Company Registration No. 00451880 (England and Wales)
FOREST GATE CONSTRUCTION CO LTD
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 SEPTEMBER 2019
FOREST GATE CONSTRUCTION CO LTD
COMPANY INFORMATION
Directors
T S Hosking
P R Reeves
(Appointed 1 August 2019)
Company number
00451880
Registered office
Sidney House
Christy Close
Southfields
Basildon
Essex
SS15 6TN
Auditor
Myers Clark
Egale 1
80 St Albans Road
Watford
Hertfordshire
WD17 1DL
Business address
Sidney House
Christy Close
Southfields
Basildon
Essex
SS15 6TN
Bankers
National Westminster Bank Plc
South Essex Commercial Office
Ground Floor
Thanet Grange
Westcliff-on-Sea
Essex
SS0 0EJ
FOREST GATE CONSTRUCTION CO LTD
CONTENTS
Page
Strategic report
1
Directors' report
2 - 3
Independent auditor's report
4 - 5
Profit and loss account
6
Statement of comprehensive income
7
Balance sheet
8
Statement of changes in equity
9
Statement of cash flows
10
Notes to the financial statements
11 - 21
FOREST GATE CONSTRUCTION CO LTD
STRATEGIC REPORT
FOR THE YEAR ENDED 30 SEPTEMBER 2019
- 1 -
The directors present the strategic report for the year ended 30 September 2019.
Fair review of the business
The principal activity of the company was that of building contractors. The Directors are satisfied with the results for the year and the company's financial position at the year end, and are confident about the company's long term prospects. Turnover has increased on the previous year, and this is mainly due to the company's successful marketing aim to apply greater focus to the healthcare sector. Although there was a drop in the GP percentage, the company has maintained a very strong margin as in previous years.
Principal risks and uncertainties
The Directors considers the key performance indicators for Forest Gate Construction to be tenders converted into secured contracts, gross margin and profit before tax. The company has derived a large proportion of its turnover in previous years via public sector projects. This has resulted in the fluctuation of tenders received due to government fiscal pressures. The Directors have aimed to seek a larger client base within the commercial and private sectors to reduce any short-term reduction in tenders in the time of recession. This is proving to be positive.
Development and performance
The volume of tenders submitted throughout the period decreased on the previous period although the percentage of tenders secured remained similar at an approximate conversion rate of 1:4. Those tenders secured into firm orders proved to be profitable and contracts have been managed in an efficient manner.
Key performance indicators
Cash reserves have increased and the Directors place great important on having sufficient surplus funds to provide working capital for the Company's business. These funds are placed in non-risk accounts bearing interest in order that the Company continues to pay creditors in a timely fashion. The company generates consistent cash inflows from operations and has liabilities that are known and can be discharged without recourse to external funding.
Other performance indicators
The Directors are pleased that the strong balance sheet has been maintained. Cash reserves continue to be healthy and this enables the Director's to monitor performance.
T S Hosking
Director
10 March 2020
FOREST GATE CONSTRUCTION CO LTD
DIRECTORS' REPORT
FOR THE YEAR ENDED 30 SEPTEMBER 2019
- 2 -
The directors present their annual report and financial statements for the year ended 30 September 2019.
Principal activities
The principal activity of the company continued to be that of building contractors.
Directors
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
T S Hosking
P R Reeves
(Appointed 1 August 2019)
Results and dividends
The results for the year are set out on page 6.
Ordinary dividends were paid amounting to £709,783. The directors do not recommend payment of a final dividend.
Preference dividends were paid amounting to £207,170.
Future developments
The directors recognise the increasing importance of the effect that the company and its employees have upon the environment and the demands placed upon contractors by local authorities and clients in that area. The company follows the Environmental Management Scheme and achieved the ISO14001 accreditation again this year. This should continue to enable the company to widen its client base.
Statement of directors' responsibilities
The directors are responsible for preparing the annual report and the financial statements in accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period. In preparing these financial statements, the directors are required to:
-
select suitable accounting policies and then apply them consistently;
-
make judgements and accounting estimates that are reasonable and prudent;
-
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company’s transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
Statement of disclosure to auditor
So far as each person who was a director at the date of approving this report is aware, there is no relevant audit information of which the company’s auditor is unaware. Additionally, the directors individually have taken all the necessary steps that they ought to have taken as directors in order to make themselves aware of all relevant audit information and to establish that the company’s auditor is aware of that information.
FOREST GATE CONSTRUCTION CO LTD
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 30 SEPTEMBER 2019
- 3 -
On behalf of the board
T S Hosking
Director
10 March 2020
FOREST GATE CONSTRUCTION CO LTD
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF FOREST GATE CONSTRUCTION CO LTD
- 4 -
Opinion
We have audited the financial statements of Forest Gate Construction Co Ltd (the 'company') for the year ended 30 September 2019 which comprise the profit and loss account, the statement of comprehensive income, the balance sheet, the statement of changes in equity, the statement of cash flows and notes to the financial statements, including a summary of significant accounting policies.
The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including FRS 102
The Financial Reporting Standard applicable in the UK and Republic of Ireland
(United Kingdom Generally Accepted Accounting Practice).
In our opinion the financial statements:
-
give a true and fair view of the state of the company's affairs as at 30 September 2019 and of its profit for the year then ended;
-
have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
-
have been prepared in accordance with the requirements of the Companies Act 2006.
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 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
We have nothing to report in respect of the following matters in relation to which the ISAs (UK) require us to report to you where:
-
the directors' use of the going concern basis of accounting in the preparation of the financial statements is not appropriate; or
-
the directors have not disclosed in the financial statements any identified material uncertainties that may cast significant doubt about the company’s ability to continue to adopt the going concern basis of accounting for a period of at least twelve months from the date when the financial statements are authorised for issue
.
The directors are responsible for the other information. The other information comprises the information included in the annual report, other than the financial statements and our auditor’s report thereon. 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.
In connection with our audit of the financial statements, 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 audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the financial statements or a material misstatement of the other information. 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' r
eport 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.
FOREST GATE CONSTRUCTION CO LTD
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF FOREST GATE CONSTRUCTION CO LTD
- 5 -
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identifie
d
material misstatements in the strategic report and the directors'
r
eport
.
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, or returns adequate for our audit have not been received from branches not visited by us; or
-
the 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.
Responsibilities of directors
As explained more fully in the directors'
r
esponsibilities
s
tatement, 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 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.
Auditor's responsibilities for the audit of the financial statements
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.
A further description of our responsibilities for the audit of the financial statements is located on the
Financial Reporting Council’s website at: http://www.frc.org.uk/auditorsresponsibilities
.
This description forms part of our auditor’s 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.
Ian Meaburn (Senior Statutory Auditor)
for and on behalf of Myers Clark
11 March 2020
Chartered Accountants
Statutory Auditor
Egale 1
80 St Albans Road
Watford
Hertfordshire
WD17 1DL
FOREST GATE CONSTRUCTION CO LTD
PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 30 SEPTEMBER 2019
- 6 -
2019
2018
Notes
£
£
Turnover
3
13,489,356
10,865,047
Cost of sales
(11,522,349)
(8,626,076)
Gross profit
1,967,007
2,238,971
Administrative expenses
(841,469)
(805,933)
Other operating income
44,595
43,140
Operating profit
4
1,170,133
1,476,178
Interest receivable and similar income
7
24,835
10,205
Profit before taxation
1,194,968
1,486,383
Tax on profit
8
(222,768)
(266,522)
Profit for the financial year
972,200
1,219,861
The profit and loss account has been prepared on the basis that all operations are continuing operations.
FOREST GATE CONSTRUCTION CO LTD
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 SEPTEMBER 2019
- 7 -
2019
2018
£
£
Profit for the year
972,200
1,219,861
Other comprehensive income
-
-
Total comprehensive income for the year
972,200
1,219,861
FOREST GATE CONSTRUCTION CO LTD
BALANCE SHEET
AS AT
30 SEPTEMBER 2019
30 September 2019
- 8 -
2019
2018
Notes
£
£
£
£
Fixed assets
Tangible assets
10
119,148
341,997
Investment properties
11
-
479,180
119,148
821,177
Current assets
Stocks
13
1,392,145
884,063
Debtors
14
803,637
1,560,005
Cash at bank and in hand
3,380,659
2,823,455
5,576,441
5,267,523
Creditors: amounts falling due within one year
15
(3,290,373)
(3,694,582)
Net current assets
2,286,068
1,572,941
Total assets less current liabilities
2,405,216
2,394,118
Provisions for liabilities
16
(6,485)
(6,485)
Net assets
2,398,731
2,387,633
Capital and reserves
Called up share capital
19
46,001
46,001
Revaluation reserve
-
44,149
Non-distributable profits reserve
20
-
85,851
Distributable profit and loss reserves
2,352,730
2,211,632
Total equity
2,398,731
2,387,633
The financial statements were approved by the board of directors and authorised for issue on 10 March 2020 and are signed on its behalf by:
T S Hosking
Director
Company Registration No. 00451880
FOREST GATE CONSTRUCTION CO LTD
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 SEPTEMBER 2019
- 9 -
Share capital
Revaluation reserve
Non-distri-butable profits
Profit and loss reserves
Total
Notes
£
£
£
£
£
Balance at 1 October 2017
46,000
44,149
85,851
2,152,572
2,328,572
Year ended 30 September 2018:
Profit and total comprehensive income for the year
-
-
-
1,219,861
1,219,861
Issue of share capital
19
1
-
-
-
1
Dividends
9
-
-
-
(1,160,801)
(1,160,801)
Balance at 30 September 2018
46,001
44,149
85,851
2,211,632
2,387,633
Year ended 30 September 2019:
Profit and total comprehensive income for the year
-
-
(85,851)
1,058,051
972,200
Dividends
9
-
-
-
(916,953)
(916,953)
Other movements
-
(44,149)
-
-
(44,149)
Balance at 30 September 2019
46,001
-
-
2,352,730
2,398,731
FOREST GATE CONSTRUCTION CO LTD
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 SEPTEMBER 2019
- 10 -
2019
2018
Notes
£
£
£
£
Cash flows from operating activities
Cash generated from operations
25
1,105,971
1,263,659
Income taxes paid
(281,486)
(261,309)
Net cash inflow from operating activities
824,485
1,002,350
Investing activities
Purchase of tangible fixed assets
(68,360)
(26,583)
Proceeds on disposal of tangible fixed assets
259,821
13,901
Proceeds on disposal of investment property
473,506
-
Proceeds from other investments and loans
(40,130)
-
Interest received
24,835
10,205
Net cash generated from/(used in) investing activities
649,672
(2,477)
Financing activities
Proceeds from issue of shares
-
1
Dividends paid
(916,953)
(1,160,801)
Net cash used in financing activities
(916,953)
(1,160,800)
Net increase/(decrease) in cash and cash equivalents
557,204
(160,927)
Cash and cash equivalents at beginning of year
2,823,455
2,984,382
Cash and cash equivalents at end of year
3,380,659
2,823,455
FOREST GATE CONSTRUCTION CO LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 SEPTEMBER 2019
- 11 -
1
Accounting policies
Company information
Forest Gate Construction Co Ltd is a
private
company
limited by shares
incorporated in England and Wales.
The registered office is
Sidney House, Christy Close, Southfields, Basildon, Essex, SS15 6TN.
1.1
Accounting convention
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 a
mounts
in these financial statements are
rounded to the nearest £.
The financial statements have been prepared under the historical cost convention, modified to include the revaluation of freehold properties and to include investment properties and certain financial instruments at fair value. The principal accounting policies adopted are set out below.
1.2
Going concern
A
true
t the time of approving the financial statements
,
t
he directors have a reasonable expectation that the
company
has adequate resources to continue in operational existence for the foreseeable future. Thus
t
he directors continue to adopt the going concern basis of accounting in preparing the financial statements.
1.3
Turnover
Turnover is recognised at the fair value of the consideration received or receivable for services provided in the normal course of business
, and
is shown net of VAT and other sales related taxes
.
The fair value of consideration takes into account trade discounts, settlement discounts and volume rebates.
1.4
Tangible fixed assets
Tangible fixed assets
are initially measured at cost and subsequently measured at cost or valuation, net of depreciation and any impairment losses.
Depreciation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:
Fixtures, fittings & equipment
15% of net book value
Motor vehicles
25% of net book value
The freehold property is being depreciated to its estimated residual value over its deemed useful economic life. The directors believe the residual value to be at least the current carrying value in these accounts and therefore and depreciation would be negligible. The directors review the estimated residual value at the end of each accounting period.
The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and
is credited or charged to profit or loss
.
1.5
Investment properties
Investment property, which is property held to earn rentals and/or for capital appreciation, is initially recognised at cost, which includes the purchase cost and any directly attributable expenditure
. Subsequently it is measured
at fair value a
t
the reporting end date.
Changes in fair value are recognised in profit or loss.
Where fair value cannot be achieved without undue cost or effort, investment property is accounted for as tangible fixed assets.
FOREST GATE CONSTRUCTION CO LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 SEPTEMBER 2019
1
Accounting policies
(Continued)
- 12 -
1.6
Stocks
Stocks
are stated at the lower of cost and
estimated selling price less costs to complete and sell. Cost comprises direct materials and, where applicable, direct labour costs and those overheads that have been incurred in bringing the stocks to their present location and condition.
1.7
Cash at bank and in hand
Cash and cash equivalents
are basic financial assets
and
include cash in hand, deposits held at call with banks, other short-term liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities.
1.8
Financial instruments
The company 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 company's balance sheet when the company becomes party to the contractual provisions of the instrument.
Basic financial assets
Basic financial assets, which include debtors and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest
method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest.
Financial assets classified as receivable within one year are not amortised.
Other financial assets
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.
Impairment of financial assets
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.
Derecognition of financial assets
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when
the company
transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.
FOREST GATE CONSTRUCTION CO LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 SEPTEMBER 2019
1
Accounting policies
(Continued)
- 13 -
Classification of financial liabilities
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the company after deducting all of its liabilities.
Basic financial liabilities
Basic financial liabilities, including creditors, bank loans, loans from
fellow group companies and preference shares that are classified as debt, are
initially recognised at transaction price unless the arrangement constitutes a
financing transaction, where the debt instrument is measured at the present value of
the future
paymen
ts discounted at a market rate of interest.
Financial liabilities classified as payable within one year are not amortised.
Other financial liabilities
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
s
ubsequently 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 though 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.
Derecognition of financial liabilities
Financial liabilities are derecognised when the company’s contractual obligations
expire or are discharged or cancelled.
1.9
Equity instruments
Equity instruments issued by the company are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the company.
Changes in the fair value of derivatives that are designated and qualify as fair value hedges are recognised in profit or loss immediately, together with any changes in the fair value of the hedged asset or liability that are attributable to the hedged risk.
1.10
Taxation
The tax expense represents the sum of the tax currently payable and deferred tax.
Current tax
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the profit and loss account 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
company’s
liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.
FOREST GATE CONSTRUCTION CO LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 SEPTEMBER 2019
1
Accounting policies
(Continued)
- 14 -
Deferred tax
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.
1.11
Employee benefits
The costs of short-term employee benefits are recognised as a liability and an expense, unless those costs are required to be recognised as part of the cost of stock or fixed assets.
The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received.
Termination benefits are recognised immediately as an expense when the company is demonstrably committed to terminate the employment of an employee or to provide termination benefits.
1.12
Retirement benefits
The pension costs charged in the financial statements represent the contribution payable by the company during the year.
1.13
Leases
Rentals payable under operating leases,
including
any lease incentives received, are charged to
profit or loss
on a straight line basis over the term of the relevant lease except where another more systematic basis is more representative of the time pattern in which economic benefits from the lease
s
asset are consumed.
Rental income from operating leases is recognised on a straight line basis over the term of the relevant lease. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised on a straight line basis over the lease term.
2
Judgements and key sources of estimation uncertainty
In the application of the company’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.
3
Turnover and other revenue
An analysis of the company's turnover is as follows:
2019
2018
£
£
Turnover analysed by class of business
Sales
13,489,356
10,865,047
FOREST GATE CONSTRUCTION CO LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 SEPTEMBER 2019
3
Turnover and other revenue
(Continued)
- 15 -
2019
2018
£
£
Other significant revenue
Interest income
24,835
10,205
4
Operating profit
2019
2018
Operating profit for the year is stated after charging/(crediting):
£
£
Fees payable to the company's auditor for the audit of the company's financial statements
10,600
10,900
Depreciation of owned tangible fixed assets
24,556
25,952
Profit on disposal of tangible fixed assets
(37,317)
(1,682)
Loss on disposal of investment property
5,674
-
Cost of stocks recognised as an expense
1,480,908
1,579,877
Operating lease charges
33,336
-
5
Employees
The average monthly number of persons (including directors) employed by the company during the year was:
2019
2018
Number
Number
24
21
Their aggregate remuneration comprised:
2019
2018
£
£
Wages and salaries
1,141,467
996,737
Social security costs
116,817
115,591
Pension costs
30,431
49,373
612,568
516,706
6
Directors' remuneration
2019
2018
£
£
Remuneration for qualifying services
25,100
8,752
Company pension contributions to defined contribution schemes
7,633
10,000
32,733
18,752
FOREST GATE CONSTRUCTION CO LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 SEPTEMBER 2019
- 16 -
7
Interest receivable and similar income
2019
2018
£
£
Interest income
Interest on bank deposits
22,565
10,103
Other interest income
2,270
102
Total income
24,835
10,205
Investment income includes the following:
Interest on financial assets not measured at fair value through profit or loss
22,565
10,103
8
Taxation
2019
2018
£
£
Current tax
UK corporation tax on profits for the current period
222,768
281,486
Adjustments in respect of prior periods
-
(16,739)
Total current tax
222,768
264,747
Deferred tax
Origination and reversal of timing differences
-
1,775
Total tax charge
222,768
266,522
The actual charge 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:
2019
2018
£
£
Profit before taxation
1,194,968
1,486,383
Expected tax charge based on the standard rate of corporation tax in the UK of 19.00% (2018: 19.00%)
227,044
282,413
Tax effect of expenses that are not deductible in determining taxable profit
8,082
6,170
Tax effect of income not taxable in determining taxable profit
(12,358)
(7,097)
Under/(over) provided in prior years
-
(16,739)
Deferred tax adjustments in respect of prior years
-
1,775
Taxation charge for the year
222,768
266,522
FOREST GATE CONSTRUCTION CO LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 SEPTEMBER 2019
- 17 -
9
Dividends
2019
2018
£
£
Interim paid
916,953
1,160,801
10
Tangible fixed assets
Land and buildings Freehold
Fixtures, fittings & equipment
Motor vehicles
Total
£
£
£
£
Cost
At 1 October 2018
246,412
63,931
137,945
448,288
Additions
-
9,754
58,606
68,360
Disposals
(246,412)
-
(42,850)
(289,262)
At 30 September 2019
-
73,685
153,701
227,386
Depreciation and impairment
At 1 October 2018
-
51,168
55,123
106,291
Depreciation charged in the year
-
2,330
22,226
24,556
Eliminated in respect of disposals
-
-
(22,609)
(22,609)
At 30 September 2019
-
53,498
54,740
108,238
Carrying amount
At 30 September 2019
-
20,187
98,961
119,148
At 30 September 2018
246,412
12,763
82,822
341,997
11
Investment property
2019
£
Fair value
At 1 October 2018
479,180
Disposals
(479,180)
At 30 September 2019
-
FOREST GATE CONSTRUCTION CO LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 SEPTEMBER 2019
- 18 -
12
Financial instruments
2019
2018
£
£
Carrying amount of financial assets
Debt instruments measured at amortised cost
740,441
1,516,990
Carrying amount of financial liabilities
Measured at amortised cost
3,010,072
3,235,624
13
Stocks
2019
2018
£
£
Finished goods and goods for resale
1,392,145
884,063
14
Debtors
2019
2018
Amounts falling due within one year:
£
£
Trade debtors
694,463
1,509,219
Other debtors
61,163
7,771
Prepayments and accrued income
48,011
43,015
803,637
1,560,005
15
Creditors: amounts falling due within one year
2019
2018
£
£
Trade creditors
1,394,467
1,217,977
Corporation tax
222,768
281,486
Other taxation and social security
57,533
177,472
Other creditors
42,881
806,789
Accruals and deferred income
1,572,724
1,210,858
3,290,373
3,694,582
16
Provisions for liabilities
2019
2018
Notes
£
£
Deferred tax liabilities
17
6,485
6,485
FOREST GATE CONSTRUCTION CO LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 SEPTEMBER 2019
- 19 -
17
Deferred taxation
Deferred tax assets and liabilities are offset where the company has a legally enforceable right to do so. The following is the analysis of the deferred tax balances (after offset) for financial reporting purposes:
Liabilities
Liabilities
2019
2018
Balances:
£
£
Accelerated capital allowances
6,485
6,485
There were no deferred tax movements in the year.
The deferred tax liability set out above is expected to reverse within 12 months and relates to accelerated capital allowances that are expected to mature within the same period.
18
Retirement benefit schemes
2019
2018
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
30,431
49,373
The company operates a defined contribution pension scheme for all qualifying employees.
The assets of the scheme are held separately from those of the company in an independently administered fund.
19
Share capital
2019
2018
£
£
Ordinary share capital
Issued and fully paid
46,000 Ordinary shares of of £1 each
46,000
46,000
Preference share capital
Issued and fully paid
1 Preference share of of £1 each
1
1
Preference shares classified as equity
1
1
Total equity share capital
46,001
46,001
FOREST GATE CONSTRUCTION CO LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 SEPTEMBER 2019
- 20 -
20
Non-distributable profits reserve
2019
2018
£
£
At the beginning of the year
85,851
85,851
Non distributable profits in the year
(85,851)
-
At the end of the year
-
85,851
21
Operating lease commitments
Lessee
At the reporting end date the company had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:
2019
2018
£
£
Within one year
52,208
2,208
Between two and five years
170,833
2,208
223,041
4,416
Lessor
At the reporting end date the company had contracted with tenants for the following minimum lease payments:
2019
2018
£
£
Within one year
38,611
31,666
Between two and five years
166,667
3,403
205,278
35,069
22
Related party transactions
Transactions with related parties
During the year the company entered into the following transactions with related parties:
The investment and freehold property was sold for £717,000 to a company under the same control as Forest Gate Construction Company Ltd. After this,rent of £33,333 was paid to this company and has been charged to the P&L.
23
Directors' transactions
FOREST GATE CONSTRUCTION CO LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 SEPTEMBER 2019
23
Directors' transactions
(Continued)
- 21 -
Transactions in relation to loans from the director during the year are outlined in the table below:
Description
% Rate
Opening balance
Amounts advanced
Closing balance
£
£
£
Director Advances
2.50
-
40,130
40,130
-
40,130
40,130
24
Controlling party
The ultimate controlling party is T S Hosking who, together with his wife, holds 100% of the issued share capital of the company.
25
Cash generated from operations
2019
2018
£
£
Profit for the year after tax
972,200
1,219,861
Adjustments for:
Taxation charged
222,768
266,522
Investment income
(24,835)
(10,205)
Gain on disposal of tangible fixed assets
(37,317)
(1,682)
Loss on disposal of investment property
5,674
-
Depreciation and impairment of tangible fixed assets
24,556
25,952
Movements in working capital:
Increase in stocks
(508,082)
(386,957)
Decrease/(increase) in debtors
796,498
(391,299)
(Decrease)/increase in creditors
(345,491)
541,467
Cash generated from operations
1,105,971
1,263,659
2019-09-30
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