The directors present the strategic report for the year ended 31 December 2021.
The principal activity of the Company continues to be the provision of building contractor services delivering all construction types, including but not restricted to commercial, industrial, leisure and retail, health, education, refurbishment, public buildings, affordable and private housing of all sizes under all procurement routes.
We aim to present a considered and balanced review of the performance of the business and its position at the year end.
Turnover has maintained its circa £50 million level as the Company continues with the delivery of high quality projects, on time and to client requirements.
Profitability across the group has continued through the principals of strong, stable and professional management systems and support. We strategically target key Clients predominately in the Public Sector, such as Housing Associations and Local Authorities, whilst maintaining our links with organisations, who are strong within their own sector and provide a stable long-term informed relationship. Our continued success and stability has enabled us to retain our local workforce and strengthen our supply chain.
The group continues to invest for future performance and long-term stability by maintaining a balanced well trained, highly motivated workforce. The business takes its health and safety obligations very seriously and to this end employees attend numerous courses during the year both internally and externally, to ensure that all staff have received the necessary training to perform their duties safely.
Market conditions remain competitive and with the added complexity of COVID-19 and Brexit it is important that we continue to invest in the business. The Group has continued to invest in its people’s skills and capabilities through our training and development programs. We continually look for operational efficiencies across the business.
The demand for services of the group are dependent upon the confidence within the UK housing and construction market. This includes factors such as interest rates and the availability of credit, which are outside the group’s control. The business however continues to reduce risk and uncertainty by increasing its customer base, whilst keeping fixed costs to a minimum. Forward work load levels have remained healthy, as contracts are won, with the business already securing 80% of its anticipated work load for 2022 which includes speculative housing development opportunities.
The Directors monitor the performance of the group by reviewing actual monthly results with expected performance and by completing detailed reviews of the performance on individual contracts on a monthly basis.
In addition to this process the Directors measure financial performance for the year using the following indicators:-
2019/2020 2020/2021
Turnover £50,575,511 £47,765,383
Profit After Tax % Turnover 2.9% 2.8%
Cash Balance £12,072,559 £11,519,762
The balance sheet continues to improve with an increase in net current assets (up 28%) £4,600,305
Other Key Performance Indicators
The group uses a suite of non-financial KPI’s to monitor and measure success on a regular basis, which cover the whole business operating functions (these are monitored on a monthly basis).
Client satisfaction – service and product
Defects
Construction time and cost
Productivity
Profitability
Health and Safety inc. accident frequency rates
Staff Turnover
Sickness/Absence
Qualifications and Skills
Percentage local supplier spend
Percentage local labour
Employment/apprentice targets
Tonnage to landfill
Waste to landfill as % of all waste
Quality, Health & Safety and Environmental Policies
The group places a great importance on ensuring the business undertakes its functions in a safe manner, whilst maintaining quality and ensuring that environmental impacts are minimised. To this end we maintain our CHAS Certification, together with our IS0 9001 and 14001 external accreditation whilst carrying out extensive training and development.
Health and Safety Risk
The Group’s activities are significant and complex which require the continuous monitoring and management of health, safety and environmental risks. Failure to manage these risks could result in serious harm to employees, subcontractors, the public or the environment and could expose the Group to significant potential liabilities and reputational damage
The Group is committed to ensure a safe working environment. These risks are managed by the Group through the strong promotion of a health and safety culture and well-defined health and safety policies and procedures.
Technology / IT
The impact of digital technology continues, with the industry rapidly adjusting to consumers, clients and service providers operating in a mobile connected world, albeit through fragmented media. The Group has invested in its “IT” infrastructure to facilitate current and continued developments in this field.
Future Developments
The Board of Directors continue to actively review the Company’s performance on an ongoing basis ensuring that projects are secured with appropriate risk analysis and that suitable and sufficient resources are available to ensure the companies systems, procedures and policies are maintained at all times to ensure business success.
We continue to develop our personnel with increased focus on staff training and staff/personal development reviews. All employees have an opportunity to develop their skills within an environment of open and honest reporting systems, support mechanisms and a hierarchy of control mechanisms for key functions.
Coronavirus Pandemic/Brexit
The coronavirus pandemic and Brexit has, and continues to, create an unprecedented level of uncertainty for the UK and beyond. We have been following Government guidance since the outset of the Coronavirus outbreak and will continue to do so.
The isolation measures taken by individual governments to mitigate the spread of the virus, as well as the disease impact of the virus on the general population, may alter client and supplier behaviours. The situation, along with supply chain uncertainty, is evolving and we continue to monitor the impact of the measures taken on our business and the wider economy.
The Group will continue to monitor the situation regarding the wider impact on service delivery resulting from changing client and supply chain behaviours.
People
The success of the group depends on its ability to recruit, retrain and develop people with the necessary experience and expertise. It is critical that the group has a highly skilled, diverse and motivated workforce as the demands and complexity of project requirements increase.
The Group seeks to mitigate this risk by offering market-competitive remuneration, training and career development opportunities. Remuneration and incentive packages are reviewed annually to assist in the attraction and retention of key employees.
Supply Chain
As a business, our success depends heavily on our ability to appropriately manage our supply chain. Failure to do this could result in project delivery issues, compliance issues and strained customer relationships, ultimately leading to damage to the group reputation and financial penalties.
The Group seeks to develop long-term relationships with its key subcontractors whilst at the same time not becoming over-reliant on any particular one for the delivery of certain services. As part of its selection criteria, the Group seeks to work with subcontractors /suppliers who share its values.
Finance
The Group is able to operate through the cash reserves which have been built up through retained profits and management of working capital. Given the growth within the Group it is important that strong finances are in place and that key financial risks are managed. If the business does not have sufficient working capital, then it will be unable to meet its contractual obligations to make payments. The Group depends on appropriate, accurate and timely financial information to manage the business effectively; if there is lack of visibility then poor decisions can be made. The Group continually reviews its financial position to ensure there are sufficient resources to meet current and potential future operational demands.
Compliance
As a major employer and contractor, we have to comply with the complex and developing legal and regulatory frameworks in areas such as:
• Health and safety
• Taxation
• Fraud, bribery and corruption
• Modern Slavery Act
• Criminal Finances Act
• Payment Practices and Performance Reporting
• Gender Pay Gap Reporting
• General Data Protection Regulation (GDPR).
It is essential that we can evidence our compliance to avoid the material financial and reputational impacts associated with non-compliance.
The Group monitors and responds to legal and regulatory developments applicable to the markets in which it operates. Detailed policies and procedures exist to minimise risks and are subject to review and monitoring by Operating Companies and Group. Where considered appropriate, staff will be provided with training on such regulatory requirements, to ensure polices procedures and expected behaviours are clearly understood.
Local Communities
The Board are cognisant the effect our operations have upon local communities and we aim to reduce the impact our operations have on local communities and make a positive contribution to the communities within which we work. This includes minimising disruption; fostering local involvement and enterprise through the use of local labour, equipment, materials and supply chain partners; engaging effectively with the local community by proactively communicating and encouraging feedback about our operations; supporting educational initiatives and encouraging staff to share knowledge and skills within the wider community.
We remain confident that the company has sufficient and appropriate measures/resources in place to appropriately respond to all requirements.
The following S172 statement focuses on matters of strategic importance to the Harper Group of companies and the level of information disclosed is consistent with the size and complexity of the business. The following Group statements should be read together with the Groups Strategic Report.
The Directors are required by the Companies Act 2006 to act in the way they consider, in good fath, would be most likely to promote the success of the company for the benefit of its shareholders as a whole and, in doing so, are required to have regard for the following:-
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
The Directors continue to recognise the importance of giving due consideration to the interests of the company’s employees and other stakeholders, including the impact of its activities on the community the environment and the company’s reputation when making decisions.
The Group Board considers that its major stakeholders are its employees, customers and shareholders. When making decisions, the interests of these stakeholders is considered informally as part of the Board’s discussions. Engaging with our stakeholders, including shareholders, suppliers, customers and employees strengthens our relationships and helps the Board to understand the issues that matter most to them and our business and enables us to make better business decisions and deliver on our commitments.
Strategy
Our business plans are designed to have a long term beneficial impact on the company and to contribute to a delivery of quality finished products and services.
Staff
Our staff are fundamental to the delivery of our plans. We aim to be a responsible employer in our approach to the pay and benefits our team members receive. The health, safety and well being of our team members is one of our primary considerations in the way we do business.
Customers
Engagement with our customers is key to our success. We meet with all regularly and are flexible to changing business environments needs, whilst applying the most up to date regulations.
Suppliers
We engage with our suppliers regularly, developing relationships through our due diligence processes that ensure suppliers trade responsibly, whilst minimising risk to supply chain. We aim to pay suppliers on time wherever possible and do not tolerate modern slavery, corruption or bribery.
Environment and Community
We take account of the impact of our operations on the community and environment and our wider social responsibilities and we comply with the environmental legislation and pursue waste saving opportunities wherever possible.
The Harper Group’s intention is to act responsibly, collaboratively, considerately and to the highest standard of business conduct and governance.
By order of the board
The directors present their annual report and financial statements for the year ended 31 December 2021.
The results for the year are set out on page 14.
Ordinary dividends were paid amounting to £300,000. The directors do not recommend payment of a further dividend.
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
The auditor, CK Audit, is deemed to be reappointed under section 487(2) of the Companies Act 2006.
The UK Government’s Streamlined Energy and Carbon Reporting (SECR) policy was implemented on 1 April 2019 and this is the first time we have adopted disclosures on energy and carbon.
The figures below represent the energy use and associated greenhouse gas (GHG) emissions of The Harper Group of companies, through the use of electricity and fuel in the UK for the year ended 31 December 2021.
The SECR Submission has been complied using the 2019 HM Government Environmental Reporting Guidelines. Emissions have been grouped according to the GHG Protocol Corporate Accounting and Reporting Standard.
We have used the following data sources for the report
Electricity – Supplier Billing data in kWh
Natural Gas – Supplier Billing data in units converted to kWh
Fuel – Consumption reports in litres converted to kWh
Gas/Oil – supplier delivery data converted to kWh
CO2 emissions have been calculated using the 2020/2021 UK Government Conversion factors for company reporting. Emissions have been calculated for the company financial year 1 st January 2021 - 31 st December 2021
The chosen intensity measurement ratio is total gross emissions in metric tonnes CO2e per turnover, the recommended ratio for the sector.
We are committed to responsible energy management and practice energy efficiency throughout our organisation. We recognise that climate change is one of the most serious environmental challenges currently threatening the global community and we understand the role we must play in reducing greenhouse gas emissions.
Steps we have already taken to minimise our environmental impact include:-
Improved thermal efficiency levels to Head Office buildings
Restricted our commercial vehicle fleet to lower emission vehicles
Changed our Head Office and Site Office lighting to energy efficient LED where possible
Restricted our company car choice to lower emission vehicles
Recycling 80% of our site produced waste and 100% of our Head Office waste paper and plastics
Further steps we will be taking in the forthcoming financial year include:-
Installing car charging points at our Head Office
Further identifying and managing waste production and recycling on site
Encouraging the take up of electric vehicle useage
Further improvements in zero carbon construction techniques
We have audited the financial statements of Harper Group Management Limited (the 'parent company') and its subsidiaries (the 'group') for the year ended 31 December 2021 which comprise the group statement of comprehensive income, the group balance sheet, the company balance sheet, the group statement of changes in equity, the company statement of changes in equity, the group statement of cash flows, the company 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
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the group and parent company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard , and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the group's and 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
The other information comprises the information included in the annual report other than the financial statements and our auditor's report thereon. The directors are responsible for the other information contained within the annual report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of our audit :
the information given in the strategic report and the directors' 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.
In the light of the knowledge and understanding of the group and the parent company and their environment obtained in the course of the audit, we have not identifie d material misstatements in the strategic report or the directors' r eport . We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:
adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received from branches not visited by us; or
the parent company financial statements are not in agreement with the accounting records and returns; or
certain disclosures of directors' remuneration specified by law are not made; or
we have not received all the information and explanations we require for our audit.
As explained more fully in the directors' 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 parent company ' s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the parent company or to cease operations, or have no realistic alternative but to do so.
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements .
The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below .
We obtained an understanding of the legal and regulatory frameworks that are applicable to the Company by discussion and enquiry with the directors and management team and our general knowledge and experience of the construction industry.
We focused on specific laws and regulations which we considered may have a direct material effect on the financial statements or the operations of the company, including the Companies Act 2006, taxation legislation, data protection, employment, and health and safety legislation;
We assessed the extent of compliance with the laws and regulations identified above through making enquiries of management, reviewing correspondence with relevant regulators.
We assessed the susceptibility of the Company’s financial statements to material misstatement, including how fraud might occur. Audit procedures performed included but were not limited to:
Discussions with directors and management as to where they considered there was susceptibility to fraud, their knowledge of actual, suspected and alleged fraud;
Confirming our understanding of controls by performing a walk through test or observation and enquiry ;
Performing analytical procedures to identify any unusual or unexpected relationships;
Challenging assumptions and judgements made by management in accounting for long term construction contracts including recognition of income and estimation of costs to complete;
Identifying and testing journal entries;
Reviewing unusual or unexpected transactions; and
Agreeing the financial statement disclosures to underlying supporting documentation.
Owing to the inherent limitations of an audit, there is an unavoidable risk that we may not have detected some material misstatements in the financial statements, even though we have properly planned and performed our audit in accordance with auditing standards. The more removed that laws and regulations are from financial transactions, the less likely it is that we would become aware of non-compliance. Auditing standards also limit the audit procedures required to identify non-compliance with laws and regulations to enquiry of the directors and other management and the inspection of regulatory and legal correspondence, if any.
Material misstatements that arise due to fraud can be harder to detect than those that arise from error as they may involve deliberate concealment or collusion.
A further description of our responsibilities is available on the Financial Reporting Council’s website at: https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.
Use of our report
This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company’s members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company’s members as a body, for our audit work, for this report, or for the opinions we have formed.
The profit and loss account has been prepared on the basis that all operations are continuing operations.
As permitted by s408 Companies Act 2006, the c ompany has not presented its own profit and loss account and related notes. The c ompany’s profit for the year was £644,432 (2020 - £1,062,927 profit).
Harper Group Management Limited (“the Company”) is a limited company domiciled and incorporated in England and Wales . The registered office is Units 1 & 2, Bevan Industrial Estate, Brierley Hill, West Midlands, DY5 3TF Units 1 & 2, Bevan Industrial Estate, Brierley Hill, West Midlands, DY5 3TF.
The Group consists of Harper Group Management Limited and all of its subsidiaries.
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 investment properties and certain financial instruments at fair value. The principal accounting policies adopted are set out below.
The consolidated group financial statements consist of the financial statements of the parent company Harper Group Management Limited together with all entities controlled by the parent company (its subsidiaries) .
All financial statements are made up to 31 December 2021 . 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 g roup.
All intra-group transactions, balances and unrealised gains on transactions between group companies are eliminated on consolidation. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.
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.
Turnover is recognised at the fair value of the consideration received or receivable for goods and 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.
Revenue from contracts for the provision of services is recognised by reference to the stage of completion when the stage of completion, costs incurred and costs to complete can be estimated reliably. The stage of completion is calculated by comparing costs incurred, mainly in relation to contractual hourly staff rates and materials, as a proportion of total costs. Where the outcome cannot be estimated reliably, revenue is recognised only to the extent of the expenses recognised that are recoverable.
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 profit and loss account .
Equity in vest ments are measured at fair value through profit or loss , except for those equity investments that are not publicly traded and whose fair value cannot otherwise be measured reliably , which are recognised at cost less impairment until a reliable measure of fair value becomes available.
I n the parent company financial statements, investments in subsidiaries, associates and jointly controlled entities are initially measured at cost and subsequently measured at cost less any accumulated impairment losses.
A subsidiary is an entity controlled by the group. Control is the power to govern the financial and operating policies of the entity so as to obtain benefits from its activities.
At each reporting period end date, the group reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the company estimates the recoverable amount of the cash-generating unit to which the asset belongs.
The carrying amount of the investments accounted for using the equity method is tested for impairment as a single asset. Any goodwill included in the carrying amount of the investment is not tested separately for impairment.
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 m ethod 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.
Trade debtors , loans and other receivables that have fixed or determinable payments that are not quoted in an active market are classified as 'loans and receivables'. Loans and receivables are measured at amortised cost using the effective interest method, less any impairment.
Interest is recognised by applying the effective interest rate, except for short-term receivables when the recognition of interest would be immaterial. The effective interest method is a method of calculating the amortised cost of a debt instrument and of allocating the interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts through the expected life of the debt instrument to the net carrying amount on initial recognition.
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 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.
Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.
Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Amounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.
Financial liabilities are derecognised when the 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 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 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 profit and loss account , 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.
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.
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
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 d 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.
Government grants are recognised at the fair value of the asset receive d or receivable when there is reasonable assurance that the grant conditions will be met and the grants will be received.
A grant that specifies performance conditions is recognised in income when the performance conditions are met . Where a grant does not specify performance conditions it is recognised in income when the proceeds are received or receivable . A grant received before the recognition criteria are satisfied is recognised as a liability.
In the application of the group’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.
The following judgements (apart from those involving estimates) have had the most significant effect on amounts recognised in the financial statements.
Construction contract revenue reflects management's best estimate of the outcome and stage of completion of each contract. This includes the assessment of the profitability of each ongoing contract and estimates of costs to complete. For certain contracts the costs to complete and contract profitability are subject to significant estimation uncertainty.
The directors have considered the recoverability of amounts due from contract customers which at the year end amounted to £ 4, 682,886 (2020 £4, 518,392 ). Where amounts represent current valuations the directors are satisfied that amounts will be settled promptly on presentation of an invoice. The directors review amounts outstanding relating to retentions and consider whether there are any issues on the contract which need to be resolved, whether any further costs need to be taken in to account and the likelihood of amounts being recovered. Based on these reviews, the directors are satisfied with the recoverability of balances due from contract customers at the year end.
A provision for doubtful trade receivables is set up when the likelihood of recovering the debt is diminished. The level of provision will be based on any current repayment plan entered into and which is being adhered to by the debtor, together with an estimate of the likelihood of the amounts due being fully recovered. The directors are satisfied that there is no impairment of trade receivables at the year end.
An analysis of the group's turnover is as follows:
The whole of the turnover is attributable to the UK market.
The average monthly number of persons (including directors) employed by the group and company during the year was:
Their aggregate remuneration comprised:
A subsidiary undertaking made contributions to a money purchase pension scheme in relation to the highest paid director amounting to £ 4,000 (2020 £ 1 0,000).
The number of parent undertaking directors for whom retirement benefits are accruing under money purchase pension schemes operated by subsidiary undertakings is 3 (2020 - 3 ).
Investment income includes the following:
The actual (credit)/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:
The group has estimated tax losses of £nil (2020 £453,716 ) available for carry forward against future trading profits.
Investment property comprises residential property held for letting to third parties . The properties are considered to be held at fair value based on completed purchases in the year from individuals not connected with the company , and will be subject to independent valuations in future periods to confirm any adjustments to their fair value.
Details of the company's subsidiaries at 31 December 2021 are as follows:
The investments in subsidiaries are all stated at cost.
Deferred tax assets and liabilities are offset where the group or 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:
The deferred tax asset set out above is expected to reverse within 5 years and relates to the utilisation of tax losses against future expected profits of the same period.
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.
.
Performance bonds
Performance bonds require the bondsmen to make payments to third parties in the event that the company does not perform what is expected of it under the terms of any related contracts or commercial arrangements. Performance bonds at the year end amounted to £3,302,405 (2020 £4,751,177). Cash collateral deposits in connection with performance bonds held with insurance companies at the year end amount to £nil (2020 £ nil) and are included in cash at bank.
Operating lease payments represent rentals payable by the company for certain of its properties which include, property rental, equipment rental and motor vehicles rentals.
At the reporting end date the group had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:
At the reporting end date the total future minimum sublease payments expected to be received under non cancellable subleases was £ 18,900 (20 20 £ 31,5 00).
During the year the group entered into the following transactions with related parties:
The following amounts were outstanding at the reporting end date:
Dividends totalling £300,000 (2020 - £6,000) were paid in the year in respect of shares held by the company's directors.