The directors present the strategic report for the Period ended 30 June 2024.
The period to June 2024 has seen the group deliver a loss before tax of £79k, and turnover of £64.3m. The year has been characterised by significant turnover growth and continued stabilised profits, in the company.
In 2023 regional teams were established as part of the strategic plan to increase turnover in the business to over £200m within 3 years. The business has now been restructured with Ed Wootton appointed as Managing Director and two distinct regions formed covering the North and the Midlands. With Richard Potts recruited as Regional Director for the North and Priesh Soni promoted to Regional Director in the Midlands to support the growth plans.
The turnover growth, by the company, in 2024 has been delivered as per the strategic plan and the group is currently tracking against the 2025 business plan with all future turnover secured. The average size of each contract, in the company, has increased from £15m to £40m which is the underlying significant contribution to achieving the planned turnover growth.
In addition, within the new regions we have continued to grow and work with our supply chain partners which has helped to maintain & grow profit margins. With the year still impacted by lower margins on a number of contracts won during COVID-19, and pre-inflation pressures future years are expected to improve year on year as these contracts are now closed out.
During the period, the group successfully handed over a scheme known as the Phoenix, a prestigious 367 luxury apartment scheme in the heart of Leeds city centre. This scheme, at a construction value of £57m, is the largest scheme delivered to date and delivered under the backdrop of COVID-19, inflation, interest rate increases and the Ukraine war, marks a turning point in the Company’s journey to establish itself delivering larger schemes.
In the period, group net assets are £70k. We remain committed to our 5-year plan of increasing the balance sheet and returning stable dividends to the shareholders
The secured workload and future order book now stands at £500.2m, giving the directors confidence to continue to invest in the structure of the business and to confidently deliver the business plan for the next 3 years.
As part of the restructure, we have also integrated the pre-construction team into the regional teams to ensure we have fully detailed and de-risked schemes before we enter into contract in collaboration with our key regional subcontractor partners with full accountability with the regional teams. This process also helps ensure we remain focused on our exemplar delivery model for our stakeholders ensuring we design schemes to budget and deliver a high quality product on time and safely.
Exceptional and talented people
The success of the business is based on having the best people. The experience, commitment and dedication of our staff is critical to the ongoing success of the company and delivery of the strategic vision.
We invest in attracting and developing exceptional people to create a solutions focused, vibrant, productive and flexible workforce who strive to exceed our client expectations. We carefully select our teams, using newly deployed industry leading team management tools to ensure our client focused culture is maintained and we are proud to say we employ some of the best people in the industry.
We were delighted to be awarded the Health and Wellbeing Award at the Yorkshire Post Excellence in Business Awards 2024, which demonstrates our commitment to making Torsion a great place to work.
To support the growth of the business, investment has been made in our recruitment process to ensure we employ the right calibre of staff, using personality/behaviour tools to support recruiting the right people to fit our culture. There has been an increase in headcount, in the group, by 39 in the year, with specific focus on recommendation. This included the senior appointment of Richard Potts, who was specifically targeted and recruited directly. We acknowledge the successful delivery of our schemes relies on our people. In addition, we have continued to focus on our ‘on boarding’ process, improving our staff retention and initial productivity outputs.
We empower our people to take ownership, pride and passion in what they do. Our vision is set out clearly to staff, with our 1:3:5 strategy cascaded throughout the business, and individuals’ objectives linked to the strategy which generates a culture of success.
Maximising Cash performance
We have focused our efforts over the past twelve months to ensure the business has sufficient capital to continue to grow and most importantly meet its financial obligations. We are committed to ensuring we have the right balance between investing in future schemes and paying the supply chain partners promptly.
Profit margins
We are focused on improving margins as part of our growth strategy. To ensure we mitigate this risk we operate a full team approach to supply chain management and procurement, with the objective to engage our supply chain during the pre-construction stage of the contract. All of our pre-inflation and Covid secured contracts that have suppressed profits are now completed and we will see an significant percentage increase in profit in the coming years based on secured pipeline.
Project delivery
We continue to improve our internal processes to control Safety, Quality, Time and Cost to build on our successful track record of comprehensive management oversight, monthly project reviews and working closely with the clients to help mitigate the risk to successful project delivery and thus support the delivery of improved profit margins.
Health and safety
The health and safety of all persons on our sites is our number one priority. To mitigate risk, we continue to build our emphasise the strong safety culture by impacting behaviours to support a positive improvement. We use key metrics and live management information to review key lead and lag indicators to drive our strategic approach to long term safety whilst monitoring the safety on our sites, acting swiftly if any areas for improvement are identified.
Pipeline
Following a successful 2024 we have a very strong secured order book for 2025/26. With a secure pipeline we are now focused on securing quality schemes in sufficient time for project replacement in 2026 and to continue to deliver our turnover targets.
The company uses a range of financial and non-financial performance indicators. These are set out below:
Profit before tax
The level of profitability is a key metric. The year to June 2024 delivered a loss before tax of £79k for the group.
Order book
Secured orders provide a measure of future growth and profitability. The current overall secured order book of £500.2m gives confidence in the future success of the business.
Internal turnover
Our turnover is generated through both our sister company Torsion Developments Limited and external clients. The year to June 2024 had 57% internal turnover.
Cash
Cash backed profits are essential to sustainable growth of the group. As at 30 June 2024 cash was £5.5m.
Accident frequency rate
Health and safety is critical to the operations of the company. The company uses the Accident Frequency Rate (AFR), a measure of the number of lost time incidents per 100,000 of hours worked. The AFR for the 12 months to 30 June 2023 was nil (12 months to June 2023 was 0.26). This represents excellent performance in the construction industry. We have also maintained accreditation with Construction Line Acclaim.
ISO Accreditation
We are delighted to have maintained ISO9001, 14001, and 45001 accreditations during the year. These reflect the robustness of our processes and the commitment of our staff and our ethos of getting it right and constantly looking to improve.
Strategy
The directors undertook a review of the types of work best suited to the business and concluded the strategy will continue to focus on our own development led work and known third party clients, predominantly in the purpose-built student accommodation (PBSA), build-to-rent (BTR) and living sectors. The strategy is to grow turnover in the next 2 years to over £200m. The close relationship with TDL gives us certainty of pipeline, early engagement in the projects and clear channels of communication and full visibility to ensure profitability. Ed Wooton is also the Managing Director of TDL to create synergy between development and construction delivery, and David Worsley was recently promoted to Chief Operating Officer. This allows us to deliver and enhance our fully vertically integrated, develop, construct and operate business model, ensuring we provide a fully considered solution for delivering our schemes.
Our focus for the coming period is to ensure that we deliver all of our schemes with the first-class personalised service we are known for and that as we continue to grow, our management processes remain robust and enable is to identify and mitigate risk, whilst allowing our project teams to be empowered, agile and flexible.
To further consolidate our growth plans we have reviewed our approach to the support functions such as HR, Finance, and Marketing. There is now a Business Services lead, who ensures the visions across all areas is aligned with the Company strategy, and reports to the shareholders on a quarterly basis.
Enhancing our approach to ESG
As part of the restructure and under the guidance of the Business Service Lead – Paula Smith, we have we aligned our ESG strategy in line with growth. Each one of the key elements of the business Safety, Quality, Environment, Supply chain, People, Marketing, IT and Finance (alongside operations) have realigned their departmental visions and plans to create and aligned approach to our forward delivery of a set of measurable and co-ordinate tangible outcomes to deliver real change.
The ESG committee has been reorganised under our Business Service Lead (as chair) to be responsible for tracking and reporting to the shareholders against these plans on a quarterly basis to ensure we remain focussed on identifying how best we can contribute to building a better business and a better world. In our commitment to ESG we appointed an Environmental and Sustainability Advisor during the year.
Environment | As a construction business, we participate in an environmentally destructive industry. We are responsible for addressing the impact and have an opportunity to be part of the solution. With growing pressure on our natural resources, it is our duty to ensure that all our business activities either maintain or enhance the resilience of the natural environment in which we and our supply chain operate. We are taking steps towards establishing our organisational carbon footprint and are actively identifying viable carbon reduction measures and opportunities. We plan to set ourselves ambitious but achievable short, mid, and long-term carbon reduction targets. We are working with our supply chain to identify emission reduction opportunities up and down our value chain, establishing trust and common goals, promoting efficient and effective working practices while rewarding innovation. In the year we have entered our first funding arrangement using a green fund in TDL for the Construction of Burley Road with the committed reduction of carbon is 500 kg/ m2, currently were achieving 413 kg /m2. |
Social | People are at the heart of everything that we do. Our approach is to focus on social value locally, driving the local pound and creating value that will ensure high impact and positive ripple effects. This will include spending with local businesses and creating opportunities for local employment. All of this is founded on the passion and engagement of our people and supply chain partners. We have updated our EDI Policy in line with new legislation on employers being proactive in preventing Sexual Harassment and have rolled out refresher training to every employee. Our commitment is to educate employees on celebrating equality, diversity & inclusion and we invite everyone to be part of a culture where they treat others equally, fairly and with respect. |
Governance | Our vision is to develop a culture of continuous improvement throughout our business, challenging our performance and business-as-usual processes to deliver outstanding service. Our 1:3:5 strategy has been cascaded throughout the business; it aligns with shareholder objectives. All business services have developed change plans which are being monitored quarterly at shareholder meetings. One of the key focus areas is to strengthen our IT resilience. A detailed strategy is being developed and further investment in this area is planned by appointing an IT Manager. |
2024 has been a transformational year where we are starting to see the success of our 5 year business strategy implemented 18 months ago and the governance provided by the newly formed regions and key senior appointments.
With a strong secured forward order book and current volume of works under construction the directors are confident the business will continue to increase turnover and deliver significantly increased profitability in 2025 and beyond.
This is an overview of how Directors performed their duty to promote the success of the company under section 172 of the Companies Act 2006.
Duty to promote the success of the Company
In executing our strategy, Directors must act in accordance with a set of general duties detailed in section 172 of the Companies Act 2006. These general duties include a duty to promote the success of the Company, and specifically, to act in a way that the Director considers, in good faith, would be most likely to promote the success of the Company for the benefit of its shareholders as a whole and, in doing so, having regard (amongst other matters) to the:
likely consequences of any decisions in the long-term.
interests of the Company's employees.
need to foster the Company's business relationships with suppliers, customers, and others.
impact of the Company's operations on the community and environment.
desirability of the Company maintaining a reputation for high standards of business conduct; and
need to act fairly between shareholders of the Company.
This statement has been prepared in accordance with the requirements of The Companies (Miscellaneous Reporting) Regulations 2018, which require the Company to describe how the Directors have had regard to the matters set out in section 172 of the Companies Act 2006 during the financial year under review. It is noted that the Directors have always acted in accordance with such duties in their decision making and they will continue to do so. Considering the additional disclosure requirements, we have set out in the strategic report how the Directors have fulfilled their duties during the year ended 30 June 2024.
Having regard to the likely consequences of any decisions in the long-term
The Board cultivates strong relationships with key stakeholders so that it is well placed and sufficiently informed to take their considerations into account when making decisions and assessing any likely long-term impact of those decisions. Torsion Construction's core strategy is to provide a bespoke boutique operating model and be the best-in-class contractor of choice and this core strategy underpins all Board decisions and the creation of long-term value for all stakeholders.
Having regard to the interest of the Company’s employees
The Board understands that the Group’s employees are fundamental to its long-term success. The health, safety and well-being of the employees are of paramount importance alongside the provision of an ethical workplace. The Group engages in an active way with its employees. Many of the staff work on site and senior management regularly complete site visits to maintain timely interaction.
Having regard to the need to foster the Company's business relationships with suppliers, customers, and others.
Fostering positive business relationships with key stakeholders, such as suppliers and customers is also important to the success of the Group’s businesses. As a result of Torsion’s model, engagement with customers is a matter that is largely delegated to the management teams, who know their customers best. The Board has been and continues to be, available to support the business in this area as and when required and will continue to maintain the relationships with key suppliers and customers. The business has heavily invested in their relationships with suppliers and customers throughout the year ended 30 June 2024.
Having regard to the impact of the Company’s operations on the community and environment
In their decision making, the Directors need to have regard to the impact of the Company’s operations on the community and environment. The Board plays a constructive role in tackling issues through engagement and investment.
It is important for the long-term future of our business that we protect and enhance the environment. Climate change will affect how much non-renewable energy is available, and the stakeholders are rightly concerned about the resilience of supplies and are looking to companies to adapt and take the necessary steps to reduce their climate change risk. We are committed to reducing our carbon footprint and contribution to climate change where economically viable.
Having regards to the desirability of the Company maintaining a reputation for high standards of business conduct
Customer fulfilment and customer satisfaction are essential for us to consistently deliver a high-quality service. The Board recognises that culture, values, and standards are key contributors to how a company creates and sustains value over the longer-term, to enable it to maintain a reputation for high standards of business conduct which guide and assist in the Board’s decision making, and in doing so, help promote the Company’s success, recognising, amongst other things, the likely consequences of any decision in the long-term and wider stakeholder considerations.
The standards set by the Board mandate certain requirements and behaviours with regards to the activities of the Directors, the Group’s employees and others associated with the Group.
Having regard to the need to act fairly between shareholders of the Company
The members of the Board consider, both individually and together, that they have acted in the way they consider, in good faith, would be most likely to promote the success of the Company for the benefit of its members as a whole (having regard to the stakeholders and matters set out in s172(1)(a-f) of the Companies Act 2006) in the decisions taken during the year ended 30 June 2024.
On behalf of the board
The directors present their annual report and financial statements for the Period ended 30 June 2024.
The results for the Period are set out on page 13.
No ordinary dividends were paid. The directors do not recommend payment of a further dividend.
The directors who held office during the Period and up to the date of signature of the financial statements were as follows:
Sumer Auditco Limited were appointed as auditor to the company and in accordance with section 485 of the Companies Act 2006, and deemed to be reappointed under section 487(2) of the Companies Act 2006.
At Torsion, we are committed to building sustainable developments. With growing pressure on our natural resources, we must ensure all of our business activities enhance the resilience of the natural environment. We are committed to reducing carbon and waste on our projects and apply sustainability principles throughout our business activities.
The data below is for the year ended 30 June 2024.
Construction emissions relating to site, running the head office and staff business mileage have been included within this report.
In order to calculate the required information, we have used:
The 2019 UK Government Environmental Reporting Guidelines
UK Government GHG Conversion Factors for Company Reporting 2024
The company’s entire operations are based in the UK and its primary energy uses are:
Fuel used on site
Electricity used on site
Fuel used for business travel
Gas and electricity used at our head office
To account for changes in business activities year on year, the company applies an emission intensity ratio which expressed its annum emissions in relation to annual turnover. For 2024, the carbon emission intensity ratio for scope 1 & scope 2 emissions is shown in the table above.
As Torsion Construction begin to integrate sustainability considerations at the core of strategic business decisions, we expect energy efficiency action and sustainability initiatives to evolve year on year from the period covered by this report.
The adoption of SmartWaste software in spring 2023 has enabled the business to gather and monitor emissions data more efficiently. The business is in the process of improving utilisation of this software across our operations through training, awareness and auditing.
The business recognises that waste generated in our operations is likely to be a major emissions source. Although not reported this year, the company has a strong focus on reducing waste and monitors the amount of waste diverted from landfill. We also continue to use modern methods of construction (MMC) incorporating energy efficient design and environmentally sustainable materials wherever possible.
Two of our construction sites have opted to use giant battery energy storage systems on site, as an alternative to the traditional diesel generator solution, minimising diesel use on site. We are looking to explore this option further, as well as hybrid generator units, to expand utilisation of greener power solutions across our sites.
Torsion Construction have taken the step of employing a dedicated Environment and Sustainability Advisor in June 2024, to assist the business in establishing its sustainability strategy and goals, driving the adoption of effective carbon and energy management and reduction measures.
We have audited the financial statements of Torsion Group Holdco Limited (the 'parent company') and its subsidiaries (the 'group') for the Period ended 30 June 2024 which comprise the group statement of comprehensive income, the group balance sheet, the company balance sheet, the group statement of changes in equity, the company statement of changes in equity, the group statement of cash flows, the company statement of cash flows and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).
Basis for opinion
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the group's and parent company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
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 Period 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.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below.
We identified areas of laws and regulations that could reasonably be expected to have a material effect on the financial statements from our general commercial and sector experience, and through discussions with the Directors (as required by auditing standards) and discussed with the Directors the policies and procedures regarding 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 and taxation legislation. We assessed the extent of compliance with these laws and regulations as part of our procedures on the related financial statement 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. We identified the following areas as those most likely to have such an effect; laws related to Health and Safety, Employment, UK Companies Act, Pension Legislation, Tax Legislation and Construction Regulations.
Auditing standards limit the required audit procedures to identify non-compliance with these laws and regulations to enquiry of the Directors and inspection of regulatory and legal correspondence, if any. Through these procedures we did not become aware of any actual or suspected non-compliance.
Owing to the inherent limitations of an audit, there is an unavoidable risk that we may not have detected some material misstatements in the financial statements, even though we have properly planned and performed our audit in accordance with auditing standards. For example, the further removed non-compliance with laws and regulations (irregularities) is from the events and transactions reflected in the financial statements, the less likely the inherently limited procedures required by auditing standards would identify it. In addition, as with any audit, there remained a higher risk of non-detection of irregularities, as these may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal controls. We are not responsible for preventing non-compliance and cannot be expected to detect non-compliance with all laws and regulations
We design procedures in line with our responsibilities, outlined below to detect material misstatement due to fraud:
Matters are discussed amongst the audit engagement team regarding how and where fraud might occur in the financial statements and potential indicators of fraud
Identifying and assessing the design and effectiveness of controls that management have in place to prevent and detect fraud
Detecting and responding to the risks of fraud following discussions with management and enquiring as to whether management have knowledge of any actual, suspected or alleged fraud.
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.
As permitted by s408 Companies Act 2006, the company has not presented its own profit and loss account and related notes. The company’s profit for the year was £13,250.
Torsion Group Holdco Limited (“the company”) is a private limited company domiciled and incorporated in England and Wales. The registered office is 1280 Century Way, Thorpe Park, Leeds, LS15 8ZB.
The group consists of Torsion Group Holdco Limited and all of its subsidiaries.
The reporting period was a 17 month period to 30 June 2024.
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 certain financial instruments at fair value. The principal accounting policies adopted are set out below.
The consolidated group financial statements consist of the financial statements of the parent company Torsion Group Holdco Limited together with all entities controlled by the parent company (its subsidiaries) and the group’s share of its interests in joint ventures and associates.
All financial statements are made up to 30 June 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.
Subsidiaries are consolidated in the group’s financial statements from the date that control commences until the date that control ceases.
Entities in which the group holds an interest and which are jointly controlled by the group and one or more other venturers under a contractual arrangement are treated as joint ventures. Entities other than subsidiary undertakings or joint ventures, in which the group has a participating interest and over whose operating and financial policies the group exercises a significant influence, are treated as associates.
Investments in joint ventures and associates are carried in the group balance sheet at cost plus post-acquisition changes in the group’s share of the net assets of the entity, less any impairment in value. The carrying values of investments in joint ventures and associates include acquired goodwill.
If the group’s share of losses in a joint venture or associate equals or exceeds its investment in the joint venture or associate, the group does not recognise further losses unless it has incurred obligations to do so or has made payments on behalf of the joint venture or associate.
Unrealised gains arising from transactions with joint ventures and associates are eliminated to the extent of the group’s interest in the entity.
At the time of approving the financial statements, the directors have a reasonable expectation that the group has adequate resources to continue in operational existence for the foreseeable future. Thus the directors continue to adopt the going concern basis of accounting in preparing the financial statements.
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.
When cash inflows are deferred and represent a financing arrangement, the fair value of the consideration is the present value of the future receipts. The difference between the fair value of the consideration and the nominal amount received is recognised as interest income.
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.
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, associates and jointly controlled entities are initially measured at cost and subsequently measured at cost less any accumulated impairment losses.
A subsidiary is an entity controlled by the group. Control is the power to govern the financial and operating policies of the entity so as to obtain benefits from its activities.
An associate is an entity, being neither a subsidiary nor a joint venture, in which the company holds a long-term interest and where the company has significant influence. The group considers that it has significant influence where it has the power to participate in the financial and operating decisions of the associate.
Investments in associates are initially recognised at the transaction price (including transaction costs) and are subsequently adjusted to reflect the group’s share of the profit or loss, other comprehensive income and equity of the associate using the equity method. Any difference between the cost of acquisition and the share of the fair value of the net identifiable assets of the associate on acquisition is recognised as goodwill. Any unamortised balance of goodwill is included in the carrying value of the investment in associates.
Losses in excess of the carrying amount of an investment in an associate are recorded as a provision only when the company has incurred legal or constructive obligations or has made payments on behalf of the associate.
In the parent company financial statements, investments in associates are accounted for at cost less impairment.
Entities in which the group has a long term interest and shares control under a contractual arrangement are classified as jointly controlled entities.
At each reporting period end date, the group reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the company estimates the recoverable amount of the cash-generating unit to which the asset belongs.
The carrying amount of the investments accounted for using the equity method is tested for impairment as a single asset. Any goodwill included in the carrying amount of the investment is not tested separately for impairment.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.
Recognised impairment losses are reversed if, and only if, the reasons for the impairment loss have ceased to apply. Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.
The group has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.
Financial instruments are recognised in the group's 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, 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.
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 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.
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.
In the application of the group’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.
The estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are as follows.
Profit on construction contracts ongoing at the balance sheet date is calculated based on the final expected profit margin for that contract as a percentage of completion of the contract. The percentage of completion of a contract is calculated based on the sales value to date versus the full contract value. Sales value is measured by reference to independent quantity surveyors' regular reports on the project.
Where contracts are forecast to make a loss, these are treated as onerous contracts in accordance with FRS102 and the total estimated loss is recognised in the year as part of the cost of sales and in provisions for liabilities on the balance sheet.
The Directors' have reviewed the status of all incomplete contracts both as at 30 June 2024 and up to the point of signing the financial statements and remain confident that assumed profitability levels will be maintained on the contracts through to completion. The directors' have considered previous forecasting accuracy in recent years in this regard and note that, with the exception of one specific contract, actual profitability achieved has been the same or higher than that initially forecasted in the pre-completion phases of the contracts. This suggests that the directors adopt a reasonably prudent approach in estimating contract profitability.
The directors acknowledge the inherent risk in this industry of contract losses occurring and are mindful of the significant losses incurred during the financial year to 30 June 2021 on one specific contract. These losses were incurred as a result of issues specific to that project and were exacerbated by delays caused by the COVID-19 pandemic. Management has put in place remedial action, including improving controls around governance and oversight as well as making changes in personnel, and they are of the view that the significant disruption caused by COVID-19 in 2020 and 2021 will not recur given the UK's vaccine-led recovery. On this basis, the directors have judged that none of the current ongoing contracts will result in such losses and have therefore not made provision to reflect that.
Included within other debtors are amounts loaned to other entities under common ownership of the ultimate controlling party. These loans are repayable on demand and do not bear interest charges. Some of these ventures are start up companies which currently don't yet have sufficient resources to be in a position to repay the amounts owed to the Company should repayment be demanded.
The directors must ascertain recoverability of these debtors based on the forecasted cash flows to be generated by each venture. These ventures are in the homes and care homes sectors; the directors of those businesses have prepared business plans which demonstrate that repayment of amounts owed will be made within the foreseeable future following completion of sale contracts in those businesses. The businesses are currently performing as expected and no impairment triggers have been identified by the directors. On this basis, the directors continue to believe that full recovery of the amounts owed by these related parties is probable.
The above turnover has been generated in the UK.
The average monthly number of persons (including directors) employed by the group and company during the Period was:
Their aggregate remuneration comprised:
The director remuneration was £9,600 (2023: £9,600)
The actual (credit)/charge for the Period can be reconciled to the expected credit for the Period based on the profit or loss and the standard rate of tax as follows:
Details of the company's subsidiaries at 30 June 2024 are as follows:
Registered office addresses (all UK unless otherwise indicated):
The long term loan of £221,363 is secured by a fixed and floating charge over the property or undertaking of Torsion Construction Limited and Torsion Group Holdco Limited.
The following are the major deferred tax liabilities and assets recognised by the group and company, and movements thereon:
A defined contribution pension scheme is operated for all qualifying employees. The assets of the scheme are held separately from those of the group in an independently administered fund.
The shareholders had unpaid share capital of £2,991.