The directors present the strategic report for the year ended 31 December 2024.
BCEGI Holdings (UK) Limited (referred to as "the Group") is a UK construction and infrastructure business. Our strategy has remained consistent throughout our years, with our focus on long term frameworks that allows us to build meaningful relationships with our key customers, and this strategy is reviewed on an annual basis to test its effectiveness. The Group works for private and public sector customers on projects and framework and the activities range from small work to the design and delivery of construction projects and we do not expect this to change in the foreseeable future.
This year has been particularly challenging for the Group, with financial results being significantly impacted by a small number of loss making projects, the Group has taken a series of responsive measures, including changes to the Board of Directors, reductions in management fees and other overheads, and a focus on improving profitability, all aimed at securing a stronger and more sustainable future. The Directors emphasise that, with the strong backing and continued support of the Parent Company, BCEGI has a solid platform for future development. With this support, we are confident that performance will improve and the business will move towards a brighter future and a more stable outlook.
During the period, the Group continued to experience the disruptive effects of a number of external factors impacting the construction industry. These included the ongoing impact of post COVID-related delays, geopolitical volatility affecting supply chain pricing and availability, the high inflationary pressures experienced across the UK in recent years, and the well-documented labour shortages across the country. A small number of construction projects were severely impacted by the factors above, resulting in the need to book provisions in the accounts. We are engaging positively with our clients to minimise the financial impact of these loss-making projects and to seek recovery of the provisional losses that have been recognised.
Looking ahead, our continued focus on frameworks and identifying clients with multiple opportunities to create a sustainable pipeline of work to support the continued growth of the Group. While uncertainties still exist, the outlook for the years ahead remains positive.
For the coming year all the projects are in hand as well as new tenders under consideration. All activity is underpinned by the Groups uncompromising focus on embedding its safety culture across all operations and its philosophy of perfect delivery, aligned with a commitment to drive industry standards in innovation and sustainability.
The Group continues to develop and seek further opportunities in the North-West and North-East regions, in both residential and commercial buildings. The company continues to focus on internal controls to maintain and improve margins where possible as well as ensuring that organic growth is achieved in a well-managed and controlled manner.
Further IT developments and systems improvements are coming into the business and will assist in further enhancing performances. We will focus on developing our market presence maximising return on capital employed. The business will focus on growing by working with clients and partners whom we believe we can add mutual value.
Financial postition
The results of the Group as set out on page 15 show a loss on ordinary activities before taxation of £-5,582,750 (2023: £-8,525,929). The shareholders' funds for the Group total £-16,769,231 (2023: £-11,186,481)
Key performance indicators
The Group's financial key performance indicators are described in the business review above. No other key performance indicators are deemed necessary to explain the development, performance or position of the Group. The Key financial performance indicators used within the business are Revenue, Number of projects, Number of clients, Gross margins, Debtor days and Cash generation.
Principle risks and uncertainties
The management of the business and the execution of the Group's strategy are subject to a number of risks. The key business risks are uncertainties affecting the Group and are considered to relate to the market and economic environment, Brexit, inflation, health and safety, contractual risk (including mispricing of contracts, managing changes to contracts and contract disputes, poor project delivery and poor contract selection) and liquidity risks.
Contract risk
The key risks are the general market conditions which accompany the construction sector, loss making projects and ensuring the retention and recruitment of our employees with the appropriate skills. A more focused approach to work winning has been implemented which is vital in such challenging market conditions. Further strengthening of risk management procedures and processes, particularly in relation to certain types of work has contributed to progressing the target of reducing/eliminating loss making contracts. Action has been taken to ensure that all key positions at the business are occupied by employees with required level of skills. Skill shortages and material price inflation continues to present challenges in the current marketplace and need to manage in the tender and procurement process as well as in the delivery of contracts undertaken.
Financial risk management and objectives policies
The Group's operations expose it to a variety of financial risks that include credit risk, liquidity risk, interest rate and price risk.
Price risk
The Group has no exposure to equity securities price risk as it holds no listed or other equity investments. We also work closely with clients and suppliers on a project by project basis to manage any price fluctuations. The directors will revisit the appropriateness of this policy should the Group's operation change in size or nature.
Inflation Risk
The present value of the liabilities is calculated by reference to a best estimate of future inflation. If inflation turns out to be higher than this estimate, then the deficit will increase.
Currency risk
The Group has minimum exposure to currency risk as our key sub-contractors are mainly UK based and contracts are in Sterling.
Liquidity risk
This is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group aims to manage liquidity by ensuring that it will always have sufficient resources to meets its liabilities when they fall due, under both normal and stress conditions, without incurring unacceptable losses or risking damage to the Group's (Ultimate Parent's) reputation. As the Group continues to receive financial support from the ultimate Parent Company in Beijing, China, liquidity risk is low as the Parent Company remains supportive and committed through cash advances and access to loan facilities.
Credit risk
With regard credit risk the Group has implemented policies that require appropriate credit checks on all potential and existing customers before contracts are commenced. Clients for our current projects are all reputable large organisations who we have very good working relationships with, which proves to be valuable in understanding and managing credit risk.
Interest rate and cash flow risk
The Group has both interest bearing assets and interest bearing liabilities. Interest bearing liabilities include bank loans. The Group manages interest rate risk and cash flow risk by actively monitoring its cash requirements through regular forecasts to ensure sufficient cash is available.
Cyber Security and GDPR
The directors acknowledge the potential threat that poor levels of cyber security could present, this could impact on our ability to both deliver our projects and our reputation as a trusted brand. Robust controls and procedures are in place to help mitigate these issues, including continual review of our IT infrastructure and data protection procedures and a whole staff training programme to raise awareness of the potential risks.
The directors, in line with their duties under section 172 of the Companies Act 2006, in promoting the long-term success of the Company for the benefits of all stakeholders. The following disclosure describes how the directors have had regard to the matters set out in section 172(1)(a) to (f) and forms the directors statement required under the section 414 CZA of the Companies Act 2006.
Stakeholders
The directors consider its shareholder, employees, customers, suppliers and local communities to be its core stakeholder groups. As part of its ongoing activities of engaging with stakeholders, the directors have undertaken the following activities in 2024.
Shareholder
Our ultimate shareholder is the Group. We create value for the Group by generating sustainable results which will ultimately translate into dividends. We present our performance in monthly summaries to the board. The directors routinely engage with the Group on topics of strategy, governance and performance and our strategic plans including information on the impact on each f our stakeholders including the community and environment.
Customers
One of our core values is "the customer comes first", this is underpinned by our perfect delivery approach, the cornerstone of this is to develop a customer charter for each project which gives clarity around our customers objectives, ensuring we focus on these at all times and working quickly to resolve any isolated disagreements that may arise from time to time.
Suppliers
Our suppliers and subcontractors are critical to our operations, and we take a long-term collaborative approach to working with them. During the year we have undertaken various events around the country to engage with our suppliers, including sharing with them our strategy and pipeline of work. We have also focused heavily on improving our payment record with our suppliers to ensure that we are meeting and if not exceeding the statistics shown by the government on an annual basis of the Prompt Payment code target of 95%. The Company has targets of a minimum of 70% subcontractors and materials order to be placed within 30 miles of the project, recognising the need to ensure strong supply chains and to support the local economy.
Employees
Our employees are at the forefront of our business. We are proud of our people who have the passion, commitment and range of expertise we need to support and make a difference for our clients. Our key priority is to provide our employees with a fair, respectful and safe environment in which to work, have regard for their health and well-being, invest in their personal development and career progression and create an open and honest cultures that promotes diversity and inclusion. Our employee policies are designed to support these goals and consideration of external legislation, our Code of Conduct and our Core Values so that we can continue to recruit, develop and retain the talent needed to deliver our strategy.
Training and development opportunities are regularly discussed at personal development reviews, and staff are encouraged to pursue mentoring opportunities and further qualifications within their specialist areas.
Over the past 12 months, our ongoing initiatives have steadfastly prioritized employee health and safety, as well as mental health and wellbeing, particularly as colleagues transitioned from extended remote work and society gradually returned to renewed normalcy. The mental health awareness training highlighted in last year’s reporting remains fully accessible to all employees, reinforcing our commitment to sustaining this vital support.
Applications for employment by disabled persons are always fully considered, bearing in mind the respective aptitudes and abilities of the applicant concerned. In the event of members of staff becoming disabled every effort is made to ensure that their employment with the Company continues and the appropriate training is arranged. It is the policy of the Company that the training, career development and promotion of a disabled person should as far as possible, be identical to that of a person who does not suffer from a disability, and will continue to do so as the directors believe that a truly diverse and inclusive workplace will ultimately benefit this company moving forward.
We recognise that diversity of thought, perspectives and experiences drive innovation and provides a competitive advantage and therefore ensure that our employment practices promote a diverse and inclusive work environment. We are committed to creating opportunities for career growth and building a continuous learning culture for all of our employees.
We will continue to invest in our people and seek to be recognised as a leading employer in our sector. Staff developments through investment in both vocational and professional skills have been essential in recruiting, maintaining, and retaining an experience workforce. We believe that the skills and competences of our people are crucial for the continued success of the business and will continue to invest in our development programs. Our aim is to develop a market leading capability and be recognised as a leading employer.
The company recognises the need to ensure effective communication with employees and focuses on three key methods of engagements: virtual briefings, leadership briefings and through in-house newsletters and intranet updates. We have adapted our ways of working to enhance the level of communication and engagement, and continued to focus on adaptable working and employee wellbeing.
BCEGI is committed to acting ethically and with integrity in delivering its business operations and maintains a zero-tolerance approach to Modern Slavery and Human Trafficking. By encouraging transparency within its relationships with its clients and its suppliers and subcontractors BCEGI aims to prevent any opportunity for modern slavery to occur within its supply chain, including servitude, forced or compulsory labour and human trafficking as defined within the Modern Slavery Act 2015.
Health, safety and wellbeing
Within the business of construction, the company undertakes activities that have the potential to cause injury or hazards to our workforce, site visitors, member of the public and the environment. To minimise risk, reputational damage or potential liability we work to stringent policies and procedures, which are regularly reviewed.
Continual investment in health, safety and welfare has been a priority for the group this year and will continue to do so in future years as all our workforce and those affected by our activities are fundamental to the success of our business. We promote a health and safety ethos which is fully integrated into our management system and decision-making process by:
Providing strong and active leadership;
Providing a safe and healthy working environment;
Identifying hazards, eliminating the risk where reasonably practicable and implementing robust management arrangements to control those risks which remain;
Providing information, instructions, training and supervision to enable the safe performance of all our operations and activities; and
Maintaining effective systems to enable communications and consultations with our workforce, our suppliers, our subcontractors and other interested parties.
Our workforce must be diligent in taking reasonable care for health, safety and wellbeing of themselves and of other who may be adversely affected by their actions or neglect. Everyone has an individual responsibility to challenge unsafe practices, report unsafe conditions and comply with all health and safety requirements. We are committed to preventing injuries and the protection of health and wellbeing buy driving improvements, creating innovation and challenging conventional views and practices.
We bring this policy to the attention of all our Employees, our subcontractors, partners and other interested parties, as collectively their support and professionalism is essential in making it truly effective.
Our number one priority in the business has always been health and safety, where historically this has focused on physical wellbeing. The directors recognise the impact of potential mental health issues especially given poor statistics in our industry. Therefore, we have sought to promote health awareness across our employees as well encouraging several employees to train as mental health first aiders.
We bring this policy to the attention of all our Employees, our subcontractors, partners and other interested parties, as collectively their support and professionalism is essential in making it truly effective.
Our number one priority in the business has always been health and safety, where historically this has focused on physical wellbeing. The directors recognise the impact of potential mental health issues especially given poor statistics in our industry. Therefore, we have sought to promote health awareness across our employees as well encouraging several employees to train as mental health first aiders.
Communities
We consult local communities impacted by our proposed developments to find out any concern they may have. During 2024, we have engaged with the local communities close to where we work in a number of ways, including local community sessions to discuss plans, project updates via post drops and e-newsletters as well as visits to schools and other charity funded organisations to build engagement. We also ensure that our website, project specific microsites and social media presence promotes the value and reasons why we are working in the area to encourage people to get in touch if they have any concerns.
Principle decisions
We define principal decisions as those that are material to the Company and to the Group and those that are significant to our key stakeholder groups as above. We have given examples of how the directors have considered the outcomes from our stakeholders’ engagements as well as the need to maintain the Company's reputation for high standards of business conduct and to act fairly between the members of the Company in some of the principle decision we have taken during the year.
We continued to promote adaptable working to support the wellbeing of our people utilising the technology we have embedded in our organisation and encouraging engagement as part of our culture and values.
As stated above a significant amount of our workload is undertaken through long term frameworks, for customers typically in the public or private sectors. As part of the procurement process for securing these frameworks there is normally a lot of emphasis on how we engage with our employers, suppliers and the local communities we work in.
On behalf of the board
The directors present their annual report and financial statements for the year ended 31 December 2024.
There were no interim dividends paid in the current or prior period. The directors do not recommend the payment of a final dividend (2023: £nil).
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
Any relevant information relating to events since the end of the year is given in the notes to the financial statements.
The business has developed a strategic road map detailing how we will operate and identifying the markets in which we believe we can add the most value. The directors have identified the key investments and the areas of focus.
We will focus on developing our market presence as well as working with clients and partners with whom we believe we can add mutual value and together build a strong brand internationally. We will continue to invest in our people seeking to be recognised as a leading employer in our sector.
We will continue our focus on developing innovative solutions, working in partnership with like-minded organisations and we will seek to develop alternate intelligent solutions to business challenges.
DJH Audit Limited, have expressed their willingness to be appointed as auditors of the company. A resolution was proposed at the Annual General Meeting to appoint DJH Audit Limited as the auditors of the company.
Following the introduction of the new Streamlined Energy and Carbon Reporting framework, the directors represent their energy consumption and emissions for the financial year below.
To allow for accurate and representative data to include with our Streamline Energy and Carbon Reporting and wider carbon footprint monitoring, strategic procedures continue to determine appropriate calculations for the data disclosure. The following methodologies were used to ensure verifiable data was obtained where reasonably practicable :
Electricity and Water: meter reading data for fixed office locations were obtained directly from the supplier, accessed from invoices provided. At construction sites with an electrical supply, we install electricity meters and where possible smart meters to temporary or permanent supplies feeding site operations, site management personnel submit KWH meter readings through the site diaries on a monthly basis with all the data being gathered by the SHEQ (Safety, Health, Environmental & Quality) team who verify and convert to carbon footprint.
Transport fuel: Consumption is calculated from vehicle mileage records for vehicles owned by the individuals who are using personal vehicles for business purposes. Mileage covered is converted into kwh data using recognised conversion factors, which then allows a carbon conversion factor per kwh to be applied.
Fuel: Site management teams submit a record of fuel used in litres in site diaries on a monthly basis with all the data being gathered by the SHEQ team who verify and convert to carbon footprint.
The chosen intensity measurement ratio is total gross emissions in metric tonnes CO2e per £1,000 of revenue.
Environment
The Group is committed to sustainable practices that minimise our impact, protect and enhance the environment and create a positive legacy for future generations. We proactively work with our colleagues, clients, supply chain and interested parties to ensure our environmental expectations are managed in that everyone working with us will:
Identify and control environmental risks through effective measures in a sustainable manner;
Provide leadership and ensure effective communication and awareness on environmental matters;
Encourage, promote and adopt environmental best practices across our operations;
Comply with all applicable legal requirements and continually seek new improved initiatives; and
Remain focused on technological innovations and change management to assist in meeting or exceeding the requirements.
We aim to achieve continual improvement through:
Effective leadership, consistent management reviews, leadership engagement and objective and target reviews;
Planning and evaluation reviews of environmental impacts and aspects and supporting requirements through competent resources;
Being conscious of the environment both within and out with our immediate operational areas, proactively preventing pollution and maintaining preparedness for emergency situations;
Providing support and training to our employees and supply chain to encourage and achieve best practice; and
Promoting efficient use of resources by challenging designers to ensure the most efficient use of energy water or materials.
We bring this policy to the attention of all our employees, all business within the Group, our supply chain and other interested parties, as collectively their support and professionalism is essential in making it truly effective.
We have adopted a local sourcing policy where possible to reduce the carbon emission associated with travel to our projects, we aim to source 70% of subcontract and material trade packages by value within 30 miles of a site.
We have systematically adopted the Group's working attitude and behavior to allow for a more sustainable working pattern, in line with reducing our energy usage of a company. These adjustments include; reduce our business travel facilitated through virtual communication, flexible working, such as remote working from home has been encouraged to increase production whilst reducing emissions.
The Group has chosen in accordance with Companies Act 2006, s414C (11) to set out in the group's strategic report information required by Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008, Sch.7 to be contained in the directors' report.
We have audited the financial statements of BCEGI Holdings (UK) 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 and parent company statement of financial position, the group and parent company statement of changes in equity, the group statement of cash flows and the group and parent company notes to the financial statements, including significant accounting policies.
The financial reporting framework that has been applied in their preparation is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union and as regards the parent company financial statements, as applied in accordance with the provisions of the Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the group and parent company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the group's and company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
Other information
The other information comprises the information included in the annual report other than the financial statements and our auditor's report thereon. The directors are responsible for the other information contained within the annual report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of 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.
In the light of the knowledge and understanding of the group and parent company and their environment obtained in the course of the audit, we have not identified material misstatements in the strategic report and the directors' report.
We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion:
adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received from branches not visited by us; or
the parent company financial statements are not in agreement with the accounting records and returns; or
certain disclosures of directors' remuneration specified by law are not made; or
we have not received all the information and explanations we require for our audit.
As explained more fully in the directors' responsibilities statement, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the group's and parent company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion.
Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
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.
the engagement partner ensured that the engagement team collectively had the appropriate competence, capabilities and skills to identify or recognise non-compliance with applicable laws and regulations;
we identified the laws and regulations applicable to the company through discussions with directors and other management;
we focused on specific laws and regulations which we considered may have a direct material effect on the financial statements or the operations of the company, including legislation such as the Companies Act 2006, taxation legislation, data protection, employment, and health and safety legislation;
we assessed the extent of compliance with the laws and regulations through making enquiries of management and reviewing legal and professional fee invoices and inspecting legal correspondence; and
identified laws and regulations were communicated within the audit team and the audit team remained alert to instances of non-compliance throughout the audit.
We assessed the susceptibility of the company's financial statements to material misstatement, including obtaining an understanding of how fraud might occur, by:
making enquiries of management as to where they considered there was susceptibility to fraud, their knowledge of actual, suspected and alleged fraud; and
considering the internal controls in place to mitigate risks of fraud and non-compliance with laws and regulations.
To address the risk of fraud through management bias and override of controls, we:
performed analytical procedures to identify any unusual or unexpected relationships;
tested journal entries posted during the period and at the period end to identify unusual transactions and agreed to underlying supporting documentation;
investigated the rationale behind significant or unusual transactions; and
performed walkthrough tests on major transaction cycles; and
performed detailed testing relating to the significant accounting estimates.
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;
enquiring of management as to actual and potential litigation and claims;
reviewing correspondence with regulators; and
reviewing legal and professional fees incurred during the period to identify any potential indications of non-compliance with laws and regulations.
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.
BCEGI Holdings (UK) Limited is a private Company, limited by shares and is registered and incorporated in England and Wales under the Companies Act 2006. Its immediate parent company is BCEG International (HK) Co, Ltd, Incorporated in Hong Kong, and the ultimate holding company is Beijing Construction Engineering Group Co Ltd, a company Incorporated in The Peoples Republic of China. Its ultimate controlling part is the State-owned Assets Supervision and Administration Commission of the State Council, the People's Republic of China.
The smallest Group to which the results of the company were consolidated was headed by BCEGI Holdings (UK) Limited and all its subsidiaries. The largest Group to which the results of the Company were consolidated was headed by Beijing Construction Engineering Group Co Ltd.
The Company's and the Group's principal activities and nature of its operations are disclosed in the Directors report.
These financial statements are presented in sterling (£) which is the Company's and the Group's functional and presentational currency. Monetary amounts in these financial statements are rounded to the nearest £.
Accounting convention (continued)
In these financial statements the company has applied the exemptions available under IFRS in respect of the following disclosures:
Disclosures in respect of transactions with wholly owned subsidiaries;
Certain disclosures required by IFRS 15 Revenue from Contract Customers in respect of information regarding the company's contracts with its customers, how its revenue is disaggregated, the timing of satisfaction of performance obligation and the transactions price to be allocated to remaining performance obligations.
The cost of a business combination is the fair value at the acquisition date of the assets given, equity instruments issued and liabilities incurred or assumed, plus costs directly attributable to the business combination. The excess of the cost of a business combination over the fair value of the identifiable assets, liabilities and contingent liabilities acquired is recognised as goodwill.
The cost of the combination includes the estimated amount of contingent consideration that is probable and can be measured reliably, and is adjusted for changes in contingent consideration after the acquisition date.
Provisional fair values recognised for business combinations in previous periods are adjusted retrospectively for final fair values determined in the 12 months following the acquisition date.
The consolidated group financial statements consist of the financial statements of the parent company BCEGI Holdings (UK) Limited together with all entities controlled by the parent company (its subsidiaries) and the group’s share of its interests in joint ventures and associates.
All financial statements are made up to 31 December 2024. Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with those used by other members of the group.
All intra-group transactions, balances and unrealised gains on transactions between group companies are eliminated on consolidation. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.
Subsidiaries are consolidated in the group’s financial statements from the date that control commences until the date that control ceases.
Revenue (continued)
Revenue is measured based on the consideration specified in a contract with a customer. Where consideration is not specified within the contract and therefore subject to variability, the Company estimates the amount of consideration to be received from its customer. The consideration recognised is the amount which is highly probable not to result in a significant reversal in future periods.
Where a modification to an existing contract occurs, the Company assesses the nature of the modification and whether it represents a separate performance obligation is required to be satisfied or whether it is a modification to the existence of performance obligation.
The Company's activities are wide-ranging, and as such, depending on the nature of the service delivered and the timing of when the control is passed to the customer, the company will account for revenue over time and at a point of time. Where revenue is measured over time the input method is used to measure progress of delivery.
Depreciation is recognised so as to write off the cost of assets less their residual values over their useful lives using the straight line and reducing balance. The estimated useful lives, residual values and depreciation method are reviewed at the end of each reporting period, with the effect of any changes in estimate accounted for on a prospective basis. Depreciation is charged on the following basis:
An item from plant and equipment is derecognised upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on the disposal or retirement of an item from plant and equipment is determined as the difference between the sale proceeds and the carrying amount if the asset and is recognised in the statements of comprehensive income.
Interests in subsidiaries, associates and jointly controlled entities are initially measured at cost and subsequently measured at cost less any accumulated impairment losses. The investments are assessed for impairment at each reporting date and any impairment losses or reversals of impairment losses are recognised immediately in profit or loss.
Investment in subsidaries
A subsidiary is an entity controlled by the parent company. Control is the power to govern the financial and operating policies of the entity so as to obtain benefits from its activities.
Investment in associates
An associate is an entity, being neither a subsidiary nor a joint venture, in which the group holds a long-term interest and has significant influence. The group considers that it has significant influence where it has the power to participate in the financial and operating decisions of the associate.
Investments in joint arrangements
Investments are initially recorded at cost, based on level of contributions made to partnership capital, and subsequently stated at costs less any accumulated impairment losses.
Non financial asset impairment
Non financial assets are assessed annually for any indicators of impairment. Where indicators of impairment are identified the Directors undertake a detailed impairment assessment. As part of the impairment assessment the recoverable amount of non financial assets is assessed based on the higher of value in use of fair value less cost to dispose. Where the recoverable amount is determined by the Directors is less than the carrying value of the difference is recognised as an impairment charge within profit or loss. In future periods, where evidence exists that the factors that resulted in the impairment have changed, the impairment losses previously recognised may be reversed. Any reversal of impairment losses will be restricted as such that the carrying value does not exceed the amount recognised prior to the recognition of the impairment.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.
Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.
The Group derecognises a financial asset when the contractual rights to the cash flow from the asset expire or are settled, or when it transfers the financial asset substantially all the risks and rewards of ownership to another entity. If the Group neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Group recognises its retained interest in the asset and an associated liability for amounts it may have to pay. If the group retains substantially all the risks and rewards of ownership of a transferred asset, the Group will continue to recognise the financial asset and also recognises a collateralised borrowing for proceeds received.
On derecognition of a financial asset in its entirety, the difference the asset's carrying amount and the sum of the consideration received and receivables and the cumulative gain or loss that had been recognised in other comprehensive income and accumulated in equity is recognised in profit or loss.
On derecognition of a financial asset other than its entirety (e.g. when the Group retains an option to repurchase part of a transferred asset) the group allocates the previous carrying amount of the financial asset between the part it continues to recognise under continuing involvement, and the part it no longer recognises on the basis of the relative fair values of those parts on the date of the transfer. The difference between the carrying amount allocated to the part that is no longer recognised and the sum of the consideration received for the part no longer recognised and any cumulative gain or loss allocated to it that had been recognised in other comprehensive income is recognised in profit or loss.
The group recognises financial debt when the group becomes a party to the contractual provisions of the instruments. Financial liabilities are classified as either 'financial liabilities at fair value through profit or loss' or 'other financial liabilities'.
Debt and equity instruments issued by a Group entity are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument.
Other financial liabilities (including borrowings and trade and other payables) are subsequently measured at amortised cost using the effective interest method.
The effective interest method is a method of calculating the amortised cost of financial liability and allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments (including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the financial liability, or (where appropriate) a shorter period, to the net carrying amount on initial recognition.
The Group derecognises financial liabilities when, and only when, the Group's obligations are discharged, cancelled or have expired. The difference between the carrying amount of the financial liability is derecognised when the consideration is paid or payable is recognised in the statement of comprehensive income.
An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued by a Group entity are recognised at the proceeds received, net of direct issue costs.
Repurchase of the Group's own equity instruments is recognised and deducted directly in equity. No gain or loss is recognised in profit or loss on the purchase, sale, issue or cancellation of the company's own equity instruments.
The tax expense represents the sum of the tax currently payable and deferred tax.
The Company assesses at inception whether the contract is, or contains, a lease. A lease exists if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. The Company assessment includes whether:
the contract involves the use of an identified asset;
the company has the right to obtain substantially all of the economic benefits from the use of the asset throughout the contract period; and
the company has the right to direct use of the asset.
At the commencement of a lease, the Company recognises a right-of-use asset along with a corresponding lease liability.
The lease liability is initially measured at the present value of the remaining lease payments, discounted using the Company's incremental borrowing rate. The lease term comprises the non-cancellable period of the contract, together with periods covered by an option to extend the lease where the Company is reasonably certain to exercise that option. Subsequently, the lease liability is measured by increasing the carrying amount to reflect interest on the lease liability, and reducing it by the lease payments made. The lease liability is remeasured when the Company changes its assessment of whether it will exercise an extension or termination option.
Right-of-use assets are initially measured at cost, comprising the initial measurement of the lease liability, plus any initial direct costs and an estimate of asset retirement obligations, less any lease incentives. Subsequently, right-of-use assets are measured at cost, less any accumulated depreciation and any accumulated impairment losses, and are adjusted for certain re-measurements of the lease liability. Depreciation is calculated on a straight-line basis over the length of the lease.
Right-of-use assets are presented within non-current assets on the face of the statement of financial position and lease liabilities are shown separately on the statement of financial position in current liabilities and non-current liabilities depending on the length of the lease term.
The lease liability is initially measured at the present value of the lease payments that are unpaid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the group's incremental borrowing rate. Lease payments included in the measurement of the lease liability comprise fixed payments, variable lease payments that depend on an index or a rate, amounts expected to be payable under a residual value guarantee, and the cost of any options that the group is reasonably certain to exercise, such as the exercise price under a purchase option, lease payments in an optional renewal period, or penalties for early termination of a lease.
The lease liability is measured at amortised cost using the effective interest method. It is remeasured when there is a change in: future lease payments arising from a change in an index or rate; the group's estimate of the amount expected to be payable under a residual value guarantee; or the group's assessment of whether it will exercise a purchase, extension or termination option. When the lease liability is remeasured in this way, a corresponding adjustment is made to the carrying amount of the right-of-use asset, or is recorded in profit or loss if the carrying amount of the right-of-use asset has been reduced to zero.
The Company has elected to apply exemptions for short-term leases and leases for which the underlying asset is of low value. For these leases, payments are charged to the income statement on a straight-line basis over the term of the relevant lease. For the period of review, payments charged to the income statement relating to leases were not material.
BCEGI Holdings (UK) Limited is a private Company, limited by shares and is registered and incorporated in England and Wales under the Companies Act 2006. Its immediate parent company is BCEG International (HK) Co, Ltd, Incorporated in Hong Kong, and the ultimate holding company is Beijing Construction Engineering Group Co Ltd, a company Incorporated in The Peoples Republic of China. Its ultimate controlling part is the State-owned Assets Supervision and Administration Commission of the State Council, the People's Republic of China.
The smallest Group to which the results of the company were consolidated was headed by BCEGI Holdings (UK) Limited and all its subsidiaries. The largest Group to which the results of the Company were consolidated was headed by Beijing Construction Engineering Group Co Ltd.
The Company's and the Group's principal activities and nature of its operations are disclosed in the Directors report.
These financial statements are presented in sterling (£) which is the Company's and the Group's functional and presentational currency. Monetary amounts in these financial statements are rounded to the nearest £.
These financial statements have been prepared in accordance with International Financial Reporting Standards, (IFRS) as adopted for use in the European Union (EU), including International Accounting Standards (IAS) and interpretation issued by the International Financial Reporting Standards Interpretations Committee (IFRS IC) and the Companies Act 2006 applicable to Companies reporting under IFRS. Further standards may be issued by the International Accounting Standards and standards currently in issue and endorsed by the EU may be subject to interpretations issued by the IFRS IC.
The principal accounting policies have been applied consistently and are set out below.
In these financial statements the company has applied the exemptions available under IFRS in respect of the following disclosures:
Certain disclosures required by IFRS 15 Revenue from Contract Customers in respect of information regarding the Company's contracts with its customers, how its revenue is disaggregated, the timing of satisfaction of performance obligation and the transactions price to be allocated to remaining performance obligations.
Further standards may be issued by the International Accounting Standards and standards currently in issue and endorsed by the EU may be subject to interpretations issued by the IFRS IC.
Preparation of consolidated financial statements
The financial statements contain information about BCEGI Holdings (UK) Limited as an individual company and do not contain consolidated financial information as the parent of a group. The company is exempt under Section 400 of the Companies Act 2006 from the requirements to prepare consolidated financial statements as it and its subsidiary undertakings are included by full consolidation in the consolidated financial statements of its parent, BCEGI Holdings (UK) Limited, 807, Spaces, Peter House, Manchester, M1 5AN.
The company applies accounting policies consistent with those applied by the. To the extent that an accounting policy is relevant to both group and parent company financial statements, please refer to the group financial statements for disclosure of the relevant accounting policy.
The directors have at the time of approving the financial statements, a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future. Thus the directors continue to adopt the going concern basis of accounting in preparing the financial statements.
In the current year, the following new and revised standards and interpretations have been adopted by the group and have an effect on the current period or a prior period or may have an effect on future periods:
The company has applied the amendments to the above standards effective during the year and with the adoption of the amended standards do not feel it had a significant effect of the company's financial statements.
At the date of authorisation of these financial statements, the following standards and interpretations, which have not yet been applied in these financial statements, were in issue but not yet effective (and in some cases had not yet been adopted by the EU):
At the time of preparing this report the entity continues to assess the possible impact of the adoption of these standards in future periods and updates will be provided in a future annual report. Given the nature of the transactions in the Group, the initial impact assessment of the new standards is not expected to be significant.
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, if the revision affects only that period, or in the period of the revision and future periods if 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 outlined below.
The Group enters into a fixed price construction contract with its customers. At each reporting date the directors perform an assessment to determine the stage of completion of contracts to determine revenue and costs to be recognised. In addition, the directors assess all contracts to identify potential loss making contracts and where full provision for future losses is required. Assessing stage of completion and the future profitability of construction contracts requires the directors to apply estimates and judgements which could differ from actual results.
Investments in Subsidiary Undertakings and other investment are recorded at cost, which is the fair value of the consideration paid. Investments are assessed annually for indicators of impairment and are carried at cost less accumulated impairment losses. Where an impairment is identified, it is charged to the Income Statement. Investments that suffered an impairment are reviewed for possible reversal of the impairment at each reporting date. The determination of recoverable amounts of investments requires management to make judgements and estimates about the value of future cash flows where estimates could materially differ from actual results.
The Group has been loss making in previous accounting periods therefore judgements have been applied by the directors in assessing the recoverability of deferred tax assets relating to tax losses generated. In determining whether to recognise deferred tax assets for tax losses the directors are required to make estimates and assumptions over future trading performance, which can be subjective.
The average monthly number of persons (including directors) employed by the group during the year was:
Their aggregate remuneration comprised:
The directors of the company received no remuneration from the company during the year.
Total interest income for financial assets that are not held at fair value through profit or loss is £- (2023 - £-).
The charge for the year can be reconciled to the (loss)/profit per the income statement as follows:
The main rate of corporation tax for the 2024 financial year was 25%.
No deferred tax asset has been recognised in respect of material tax losses amounting as it is not considered probable that there will be future taxable profits available. Losses may be carried forward indefinitely.
Property, plant and equipment includes right-of-use assets, as follows:
Depreciation on plant and equipment is recognised in administrative expenses within the statement of total comprehensive income.
The directors consider that the carrying amounts of financial assets carried at amortised cost in the financial statements approximate to their fair values.
The directors consider that the carrying amounts of financial assets carried at amortised cost in the financial statements approximate to their fair values.
The company's investments at the Statement of Financial Position date in the share capital of companies include the following:
BCEG International (UK) Limited
Registered office: England and Wales
Nature of business: Management charges for services
Class of shares: Ordinary
Holding: 100%
BCEGI Construction (UK) Limited
Registered office: England and Wales
Nature of business: Construction
Class of shares: Ordinary
Holding: 100.00%
Airport City Limited Partnership
Registered office: England and Wales
Nature of business: Construction
Class of shares: Partnership share
Holding: 20.00%
Airport City (General Partnership) Limited
Registered office: England and Wales
Nature of business: Construction
Class of shares: Ordinary
Holding: 20%
Airport City (Asset Manager) Limited
Registered office: England and Wales
Nature of business: Construction
Class of shares: Ordinary
Holding: 20.00%
The directors of the Group are satisfied that the carrying value of the investment of £20 (2023: £20) in Airport City Limited Partnership is appropriate as they are confident that over the time of the investment this will generate significant profits for BCEGI Holdings (UK) Limited.
The Group's interest in Airport City (General Partnership) Ltd and Airport City (Asset Manager) Ltd arise through shareholdings in its subsidiary undertakings and are indirectly held.
Details of the company's principal operating subsidiaries are detailed above.
The directors consider that the carrying amount of trade and other receivables is approximately equal to their fair value.
No significant receivable balances are impaired at the reporting end date.
Related parties and group undertakings
Loans from related parties are interest free, unsecured and will not be recalled for at least 12 months. All loans from the related parties are denominated in Sterling
Charges to the profit and loss in respect of defined contribution schemes was £131,077 (2023: £194,999).
The Group 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 £18,539 (2023: £45,383) were payable to the fund at the year end and are included in creditors.
The Group's objective when managing capital are to safeguard the Group's ability to continue as a going concern in order to provide returns for Shareholders and benefits for other stakeholders.
Financial instruments utilised by the company during the year's ended 31 December 2024 and 31 December 2023, together with information regarding the methods and assumptions used to calculate fair values, can be summarised as follows:
Financial assets
The company classifies all financial assets which comprise trade and other receivables (excluding prepayments and accrued income), amounts due from customers under construction contracts and cash and cash equivalents, as loans and receivables.
Financial liabilities
The company classifies all financial liabilities, which comprise trade and other payables (excluding accruals & deferred income and lease incentives), amounts due to customers under construction contracts and borrowings as financial liabilities measured at amortised cost.
2024 2023
Carrying amounts of financial assets £ £
Financial assets measured at amortised cost 6,790,594 12,446,673
Carrying amounts of financial liabilities
Measured at amortised cost 22,448,998 12,285,282
The Group's activities expose it to a variety of financial risks: market risks (including cash flow interest rate risk and fair value interest rate risk), credit risk and liquidity risk. The overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the 's Group's financial performance.
Risk management is carried out by the directors. The directors identify, evaluate and hedges financial risk as appropriate. The directors have written policies covering specific areas, such as foreign exchange risk, interest rate risk, credit risk, use of derivative financial instruments and non-derivative financial instruments, and investment of excess liquidity.
a) Market risk
As the Group has no significant interest-bearing assets, the Group's income and operating cash flows are substantially independent of changes in market interest rates.
The Group's interest rate risk arises from long-term borrowing. Borrowing 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.
b) Credit risk
Credit risk is managed at a Group level. Credit risk arises from cash and cash equivalent and deposits with banks and financial institutions, as well as credit exposure to customers, including outstanding receivables and committed transactions.
For banks and financial institutions, only independently rated parties with a minimum rating of 'A-2' are accepted. If customers are independently rated, these ratings are used. If there is no independent rating, risk control assesses the credit quality of the customer, taking into accounts its financial position, past experience and other factors. Individual risk limits are set based on internal or external ratings in accordance with limits set by the directors. The utilisation of credit limit is regularly monitored.
c) Liquidity risk
Prudent liquidity risk management implies maintaining sufficient cash reserves and maintaining the availability of funding through an adequate amount of committed credit facilities and loans from related parties.
d) Interest rate risk
The Group's interest rate risk arises from borrowings. The Group reviews its exposure to interest rates on a regular basis and borrow from related parties at fixed rates.
The Group's immediate parent company is BCEGI (Hong Kong) Company Limited, incorporated in HK, and a Company which is the parent undertaking of the smallest Group to consolidate these financial statements.
The Group's ultimate parent company is Beijing Construction Engineering Group Co.,Ltd, a Company incorporated and registered in the Peoples Republic of China. Beijing Construction Engineering Group Co, Ltd is the parent undertaken of the largest Group to consolidate these financial statements.
The Group's ultimate controlling party is the State-Owned Assets and Administration Commission of the State Council, The People's Republic of China.
As at 31 December 2024, the Group owed to related parties £17,898,765 (2023: owed to related parties £7,856,887).