The director presents the strategic report for the year ended 31 December 2023.
The results contained in these financial statements reflect the success of the strategy adopted by the management team, led by Brian Conaghan, as managing director of Glenlee Limited (“GLL”).
Following ongoing strategic reviews, which confirm the view that GLL is a solid business with a robust client base, strong operational capabilities and network, the management team identified its strategic priorities:
Coordinating and streamlining operations
Central costs are being reduced and management teams have taken responsibility and accountability for their operations on a fully costed basis. This will enable better visibility of the profitability of each division
Increasing utilisation levels of operational systems
Any underutilisation is being addressed and operated more effectively, by the use of enhanced reporting of utilisation levels, which has allowed for better planning and is expected to drive profitability going forward
Re-focusing the client base
Review of the existing client sectors and focus on areas aligned to the Company’s core operational capabilities, is driving efficiencies and improving profitability.
Throughout the year, the business has continued to invest for the future, in particular the renewal of its IT systems, which will deliver future savings.
The Company has come out of a period of continued difficult trading in the UK with demonstrable successes against its key strategic objectives and against a background of unprecedented economic pressures, by focusing on the core competences of the business.
Following the year end, the Company has continued to trade successfully. The Company is focused on growing and improving the profitability and to that end continues to invest in increasing growth. The principal activities of the Company are expected to continue in line with the year ended 31 December 2023.
Principal Activities
The main core business activity is that of a specialist commercial contractor providing a variety of payroll, CIS scheme and related compliance services to the construction industry.
GLL is fast becoming a key supplier of payroll and compliance solutions to UK businesses. The business operates and maintains high levels of service while delivering cost effective solutions to our clients.
Our strategy focuses on the efficient utilisation of our systems and expertise, to deliver long term value to our clients. Growth is targeted in key market sectors that are complementary to the company's current network and core competencies.
Despite the pandemic and its aftermath, we have continued to deliver excellent service to our clients and at times of exceptional demands we have provided additional resource on very short notice to support our clients. This ability to demonstrate flexibility and provide support on short lead times has been a contributing factor to further client gains in the year.
During the year, the Board is ultimately responsible for setting the Company's risk appetite and for overseeing the effective management of risk. The risk strategy for the company is based on the Company’s risk framework, management and internal controls. Day to day risk management is the responsibility of the senior management team of the Company and a risk management framework setting out the Company's risk management processes and procedures in place.
A summary of the more significant risks specific to our operations and industry are outlined below.
Economic Environment Risk
Changes in the economic environment, whether resulting from the changing government policy and legislation or other external factors, may adversely affect our business and our clients’ businesses. For example, more complex rules for restrictions on the movement of workers from Europe may affect the Company's operations and financial position.
The Board monitors developments in the economic environment and other factors that may affect the Company. Advisers are retained to assist in minimising the impact of adverse changes in the economic environment. The Board also monitors economic developments that present opportunities which offset the downside risks.
Operating Environment Risk
Client demand for outsourced payroll and compliance services may change. There may be changes in the availability of workers and other opportunities to support business growth. New technologies and legislation may well emerge that change the nature of our industry.
We continually review and monitor market developments including new technologies, and emerging business models, and review our strategy accordingly. The Company stays in close contact with its clients to ensure we understand and can respond to their changing needs. We continue to invest in our own development in order to stay at the forefront of expertise in our industry.
People Risk
Loss of one or more key members of the senior management team or failure to retain and attract experienced and skilled people at all levels across the business could also have an adverse impact.
The executive management structure of GLL and management team of the Company bring with them market and sector experience into the business. The management team is appropriately rewarded for its efforts and succession plans are in place across key positions. We take pride in creating a positive workplace environment, through training, engagement, rewards and values for all positions.
Client Risk
Loss of one or more of our key clients could have a material impact on Company revenues.
We believe that the best way to mitigate this risk is to continue to deliver excellent levels of service at competitive rates.
We monitor our key client dependency regularly and seek to balance our exposure to each market sector we operate in by targeting new client opportunities. We typically have long-standing client relationships and many of our key relationships have lasted for many years.
A healthy pipeline of new opportunities is being evaluated and this risk is also mitigated by our strategy of building a balanced portfolio across the sectors we operate in.
Health and Safety Risk
Our primary concern is to minimise, to the extent possible, the risk of harm to people who work in our business or are affected by it. Induction sessions for new employees involve health and safety training. We also have a comprehensive suite of health and safety procedures that all new joiners must confirm they will adhere to.
Reputational Risk
Our potential to win new business or develop existing relationships could be adversely affected by a material incident and a negative perception of our brand. Such incidents could include a significant failure to deliver a client project, or a breach of our IT security system.
We have comprehensive processes and procedures in place to manage operational risk and adherence to those processes and procedures is regularly reviewed. We also have a business continuity plan in place and escalation processes to ensure significant incidents are dealt with promptly and effectively.
Systems and Technical Risk
A failure or unavailability of a key IT system, unauthorised access or a cyber security breach could have a significant impact on operational performance, company reputation and financial performance.
All critical core IT infrastructure and data is replicated across dual data centres, to provide resilience and availability. A formal testing programme is in place to provide assurance of recovery in the event of a disaster. We continue to invest in cyber-security solutions, tools and infrastructure in line with industry best practice.
Financial Risk
Lack of available liquidity could result in the Company being unable to meet its financial obligations. Through its operations, the company is exposed to liquidity risk and Credit risk from trade debtors.
Net debt and expected cash flow movements are monitored to ensure that adequate funds are in place. The Company has no significant concentration of credit risk, with exposure spread over a number of clients, thus avoiding an increase in credit risk.
Legal and regulatory risk
We are required to comply with extensive and complex legal and regulatory regimes. Noncompliance could result in significant fines and reputational damage. Changes in laws and regulations could have an adverse impact on our operations and financial performance.
We have systems and procedures in place to ensure compliance with, and to manage the impact of, and changes in, government legislation and regulation.
Our key performance indicators are, Turnover and Profit from operating activities before exceptional items.
It is important to note that the period to 31st December 2022 represents a 16-month period, as compared to a 12-month period for the year ended 31st December 2023. Whilst turnover has reduced from £125,473,311 in the 16-month period to 31st December 2022 to £101,528,179 in the year to 31st December 2023, when comparing turnover on a 12-month basis, this has increased by 7.9% in these financial statements for the year ended 31 December 2023. The increase is a result of positive actions taken to deliver the strategy to focus on core capabilities.
Similarly, the Profit from operating activities before exceptional items in the period of £280,870, being the 12 month period in these financial statements for the year ended 31 December 2023, compared with the Profit for the previous financial statements for the year ended 31 December 2022 of £619,918, representing a 16 month period, the Profit shows a decrease Profit of £339,048. The level of Profit remains stable despite the current economic uncertainties, and we are confident that our operating model provides us with the flexibility to respond rapidly to changing conditions.
Our business performance will continue to be driven by our strategy to achieve improved performance and will be achieved through:
Maintaining our market leading client service position
Continuing to innovate and invest in technology led operations
Maintenance of an experienced and high performing management team
Environmental matters
The Company will seek to minimise adverse impacts on the environment from its activities, whilst continuing to address health, safety and economic issues. The Company has complied with all applicable legislation and regulations.
The director has an excellent expectation that the Company has sufficient resources to continue in operation for the foreseeable future from the date of this report.
The Company's liquidity is managed closely and in making judgments around the going concern assumption, the Company's director has considered the future trading forecasts of the Company and confirmed that:
The trading forecasts of the Company are included within the forecasts.
The trading forecasts for the company show sufficient headroom with regards to liquidity and covenant compliance such that the use of the going concern assumption is appropriate.
The director has considered sensitivities to the forecasts, which we believe adequately cover any sensitivities that may be relevant to the Company.
Sensitivities considered included material reductions in trading volumes allied to increased costs, the failure to achieve cost and efficiency savings and a deterioration in working capital system of measurement.
The directors of the Company continue to adopt the going concern basis of accounting in preparing the annual financial statements.
The Board of directors of GLL considers that it has, both individually and collectively, acted in good faith in a way which would most likely promote the success of the Company for the benefit of the members as a whole, and in doing so have had a regard, amongst other matters, to factors in (a) to (f) as set out in s172(1) of the Companies Act 2006 for the decisions during the period ended 31 December 2023. In making this statement the director has considered the following matters:
Likely consequences of any decision in the long-term:
The Board reviewed the Company's strategy, as disclosed in the Strategic Report, during the year and concluded that it remains appropriate to support the long-term success of the Company. Shorter term expectations in supporting that strategy are approved by the Board as part of the annual budgeting process, against which the performance of the Company is then monitored. Decisions taken during the year are made in the context of the Company's strategy in order to ensure that they are consistent with that strategy.
The interests of the Company's employees:
Our people are critical to the success of our business and a core component of our business model. We endeavour to recruit the best people, train them well and look after them so that they provide the best possible service for our clients and remain with us for the long term. The Board has ultimate responsibility for ensuring the Company's decisions consider the interests of our employees.
The need to foster the Company's business relationships with suppliers, clients and others: Managing the Company's relationships with suppliers and clients is critical in ensuring the Company delivers on its strategy. Management at all levels are dedicated to ensuring that we maintain an ongoing dialogue with clients and suppliers to enable us to respond at all levels of the organisation appropriately.
The impact of the Company's operations on the community and the environment:
The Company seeks to have a positive impact on the communities in which it operates and minimise the environmental impact on our operations.
The desirability of the Company maintaining a reputation for high standards of business conduct: The Company regularly reviews and updates, where appropriate, its business conduct and ethics policies and ensures that these are communicated to employees, clients and suppliers and that appropriate training is undertaken by relevant employees on a regular basis to reinforce the Company's policies. The Company business ethics and conduct policy is approved by the Board and is communicated to relevant stakeholders.
The need to act fairly as between members of the Company:
The Company always seeks to ensure that its communications are transparent and its actions are in accordance with the Company's stated strategic aims to promote the long-term success of the Company.
On behalf of the board
The director presents his annual report and financial statements for the year ended 31 December 2023.
The results for the year are set out on page 12.
No ordinary dividends were paid. The director does not recommend payment of a final dividend.
The director who held office during the year and up to the date of signature of the financial statements was as follows:
The company conducts weekly communications with employees informing them of all matters directly relating to them. We also engage directly with employees on an individual basis by phone or email if felt if it is in the interest of our employees to benefit from direct contact thus directly benefiting the employees. The company is committed to developing its business and facilitate employees by encouraging communication with our employees. All employee communication is facilitated and welcomed with any suggestions from employees acted upon if in the interests of all stakeholders of the company.
The company is acutely aware of the importance of its relationship with both the upstream and downstream supply chain. Our primary concern is to our clients, with whom we have a very good relationship and each individual account has a dedicated Account manager to ensure that any and all issues arising are dealt with and resolved without delay. We also plan and implement collectively, policies on the various changes in legislation ensuring full adherence and timely implementation of any legislative changes. Our proactive and forward-thinking relationship with our clients is paying dividends in relation to the company’s development.
There have been no significant events affecting the Company since the year end.
Although the growth of the UK economy looks to have strengthened, the risks to UK economic growth remain significant and future prospects may be influenced by developments in the Eurozone. We believe that the economic environment will continue to evolve at a rapid pace over the next two to three years, making a return to relative stability and more certainty. Interest rates are predicted to increase in the short to medium term.
We are expecting there to be continuing downward pressure on pricing and also the potential for an increase in competition in our sector. We plan to actively review our operating criteria and handling processes to seek to ensure profitability is maintained in difficult market conditions. This includes gaining a better understanding of our component costs, pricing and profit profile to develop a strategy to remain competitive in the market.
Overall, in the coming year we aim to grow net profits at a rate broadly consistent with the current year whilst continuing to maintain and develop our relationships with clients, generating new business where possible and increasing retention levels while navigating the pressure on pricing.
Newton & Garner Limited were appointed as auditor to the company and in accordance with section 485 of the Companies Act 2006, a resolution proposing that they be re-appointed will be put at a General Meeting.
The Company has not disclosed information in respect of greenhouse gas emissions, energy consumption and energy efficiency action as its energy consumption in the United Kingdom for the year is 40,000kWh or lower.
Basis for opinion
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the director's use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the director with respect to going concern are described in the relevant sections of this report.
Other information
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of our audit:
the information given in the strategic report and the director's report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
the strategic report and the director's report have been prepared in accordance with applicable legal requirements.
As explained more fully in the director's responsibilities statement, the director is responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the director determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the director is responsible for assessing the company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the director either intends to liquidate the company or to cease operations, or has no realistic alternative but to do so.
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. The objectives of our audit were to identify and assess the risks of material misstatement of the financial statements from irregularities, whether due to fraud or error, and discussed these risks between our audit team members. We then designed and performed audit procedures responsive to those risks, including obtaining sufficient appropriate audit evidence to provide a basis for our opinion, and to respond appropriately to any instances of identified or suspected non-compliance of laws and regulations.
To identify and assess such risks, the audit team:
Obtained an understanding of the nature of the company’s industry and its control environment and reviewed the company’s documentation of their policies and procedures relating to fraud and compliance with laws and regulations.
Inquired of management about their own identification and assessments of the risks of irregularities.
Obtained an understanding of the legal and regulatory frameworks within which the company operates, focusing on those laws and regulations that have a direct effect on the determination of material amounts and disclosures in the financial statements. The main law and regulation we considered in this context was The Financial Reporting Standards applicable in the UK and Republic of Ireland (FRS 102). We assessed the required compliance with these as part of our audit procedures on the related financial statement items.
Considered the opportunities and incentives that may exist within the company for fraud and how and where the financial statements may be susceptible to fraud. Auditing standards limit the required audit procedures to identify non-compliance.
The audit team identified the greatest risk of material impact on the financial statements from irregularities, including fraud, to be within the recording of income and the override of controls by management. Our audit procedures to respond to these risks included, but were not limited to, testing manual journal entries and other adjustments for appropriateness, and evaluating the business rationale of significant transactions outside the normal course of business. We also enquired with management around actual and potential litigation and claims. We reviewed assumptions and judgements made by management in their accounting estimates. We have also performed analytical procedures to identify any unusual relationships that may indicate any risk of material misstatement due to fraud and reviewed these with those charged with governance.
Because of the inherent limitations of an audit, there is an unavoidable risk that we may not detect all irregularities, including those leading to a material misstatement in the financial statements or non-compliance with regulation. This risk increases the more that compliance with a law or regulation is removed from the events and transactions reflected in the financial statements, as we will be less likely to become aware of instances of non-compliance. The risk is also greater regarding irregularities occurring due to fraud rather than error, as fraud involves intentional concealment, forgery, collusion, omission or misrepresentation. Even though we have properly planned and performed our audit in accordance with auditing standards, we are not responsible for preventing non-compliance and cannot be expected to detect non-compliance with all laws and regulations.
A further description of our responsibilities is available on the Financial Reporting Council’s website at: https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.
Use of our report
This report is made solely to the company's member in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company's member those matters we are required to state to the member in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's member, for our audit work, for this report, or for the opinions we have formed.
The profit and loss account has been prepared on the basis that all operations are continuing operations.
GLENLEE LIMITED is a private company limited by shares incorporated in England and Wales. The registered office is Lantern House, 39 - 41 High Street, Potters Bar, Hertfordshire, England, EN6 5AJ.
The year end was amended for the accounts to 31st December 2022 in order to align the accounting period to a calendar year. The comparatives therefore represent a sixteen month period.
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 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 director is required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.
The following judgements (apart from those involving estimates) have had the most significant effect on amounts recognised in the financial statements.
The recoverability of trade debtors has been assessed as at the year end and up until the date of signing these financial statements. Management have based the decision to provide for any amounts based on their judgement of all available information, and their experience of the specific nature of trade receivables in question.
The average monthly number of persons (including directors) employed by the company during the year was:
Their aggregate remuneration comprised:
The actual charge for the year can be reconciled to the expected charge for the year based on the profit or loss and the standard rate of tax as follows:
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.