The directors present the strategic report for the year ended 31 March 2024.
Principal activities
The principal activity of the company continued to be that of the provision of property construction and consultation services.
The directors have determined that the following financial indicators are the most effective measures of progress towards achieving the company’s objectives.
Construction turnover: 2024 - £41.0 million compared with 2023 - £44.4 million
Gross Profit: 2024 - £2.1 million compared with 2023 - £1.9 million
Profit before taxation: 2024 - £0.4 million compared with 2023 - £0.5 million
Cash at bank and in hand: 2024 - £3.8 million compared with 2023 - £5.5 million
The directors deem the results as satisfactory.
The company has continued to invest in its people’s skills and capabilities as demonstrated by:
extending our apprentice scheme from 1 to 7 apprentices across disciplines such as quantity surveying (2), engineering (1) and construction management (4)
awarded the: RoSPA Gold Award for the 7th consecutive year
continuing to hold ISO9001:2015 achieved in April 2018
continuing to hold ISO45001:2018 achieved in October 2018
continuing to hold ISO14001:2015 achieved January 2019
The company is in a strong position with a fantastic pipeline of opportunity enhanced this year with improved gross margin. Cash at bank and in hand has remained strong at £3.8m (2023: £5.5m). The company continues to play close attention to operating working capital management and maintaining a principle of ensuring prompt supplier payment.
The net assets of the company remain consistent at £1.3m (2023: £1.3m).
There are many risks that can adversely affect the company and if not managed they have the potential to seriously damage our financial performance and reputation. The Directors recognise that consistent and effective risk management is vital to the delivery of its business strategy. The board has overall responsibility for risk management and for ensuring that appropriate controls and audit systems are in place.
Health and safety risk
The company's activities are significant and complex which require the continuous monitoring and management of health, safety and environmental risks. Failure to manage these risks could result in serious harm to employees, subcontractors, the public or the environment and could expose the company to significant potential liabilities and reputational damage.
The company is committed to ensuring a safe working environment. These risks are managed by the company through: the strong promotion of a health and safety culture; and well-defined health and safety policies and procedures. Additionally, the company employ experienced Health and Safety professionals who provide support and advice and undertake regular onsite audits.
Markets
The impact of any political change, shift in government policy or changing market conditions/trends may cause the company’s clients to cancel, postpone or reduce existing or future projects. Changes in market conditions could also have a material impact on our supply chain which could lead to supply chain failure or liquidity issues. This could impact on our ability to deliver contracts to programme and on budget.
Work winning
The company has set out its appetite for the amount of exposure it is willing to accept in regions / sectors through business planning sessions. The commercial expectations in respect of margin, risk, contract terms etc. also form part of the business planning and are discussed at management board meetings.
Delivery
The company is engaged in a wide number of complex construction projects at any one time across the North West of England. Given the nature of these large projects, it is exposed to a variety of projects which are reliant on effective operational and commercial procedures and controls being implemented and maintained. The business is reliant on its staff to make complex, technical and commercial judgements and estimates regarding, cost, value and progress outcomes. If these risks are not managed effectively, the company may suffer losses, delays and potential reputational damage.
Each project has an operating structure, policies and procedures designed to address the risks inherent in project delivery. Each project undertaken is subject to regular management review, this includes a rigorous and regular review of the forecast revenue and costs to complete, with progress monitored and steps put in place to address specific risks identified on those projects.
People
The success of the company depends on its ability to recruit, retain and develop people with the necessary experience and expertise. It is critical that the company has a highly skilled, diverse and motivated work-force as the demands and complexity of the project requirements increase.
Vermont seeks to mitigate this risk by offering market-competitive remuneration, training and career development opportunities. Remuneration and incentive packages are reviewed annually to assist in the attraction and retention of key employees.
Supply chain
As a business, our success depends heavily on our ability to appropriately manage our supply chain; failure to do so could result in delivery failures, compliance issues and strained customer relationships, ultimately leading to damage to the company reputation and financial loss and / or penalties.
The company seeks to develop long-term relationships with its key subcontractors whilst at the same time not becoming over-reliant on any one for the delivery of certain services. As part of its selection criteria, the company seeks to work with subcontractors /suppliers who share its values.
Finance
The company is able to operate through its cash reserves which have been built up through retained profits and by management of working capital. Given the growth within the company it is important that strong finances are in place and that key financial risks are managed. If the business does not have sufficient working capital, then it will be unable to meet its contractual obligations to make payments. The company depends on appropriate, accurate and timely financial information to manage the business effectively; if there is lack of visibility then poor decisions can be made.
The company continually reviews its financial position to ensure there are sufficient resources to meet current and potential future operational demands. New financial reporting systems have been introduced to improve the visibility and speed at which information is made available.
Compliance
We have to comply with the complex and developing legal and regulatory frameworks in areas such as:
Health and safety
Taxation
Payment Practices and Performance Reporting; and
General Data Protection Regulation (GDPR).
It is essential that we can demonstrate compliance to avoid the material financial and reputational impacts associated with non-compliance.
The company monitors and responds to legal and regulatory developments applicable to the markets in which it operates. Detailed policies and procedures exist to minimise risks and are subject to review and monitoring by the company. Where considered appropriate, staff will be provided with training on such regulatory requirements, to ensure polices procedures and expected behaviours are clearly understood.
Systems
The efficient operation of the company is increasingly dependent on the proper operation, performance and development of its IT systems. Failure to manage or integrate IT systems or to implement successfully changes in IT systems could result in a loss of control over critical business information and/or systems. This in turn could impact the company’s ability to fulfil its contractual obligations. A breach of information security, an improper disclosure of such information or the loss of business information could expose the company to adverse publicity, investigation, financial loss and legal claims.
Robust controls and procedures are in place to effectively monitor our systems for on-going performance and external threats. The company has in place a comprehensive IT Disaster Recovery Plan, which is routinely tested to ensure it remains fit for purpose. Robust data protection policies and procedures are in place which comply with the General Data Protection Regulations (GDPR). All staff have been provided with appropriate training in the area of information and personal data security.
Liquidity risk
The company manages its cash and borrowing requirements in order to maximise interest income and minimise interest expense, whilst ensuring the company has sufficient liquid resources to meet the operating needs of the business.
Credit risk
Investments of cash surpluses and borrowings are made through banks and companies which must fulfil credit rating criteria approved by the Board.
All customers who wish to trade on credit terms are subject to credit verification procedures. Trade debtors are monitored on an ongoing basis and provision is made for doubtful debts where necessary.
Future Developments
The company continues to seek out opportunities across the North West in line with business strategy.
On behalf of the board
The directors present their annual report and financial statements for the year ended 31 March 2024.
The results for the year are set out on page 10.
Ordinary dividends were paid amounting to £337,600. The directors do not recommend payment of a final dividend.
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
DSG resigned as auditor on 11 September 2024. DSG Audit were appointed on 11 September 2024 to the company and in accordance with section 485 of the Companies Act 2006, a resolution proposing that they be re-appointed will be put at a General Meeting.
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.
We have audited the financial statements of Vermont Construction (Manchester) Limited (the 'company') for the year ended 31 March 2024 which comprise the statement of comprehensive income, the balance sheet, the statement of changes in equity 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
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
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.
The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below.
Capability of the audit in detecting irregularities, including fraud
Discussions with and enquiries of management and those charged with governance were held with a view to identifying those laws and regulations that could be expected to have a material impact on the financial statements. During the engagement team briefing, the outcomes of these discussions and enquiries were shared with the team, as well as consideration as to where and how fraud may occur in the entity. The following laws and regulations were identified as being of significance to the entity:
Those laws and regulations considered to have a direct effect on the financial statements include UK financial reporting standards, Company Law, Tax and Pensions legislation, and distributable profits legislation.
Those laws and regulations for which non-compliance may be fundamental to the operating aspects of the business and therefore may have a material effect on the financial statements include health and safety legislation, payment practices and performance reporting regulations and GDPR.
Audit procedures undertaken in response to the potential risks relating to irregularities (which include fraud and non-compliance with laws and regulations) comprised of: enquiries of management and those charged with governance as to whether the entity complies with such laws and regulations; enquiries with the same concerning any actual or potential litigation or claims; inspection of relevant legal correspondence; review of board minutes; testing the appropriateness of journal entries; reviewing post year end payments for evidence of claims pay outs and the performance of analytical review to identify unexpected movements in account balances which may be indicative of fraud.
No instances of material non-compliance were identified. However, the likelihood of detecting irregularities, including fraud, is limited by the inherent difficulty in detecting irregularities, the effectiveness of the entity’s controls, and the nature, timing and extent of the audit procedures performed. Irregularities that result from fraud might be inherently more difficult to detect than irregularities that result from error. As explained above, there is an unavoidable risk that material misstatements may not be detected, even though the audit has been planned and performed in accordance with ISAs (UK).
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 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.
The profit and loss account has been prepared on the basis that all operations are continuing operations.
Vermont Construction (Manchester) Limited is a private company limited by shares incorporated in England and Wales. The registered office is 1 Sefton Street, Liverpool, L8 5TH. The principal activities of the company are disclosed in the Strategic Report.
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 7 ‘Statement of Cash Flows’: Presentation of a statement of cash flow and related notes and disclosures;
Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instrument Issues’: Interest income/expense and net gains/losses for each category of financial instrument; basis of determining fair values; details of collateral, loan defaults or breaches, details of hedges, hedging fair value changes recognised in profit or loss and in other comprehensive income;
Section 26 ‘Share based Payment’: Share-based payment expense charged to profit or loss, reconciliation of opening and closing number and weighted average exercise price of share options, how the fair value of options granted was measured, measurement and carrying amount of liabilities for cash-settled share-based payments, explanation of modifications to arrangements;
Section 33 ‘Related Party Disclosures’: Compensation for key management personnel.
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.
Basic financial assets, which include debtors and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised.
Other financial assets, 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 creditors, bank loans, loans from fellow group companies and preference shares that are classified as debt, are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future payments discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.
Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.
Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Amounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.
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.
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 estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are as follows.
As referred to in section 1.4, the revenue of the company is principally derived from the completion of construction contracts. These contracts are accounted for as long term contracts with revenue recognition in this area being a critical judgement made by management. In reaching their conclusion as to the level of revenue (and hence profit) to recognise in a financial period management considers the likely costs to complete of each project and such estimates represent a key area of estimation uncertainty.
An analysis of the company's turnover is as follows:
The average monthly number of persons (including directors) employed by the 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:
Amounts owed to group undertakings are interest free, have no fixed date of repayment and are repayable upon demand.
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.
All shares rank pari passu in relation to dividends, voting rights and any payments made on winding up.
On 21 March 2024 80 Ordinary C shares were issued at a nominal value of £1 each.
On 21 March 2024 744 Ordinary A shares were issued at a nominal value of £1 each.
In the year the company had sales of £8,649 (2023: £48,772) and purchases of £2,005,137 (2023: £1,307,149) with Vermont Property Group Limited. The company also paid dividends of £195,000 (2023: £290,000) to Vermont Property Group Limited.
The company had sales of £4,610 (2023: £425,363) and purchases of £10,899 (2023: £68,643) with Vermont Construction Limited in the year. At year end the company was owed £38,600 (2023: £52,410) by Vermont Construction Limited.
The company had sales in the year of £1,164 (2023: £1,567) with Vermont Property Services Limited. The company was owed £74 (2023: £63) by Vermont Property Services Limited as at year end.
The company had sales in the year of £639 (2023: £192) with CCH Properties Limited.
The company had sales in the year of £954 (2023: £69) with CCH Commercial Properties Limited.
The above companies are related parties by virtue of common shareholders and/or directors.
Within trade debtors is an amount owed by Mark Connor (a company director) amounting to £351,184 (2023: £66,647) relating to a construction project undertaken under a JCT contract directly between Mark Connor and Vermont Construction (Manchester) Limited. This generated sales of £959,127 (2023: £389,364) and cost of sales of £1,056,500 (2023: £366,630) in the financial year.