The directors present the strategic report for the year ended 30 June 2024.
The principal activity of the trading subsidiary and the group during the year remains that of fit-out and refurbishment, operating primarily in the commercial office and leisure sectors. The majority of our projects are carried out in the London and South East area. The group continues to operate primarily in the following sectors:
- Structural refurbishment
- Commercial office fit out and refurbishment
- Student accommodation
Turnover and profitability
The group achieved turnover of £124m in the year, down 14% on the previous year. The introduction of the Building Safety Act has had an impact on the lead in times for projects, the effects of which have been noticeable in the first few years of the Act being brought into force. We have secured workload for 2025 of £101m, £45m for 2026 and £30m for 2027.
Margins continue to be challenging in the current market. We have no lossmaking jobs in the year, nor any in the pipeline for 2025, however, one contract did suffer a material backwards movement in 2024, resulting in a £900k reduction to profit which was disappointing. We have addressed the issues which led to this and have introduced new processes to mitigate against it happening again. Overheads remain controlled and in line with expectations.
The group had an ongoing claim relating to Research and Development tax credits for previous years with HMRC. The claim was heard at the First Tier Tribunal in December 2023 and we were notified of the successful verdict in October 2024. As HMRC did not appeal the case and have subsequently settled the claim, we have included the full amount (£4.1m) (£2023 - £2m) and interest received (£322k) in these accounts. The overhead figure includes an unusual sum of £840k which relates to expenditure on consultancy and legal expenses.
The group's key performance indicators are:
Sales: £124m (2023: £145m)
Operating profit: £44k (2023: Operating profit: 2023 as restated- £428k)
Order book: £96m (2023 - £114m)
Cash balances: £11m (2023 - £11.2m)
Reportable incidents: 3 (2023 - 0)
Supplier payment days: 33 days (2023: 33 days)
Net assets: £11.9m (2023: £9.5m)
Gross profit margin: 8.8% (2023 as restated - 6.7%)
Future Developments
The Company's strategy is to continue to focus attention on considering factors which can impact performance. These comprise incorporating price fluctuation mechanisms in our longer term contracts; ensuring that any potential levys and tariffs imposed globally are addressed in contracts; continuing to push back on onerous contract conditions, disproportionate damages and uncapped liabilities with the aim of encouraging fairness for all parties. We are also carrying outa strategic review of how PCSA periods are managed and priced, given the current trend for extended PCSA periods particularly under Building Safety Act conditions.
Principal risks and uncertainties
Currently the group considers its risks to comprise of the following:
i) Liquidity
The principal risk to the group continues to be that clients and suppliers may have their working capital facilities restricted in an adverse economic climate which could then affect the group. The group manages its own liquidity risks by imposing strict credit review processes at project commencement; using payment plans or escrow accounts if required; and prompt cash collection at the invoicing stage to support project financing. The group has maintained a strong cash balance of £11m (2023: £11.2m). This is more than sufficient to meet the day to day working capital requirements without the need for a bank overdraft. The company also have the option of an invoice discounting facility issues by its bankers, Lloyds, for the value of £6m which is available if required. The group remains self funded and financially strong. The group continues to manage its overhead levels, it has a stable balance sheet and healthy cash reserves and as such is still well placed to adapt and react to external forces which could affect us.
ii) Health, Safety & Environment
The group places a lot of emphasis on the maintenance of safe working environments across all its sites and monitors the effect of group processes and procedures, continually assessing them and making improvements. We have been a member of RoSPA for 17 years and were delighted this year to receive a RoSPA gold award.
iii) Supply chain price volatility
The group is not tied in to any long term, fixed price framework agreements which would be vulnerable to price fluctuations.
iv) Restrictions on labour movement
The group subcontracts out the majority of its operations and as such is reliant upon subcontractors and labour agencies abilities to recruit and retain suitable staff.
v) Political uncertainty
Globally there are many ongoing factors which add to uncertainty. The ongoing conflict in Ukraine and Gaza as well as the prospect of tariffs and global trade wars.
The introduction of the Building Safety Act has had an impact on the industry. We have noticed that the pipeline for new projects has been extended by as much as six months while contractors and designers work to fulfil their obligations under the Act. This has meant that projects which previously could be relied upon to start promptly are being delayed. The impact of this in the short term is an inevitable greater overhead burden while we become accustomed to longer lead times in the short term.
The risks facing Collins will equally apply to other providers in similar markets. The main risk we can foresee continues to be that our subcontractors may face delays when purchasing construction supplies from mainland Europe due to potential increased levels of customs checks, coupled with restrictions on travel as a consequence of Covid. The knock on effect could be delays to our project programmes, leaving us susceptible to damages levied by the client. We could also incur extended preliminary and management costs due to delays. To mitigate against this we are including pricing clauses in our main contracts when possible. Where we are unable to do this we shall be including damages recovery processes within our subcontract orders so the risks can be shared with our supply chain.
Research & Development
Collins have become accustomed to delivering high quality refurbishments and commercial fit outs to our customers. We have a diverse range of expertise which allows us to undertake a variety of fit-out, refurbishments, renovations, and design and build projects across a range of different sectors. Due to the unique nature of many of the projects undertaken, Collins are required to adopt innovative approaches to facilitate a range of different design and development projects.
Whilst a proportion of the work which we produce is standard within the industry, we do frequently face increasingly complex technological uncertainties that require significant amounts of research and development to resolve. These technological uncertainties often stem from the unique demands from architects, engineers, designers and clients who are continuously pushing the limits of building design structurally, conceptually and creatively. It is therefore our task to convert these idealistic visions into a reality. The group are therefore continually required to innovate, prototype and tests the boundaries of what can be achieved. Throughout the period covered by this report, we have undertaken a range of different research and development projects.
Section 172 Companies Act 2006
The board of directors must act in the way they consider, in good faith, would be the most likely to promote the success of the company for the benefit of its stakeholders and employees. The decisions taken by the board are taken with the very best interests of the company in mind. Strategic decisions are considered carefully by the board, having availed themselves of all information available to them. The board meets regularly on a monthly basis and additionally if circumstances require it. The board are also represented at the monthly contract review meetings which ensures they are kept appraised of contract progress and issues facing the commercial teams.
The board is committed to the following core values:
Building relationships which are strong, respectful, and sustainable with our stakeholders. We consider our primary stakeholders to be our employees, our clients, our supply chain and the communities we are involved in. This is not an exclusive list, there are many other agencies we transact with and it is important to us that we have good relationships with all of them.
Making a positive impact: Delivering the very best for our clients, creating perfect workspaces which help our clients to achieve their own goals.
Being flexible: because every client vision is unique.
Love the work you do and be the very best at what you do: Ensuring our employees are given every opportunity to grow and develop, to have fun, show kindness and care. Whatever your role or job title, be the best at it.
Ensuring that we consider the impact of the company actions on our environment and on the community, both at local and global levels.
Primary Stakeholders
Our People
Staff development has always been key to Collins so we are continuing to support our people and ensure they have the skills, experience, and confidence to perform their roles to the best of their abilities. We have invested in a new digital training platform to enable all staff to access training tailored to their requirement as well as more general topics such as mental heath, wellbeing and cyber awareness. We also offer in-house training, mentoring schemes and the opportunity to gain qualifications through trusted training providers, colleges and universities.
Our apprenticeship scheme in partnership with the London South Bank University continues to be very successful and we welcomed a further two new apprentices this year. Each trainee has the opportunity to achieve a Level 4 NVQ in site supervision and quantity surveying and obtain hands on experience with all departments.
Our staff remain at the heart of what we do. We want our staff to have a healthy work life balance as it not only benefits our staff as individuals, it benefits the wider company. We strive to foster a healthy work environment with supportive management and development opportunities. As well as the annual staff appraisal process we also have our six monthly 'Pit Stop' meeting to review appraisal goal progress. We also encourage all our managers to have monthly 'coffee catch ups' with their direct reports.
During the year we carried out a thorough staff survey to identify areas where we as a company could make improvements and also identify where we were achieving our goals. The results formed the basis of one of our regular 'All Company Presentations' where the findings were openly and honestly presented to staff.
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The group has a number of corporate policies in place which are regularly reviewed to ensure both compliance with the law and also that the group operates in a socially responsible and ethical manner. These policies include the following:
- Equality and Diversity
- Environmental
- Sustainability
- Data Protection
- Anti slavery and human trafficking
-Training
On behalf of the board
The directors present their annual report and financial statements for the year ended 30 June 2024.
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
No ordinary dividends were paid. The directors do not recommend payment of a further dividend.
In accordance with the company's articles, a resolution proposing that Moore Kingston Smith LLP be reappointed as auditors of the company will be put to a General Meeting.
The group has chosen in accordance with Companies Act 2006, s. 414C(11) to set out in the group'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.
The requirements of the Streamlined Energy and Carbon Reporting (SECR) Regulations are disclosed on page 6.
We have audited the financial statements of Collins 2017 Limited (the 'parent company') and its subsidiaries (the 'group') for the year ended 30 June 2024 which comprise the Group Statement of Comprehensive Income, the Group Balance Sheet, the Company Balance Sheet, the Group Statement of Changes in Equity, the Company Statement of Changes in Equity, the Group Statement of Cash Flows and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).
Basis for opinion
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the group's and parent company’s ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
Other information
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of our audit:
the information given in the Strategic Report and the Directors' Report for the financial 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.
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 group's or the parent 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 group or the parent 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.
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.
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.
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 noncompliance 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.
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 for no purpose other than to draw to the attention of the company’s members those matters we are required to include in an auditor's report addressed to them. To the fullest extent permitted by law, we do not accept or assume responsibility to any party other than the company and the company’s members as a body, for our audit work, for this report, or for the opinions we have formed.
As permitted by s408 Companies Act 2006, the company has not presented its own profit and loss account and related notes. The company’s loss for the year was £49,336 (2023 - £69,546 loss).
Collins 2017 Limited (“the company”) is a private limited company domiciled and incorporated in England and Wales. The registered office is No.1 Croydon, 12-16 Addiscombe Road, Croydon, Surrey, CR0 0XT.
The group consists of Collins 2017 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. 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 consolidated group financial statements consist of the financial statements of the parent company Collins 2017 Limited together with all entities controlled by the parent company (its subsidiaries) and the group’s share of its interests in joint ventures and associates.
All financial statements are made up to 30 June 2024. Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with those used by other members of the group.
All intra-group transactions, balances and unrealised gains on transactions between group companies are eliminated on consolidation. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.
Entities in which the group holds an interest and which are jointly controlled by the group and one or more other venturers under a contractual arrangement are treated as joint ventures. Entities other than subsidiary undertakings or joint ventures, in which the group has a participating interest and over whose operating and financial policies the group exercises a significant influence, are treated as associates.
Investments in joint ventures and associates are carried in the group balance sheet at cost plus post-acquisition changes in the group’s share of the net assets of the entity, less any impairment in value. The carrying values of investments in joint ventures and associates include acquired goodwill.
If the group’s share of losses in a joint venture or associate equals or exceeds its investment in the joint venture or associate, the group does not recognise further losses unless it has incurred obligations to do so or has made payments on behalf of the joint venture or associate.
Unrealised gains arising from transactions with joint ventures and associates are eliminated to the extent of the group’s interest in the entity.
At the year end the company has net current liabilities of £2,844,412 (2023: £2,794,976) and the group has net current assets of £7,888,424 (2023: £5,773,624). Included within current liabilities is an amount due to the directors of £914,422 (2023: £1,543,729). The directors have confirmed that they will not call upon this loan for at least 12 months from the date of approval of these financial statements. In addition to the directors' loans included within current liabilities, the balance within long term creditors of £7,500,000 (2023: £7,500,000) is also owed to the directors. The directors have confirmed they will not draw on these balances in future if it jeopardises the group's ability to meet its other liabilities as they fall due and specifically have confirmed they will not do so for at least 12 months from the date of approval of the financial statements.
The group’s business activities, together with the factors likely to affect its future development, performance and position are set out in the strategic report. The Directors report further describes the financial position of the group, its cash flows and liquidity position; the group’s objectives, policies and processes for managing its capital; its financial risk management objectives and its exposure to credit and liquidity risk.
The group prepares budgets and forecasts which are monitored against actual results on a monthly basis. They show that the group is anticipating an improvement in margin in the next financial year. The group is performing as expected and in line with the budget in the first quarter of the next financial year.
The group meets its day to day working capital requirements through its cash balances without the need for an overdraft facility. As a result the directors believe that the group will be able to continue in business and meet its liabilities as they fall due for a period of at least twelve months from the date of approval of the financial statements.
Turnover represents the value of goods and services provided during the year net of value added tax.
Research expenditure is written off against profits in the year in which it is incurred. Identifiable development expenditure is capitalised to the extent that the technical, commercial and financial feasibility can be demonstrated.
The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is recognised in the profit and loss account.
In the parent company financial statements, investments in subsidiaries, associates and jointly controlled entities are initially measured at cost and subsequently measured at cost less any accumulated impairment losses.
A subsidiary is an entity controlled by the group. Control is the power to govern the financial and operating policies of the entity so as to obtain benefits from its activities.
At each reporting period end date, the group reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the company estimates the recoverable amount of the cash-generating unit to which the asset belongs.
The carrying amount of the investments accounted for using the equity method is tested for impairment as a single asset. Any goodwill included in the carrying amount of the investment is not tested separately for impairment.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.
Recognised impairment losses are reversed if, and only if, the reasons for the impairment loss have ceased to apply. Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.
The group has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.
Financial instruments are recognised in the group's balance sheet when the group becomes party to the contractual provisions of the instrument.
Financial assets and liabilities are offset and the net amounts presented in the financial statements when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.
Basic financial assets, which include debtors and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised.
Other financial assets, including investments in equity instruments which are not subsidiaries, associates or joint ventures, are initially measured at fair value, which is normally the transaction price. Such assets are subsequently carried at fair value and the changes in fair value are recognised in profit or loss, except that investments in equity instruments that are not publicly traded and whose fair values cannot be measured reliably are measured at cost less impairment.
Financial assets, other than those held at fair value through profit and loss, are assessed for indicators of impairment at each reporting end date.
Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected. If an asset is impaired, the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset’s original effective interest rate. The impairment loss is recognised in profit or loss.
If there is a decrease in the impairment loss arising from an event occurring after the impairment was recognised, the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been, had the impairment not previously been recognised. The impairment reversal is recognised in profit or loss.
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the group transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the group after deducting all of its liabilities.
Basic financial liabilities, including creditors, bank loans, loans from fellow group companies and preference shares that are classified as debt, are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future payments discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.
Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.
Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Amounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.
Derivatives, including interest rate swaps and forward foreign exchange contracts, are not basic financial instruments. Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured at their fair value. Changes in the fair value of derivatives are recognised in profit or loss in finance costs or finance income as appropriate, unless hedge accounting is applied and the hedge is a cash flow hedge.
Debt instruments that do not meet the conditions in FRS 102 paragraph 11.9 are subsequently measured at fair value through profit or loss. Debt instruments may be designated as being measured at fair value through profit or loss to eliminate or reduce an accounting mismatch or if the instruments are measured and their performance evaluated on a fair value basis in accordance with a documented risk management or investment strategy.
Financial liabilities are derecognised when the group's contractual obligations expire or are discharged or cancelled.
Equity instruments issued by the group are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the group.
The tax expense represents the tax currently payable.
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the profit and loss account because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The group’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.
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.
The company operates a defined contribution scheme for the benefit of its employees. Contributions payable are charged to the profit and loss account in the year they are payable.
Equity-settled share-based payments are measured at fair value at the date of grant by reference to the fair value of the equity instruments granted using the Black-Scholes model. The fair value determined at the grant date is expensed on a straight-line basis over the vesting period, based on the estimate of shares that will eventually vest. A corresponding adjustment is made to equity.
When the terms and conditions of equity-settled share-based payments at the time they were granted are subsequently modified, the fair value of the share-based payment under the original terms and conditions and under the modified terms and conditions are both determined at the date of the modification. Any excess of the modified fair value over the original fair value is recognised over the remaining vesting period in addition to the grant date fair value of the original share-based payment. The share-based payment expense is not adjusted if the modified fair value is less than the original fair value.
Cancellations or settlements (including those resulting from employee redundancies) are treated as an acceleration of vesting and the amount that would have been recognised over the remaining vesting period is recognised immediately.
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 leased asset are consumed.
Stock and work in progress
Work in progress is stated at the lower of cost and net realisable value. Cost includes all direct costs incurred in bringing the work in progress to its present position.
Long term contracts
Long-term contract balances classified under the balance sheet heading of 'Stock' are stated at total costs incurred, net of amounts in respect of work carried out to date less foreseeable loss and applicable payments on account.
Cumulative turnover (i.e. the total turnover recorded in respect of the contract in the profit and loss accounts of all accounting periods since inception of the contract) is compared with the total payments on account. If turnover exceeds payments on account an 'amount recoverable on contracts' is established and separately disclosed within debtors. If payments on account are greater than turnover to date the excess is classified as a deduction from any balance on that contract in stocks with any residual balance in excess of cost being classified within creditors.
Full provision is made for losses on all contracts in the year in which the loss is first foreseen.
In the application of the group’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.
The following judgements (apart from those involving estimates) have had the most significant effect on amounts recognised in the financial statements.
The directors have applied their judgement to the following areas: Work in Progress, profit margin and stage of completion. Each live contract is regularly reviewed by the directors as part of the contract valuation process. We review the costs and revenues to date and estimated costs and revenues to completion, which enables us to assess the most likely profit outcome and valuation of works carried out at a point in time. The closer to completion a contract is, the more certain the outcome will be and so the directors will always take a prudent view of contracts which cannot be estimated with certainty.
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.
Goodwill impairment reviews are also performed annually. These reviews require an estimation of the value in use of the cash generating units to which goodwill has been allocated. The value in use calculation requires the entity to estimate the future cash flows expected to arise for the cash generating unit and a suitable discount rate to calculate present value.
See note 11 for the carrying amount of the intangible assets and notes 1.6 and 1.7 for the useful economic lives for each class of asset.
The group continually invests in its products and services and has consequently made claims for research & development tax credits for the two years ended 30 June 2019. These claims for tax credits has been reviewed by HMRC and are agreed. The group has included an asset in the balance sheet which matches the post year end receipt.
The total turnover of the company for the year has been derived from its principal activity wholly undertaken in the United Kingdom.
The company has no employees. The average monthly number of persons (including directors) employed by the group 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 - 8).
Borrowing costs excluded from interest payable and included in the cost of assets during the year are as follows:
The actual (credit)/charge for the year can be reconciled to the expected credit for the year based on the profit or loss and the standard rate of tax as follows:
The net carrying value of tangible fixed assets includes the following in respect of assets held under finance leases or hire purchase contracts.
Details of the company's subsidiaries at 30 June 2024 are as follows:
Two of the directors, C D Bartram and M J Dockery, hold fixed and floating charges over the property and undertakings of Collins 2017 Limited.
Finance lease payments represent rentals payable by the company or group for certain motor vehicles. 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 4 years. All leases are on a fixed repayment basis and no arrangements have been entered into for contingent rental payments.
A defined contribution pension scheme is operated for all qualifying employees. The assets of the scheme are held separately from those of the group in an independently administered fund.
The options outstanding at 30th June 2024 are exercisable if the option holder is still an employee at the maturity date. The exercise price as agreed with HMRC is £3.56 per option (2023: £3.56). Each option has a maximum contractual life of 10 years and a remaining expected life of 8 years.
The weighted average fair value of options outstanding at the year end was determined using the Black-Scholes option pricing model. The Black-Scholes model is considered to apply the most appropriate valuation method due to the contractual length of the options. The expected life used in the model has been adjusted to reflect the weighted average expected life of options.
The inputs in the Black-Scholes model were as follows: Weighted average share price: £0.10; Weighted average exercise price £3.56; expected volatility 40%; expected years 8 and risk free rate of return 4.81%.
There has been no charge to the Statement of total comprehensive income during the year as management consider the expense related to share based payments to be immaterial to the accounts.
The capital contribution reserve was created as a result of two directors forfeiting £5m of deferred consideration due on the purchase of the subsidiary, Collins Construction Limited.
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:
The remuneration of key management personnel is as follows.
Included within other creditors is a loan amount £798,065 (2023: £1,215,599) due to C Bartram, a director of the company. 4% interest has been accrued.
Included within other creditors is a loan amount £116,357 (2023: £328,130) due to M Dockery, a director of the company. 4% interest has been accrued.
Included within creditors: amounts falling due after more than one year, are amounts of £5,250,000 (2023: £5,250,000) and £2,250,000 (2023: £2,250,000) owing to C Bartram and M Dockery respectively.
The financial statements of Collins Construction Ltd have been restated to include the impact of underaccrued costs and overvaluation of two of our contracts which were completed in 2023. The assessment of these projects did not included costs which, had they been taken into account, would have had a material impact on the level of profit reported in the year. The overvaluation related to incorrect assessments of the final account position of the two projects. These have now been corrected by way of a prior year adjustment.
P&L
The prior year adjustment has resulted in a reduction in gross profit of £1,628,653 and a reduction in profit after tax of £1,294,799. The restated loss after tax in Collins Construction Ltd is £148,134. The restated loss after tax for the group is £1,900,676.
The impact on the tax liability was a reduction of £333,807.
Balance Sheet
The prior year adjustment has resulted in a reduction in work in progress of £126,631 and amounts recoverable on long terms contracts of £350,000. There has been an increase in trade creditors of £1,152,022.