Opening Statement
Our year-end financials reflect a strong performance, showcasing significant growth and resilience across key metrics. We’ve successfully navigated challenges, delivered solid returns, and positioned ourselves for continued success in the coming year. This performance highlights our team’s dedication, strategic vision, and commitment to driving sustainable growth as we continue to build long term relationships with our clients as well as our supply chain partners in delivering projects. We continue to be relied upon when clients are facing difficulties on their other projects, we are clearly being regarded as a safe alternative that can be called upon.
With the recent easing of planning delays and guidance in relation to the Building Safety Act now becoming understood, we have seen a number of projects that were secured but on hold, now progressing, further enhancing our order book for 2025 and 2026.
Our profitability in the reporting year was impacted by more supply chain insolvencies in the MEP and glazing sector. Projects impacted by these supply chain insolvencies were completed in the financial year, with Practical Completions achieved and accounts agreed. Our selection of supply chain partners is in constant review to mitigate and minimise the impact of these on-going risks.
Following on from our strong trading position in 2023 /24, our current financial year continues to trade positively, with a number of new projects secured on terms reflecting the trends of the previous year.
Looking further forward, we have already secured contracts providing c.35% of turnover for the 2025/26 financial year, some of these contracts extend in 2027.
It has become clear that the progress of De Group Contracting (DeGC) developing blue-chip relationships and opportunities has been accelerated by demonstrable evidence of an exemplar product that clients with clear high specification and quality expectations appreciate.
Trading Update
The principal activity of DeGC during the year remains construction, refurbishment and fit out performing as a Principal Contractor across London’s prime commercial, residential, hotel, hospitality and leisure sectors.
The values of Contracts secured range from c.£20m to c.£70m and are commonly JCT Design & Build or traditional Standard Building Contracts. Contracts generally secured through traditional single or two stage tendering process alongside hybrid & negotiated procurement routes.
The synergies and opportunity benefited through crossover or novation with our De Group company Deconstruct have been appreciated by many of our clients. By no means a pre-requisite, however our customers have repeatedly seen that a project enabled by Deconstruct benefits from a reliable commencement and seamless transition into a Main Contract.
The continuity of quality, brand and spirit is a clear benefit.
In the past financial year DeGC have secured and/or have been working on several high-profile projects for bluechip clients to the highest quality and specification.
Our current order book consists of a spread of projects.
Prominent examples of this are: -
91-92 Dean Street in Soho, London. A re-development to create an exciting new upscale shared accommodation concept mixed with modern methods of construction, comprising c.670 pod rooms. Extensive demolition and structural alterations across seven buildings each with their own character and style which are sensitively knitted together with part retained and part new façades & roofs.
The Hertford (formerly Park Lane Mews) in Mayfair, London. An 83-room hotel and 17 prime apartment scheme involving demolition and significant structural alterations, preservation and renovation of heritage structure & fabric due to its partial Grade II listed status. The scheme also includes a signature restaurant, lobby bar, café and private members’ space.
One Palace Green, in Kensington, London. The refurbishment of a Grade II* Listed mansion to form several high end residential apartments and a single coach house residence.
The Carrington, in Mayfair, London. The fit out of a 70,000sft shell for a business focussed private members club with prime commercial offices, meeting rooms, external hospitality areas, restaurants, bars, health, swimming pool, fitness and spa.
17-22 South Audley Street, in Mayfair, London. A mixed-use scheme with art galleries, offices and prime residential. Significant structural alterations and heritage restoration works due to the Grade II* listed status of the existing building.
Kingly Street, Soho, London, Commercial office fit out to CAT B standard, across a number of floors above several live operating retail outlets.
Staff
We continue to seek to attract the top talent to our business and are proud of our low staff turnover. In addition to recruiting experienced industry professionals we invest significantly in Trainees and Undergraduates that we will develop through our apprenticeship programme.
Safety, Health, Environment and Quality
Operating in what is widely recognised as a high-risk sector, the importance of exemplary corporate governance and occupational safety and health excellence is a cornerstone of our business.
Our full-time and in-house SHEQ and Sustainability team are dedicated to protecting people and helping everyone lead safer and healthier lives.
With a focus on our performance in our financial year 2023/24 we have seen over 600,000 hours worked on our sites with zero RIDDOR reportable accidents, this metric is just one of the measurement tools we use to benchmark our performance with our peers and others working in similarly high-risk sectors.
We continue to maintain and where possible enhance our management systems, with these systems independently audited and certificated by BSI to ISO 9001, ISO 14001, and ISO 45001, these further supported by holding several other industry recognised accreditations and memberships of trade bodies.
2023/24 DE Group Contracting received their 6th consecutive Gold Award from RoSPA for our demonstrable exemplar approach to Safety, Health, Environment and Quality.
We will continue to invest in our training, up-skilling, mentoring and employing best practices to ensure our industry leading standards of Health and Safety are maintained.
Notable statistics from 2023/24
Over 600,000 person hours worked
297 internal SHEQ inspections
38 Director safety tours
62 external audits
0 visits from enforcing authorities with no adverse observations or enforcement actions
Social Values, Community Engagement, and the Wellbeing or all De Group staff
We remain strongly committed to supporting the communities in which we operate, we continue to support the development of career opportunities in deprived areas, targeting the long term unemployed and those Not in Education, Employment or Training (NEET). As part of this support, we provide a career advisor each month to job fairs hosted by the Department of Work & Pensions alongside providing assistance in writing and presenting CV’s.
In support of the communities that live around the Grenfell Tower site we provide a fully funded vehicle to support small local charities by distributing goods, donations and equipment, the support including encouraging all staff to utilise volunteer hours, other initiatives undertaken during this reporting period included.
Establishing a children’s book reuse scheme on all our projects which sees books donated to schools and community groups to assist with teaching and encouraging children to read.
Provide English speaking classes for 5 members of a bereaved family for 2 years – 3 terms per year
Provide 2 No industrial sewing machines to a group for their resilience and making/repairing clothing/banners/scarves
Provide laptops and printers alongside IT support for groups to communicate better with their team members and the Public
Provided safety equipment for the Moroccan community to support the earthquake disaster
Provide stressbusters massages for residents in controlled environment
Provide PSA/Thyroid testing in the community
Of course, Social Value and Community Engagement is our outward commitment. This is underpinned by our support and appreciation of our employees. With active and targeted wellbeing programmes through Validium, occupational health screening, training, and mentoring at the heart of our commitment to staff, we have also trained several members of staff in mental health first aid.
We staunchly believe a better product is delivered by appreciated and committed staff and our willingness to support them is communicated constantly by myself and the entire leadership team. This is a core value of the De Group and key to our successes.
Identified Principal Risks and Uncertainties
We recognise liquidity and credit strength as being risks and these remain a primary focus for our Board. We maintain a rolling cashflow forecast in addition to long term planning and have adequate facilities in place should they be required. Regular dialogue is maintained with clients regarding payment.
Inflation has presented a real challenge over the period and whilst we have seen a reduction in the rate and the trend looks positive we endeavour to anticipate inflation when tendering our projects.
Insurance and Bonding
Whilst our strict management of Health and Safety has maintained a low level of claims, Insurance premiums remain high reflecting the level of cover that is sought by our clients.
High profile insolvencies have put pressure on the bonding market significantly reducing the number of providers and affecting the criteria. We are grateful for the continued support of our Bondsmen.
Sustainability
We continue our Roadmap to Net Carbon zero, with environmental sustainability embedded at corporate level, this ensures clear, robust and consistent monitoring, which in turn allows us to ‘forward-think’ our Net Zero strategy.
DE Group Contracting is an ISO 14001-certified organisation and as such we align with the United Nations Sustainable Development Goals (SDGs), to demonstrate this commitment and as part of our strategic goal of Net Carbon Zero by 20232 we are now implementing PAS 2060 to manage science-based targets.
Following the launch of our Roadmap 2023/24 year saw the following progression activities.
Evaluation of data to determine our base line for identified carbon reduction strategies
The development of carbon reduction plans and science-based targets in line with identified areas for stage 1 reductions and data findings from baseline analysis has been undertaken, with a view to implementation during 2024/25 financial year in alignment with the requirements of PAS 2060.
The development of electronic systems in preparation for Scope 3 reporting and compliance requirements.
In this reporting period we became active members of both Concrete Zero and Steel Zero, we use these forums to share and gather information on best practice, advanced technology and to enable us to benchmark our specific performance. We have target-based commitments, both long and short term that have been established by Concrete and Steel Zero.
We monitor scope 1 and 2 data monthly. 2024 saw us invest in technology to aid the reporting of scope 3 emissions.
We keep informed on technological advances in the industry, this includes HVO based plant, the use of solar charging where possible, earth friendly concrete, low carbon hoarding and other environmental solutions. The use of rechargeable, electric and solar powered equipment, plant and machinery on site has resulted in the reduction of fossil fuels used.
We use live monitoring where possible on site, this includes metrics on travel, site delivery, dust, noise and air monitoring.
We have a strong ethos for repurposing across the Group, reducing further waste generated and enabling us to meet our waste recycling targets.
We work in close collaboration with our supply chain, with 2024 seeing the launch of our minimum standards campaign, ensuring our operations are conducted in line with our strategic goals.
The re-use of materials and consumables has significantly increased over the last 12 months. We have developed and established a network of Circular Economy Partners to ensure that at every opportunity, surplus items are effectively reused, further building on the Groups Cradle to Cradle thesis.
Recognising that Sustainability includes what we leave behind for the next generation, we are committed to engaging with local communities and educational institutes offering practical and theoretical experiences, guidance, and general information to improve awareness wherever we can.
These steps will ensure that sustainability and environmental governance is a golden thread that ensures we will not only reduce our impact on the planet but also, enhance our client’s journey, assisting them in achieving environmental excellence at every opportunity.
Our Defined Core Values
Integrity, honesty, and Trust - always Doing the right thing with consistent moral and ethical principles.
Accountability and Ownership – Clear Roles and Responsibilities ensures all our staff are empowered to act with accountability and confidence.
Customer Commitment – Consistent outstanding service, products and quality ensure our clients journey earns our trust and ultimately their loyalty.
Leadership – Is for everyone to demonstrate. It starts with authenticity, approachability, respect, and humility. A vital staff attribute.
Our People – Whether employed by our Group in any capacity or reside or work within the Communities in which we operate, all people are our very first concern. No discrimination. Demonstrable support, encouragement, consideration, and care.
We remain committed to ensure DeGC lead our sector in quality, professionalism, and reliability.
We must continue to attract the best people and indeed clients.
Only through constantly challenging ourselves can we continue to improve, being more responsible for this generation and those that will inevitably follow.
The directors present the strategic report for the year ended 31 October 2024.
The group uses financial instruments compromising bank borrowings and various net working capital items, such as trade debtors and trade creditors, to finance its operations not funded by way of equity. The main risks identified with using these financial instruments are the management of cash flow and exposure to interest rate fluctuations. The group mitigates this risk by managing cash flow and negotiating credit facilities to assist with liquidity as required.
The group meets its day to day working capital requirements through bank facilities which are renewed regularly. The group's forecasts and projections, taking account of reasonably possible changes in trading performance, show that the group will be able to operate within the level of its current facility. The directors are confident the facility will continue to be forthcoming on acceptable terms and, accordingly, the directors continue to adopt the going concern basis in preparing the financial statements.
In determining the appropriate basis of preparation of the Financial Statements, the directors are required to consider whether the group can continue in operational existence for the foreseeable future.
The Group’s forecast and projections, taking account of reasonable possible changes in trading performance, show that the Group will be able to operate within the level of its current facilities.
Accordingly, at the time of approving the financial statements, the directors have a reasonable expectation that the group and company has adequate resources to continue in operational existence for the foreseeable future. Therefore, the directors continue to adopt the going concern basis of accounting in preparing the financial statements.
2024 2023
Turnover £60,729k £54,912k
Gross Profit £3,946k £3,226k
Gross Profit % 6.5% 5.9%
EBITDA £737k £216k
EBITDA % 1,21% 0.39%
Profit/(Loss) before tax (£95k) (£481k)
Profit before tax % (0.2%) (0.9%)
On behalf of the board
The directors present their annual report and financial statements for the year ended 31 October 2024.
The results for the year are set out on page 12.
No ordinary dividends were paid. The directors do not recommend payment of a dividend.
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
The group provides specialist construction solutions as a Principal Contractor primarily within Central London and in the Residential, Commercial, Retail, Hotel and Leisure sectors. In certain projects, the group carries out research and development activities to seek scientific and technological advancements to be able to complete complex solutions that were previously unattainable.
In accordance with the company's articles, a resolution proposing that Goodman Jones LLP be reappointed as auditor of the group will be put at a General Meeting.
As the group has not consumed more than 40,000 kWh of energy in this reporting period, it qualifies as a low energy user under these regulations and is not required to report on its emissions, energy consumption or energy efficiency activities.
We have audited the financial statements of DEGC (Holdings) Ltd (the 'parent company') and its subsidiaries (the 'group') for the year ended 31 October 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.
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.
Based on our understanding of the company and industry, we identified that the principal risks of non-compliance with laws and regulations related to industry sector regulations and unethical and prohibited business practices, and we considered the extent to which non-compliance might have a material effect on the financial statements. We also considered those laws and regulations that have a direct impact on the preparation of the financial statements such as the Companies Act 2006 and UK Tax Legislation. We evaluated management’s incentives and opportunities for fraudulent manipulation of the financial statements (including the risk of override of controls). Appropriate audit procedures in response to these risks were carried out. These procedures included:
Discussions with management, including consideration of known or suspected instances of non-compliance with laws and regulation and fraud;
Reading minutes of meetings of those charged with governance;
Obtaining and reading correspondence from legal and regulatory bodies including HMRC;
Identifying and testing journal entries;
Challenging assumptions and judgements made by management in their significant accounting estimates.
We also communicated relevant identified laws and regulations and potential fraud risks to all engagement team members; and remained alert to any indications of fraud or non-compliance with laws and regulations throughout the audit.
There are inherent limitations in the audit procedures described above. The further removed instances of non-compliance with laws and regulations are from the events and transactions reflected in the financial statements, the less likely we are to become aware of it. 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.
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.
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 £108,328 (2023 - £70,136 loss).
DEGC (Holdings) Ltd (“the company”) is a private limited company domiciled and incorporated in England and Wales. The registered office is 1st Floor Arthur Stanley House, 40-50 Tottenham Street, London, W1T 4RN.
The group consists of DEGC (Holdings) Ltd 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 DEGC (Holdings) Ltd 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 31 October 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.
Subsidiaries are consolidated in the group’s financial statements from the date that control commences until the date that control ceases.
In determining the appropriate basis of preparation of the Financial Statements, the directors are required to consider whether the group can continue in operational existence for the foreseeable future.
The Group’s forecast and projections, taking account of reasonable possible changes in trading performance, show that the Group will be able to operate within the level of its current facilities.
Accordingly, at the time of approving the financial statements, the directors have a reasonable expectation that the group and company has adequate resources to continue in operational existence for the foreseeable future. Therefore, the directors continue to adopt the going concern basis of accounting in preparing the financial statements.
Turnover is derived entirely from contracts within the construction industry and is measured at the fair value of the consideration receivable for all works carried out under construction contracts, stated net of discounts, VAT and other sales related taxes.
Turnover from these contracts is recognised as a percentage of the anticipated total revenue over the period of the contract depending on stage of completion, which is certified by appropriate professionals experienced in the recognition and measurement of such works carried out.
Turnover is recognised when it is probable that the associated economic benefits will flow to the entity, and the costs incurred or to be incurred in respect of the transactions can be reliably measured.
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.
Equity investments are measured at fair value through profit or loss, except for those equity investments that are not publicly traded and whose fair value cannot otherwise be measured reliably, which are recognised at cost less impairment until a reliable measure of fair value becomes available.
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 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 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.
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 profit and loss account, 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, 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.
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
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.
Financial risk
The company uses financial instruments comprising borrowings and various net working capital items such as trade debtors and trade creditors, to finance its operations not funded by way of equity. The main risks identified with using these financial instruments are the management of cash flow and exposure to interest rate fluctuations.
The company meets its day to day working capital requirements through cash balances, intercompany loans and bank facilities which are renewed regularly. The company's forecasts and projections, taking account of possible changes in trading performance, show that the the company will be able to operate within the level of its current cash balances. Accordingly, the directors continue to adopt the going concern basis in preparing the financial statements.
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.
Amounts recoverable on long term contracts
The company applies its policy on contract accounting when recognising revenue and profit on partially completed contracts. The application of this policy requires judgements to be made in respect of the total expected costs to complete for each site. The company has in place established internal control processes to ensure that the evaluation of costs and revenues is based upon appropriate estimates. Included within other debtors are amounts recoverable on long term contracts which are recognised at the year end at £6,910,530(2023 - £8,923,776).
Fair value adjustment to loans
The group has recorded various loans provided to it at their fair value using a market rate of interest with the fair value adjustment recognised as an ‘other reserve’ in equity. The fair value adjustment is based on an assessment of the market rate interest of the various loans based on similar instruments in the market place with the same term and security. The group has made assessments as to the expected cashflows arising under the loan arrangements.
Goodwill
Goodwill represents the excess of the cost of a business combination over the fair value of the group's share of the net identifiable assets of the acquired subsidiary at the date of acquisition. Goodwill on acquisitions of subsidiaries is included in Intangible Assets. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold. Goodwill is carried at cost less accumulated amortisation and accumulated impairment losses. Goodwill amortisation is calculated by applying the straight-line method to its estimated useful life of ten years.
The average monthly number of persons (including directors) employed by the group and company during the year was:
Their aggregate remuneration comprised:
The actual 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:
More information on impairment movements in the year is given in note .
Goodwill amortisation is based on the profile of the expected pre-tax profits estimated to October 2028, within the cashflow forecasts used to value the business for the acquisition giving rise to the goodwill. This represented an 8 year period to October 2028.
Details of the company's subsidiaries at 31 October 2024 are as follows:
The registered office of the above named subsidiaries is 1st Floor Arthur Stanley House, 40-50 Tottenham Street, London, W1T 4RN.
Interest and arrangement fees on the bank loan are paid for by the government for the first 12 months, with an annual interest rate of 2.5% payable by the group thereafter. The directors consider the interest rate on the loan to be at a market rate and as such have not recognised the immaterial impact of discounting the loan to present value. The loan will be fully repaid by June 2026.
Included within other loans are loans notes issued at a par value of £5,000,000, which are interest bearing and are redeemable in full on or before 31 October 2028. The loan notes are convertible into fully paid shares if not redeemed at 31 October 2028. The conversion rate of the loan notes is at the par monetary value.
The loan notes are secured by fixed and floating charges over the company’s assets and there is a cross guarantee arrangement in relation to the company’s subsidiaries.
The loan notes have been recorded at their fair value using a market rate of interest with the fair value adjustment recognised as an ‘other reserve’ in equity.
It has been agreed with the shareholders and the loan note holders that should the group come into financial difficulty in the future, the group will not make repayments on the balances due.
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.
At the balance sheet date, there was an amount due from a director of £183,658 (2023: £Nil). This balance did not bear any interest and was repaid after the year end.
During the year the group entered into the following transactions with related parties:
The following amounts were outstanding at the reporting end date:
The following amounts were outstanding at the reporting end date:
The total remuneration for key management personnel for the year totalled £432,319 (2023: £502,252).