The Group Chairman presents his review of the group for the year ending 31st August 2024.
Principal activities
During the financial year, the Group was principally engaged in the following trading activities:
a) Via John Lord Holdings Ltd; commercial leasing of six individual industrial units, five located in the Bury area and one in Nottingham.
b) Via John. L. Lord & Son (Rizistal) Ltd; manufacture, sale and contract installation of resin and cementitious based industrial flooring systems; sale and contracting of ‘soft flooring’ systems, including but not exclusively carpet, vinyl, hard wood and ceramics. The manufacture and on-line sales of specialist building products via the Rizistal sub brand. The manufacture, sale and contract installation of stainless steel drainage ware, wall base protective kerbing and a range of factory impact protection products all via the Aspen sub brand.
Performance Review
John. L. Lord & Son (Rizistal) Ltd
The strategic plan for diversification and expansion of the business continues. The business occupies a state of the art 25,000 sq. ft factory in Bury, purchased by the Holding Company new in 2018. This facility is fully utilised and is providing continued operational efficiency due to previous investment in manufacturing plant and equipment, well planned workflow with orchestrated patterns of activity and modern amenities and welfare facilities.
Despite unjustified reputational damage caused by the unfortunate demise of Canal Engineering last year and continued stagnation in the company’s main markets during this financial year the John Lord Flooring business has maintained a robust and innovative approach to re-building reputational confidence as well as investing in future business development to broaden and expand the company’s offerings to a much wider marketplace. The industrial resin based flooring sector showed a some stagnation in sales throughout the year but there are encouraging signs of growth going forward as witnessed by a large intake of sales orders as the financial year came to an close. The John Lord contract flooring (soft flooring) activities have continued to increase in turnover with successful recruitment of additional office staff, fitters and apprentices to service increased demand. The challenge for this sector of the business going forward is to continue to manage an increase in turnover whilst maintaining margin.
The design, manufacture and sale of specialist stainless steel drainage, kerbing and other factory fitout items has been an integral part of the John Lord Specialist Flooring offer to market for many years. Following the demise of the Canal Engineering business in 2023, the directors decided to maintain these operational activities by creating an in-house division of John. L. Lord & Son (Rizistal) Ltd for sales, manufacturing and contract installation, to be known as Aspen Fabrications. To that end, John Lord recruited a number of skilled operatives in manufacture and installation along with operational management to maintain this service. With personnel, plant and machinery secured, a search is being actively pursued to obtain a suitable factory in the Nottingham/ Derby corridor from which to operate. A number of suitable factories have been identified and it is hoped to conclude this issue in the coming financial year. Discussions are also under way to recruit the services of a senior business leader to drive the Aspen offer further into carefully selected additional markets.
With concentration of effort by the directors on the above strategic plans, the Rizistal manufacturing and on-line sales business plan to significantly increase sales and offer diversity has been postponed and will be incorporated into the new plans for growth, going forward.
John Lord Holdings Ltd.
John Lord Holdings concluded the sale of the Lenton Lane factory during this financial year. The remaining property portfolio has been maintained and leasing to a variety of tenants has continued profitably throughout the year.
Financial Review
The John Lord Holdings group has navigated another challenging year, dealing with the continued fallout surrounding the closure of Canal Engineering. Confidence is now returning from the small section of our customer base who harboured concerns.
As a consequence, the group incurred losses during this financial year, amounting to some £450,000 yet despite these losses, the group’s balance sheet remains strong and the group is well funded with available cash reserves of £2.7M to fund the above mentioned business opportunities.
Post year end the group repaid its residual debt from the purchase of the new Bury factory 2018 and is now completely ungeared.
The group directors and senior management team believe that the prospects for the group in the next financial year are strong and likely to enhance and consolidate the group’s financial position resulting in a yet stronger balance sheet at year end.
Key performance indicators continuing activities
£000/ % | 2024 | 2023 | 2022 |
|
|
|
|
Turnover | 7,900 | 7,842 | 8,011 |
Gross margin % | 30.7% | 34.5% | 34.1% |
Operating profit (loss) | (448) | 370 | 317 |
Operating cash flow | 246 | (347) | 814 |
Cash and liquid investments | 2,681 | 1,217 | 1,779 |
Net assets | 8,360 | 8,735 | 8,002 |
Risks and uncertainties
The directors and management team monitor the on-going operational and financial performance as a main agenda item at monthly business review and margin meetings and believe that the major foreseeable risks and uncertainties are being addressed adequately and as the need arises.
The principal risks and uncertainties impacting upon the group along with the procedures in place to mitigate them are described below:
Directors long term business plans:
It is the intention of the group directors to plan for the on-going security of the group and to create well thought out and innovative strategies for the groups sustainable growth.
Reliance on and retention of key personnel:
* Active encouragement of promotion within the group
* Continued vocational training and personal development
* Acknowledgment of the age demographic of certain senior and key personnel and adoption of sympathetic succession planning where necessary
* Strategic recruitment policy to strengthen management capability
* Continuous staff appraisal systems across all areas
* Competitive remuneration, bonus and benefits packages
* Regular consultations and participation with compliance and HR departments
Adverse economic conditions:
*Some stagnation and marginal decline in the company’s traditional markets resulting in compromised specifications and increasingly competitive pricing.
*Continued raw material price increases across all sectors. Particular concerns relate to the price of imports from the EU, possible custom check delays and tariffs, exchange rate fluctuations and general business confidence.
* Difficulties in trading in the EU due to customer perception which remains negative since Brexit.
* The less publicised global downturn brought about, in part, by the continued Ukraine war, the Israel Gaza conflict, the turmoil in Syria and Lebanon and potential worldwide tariff impositions which may stifle growth.
*The continued growth of Chinese imports, particularly vehicles at subsidised prices which are having a devastating effect on manufacturers in Europe and the USA.
Opportunities within the group:
* Continued diversity of group activities.
* Continued diversification of the customer base
* Development of home market product sales opportunities
* Continuous research and development work to create new products which will present new trading opportunities
* Partnering opportunities with other manufacturers/suppliers to benefit both parties by exploiting each party’s key attributes.
*Potential joint marketing and promotional activities with synergistic partners
* Regular review of IT systems to improve efficiency and working conditions
Changes in industry standards and legislation:
*Active participation in appropriate trade associations by technical team
* Consistent research and development work to create new products which avoid ingredients or installation practices which may in the future be deemed potentially hazardous to health
* Review of factory facilities and infrastructure to improve working environment and efficiency
* Regular review and improvement of in-house quality and compliance procedures
Failure of a major supplier or customer:
*Detailed financial and quality audit reviews of key suppliers and customers
* Regular review of key supplier’s own contingency plans
* Dual sourcing arrangements in place wherever possible to counter key supply chain deficiencies
* Negotiate payment terms with customers to cover costs up front whenever possible
Other matters
Working Capital requirement
* The group is able to fund on-going trading and planned strategic expansion from existing group resources.
* The group is also able to contribute to funding for planned capital expenditure from the same source.
Research and development
* The group is totally committed to research and development and maintains a team of people who work within the businesses and throughout the raw material supply chains to ensure our products are at the forefront of an extremely competitive market.
Human Resources
*In the recruitment of staff and the future career development, individuals are considered having regard to their aptitudes and abilities, irrespective of gender, race, marital status or disability.
Health and safety
* The group seeks to comply with all relevant health and safety legislation to ensure, as far as reasonably practicable, that safety working rules are established, maintained and adhered to in order to secure the safety of employees, contractors and visitors within all aspects of its operations.
* All employees are educated in aspects of health and safety compliance within their environment and beyond, with suitable procedures in place to cover incidents should they arise.
By order of the board
The director presents his annual report and financial statements for the year ended 31 August 2024.
E.S.R Lord was the sole director who held office during the year and up to the date of signature of the accounts.
The results for the year are set out on page 9.
Ordinary dividends were paid by the company of £134,422 (2023: £179,351) and further dividends of £86,325 (2023: £132,686) are as yet unpaid.
The group's current policy concerning the payment of trade creditors is to
settle the terms of payment with suppliers when agreeing the terms of each transaction,
ensure that suppliers are made aware of the terms of payment by inclusion of the relevant terms in contracts, and
pay in accordance with the company’s contractual and other legal obligations.
The auditor, Royce Peeling Green Limited, is deemed to be reappointed under s487(2) Companies Act 2006.
We have audited the financial statements of John Lord Holdings Limited (the 'parent company') and its subsidiaries (the 'group') for the year ended 31 August 2024 which comprise the group statement of comprehensive income, the group balance sheet, the group statement of changes in equity, the company statement of changes in equity, the group statement of cash flows and notes to the financial statements, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice)(UKGAAP).
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.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the director's use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the 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 director with respect to going concern are described in the relevant sections of this report.
Other information
The director is responsible for the other information. The other information comprises the information included in the annual report, other than the financial statements and our auditor’s report thereon. 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.
In connection with our audit of the financial statements, 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 audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the financial statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of our audit:
the information given in the strategic report and the director's report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
the strategic report and the director's report have been prepared in accordance with applicable legal requirements.
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 director's report.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:
adequate accounting records have not been kept 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 director's responsibilities statement, the director is responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the director determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the director is responsible for assessing the 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 director either intends to liquidate the parent company or to cease operations, or has 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.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below:
In audit planning we gain an understanding of the laws and regulations which apply to the companies and how management seek to comply with them. This helps us to make appropriate risk assessments.
During the audit we focus on relevant risk areas and review compliance with laws and regulations through making relevant enquiries and corroboration by, for example, reviewing Board Minutes and other documentation.
We also assess the risk of material misstatement in the financial statements including as a result of fraud and undertake procedures including:
Review of controls set in place by management
Enquiry of management as to whether they consider fraud or other irregularities may have occurred or where such opportunity might exist
Challenge of management assumptions with regard to accounting estimates
Identification and testing of journal entries, particularly those which may appear to be unusual by size or nature.
Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading to a material misstatement in the financial statements, or non-compliance with regulation. This risk increases the more that compliance with a law or regulation is removed from the events and transactions reflected in the financial statements, as we are less likely to become aware of instances of non-compliance. The risk is also greater regarding irregularities occurring due to fraud rather than error, as fraud involves intentional concealment, forgery, collusion, omission or misrepresentation.
A further description of our responsibilities for the audit of the financial statements is located on the FRC’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 profit and loss account and related notes. The company’s loss for the year was £151,529 (2023 - £140,657 profit).
John Lord Holdings Limited (“the company”) is a private limited company domiciled and incorporated in England and Wales. The registered office is Unit 4 Park 66, Bury, Lancashire, United Kingdom, BL9 8RZ.
The group consists of John Lord 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 properties and to include certain financial instruments at fair value. The principal accounting policies adopted are set out below.
The consolidated financial statements incorporate those of John Lord 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 director has a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future. Thus the director continues to adopt the going concern basis of accounting in preparing the financial statements.
Turnover is recognised at the fair value of the consideration received or receivable for goods and services provided in the normal course of business, and is shown net of VAT and other sales related taxes. The fair value of consideration takes into account trade discounts, settlement discounts and volume rebates.
Revenue from the sale of goods is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer (usually on dispatch of the goods), the amount of revenue can be measured reliably, it is probable that the economic benefits associated with the transaction will flow to the entity and the costs incurred or to be incurred in respect of the transaction can be measured reliably.
Revenue from contracts for the provision of services is recognised by reference to the stage of completion when the stage of completion, costs incurred and costs to complete can be estimated reliably. The stage of completion is calculated by comparing costs incurred, mainly in relation to contractual hourly staff rates and materials, as a proportion of total costs. Where the outcome cannot be estimated reliably, revenue is recognised only to the extent of the expenses recognised that are recoverable. When it is probable that total contract costs will exceed total contract turnover, the expected loss is recognised as an expense immediately.
Research expenditure is written off against profits in the year in which it is incurred.
Identifiable development expenditure is capitalised to the extent that the technical, commercial and financial feasibility can be demonstrated.
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 profit and loss account.
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.
In the parent company financial statements, investments in subsidiaries are initially measured at cost and subsequently measured at cost less any accumulated impairment losses.
Classic car investments held for capital appreciation are held at estimated market value.
At each reporting period end date, the group reviews the carrying amounts of its tangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the company estimates the recoverable amount of the cash-generating unit to which the asset belongs.
The carrying amount of investments accounted for using the equity method is tested for impairment as a single asset. Any goodwill in the carrying amount of an 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.
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 balance sheet 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 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, other than those held at fair value through profit and loss, are assessed for indicators of impairment at each reporting end date.
Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected. If an asset is impaired, the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset’s original effective interest rate. The impairment loss is recognised in profit or loss.
If there is a decrease in the impairment loss arising from an event occurring after the impairment was recognised, the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been, had the impairment not previously been recognised. The impairment reversal is recognised in profit or loss.
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 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 group after deducting all of its liabilities.
Basic financial liabilities, including creditors and loans, 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.
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 profit and loss account because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The 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 profit and loss account, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset 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 fixed assets. The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received. Termination benefits are recognised immediately as an expense when the company is demonstrably committed to terminate the employment of an employee or to provide termination benefits.
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessees. All other leases are classified as operating leases.
Assets held under finance leases are recognised as assets at the lower of the assets fair value at the date of inception and the present value of the minimum lease payments. The related liability is included in the balance sheet as a finance lease obligation. Lease payments are treated as consisting of capital and interest elements. The interest is charged to profit or loss so as to produce a constant periodic rate of interest on the remaining balance of the liability.
Rentals payable under operating leases, including any lease incentives received, are charged to profit or loss on a straight line basis over the term of the relevant lease except where another more systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed.
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.
Liability limitation agreement
The company has entered into a liability limitation agreement with Royce Peeling Green Limited, the statutory auditor for the year ended 31 August 2024. The proportionate liability agreement follows the standard terms in Appendix B to the FRC's June 2008 Guidance on Auditor Liability Agreements, and has been approved by the shareholders.
In the application of the group’s accounting policies, the director is required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both 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.
The group's revenue and profit recognition policies as set out in note 1 are central to the way it values its work each year and have been consistently applied. The key judgements and estimates in determining the turnover and profits of these contracts are:
estimation of costs to complete;
achieving the agreed contractual program; and
recoverability of any claims or variations.
The estimation uncertainty is reduced by the effect of the portfolio of work ongoing in any period, the short duration of many contracts and by the significant experience of the management team which includes qualified estimators. Nevertheless, profit recognition is a key estimate and is inherently judgemental in any contracting business.
The results of Discontinued operations in the comparative period relate to the activities of Canal Engineering Limited to the date of its entering liquidation in July 2023.
The average monthly number of persons (including directors) employed by the group and company during the year was:
Their aggregate remuneration comprised:
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.
Following detailed business reviews, Company restructuring, management changes and in-depth strategic planning it was with the deepest regret that in July 2023 the Group Directors took the decision to place Canal Engineering Ltd into Creditors Voluntary Liquidation. The effective date of liquidation was 14th July 2023.
The actual (credit)/charge for the year can be reconciled to the expected credit for the year based on the profit or loss and the standard rate of tax as follows:
Other investments largely comprise investments in classic cars.
Details of the company's subsidiaries at 31 August 2024 are as follows:
Registered office addresses (all UK unless otherwise indicated):
The net carrying value of tangible fixed assets includes the following in respect of assets held under finance leases or hire purchase contracts.
At 31 August 2024 freehold land and buildings comprised:
one property at a carrying amount of £678,000 which was last revalued in 2021 by the director on the basis of market value based on market transactions on arm's length terms for similar properties; and
a second property carried at valuation of £2,900,000 which was revalued in the year by Allsop LLP, members of RICS, based on vacant possession.
At 31 August 2023 freehold land and buildings comprised:
one property at a carrying amount of £678,000 which was last revalued in 2021 by the director on the basis of market value based on market transactions on arm's length terms for similar properties;
a second property carried at valuation of £1,700,000 currently being marketed for sale; and
a further property with a carrying amount of £2,702,703 is held at cost on the basis that it was only recently purchased and this remains equivalent to its market value.
The historic cost and consequent accumulated depreciation of the revalued properties is as follows:
The bank loan is secured by a legal charge over the registered office property dated 9 July 2019 and cross guarantee from subsidiary undertakings. This loan bears interest at a rate of 2% over base rate and the residual balance was scheduled for repayment and was repaid in full by 31 October 2024.
Finance lease payments represent rentals payable by the company or group for certain items of plant and machinery. Leases include purchase options at the end of the lease period, and no restrictions are placed on the use of the assets. The average lease term is 3.5 years. All leases are on a fixed repayment basis and no arrangements have been entered into for contingent rental payments.
Amounts owed under finance leases or hire purchase contracts are secured against the underlying assets to which the finance relates.
The following are the major deferred tax liabilities and assets recognised by the group and company, and movements thereon:
Group
The group reserves comprise the following:
The Other reserve is a Merger reserve which represents the difference between the nominal value of shares issued by the parent company and the net assets of John L. Lord & Son (Rizistal) Limited and Rizistal Engineering Services Limited upon acquisition in 1996. This reserve is not distributable.
The Profit and loss reserve represents cumulative profits or losses net of dividends paid.
The Revaluation reserve comprises the cumulative unrealised gains on revaluation of properties, fixed asset investments and current asset investments being the difference between their fair value included in the financial statements and amortised cost. Other movements in the year shown in the Statement of changes in equity comprise the realisation of historical cost gains and losses. This reserve is not distributable.
Company
The company reserves comprise the following:
The Other reserve represents the difference between the fair value and nominal value of shares issued by the company to acquire John L. Lord & Son (Rizistal) Limited and Rizistal Engineering Services Limited in 1996. This reserve is not distributable.
The Profit and loss reserve represents cumulative profits or losses net of dividends paid.
The Revaluation reserve comprises the cumulative unrealised gains on revaluation of properties, fixed asset investments and current asset investments being the difference between their fair value included in the financial statements and amortised cost. Other movements in the year shown in the Statement of changes in equity comprise the realisation of historical cost gains and losses. This reserve is not distributable.
The company’s bank borrowing facilities are secured by way of cross-guarantee between the following related parties John Lord Holdings Limited, John L Lord & Sons (Rizistal) Limited and SLS Design Consultants Limited, and by a first legal charge over a number of the properties owned by these entities. The company has similarly cross guaranteed the bank borrowings of those entities. The amount outstanding under these facilities at 30 September 2024 was £408,620 (2023: £525,252).
At the reporting end date the group had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:
Dividends of £134,422 (2023: £179,351) were paid in the year in respect of shares held by the company's director.
At the year end an amount of £46,824 was owed by E.S.R. Lord (2023: £134,422). This comprises current account balances owed by E.S.R. Lord which are repayable on demand and bear no interest.
The company has taken advantage of the exemption available in FRS 102 whereby it has not disclosed transactions with any wholly owned subsidiary undertaking.
Dividends of £26,820 (2023:£35,784) were declared but not paid in the year in respect of shares held by the Trustees of the John Lord Pension Scheme. The balance unpaid at 31 August 2024 was £26,820 (2023: £101,036). E.S.R. Lord is a trustee and a beneficiary of the scheme.