The directors present their annual report and the audited financial statements of the Company and the Group for the year ended 31 December 2024.
Lexia Solutions Group Limited and its subsidiaries (the “Group”) is a leading specialist enabling works provider and support services organisation. The Group provides a range of specialist inter-related services delivered via two distinct brands: Rhodar and Thermac:
Rhodar - delivers asbestos abatement, demolition, land remediation and fire protection services, either individually or collectively within an overall enabling works package,
Thermac - specialises in the hire, sale and servicing of plant and equipment for the asbestos and wider decontamination sector.
With a network of UK offices spread across geographical regions and one of the largest dedicated operative workforces in the UK it can deliver a consistent, professional, first class service to a nationwide customer base on a scale that few can match.
The Group is recognised as a market leader in innovation and maintains industry leading standards in the highly regulated market in which it operates. Our business model is focused on identifying and working with blue chip clients, covering the private and public sectors, across a range of industry sectors. We have a large number of long term agreements and frameworks, ensuring repeat revenues form a significant part of our business.
Our continued focus as a Group has been to offer our major clients an ‘enabling works package’ comprising our four key skillsets of asbestos, demolition, remediation and passive fire protection. The Group has continued to build on the successful rebranding strategy for Rhodar to reposition the business as an enabling works provider, delivering an integrated service package. In 2024, the staged merger of Rhodar Limited into Rhodar Industrial Services Limited, was completed.
Despite ongoing economic challenges following the challenging economic conditions of 2023, the Group delivered a record-breaking performance in 2024, achieving a turnover of £70m and exceeding profit expectations. Thanks to the continued success of the Employee Ownership Trust (EOT), established in November 2020, all employees once again benefited directly through a tax-free bonus, recognising their contribution to the Group’s achievements.
Reviewing the past year for Rhodar from the perspective of these four disciplines:
Asbestos:
The division had a financially strong year, with standout performance across sectors like education, local authorities, infrastructure, rail, defence, and nuclear. Growth was driven by key framework wins and renewals, both directly (TfL, BT, Yorkshire Water) and via national frameworks (NEPO, NHS, NEUPC).
A key strategic move within the division (made early in the year) has been to restructure our project delivery infrastructure in order to strengthen our national delivery capability. This involved creation of three regions (Scotland, Northern & Southern) – streamlining processes, reporting lines and resource allocations to maximise project delivery efficiencies. Each region delivered major projects for clients such as Scottish Water, BAE Systems, and Aspire Defence.
Focus areas included:
Rail: Expansion of the team, framework renewals, key projects like Lords Covered Way and Mersey Tunnels.
Nuclear/Defence: Growth at AWE and Sellafield with specialist, security-cleared teams. Recent ‘Principal Contractor Status at AWE – major springboard to expanding our activities on this site.
Demolition
The division has had a highly successful year in 2024, surpassing targets and securing a strong pipeline for 2025. Key factors contributing to their success include a disciplined bid qualification process focusing on fewer but higher-quality projects and a strategic emphasis on sectors like healthcare, education, defence, nuclear, rail, MOD/Defence, and utilities. They have expanded their portfolio through prestigious frameworks like Crown Commercial Services and Pagabo, with notable wins including projects for NWG, Gloucester Place, Scotland Excel, and Procure Public.
The division is increasingly involved as a Principal Contractor, directly engaging with clients and supporting multi-discipline enabling works projects, a significant growth area. Recent high-profile projects include the Darwin Tower demolition for Edinburgh University, the Findel Complex near Manchester, and the Cardiff Regeneration project for Vastint. Their achievements were highlighted by winning the UK Demolition Project of the Year (over £1m) at the British Demolition Awards, solidifying our Demolition Team’s leading position and reputation within the sector.
Remediation:
The division has consolidated its position in the market over the past twelve months, cementing its reputation as a turnkey enabling works provider with a number of high profile repeat business clients. With broader capability and increased capacity through both continued strategic hires and purchase of further new equipment the division has delivered almost £9M of multi-disciplinary projects across the defence, civil infrastructure and development sectors.
These have included construction of a car park at Lynfield Mount Hospital for the NHS trust and support of infrastructure and accommodation upgrades at St George’s Barracks. We have also secured a position on the prestigious Northern Gas Networks Remediation Framework and increased our profile with local authorities, including City of York Council, to further diversify our client portfolio and range of enterprise activities.
Passive Fire Protection:
The past year has been focused on developing the scale and technical competence of our delivery team, recruiting and training at all levels to position ourselves to maximise on this rapidly expanding sector. Our strategy has been based on structured, regionalised growth, leveraging on introductions via our other divisions to existing group clients and through targeted marketing campaigns so we continue to grow in a sustained way.
Work underpinned by increasing roster of Frameworks and a developing and trusted supplier base for specialist and time-critical components. We have developed strong relationships within Higher Education and NHS Trusts and also targeting Councils, Hospitality/Hotels, Retail/Developers.
Recent success in winning major project work at the UKRIA through competitive tender has been a key testament to the divisions development and positioning within the sector. Whilst being a highly competitive and saturated marketplace, our steady delivery of a quality service, delivered by highly competent and professional operatives is being noticed within the industry and we are winning more and more work by referral.
Turning to our equipment specialist, Thermac - having implemented a strategic plan aimed at maximising on its core strengths, Thermac exceeded profit expectations although on less turnover than in 2023. With innovation at its core, Thermac have continued to develop their in-house developed and manufactured equipment, recognised for their performance and reliability within the industry. 2024 saw a record number of orders, a new branch in Barking, a revamped E-commerce platform, and winning the prestigious “Supplier of the Year” award from Asbestos Hub Magazine.
Principal risks and uncertainties
The Group’s decision making remains centred on a comprehensive and detailed understanding of the exposures faced by the organisation. The identification of risks to achieving business and strategic objectives, alongside the use of detailed analysis to inform and prioritise responses, remains key to balancing risk taken in line with risk appetite.
Within its highly regulated marketplace, loss of any of the Group’s HSE asbestos licences is a key business risk. Both Rhodar and Thermac’s licenses were renewed in 2023, with Rhodar having a maximum three-year term licence that expires in September 2026, and the Thermac maintenance licence running for three years until December 2026. Conducting business in a safe away and providing a Zero Harm environment for our employees and stakeholders is paramount.
Given the current challenging economic environment for the construction sector generally, continuing to secure work at acceptable margins in open market conditions is a key business risk. The Group seeks to manage potential contractual risk transfer through delegated authorities that govern tenders and acceptance of customers. The Group has processes and procedures to ensure that work is undertaken in accordance with the corresponding contractual conditions.
The directors consider that our key performance indicators are those that communicate a summary of the performance and the strength of the Group as a whole; those being turnover, gross profit margin, operating profit and retained reserves.
The results for the years ended 31 December 2024 and 31 December 2023 are as follows:
Continuing operations | Year ended Revenue £’000 | Year ended Revenue £’000 | Year ended Gross profit £’000 | Year ended Gross profit £’000 |
Asbestos abatement | 44,135 | 37,562 | 13,608 | 10,758 |
Demolition and land remediation | 19,856 | 21,970 | 4,040 | 4,520 |
Fire Protection | 3,684 | 1,867 | 1,290 | 461 |
Hire / consumables | 5,621 | 6,178 | 1,552 | 1,513 |
Intra group trading | (2,797) | (2,918) | - | - |
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Group | 70,499 | 64,659 | 20,490 | 17,252 |
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Given the diverse nature of the business, the Group's directors are of the opinion that analysis of the business is best done through the review of the business divisions. The directors consider gross profit to be the principal measure of the operating divisions and for the business as a whole as disclosed in the table above. The directors also consider earnings before interest, depreciation and amortisation (‘EBITDA’) to be a KPI. A reconciliation of EBITDA has been summarised below.
| Year ended 31 December 2024 £’000 | Year ended 31 December 2023 £’000 |
Operating profit | 3,912 | 2,153 |
Depreciation of tangible fixed assets Amortisation of intangible fixed assets | 687 1 | 740 1 |
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EBITDA | 4,600 | 2,894 |
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Future developments
With the rebrand and strategic realignment of Rhodar focused on combined enabling works packages, we are now actively delivering in this dynamic area. While continuing to grow each of our four core service lines independently, we will also identify opportunities to integrate multiple services into a single solution - offering clients enhanced value through improved cost efficiency and streamlined delivery.
Our ongoing strategy of securing targeted framework wins is strengthening our medium to long-term revenue confidence, enabling more effective horizon planning and supporting the continued growth of the business.
As part of our enabling strategy with developers and main contractors, we are placing strategic focus on urban regeneration projects—particularly those backed by government initiatives and secured funding streams, such as the Build to Rent (BTR) and Purpose-Built Student Accommodation (PBSA) sectors. This approach is proving to be a highly effective route for future work winning.
Our broad sector coverage allows the Group to strategically pivot and capitalise on the strongest growth opportunities, particularly during periods of uncertainty in other areas of the market. Key growth sectors for the Group are:
Nuclear / Nuclear Defence: AWE and Sellafield are seen as areas for targeted growth over the next 2 years
Defence: Defence Estate Optimisation (DEO) and existing frameworks
Network Rail: Infrastructure, focus on facility delivery teams
Government Funding Initiatives: Carbon reduction programmes in public buildings
Scotland: Energy and Utilities (Scottish Power, etc)
Section 172 Companies Act 2006
This report sets out how the Directors comply with the requirements of Section 172 Companies Act 2006 and how these requirements have impacted the Board’s decision making throughout 2023.
The Board’s primary responsibility is to promote the long-term success of the Group by creating and delivering sustainable value as well as contributing to wider society. The successful delivery of the long-term plans relies on key inputs and positive relationships with a wide range of stakeholders. The Board seeks to achieve this by setting out its strategy, monitoring performance against the Group’s strategic objectives and reviewing the implementation of the strategy. The Board also monitors the effectiveness of the Group’s systems of internal control, governance and risk management.
Engaging with stakeholders to deliver long term success is a key area of focus for the Board and all decisions take into account the impact on stakeholders. Obviously, stakeholders are impacted by, or benefit from, decisions made by the Board in different ways. However, it is the Board’s priority to ensure that the Directors have acted both individually and collectively in the way that they consider, in good faith, would be most likely to promote the success of the Group for the benefit of the members as a whole with regard to all its stakeholders and to the matters set out in paragraphs a-f of Section 172 of the Companies Act 2006.
Engagement with employees
The Group goal is to provide an engaging and highly motivated environment, attractive career paths and benefits and empowerment to own and drive our vision. The Group recognises the importance of engaging employees to help them make their fullest contribution to the business, which is fundamental to achieving the Group’s strategy and long-term objectives. This is supported by our retention of our Investors in People status.
Employment of disabled persons
At Lexia, we are fully committed to equality in the workplace and engage, promote and train staff on the basis of their capabilities, qualifications and experience without discrimination of any kind. This is underpinned by the policies and practices embedded within the Group. All employees receive equal opportunity to progress within the Group ensuring we have access to the widest talent pool. We make reasonable adjustments to the business premises and working arrangements for disabled applicants and employees, including employees who become disabled during their employment.
Employee involvement
At Lexia, employee engagement is very important to us, and we actively seek the views and opinions of our staff through continuous employee engagement. Staff participation is encouraged at many levels, such as recognising colleagues for our values awards. Our performance management standard: In Pursuit of Excellence (IPOE) encompasses all aspects of our employee’s development, from performance management and management training to leadership development and charitable fundraising.
Staff Wellbeing
Staff wellbeing is a cornerstone of our organisational success and a key focus in fostering a positive and productive work environment. We are committed to supporting the physical, mental, and emotional health of our employees through comprehensive wellbeing initiatives, including flexible working arrangements, access to wellness programs, and promoting a healthy work-life balance. By investing in staff wellbeing, we aim to reduce stress, increase job satisfaction, and enhance overall employee engagement.
Engagement with suppliers, customers and others
The Board regularly reviews how the Group maintains positive relationships with all its stakeholders, including suppliers, customers, community and others.
Suppliers
The Directors understand the importance of the Group’s supply chain in delivering the long-term plans of the Group. One of the ways we can ensure effective relationships with our supply chain is to pay them on time.
We understand the importance of paying suppliers and subcontractors in a timely and professional manner and are committed to this practice. We adopt a flexible approach which matches payment terms to the requirements and capabilities of our suppliers, and consider the option of early payment to suppliers who are experiencing financial constraints.
Customers
Our broad customer base spans several sectors, industries and businesses and believe in strong collaborative relationships borne out of a mutual and beneficial understanding of process, procedure and communication. We work closely with our customers to understand their evolving needs so we can improve and adapt to meet them.
We have continued to deliver our ‘Built Environment’ Knowledge Seminars Roadshows, showcasing our four core services and the advantages of combined delivery within an enabling package to the built environment sector. These roadshows, delivered at venues across the UK, positioned Rhodar as leading subject-matter experts and solutions provider, reaching hundreds of existing and new clients, providing a unique opportunity for face-to-face interaction and knowledge share.
Community
Social value and Sustainability have continued to be a strong feature of our activities through our extensive charitable activities. Our commitment to social responsibility is reflected in a range of impactful charity and sponsorship initiatives. The “Charity 6” campaign, driven by staff, sees six charities selected each year and supported through various fundraising efforts, engaging the entire business. We also support local causes, including the Blackburn & Darwen and Bradford NHS “You’re a Star” events, among many others. The 2024 “Crosspoint Challenge” in the Lake District raised £10,000 for WellChild, which takes our contribution to £55,000 for the charity in total over the years. Looking ahead, we’re excited to launch the “Yorkshire 3 Peaks Challenge” in 2025 for Martin House Children’s Hospice.
We are also proud to support major regional projects like Darwin Tower for The University of Edinburgh, with over £35,000 donated. Our focus on local employment and resourcing for key projects further strengthens our ties to the communities we serve, making a lasting impact in the areas where we operate.
Sustainability
As a Group, operating to ISO 14001, we already have well-developed environmental programmes across the business. In 2024 we appointed a Sustainability Consultancy advisory partner to support the Group in developing and delivering our long-term carbon emissions reduction strategy (“Carbon Reduction Flightpath”). This partnership will ensure we meet our legislative/statutory obligations, train/upskill our staff, and provide project-specific support either part of the bid process or delivery phase.
Further information is included within the Directors Report, where we have disclosed our Energy and Carbon Report for the year ended 31 December 2024.
Going Concern
The Company is a subsidiary of the Lexia Solutions Group Limited group (the “Group”) and has access to the group’s current banking facilities.
The Company, and wider Group, continues to recognise the economic and trading uncertainties resulting from the conflict in Ukraine, which continue to be closely monitored. Although the Group do not trade outside the UK, interruption to commodity supplies and rising prices due to the reduced supply is likely to impact the supply chain. After considering the factors and sensitivities outlined above for a range of scenarios, the Directors consider that the Group has adequate resources to continue in operational existence for the foreseeable future. Uncertainties and risk inherent in the construction industry may impact future performance, and management remain vigilant in monitoring and addressing these challenges proactively.
The Directors regularly review the working capital requirements of the Company, and wider Group, while reviewing sensitivities to future performance. The Directors have reviewed budgets and future forecasts and have satisfied themselves that the Company has sufficient financial and liquid resources to continue to operate for a period of at least 18 months from the date these financial statements are signed.
Overall, the Directors remain confident in their strategy and the strength of the business.
Accordingly, the Directors continue to adopt the going concern basis in preparing the Company and the wider Group accounts. Further details regarding the adoption of the going concern basis can be found in the Accounting Policies.
On behalf of the board
The directors present their annual report and financial statements for the year ended 31 December 2024.
The profit for the year, after taxation, amounted to £3,859,000 (2023 - £3,375,000).
A dividend of £1,007,000 was paid during the year (2023 - £911,000).
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
Research and development (R&D) activities are undertaken with the prospect of gaining new scientific or technical knowledge and understanding. R&D is a critical component of Group’s growth strategy, enabling us to stay competitive by developing innovative products and services that meet the changing needs of customers.
The Group invests in R&D to improve the quality of its products and services, reduce costs, and increase efficiency. R&D helps the Company to differentiate itself from competitors and maintain its market position.
The Group is committed to ensuring it maintains strong relationships with all stakeholders (including employees)and actively engages with them on an ongoing basis. Further details are provided in the Strategic Report.
BHP LLP were appointed as auditor to the group and in accordance with section 485 of the Companies Act 2006, a resolution proposing that they be re-appointed will be put at a General Meeting.
Lexia Solutions Group GHG emissions and energy use data for period 1st January 2023 to 31st December 2024:
Annual Energy Consumption (kWh) | Current Reporting Year | Comparison Year |
01/01/2024 - 31/12/2024 | 01/01/2023 - 31/12/2023 | |
Scope 1 | 13,102,969 | 16,972,295 |
Stationary Combustion | 200,284 | 163,102 |
Mobile Combustion | 12,902,685 | 16,809,193 |
Process Emissions | N/A | N/A |
Fugitive Emissions | N/A | N/A |
Scope 2 | 315,042 | 374,033 |
Purchased Electricity | 315,042 | 374,033 |
Purchased Steam, Heat, Cooling | - | - |
Scope 3 (Grey Fleet) | 20,628 | 21,127 |
Grey Fleet | 20,628 | 21,127 |
Total | 13,438,640 | 17,367,455 |
Annual Carbon Emissions (tCO2e) | Current Reporting Year | Comparison Year |
01/01/2024 - 31/12/2024 | 01/01/2023 - 31/12/2023 | |
Scope 1 | 3,231 | 4,257 |
Stationary Combustion | 37 | 30 |
Mobile Combustion | 3,195 | 4,227 |
Process Emissions | - | - |
Fugitive Emissions | - | - |
Scope 2 (Location Based) | 65 | 77 |
Scope 2 (Market Based) | 65 | 77 |
Purchased Electricity | 65 | 77 |
Purchased Electricity | 65 | 77 |
Purchased Steam, Heat, Cooling | - | - |
Scope 3 (Grey Fleet) | 6.3 | 6.5 |
Grey Fleet | 6.3 | 6.5 |
Total (Location Based) | 3,303 | 4,341 |
Total (Market Based) | 3,303 | 4,341 |
Direct Biogenic Emissions | 286 | 291 |
Mandatory Greenhouse Gas Report intensity ratios are calculated by dividing emissions by an organisation-specific metric.
In the case of Lexia Solutions Group, the metrics chosen to normalise emissions: Turnover (GBP), FTE (FTE).
The intensity ratios as well as the business metrics are detailed below. The intensity ratio is calculated based on total emissions (location based).
Carbon Emissions per Business Metric | Current Reporting Year | Comparison Year |
01/01/2024 - 31/12/2024 | 01/01/2023 - 31/12/2023 | |
Emission per Turnover | 0.1 | 0.1 |
Emission per FTE | 6,978 | 9,239 |
Business Metric | Current Reporting Year | Comparison Year |
01/01/2024 - 31/12/2024 | 01/01/2023 - 31/12/2023 | |
Turnover (GBP) | 67,645,000 | 56,609,000 |
FTE (FTE) | 500 | 487 |
Please note that the year 1st January 2023 to 31st December 2023 (Lexia Solutions Group’s emissions reporting baseline) was re-calculated and re-baselined with a more accurate dataset in 2025, resulting in new energy and emissions figures compared to the previous SECR report for 2023.
The Group's activities expose it to a variety of financial risks: market risk (including interest rate risk), credit risk and liquidity risk. The Group’s overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the Group's financial performance.
Risk management is carried out on a group-wide basis under policies approved by the Board of Directors.
Market risk
Interest rate risk
The Group's interest rate risk arises from long-term borrowings. Borrowings issued at variable rates expose the group to cash flow interest rate risk. Borrowings issued at fixed rates expose the group to fair value interest rate risk. During 2023, the Group s borrowings were denominated solely in Sterling.
The Group manages its cash flow interest rate risk by using fixed interest rate borrowings where possible.
Credit risk
Credit risk is managed on a Group basis. Credit risk arises from cash and cash equivalents, derivative financial instruments and deposits with banks, as well as exposure to outstanding receivables. The Group’s policy is to manage credit exposure to trading counterparties within defined trading limits. All of the Group’s significant counterparties are assigned internal credit limits.
If any of the Group’s customers are independently rated, these ratings are used. Otherwise, if there is no independent rating, the group assesses the credit quality of the customer taking into account its financial position, past experience and other factors.
Liquidity risk
The Group is subject to the risk that it will not have sufficient borrowing facilities to fund its existing business and its future plans for growth. The Group manages its liquidity requirements with the use of both short and long term cash flow forecasts. These forecasts are supplemented by a financial headroom position which is used to demonstrate funding adequacy for at least an 18 month period. The current funding arrangements continue on a rolling basis. The Directors fully expect to arrange equivalent facilities of at least the same level as present.
Prudent liquidity risk management implies maintaining sufficient cash and the availability of funding through an adequate amount of committed credit facilities. Due to the nature of the underlying businesses, the treasury function aims to maintain flexibility in funding by keeping committed credit lines available.
Capital risk management
The Group's objectives when managing capital are to safeguard its ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders. The objectives are also to maintain an optimal capital structure to reduce the cost of capital in the Group and to ensure financial covenants contained in the bank facility agreement are met throughout the year. In order to maintain or adjust the capital structure, the group may vary the amount of dividends paid to shareholders.
We have audited the financial statements of Lexia Solutions Group Limited (the 'parent company') and its subsidiaries (the 'group') for the year ended 31 December 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.
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 Group through discussions with directors and other management, and from our commercial knowledge and experience of the trade;
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 Group;
we assessed the extent of compliance with the laws and regulations considered above through making enquiries of management; and
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 group’s financial statements to material misstatement, including obtaining an understanding of how fraud might occur, by;
making enquiries of management as to where they considered there was susceptibility to fraud, their knowledge of actual, suspected and alleged fraud; and
considering the internal controls in place to mitigate risks of fraud and non-compliance with laws and regulations.
To address the risks of fraud through management bias and override controls, we:
performed analytical procedures to identify any unusual or unexpected relationships;
tested journal entries to identify unusual transactions;
assessed whether judgements 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 meetings of those charged with governance;
enquiring of management as to actual and potential litigation and claims; and
discussions with senior management regarding relevant regulations and reviewing the company’s legal and professional fees.
There are inherent limitations in our audit procedures described above. The more removed that laws and regulations are from financial transactions, the less likely it is that we would become aware of non-compliance. Auditing standards also limit the audit procedures required to identify non-compliance with laws and regulations to enquiry of the director’s and other management and the inspection of regulatory and legal correspondence.
As part of our audit, we addressed the risk of management override of internal controls, including testing of journals and review of the nominal ledger. We evaluated whether there was evidence of bias by the directors that represented a risk of material misstatement due to fraud.
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 profit for the year was £780,000 (2023: £965,000).
Lexia Solutions Group Limited is a private company, limited by shares, incorporated in England and Wales under the Companies Act 2006. The address of the registered office is shown on the Company Information page and the nature of the Group's operations and its principal activity is set out in the Strategic Report.
The financial statements have been prepared under the historical cost convention unless otherwise specified within these accounting policies and in accordance with Financial Reporting Standard 102,the Financial Reporting Standard applicable in the UK and the Republic of Ireland and the Companies Act 2006.
The presentation currency of these financial statements is sterling. All amounts in the financial statements have been rounded to the nearest £1,000.
The preparation of financial statements in compliance with FRS 102 requires the use of certain critical accounting estimates. It also requires Group management to exercise judgement in applying the Group’s accounting policies (see note 2).
The Company has taken advantage of the exemption allowed under section 408 of the Companies Act 2006 and has not presented its own Statement of Comprehensive Income in these financial statements.
In preparing the separate financial statements of the parent company, advantage has been taken of the following disclosure exemptions available to qualifying entities:
only one reconciliation of the number of shares outstanding at the beginning and end of the period has been presented as the reconciliations for the group and the parent company would be identical;
no cash flow statement or net debt reconciliation has been presented for the parent company;
disclosures in respect of the parent company’s income, expense, net gains and net losses on financial instruments measured at amortised cost have not been presented as equivalent disclosures have been provided in respect of the group as a whole; and
no disclosure has been given for the aggregate remuneration of the key management personnel of the parent company as their remuneration is included in the totals for the group as a whole.
The consolidated financial statements present the results of the Company and its own subsidiaries ("the Group") as if they form a single entity. Intercompany transactions and balances between group companies are therefore eliminated in full.
The consolidated financial statements incorporate the results of business combinations using the purchase method. In the Statement of Financial Position, the acquiree’s identifiable assets, liabilities and contingent liabilities are initially recognised at their fair values at the acquisition date. The results of acquired operations are included in the Consolidated Statement of Comprehensive Income from the date on which control is obtained. They are deconsolidated from the date control ceases.
The uncertainty as to the future impact on the Company, and the wider Group, of the UK economy and the wider macroeconomic conditions has been separately considered as part of the Director's consideration of the going concern basis of preparation.
The Directors have prepared cash flow forecasts, based on a series of current trading forecasts and taking into account current borrowing facilities, for a period of 18 months from the date of approval of these financial statements, which indicate that the Group will have sufficient funds to meet its liabilities as they fall due for that period. Under this scenario there would be no breach of working capital facility as there is sufficient headroom. There are no material capital repayments of debt falling due within the forecast period.
The Directors believe that it remains appropriate to prepare the financial statements on a going concern basis.
Turnover is measured at the fair value of the consideration received or receivable and represents the amount receivable for goods supplied or services rendered, net of returns, discounts and rebates allowed by the Group and value added taxes.
Turnover from contracts for the provision of professional services is recognised by reference to the stage of completion when the stage of completion, costs incurred and costs to complete can be estimated reliably. The stage of completion is calculated by comparing costs incurred, mainly in relation to contractual hourly staff rates and materials, as a proportion of total costs. Where the outcome cannot be estimated reliably, turnover is recognised only to the extent of the expenses recognised that are recoverable.
Turnover from the sale of goods is recognised when the significant risks and rewards of ownership have been transferred to the buyer, the Group retains no continuing involvement or control over the goods, the amount of turnover can be measured reliably and it is probable that future economic benefits will flow to the entity.
The assets' residual values, useful lives and depreciation methods are reviewed, and adjusted prospectively if appropriate, or if there is an indication of a significant change since the last reporting date.
Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised in the Consolidated Statement of Comprehensive Income.
Investments in subsidiaries are measured at cost less accumulated impairment.
In accordance with FRS 102.22, financial instruments issued by the Group are treated as equity only to the extent that they meet the following two conditions:
they include no contractual obligations upon the Group to deliver cash or other financial assets or to exchange financial assets or financial liabilities with another party under conditions that are potentially unfavourable to the Group; and
where the instrument will or may be settled in the entity’s own equity instruments, it is either a non¬derivative that includes no obligation to deliver a variable number of the entity's own equity instruments or is a derivative that will be settled by the entity exchanging a fixed amount of cash or other financial assets for a fixed number of its own equity instruments.
To the extent that this definition is not met, the proceeds of issue are classified as a financial liability. Where the instrument so classified takes the legal form of the entity’s own shares, the amounts presented in these financial statements for called up share capital and share premium account exclude amounts in relation to those shares.
Trade and other debtors/creditors
Trade and other debtors are recognised initially at transaction price less attributable transaction costs. Trade and other creditors are recognised initially at transaction price plus attributable transaction costs. Subsequent to initial recognition they are measured at amortised cost using the effective interest method, less any impairment losses in the case of trade debtors. If the arrangement constitutes a financing transaction, for example if payment is deferred beyond normal business terms, then it is measured at the present value of future payments discounted at a market rate of instrument for a similar debt instrument.
Interest-bearing borrowings classified as basic financial instruments
Interest-bearing borrowings are recognised initially at the present value of future payments discounted at a market rate of interest. Subsequent to initial recognition, interest-bearing borrowings are stated at amortised cost using the effective interest method, less any impairment losses. Transaction costs are expensed over the life of the facility.
Cash and cash equivalents
Cash and cash equivalents comprise cash balances and call deposits.
Financial assets (including trade and other debtors)
A financial asset not carried at fair value through profit or loss is assessed at each reporting date to determine whether there is objective evidence that it is impaired. A financial asset is impaired if objective evidence indicates that a loss event has occurred after the initial recognition of the asset,and that the loss event had a negative effect on the estimated future cash flows of that asset that can be estimated reliably.
An impairment loss in respect of a financial asset measured at amortised cost is calculated as the difference between its carrying amount and the present value of the estimated future cash flows discounted at the asset’s original effective interest rate. For financial instruments measured at cost less impairment an impairment is calculated as the difference between its carrying amount and the best estimate of the amount that the Group would receive for the asset if it were to be sold at the reporting date. Interest on the impaired asset continues to be recognised through the unwinding of the discount. Impairment losses are recognised in profit or loss. When a subsequent event causes the amount of impairment loss to decrease, the decrease in impairment loss is reversed through profit or loss.
An impairment loss is reversed if and only if the reasons for the impairment have ceased to apply.
Impairment losses recognised in prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined,net of depreciation or amortisation, if no impairment loss had been recognised.
The tax expense represents the sum of the tax currently payable and deferred tax.
Tax is recognised in profit or loss except that a charge attributable to an item of income and expense recognised as other comprehensive income or to an item recognised directly in equity is also recognised in other comprehensive income or directly in equity respectively.
The current income tax charge is calculated on the basis of tax rates and laws that have been enacted or substantively enacted by the reporting date in the countries where the Company and the Group operate and generate income.
Deferred tax balances are recognised in respect of all timing differences that have originated but not reversed by the reporting date, except that:
The recognition of deferred tax assets is limited to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits;
Any deferred tax balances are reversed if and when all conditions for retaining associated tax allowances have been met; and
Where they relate to timing differences in respect of interests in subsidiaries, associates,branches and joint ventures and the Group can control the reversal of the timing differences and such reversal is not considered probable in the foreseeable future.
Deferred tax balances are not recognised in respect of permanent differences except in respect of business combinations, when deferred tax is recognised on the differences between the fair values of assets acquired and the future tax deductions available for them and the differences between the fair values of liabilities acquired and the amount that will be assessed for tax. Deferred tax is determined using tax rates and laws that have been enacted or substantively enacted by the reporting date.
The Group operates a defined contribution plan for its employees. A defined contribution plan is a pension plan under which the Group pays fixed contributions into a separate entity. Once the contributions have been paid the Group has no further payment obligations.
The contributions are recognised as an expense in profit or loss when they fall due. Amounts not paid are shown in accruals as a liability in the Statement of Financial Position. The assets of the plan are held separately from the Group in independently administered funds.
Assets obtained under hire purchase contracts and finance leases are capitalised as tangible fixed assets. Assets acquired by finance lease are depreciated over the shorter of the lease term and their useful lives. Assets acquired by hire purchase are depreciated over their useful lives. Finance leases are those where substantially all of the benefits and risks of ownership are assumed by the Group.
Obligations under such agreements are included in creditors net of the finance charge allocated to future periods. The finance element of the rental payment is charged to the Consolidated Statement of Comprehensive Income so as to produce a constant periodic rate of charge on the net obligation outstanding in each period.
Rentals paid under operating leases are charged to profit or loss on a straight-line basis over the lease term.
Amounts due from lessees under finance leases are recognised as receivables at the amount of the group's net investment in the leases. Finance lease income is allocated to accounting periods so as to reflect a constant periodic rate of return on the group’s net investment outstanding in respect of leases.
Finance costs
Finance costs are charged to profit or loss over the term of the debt using the effective interest method so that the amount charged is at a constant rate on the carrying amount. Issue costs are initially recognised as a reduction in the proceeds of the associated capital instrument.
Dividends
Equity dividends are recognised when they become legally payable. Interim equity dividends are recognised when paid. Final equity dividends are recognised when approved by the shareholders at an annual general meeting.
In the application of the group’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.
The estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are as follows.
Whilst there are controls in place, debtor recoverability is inherently susceptible to the financial stability of the respective customers. Management must therefore make estimates for provision levels to be made.
The judgements, estimates and associated assumptions necessary to calculate the above provisions are based on historical experience, current industry knowledge and other reasonable factors.
The Group conducts a significant portion of its business under contracts with customers. The group accounts for revenue on projects as performance on contracts progresses. This method places considerable importance on accurate estimates of the extent of progress towards completion and may involve estimates on the scope of deliveries and services required for fulfilling the contractually defined obligations. These significant estimates include total contract costs, total contract revenues, contract risks and other judgements. Such changes in estimates may lead to an increase or decrease of revenues.
All of the turnover arose solely within the United Kingdom.
The average monthly number of persons (including directors) employed by the group and company during the year was:
Their aggregate remuneration comprised:
During the year retirement benefits were accruing to 2 Directors (2023 - 1) in respect of defined contribution pension schemes.
The actual credit for the year can be reconciled to the expected charge for the year based on the profit or loss and the standard rate of tax as follows:
Factors that may affect future tax charges
The Group has tax losses of £14.1m as at 31 December 2024 (2023: £17.8m). A deferred tax asset of £1,356k (2023: £1,333k) in respect of £5,424k (2023: £5,332k) of those losses has been recognised based on forecast taxable profits. There is uncertainty in use of other losses hence no further asset has been recognised other than a deferred tax asset of £531,000 (2023: £251,000) to offset the deferred tax liability of £531,000 (2023: £251,000) in respect of fixed asset and other timing differences.
The intangible asset related to an exclusivity agreement as the sole distributor of Phoenix Brands products. It was disposed of during the year.
The net carrying value of tangible fixed assets includes the following in respect of assets held under finance leases or hire purchase contracts.
Details of the company's subsidiaries at 31 December 2024 are as follows:
The difference between purchase price or production cost of stocks and their replacement cost is not material.
Impairment losses totalling £Nil (2023: £Nil) were recognised in profit and loss.
All amounts due from group undertakings are interest free and are repayable on demand.
Included within other debtors for the company and group is a balance owed from a Director. See note 27 for further detail.
The impairment loss recognised in profit or loss for the period in respect of bad and doubtful trade debtors was £64,000 (2023: £81,000).
All amounts owed to group undertakings are interest free, carry no security and are repayable on demand.
The obligations under finance lease agreements are secured against the asset to which they relate.
The obligations under finance lease agreements are secured against the assets to which they relate.
The following are the major deferred tax liabilities and assets recognised by the group and company, and movements thereon:
A defined contribution pension scheme is operated for all qualifying employees. The assets of the scheme are held separately from those of the group in an independently administered fund.
The borrowing facilities in place at the year end are secured by unlimited debenture against the assets of the Company and its subsidiary undertakings.
At the reporting end date the group had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:
The Company has taken advantage of the available exemption conferred by Section 33.1A of FRS102 not to disclose transactions with wholly owned members of the Group.
During the year the Group leased property from one of the director's pension schemes. The lease cost paid to the directors' pension scheme during the year was £166,000 (2023: £165,000).
During the year the Group acquired services from Tradeslink Asbestos Services Limited, a wholly owned company of a subsidiary director, J M Davy, for a total value of £453,000 (2023: £484,000). The balance outstanding at the year end in relation to these transactions was £Nil (2023: £Nil).
During the year the Group acquired services from East Riding Laboratories Limited, a wholly owned company of connected parties to D Hart, a subsidiary director during the year, for a total value of £3,000 (2023: £4,000). The balance outstanding at the year end in relation to these transactions was £100 (2023: £Nil).
During the year, the Group disposed of a motor vehicle to a Director at a market rate of £22,500, (NBV: £18,951).
The Directors consider the members of key management to be the directors of principal trading subsidiaries. Total compensation of key management personnel in the year amounted to £1,258,000 (2023: £1,188,000).
During the year the company made a capital contribution of £1,070,000 (2023: £911,000) to The Lexia Solutions Employee Ownership Trust. J M Davy, a Director, is also a director of the trustee company of the Trust.