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 Contractors Limited. Turnover for the year rose to £53m, a 18% increase from £45m in 2023, reflecting increased client acquisition and retention. Operating profit grew to £8.3m (2023: £6.5m), highlighting improved operational efficiencies and strategic cost management. The company’s net assets at year-end stood at £20.6m, a notable 10% improvement over the prior year’s £18.8m. These results align closely with the board’s strategic goals and expectations.
As we slowly approach our 50th year anniversary, the company 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 company also retained its long-standing ISO 9001 and ISO 14001 certifications, reaffirming our commitment to quality management and environmental stewardship.
The company uses various financial instruments including cash and various items which arise directly from its operations such as trade debtors and trade creditors. The main purpose of these are to raise working capital and carry out business operations.
The main risks arising from the company’s financial instruments are market risk, liquidity 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 risk
The company finances its operations through a mixture of retained profits and bank borrowings. The borrowings bear interest at a floating rate and the company's 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 procured. 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 company by our specialist buyer and suppliers in advance
Liquidity risk
The company 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 company’s 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 risk associated with new clients and especially with fast-track projects for example restaurants. On larger projects invoices are raised monthly and collection made accordingly. The company also seeks deposits upfront for some projects.
The company’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 company. Turnover for the year generated from the principal business activities amounted to £53m (2023: £45m) whilst our headline gross margin was £16.1m (2023: £10.6m). The net assets position as at the year-end was £20.6m (2023: £18.8m). Our focus remains on the principle 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 company 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 company are timely and quality delivery of the provision of construction services as per agreements with clients, 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.
Outlook and future developments
The company’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 company’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.
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 Contractors Ltd 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 company. 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 Company 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 consider 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 Company’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 Company 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 company’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 £40m. 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.
Communities
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 Company 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 Company’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 11.
Ordinary dividends were paid amounting to £5,000,000. The directors do not recommend payment of a final dividend (2023: £4,000,000).
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 company is required to present the carbon footprint of its operations and measures introduced to improve efficiency.
We have followed the 2019 HM Government Environmental Reporting Guidelines. We have 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 at the end of 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.
Basis for 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. 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
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.
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 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.
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 company 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 company 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 company’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 company 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 Company 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 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 is available on the Financial Reporting Council’s website at: https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.
Use of our report
This report is made solely to the company's member 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 member those matters we are required to state to the member 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 member, for our audit work, for this report, or for the opinions we have formed.
The income statement has been prepared on the basis that all operations are continuing operations.
Vascroft Contractors Limited is a private company limited by shares incorporated in England and Wales. The registered office is Vascroft Estate, 861 Coronation Road, Park Royal, London, NW10 7PT.
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 £.
This company is a qualifying entity for the purposes of FRS 102, being a member of a group where the 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 has therefore taken advantage of exemptions from the following disclosure requirements:
Section 4 ‘Statement of Financial Position’: Reconciliation of the opening and closing number of shares;
Section 7 ‘Statement of Cash Flows’: Presentation of a statement of cash flow and related notes and disclosures;
Section 33 ‘Related Party Disclosures’: Compensation for key management personnel.
The financial statements of the company are consolidated in the financial statements of Vascroft Holdings Limited as at 31 August 2024. These consolidated financial statements are available from its registered office, Vascroft Estates, 861 Coronation Road, Park Royal, London, NW10 7PT.
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 credited or charged to profit or loss.
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.
Other financial assets, including investments in equity instruments which are not subsidiaries, associates or joint ventures, are initially measured at fair value, which is normally the transaction price. Such assets are subsequently carried at fair value and the changes in fair value are recognised in profit or loss, except that investments in equity instruments that are not publicly traded and whose fair values cannot be measured reliably are measured at cost less impairment.
Financial assets 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.
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the company after deducting all of its liabilities.
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.
Derivatives, including interest rate swaps and forward foreign exchange contracts, are not basic financial instruments. Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured at their fair value. Changes in the fair value of derivatives are recognised in profit or loss in finance costs or finance income as appropriate, unless hedge accounting is applied and the hedge is a cash flow hedge.
Debt instruments that do not meet the conditions in FRS 102 paragraph 11.9 are subsequently measured at fair value through profit or loss. Debt instruments may be designated as being measured at fair value through profit or loss to eliminate or reduce an accounting mismatch or if the instruments are measured and their performance evaluated on a fair value basis in accordance with a documented risk management or investment strategy.
Financial liabilities are derecognised when the company’s contractual obligations expire or are discharged or cancelled.
Equity instruments issued by the company are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the company.
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 Company 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 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 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 2024 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 tangible fixed assets 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 tangible fixed assets is disclosed in note 11 respectively.
The stage of completion of each contract is measured by work done which is certified by the internal valuer so that the appropriate amount is recognise in a given period
An analysis of the company's revenue is as follows:
All turnover arose within the United Kingdom.
The average monthly number of persons (including directors) employed by the company during the year was:
Their aggregate remuneration comprised:
The number of directors for whom retirement benefits are accruing under defined contribution schemes amounted to 1 (2023 - 1).
The actual charge for the year can be reconciled to the expected charge for the year based on the profit or loss and the standard rate of tax as follows:
Details of the company's subsidiaries at 31 August 2024 are as follows:
Provisions for liabilities
Provisions are made for sales contracts where the company has a legal or constructive obligation to deliver services and a reliable estimate of the contract specific costs still expected to be incurred as of the balance sheet date exceed the related contract income to be earned. The excess cost provided for is charged as an expense to the profit and loss account in the period that the company becomes aware of the obligation and the liability is recorded in provisions. When costs are incurred, they are charged against the provision carried in the balance sheet.
The following are the major deferred tax liabilities and assets recognised by the company and movements thereon:
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 company has given Composite Company Unlimited Multilateral guarantee to the group companies.
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:
During the year the company entered into the following transactions with related parties:
The company has taken advantage of Financial Reporting Standard 102 section 33 "Related Party Disclosures" and has not disclosed transactions with group members on the basis that the results are included within consolidation financial statements of Vascroft Holdings Limited that are publicly available.
Loan amounting to £3,000,000 (2023: £7,500,000) were granted to group companies on commercial terms which are secured against debenture on the assets of the borrowing company.
Key management personnel compensation was £788,367 (2023: £764,416).