Adjaye Associates Limited
Annual Report and Financial Statements
For the year ended 31 December 2023
Company Registration No. 04619782 (England and Wales)
Adjaye Associates Limited
Company Information
Director
D Adjaye
Secretary
L Tilley
Company number
04619782
Registered office
Edison House
223-231 Old Marylebone Road
London
NW1 5QT
Auditor
Moore Kingston Smith LLP
6th Floor
9 Appold Street
London
EC2A 2AP
Adjaye Associates Limited
Contents
Page
Strategic report
1 - 3
Director's report
4 - 5
Independent auditor's report
6 - 9
Profit and loss account
10
Statement of comprehensive income
11
Balance sheet
12
Statement of changes in equity
13
Notes to the financial statements
14 - 26
Adjaye Associates Limited
Strategic Report
For the year ended 31 December 2023
Page 1
The director presents the strategic report for the year ended 31 December 2023.
Business Overview
Adjaye Associates works in the belief that architecture should represent and uplift the communities it serves. Meeting this ambition means building a coalition of designers, thinkers, and researchers that wholly represent those communities. As such, our practice is made up of a diverse team that consistently delivers architecture which champions representation at all levels.
The studio has built a robust reputation for both its built portfolio and intellectual and cross-cultural endeavors. Our built projects range in scale from private houses, exhibition designs, product designs, and temporary pavilions to major arts centres, landscape design, civic buildings, residential schemes, and large-scale masterplans. We are renowned in the architectural industry for research-driven solutions, an aesthetic built on eclectic material and colour palettes, as well as a capacity to offer rich civic experiences. Overall, our goal is to explore how architecture can act as a platform for storytelling, activating its power to build authentic narratives of place and people. The result is a practice portfolio of buildings that function not only as bold cultural symbols, but as significant social catalysts.
Our studio’s work reflects our team’s composition. Adjaye Associates cultivates an open office culture, where an approach of knowledge-sharing is universally encouraged and where everybody learns from each other. We pride ourselves on having a gender-balanced, ethnically diverse, international team where all knowledge systems are valued and used.
Projects and Pipeline
2023 was a commercially challenging year for the construction industry at large and this is reflected in our financial reporting for the period. Our position as one of the most diverse practices in the world, recognised for the representation we bring to architecture and for the quality and social impact of our work, together with our ability to be agile with our resourcing, is a resilient basis from which to recover from a temporary downturn.
An economic slowdown across many global economies led to delays on a number of significant projects in these markets. Our portfolio of work on the African continent has expanded, in line with GlobalData reporting on growth trends in emerging markets.
Progress continued on many international commissions and local contracts of varying scale and scope. Notable projects the practice completed in 2023 were the King Salman Park Visitor Centre in Riyadh, the George Street Plaza & Community Building in Sydney, Australia; 130 William, a residential skyscraper in New York City, USA; Sycamore & Oak, a community hub in the Congress Heights area of Washington DC, USA; and a commercial building in central London, UK. Our work receives positive recognition in the press and industry awards cycle.
The practice continued work on a number of major projects in the UK, Americas, the Middle East and African continent. A major new commission for The Kiran Nadar Museum of Art & Cultural Center, which will be the largest private art museum in India, was revealed at the 2023 Venice Biennale. The 100,000 sqm project is progressing on site. The practice won competitions for a major arts project in Saudia Arabia and a large scale residential project in France.
Significant Achievements
Adjaye Associates’ industry successes and recognitions in 2023 were a reflection of the strength and resilience of the studio’s global reputation as a practice that prioritises representation in the built environment. In April, David Adjaye’s innovative use of materiality was celebrated in ‘Alchemy’, a monograph published by Phaidon. The studio contributed to the 2023 Venice Biennale, curated by Lesley Lokko, with the installation of a black timber pyramid structure, Kwae, and a series of specially commissioned films about the studio’s work.
Adjaye Associates Limited
Strategic Report (Continued)
For the year ended 31 December 2023
Page 2
Hybrid Work
The company has retained its offer of a hybrid working pattern for our teams enabling flexible working. We have developed a model of working that meets the demands of our business as a world-leading design studio whilst responding to the work/life balance desired by a diverse international team. Our policies help us attract and retain the best possible candidates for the practice so we can continue to deliver exceptional projects.
Staff Training
Adjaye Associates’ management prides itself on supporting a skilled, professional, and flexible workforce. Team members are encouraged to develop their talents and skills with a view to increasing individual capabilities and opportunities. Practically, this translates into regular appraisals and reviews; RIBA and ARB accredited continuing professional development; further education and specific training programs; RIBA Part 3 support; and dedicated skills training and promotion for senior staff.
We encourage requests for training and development at all levels, provide regular REVIT/BIM Training and run a robust program of CPD (Continuous Professional Development), including mandatory sessions on CDM, Health & Safety and Regulatory issues. Our team is also supported through specific skills training. We fund training courses in part or fully as a wider ambition to enhance our staff’s wider career development, including soft-skills training around management, leadership, and presentation skills.
Equality, Diversity and Inclusion
Adjaye Associates has intentionally composed a diverse team of architects, interior architects, researchers, and project managers. The practice’s commitment to diversity is far-reaching and is the founding principle on which the studio is built. We advocate, and are committed to, consistently ensuring that an inclusive and diverse team is supported. As such, we support and engage with groups including the Paradigm Network to ensure opportunities reach the widest possible pool of typically underrepresented candidates.
Adjaye Associates is composed of a diverse, gender-balanced team with 21 different nationalities represented in our studio . This diversity is represented at all levels of seniority, from entry level designers through to Part 3 architects, project leaders and senior management. We understand that achieving this level of representation does not happen without the appropriate training, mentorship, and progression programs – both formal and informal. The company encourages this culture of progression, enabling all members of staff the opportunities to access higher level positions.
Financial Review and Key Performance Indicators (KPIs)
In 2023, the company maintained strong performance with a turnover of £17m, driven by ongoing international projects. Gross margin percentage remained steady year-on-year, in line with the change in turnover. However, the overall profit before tax margin excluding exceptional items fell to 4% (from 12% in 2022) due to global economic challenges. Despite these difficulties, this was a commendable result in a commercially challenging year.
The average headcount decreased to 85 staff members (down from 96 in 2022), while turnover per employee remained stable at £202k (compared to £213k in 2022), which is above the industry average. Despite the economic uncertainty, strong reserves were maintained through steady cost management, accurate forecasting, and effective working capital management.
Adjaye Associates Limited
Strategic Report (Continued)
For the year ended 31 December 2023
Page 3
Principal Risks and Uncertainties
Project Pipeline
Having sufficient projects to ensure long term financial sustainability is managed by proactively seeking new business opportunities, exploring new and emerging markets and implementing cost control and cash flow forecasting.
Recruitment Shortages
Thanks to Adjaye Associates’ longstanding and visible track record on diversity in recruitment, our practice continued to enjoy high levels of candidate interest across all staff levels and will continue to build on our recruitment achievements through our practice’s messaging and by shaping an environment that attracts and retains talent.
Financial Risk
Credit risk is mitigated through constant monitoring of debtors and regular project reviews, to ensure that corrective action is taken before debt becomes overdue. Liquidity risk is managed through detailed cash flow projections, which enable the company to maintain appropriate levels of working capital to meet its financial obligations as they fall due and protect itself against short-term adverse fluctuations in market risk.
Currency risk arises from the revenue that the company earns from contracts denominated in non-Sterling currencies. The company manages this exposure by matching revenues and costs in the same currencies, and then converting excess cash balances in foreign currencies into Sterling as soon as is practicable.
Future Developments
We are committed to creating a nurturing environment where everyone is supported and has the freedom to be individuals. We are proud to have built a global practice that actively recruits from underrepresented and diverse groups. We are continually looking at how our studio can serve as an incubator for diverse talent and future leaders in the UK, USA and Africa, by giving opportunities to work on extraordinary projects of all scales in many different geographies and contexts. We are especially proud of our working collaboration with our studio in Accra, Ghana, where we are leveraging valuable global project experience for many young architects and supporting teams in this thriving and expanding creative economy.
Despite an unsettled period, we are optimistic about the resilience of the practice, as we continue to deliver projects around the world. This, together with our ongoing operational soundness, will allow the practice to focus exclusively on quality of output, the health and wellbeing of our staff, and seeking out ways to continue to deliver sustainable, representative architecture.
Adjaye Associates Limited
Director's Report
For the year ended 31 December 2023
Page 4
The director presents his annual report and financial statements for the year ended 31 December 2023.
Principal activities
The principal activity of the company continued to be that of architects.
Director
The following director held office during the year and up to the date of signature:
D Adjaye
Results and dividends
The results for the year are set out on page 10.
Ordinary dividends were paid amounting to £1,888,733. The director does not recommend payment of a further dividend.
Qualifying third party indemnity provisions
The company has made qualifying third party indemnity provisions for the benefit of its director during the year. These provisions remain in force at the reporting date.
Auditor
The auditor, Moore Kingston Smith LLP, is deemed to be reappointed under section 487(2) of the Companies Act 2006.
Statement of director's responsibilities
The director is responsible for preparing the annual report and the financial statements in accordance with applicable law and regulations.
Company law requires the director to prepare financial statements for each financial year. Under that law the director has elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the director must not approve the financial statements unless he is satisfied that they give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period. In preparing these financial statements, the director is required to:
select suitable accounting policies and then apply them consistently;
make judgements and accounting estimates that are reasonable and prudent;
state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements;
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.
The director is responsible for keeping adequate accounting records that are sufficient to show and explain the company’s transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the Companies Act 2006. He is also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
Strategic report
The company has chosen in accordance with Companies Act 2006, s. 414C(11) to set out in the company's strategic report information required by Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008, Sch. 7 to be contained in the directors' report. It has done so in respect of Principal Risks and Uncertainties and Future Developments.
Adjaye Associates Limited
Director's Report (Continued)
For the year ended 31 December 2023
Page 5
Statement of disclosure to auditor
So far as each person who was a director at the date of approving this report is aware, there is no relevant audit information of which the company’s auditor is unaware. Additionally, the directors individually have taken all the necessary steps that they ought to have taken as directors in order to make themselves aware of all relevant audit information and to establish that the company’s auditor is aware of that information.
On behalf of the board
D Adjaye
Director
14 March 2025
Adjaye Associates Limited
Independent Auditor's Report
To the Members of Adjaye Associates Limited
Page 6
Opinion
We have audited the financial statements of Adjaye Associates Limited (the 'company') for the year ended 31 December 2023 which comprise the Profit and Loss Account, 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 FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).
In our opinion the financial statements:
give a true and fair view of the state of the company's affairs as at 31 December 2023 and of its loss for the year then ended;
have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
have been prepared in accordance with the requirements of the Companies Act 2006.
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the director's use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the 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.
The other information comprises the information included in the annual report, other than the financial statements and our auditor's report thereon. The director is responsible for the other information contained within the annual report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.
Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Adjaye Associates Limited
Independent Auditor's Report (Continued)
To the Members of Adjaye Associates Limited
Page 7
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.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identified material misstatements in the Strategic Report or the Director's Report.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:
adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or
the financial statements are not in agreement with the accounting records and returns; or
certain disclosures of remuneration specified by law are not made; or
we have not received all the information and explanations we require for our audit.
Responsibilities of director
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.
Adjaye Associates Limited
Independent Auditor's Report (Continued)
To the Members of Adjaye Associates Limited
Page 8
Auditor's responsibilities for the audit of the financial statements
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.
As part of an audit in accordance with ISAs (UK) we exercise professional judgement and maintain professional scepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purposes of expressing an opinion on the effectiveness of the company’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors.
Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the company to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
Adjaye Associates Limited
Independent Auditor's Report (Continued)
To the Members of Adjaye Associates Limited
Page 9
Explanation as to what extent the audit was considered capable of detecting irregularities, including fraud
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.
The objectives of our audit in respect of fraud, are; to identify and assess the risks of material misstatement of the financial statements due to fraud; to obtain sufficient appropriate audit evidence regarding the assessed risks of material misstatement due to fraud, through designing and implementing appropriate responses to those assessed risks; and to respond appropriately to instances of fraud or suspected fraud identified during the audit. However, the primary responsibility for the prevention and detection of fraud rests with both management and those charged with governance of the company.
Our approach was as follows:
We obtained an understanding of the legal and regulatory requirements applicable to the company and considered that the most significant are the Companies Act 2006, UK financial reporting standards as issued by the Financial Reporting Council, and UK taxation legislation.
We obtained an understanding of how the company complies with these requirements by discussions with management and those charged with governance.
We assessed the risk of material misstatement of the financial statements, including the risk of material misstatement due to fraud and how it might occur, by holding discussions with management and those charged with governance.
We inquired of management and those charged with governance as to any known instances of non-compliance or suspected non-compliance with laws and regulations.
Based on this understanding, we designed specific appropriate audit procedures to identify instances of non-compliance with laws and regulations. This included making enquiries of management and those charged with governance and obtaining additional corroborative evidence as required.
There are inherent limitations in the audit procedures described above. We are less likely to become aware of instances of non-compliance with laws and regulations that are not closely related to events and transactions reflected in the financial statements. Also, the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery or intentional misrepresentations, or through collusion.
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.
Robert Kersse
Senior Statutory Auditor
for and on behalf of Moore Kingston Smith LLP
14 March 2025
Chartered Accountants
Statutory Auditor
6th Floor
9 Appold Street
London
EC2A 2AP
Adjaye Associates Limited
Profit and Loss Account
For the year ended 31 December 2023
Page 10
2023
2022
£
£
Turnover
3
17,148,596
20,463,936
Cost of sales
(9,730,104)
(11,614,341)
Gross profit
7,418,492
8,849,595
Administrative expenses
(6,657,909)
(6,303,657)
Exceptional item
4
(1,461,125)
Operating (loss)/profit
5
(700,542)
2,545,938
Interest receivable and similar income
8
4,167
2,982
Interest payable and similar expenses
9
(23,844)
(26,679)
(Loss)/profit before taxation
(720,219)
2,522,241
Taxation
10
382,253
376,442
(Loss)/profit for the financial year
(337,966)
2,898,683
The Profit and Loss Account has been prepared on the basis that all operations are continuing operations.
Adjaye Associates Limited
Statement of Comprehensive Income
For the year ended 31 December 2023
Page 11
2023
2022
£
£
(Loss)/profit for the year
(337,966)
2,898,683
Other comprehensive income
-
-
Total comprehensive income for the year
(337,966)
2,898,683
Adjaye Associates Limited
Balance Sheet
As at 31 December 2023
Page 12
2023
2022
Notes
£
£
£
£
Fixed assets
Intangible assets
12
251,130
281,645
Tangible assets
13
278,024
298,280
529,154
579,925
Current assets
Debtors
14
9,258,399
8,013,943
Cash at bank and in hand
2,222,096
5,613,933
11,480,495
13,627,876
Creditors: amounts falling due within one year
15
(7,334,475)
(7,246,796)
Net current assets
4,146,020
6,381,080
Total assets less current liabilities
4,675,174
6,961,005
Creditors: amounts falling due after more than one year
16
(161,297)
(240,429)
Provisions for liabilities
19
(20,000)
Net assets
4,493,877
6,720,576
Capital and reserves
Called up share capital
21
1,000
1,000
Profit and loss reserves
4,492,877
6,719,576
Total equity
4,493,877
6,720,576
The financial statements were approved and signed by the director and authorised for issue on 14 March 2025
D Adjaye
Director
Company Registration No. 04619782
Adjaye Associates Limited
Statement of Changes in Equity
For the year ended 31 December 2023
Page 13
Share capital
Profit and loss reserves
Total
Notes
£
£
£
Balance at 1 January 2022
1,000
5,764,863
5,765,863
Year ended 31 December 2022:
Profit and total comprehensive income for the year
-
2,898,683
2,898,683
Dividends
11
-
(1,943,970)
(1,943,970)
Balance at 31 December 2022
1,000
6,719,576
6,720,576
Year ended 31 December 2023:
Loss and total comprehensive income for the year
-
(337,966)
(337,966)
Dividends
11
-
(1,888,733)
(1,888,733)
Balance at 31 December 2023
1,000
4,492,877
4,493,877
Adjaye Associates Limited
Notes to the Financial Statements
For the year ended 31 December 2023
Page 14
1
Accounting policies
Company information
Adjaye Associates Limited is a private company limited by shares incorporated in England and Wales. The registered office is Edison House, 223-231 Old Marylebone Road, London, NW1 5QT.
1.1
Accounting convention
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. The principal accounting policies adopted are set out below.
1.2
Exemptions for qualifying entities under FRS 102
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 Adjaye Holdings Ltd. These consolidated financial statements are available from its registered office, Edison House, 223-231 Old Marylebone Road, London, NW1 5QT.
1.3
Going concern
Atruet the time of approving the financial statements, the director has a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future. Management have modelled the company's cash flows using different scenarios, considering the timing of ongoing projects, outgoings to subcontractors and variability on other costs. The director has provided a letter of support, confirming their personal financial support should the company require it. Therefore the director is confident that the business can meet its liabilities as they fall due for at least 12 months from the date of signing of these financial statements.
On the basis of the above, the director continues to adopt the going concern basis of accounting in preparing the financial statements.
Adjaye Associates Limited
Notes to the Financial Statements (Continued)
For the year ended 31 December 2023
1
Accounting policies
(Continued)
Page 15
1.4
Turnover
Turnover represents amounts chargeable to clients for professional services provided and includes net invoiced sales of services which excludes value added tax.
Services provided but which had not been billed at the balance sheet date have been recognised as revenue. Revenue is recognised to the extent that it is probable that the economic benefits will flow to the firm and the revenue can be reliably measured. Revenue recognition in this manner is based on an assessment of the fair value of the services provided at the balance sheet date where there exists an agreed right to receive consideration for work undertaken.
Revenue from a contract to provide services is recognised in the period in which the services are provided using the percentage of completion method over the life of the project. This is based on the direct labour cost to date as a percentage of the total expected direct labour cost.
Accrued income is included in the financial statements as a current asset. Payments received on account of unbilled work are set off against accrued income in the balance sheet.
Income which is billed for work to be carried out at a future date or in advance of providing other services where a liability exists at the balance sheet date to fulfil specific future obligations, is treated as deferred income and included in current liabilities.
1.5
Intangible fixed assets other than goodwill
Intangible assets acquired separately from a business are recognised at cost and are subsequently measured at cost less accumulated amortisation and accumulated impairment losses.
Amortisation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:
Computer Software
20% and 33% on straight line basis
1.6
Tangible fixed assets
Tangible fixed assets are initially measured at cost and subsequently measured at cost or valuation, net of depreciation and any impairment losses.
Depreciation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:
Leasehold improvements
Over the lease term
Plant & Machinery etc
20% and 33% on straight line basis
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.
1.7
Cash and cash equivalents
Cash and cash equivalents are basic financial assets and include cash in hand, deposits held at call with banks, other short-term liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities.
Adjaye Associates Limited
Notes to the Financial Statements (Continued)
For the year ended 31 December 2023
1
Accounting policies
(Continued)
Page 16
1.8
Financial instruments
The company only has basic financial instruments measured at amortised cost, with no financial instruments classified as other or basic instruments measured at fair value.
Basic financial assets
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.
Basic financial 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.
1.9
Equity instruments
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.
1.10
Taxation
The tax expense represents the sum of the tax currently payable and deferred tax.
Current 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 company’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.
Adjaye Associates Limited
Notes to the Financial Statements (Continued)
For the year ended 31 December 2023
1
Accounting policies
(Continued)
Page 17
1.11
Provisions
Provisions are recognised when the company has a legal or constructive present obligation as a result of a past event, it is probable that the company will be required to settle that obligation and a reliable estimate can be made of the amount of the obligation.
The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the reporting end date, taking into account the risks and uncertainties surrounding the obligation. Where the effect of the time value of money is material, the amount expected to be required to settle the obligation is recognised at present value. When a provision is measured at present value, the unwinding of the discount is recognised as a finance cost in profit or loss in the period in which it arises.
1.12
Employee benefits
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.
1.13
Retirement benefits
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
1.14
Leases
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessees. All other leases are classified as operating leases.
Assets held under finance leases are recognised as assets at the lower of the assets fair value at the date of inception and the present value of the minimum lease payments. The related liability is included in the balance sheet as a finance lease obligation. Lease payments are treated as consisting of capital and interest elements. The interest is charged to profit or loss so as to produce a constant periodic rate of interest on the remaining balance of the liability.
Rentals payable under operating leases, including any lease incentives received, are charged to profit or loss on a straight line basis over the term of the relevant lease except where another more systematic basis is more representative of the time pattern in which economic benefits from the leases asset are consumed.
1.15
Foreign exchange
Transactions in currencies other than pounds sterling are recorded at the rates of exchange prevailing at the dates of the transactions. At each reporting end date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the reporting end date. Gains and losses arising on translation in the period are included in profit or loss.
Adjaye Associates Limited
Notes to the Financial Statements (Continued)
For the year ended 31 December 2023
Page 18
2
Judgements and key sources of estimation uncertainty
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.
Key sources of estimation uncertainty
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.
Valuation of incomplete work in progress and amounts recoverable on long term contracts
Revenue from contracts to provide services is assessed on an individual basis with revenue earned being ascertained based on the stage of completion of the contract which is estimated using a combination of the milestones in the contract and the time spent to date compared to the total time expected to be required to undertake the contract. Estimates of the total time required to undertake the contracts are made on a regular basis and subject to management review. These estimates may differ from the actual results due to a variety of factors such as efficiency of working, accuracy of assessment of progress to date and client decision making.
Amortisation
The annual amortisation charge for intangible assets is sensitive to changes in the estimated lives and residual values of the assets. The useful economic lives and residual values are re-assessed annually. See note 10 for the carrying amount of the intangible assets and note 1.4 for the useful economic lives for each class of asset.
3
Turnover and other revenue
An analysis of the company's turnover is as follows:
2023
2022
£
£
Turnover analysed by geographical market
Africa
1,450,590
261,413
Americas
641,409
398,488
Asia
891,546
4,826,184
Australasia
102,482
106,864
Europe
75,095
101,051
Middle East
13,003,166
14,085,437
UK
984,308
684,499
17,148,596
20,463,936
Adjaye Associates Limited
Notes to the Financial Statements (Continued)
For the year ended 31 December 2023
3
Turnover and other revenue
(Continued)
Page 19
2023
2022
£
£
Other significant revenue
Interest income
4,167
2,982
All turnover is from rendering of services
4
Exceptional item
2023
2022
£
£
Expenditure
Provision against withholding tax debtors
1,461,125
-
During the year, the company reviewed the position of claims for withholding taxes from foreign jurisdictions and has provided against those claims where there is either a limited or no chance of further recovery of these amounts.
5
Operating (loss)/profit
2023
2022
Operating (loss)/profit for the year is stated after charging:
£
£
Exchange differences apart from those arising on financial instruments measured at fair value through profit or loss
345,575
8,947
Depreciation of owned tangible fixed assets
124,674
110,769
Amortisation of intangible assets
189,256
179,936
Operating lease charges
474,355
469,566
6
Auditor's remuneration
2023
2022
Fees payable to the company's auditor and associates:
£
£
For audit services
Audit of the financial statements of the company
43,890
36,000
Adjaye Associates Limited
Notes to the Financial Statements (Continued)
For the year ended 31 December 2023
Page 20
7
Employees
The average monthly number of persons (including directors) employed by the company during the year was 85. (2022: 96).
2023
2022
Number
Number
Architects
63
74
Admin
14
14
Comms & Graphics
5
5
Research
3
3
85
96
Their aggregate remuneration comprised:
2023
2022
£
£
Wages and salaries
5,051,135
6,018,198
Social security costs
525,178
761,879
Pension costs
129,737
210,397
5,706,050
6,990,474
No remuneration was paid to the director.
8
Interest receivable and similar income
2023
2022
£
£
Interest income
Interest on bank deposits
4,167
2,982
9
Interest payable and similar expenses
2023
2022
£
£
Other interest
23,844
26,679
10
Taxation
2023
2022
£
£
Current tax
UK corporation tax on profits for the current period
(382,253)
(376,442)
Adjaye Associates Limited
Notes to the Financial Statements (Continued)
For the year ended 31 December 2023
10
Taxation
(Continued)
Page 21
The actual credit for the year can be reconciled to the expected (credit)/charge for the year based on the profit or loss and the standard rate of tax as follows:
2023
2022
£
£
(Loss)/profit before taxation
(720,219)
2,522,241
Expected tax (credit)/charge based on the standard rate of corporation tax in the UK of 23.50% (2022: 19.00%)
(169,251)
479,226
Tax effect of expenses that are not deductible in determining taxable profit
4,663
8,141
Capital allowances in excess of depreciation
4,596
5,195
Depreciation on assets not qualifying for tax allowances
21,047
Other non-reversing timing differences
(6,571)
(6,902)
R&D Tax Credits
(382,253)
(964,290)
Other differences
166,563
81,141
Taxation credit for the year
(382,253)
(376,442)
Changes to the future UK corporation tax rates were substantively enacted as part of the Finance Bill 2021 on 24 May 2021. It makes provision for the rate of corporation tax in the UK to increase from April 2023 from 19% to 25% where a company has taxable profits exceeding £250,000 (equivalent to €282,000).
11
Dividends
2023
2022
£
£
Final paid
1,888,733
1,943,970
Adjaye Associates Limited
Notes to the Financial Statements (Continued)
For the year ended 31 December 2023
Page 22
12
Intangible fixed assets
Computer Software
£
Cost
At 1 January 2023
696,809
Additions
158,741
Disposals
(383,725)
At 31 December 2023
471,825
Amortisation and impairment
At 1 January 2023
415,164
Amortisation charged for the year
189,256
Disposals
(383,725)
At 31 December 2023
220,695
Carrying amount
At 31 December 2023
251,130
At 31 December 2022
281,645
13
Tangible fixed assets
Plant and machinery
£
Cost
At 1 January 2023
782,932
Additions
104,418
At 31 December 2023
887,350
Depreciation and impairment
At 1 January 2023
484,652
Depreciation charged in the year
124,674
At 31 December 2023
609,326
Carrying amount
At 31 December 2023
278,024
At 31 December 2022
298,280
Adjaye Associates Limited
Notes to the Financial Statements (Continued)
For the year ended 31 December 2023
Page 23
14
Debtors
2023
2022
Amounts falling due within one year:
£
£
Trade debtors
6,634,516
2,258,082
Corporation tax recoverable
1,012,155
1,914,876
Amounts owed by group undertakings
17
Other debtors
655,582
2,993,041
Prepayments and accrued income
956,146
847,927
9,258,399
8,013,943
15
Creditors: amounts falling due within one year
2023
2022
Notes
£
£
Bank loans
17
50,000
50,000
Obligations under finance leases
18
128,345
165,109
Trade creditors
1,589,953
1,075,214
Amounts owed to group undertakings
483
Taxation and social security
119,105
437,223
Other creditors
718,204
497,039
Accruals and deferred income
4,728,385
5,022,211
7,334,475
7,246,796
Within deferred income, the company has a performance bond in favour of one of its clients in Saudi Arabia. This bond, of SAR905,114, is contingent on Adjaye Associates being able to produce the deliverables agreed as per the contract.
16
Creditors: amounts falling due after more than one year
2023
2022
Notes
£
£
Bank loans and overdrafts
17
87,500
137,500
Obligations under finance leases
18
73,797
102,929
161,297
240,429
Adjaye Associates Limited
Notes to the Financial Statements (Continued)
For the year ended 31 December 2023
Page 24
17
Loans and overdrafts
2023
2022
£
£
Bank loans
137,500
187,500
Payable within one year
50,000
50,000
Payable after one year
87,500
137,500
The company's bank borrowings are secured by a debenture comprising fixed and floating charges over all the company's assets.
The financing facility relates to a £250,000 Fixed rate loan agreement as part of the Coronavirus Business Interruption Loan Scheme. Interest is charged at the Base Rate plus 2.96% on the drawn-down amount. The fixed rate period is 60 months, with the final repayment date being 72 months after the Loan is drawn. This will be paid in monthly instalments of £4,167.
18
Finance lease obligations
2023
2022
Future minimum lease payments due under finance leases:
£
£
Within one year
128,345
165,109
In two to five years
73,797
102,929
202,142
268,038
Finance lease payments represent rentals payable by the company for certain items of plant and machinery. Leases include purchase options at the end of the lease period, and no restrictions are placed on the use of the assets. The average lease term is 3 years. All leases are on a fixed repayment basis and no arrangements have been entered into for contingent rental payments.
19
Provisions for liabilities
2023
2022
£
£
Dilapidations provision
20,000
-
Movements on provisions:
Dilapidations provision
£
Additional provisions in the year
20,000
The provision relates to dilapidations and the timing of the payment is uncertain.
Adjaye Associates Limited
Notes to the Financial Statements (Continued)
For the year ended 31 December 2023
Page 25
20
Retirement benefit schemes
2023
2022
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
129,737
210,397
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.
The company had unpaid pension contributions of £nil (2022: £27,963) at year end.
21
Share capital
2023
2022
2023
2022
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Ordinary shares of £1 each
1,000
1,000
1,000
1,000
22
Operating lease commitments
Lessee
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:
2023
2022
£
£
Within one year
274,869
449,439
Between two and five years
3,174
262,173
Total
278,043
711,612
23
Related party transactions
The remuneration of key management personnel is £517,468 (2022: £1,300,826)
At the end of year £137,622 (2022: £456,607) included in other debtors was owed from companies under common control.
During the year, the company made sales of £1,063,812 (2022: £311,615) to companies under common control and purchases of £348,290 (2022: £413,048) from companies under common control.
The company has taken advantage of the exemption available in accordance with FRS 102 section 33 'Related Party Disclosures' not to disclose transactions entered into between two or more members of a group, as the company has a wholly owned subsidiary undertaking of the company which it is party to the transactions.
Adjaye Associates Limited
Notes to the Financial Statements (Continued)
For the year ended 31 December 2023
Page 26
24
Controlling party
The immediate and ultimate parent company is Adjaye Holdings Limited, a company incorporated in England and Wales with its registered office at Edison House, 223-231 Old Marylebone Road, London, NW1 5QT. The ultimate controlling party is D Adjaye by virtue of his majority shareholding.
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