The directors present the strategic report for the year ended 30 June 2024.
Principal Activities
Torsion Construction Limited ("the company") is a privately-owned construction business, delivering a full design and build service in England, predominantly in the Midlands, Lancashire, Yorkshire and North East.
The year to June 2024 has seen the company deliver profit before tax of £404k (2023: £116k), and turnover of £117.2m (2023: £57.0m). The year has been characterised by significant turnover growth and continued stabilised profits.
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 in 2024 has been delivered as per the strategic plan and the Company is currently tracking against the 2025 business plan with all future turnover secured. The average size of each contract 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 year, the company 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 year, net assets have increased by £0.5m to £2.7m. 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 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 focus of our work remains with our sister company, Torsion Developments Limited (“TDL”), where we closely monitor the timing of the schemes and likely future profit margin. Where our work is with external clients, we emphasise the importance early engagement, working with the appropriate level of funding, maintain an open relationship to deliver the scheme successfully. We are fully immersed in the Building Safety Act 2022 and our first scheme under the Act is now underway. To ensure adherence to this we internally promoted Martin Wing into the new role of Compliance and Technical Director, in the year.
Project delivery is a risk to the company; any project due to the complex nature of construction could encounter difficulties leading to cost and time overruns, litigation, and disputes. Our successful track record of comprehensive management oversight, monthly project reviews and working closely with the client help mitigate the risk to successful project delivery.
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 profit before tax of £404k (30 June 2023: £116k). Increase of 248.9%
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 company. As at 30 June 2024 cash was £5.5m (30 June 2023: £2.9m) an increase of 92.0%
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 year ended 30 June 2024.
The results for the year are set out on page 13.
Ordinary dividends were paid amounting to £13,250. The directors do not recommend payment of a further dividend.
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
Sumer Auditco Limited were appointed as auditor to the company and are 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 Construction Limited (the 'company') for the year ended 30 June 2024 which comprise the statement of comprehensive income, the balance sheet, the statement of changes in equity and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).
Basis for opinion
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
Other information
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of our audit:
the information given in the strategic report and the directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
the strategic report and the directors' report have been prepared in accordance with applicable legal requirements.
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.
Torsion Construction Limited is a private company limited by shares incorporated in England and Wales. The registered office is 1280 Century Way, Thorpe Park, Leeds, LS15 8ZB.
The financial statements are prepared in sterling, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £.
This company is a qualifying entity for the purposes of FRS 102, being a member of a group where the parent of that group prepares publicly available consolidated financial statements, including this company, which are intended to give a true and fair view of the assets, liabilities, financial position and profit or loss of the group. The company has therefore taken advantage of exemptions from the following disclosure requirements:
Section 7 ‘Statement of Cash Flows’: Presentation of a statement of cash flow and related notes and disclosures;
Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instrument Issues: Interest income/expense and net gains/losses for financial instruments not measured at fair value; basis of determining fair values; details of collateral, loan defaults or breaches, details of hedges, hedging fair value changes recognised in profit or loss and in other comprehensive income;
Section 26 ‘Share based Payment’: Share-based payment expense charged to profit or loss, reconciliation of opening and closing number and weighted average exercise price of share options, how the fair value of options granted was measured, measurement and carrying amount of liabilities for cash-settled share-based payments, explanation of modifications to arrangements;
Section 33 ‘Related Party Disclosures’: Compensation for key management personnel.
The financial statements of the company are consolidated in the financial statements of Torsion Group Holdings Limited. These consolidated financial statements are available from its registered office, 1280 Century Way, Thorpe Park, Leeds, LS15 8ZB.
The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is credited or charged to profit or loss.
Basic financial assets, which include debtors and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised.
Other financial assets, including investments in equity instruments which are not subsidiaries, associates or joint ventures, are initially measured at fair value, which is normally the transaction price. Such assets are subsequently carried at fair value and the changes in fair value are recognised in profit or loss, except that investments in equity instruments that are not publicly traded and whose fair values cannot be measured reliably are measured at cost less impairment.
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the company transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the company after deducting all of its liabilities.
Basic financial liabilities, including creditors, bank loans, loans from fellow group companies and preference shares that are classified as debt, are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future payments discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.
Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.
Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Amounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.
Derivatives, including interest rate swaps and forward foreign exchange contracts, are not basic financial instruments. Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured at their fair value. Changes in the fair value of derivatives are recognised in profit or loss in finance costs or finance income as appropriate, unless hedge accounting is applied and the hedge is a cash flow hedge.
Debt instruments that do not meet the conditions in FRS 102 paragraph 11.9 are subsequently measured at fair value through profit or loss. Debt instruments may be designated as being measured at fair value through profit or loss to eliminate or reduce an accounting mismatch or if the instruments are measured and their performance evaluated on a fair value basis in accordance with a documented risk management or investment strategy.
Financial liabilities are derecognised when the company’s contractual obligations expire or are discharged or cancelled.
Equity instruments issued by the company are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the company.
In the application of the company’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.
The estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are as follows.
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 company obtains Research and Development tax relief for small and medium sized enterprises through its corporation tax returns. As at the time of completing these financial statements, the tax relief claim for the year has not been finalised or submitted. Therefore the directors have estimated the value of the tax relief for the year based on their knowledge of Research and Development activity undertaken during the year and by prior year claims as a benchmark. As at 30 June 2024, the amount included as a debtor was £520,173 (2023: £313,464).
All the company's turnover arose within the UK.
The average monthly number of persons (including directors) employed by the company during the year was:
Their aggregate remuneration comprised:
The actual credit for the year can be reconciled to the expected charge for the year based on the profit or loss and the standard rate of tax as follows:
Bank loans include £20,752 (2023: £30,746) which is a Bounce Back Loan secured by the Government.
The bank hold a fixed floating charge over the assets of the company.
A unlimited multilateral guarantee has been provided by Torsion Group Limited and Torsion Group Holdings Limited.
The following are the major deferred tax liabilities and assets recognised by the company and movements thereon:
The company operates a defined contribution pension scheme for all qualifying employees. The assets of the scheme are held separately from those of the company in an independently administered fund.
Contributions amounting to £86,755 (2023: £54,788) were payable to the scheme and are included in creditors.
Ordinary shares have full voting rights, full rights in respect of capital and are not redeemable.
The company has given its bankers an unlimited multilateral guarantee with its parent company, Torsion Group Holdco Limited.
At the reporting end date the company had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:
During the year the company entered into the following transactions with related parties:
The following amounts were outstanding at the reporting end date:
Of the amounts owed to entities under common ownership, £nil (2023: £58,983) is included in trade creditors due within one year and £1,192,005 (2023: £96,933) is included within other creditors.
Of the amounts owed by entities under common ownership, £nil (2023: £256,499) is included in trade debtors due within one year and £19,194,565 (2023: £4,462,813) is included in other debtors.
Interest free loans have been granted by the company to its directors as follows: