The directors present the strategic report for the year ended 30 April 2024.
During the financial year the business continued to be a major player in the market space which has seen increased competition in the construction sector generally. The housing market has seen a lot of volatility throughout the year with a strong early trading period followed by a slower period due to poor housing sales. The ongoing global political landscape caused further burdens on the supply chain, leading to a continuation of extraordinary cost increases. Despite the tough market conditions and a reduction of turnover, Gracelands continues to hold a strong market share in the industry and was successful in securing a number of large contracts over the year which will provide a stable workflow for the following period. A key focus of the business has been diversifying our client portfolio to further protect against market fluctuations whilst maintaining a focus on profitability.
As with all industries currently, the biggest risk to the business is the continued material and energy cost fluctuations. As the housing market starts to see a slow down due to market conditions, margins are tightening, and the business will need to manage this accordingly. The company continues to hold a strong enough financial position to be able to withstand any future shocks that may arise.
The company is exposed to other normal trading risks, including fluctuations in the economy, Cost of Living Crisis, bad debt risk, potential supply issues, but management has controls in place designed to mitigate those risks and the company is well-placed to respond positively.
There is severe lack of appropriately skilled personnel in the industry, which provides a risk to the growth of the business. Employee incentive schemes and continual investment in staff training with an environment encouraging staff development and retention is helping to mitigate those risks. The business continues to invest and commit to our apprenticeship program.
Activities fell in the year, producing a turnover smaller than the previous year, profit margins were up despite the cost increases affecting ongoing contracts. The company has been strategic in contracts it is pursuing, with peers reducing margins in a competitive market, the company has not followed this trend. The reduced turnover in the short term is part of the building strategy with a strong future pipeline of contracts at healthier margins going forward.
The company's key performance indicators are turnover, gross profit and profit before tax ("PBT").
In 2024 the company's turnover decreased by 12.79% to £40,771,521 (2023: £46,749,647).
In 2024 the company's gross profit margin increased by 2.96% to 7.30% (2023: 4.34%)
In 2024 the company has loss before taxation of £339 (2023: loss before taxation £993,386).
The business enters into long term contracts with its clients, and financial success is dependent on close control of costs on those contracts. This is a continuing focus for the business going forward. The directors monitor gross profit margins on its contracts as this is the key indicator of the profitability of the company.
The success of our business is dependent on the support of all of our stakeholders. Building positive relationships with stakeholders that share our values is important to us and working together towards shared goals assists us in delivering long-term sustainable success.
The company has a single executive board which is responsible for oversight of the contracting business and for making any major strategic or operational decisions.
When the business reviews its long term plans, it ensures that it take into account all stakeholders from staff to supply chain and all our business partners.
Employees – our employees are the heart of the business and management therefore look to engage with them regularly. The management team maintains individual relationships with all employees and provides opportunity for staff to develop and raise any concerns that they may have about their role within the business.
Customers – The relationship between the business and its customers is paramount to our future success and a key focus for all our management and employees with regular communication at a number of levels. The company prides itself on delivering a quality service and this is what is at the core of the culture of the business and ensuring our ongoing customer relationships.
Suppliers – Our supply chain is vital in ensuring we deliver our product and the company has a long-standing reputation in the marketplace as a business to work for, built up through years of trust, regular communication and delivery on our promises. In particular, we pride ourselves on ensuring we maintain excellent payment terms to our suppliers as we see this as the most important lever in engendering really positive relationships and loyalty.
Environment – We are conscious of the impact construction has on the environment and this is an area of continuing focus for the company.
On behalf of the board
The directors present their annual report and financial statements for the year ended 30 April 2024.
The results for the year are set out on page 8.
Ordinary dividends were paid amounting to £35,000. The directors do not recommend payment of a final dividend.
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
The company’s principal financial instruments include bank balances, trade debtors and trade creditors arising directly from its operations.
The company manages its cash and borrowing requirements in order to maximise interest income and minimise interest expense, whilst ensuring the company has sufficient liquid resources to meet the operating needs of the business.
Investments of cash surpluses and borrowings are made through financial instruments which must fulfil credit rating criteria approved by the board.
All customers who wish to trade on credit terms are subject to credit verification procedures. Trade debtors are monitored on an ongoing basis and provision is made for doubtful debts where necessary.
The directors consider that the company faces the usual pricing risk of any other company operating in a competitive, commercial environment. The business minimises these risks with the strong working relationships we have built with customers.
The challenges facing the business regards cost control have continued into the April 2024 trading year, however through collaborative dialogue with our clients and supply chain the business has been able to manage these cost increases. The general industry in the south coast is seeing strong levels of production albeit lower than the previous year and the business has continued to secure contracts at fair market value, with a strong order book going forward. The company has expanded its client base in order to manage production fluctuations better.
The auditor, Sumer Audit, is deemed to be reappointed under section 487(2) of the Companies Act 2006.
The company's annual energy consumption, greenhouse gas emissions and energy efficiency activities are included and disclosed within Changeregard Limited consolidated accounts.
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 UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements; and
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.
We have audited the financial statements of Gracelands Limited (the 'company') for the year ended 30 April 2024 which comprise the statement of comprehensive income, the balance sheet, the statement of changes in equity and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including 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 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.
In identifying and assessing risks of material misstatement in respect of irregularities, including fraud and non-compliance with laws and regulations, our procedures included the following:
Obtaining an understanding of the legal and regulatory framework that the company operates in, focusing on those laws and regulations that had a direct effect on the financial statements and operations;
Obtaining an understanding of the company’s policies and procedures on fraud risks, including knowledge of any actual, suspected or alleged fraud;
Discussing among the engagement team how and where fraud might occur in the financial statements and any potential indicators of fraud through our knowledge and understanding of the company and our sector-specific experience.
As a result of these procedures, we considered the opportunities and incentives that may exist within the company for fraud. We are also required to perform specific procedures to respond to the risk of management override. As a result of performing the above, we identified the following areas as those most likely to have an impact on the financial statements: health & safety, employment law, long-term contract valuations and compliance with the UK Companies Act.
In addition to the above, our procedures to respond to risks identified included the following:
Making enquiries of management about any known or suspected instances of non-compliance with laws and regulations and fraud;
Reviewing minutes of contract meetings and ensuring controls are adhered to;
Challenging assumptions and judgements made by management in their significant accounting estimates, in particular in relation to amounts recoverable on long-term contracts, retentions, contract valuations; and the depreciation rates and methods of property, plant and equipment.
Auditing the risk of management override of controls, including through testing journal entries and other adjustments for appropriateness.
Due to the inherent limitations of an audit, there is an unavoidable risk that some material misstatements in the financial statements may not be detected, even though the audit is properly planned and performed in accordance with the ISAs (UK). For instance, the further removed non-compliance is from the events and transaction's reflected in the financial statements, the less likely the auditor is to become aware of it or to recognise the non-compliance.
A further description of our responsibilities is available on the Financial Reporting Council’s website at: https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.
Use of our report
This report is made solely to the company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's members as a body, for our audit work, for this report, or for the opinions we have formed.
The profit and loss account has been prepared on the basis that all operations are continuing operations.
Gracelands Limited is a private company limited by shares incorporated in England and Wales. The registered office is Stag Gates House, 63/64 The Avenue, Southampton, Hampshire, SO17 1XS.
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 £.
This company is a qualifying entity for the purposes of FRS 102, being a member of a group where the parent of that group prepares publicly available consolidated financial statements, including this company, which are intended to give a true and fair view of the assets, liabilities, financial position and profit or loss of the group. The company has therefore taken advantage of exemptions from the following disclosure requirements:
Section 7 ‘Statement of Cash Flows’: Presentation of a statement of cash flow and related notes and disclosures;
Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instrument Issues’: Interest income/expense and net gains/losses for each category of financial instrument; basis of determining fair values; details of collateral, loan defaults or breaches, details of hedges, hedging fair value changes recognised in profit or loss and in other comprehensive income;
Section 26 ‘Share based Payment’: Share-based payment expense charged to profit or loss, reconciliation of opening and closing number and weighted average exercise price of share options, how the fair value of options granted was measured, measurement and carrying amount of liabilities for cash-settled share-based payments, explanation of modifications to arrangements;
Section 33 ‘Related Party Disclosures’: Compensation for key management personnel.
The financial statements of the company are consolidated in the financial statements of Changeregard Limited. These consolidated financial statements are available from its registered office, 97 Leigh Road, Eastleigh, Hampshire, SO50 9DR. The consolidated financial statements are available from Companies House.
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 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 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 company 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 company’s contractual obligations expire or are discharged or cancelled.
Equity instruments issued by the company are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the company.
In the application of the company’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.
Recognition of revenue and profit is based on judgements made in respect of the ultimate profitability of a contract. Such judgements are arrived at through the use of estimation in relation to costs and value of work performed to date and to be performed in bringing contracts to completion. These estimates are made by reference to recovery of pre-contracts costs, variations in work scopes, claim recoveries and expected contract costs to complete. The company has appropriate control procedures to ensure all estimates are determined on a consistent basis.
All turnover is generated in the United Kingdom in the current and comparative period
The average monthly number of persons (including directors) employed by the company during the year was:
Their aggregate remuneration comprised:
The number of directors for whom retirement benefits are accruing under defined contribution schemes amounted to 3 (2023 - 6).
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:
Included in trade debtor are gross amounts due from contract customers of £11,752,958 (2023: £12,490,288).
The company operates a defined contribution pension scheme for all qualifying employees. The assets of the scheme are held separately from those of the company in an independently administered fund.
Contributions totalling £7,559 (2023: £7,563) were payable at the year end and are included in creditors.
The ordinary shares have attached to them full voting, dividend and capital distribution (including on winding up) rights.
The ordinary A shares and B shares have dividend rights but do not have voting nor capital distribution (including on winding up) rights.
Gracelands Limited has taken advantage of the exemption available in FRS 102 whereby it has not disclosed transactions with its ultimate parent company or any wholly owned subsidiary undertakings of the group.
During the year the company entered into transactions with the following connected companies:
Highbridge Property Investments Limited - joint venture
The company made total purchases of £3,813 ( 2023: £27,336) and total sales of £nil (2023: £4,329). At the reporting date £82,711 ( 2023: £80,401) was included in trade creditors, £1,054,268 (2023: £1,054,268) was included in trade debtors.
Darkwater Homes Limited - with common directors
The company made total sales of £373,320 (2023: £61,808). At the reporting date £95,512 (2023: £61,808) was included in trade debtors.
The company operated loan accounts with the directors during the year. All loans were interest free.
At the year end year end 30 April 2023, four directors owed the company £96,070. During the year ended 30 April 2024, there were transactions with four of the directors, where amounts advanced totalled £264,811, amounts written off was £23,090 and amounts repaid totalled £55,949. At the year end 30 April 2024, three directors owed the company £281,842.