REGISTERED NUMBER: |
Strategic Report, Report of the Directors and |
Financial Statements for the Year Ended 31 July 2024 |
for |
Tough Construction Limited |
REGISTERED NUMBER: |
Strategic Report, Report of the Directors and |
Financial Statements for the Year Ended 31 July 2024 |
for |
Tough Construction Limited |
Tough Construction Limited (Registered number: SC055889) |
Contents of the Financial Statements |
for the Year Ended 31 July 2024 |
Page |
Company Information | 1 |
Strategic Report | 2 |
Report of the Directors | 4 |
Report of the Independent Auditors | 6 |
Income Statement | 10 |
Other Comprehensive Income | 11 |
Balance Sheet | 12 |
Statement of Changes in Equity | 13 |
Cash Flow Statement | 14 |
Notes to the Cash Flow Statement | 15 |
Notes to the Financial Statements | 16 |
Tough Construction Limited |
Company Information |
for the Year Ended 31 July 2024 |
DIRECTORS: |
REGISTERED OFFICE: |
REGISTERED NUMBER: |
AUDITORS: |
Statutory Auditor |
Chartered Accountants |
Pavilion 1 |
Finnieston Business Park |
Minerva Way |
GLASGOW |
G3 8AU |
Tough Construction Limited (Registered number: SC055889) |
Strategic Report |
for the Year Ended 31 July 2024 |
The directors present their strategic report for the year ended 31 July 2024. |
REVIEW OF BUSINESS |
The results for the year and financial position of the company are as shown in the annexed financial statements. |
The company turnover for the year was £61.8m as compared to £70.7m in the previous year with gross profit margin of 7.6 % (2023 7.2%). The company profit before taxation was £1.0m (2023 £1.6m). |
Despite a slowdown in the Scottish housing market due to increased interest rates and affordability issues, trading levels for the year were satisfactory. The reduced availability of work has heightened competition in an already competitive market. |
As of the date of this report, the board is pleased to announce that activity has been satisfactory and anticipates a favourable outcome for the current year. |
PRINCIPAL RISKS AND UNCERTAINTIES |
The principal risks and uncertainties affecting the business, together with the company's approach to those are summarised below:- |
Market conditions: Despite the uncertain economic backdrop and competitive pressures within the sector, the company continues to benefit from strong demand for its services from house builder clients, owing to its longstanding reputation for performance reliability in the marketplace. |
Health, Safety, and Environmental Risk: The company addresses health, safety, and environmental risks through continuous monitoring by management and comprehensive employee training programs. These efforts ensure that all aspects of health, safety, and environmental protection are effectively managed and maintained. |
Product risk: The company mitigates product risk by maintaining a wide network of suppliers and investing in long-term relationships with them. Our buying and accounts payable teams ensure regular contact with every active supplier to guarantee continuity of supply. |
IT & Cyber Security Risk: The company relies on robust IT systems for business management and control. Our IT function oversees all systems, implementing policies to protect software, hardware, and data, and to prevent unauthorized access. With increasing cyber threats, we invest in advanced cybersecurity measures to safeguard against data breaches and cyber-attacks. |
Fraud risk: The company has robust internal controls to ensure thorough checks across all business areas. Our management reporting systems are designed to detect irregularities throughout the funds cycle, ensuring the safety and security of assets. |
Liquidity risk: Current and projected working capital demands are reviewed alongside existing financing facilities to determine cash requirements as part of our routine reporting process. This ensures that the company maintains adequate liquidity to meet its obligations. |
Credit risk: The company maintains strong relationships with key customers and suppliers, regularly monitoring their positions at both operational and board levels. This proactive approach helps manage credit risk effectively. |
Human Resources: The shortage of skilled labour remains an industry-wide issue, resulting in sustained wage inflation pressures. This situation is being carefully managed to mitigate its impact. |
The board regularly reviews these risks and uncertainties to ensure effective risk management and mitigation strategies are in place. By proactively addressing these challenges, we aim to safeguard the company's long-term success and stability. |
Tough Construction Limited (Registered number: SC055889) |
Strategic Report |
for the Year Ended 31 July 2024 |
SECTION 172(1) STATEMENT |
As directors of Tough Construction Ltd, we are committed to promoting the success of the company for the benefit of its members. In doing so, we have regard to the following matters: |
1. Long-term Consequences: We consider the long-term impact of our decisions on the company's future. This includes strategic planning and investment in sustainable practices to ensure ongoing growth and stability. |
2. Employee Interests: We value our employees and strive to create a supportive and inclusive work environment. We invest in training and development programs to enhance their skills and career progression. |
3. Business Relationships: We foster strong relationships with our suppliers, customers, and other stakeholders. We believe that maintaining these relationships is crucial for our business success and reputation. |
4. Community and Environment: We are committed to minimising our environmental impact and contributing positively to the communities in which we operate. The company is actively seeking strategies to reduce our carbon footprint. |
5. High Standards of Business Conduct: We uphold high standards of business conduct and corporate governance. We ensure that our operations are conducted ethically and transparently. |
6. Fairness Between Members: We act fairly between members of the company, ensuring that all decisions are made in the best interests of the company and its stakeholders. |
The board regularly reviews and assesses the company's performance in these areas to ensure that we continue to meet our obligations under Section 172(1) of the Companies Act 2006. |
KEY FINANCIAL PERFORMANCE INDICATORS |
These include the monitoring of turnover, cost of sales and its component parts, gross margin, net profitability, staff turnover, health and safety and returns on capital employed. |
Turnover £61,750,108 (2023 £70,689,480) |
Gross Profit Margin 7.6% (2023 7.2%) |
Profit Before Tax Margin 1.6% (2023 2.3%) |
The company places particular emphasis on the training and well being of its workforce and seeks to achieve this through in house and external training as well as the provision of occupational health screening to all employees. |
FUTURE DEVELOPMENTS |
The company continues to remain competitive within the marketplace and is continuing to be awarded new contracts in the new financial year. |
ON BEHALF OF THE BOARD: |
Tough Construction Limited (Registered number: SC055889) |
Report of the Directors |
for the Year Ended 31 July 2024 |
The directors present their report with the financial statements of the company for the year ended 31 July 2024. |
PRINCIPAL ACTIVITY |
The principal activity of the company in the year under review was that of Civil Engineering Contractors. |
DIVIDENDS |
The total distribution of dividends for the year ended 31 July 2024 were £2,882,160. |
The directors recommend that no final dividend be paid. |
DIRECTORS |
The directors shown below have held office during the whole of the period from 1 August 2023 to the date of this report. |
EMPLOYEES |
The company provides employees with information about the company and ensures that the suggestions and views of the employees are taken into account. |
According to their capabilities, consideration is given to applications for employment from disabled persons. Opportunities for training, career development and promotion do not operate to the detriment of disabled employees. |
STREAMLINED ENERGY AND CARBON REPORTING |
Energy and carbon reporting requirements have been disclosed on a group basis within the financial statements of the Company's parent, Tough Civil Engineering Limited, which included the relevant energy and carbon information for the company. As such, the company is not obliged and has not reported their energy and carbon information here. The financial statements of Tough Civil Engineering Limited are accessible via Companies House. |
STATEMENT OF DIRECTORS' RESPONSIBILITIES |
The directors are responsible for preparing the Strategic Report, the Report of the Directors and the financial statements in accordance with applicable law and regulations. |
Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period. In preparing these financial statements, the directors are required to: |
- | select suitable accounting policies and then apply them consistently; |
- | make judgements and accounting estimates that are reasonable and prudent; |
- | state whether applicable accounting standards have been followed, subject to any material departures disclosed and explained in the financial statements; |
- | prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business. |
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company's transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. |
Tough Construction Limited (Registered number: SC055889) |
Report of the Directors |
for the Year Ended 31 July 2024 |
STATEMENT AS TO DISCLOSURE OF INFORMATION TO AUDITORS |
So far as the directors are aware, there is no relevant audit information (as defined by Section 418 of the Companies Act 2006) of which the company's auditors are unaware, and each director has taken all the steps that he or she ought to have taken as a director in order to make himself or herself aware of any relevant audit information and to establish that the company's auditors are aware of that information. |
AUDITORS |
The auditors, Gerber Landa & Gee, will be proposed for re-appointment by the board of directors. |
ON BEHALF OF THE BOARD: |
Report of the Independent Auditors to the Members of |
Tough Construction Limited |
Opinion |
We have audited the financial statements of Tough Construction Limited (the 'company') for the year ended 31 July 2024 which comprise the Income Statement, Other Comprehensive Income, Balance Sheet, Statement of Changes in Equity, Cash Flow Statement and Notes to the Cash Flow Statement, Notes to the Financial Statements, including a summary of 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). |
In our opinion the financial statements: |
- | give a true and fair view of the state of the company's affairs as at 31 July 2024 and of its profit for the year then ended; |
- | have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and |
- | have been prepared in accordance with the requirements of the Companies Act 2006. |
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 Auditors' responsibilities for the audit of the financial statements section of our report. We are independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC's Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. |
Conclusions relating to going concern |
In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate. |
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue. |
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report. |
Other information |
The directors are responsible for the other information. The other information comprises the information in the Strategic Report and the Report of the Directors, but does not include the financial statements and our Report of the Auditors thereon. |
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. |
In connection with our audit of the financial statements, 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 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 the audit: |
- | the information given in the Strategic Report and the Report of the Directors for the financial year for which the financial statements are prepared is consistent with the financial statements; and |
- | the Strategic Report and the Report of the Directors have been prepared in accordance with applicable legal requirements. |
Report of the Independent Auditors to the Members of |
Tough Construction Limited |
Matters on which we are required to report by exception |
In the light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identified material misstatements in the Strategic Report or the Report of the Directors. |
We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion: |
- | adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or |
- | the financial statements are not in agreement with the accounting records and returns; or |
- | certain disclosures of directors' remuneration specified by law are not made; or |
- | we have not received all the information and explanations we require for our audit. |
Responsibilities of directors |
As explained more fully in the Statement of Directors' Responsibilities set out on page four, 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 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 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 company or to cease operations, or have no realistic alternative but to do so. |
Report of the Independent Auditors to the Members of |
Tough Construction Limited |
Auditors' responsibilities for the audit of the financial statements |
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue a Report of the Auditors 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 sector. |
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. |
We assessed the extent of compliance with the laws and regulations identified above through making enquiries of management and inspecting relevant correspondence. |
Identified laws and regulations were communicated within the audit team regularly and the team remained alert to instances of non-compliance throughout the audit. |
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 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 to identify unusual transactions; |
- assessed whether judgement and assumptions made in determining the accounting estimates were indicative of potential bias; and |
- investigated the rationale behind significant or unusual transactions. |
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; |
- reading the minutes of those charged with corporate governance; |
- enquiring of management as to actual and potential litigation and claims; and |
Report of the Independent Auditors to the Members of |
Tough Construction Limited |
- reviewing correspondence with HMRC, relevant regulators and the company's legal advisors. |
There are inherent limitations in our audit procedures described above. The more removed that laws and regulations are from the 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 for the audit of the financial statements is located on the Financial Reporting Council's website at www.frc.org.uk/auditorsresponsibilities. This description forms part of our Report of the Auditors. |
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 a Report of the Auditors 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. |
for and on behalf of |
Statutory Auditor |
Chartered Accountants |
Pavilion 1 |
Finnieston Business Park |
Minerva Way |
GLASGOW |
G3 8AU |
Tough Construction Limited (Registered number: SC055889) |
Income Statement |
for the Year Ended 31 July 2024 |
31.7.24 | 31.7.23 |
Notes | £ | £ |
TURNOVER | 3 |
Cost of sales |
GROSS PROFIT |
Administrative expenses |
OPERATING PROFIT | 5 |
Interest receivable and similar income |
1,088,113 | 1,698,476 |
Interest payable and similar expenses | 6 |
PROFIT BEFORE TAXATION |
Tax on profit | 7 |
PROFIT FOR THE FINANCIAL YEAR |
Tough Construction Limited (Registered number: SC055889) |
Other Comprehensive Income |
for the Year Ended 31 July 2024 |
31.7.24 | 31.7.23 |
Notes | £ | £ |
PROFIT FOR THE YEAR |
OTHER COMPREHENSIVE INCOME | - | - |
TOTAL COMPREHENSIVE INCOME FOR THE YEAR |
Tough Construction Limited (Registered number: SC055889) |
Balance Sheet |
31 July 2024 |
31.7.24 | 31.7.23 |
Notes | £ | £ | £ |
FIXED ASSETS |
Tangible assets | 9 |
CURRENT ASSETS |
Stocks | 10 |
Debtors | 11 |
Cash at bank and in hand |
CREDITORS |
Amounts falling due within one year | 12 |
NET CURRENT ASSETS |
TOTAL ASSETS LESS CURRENT LIABILITIES |
CREDITORS |
Amounts falling due after more than one year | 13 | ( |
) | ( |
) |
PROVISIONS FOR LIABILITIES | 15 | ( |
) | ( |
) |
NET ASSETS |
CAPITAL AND RESERVES |
Called up share capital | 16 |
Retained earnings | 17 |
SHAREHOLDERS' FUNDS |
The financial statements were approved by the Board of Directors and authorised for issue on |
Tough Construction Limited (Registered number: SC055889) |
Statement of Changes in Equity |
for the Year Ended 31 July 2024 |
Called up |
share | Retained | Total |
capital | earnings | equity |
£ | £ | £ |
Balance at 1 August 2022 |
Changes in equity |
Dividends | - | ( |
) | ( |
) |
Total comprehensive income | - |
Balance at 31 July 2023 |
Changes in equity |
Dividends | - | ( |
) | ( |
) |
Total comprehensive income | - |
Balance at 31 July 2024 |
Tough Construction Limited (Registered number: SC055889) |
Cash Flow Statement |
for the Year Ended 31 July 2024 |
31.7.24 | 31.7.23 |
Notes | £ | £ |
Cash flows from operating activities |
Cash generated from operations | 1 |
Interest paid | ( |
) |
Interest element of hire purchase payments paid |
( |
) |
( |
) |
Tax paid | ( |
) | ( |
) |
Net cash from operating activities |
Cash flows from investing activities |
Purchase of tangible fixed assets | ( |
) | ( |
) |
Sale of tangible fixed assets |
Interest received |
Net cash from investing activities | ( |
) | ( |
) |
Cash flows from financing activities |
Capital repayments in year | ( |
) | ( |
) |
Equity dividends paid | ( |
) | ( |
) |
Net cash from financing activities | ( |
) | ( |
) |
Decrease in cash and cash equivalents | ( |
) | ( |
) |
Cash and cash equivalents at beginning of year |
2 |
3,170,590 |
Cash and cash equivalents at end of year | 2 | 874,174 | 3,012,136 |
Tough Construction Limited (Registered number: SC055889) |
Notes to the Cash Flow Statement |
for the Year Ended 31 July 2024 |
1. | RECONCILIATION OF PROFIT BEFORE TAXATION TO CASH GENERATED FROM OPERATIONS |
31.7.24 | 31.7.23 |
£ | £ |
Profit before taxation |
Depreciation charges |
Loss/(profit) on disposal of fixed assets | ( |
) |
Finance costs | 113,951 | 84,789 |
Finance income | (68,420 | ) | (12,799 | ) |
1,918,095 | 2,375,300 |
Decrease in stocks |
(Increase)/decrease in trade and other debtors | ( |
) |
Increase/(decrease) in trade and other creditors | ( |
) |
Cash generated from operations |
2. | CASH AND CASH EQUIVALENTS |
The amounts disclosed on the Cash Flow Statement in respect of cash and cash equivalents are in respect of these Balance Sheet amounts: |
Year ended 31 July 2024 |
31.7.24 | 1.8.23 |
£ | £ |
Cash and cash equivalents | 874,174 | 3,012,136 |
Year ended 31 July 2023 |
31.7.23 | 1.8.22 |
£ | £ |
Cash and cash equivalents | 3,012,136 | 3,170,590 |
3. | ANALYSIS OF CHANGES IN NET FUNDS/(DEBT) |
At 1.8.23 | Cash flow | At 31.7.24 |
£ | £ | £ |
Net cash |
Cash at bank and in hand | 3,012,136 | (2,137,962 | ) | 874,174 |
3,012,136 | ( |
) | 874,174 |
Debt |
Finance leases | (2,407,209 | ) | 245,654 | (2,161,555 | ) |
(2,407,209 | ) | 245,654 | (2,161,555 | ) |
Total | 604,927 | (1,892,308 | ) | (1,287,381 | ) |
Tough Construction Limited (Registered number: SC055889) |
Notes to the Financial Statements |
for the Year Ended 31 July 2024 |
1. | STATUTORY INFORMATION |
Tough Construction Limited is a |
2. | ACCOUNTING POLICIES |
Basis of preparing the financial statements |
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 £. |
Critical accounting judgements and key sources of estimation uncertainty |
In preparing these financial statements, the directors have made the following judgements: |
Tangible fixed assets are depreciated over their useful lives taking into account residual values, where appropriate. The actual lives of the assets and residual values are assessed annually and may vary depending on a number of factors. In re-assessing asset lives, factors such as technological innovation, product life cycles and maintenance programmes are taken into account. Residual value assessments consider issues such as future market conditions, the remaining life of the asset and projected disposal values. |
Assets are considered for impairment. If required an impairment review will be carried out and a decision made on possible impairment. Factors taken into consideration in reaching such a decision include the economic viability and expected future financial performance of the asset and where it is a component of a larger cash-generating unit, the viability and expected future performance of the unit. |
Estimation uncertainty in relation to stages of contracts and best estimates of performance of ongoing contracts is covered in the note on revenue. |
Revenue |
Revenue from contracts to provide services is recognised in the period in which the services are provided in accordance with the stage of completion of each individual contract providing that the amount of revenue can be measured reliably, it is probable that the company will receive the consideration due and the costs can be measured reliably. |
The company is involved in the construction industry and generates the majority of its turnover from long-term contracts. The profitability of each contract varies over its life. The directors regularly review the performance of each contract to assess periodic profit recognition. |
Adjustments are made over the life of each contract to determine the profits expected to be generated. It is necessary to consider the timing and quantification of ongoing income and expenditure streams. At each financial year end, this process involves analysing the stage of completion, future costs and work yet to be completed in respect of each ongoing contract, together with anticipating any future costs arising post contract completion. |
Tough Construction Limited (Registered number: SC055889) |
Notes to the Financial Statements - continued |
for the Year Ended 31 July 2024 |
2. | ACCOUNTING POLICIES - continued |
Tangible fixed assets |
Tangible fixed assets are stated at their purchase price, together with any incidental expenses of acquisition. |
Provision for depreciation is made so as to write off the cost of tangible fixed assets less their residual value on a straight line basis over the expected useful economic life to the entity of the asset concerned or, if held under a finance lease, over the lease term, whichever is the shorter. Depreciation is charged over the following periods: |
Plant and machinery | -5 to 10 years & 15% on cost |
Fixtures and fittings | -3 to 5 years |
Motor vehicles | -5 years & 17% on cost |
Stocks |
Stocks are valued at the lower of cost and net realisable value, after making due allowance for obsolete and slow moving items. |
Financial instruments |
Financial instruments are recognised in the company's balance sheet when the company becomes party to the contractual provisions of the instrument. |
Financial assets and liabilities are offset, with 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 |
Basic financial assets, which include debtors and cash and bank balances, are initially measured at transaction price including transactions 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. |
Derecognition of financial assets |
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the company transfers the financial asset and substantially all of 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. |
Classification of financial liabilities |
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the company after deducting all of its liabilities. |
Basic financial liabilities |
Basic financial liabilities, including creditors, 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. |
Tough Construction Limited (Registered number: SC055889) |
Notes to the Financial Statements - continued |
for the Year Ended 31 July 2024 |
2. | ACCOUNTING POLICIES - continued |
Taxation |
Taxation for the year comprises current and deferred tax. Tax is recognised in the Income Statement, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. |
Current or deferred taxation assets and liabilities are not discounted. |
Current tax is recognised at the amount of tax payable using the tax rates and laws that have been enacted or substantively enacted by the balance sheet date. |
Deferred tax |
Deferred tax is recognised in respect of all timing differences that have originated but not reversed at the balance sheet date. |
Timing differences arise from the inclusion of income and expenses in tax assessments in periods different from those in which they are recognised in financial statements. Deferred tax is measured using tax rates and laws that have been enacted or substantively enacted by the year end and that are expected to apply to the reversal of the timing difference. |
Unrelieved tax losses and other deferred tax assets are recognised only to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. |
Hire purchase and leasing commitments |
Assets obtained under hire purchase contracts or finance leases are capitalised in the balance sheet. Those held under hire purchase contracts are depreciated over their estimated useful lives. Those held under finance leases are depreciated over their estimated useful lives or the lease term, whichever is the shorter. |
The interest element of these obligations is charged to profit or loss over the relevant period. The capital element of the future payments is treated as a liability. |
Rentals paid under operating leases are charged to profit or loss on a straight line basis over the period of the lease. |
Pension costs and other post-retirement benefits |
The company operates a defined contribution pension scheme. Contributions payable to the company's pension scheme are charged to profit or loss in the period to which they relate. |
Going concern |
At the time of approving the financial statements, the directors have a reasonable expectation that the Company 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. |
Amounts recoverable on contracts |
Amounts recoverable on contracts include certified and uncertified amounts due from contract customers, including retentions. |
Tough Construction Limited (Registered number: SC055889) |
Notes to the Financial Statements - continued |
for the Year Ended 31 July 2024 |
2. | ACCOUNTING POLICIES - continued |
Impairment |
Assets, other than those measured at fair value, are assessed for indicators of impairment at each balance sheet date. If there is objective evidence of impairment, an impairment loss is recognised in the income statement as described below. |
Non-financial assets |
An asset is impaired where there is objective evidence that, as a result of one or more events that occurred after initial recognition, the estimated recoverable value of the asset has been reduced. The recoverable amount of an asset is the higher of its fair value less costs to sell and its value in use. |
Where indicators exist for a decrease in impairment loss, the prior impairment loss is tested to determine reversal. An impairment loss is reversed on an individual impaired asset to the extent that the revised recoverable value does not lead to a revised carrying amount higher than the carrying value had no impairment been recognised. |
Financial assets |
For financial assets carried at amortised cost, the amount of impairment is the difference between the asset's carrying amount and the present value of estimated future cash flows, discounted at the financial asset's original effective interest rate. |
For financial assets carried at cost less impairment, the impairment loss is the difference between the asset's carrying amount and the best estimate of the amount that would be received for the asset if it were to be sold at the reporting date. |
Where indicators exist for a decrease in impairment loss, and the decrease can be related objectively to an event occurring after the impairment was recognised, the prior impairment loss is tested to determine reversal. An impairment loss is reversed on an individual impaired financial asset to the extent that the revised recoverable value does not lead to a revised carrying amount higher than the carrying value had no impairment been recognised. |
3. | TURNOVER |
The turnover and profit before taxation are attributable to the one principal activity of the company. |
An analysis of turnover by class of business is given below: |
31.7.24 | 31.7.23 |
£ | £ |
4. | EMPLOYEES AND DIRECTORS |
31.7.24 | 31.7.23 |
£ | £ |
Wages and salaries |
Social security costs |
Other pension costs |
Tough Construction Limited (Registered number: SC055889) |
Notes to the Financial Statements - continued |
for the Year Ended 31 July 2024 |
4. | EMPLOYEES AND DIRECTORS - continued |
The average number of employees during the year was as follows: |
31.7.24 | 31.7.23 |
Administration | 45 | 40 |
Site Operatives | 413 | 473 |
31.7.24 | 31.7.23 |
£ | £ |
Directors' remuneration |
Directors' pension contributions to money purchase schemes |
The number of directors to whom retirement benefits were accruing was as follows: |
Money purchase schemes |
Information regarding the highest paid director is as follows: |
31.7.24 | 31.7.23 |
£ | £ |
Emoluments etc |
Pension contributions to money purchase schemes |
The Directors are considered to constitute the key management personnel of the company. |
5. | OPERATING PROFIT |
The operating profit is stated after charging/(crediting): |
31.7.24 | 31.7.23 |
£ | £ |
Hire of plant and machinery |
Other operating leases |
Depreciation - owned assets |
Depreciation - assets on hire purchase contracts |
Loss/(profit) on disposal of fixed assets | ( |
) |
Auditors' remuneration |
6. | INTEREST PAYABLE AND SIMILAR EXPENSES |
31.7.24 | 31.7.23 |
£ | £ |
Bank interest |
Hire purchase |
Tough Construction Limited (Registered number: SC055889) |
Notes to the Financial Statements - continued |
for the Year Ended 31 July 2024 |
7. | TAXATION |
Analysis of the tax charge |
The tax charge on the profit for the year was as follows: |
31.7.24 | 31.7.23 |
£ | £ |
Current tax: |
UK corporation tax |
Deferred tax: |
Origination and reversal of timing differences | ( |
) |
Tax on profit |
UK corporation tax has been charged at 25% (2023 - 21%). |
Reconciliation of total tax charge included in profit and loss |
The tax assessed for the year is higher than the standard rate of corporation tax in the UK. The difference is explained below: |
31.7.24 | 31.7.23 |
£ | £ |
Profit before tax |
Profit multiplied by the standard rate of corporation tax in the UK of (2023 - |
Effects of: |
Expenses not deductible for tax purposes |
Capital allowances in excess of depreciation | - | ( |
) |
Depreciation in excess of capital allowances | - |
Deferred Tax movement | (51,777 | ) | 80,869 |
Total tax charge | 291,055 | 344,188 |
8. | DIVIDENDS |
31.7.24 | 31.7.23 |
£ | £ |
Ordinary shares of £1 each |
Interim |
During the previous financial year, ultimate ownership of the company transitioned to Tough Construction Employee Ownership Trust. An additional transfer of £2,882,160 from the company's Profit and Loss reserves was necessary to facilitate this change. The board has been able to execute the transaction without adversely affecting operations or the company's working capital requirements. |
Tough Construction Limited (Registered number: SC055889) |
Notes to the Financial Statements - continued |
for the Year Ended 31 July 2024 |
9. | TANGIBLE FIXED ASSETS |
Fixtures |
Plant and | and | Motor |
machinery | fittings | vehicles | Totals |
£ | £ | £ | £ |
COST |
At 1 August 2023 |
Additions |
Disposals | ( |
) | ( |
) | ( |
) |
At 31 July 2024 |
DEPRECIATION |
At 1 August 2023 |
Charge for year |
Eliminated on disposal | ( |
) | ( |
) | ( |
) |
At 31 July 2024 |
NET BOOK VALUE |
At 31 July 2024 |
At 31 July 2023 |
Fixed assets, included in the above, which are held under hire purchase contracts are as follows: |
Plant and | Motor |
machinery | vehicles | Totals |
£ | £ | £ |
COST |
At 1 August 2023 |
Additions |
Disposals | ( |
) | ( |
) | ( |
) |
Transfer to ownership | (987,930 | ) | (51,730 | ) | (1,039,660 | ) |
At 31 July 2024 |
DEPRECIATION |
At 1 August 2023 |
Charge for year |
Eliminated on disposal | ( |
) | ( |
) | ( |
) |
Transfer to ownership | (447,714 | ) | (11,472 | ) | (459,186 | ) |
At 31 July 2024 |
NET BOOK VALUE |
At 31 July 2024 |
At 31 July 2023 |
Tough Construction Limited (Registered number: SC055889) |
Notes to the Financial Statements - continued |
for the Year Ended 31 July 2024 |
10. | STOCKS |
31.7.24 | 31.7.23 |
£ | £ |
Stocks |
11. | DEBTORS |
31.7.24 | 31.7.23 |
£ | £ |
Amounts falling due within one year: |
Amounts Recoverable On Contracts |
Other debtors |
VAT Debtor | 1,003,023 | 1,212,170 |
Amount due from Group |
Undertakings | 2,181,498 | 2,177,793 |
Prepayments |
Amounts falling due after more than one year: |
Amounts recoverable on |
contracts | 1,848,357 | 1,995,380 |
Aggregate amounts |
12. | CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR |
31.7.24 | 31.7.23 |
£ | £ |
Hire purchase contracts (see note 14) |
Trade creditors |
Taxation Creditor |
Social security and other taxes |
Other creditors |
Accrued expenses |
13. | CREDITORS: AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR |
31.7.24 | 31.7.23 |
£ | £ |
Hire purchase contracts (see note 14) |
Tough Construction Limited (Registered number: SC055889) |
Notes to the Financial Statements - continued |
for the Year Ended 31 July 2024 |
14. | LEASING AGREEMENTS |
Minimum lease payments fall due as follows: |
Hire purchase contracts |
31.7.24 | 31.7.23 |
£ | £ |
Gross obligations repayable: |
Within one year |
Between one and five years |
Finance charges repayable: |
Within one year |
Between one and five years |
Net obligations repayable: |
Within one year |
Between one and five years |
Non-cancellable operating | leases |
31.7.24 | 31.7.23 |
£ | £ |
Within one year |
Between one and five years |
In more than five years |
15. | PROVISIONS FOR LIABILITIES |
31.7.24 | 31.7.23 |
£ | £ |
Deferred tax | 844,401 | 896,178 |
Deferred |
tax |
£ |
Balance at 1 August 2023 |
Accelerated capital allowances | (51,777 | ) |
Balance at 31 July 2024 |
Tough Construction Limited (Registered number: SC055889) |
Notes to the Financial Statements - continued |
for the Year Ended 31 July 2024 |
16. | CALLED UP SHARE CAPITAL |
Allotted, issued and fully paid: |
Number: | Class: | Nominal | 31.7.24 | 31.7.23 |
value: | £ | £ |
Ordinary | £1 | 5,000 | 5,000 |
17. | RESERVES |
Retained |
earnings |
£ |
At 1 August 2023 |
Profit for the year |
Dividends | ( |
) |
At 31 July 2024 |
18. | PENSION COMMITMENTS |
The company contributes to defined contribution pension schemes for its directors and employees. During the year the contributions incurred by the company amounted to £405,220 (2023: £238,019). |
19. | ULTIMATE PARENT COMPANY |
The parent company of the group is Tough Civil Engineering Limited, a company incorporated in Scotland having its registered office at 100 Dalsetter Avenue, Drumchapel, Glasgow G15 8TE. |
Tough Civil Engineering Limited is controlled by Tough Construction EOT Limited as the Trustee of the Tough Construction Employee Ownership Trust. |
20. | CAPITAL COMMITMENTS |
31.7.24 | 31.7.23 |
£ | £ |
Contracted but not provided for in the |
financial statements |
21. | RELATED PARTY DISCLOSURES |
As at 31 July 2024 Tough Construction Limited is owed the sum of £2,181,498 (2023 £2,177,793) from Tough Civil Engineering Limited, the ultimate parent company. The amount due is interest free and has no fixed repayment date. |