The directors present the strategic report for the year ended 31 October 2025.
Introduction
The Knowles Holdings group comprises, Knowles Construction Limited, K Plant Hire Limited and a number of land holding businesses, the most significant of which is, Henley Road Limited. The Group's principal operating business is Knowles Construction Ltd ("KCL"). KCL has three principal divisions; Structures, Country Projects and London Projects, all work closely together sharing common resources.
2025 saw Knowles complete major private residential new build and refurbishment projects in London and the country. The number of projects that the company undertook during the year remained constant. The Board remains focused on seeking out projects which best suit the business's unique combination of subterranean, structural, specialist building and finishes skills. It is anticipated that annual turnover is likely to continue to flex up and down in response to opportunities in the market. The business continues to actively look to win higher value, selected, projects. The company has a strong order book for the year ahead.
KCL continues to create commercial opportunities for the group, notably for K Plant which successfully supports the construction business. K Plant also has a growing number of external clients and has been successful in targeting significant external growth, whilst still servicing KCL. The group’s in-house resources give far greater control over the delivery of our projects in what continues to be a volatile market. It is worth noting that there are no other construction groups in our market who have a comprehensive, long established, in-house subterranean and structures capability as well as offering a complete building, finishing and maintenance service.
The Board remains focused on profitable projects, seeking out opportunities which best suit the group’s unique combination of subterranean, structural, specialist building and finishes skills. The number of projects undertaken at any one time remains relatively constant, however, the business is actively looking to win selected higher value projects. This has resulted the company securing several very significant contracts. With the focus on profitable projects the Board’s strategy is to “flex” turnover in response to opportunities in the market. The group has a good order book for 2025-2026 and beyond.
The business has had another profitable year. Turnover for the year of £69.337m has increased slightly from the previous year (2024: £68.748m), an increase of approximately 1%. Gross margins, however, improved to 10.8% (2024: 8.5%), and gross profit increased to £7.513m (2024: £5.824m).
Operating profit for the year was £2.601m (2024: £2.263m) and profit before taxation was £2.181m (2024: £2.084m). Results for the year do not benefit from the £600,000 of research and development tax credits recognised as other operating income in the prior year. Administrative expenses increased to £4.903m (2024: £4.234m). Profit after taxation was £1.934m (2024: £2.094m).
Net assets increased to £10.430m (2024: £9.391m), after dividends of £895,000 were paid during the year (2024: £1,108,065). Cash at bank at the year end was £4.737m (2024: £5.151m). The Board remains focused on carefully managing overheads and on delivering a profit above the industry norm.
Financial Risk
In common with all construction businesses, rising labour and material costs are the principal financial risks that face the business. These impact on our ability to accurately estimate the costs of completing contracts and to accurately tender future work. Other risks include; our ability to recover increased costs under the payment terms of the contracts, the financial standing of our clients, the financial standing of our subcontractors and suppliers and their ability to discharge their obligations to us.
The Board continues to control these risks in several ways; the company is selective in the type of work that it tenders for in terms of the client, contract type, project size, location, complexity, profitability, and contract duration. The Board continues to favour “phased” contracts where work on any given project is awarded in stages; basement and structural work, then the shell and subsequently, the finishes. This minimises the risks associated with long term fixed price contracts. These criteria are constantly reviewed by the Board to ensure that risks are mitigated. The Board also has procedures in place to ensure that our supply chain is as robust as possible.
Performance Risk
The company is committed to delivering our contracts on time whilst maintaining the required levels of safety, quality, productivity, and cost control which lie at the core of our general contracting activities. To manage and control the performance of the business we have bolstered our senior commercial and operational management teams and empowered key managers in all parts of the business. Processes and in-house resources are in place to support the management team including structural design, procurement, administrative support and financial control.
Health & Safety
The Board recognises the importance of the health and safety of all workers, sites and the general public, and operates policies and procedures to ensure that the risks associated with accidents and health are properly managed, controlled and reduced.
The Environment
Measures to reduce the impact on the environment of the company's activities are being actively reviewed. These are more fully addressed in notes that accompany the Holding Company's accounts.
The business monitors its sales enquiries and tracks these through to tender/bid stage. The monitoring of sales forecasts and new business is ongoing and reviewed on a regular basis to manage resourcing requirements. All contracts are closely monitored to track performance against tender targets. Company-wide actual performance in terms of turnover, margins and overheads, compared with budget, is closely monitored, as is cash flow and working capital requirements. Key Performance Indicators are in place throughout the business to identify any issues requiring senior management attention. The Board continually manages the exposure of the business to price risk, credit risk, liquidity risk and cash flow risk.
Consistently delivering quality in terms of both work on site and service are priorities for the Board and are subject to constant review by the directors.
The Board of Directors continues to operate in ways that they consider are going to promote the success of the company for the benefit of all its stakeholders. The Board is aware how important it is to consider the impact of their decisions on the long-term survival and success of the business and recognises that motivated, engaged employees are central to future success.
The Board is focused on building strong, ongoing, relationships with all of its suppliers and subcontractors and with all of its clients and their professional teams. The business has a strong track record of repeat projects with its clients and their professional advisers and places an emphasis on long term relationships to maintain a steady flow of work into the business.
Recognising the impact of construction projects on both the environment and on the communities in which the company works, Knowles Holdings Ltd, Knowles Construction’s holding company, has policies in place addressing carbon emissions and measures, wherever possible, to add value to the communities in which we work, through local employment and other community-focused initiatives. Knowles Construction is also part of the “Considerate Constructors Scheme”, supporting and guiding positive change in the construction industry.
On behalf of the board
The directors present their annual report and financial statements for the year ended 31 October 2025.
The results for the year are set out on page 10.
The directors recommend that a dividend of £895,000 (2024: £1,108,065) is paid in the year.
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
The board believes that adding value through excellent customer service is central to continued success and the group strives to improve through efficiencies and to maintain the highest standards, delivering value for money for our clients. The group businesses look to provide innovative solutions to everyday problems on projects ranging from traditional construction to extremely complex structural schemes. The group aims to offer our clients, partners and professional teams greater choice through a range of high value systems, products, and solutions.
The board has continued to invest in relationships with key subcontractors, suppliers, clients and their professional advisors, seeing these relationships as the bedrock of the group businesses. This approach has generated significant word of mouth recommendations, resulting in the continued growth and expansion of the group.
There have been no significant events affecting the Group since the year end.
The board sees a significant and ongoing demand for its full range of services in London and the Home Counties with an emphasis on significant private new-build residential projects and country house restoration, as well as commercial schemes in the luxury hospitality sector. Having successfully delivered several very large private residential new build and refurbishment projects in both London and the country, the group is now actively looking to extend its geographical reach.
Under section 487(2) of the Companies Act 2006, BKL Audit LLP will be deemed to have been reappointed as auditors 28 days after these financial statements were sent to members or 28 days after the latest date prescribed for filing the accounts with the registrar, whichever is earlier.
Emissions have been calculated using the UK Government's 2024 GHG Conversion Factors for Company Reporting, published by the Department for Energy Security and Net Zero (DESNZ).
Electricity usage has been estimated based on industry benchmarks (3,500 kWh per FTE per year), as the company operates from a serviced office and does not have direct access to electricity billing data.
The following intensity ratios are used to normalise emissions relative to the size and activity of the company.
The directors will continue to comply with all relevant UK legislation while also taking steps to further understand the Scope 3 emissions currently excluded from the above disclosure.
We have audited the financial statements of Knowles Holdings Limited (the 'parent company') and its subsidiaries (the 'group') for the year ended 31 October 2025 which comprise the group statement of comprehensive income, the group statement of financial position, the company statement of financial position, the group statement of changes in equity, the company statement of changes in equity, the group statement of cash flows and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).
Basis for opinion
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the group's and parent company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
Other information
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of our audit:
The information given in the strategic report and the directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
The strategic report and the directors' report have been prepared in accordance with applicable legal requirements.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:
Enquiring of management and those charged with governance around actual and potential litigation and claims;
Enquiring of entity staff in finance and compliance functions to identify any instances of non-compliance with laws and regulations;
Reviewing minutes of meetings of those charged with governance;
Reviewing financial statement disclosures and testing to supporting documentation to assess compliance with applicable laws and regulations.
Performing audit work over the risk of management override of controls, including testing of journal entries and other adjustments for appropriateness, evaluating the business rationale of significant transactions outside the normal course of business and reviewing accounting estimates for bias.
Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading to a material misstatement in the financial statements or non-compliance with regulation. This risk increases the more that compliance with a law or regulation is removed from the events and transactions reflected in the financial statements, as we will be less likely to become aware of instances of non-compliance. The risk is also greater regarding irregularities occurring due to fraud rather than error, as fraud involves intentional concealment, forgery, collusion, omission or misrepresentation.
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 notes on pages 16 to 32 form part of these financial statements.
The notes on pages 16 to 32 form part of these financial statements.
The notes on pages 16 to 32 form part of these financial statements.
The notes on pages 16 to 32 form part of these financial statements.
The notes on pages 16 to 32 form part of these financial statements.
The notes on pages 16 to 32 form part of these financial statements.
Knowles Holdings Limited is a limited liability company incorporated in England & Wales.
The principal activity of the company is that of a holding company.
The principal activities of the group is that of providing value-added construction services by creating successful partnerships throughout the construction process, property development, the construction of bespoke subterranean car garages for private clients and the leasing of construction and civil engineering machinery and equipment.
The Registered Office address is 12th Floor, Capital House, 25 Chapel Street, London, NW1 5DH.
These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006.
The financial statements are prepared in Sterling, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £.
The financial statements have been prepared under the historical cost convention. The principal accounting policies adopted are set out below.
The consolidated group financial statements consist of the financial statements of the parent company Knowles Holdings Limited together with all entities controlled by the parent company (its subsidiaries).
All financial statements are made up to 31 October 2025. 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.
Entities in which the group holds an interest and which are jointly controlled by the group and one or more other venturers under a contractual arrangement are treated as joint ventures. Entities other than subsidiary undertakings or joint ventures, in which the group has a participating interest and over whose operating and financial policies the group exercises a significant influence, are treated as associates.
Investments in joint ventures and associates are carried in the group statement of financial position at cost plus post-acquisition changes in the group’s share of the net assets of the entity, less any impairment in value. The carrying values of investments in joint ventures and associates include acquired goodwill.
If the group’s share of losses in a joint venture or associate equals or exceeds its investment in the joint venture or associate, the group does not recognise further losses unless it has incurred obligations to do so or has made payments on behalf of the joint venture or associate.
Unrealised gains arising from transactions with joint ventures and associates are eliminated to the extent of the group’s interest in the entity.
At the time of approving the financial statements, the directors have a reasonable expectation that the group 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.
The group recognises revenue when contractual performance obligations are satisfied, and control is transferred over a product or service to its customer. Revenue is measured based on the transaction price specified in a contract with a customer which includes fixed and variable consideration and excludes amounts collected on behalf of third parties. Where consideration is not specified within the contract and is therefore subject to variability, the group estimates the amount of consideration to be received from its customer. Where consideration is variable, it is included in the transaction price only to the extent that it is highly probable that a significant reversal of revenue will not occur.
Where a modification to an existing contract occurs, the group assesses the nature of the modification and whether it gives rise to a new contract or changes to an existing contract.
The group does not have any contracts where the period between the transfer of the promised goods or services to the customer and payment by the customer exceeds one year. As a result, the group does not adjust its transaction price for the time value of money.
The group’s activities are wide ranging, and as such, depending on the nature of the product or service delivered and the timing of when control is passed onto the customer, the group will account for revenue over time and at a point in time. Where revenue is measured over time, the group uses the input method to measure progress of delivery.
Revenue is recognised as follows:
revenue from construction and services activities is recognised over time and the group uses the output method to measure progress of delivery; and
revenue is recognised by the group from the installation of specialist systems defined as provisional sums, where scope and pricing are refined during execution.
Construction and services contracts
When the outcome of individual contracts can be estimated reliably, contract revenue is recognised over time by reference to the measure of progress at the reporting date using the output method, based on surveys of work completed.
Costs are recognised as incurred, and revenue is recognised in proportion to the physical progress of the contract, as assessed through certified valuations or independent surveys.
Estimates of the final out-turn on each contract may include cost contingencies to reflect specific risks identified during the early stages of the contract. These contingencies are reviewed regularly and adjusted as necessary. However, due to the nature of construction risks, some may only be resolved at project completion.
The estimated final out-turns are continuously reviewed, and in certain cases, recoveries from insurers are assessed and recognised where appropriate.
No margin is recognised until the outcome of the contract can be estimated with reasonable certainty.
Provision is made for all known or expected losses on individual contracts as soon as they are foreseen.
Revenue in respect of variations to contracts and incentive payments is recognised only when there is an enforceable right to payment and it is highly probable that the amount will be agreed by the customer.
Variable consideration, including claims, liquidated damages, and is assessed on a contract-by contract basis and recognised only to the extent that it is highly probable that a significant reversal will not occur. Profit includes the benefit of claims settled during the year, to the extent not previously recognised.
Revenue on specialists’ systems
Certain contracts include specialist systems that are defined as provisional sums, meaning their scope and cost are variable, are subject to constraint and subject to refinement as design and coordination progress.
Revenue recognition for these systems follows the same principles as the main construction contract, provided the performance obligations are satisfied over time and the customer benefits concurrently. Where scope or pricing is refined during execution, adjustments are made in accordance with FRS 102 ’s (2024) guidance on contract modifications and variable consideration.
Contract assets and liabilities
The group recognises revenue based on surveys of work completed and bills customers upon receipt of certification. As the right to consideration for certified work is deemed unconditional at the point of certification, no contract asset is recognised. Instead, the amount due is recognised as a trade receivable.
A contract liability is the obligation to transfer goods or services to a customer for which the group has received consideration (or an amount is due). Contract liabilities are recognised as revenue when the group performs under the contract.
Revenue recognised may differ from amounts billed and certified. Where goods or services transferred exceed billings, the difference is recognised as a contract asset. Where billings exceed goods or services transferred, the difference is recognised as a contract liability.
The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is recognised in the income statement.
Investments in subsidiaries are measured at cost less accumulated impairment.
The group has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.
Financial instruments are recognised in the group's statement of financial position when the group becomes party to the contractual provisions of the instrument.
Financial assets and liabilities are offset and the net amounts presented in the financial statements when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.
Basic financial assets, which include trade and other receivables and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised.
Other financial assets, including investments in equity instruments which are not subsidiaries, associates or joint ventures, are initially measured at fair value, which is normally the transaction price. Such assets are subsequently carried at fair value and the changes in fair value are recognised in profit or loss, except that investments in equity instruments that are not publicly traded and whose fair values cannot be measured reliably are measured at cost less impairment.
Financial assets, other than those held at fair value through profit and loss, are assessed for indicators of impairment at each reporting end date.
Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected. If an asset is impaired, the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset’s original effective interest rate. The impairment loss is recognised in profit or loss.
If there is a decrease in the impairment loss arising from an event occurring after the impairment was recognised, the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been, had the impairment not previously been recognised. The impairment reversal is recognised in profit or loss.
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the group transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the group after deducting all of its liabilities.
Basic financial liabilities, including trade and other payables, bank loans, loans from fellow group companies and preference shares that are classified as debt, are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future payments discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.
Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.
Trade payables 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 payables are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.
Derivatives, including interest rate swaps and forward foreign exchange contracts, are not basic financial instruments. Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured at their fair value. Changes in the fair value of derivatives are recognised in profit or loss in finance costs or finance income as appropriate, unless hedge accounting is applied and the hedge is a cash flow hedge.
Debt instruments that do not meet the conditions in FRS 102 paragraph 11.9 are subsequently measured at fair value through profit or loss. Debt instruments may be designated as being measured at fair value through profit or loss to eliminate or reduce an accounting mismatch or if the instruments are measured and their performance evaluated on a fair value basis in accordance with a documented risk management or investment strategy.
Financial liabilities are derecognised when the group's contractual obligations expire or are discharged or cancelled.
Equity instruments issued by the group are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the group.
The tax expense represents the sum of the tax currently payable and deferred tax.
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the income statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The group’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.
Deferred tax liabilities are generally recognised for all timing differences and deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Such assets and liabilities are not recognised if the timing difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.
The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the income statement, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset if, and only if, there is a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
As a lessee, the group assesses whether a contract is, or contains, a lease at the inception of a contract. 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. To assess if a lease exists, the group assesses whether:
(i) the contract involves the use of an identified asset;
(ii) the group has the right to obtain substantially all of the economic benefits from the use of the asset throughout the lease term; and
(iii) the group has the right to direct the use of the asset.
To determine if the contract involves the use of an identified asset, the group exercises judgement to assess if the supplier has a substantive substitution right over the asset. An asset is not identified if it has been determined that the supplier has substantive substitution rights.
The group recognises a right-of-use asset and a lease liability at the lease commencement date.
The right-of-use asset is initially measured at cost and subsequently depreciated over the lease term.
The lease liability is measured at the present value of the lease payments that are not paid 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 or the group’s obtainable borrowing rate on a lease-by-lease basis.
The group has elected to apply the practical expedient which allows the Group to use a single discount rate for a portfolio of leases with similar characteristics.
The group has elected not to recognise right-of-use assets and lease liabilities for short-term leases of less than 12 months and leases of low value assets. Instead, the group recognises the lease payments associated with these leases as an expense on a straight-line basis over the lease term.
Interest Income
Interest income is recognised in profit or loss using the effective interest method.
Finance cost
Finance costs are charged to profit or loss over the term of the debt using the effective interest method so that the amount charged is at a constant rate on the carrying amount. Issue costs are initially recognised as a reduction in the proceeds of the associated capital instrument.
Dividends
Equity dividends are recognised when they become legally payable. Interim equity dividends are recognised when paid. Final equity dividends are recognised when approved by the shareholders at an annual general meeting.
The preparation of Group’s financial statements under FRS 102 (2024) requires management to make judgements, estimates and assumptions that affect amounts recognised for assets and liabilities at the reporting date and the amounts of revenue and expenses incurred during the reporting period. Actual outcomes may differ from these judgements, estimates and assumptions.
In the process of applying the group’s accounting policies, management has made the following judgements, which have the most significant effect on the amounts recognised in the consolidated financial statements:
The group’s revenue and margin recognition policies, as set out in Notes 1.4, require significant judgement in assessing the financial performance of long-term construction contracts. Judgement is applied in determining whether the outcome of a contract can be estimated reliably, and whether revenue should be recognised over time. This includes assessing the enforceability of rights to payment for variations, claims, and incentive payments, and evaluating whether it is highly probable that such amounts will not significantly reverse.
For cost-reimbursable contracts, judgement is required to assess the level of disallowable costs, determining whether such costs are recoverable under the terms of the contract and therefore eligible for revenue recognition.
Within the group’s portfolio, a limited number of long-term involve significant judgement over contractual entitlements relating to recoveries of claim income from customers and suppliers, and liquidated damages levied by customers. These recoveries are recognised only when considered highly probable not to significantly reverse.
The group determines the lease term as the non-cancellable period of the lease, together with any periods covered by an option to extend the lease if it is reasonably certain to be exercised, or any periods covered by an option to terminate the lease if it is reasonably certain not to be exercised.
As a lessee, the group applies judgement in evaluating whether it is reasonably certain to exercise renewal or termination options embedded in lease contracts. This includes consideration of economic incentives, The group reassesses the lease term if a significant event or change in circumstances occurs that is within its control and affects its ability to exercise, or not to exercise, the relevant option.
The estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are as follows.
The group makes estimates in forecasting the outcomes of individual contracts, including total contract costs, income, and timing of recognition.
In respects of costs, estimates are made regarding the final out-turn of each contract, including potential costs associated with maintenance and defects liabilities. On the income side, estimates are made in respect of variations to consideration, including scope changes, recoveries of claim income, and potential liquidated damages.
These estimates are reviewed regularly throughout the life of each contract and adjusted where necessary based on the latest available information.
Due to the level of uncertainty, the combination of cost and income variables, and the timing across a large portfolio of contracts at various stages of completion, it is impracticable to provide a quantitative analysis of the aggregated estimates applied at a portfolio level.
At each period end debtors are assessed for recoverability. If there are doubts over the recoverability of a debtor, a provision is made against the balance.
The average monthly number of persons (including directors) employed by the group and company during the year was:
Their aggregate remuneration comprised:
During the year retirement benefits were accruing to 7 directors (2024 - 5) in respect of defined contribution pension schemes.
The highest paid director received remuneration of £131,292 (2024 - £130,000).
The value of the Group's contributions paid to a defined contribution pension scheme in respect of the highest paid director amounted to £13,729 (2024 - £NIL).
The actual charge/(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 Right of use asset relates to the lease of the head office of the group.
Details of the company's subsidiaries at 31 October 2025 are as follows:
* Indirect subsidiary
** subsidiaries taking advantage of the parent company guarantee exemption from preparing audited financial statements
*** dormant subsidiary
The other loan falling due within one year is secured on the property in stock as well as a personal guarantee from two of the directors.
The bank loan falling due after more than 5 years are secured against the Property to which they relate to and are due for repayment in 14 years. Interest is charged at 4.15% for the first 5 years and 4% + SONIA thereafter.
The following are the major deferred tax liabilities and assets recognised by the group and company, and movements thereon:
A defined contribution pension scheme is operated for all qualifying employees. The assets of the scheme are held separately from those of the group in an independently administered fund.
The capital redemption reserve is made up of the nominal value of the shares repurchased by a subsidiary company prior to the group reconstruction.
Profit and loss account
The profit and loss account is made up of all current and prior year profits and losses less dividends paid.
The company forms part of a VAT group with other 100% controlled subsidiaries of Knowles Holdings Limited. The company carries joint and several liability for all group VAT balances.
A company within the group has an ongoing enquiry with HMRC relating to historic VAT returns. The directors are anticipating no material adjustment and so no amount has been included in the accounts relating to this enquiry.
Included within other debtors is a balance of £650,283 due from M Knowles. This is made up of an opening balance of £640,283, advances of £237,500, repayments of £227,500. This balance is unsecured with no fixed repayment date. Interest is charged on this loan at 2.25%.
Included within other debtors is a balance of £1,036,930 due from R Knowles. This is made up of an opening balance of £459,655, advances of £804,775, repayments of £227,500. This balance is unsecured with no fixed repayment date. Interest is charged on this loan at 2.25%.
Included within other debtors is a balance of £52,936 due from P Kilbane. This is made up of an opening balance of £272,936, advances of £220,000, repayments of £440,000. This balance is unsecured with no fixed repayment date. Interest is charged on this loan at 2.25%.
Included within other debtors is a balance of £15,749 due from M Macdonald Johnston. This is made up of an opening balance of £21,271 and repayments of £5,522. This balance is unsecured with no fixed repayment date. Interest is charged on this loan at 2.25%.
Where possible, the company has taken advantage of the exemption within s33.1A of FRS 102 not to disclose related party transactions with other wholly owned group undertakings.
The directors are considered key management and their salaries are disclosed in note 7 to the financial statements.