortlakes, RICS on 10 September 2021 on a fair value basis. The desktop valuation was performed as an addendum to the previous full valuation performed on 30 June 2020. The previous valuation has been recognised on the basis of ‘material valuation uncertainty’ which was as per RICS guidance due to the impact of COVID-19 on the real estate and hence this uncertainity has been brought forward in the current valuation. The directors consider that these valuations remain appropriate as at 31 August 2024.
If revalued assets were stated on an historical cost basis rather than a fair value basis, the total amounts included would have been as follows:
The investment property was valued during the previous year at £5,660,000 by Bellevue Mortlakes, RICS on 10 September 2021 on a fair value basis. The desktop valuation was performed as an addendum to the previous full valuation performed on 30 June 2020. The previous valuation has been recognised on the basis of ‘material valuation uncertainty’ which was as per RICS guidance due to the impact of COVID-19 on the real estate and hence this uncertainity has been brought forward in the current valuation. The directors consider that these valuations remain appropriate as at 31 August 2024.
The group has taken advantage of the exemption in "The Companies Act 2006 s405" from the requirement to consolidate the accounts of subsidiaries, Brentford Ventures Limited and Uxbridge Ventures Limited.
Details of the company's subsidiaries at 31 August 2024 are as follows:
The following are the major deferred tax liabilities and assets recognised by the group and company, and movements thereon:
A defined contribution pension scheme is operated for all qualifying employees. The assets of the scheme are held separately from those of the group in an independently administered fund.
Revaluation Reserve
The revaluation reserve includes all revaluation surpluses of freehold property for current and prior periods.
Merger Reserve
The merger relief reserve arises on the acquisition of subsidiaries.
Profit & loss account
The profit and loss account includes all current and prior period retained profit and losses.
The group and the company had no commitments under the non-cancellable operating leases as at the reporting date.
The remuneration of key management personnel is as follows.
During the year the group entered into the following transactions with related parties:
Loan amounting to £5,000,000 (2023: £9,500,000) were granted to group companies on commercial terms which are secured against debenture on the assets of the borrowing company.