The directors present the strategic report for the year ended 31 December 2024.
The profit for the financial year after taxation amounted to £3,970,280 (2023: £2,658,725).
The company has achieved another exceptional year of trading and has once again surpassed the budget which was put into place for 2024 in both turnover and net profit. This is despite some very challenging conditions and competition in the marketplace.
A budget has once again been set for 2025 which shows further growth in margin. The company continues to be selective in the type and nature of work that it takes onboard. The company has been offered some projects which represent too much commercial risk and as such, after careful analysis, have been rejected. The strategy now is to increase turnover and associated margin in markets that represent low commercial risk for Blue Chip clients.
The company is now well positioned to attract the type and nature of work that will deliver greater profitability.
The company continues to operate certified Quality, Environmental and Occupational Health and Safety Management Systems to ISO9001, ISO14001 and ISO45001.
The company also has the following accreditations:
Acclaim SSIP
Achilles UDVB
Achilles Building Confidence
Alcumus SafeContractor SSIP
Builders Profile
Constructionline Gold
CHAS
CIRAS
ECIA
EIC
RISQS
ROSPA
SMAS
SEDEX
Sentinel
Sustainability School
Worksafe
Yellow Jacket
We are longstanding members and supporters of the National Access & Scaffolding Confederation (NASC), who are the recognised industry body for quality, safety and technical standards by the Health and Safety Executive. All of our activities are audited and certified by the NASC, again creating a very strong marketing tool.
The company has successfully retained the Fleet Operators Recognition (FORS) certification for the seventh year running and is currently at Silver Status. The scheme recognises those that excel in health, safety and environmental management in its transport operations.
2024 also saw the complete renewal of the Transport Fleet at the company, which equated to over 60 vehicles. Included in the renewal were all of the HGV classification (26 Tonne), Light goods vehicles (7.5 Tonne), pickups, vans and crew cabs.
The company has also continued with its capital expenditure investment in scaffolding stock in both traditional tube and fittings and system scaffolding (Layher).
We have secured further works at Hinkley Point C Nuclear Power Station and are well placed to secure further opportunities.
The Board of Directors again wish to thank all our employees for their continued loyal support and hard work. Their effort and teamwork are so important in helping us to achieve our objectives. The Board continue to do everything in its power to ensure the health, safety and welfare of its employees is maintained at the highest level. We have an excellent record of providing long term employment.
Palmers has repair and maintenance contracts at both Heathrow and Gatwick airports and we had reported last year that there had been a gradual return to business levels experienced in previous years. Both airports have featured heavily in the media in the last 12 months and Palmers is now well placed to capitalise on the further developments of the infrastructure at both of those locations both airside and landside.
Palmers is exposed to a variety of financial risks which the Board manages with the objective of minimising any potential adverse effect on the company's performance. The construction sector is exposed to changes in the economic climate, the UK Government's policies and employment laws as well as changing market practices and behaviours following a handful of high-profile company collapses.
The Board will therefore continue to mitigate these risks in a number of ways, notably by continuing to foster long-term relationships with our key clients, maintaining flexibility in our cost base, ensuring that we are not overly reliant on any one part of our supply chain.
Financial key performance indicators
Palmers is managed via our branch structure, with each branch having monthly targets to achieve across a range of financial and non-financial KPIs. The basis of these KPIs are agreed as part of our annual budget and business plan process and cover financial, commercial, operational and safety targets against which performance is monitored monthly.
The company has implemented a new Financial Accounting software package (Sun Systems) which allows much more accurate and timely reporting to be operated and reviewed at predetermined intervals to improve business performance. The Company has now introduced a new, more streamlined Payroll system to compliment Sun Systems (Mitrefinch) and this is now successfully up and running.
Palmers will continue to focus on its core clients operating in the infrastructure, construction and industrial related sectors, but as mentioned earlier, will be more selective in the type and nature of contracts that it accepts going forward. Our objective remains to operate safely, provide exceptional delivery to our customers and maintain strong relationships with our suppliers. There is now more of a focus on the commercial performance of the existing contracts already in place and the new business that the company continues to secure.
The directors, while in continual review, feel confident that there is sufficient flexibility in the cost base and variety in contracted work to effectively manage any downturn in trading and ensure that the company has sufficient resources to meet its financial obligations.
We have maintained cash flows and have ensured that all of the company’s liabilities with regard to PAYE and VAT have been met and are up to date. The company has further reduced its CBILS facility in 2024. The original CBILS facility was £3.5M, and this had been reduced to £272K at the balance sheet date. The company has now managed to secure preferential repayment terms for the balance. The company has now also repaid the “cash backing” of the CBILS facility of £500K to the owner.
The business has operational and financial reporting procedures, supported by appropriate key performance indicators, to manage the business and any risks that may exist. The principal key performance indicators used by management to monitor performance are as follows:
1. Safety Performance
2. Revenue
3. EBIT (Earnings before Interest and Tax)
4. Debtor Days / Cash Collection
We measure safety performance over a number of leading and lagging indicators. Our lost time accident frequency rate, per 100,000 man hours, was 0.00 (2023 – 0.21) There were no lost time accidents in the full year 2024 which is a significant achievement. Our accident statistics are well below the National averages.
Revenues have increased by 38.4% in comparison to the prior year.
EBITDA has increased from £2,527k to £4,190k and EBIT has increased from £2,202k to £3,769k.
Average debtor days for the year are 89 days compared with customer credit terms of 60 days.
Going concern
The directors have assessed that the actions and strategies available to them mitigate business threats, the forecasts demonstrated that the group could operate within its available funding arrangements. Therefore, as there is a reasonable expectation that the group has adequate resources to continue in operational existence for the foreseeable future, the directors have concluded this does not represent a material uncertainty with regards to going concern.
Thus, the financial statements have been prepared on a going concern basis which presumes the realisation of assets and liabilities in the normal course of business. Under this scenario the company still has significant cash headroom which will allow for further external factors to impact upon it and still enable it to discharge its liabilities as they become due. A reverse stress test is not considered appropriate given the headroom in place. There is of course a credit risk associated with the company’s debtor book but the Board has identified this issue as utmost priority and has put steps in place to collect it.
Based on the above, the directors are confident that the actions and strategies in place, results in the company being able to mitigate business threats as they arise.
Contractual relations
The company agrees payment terms with its suppliers when it enters into binding purchase contracts. The company seeks to abide by the payment terms agreed with suppliers whenever it is satisfied that the supplier has provided the goods or service in accordance with the agreed terms and conditions.
The company does not have a standard or code which deals specifically with the payment of suppliers. The number of days billing from suppliers outstanding at the year-end was approximately 50 days (2023: 50 days).
On behalf of the board
The directors present their annual report and financial statements for the year ended 31 December 2024.
The results for the year are set out on page 9.
Interim dividends of £200,000 were paid in the year. The directors do 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:
Liquidity risk is the risk that the company will not be able to support its own working capital requirement and that the company will encounter difficulty in meeting its financial obligations as they fall due.
The Board receives rolling 12-month cash flow projections on a weekly basis as well as information regarding cash balances. At the end of the financial year, these projections indicated that the company will have sufficient liquid resources to meet all reasonable expected obligations as they fall due.
Credit risk is the risk of financial loss to the company if a customer or counterparty to a financial instrument fails to meet its contractual obligations. The company is mainly exposed to credit risk from credit sales. It is company policy to assess the credit risk of new customers before entering contracts. Such credit ratings are taken into account by local business practices. Each new customer is analysed individually for creditworthiness before the company’s standard payment and delivery terms and conditions are offered. Purchase limits are established for each customer, which represents the maximum open amount without requiring approval.
A monthly review of the trade receivables' ageing analysis is undertaken and customers' credit is reassessed periodically.
Information concerning employees and their remuneration is set out in notes 6 and 7 to the financial statements.
It is the policy of the company to communicate with employees on matters of mutual interest, including health and safety, and to keep them informed about group affairs. Information is provided by various means.
It is also the company’s policy to encourage the employment, training and career development of disabled persons. If employees become disabled, every effort is made for them to continue in employment or receive appropriate training. In order to safeguard its employees, the company pursues a policy which seeks to achieve, as far as practicably possible, secure working environments, and has achieved accreditation to ISO 9001 for all operating divisions. The company undertook 327 training days of our employees this year to both maintain and further enhance the skill set of employees to meet the demands of the business.
JS. Audit Limited were appointed as auditor to the company 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.
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; 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.
This report has been prepared in accordance with the provisions applicable to companies entitled to the medium-sized companies exemption.
We have audited the financial statements of Palmers Scaffolding UK Limited (the 'company') for the year ended 31 December 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 and 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 sector, we identified that the principal risks of non-compliance with laws and regulations related to, but were not limited to, the Companies Act 2006, UK tax, employment, pension and health and safety legislation 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.
We evaluated management’s incentives and opportunities for fraudulent manipulation of the financial statements (including the risk of override of controls) and determined that the principal risks were related to management bias in accounting estimates and judgements and the risk of fraud in revenue recognition.
Our procedures to respond to risks identified included the following:
reviewing the financial statement disclosures and testing to supporting documentation to assess compliance with provisions of relevant laws and regulations described as having a direct effect on the financial statements;
enquiring of management about actual and potential litigation and claims, their policies and procedures to prevent and detect fraud as well as whether they have knowledge of any actual, suspected or alleged fraud;
performing analytical procedures to identify any unusual or unexpected relationships that may indicate risks of material misstatement due to fraud;
obtaining an understanding of provisions and holding discussions with management to understand the basis of recognition or non-recognition of tax provisions;
in addressing the risk of fraud through management override of controls: testing the appropriateness of journal entries; assessing whether the accounting estimates, judgements and decisions made by management are indicative of a potential bias; and evaluating the business rationale of any significant transactions that are unusual or outside the normal course of business.
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 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 directors and other management and the inspection of regulatory and legal correspondence, if any. Material misstatements that arise due to fraud can be harder to detect than those that arise from error as they may involve deliberate concealment or collusion.
A further description of our responsibilities 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.
Palmers Scaffolding UK Limited is a private company limited by shares incorporated in England and Wales. The registered office is International House, Aviation Park, Flint Road, Saltney Ferry, Chester, CH4 0GZ.
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 financial instruments not measured at fair value; 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 33 ‘Related Party Disclosures’: Compensation for key management personnel.
The financial statements of the company are consolidated in the financial statements of Innovative Scaffold Services Limited. These consolidated financial statements are available from Companies House, Crown Way, Cardiff CF14 3UZ.
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 credited or charged to profit or loss.
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.
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 and loans from fellow group companies 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.
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.
In preparing these financial statements, the directors have made the following judgements:-
Amounts recoverable on contracts have been reviewed on a contract by contract basis. The contracts have been assessed using estimated selling prices and costs to complete the projects.
Trade debtors are reviewed for recoverability with provisions being made for bad or doubtful debts based upon market conditions, historical data and up to date credit rating data.
The estimated useful life of tangible fixed assets have been reviewed by the directors, based on past experience, to arrive at the appropriate depreciation rates
disclosed in note 1.4.
A deferred tax asset has been recognised on the basis that the directors believe it is probable that it will be recovered within the next 12 months. This assessment is based on management's expectations and review of forecasted trading results for a 12 month period.
The potential charge in respect of the share based payment has been determined on the basis of management's assessment of the likely exercise date of the share options, taking into account the terms and conditions of the related share scheme.
Turnover arises from services supplied in the United Kingdom. All turnover and profits are derived from the supply of industrial services which, in the opinion of the directors, constitutes one class of business.
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 2 (2023 : 2).
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:
The company has an unprovided deferred tax asset of £4,220,530 (2023: £5,295,664) in respect of tax losses and timing differences which may be relievable in future years.
The net carrying value of tangible fixed assets includes the following in respect of assets held under finance leases or hire purchase contracts:
The impairment loss recognised in the Statement of Comprehensive Income for the year in respect of bad and doubtful trade debts was £156,021 (2023: £54,945).
See note 25 to the financial statements, Financial commitments, guarantees and contingent liabilities in respect of security against loans.
The Coronavirus Business Interruption Loan Scheme loan incurs interest at a rate of 3% pa over base rate. The interest is paid separately to the capital on a quarterly basis. The other bank loan incurs interest at a fixed rate of 6.09% and is being paid monthly. Capital is being repaid monthly on both loans.
Loans from related parties were repaid in full during the year and interest of £1,973 was charged.
Finance lease payments represent rentals payable by the company for certain items of plant and machinery. Leases include purchase options at the end of the lease period, and no restrictions are placed on the use of the assets. The average lease term is 18 months. All leases are on a fixed repayment basis and no arrangements have been entered into for contingent rental payments.
The following are the major deferred tax liabilities and assets recognised by the company and movements thereon:
The deferred tax asset set out above is expected to reverse within 12 months and relates to the utilisation of tax losses against future expected profits of the same period.
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 amounting to £65,150 (2023: £201,706) were payable to the scheme at the year end and are included in creditors.
On 14 March 2024 the company utilised its other reserve to issue 40,250,000 ordinary £1 shares at par. On the same day the company cancelled and extinguished 40,250,000 ordinary £1 shares with the credit being allocated to profit and loss reserves.
The share premium account arose from the excess received on shares issued and fully paid in previous years and was non-distributable. On 14 March 2024 the share premium account of the company was cancelled and credited to the profit and loss reserve.
The other reserve represented intercompany loan amounts forgiven by the company's previous ultimate parent company over a number of years which have been classified as capital contributions.
On 14 March 2024 this reserve was capitalised to issue 40,250,000 ordinary £1 shares at par.
The profit and loss account represents cumulative profits less distributions to shareholders.
Mr C C Butt, a director, holds a fixed and floating charge over the company's property and assets dated 16 January 2017.
The company's bankers, National Westminster Bank plc hold a fixed and floating charge over the company's assets dated 1 May 2020.
The other bank loan advanced by IFW Debt LP is secured by a debenture dated 22 December 2023, a personal guarantee from Mr C C Butt, a director, and a guarantee from the parent company, Innovative Scaffold Services Limited.
At the reporting end date the company 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 exemption under FRS 102 not to disclose transactions or balances with other group companies.
The company has the following balances and transactions with companies related by common directors:
Balances due from related companies totalled £402,317 as at 31 December 2024 (2023: £20,909).
Balances due to related parties totalled £24,400 as at 31 December 2024 (2023: £395,371).
The company loaned an amount of £38,884 to one of the directors during the year. This amount was outstanding at the balance sheet date and no interest has been charged.
As disclosed in note 25, Mr C C Butt, a director, has provided a personal guarantee in respect of one of the company's loans.