The directors present the strategic report for the year ended 30 June 2024.
The directors are pleased to report that group turnover for the year to 30 June 24 is £61,056,078 (2023 - £65,991,810). The reduction in sales is due to lower construction sales in one of our subsidiaries, Elite Landscapes Ltd.
The group’s principal activity continues to be the carrying out of commercial landscaping and sundry civils contracts throughout the UK. This comprises a mixture of construction and maintenance contracts.
The gross margin percentage has increased compared to the previous year from 14.1% to 17.0%. This is largely due to the elimination of poor performing contracts.
There has been an increase in administration expenses from £4,910,937 in 2023 to £6,197,395 in 2024. This has largely been due to an impairment recognised on the goodwill of subsidiary company Kelbec Civils Limited, which is expected to cease trading post year-end. For more information on this, please see the future developments section of this strategic report and the events after the reporting date note.
The interest payable in the year has reduced from £576,418 in 2023 to £435,814 in 2024. This is due to the continued reduction in amounts due in connection with deferred consideration with payments of £2,602,237 being made in accordance with expectations, with a corresponding reduction in other creditors as a result.
Profit after taxation has decreased from £2,795,398 to £2,497,030 in the current period due to the reasons noted above and an increase in the average tax rate.
At the statement of financial position date group net assets increased from £11,125,423 in 2023 to £13,478,453 in 2024.
The group has experienced significant increases in labour costs during the year but has largely been able to mitigate the majority of these.
The group is exposed to fluctuations in the construction industry. Trading in the majority of the group’s markets continues to be strong, but there are signs that sales related to the housebuilding sector may come under pressure for a short period.
Overall, the group operates in a number of different sectors carrying out both construction and maintenance works and due to this diversity has a spread exposure to mitigate any effects.
Financial instrument risk
Foreign currency risk
The group is exposed in its trading operations to the risk of changes in foreign currency exchange rates. The overall risk is not significant. The main foreign currency in which the group operates is the Euro.
Credit risk
There is an increased risk of customer default currently of companies in the construction industry.
The group has partially offset its risk with credit insurance in place on a number of customers and closely monitors outstanding debtor amounts against credit ratings. The amounts presented in the balance sheet are net of allowances for doubtful debts. The group's credit risk is spread over a large number of customers and overall the group is not concerned about its credit risk exposure.
Liquidity risk
The group's policy has been to ensure continuity of funding through acquiring an element of its fixed assets under finance leases and arranging funding for operations via medium-term loans and additional revolving credit facilities to aid short-term flexibility. The group also funds acquisitions by way of deferred consideration which is paid over a number of periods.
Cash flow interest rate risk
Interest-bearing assets comprise cash and bank deposits, all of which earn interest at the market rate. Interest bearing liabilities consist of finance leases and deferred consideration. Finance leases carry a fixed rate of interest and deferred consideration carries a fixed rate of interest plus the Bank of England base rate. Bank loans held in previous years have been fully repaid in the period. The directors monitor the overall level of borrowings and interest costs to limit any adverse effects on the performance of the company.
The group is forecasting an increase in sales for the year to June 2025, with profits at broadly similar levels to the current year.
After the year-end, but before the date of the approval of the financial statements, a decision was made to cease trading in subsidiary Kelbec Civils Limited within the next 12 months.
The company has given notice on existing customer contracts and employees have been informed of the decision.
The company continues to trade as it winds down its operations, with some fixed assets and employees expected to transfer to other group companies.
No significant financial impact is expected on the group.
The directors consider that the key performance indicators are return on capital employed, gross profit margin and net profit margin:
Return on capital employed (ROCE) - 31.5% (2023 - 39.4%)
Gross profit margin - 17.0% (2023 - 14.1%)
Net profit margin - 4.1% (2023 - 4.2%)
Return on capital employed is operating profit as a percentage of equity shareholders' funds.
Gross profit margin is gross profit as a percentage of turnover.
Net profit margin is profit after tax as a percentage of turnover.
The group does not have any non-financial key performance indicators that it monitors.
The Board of Directors, in line with their duties under s172 of the Companies Act 2006, have acted in a way that, in their opinion, ensures the success of the group for the benefit of all members as a whole. The Board takes into account a wide range of factors when making long term decisions. The following covers the key areas.
The group takes a prudent approach to risk and continues to diversify its operations where possible. The group now incorporates companies that complement each other by operating in different markets. The group continues to have in force a credit insurance policy to protect a proportion of the group’s trading debt and hence help protect stakeholders going forward.
The different skills that the group offers mean that opportunities can be maximised across the group where possible. The group places great importance on developing good, long lasting relationships with key customers. Periodic meetings are held with key customers to aid future work planning and receive feedback on performance.
The group is committed to operating on an ethical basis and employees are made aware of our Equal Opportunities, Ethical and Whistleblowing policies. To date, no issues have been raised. We have robust Cyber Security procedures and have achieved the Cyber Essentials accreditation.
The group places great importance on the welfare and treatment of its employees. Employees are given regular appraisals to ensure that their development can be discussed and any issues are addressed. All employees are paid at or above the National Living Wage and bonuses are paid at regular intervals. Additionally, employees have access to a Mental Health First Aider and to the services of the charity Perennial which can offer help on money worries, ill health, homelessness, redundancy, bereavement or family breakdown. Employees are consulted on PPE and work clothing to ensure they are comfortable and safe during their working day.
The group has good relationships with key suppliers and regular feedback is given to ensure that operations can be carried out efficiently. The majority of our key suppliers have a long history of trading with the group and this is promoted by, for instance, ensuring that we trade in a fair way with them and comply with agreed payment terms. Suppliers are assessed on an ongoing basis to ensure that they are delivering the best service possible and their performance is discussed in weekly meetings. Regular communication is maintained with key suppliers.
The group places great importance on how it interacts with the local community. Community projects are carried out on a regular basis and involve office staff. During the year we have completed some Orchard Planting at Blythe Valley and carried out refurbishment works to a cricket pavilion at Handsworth Park. We continue to support many local charities such as St Richard's Hospice. We also make donations to a number of local amateur football teams in the form of kit sponsorship.
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 11.
Ordinary dividends were paid amounting to £144,000. 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:
As Whiting Holdings Limited is a large group, it is required to report on its emissions, energy consumption and energy efficiency by way of Streamlined Energy and Carbon Reporting in this Directors' report.
The group has consumed more than 40,000 kWh of energy in this reporting period, and it therefore does not qualify as a low energy user under these regulations.
However, no energy reporting information has been disclosed in these financial statements as the group has taken exemptions available in the Companies (Directors’ Report) and Limited Liability Partnerships (Energy and Carbon Report) Regulations 2018, Part 7A, Paragraph 20E which allows a group to exclude information for subsidiary companies that would not be required to report in their own right. All subsidiaries of Whiting Holdings Limited are small or medium sized company's and so are not required to include energy reporting information in their own financial statements. On this basis, no information is required to be included in the group report.
We have audited the financial statements of Whiting Holdings Limited (the 'parent company') and its subsidiaries (the 'group') for the year ended 30 June 2024 which comprise the group income statement, the group statement of comprehensive income, the group statement of financial position, the company statement of financial position, the group statement of changes in equity, the company statement of changes in equity, the group statement of cash flows and notes to the financial statements, including 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
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the group and parent company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the group's and parent company’s ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
Other information
The other information comprises the information included in the annual report other than the financial statements and our auditor's report thereon. The directors are 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.
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.
In the light of the knowledge and understanding of the group and the parent company and their environment obtained in the course of the audit, we have not identified material misstatements in the strategic report or the directors' report.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:
adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received from branches not visited by us; or
the parent company financial statements are not in agreement with the accounting records and returns; or
certain disclosures of directors' remuneration specified by law are not made; or
we have not received all the information and explanations we require for our audit.
As explained more fully in the directors' responsibilities statement, the directors are 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 directors determine 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 directors are responsible for assessing the parent company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the parent company or to cease operations, or have 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.
Our approach to identifying and assessing the risks of material misstatement in respect of irregularities, including fraud and non-compliance with laws and regulations, was as follows:
the engagement partner ensured that the engagement team collectively had the appropriate competence, capabilities and skills to identify or recognise non-compliance with applicable laws and regulations;
we identified the laws and regulations applicable to the company through discussions with directors and other management, and from our commercial knowledge and experience of the company;
we focused on specific laws and regulations which we considered may have a direct material effect on the financial statements or the operations of the company, including legislation such as the Companies Act 2006, taxation legislation, data protection, employment, and health and safety legislation; and
we assessed the extent of compliance with the laws and regulations identified above through making enquiries of management and inspecting legal and professional fee invoices.
We assessed the susceptibility of the company’s financial statements to material misstatement, including obtaining an understanding of how fraud might occur, by:
making enquiries of management as to where they considered there was susceptibility to fraud, their knowledge of actual, suspected and alleged fraud; and
considering the internal controls in place to mitigate risks of fraud and non compliance with laws and regulations.
To address the risk of fraud through management bias and override of controls, we:
performed analytical procedures to identify any unusual or unexpected relationships;
tested journal entries posted during the period and at the period end to identify unusual transactions;
investigated the rationale behind significant or unusual transactions;
assessed whether judgements and assumptions made in determining the accounting estimates were indicative of potential bias; and
performed walkthrough tests on major transaction cycles.
In response to the risk of irregularities and non-compliance with laws and regulations, we designed procedures which included, but were not limited to:
agreeing financial statement disclosures to underlying supporting documentation;
enquiring of management as to actual and potential litigation and claims;
reviewing any correspondence with HMRC, and
reviewing legal and professional fees incurred during the period and reviewing board minutes to identify any potential indications of non-compliance with laws and regulations.
There are inherent limitations in our audit procedures described above. The more removed that laws and regulations are from financial transactions, the less likely it is that we would become aware of non-compliance. Auditing standards also limit the audit procedures required to identify non-compliance with laws and regulations to enquiry of the directors and other management and the inspection of regulatory and legal correspondence, if any.
Material misstatements that arise due to fraud can be harder to detect than those that arise from error as they may involve deliberate concealment or collusion.
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.
The income statement has been prepared on the basis that all operations are continuing operations.
As permitted by s408 Companies Act 2006, the company has not presented its own profit and loss account and related notes. The company’s profit for the year was £1,883,092 (2023 - £2,445,212 profit).
Whiting Holdings Limited (“the company”) is a private limited company, limited by shares, domiciled and incorporated in England and Wales. The registered office is Whiting Landscape Ltd, Wildmoor Lane, Wildmoor, Bromsgrove, England, B61 0RH.
The group consists of Whiting Holdings Limited and all of its subsidiaries.
These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006.
The financial statements are prepared in sterling, which is the functional currency of the company and group. 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.
The 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 for parent company information presented within the consolidated financial statements:
Section 7 ‘Statement of Cash Flows’: Presentation of a statement of cash flow and related notes and disclosures;
Section 11 ‘Basic Financial Instruments’;
Section 33 ‘Related Party Disclosures’: Compensation for key management personnel.
The consolidated financial statements incorporate those of Whiting Holdings Limited, all its subsidiary undertakings for the period and also an associated undertaking. All financial statements are made up to 30 June 2024 except for the associated undertaking, where results are made up to 31 March 2024, with adjustments made to estimate results to 30 June 2024.
All intra-group transactions, balances and unrealised gains on transactions between group companies are eliminated on consolidation.
At the time of approving the financial statements, the directors have a reasonable expectation that the group has adequate resources to continue in operational existence for the foreseeable future. Thus the directors continue to adopt the going concern basis of accounting in preparing the financial statements.
Turnover is recognised at the fair value of the consideration received or receivable for goods and services provided in the normal course of business, and is shown net of VAT and other sales related taxes. The fair value of consideration takes into account trade discounts, settlement discounts and volume rebates.
Sale of goods
Turnover from the sale of goods is recognised when all of the following conditions are satisfied:
the Group has transferred the significant risks and rewards of ownership to the buyer;
the Group retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold;
the amount of turnover can be measured reliably;
it is probably that the Group will receive the consideration due under the transaction; and
the costs incurred or to be incurred in respect of the transaction can be measured reliably.
Rendering of maintenance services
Turnover from a contract to provide maintenance services is recognised in the period in which the services are provided in accordance with the stage of completion of the contract when all of the following conditions are satisfied:
the amount of revenue can be measured reliably;
it is probable that the Group will receive the consideration due under the contract;
the stage of completion of the contract at the end of the reporting period can be measured reliably;
it is probable that the Group will receive the consideration due under the transaction; and
the costs incurred and the costs to complete the contract can be measured reliably.
Contract turnover
Amounts recoverable on construction contracts are included in debtors and are valued, inclusive of profit, based on work executed at contract prices plus variations. Any work invoiced in advance of the work being completed is recorded in creditors. Contracts are valued based on managements judgement and the profit margin that each individual contract is expected to attain.
Turnover and costs on contracts are recognised as activity progresses once the outcome can be assessed with reasonable certainty. Full provision is made for anticipated future losses. Where contract payments received exceed amounts recoverable, these amounts are included in creditors. Materials sold as part of a contract that are held off site and have been certified by a third party are included in turnover at cost.
The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is recognised in the income statement.
The residual values and useful lives of tangible fixed assets are reviewed, and adjusted if appropriate, at the end of each reporting period if there are indicators of change. The carrying amount of an asset is written down immediately to its recoverable amount if the asset's carrying amount is assessed as greater than its estimated recoverable amount.
In the parent company financial statements, investments in subsidiaries and associates are initially measured at cost and subsequently measured at cost less any accumulated impairment losses.
A subsidiary is an entity controlled by the group. Control is the power to govern the financial and operating policies of the entity so as to obtain benefits from its activities.
An associate is an entity, being neither a subsidiary nor a joint venture, in which the company holds a long-term interest and where the company has significant influence. The group considers that it has significant influence where it has the power to participate in the financial and operating decisions of the associate.
Investments in associates are initially recognised at the transaction price (including transaction costs) and are subsequently adjusted to reflect the group’s share of the profit or loss, other comprehensive income and equity of the associate using the equity method. Any difference between the cost of acquisition and the share of the fair value of the net identifiable assets of the associate on acquisition is recognised as goodwill. Any unamortised balance of goodwill is included in the carrying value of the investment in associates. Goodwill amortisation in the Group Income Statement is netted off the share of profits of associates.
Losses in excess of the carrying amount of an investment in an associate are recorded as a provision only when the company has incurred legal or constructive obligations or has made payments on behalf of the associate.
In the parent company financial statements, investments in associates are accounted for at cost less impairment.
At each reporting period end date, the group reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any).
The carrying amount of the investments accounted for using the equity method is tested for impairment as a single asset. Any goodwill included in the carrying amount of the investment is not tested separately for impairment.
Recoverable amount is the higher of fair value less costs to sell and value in use.
If the recoverable amount of an asset is estimated to be less than its carrying amount, the carrying amount of the asset is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss.
Recognised impairment losses are reversed if, and only if, the reasons for the impairment loss have ceased to apply. Where an impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset in prior years. A reversal of an impairment loss is recognised immediately in profit or loss.
The group has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ of FRS 102 to all of its financial instruments.
Financial instruments are recognised in the group's statement of financial position when the group becomes party to the contractual provisions of the instrument.
Financial assets and liabilities are offset and the net amounts presented in the financial statements when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.
Basic financial assets, which include debtors and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised.
Financial assets are assessed for indicators of impairment at each reporting end date.
Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected. If an asset is impaired, the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset’s original effective interest rate. The impairment loss is recognised in profit or loss.
If there is a decrease in the impairment loss arising from an event occurring after the impairment was recognised, the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been, had the impairment not previously been recognised. The impairment reversal is recognised in profit or loss.
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the group transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the group after deducting all of its liabilities.
Basic financial liabilities, including creditors, bank loans and loans from fellow group companies, are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future payments discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.
Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.
Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Amounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.
Financial liabilities are derecognised when the group's contractual obligations expire or are discharged or cancelled.
Equity instruments issued by the group are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the group.
The tax expense represents the sum of the tax currently payable and deferred tax.
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the income statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The group’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.
Deferred tax liabilities are generally recognised for all timing differences and deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Such assets and liabilities are not recognised if the timing difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.
The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the income statement, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset if, and only if, there is a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.
The costs of short-term employee benefits are recognised as a liability and an expense.
The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received.
Termination benefits are recognised immediately as an expense when the company is demonstrably committed to terminate the employment of an employee or to provide termination benefits.
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessees. All other leases are classified as operating leases.
Assets held under finance leases are recognised as assets at the lower of the assets fair value at the date of inception and the present value of the minimum lease payments. The related liability is included in the statement of financial position as a finance lease obligation. Lease payments are treated as consisting of capital and interest elements. The interest is charged to profit or loss so as to produce a constant periodic rate of interest on the remaining balance of the liability.
Rentals payable under operating leases, including any lease incentives received, are charged to profit or loss on a straight line basis over the term of the relevant lease except where another more systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed.
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.
Related party exemption
The company has taken advantage of exemption, under the terms of Financial Reporting Standard 102 'The Financial Reporting Standard applicable in the UK and Republic of Ireland', not to disclose related party transactions with wholly owned subsidiaries within the group.
In the application of the group’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.
Critical judgements in applying the Group's accounting policies
In the director's opinion there are no critical judgements, apart from those involving estimations (dealt with separately below), that they have made in applying group's accounting policies and that have had a significant effect on the amounts recognised in the financial statements.
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.
Goodwill has been recognised on acquisitions made in prior periods. Management have estimated the useful economic life of goodwill based on the time period over which ongoing benefits and cash flows are anticipated from the acquired customer base, knowledge and expertise of management and the reputation of the business. Uncertainties in these estimates relate to the actual economic useful life of the goodwill.
Goodwill has been recognised on acquisitions made during prior periods. For one of the acquisitions, the estimated total consideration payable includes an element of deferred and contingent consideration. Management estimated the value of the deferred and contingent consideration based on future forecasts of the acquired company for a five year period. Future expected cash flows are discounted by management's estimated market rate of interest for a similar value liability. Uncertainties in these estimates relate to the actual future performance of the company that has been acquired and the actual interest rates available to the company for a liability of this size and nature. This estimate is reconsidered on an annual basis.
In the current year, a reduction of £162,990 in goodwill and deferred consideration has been recognised as a result of changes in estimated future profitability.
Management review each construction contract ongoing at the year end in order to obtain an accurate valuation of the work completed to date and therefore any profits or losses on contract to recognise. Management recognise profits on contracts once the outcome can be measured with reasonable certainty. Management will review the level of work completed and the costs incurred on each individual contract at the year end and estimate the profit margin that the group expects to make on each contract. The contract valuation will be adjusted based on this, with any increases in valuations of contracts being recorded in debtors and any reductions in valuations of contracts being recorded in creditors. Any anticipated future losses are provided for in full. Uncertainties in the valuation of individual contracts relate to the actual value of work to be completed on the contracts and therefore the actual profit expected to be made on each contract.
Other provisions relates to the estimated cost of a warranty to replace trees and shrubs, where required, on construction contracts in the 12 months following completion of the contract, at a cost to the company. The group includes a provision to account for the estimated likely costs on contracts completed in the financial year. Management base the valuation on the actual costs of replacements that have been carried out in the 12 months following the completion of contracts in prior periods.
Uncertainty in this provision relates to the actual number of replacements that will be required and the actual total replacement costs that will be incurred.
The average monthly number of persons (including directors) employed by the group and company during the year was:
Their aggregate remuneration comprised:
The number of directors for whom retirement benefits are accruing under defined contribution schemes amounted to 7 (2023 - 7).
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:
Impairment tests have been carried out where appropriate and the following impairment losses have been recognised in profit or loss:
More information on impairment movements in the year is given in note 12.
Other movements in goodwill relate to changes in the estimate of deferred contingent consideration in the year, as noted in the judgements and key sources of estimation uncertainty note.
Included within the total net book value of tangible assets is £502,159 (2023 - £352,399) in respect of Plant and Machinery and Motor Vehicle assets held under hire purchase contracts.
Details of the company's subsidiaries at 30 June 2024 are as follows:
The share capital of Elite Landscapes Holdings Limited is made up of 300,000 £1 Ordinary A shares and 200,000 £1 Ordinary B shares. Whiting Holdings Limited owns 100% of the Ordinary A shares and 0% of the Ordinary B shares, representing 60% control.
The share capital of Elite Landscapes Limited is 100% owned by Elite Landscapes Holdings Limited. Whiting Holdings Limited has 60% control of Elite Landscapes Limited, by virtue of its 60% control of Elite Landscapes Holdings Limited.
Details of associates at 30 June 2024 are as follows:
Aggregate capital and reserves for BCA Design Limited as at 31 March 2024 were £596,757 (2023 - £820,392) and the profit for the year ended 31 March 2024 was £229,755 (2023 - £441,311).
The share capital for BCA Design Limited is made up of 75 £1 Ordinary shares and 25 £1 Ordinary A shares. Whiting Holdings Limited owns 100% of the Ordinary A shares, representing 25% control, and as such the investment is treated as an interest in associated undertakings in these financial statements.
The share of profit in associates for the period, totalling £39,178 (2023 - £92,067), is made up of a £57,439 (2023 - £110,328) share of profit after tax of the associate, less a goodwill amortisation charge of £18,261 (2023 - £18,261).
An impairment loss of £100,000 (2023 - £nil) has been recognised against the carrying value of the group's share of investment in associates.
Included within group and company other creditors falling due within one year is deferred consideration. Of this deferred consideration, £2,292,000 (2023 - £2,875,333) is secured by an all assets debenture, containing a fixed and floating charge with a negative pledge.
Included within group and company other creditors falling due after more than one year is deferred consideration. Of this deferred consideration, £Nil (2023 - £1,416,667) is secured by an all assets debenture, containing a fixed and floating charge with a negative pledge.
Bank loans were secured by way of fixed and floating charges, with a negative pledge over all assets. A right of set-off is also included with the bank loan.
Obligations under finance leases and hire purchase contracts are secured on the assets to which they relate.
Other provisions are made up of amounts provided for in relation to potential warranty replacements of tree and shrubs in the 12 months following completion of construction contracts and amounts provided for in relation to specific issues identified on certain contracts that are outside of the control of the company but likely to give rise to additional work and/or replacements being required.
The following are the major deferred tax liabilities and assets recognised by the group and company, and movements thereon:
A defined contribution pension scheme is operated for all qualifying employees. The assets of the scheme are held separately from those of the group in an independently administered fund. Contributions totalling £1,576 (2023 - £3,314) were payable to the fund at the balance sheet date and are included in creditors.
Each ordinary share has full voting rights, full dividend rights and the right to participate in distributions on winding up.
Profit and loss reserves are made up of accumulated profits less accumulated losses and distributions up to the reporting date. This is a distributable reserve.
At the reporting end date the group had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:
Elite Landscapes Holdings Limited is a 60% subsidiary of Whiting Holdings Limited, with 100% control of its subsidiary company, Elite Landscapes Limited. The non-controlling interest at the financial year end was £4,774,596 (2023 - £4,293,074) and the share of profit on ordinary activities after taxation was £481,522 (2023 - £532,262).
After the year-end, but before the date of the approval of the financial statements, a decision was made to cease trading in subsidiary Kelbec Civils Limited within the next 12 months.
The company has given notice on existing customer contracts and employees have been informed of the decision.
The company continues to trade as it winds down its operations, with some fixed assets and employees expected to transfer to other group companies. No significant financial impact is expected on the group.
Amounts due to directors
At the balance sheet date, included in other creditors were amounts due to the directors of £3,485,012 (2023 - £5,784,028) in relation to deferred consideration.
During the year £293,920 (2023 - £381,209) interest was paid to the directors on deferred consideration. Interest is payable on £2,292,000 (2023 - £4,292,000) of the deferred consideration at a rate of 5% plus the Bank of England base rate per annum. No interest is payable on the remainder.
Rental costs
During the year, rent of £76,000 (2023 - £76,000) was charged to the group by a pension scheme in which directors are beneficiaries of. There were no balances outstanding to the pension scheme at the year end (2023 - £Nil).
Transactions with other related parties
During the year, the group made purchases of £383,309 (2023 - £443,598) from an associated company that the group has an interest in. Balances outstanding to this associated company at the year end totalled £100,891 (2023 - £132,840). During the year the group also received dividends of £32,000 (2023 - £42,000) from the associated company.
During the year, total remuneration payable to key management personnel for the group was £1,408,503 (2023 - £1,208,027).
Dividends totalling £144,000 (2023 - £288,000) were paid in the year in respect of shares held by the company's directors.
Major Non-Cash Transactions
In the current period the group entered into hire purchase agreement to the value of £247,740 (2023 - £128,984).
Deferred consideration is included within others debts in the analysis of changes in net debt note.
Other non-cash changes in the year relate to ageing of the debt and adjustments to deferred contingent consideration.