Company registration number:
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COMPANY INFORMATION
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CONTENTS
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STRATEGIC REPORT
FOR THE YEAR ENDED 31 JANUARY 2023
The Directors present the strategic report for the year ended 31 January 2023. The principal activity of the Company was that of the supply of labour for the direct contracting for tunnelling projects.
The Directors present the results of the year and the financial position at the year end and report these to be satisfactory. The results were bolstered by the continuing labour works of the HS2 Birmingham (North) and the commencement of labour works in late August 22 of HS2 Atlas Road (West). Although turnover has marginally decreased leading to a decrease in gross margin of 2.3%, which is due to keener pricing, the director’s are satisfied with the financial year result. The Directors expect growth for the foreseeable future but are mindful of political changes which may affect the performance of the Company. It continues to seek out further labour supply works to mitigate any downturn in any other projects.
During the year, a reconstruction was completed on 1 October 2023. On that date, the assets and liabilities of Tunnelcraft Holding Limited was hived down to the Company. The turnover for the 4 months to 31/01/23 was £21,762,381 against a forecast of £21,912,459.
All businesses are subject to risks and uncertainties and the key risks facing Tunnelcraft Limited are:
°Competition
°Cancellation of contracts
°Delays in completion of projects
°Political uncertainties
°Environmental and professional liabilities
°Health and safety issues
°Pandemics
°Force majeure
The Company's operations are exposed to a variety of financial risks that include the effects of changes in credit risk, liquidity risk and interest rate risk. The Company has in place a risk management program that seeks to limit the adverse effects on the financial performance of the Company by monitoring levels of the debt finance and the related finance costs. The Company does not use derivative financial instruments to manage interest rate costs and as such, no hedge accounting is applied.
Given the size of the Company, the Directors have not delegated the responsibility of monitoring financial risk management to a sub-committee of the board. The policies set by the board of directors are implemented by the Company's finance department. Price risk The Company has no exposure to equity securities price risks as it holds no listed or other equity investments. Liquidity risk The Company manages the liquidity risk by ensuring there are sufficient funds to meet the operating needs of the business. In respect of bank balances, the liquidity risk is managed by maintaining a positive balance between continuity of funding and flexibility through an agreed payment policy. The Company does not maintain any short term debt finance. Interest rate risk The Company has no interest-bearing assets but carries interest-bearing liabilities.
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STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 JANUARY 2023
Regulatory risk
The Company is exposed to a number of regulatory risks:
°Legislation risks – non-compliance with laws and statute. The Company has in place procedures to ensure changes or new legislation affecting the Company is adhered to and there are regular reviews.
°Risk of non-compliance with internal policies and procedures – The Company is under a duty to ensure all employees have and are working in a safe environment and adherence to internal rules and policies are followed.
°Health and Safety – The Company is also under a duty to provide all necessary tools and safety clothing to carry out their work. It is also under a duty to ensure that employees are suitably qualified to carry out their work and that all employees hold the relevant construction cards.
The key performance indicators used to determine the progress and performance of the Company are set out below:
EBITFDP percentage of Sales Operating profit as a percentage of sales is viewed as a key performance indicator for the business and this is reviewed regularly. The EBITFDP is a more comparable measure of the performance of the business which shows that the EBITFDP percentage of sales has increased to 9.6% [2022: Decreased 7.8%]. It is the intention of the Company to continue to strengthen its financial performance in the industry by concentrating on and improving its management processes and further expanding its market share, whilst at the same time closely monitoring both direct and indirect costs.
The Company operates an equal opportunities policy. The main aim of the policy is to ensure that there should be equal opportunity for all, and this applies to external recruitment, internal appointments, terms of employment, conditions of service and opportunity for training and promotion regardless of gender, ethnic origin or disability.
Disabled persons are given full and fair consideration for all types of vacancy in as much as opportunities available are considered by the practical limitations of the disability. Should, for whatever reason, an employee of the Company become disabled whilst in employment, every step, where applicable will be taken to assist with rehabilitation and suitable re-training. The Company maintains its own health, safety and environmental policies covering all aspects of its operations. Regular meetings and inspections take place to ensure all legal requirements are adhered to and that the Company is responsive to the needs of the employees and the environment.
As at 31 January 2023, the Company’s net assets were £3,922,085 (2022: £4,130,656) of which £2,419,645 (2022: £Nil) were cash and cash equivalents.
Company loans and borrowings were £7,592 as at 31st January 2023 (2022: £Nil). This is the balance on a working capital facility with Santander UK.
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STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 JANUARY 2023
The board collectively, have a duty to promote the success of the Company. A Director of a Company must act in the way they consider, in good faith, would be most likely to promote the success of the Company for the benefit of its members, and in doing so have regard to:
°the likely consequences of any decision in the long term,
°the interests of the Company's employees,
°the need to foster the Company's business relationships with suppliers, customers, and others,
°the impact of the Company's operations on the community and the environment,
°the desirability of the Company maintaining a reputation for high standards of business conduct, and
°the need to act fairly as between members of the Company.
This report was approved by the board and signed on its behalf.
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DIRECTORS' REPORT
FOR THE YEAR ENDED 31 JANUARY 2023
The Directors present their report and the financial statements for the year ended 31 January 2023.
The Directors are responsible for preparing the Strategic Report, the Directors' 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 applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice), including Financial Reporting Standard 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland'. 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 for the Company's financial statements and then apply them consistently;
∙make judgments and accounting estimates that are reasonable and prudent;
∙state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements;
∙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 to 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.
The loss for the year, after taxation, amounted to £208,571 (2022: profit £401,462).
The Directors do not recommend the payment of a dividend.
The Directors who served during the year were:
The company intends to continue to build on its reputation as one of the leading tunnelling labour suppliers in the sector and to recruit and develop their in-house teams to ensure the continuity and excellence of their workforce.
The Company has chosen, in accordance with Section 414C(11) of the Companies Act 2006 (Strategic Report and Directors' Report) Regulations 2013, to set out within the Company's Strategic Report the Company's Strategic Report Information Required by Schedule 7 of the Large and Medium Sized Companies and Groups (Accounts and Reports) Regulation 2008. This includes information that would have been included in the business review and details of the principal risks and uncertainties.
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DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 JANUARY 2023
There have been no significant events affecting the Company since the year end.
Menzies LLP have been appointed as the auditors of the Company to fill the casual vacancy following the resignation of Charterhouse (Audit) Limited.
Under section 487(2) of the Companies Act 2006, Menzies 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.
This report was approved by the board and signed on its behalf.
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INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF TUNNELCRAFT LIMITED
We have audited the financial statements of Tunnelcraft Limited (the 'Company') for the year ended 31 January 2023, which comprise the Statement of Comprehensive Income, the Statement of Financial Position, the Statement of Changes in Equity and the related notes, 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 Financial Reporting Standard 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland' (United Kingdom Generally Accepted Accounting Practice).
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 Auditors' 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 United Kingdom, including the Financial Reporting Council'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.
In auditing the financial statements, we have concluded that the Directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the Company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the Directors with respect to going concern are described in the relevant sections of this report.
The other information comprises the information included in the Annual Report other than the financial statements and our Auditors' 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.
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INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF TUNNELCRAFT LIMITED (CONTINUED)
In our opinion, based on the work undertaken in the course of the 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 Company and its environment obtained in the course of the audit, we have not identified material misstatements in the Strategic Report or the Directors' Report.
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INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF TUNNELCRAFT LIMITED (CONTINUED)
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 Auditors' 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 Company is subject to laws and regulations that directly affect the financial statements including financial reporting legislation. We determined that the following laws and regulations that were most significant included:
−The Companies Act 2006;
−Financial Reporting Standard 102;
−UK employment legislation;
−UK health and safety legislation;
−General Data Protection Regulations; and
−UK tax legislation.
∙We assessed the extent of compliance with these laws and regulations as part of our procedures on the related financial statement items.
∙We understood how the Company is complying with those legal and regulatory frameworks by, making inquiries to management and those responsible for legal and compliance procedures. We corroborated our inquiries through our review of board minutes.
∙The engagement partner assessed whether the engagement team collectively had the appropriate competence and capabilities to identify or recognise non-compliance with laws and regulations. The assessment did not identify any issues in this area.
∙We assessed the susceptibility of the Company financial statements to material misstatement, including how fraud might occur. Audit procedures performed by the engagement team included:
−Identifying and assessing the design effectiveness of controls management has in place to prevent and detect fraud;
−Understanding how those charged with governance considered and addressed the potential for override of controls or other inappropriate influence over the financial reporting process;
−Challenging assumptions and judgments made by management in its significant accounting estimates; and
−Identifying and testing journal entries, in particular any journal entries posted with unusual account combinations.
∙As a result of the above procedures, we considered the opportunities and incentives that may exist within the organisation for fraud and identified the greatest potential for fraud in the following areas:
−The application of inappropriate judgments or estimation to manipulate the Company's financial position;
−Posting of unusual journals and complex transactions; and
−The use of management override of controls to manipulate results, or to cause the Company to enter into transactions not in its best interests.
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.
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INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF TUNNELCRAFT LIMITED (CONTINUED)
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our Auditors' 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 Auditors' 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.
for and on behalf of
Chartered Accountants
Statutory Auditor
Ashcombe House
5 The Crescent
Surrey
KT22 8DY
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STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 JANUARY 2023
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STATEMENT OF FINANCIAL POSITION
AS AT 31 JANUARY 2023
The financial statements were approved and authorised for issue by the board and were signed on its behalf by:
The notes on pages 13 to 26 form part of these financial statements.
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STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 JANUARY 2023
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 JANUARY 2023
Tunnelcraft Limited is a private company limited by shares incorporated in England and Wales. The registered office and the business address is presented on the Company's Information page.
2.Accounting policies
The financial statements have been prepared under the historical cost convention unless otherwise specified within these accounting policies and in accordance with Financial Reporting Standard 102, the Financial Reporting Standard applicable in the UK and the Republic of Ireland and the Companies Act 2006.
The preparation of financial statements in compliance with FRS 102 requires the use of certain critical accounting estimates. It also requires management to exercise judgment in applying the Company's accounting policies (see note 3).
The following principal accounting policies have been applied:
The Company has taken advantage of the following disclosure exemptions in preparing these financial statements, as permitted by the FRS 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland":
∙the requirements of Section 7 Statement of Cash Flows;
∙the requirements of Section 3 Financial Statement Presentation paragraph 3.17(d);
∙the requirements of Section 11 Financial Instruments paragraphs 11.42, 11.44 to 1.45, 11.47, 11.48(a)(iii), 11.48(a)(iv), 11.48(b) and 11.48 (c);
∙the requirements of Section 12 Other Financial Instruments paragraphs 12.26 to 12.27, 12.29(a), 12.29(b) and 12.29A; and
∙the requirements of Section 33 Related Party Disclosures paragraph 33.7.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 JANUARY 2023
2.Accounting policies (continued)
Grants of a revenue nature are recognised in the Statement of Comprehensive Income in the same period as the related expenditure.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 JANUARY 2023
2.Accounting policies (continued)
Goodwill
Depreciation is charged so as to allocate the cost of assets less their residual value over their estimated useful lives, using the straight-line method.
Depreciation is provided on the following basis:
The assets' residual values, useful lives and depreciation methods are reviewed, and adjusted prospectively if appropriate, or if there is an indication of a significant change since the last reporting date.
Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised in profit or loss.
Provisions are charged as an expense to profit or loss in the year that the Company becomes aware of the obligation, and are measured at the best estimate at the reporting date of the expenditure required to settle the obligation, taking into account relevant risks and uncertainties. When payments are eventually made, they are charged to the provision carried in the Statement of Financial Position.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 JANUARY 2023
2.Accounting policies (continued)
The Company has elected to apply the provisions of Section 11 “Basic Financial Instruments” of FRS 102 to all of its financial instruments.
Financial instruments are recognised in the Company's Statement of Financial Position when the Company becomes party to the contractual provisions of the instrument.
Financial assets and liabilities are offset, with 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
Basic financial assets, which include trade and other receivables, cash and bank balances, are initially measured at their transaction price including transaction costs and are subsequently carried at their amortised cost using the effective interest method, less any provision for impairment, 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.
Discounting is omitted where the effect of discounting is immaterial. The Company's cash and cash equivalents, trade and most other receivables due with the operating cycle fall into this category of financial instruments.
Impairment of financial assets
Financial assets are assessed for indicators of impairment at each reporting date.
Financial assets are impaired when events, subsequent to their initial recognition, indicate the estimated future cash flows derived from the financial asset(s) have been adversely impacted. The impairment loss will be the difference between the current carrying amount and the present value of the future cash flows at the asset(s) original effective interest rate.
If there is a favourable change in relation to the events surrounding the impairment loss then the impairment can be reviewed for possible reversal. The reversal will not cause the current carrying amount to exceed the original carrying amount had the impairment not been recognised. The impairment reversal is recognised in the profit or loss.
Financial liabilities
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instruments any contract that evidences a residual interest in the assets of the Company after the deduction of all its liabilities.
Basic financial liabilities, which include trade and other payables, bank loans and other loans are initially measured at their transaction price after transaction costs. When this constitutes a financing transaction, whereby the debt instrument is measured at the present value of the future receipts discounted at a market rate of interest. Discounting is omitted where the effect of discounting is immaterial.
Debt instruments are subsequently carried at their amortised cost using the effective interest rate method.
Trade payables are obligations to pay for goods and services that have been acquired in the ordinary course of business from suppliers. Trade payables are classified as current liabilities if the payment is due within one year. If not, they represent non-current liabilities. Trade payables are initially recognised at their transaction price and subsequently are measured at amortised cost using the effective interest method. Discounting is omitted where the effect of discounting is immaterial.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 JANUARY 2023
2.Accounting policies (continued)
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 are measured at transaction price including transaction costs. Financial assets classified as receivable within one year are not amortised. Basic financial liabilities Basic financial liabilities, including creditors, are 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. 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. Key sources of estimation uncertainty 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. Establishing useful economic lives for depreciation purposes of tangible fixed asset Tangible fixed assets, consisting primarily of fixtures and fittings, computer equipment and motor vehicles. The annual depreciation charge depends on the estimated useful economic lives of each type of asset and estimated residual values. The Directors regularly review these asset useful lives and change them as necessary to reflect current thinking on remaining lives in light of prospective economic utilisation and physical condition of the assets concerned. Changes in asset useful lives can have an impact on depreciation charges for the period. Detail of useful economic lives is included in the accounting policies.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 JANUARY 2023
3.Judgments in applying accounting policies (continued)
Estimating provisions The Company makes an estimate of provisions which is based on employee costs for the year, amounts paid in previous years and the movement in CPI. Any significant change in the amounts paid would have an impact on the operating results. The amount of accrual is reviewed on an on-going basis. Goodwill valuation and impairment The Company makes a judgement on the valuation of goodwill on the acquisition of trade during the year. Further this leads to an estimate on the impairment of goodwill. Impairment reviews are carried out on a timely basis to ensure that the accounting policy adopted reflects a true and fair value of the assets.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 JANUARY 2023
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 JANUARY 2023
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 JANUARY 2023
11.Taxation (continued)
On 3 March 2021, the UK Government announced that from 1 April 2023, the main rate Corporation Tax on profits over £250,000 will be increased to 25%.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 JANUARY 2023
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 JANUARY 2023
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 JANUARY 2023
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 JANUARY 2023
Each share entitles the holder to receive notice of all general meetings and to attend and vote at any general meeting. One vote per member on a show of hands, one vote per share on a poll.
Profit and loss account
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 JANUARY 2023
Tunnelcraft Holdings Limited is the ultimate parent company of Tunnelcraft Limited and the results of Tunnelcraft Limited are included in the consolidated financial statements of Tunnelcraft Holdings Limited which are available at Ground Floor, Sidney House Christy Close, Southfields Business Park, Basildon, Essex, United Kingdom, SS15 6TN. The directors consider that there is no one ultimate controlling party.
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