Company Registration No. 03150440 (England and Wales)
J.L.C. GROUNDWORKS LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MAY 2020
J.L.C. GROUNDWORKS LIMITED
COMPANY INFORMATION
Directors
Mr J L Cookson
Mrs S M Cookson
Mr P S Brown
Secretary
Mrs S M Cookson
Company number
03150440
Registered office
The Boat House
Blackpool Road
St Michaels
Preston
PR3 0NB
Auditor
MHA Moore and Smalley
Richard House
9 Winckley Square
Preston
PR1 3HP
J.L.C. GROUNDWORKS LIMITED
CONTENTS
Page
Strategic report
1
Directors' report
2
Directors' responsibilities statement
3
Independent auditor's report
4 - 6
Statement of income and retained earnings
7
Balance sheet
8
Statement of cash flows
9
Notes to the financial statements
10 - 23
J.L.C. GROUNDWORKS LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 31 MAY 2020
- 1 -
The directors present the strategic report for the year ended 31 May 2020.
Fair review of the business
The directors are pleased to report the Company has had another successful year
of trade,
with
operating
profits slightly increase
d at £1,763,002 (2019: £1,693,075
) even though turnover
£8,891,435 (2019: £9,213,849
) was slightly down.
The
government enforced
lockdown due to Covid
-19
was the main contributor to the slight decrease in turnover and this
has also naturally affected the overall profitability reported.
The company held total cash reserves of £3,190,202 (2019: £2,178,923) at the balance sheet date, due to the good translation of profits in to cash, and after a further significant investment in to fixed assets during the year, which the directors recognise is essential to help the company maintain its quality of work and efficient delivery. Finally the company reported increased net assets at the balance sheet date of £5,154,360 (2019: £5,023,027).
Each of the above benchmarks are considered to be the most important financial KPIs and are monitored keenly by the directors on a monthly and often weekly basis.
Principal risks and uncertainties
The main risk to the company is the current economic climate as with all companies.
Whilst there are negative headwinds due to the impacts of Brexit uncertainty and the Covid-19 pandemic, this has been offset in the year under report, through t
he strong demand in the new build housing sector
, which has undoubtedly
contributed to the success of the company
as reported
in
these financial statements.
Although
recognising
demand is still high
,
the directors have made the conscious decision to secure contracts in the housing association sector with existing clients to cover their options
in respect of the company's longer term prospects.
Th
at said, from an operational perspective, the
main challenge to the business
is
the recruitment
and retention
of high-quality staff
,
to produce work of a standard that the directors expect and have
helped
built up
the long term
reputation
of the company
.
In this respect the directors await the impact of new 'Off payroll' worker regulations, due to be introduced in April 2021.
Future developments
The directors are cautiously optimistic that the company possesses the skills, machinery and client base to maintain profitable trading in to the years ahead and further diversification of its customer base has been noted above.
Unfortunately this year has been marked for all by the Covid-19 pandemic. T
he initial impact of the
government imposed
restrictions result
ed
in a complete shutdown
of operations for a constrained period of time. However normal operations
soon returned
and continued to the balance sheet date and beyond
.
Whilst the natural
concern is the long-term impact this will have on the economy
, t
o date this has
had
no adverse effect on the company
.
The directors would like to place on record their thanks to the company's loyal staff, for their efforts during the year under report.
Mr J L Cookson
Director
21 December 2020
J.L.C. GROUNDWORKS LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 MAY 2020
- 2 -
The directors present their annual report and financial statements for the year ended 31 May 2020.
Principal activities
The principal activity of the company continued to be that of a specialist groundworks contractor.
Directors
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
Mr J L Cookson
Mrs S M Cookson
Mr P S Brown
Results and dividends
The results for the year are set out on page 7.
Ordinary dividends were paid amounting to £1,600,000. The directors do not recommend payment of a further dividend.
Auditor
MHA Moore and Smalley were appointed as auditor to the company and in accordance with section 485 of the Companies Act 2006, a resolution proposing that they be re-appointed will be put at a General Meeting.
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.
On behalf of the board
Mr J L Cookson
Director
21 December 2020
J.L.C. GROUNDWORKS LIMITED
DIRECTORS' RESPONSIBILITIES STATEMENT
FOR THE YEAR ENDED 31 MAY 2020
- 3 -
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.
J.L.C. GROUNDWORKS LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF J.L.C. GROUNDWORKS LIMITED
- 4 -
Opinion
We have audited the financial statements of J.L.C. Groundworks Limited (the 'company') for the year ended 31 May 2020 which comprise the statement of income and retained earnings, the balance sheet, 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 31 May 2020 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.
J.L.C. GROUNDWORKS LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF J.L.C. GROUNDWORKS LIMITED
- 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.
Other matters which we are required to address
The prior period balances were not audited, as the company was eligible to claim exemption from a statutory audit under section 477 of the Companies Act 2006.
J.L.C. GROUNDWORKS LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF J.L.C. GROUNDWORKS LIMITED
- 6 -
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.
Joe Sullivan (Senior Statutory Auditor)
for and on behalf of MHA Moore and Smalley
Chartered Accountants
Statutory Auditor
Richard House
9 Winckley Square
Preston
PR1 3HP
23 December 2020
J.L.C. GROUNDWORKS LIMITED
STATEMENT OF INCOME AND RETAINED EARNINGS
FOR THE YEAR ENDED 31 MAY 2020
- 7 -
2020
2019
Notes
£
£
Turnover
3
8,891,435
9,213,849
Cost of sales
(6,942,313)
(7,098,047)
Gross profit
1,949,122
2,115,802
Administrative expenses
(398,429)
(523,202)
Other operating income
212,309
100,475
Operating profit
4
1,763,002
1,693,075
Interest receivable and similar income
7
82
3
Interest payable and similar expenses
8
(1,978)
(83)
Fair value gains and losses on investment properties
12
400,000
-
Profit before taxation
2,161,106
1,692,995
Tax on profit
9
(429,873)
(327,186)
Profit for the financial year
1,731,233
1,365,809
Retained earnings brought forward as previously reported
5,023,027
4,857,218
Dividends
10
(1,600,000)
(1,200,000)
Retained earnings carried forward
5,154,260
5,023,027
The Statement of Income and Retained Earnings has been prepared on the basis that all operations are continuing operations.
J.L.C. GROUNDWORKS LIMITED
BALANCE SHEET
- 8 -
2020
2019
Notes
£
£
£
£
Fixed assets
Tangible assets
11
1,243,392
1,316,154
Investment properties
12
2,078,692
1,496,692
3,322,084
2,812,846
Current assets
Stocks
13
14,649
14,964
Debtors
14
2,444,432
2,192,742
Cash at bank and in hand
3,190,202
2,178,923
5,649,283
4,386,629
Creditors: amounts falling due within one year
15
(3,532,454)
(2,002,317)
Net current assets
2,116,829
2,384,312
Total assets less current liabilities
5,438,913
5,197,158
Provisions for liabilities
16
(284,553)
(174,031)
Net assets
5,154,360
5,023,127
Capital and reserves
Called up share capital
19
100
100
Profit and loss reserves
5,154,260
5,023,027
Total equity
5,154,360
5,023,127
The financial statements were approved by the board of directors and authorised for issue on 21 December 2020 and are signed on its behalf by:
Mr J L Cookson
Director
Company Registration No. 03150440
J.L.C. GROUNDWORKS LIMITED
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 MAY 2020
- 9 -
2020
2019
Notes
£
£
£
£
Cash flows from operating activities
Cash generated from operations
23
3,480,694
2,599,873
Interest paid
(1,978)
(83)
Income taxes paid
(351,471)
(389,836)
Net cash inflow from operating activities
3,127,245
2,209,954
Investing activities
Purchase of tangible fixed assets
(334,048)
(307,318)
Purchase of investment property
(182,000)
-
Interest received
82
3
Net cash used in investing activities
(515,966)
(307,315)
Financing activities
Dividends paid
(1,600,000)
(1,200,000)
Net cash used in financing activities
(1,600,000)
(1,200,000)
Net increase in cash and cash equivalents
1,011,279
702,639
Cash and cash equivalents at beginning of year
2,178,923
1,476,284
Cash and cash equivalents at end of year
3,190,202
2,178,923
J.L.C. GROUNDWORKS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MAY 2020
- 10 -
1
Accounting policies
Company information
J.L.C. Groundworks Limited is a
private
company
limited by shares
incorporated in England and Wales.
The registered office is
The Boat House, Blackpool Road, St Michaels, Preston, PR3 0NB.
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 investment properties at fair value. The principal accounting policies adopted are set out below.
1.2
Going concern
The company’s activities were impacted by the Covid-19 pandemic and the subsequent ‘lockdown’ introduced by the government. The directors opted to suspend work on all sites for a period of time in response to this and whilst risk assessments were carried out for health and safety purposes. However at the year end all sites were fully operational.
true
The company has adapted its working practices throughout the course of the pandemic, working to the guidelines set out in both the Construction Leadership Council Site Operating Procedures and the governments ‘How to make your workplace secure’ for construction and outdoor work and offices and contact centres.
The directors have every expectation that the company will continue in operational existence for the foreseeable future.
A significant number of the company’s current jobs pertain to construction of new residential housing, which will span over a number of years and are expected to continue.
The directors
note the significant cash balances available to the company but
have produced and referred to prudent future cash flow forecasts, which indicate sufficient funds are in place to meet all liabilities as they are projected to fall due for payment over the next twelve months, leading them to the conclusion that there are no material uncertainties over adopting the going concern basis at the time of signing the financial statements.
1.3
Turnover
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
.
Revenue from contracts for the provision of professional 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
it is probable will be
recover
ed
.
Income related to property rental and the hire of equipment is recognised in line with the period or rent/hire.
J.L.C. GROUNDWORKS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2020
1
Accounting policies
(Continued)
- 11 -
1.4
Tangible fixed assets
Tangible fixed assets
are initially measured at cost and subsequently measured at cost, net of depreciation and any impairment losses.
Depreciation is recognised so as to write off the cost of assets less their residual values over their useful lives on the following bases:
Freehold land and buildings
2% per annum straight line
Plant and machinery
30% per annum reducing balance
Fixtures, fittings & equipment
30% per annum reducing balance
Motor vehicles
25% reducing balance
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.
The surplus or deficit on revaluation is recognised in profit or loss.
1.6
Impairment of fixed assets
At each reporting
period
end date, the
company
reviews the carrying amounts of its tangible
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.
1.7
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.
At each reporting date, an assessment is made for impairment. Any excess of the carrying amount of stocks over its estimated selling price less costs to complete and sell is recognised as an impairment loss in profit or loss. Reversals of impairment losses are also recognised in profit or loss.
1.8
Construction contracts
Where the outcome of a construction contract can be estimated reliably, revenue and costs are recognised by reference to the stage of completion of the contract activity at the reporting end date. Variations in contract work, claims and incentive payments are included to the extent that the amount can be measured reliably and its receipt is considered probable.
When it is probable that total contract costs will exceed total contract turnover, the expected loss is recognised as an expense immediately.
Where the outcome of a construction contract cannot be estimated reliably, contract costs are recognised as expenses in the period in which they are incurred and contract revenue is recognised to the extent of contract costs incurred where it is probable that they will be recoverable.
J.L.C. GROUNDWORKS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2020
1
Accounting policies
(Continued)
- 12 -
The “percentage of completion method” is used to determine the appropriate amount to recognise in a given period. The stage of completion is measured by the proportion of contract costs incurred for work performed to date compared to the estimated total contract costs. Costs incurred in the year in connection with future activity on a contract are excluded from contract costs in determining the stage of completion. These costs are presented as stocks, prepayments or other assets depending on their nature, and provided it is probable they will be recovered.
1.9
Cash at bank and in hand
Cash at bank and in hand
are basic financial assets
and
include cash in hand
and
deposits held at call with banks
.
1.10
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.
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 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
All of the company's financial assets are basic financial instruments.
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.
J.L.C. GROUNDWORKS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2020
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 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. A
m
ounts 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.
Other financial liabilities
All of the company's financial liabilities are basic financial instruments.
Derecognition of financial liabilities
Financial liabilities are derecognised when the company’s contractual obligations
expire or are discharged or cancelled.
1.11
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.
1.12
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.
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.
J.L.C. GROUNDWORKS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2020
1
Accounting policies
(Continued)
- 14 -
1.13
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.
1.14
Retirement benefits
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
J.L.C. GROUNDWORKS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2020
1
Accounting policies
(Continued)
- 15 -
1.15
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.
1.16
Government grants
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.
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.
Critical judgements
The following judgements (apart from those involving estimates) have had the most significant
effect on amounts recognised in the financial statements.
Recognition of contract revenue and profit
This is a natural area of estimation uncertainty given the industry in which the company operates. The narrative within notes 1.3 and 1.8 to the financial statements provides further information.
The company uses a suitably qualified Quantity Surveyors to assess the level of work done, associated revenue and thus profit recognition. These assessments are then reviewed by the company's finance team, providing an additional level of internal assurance that reduces the estimation uncertainty to an appropriate level.
J.L.C. GROUNDWORKS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2020
2
Judgements and key sources of estimation uncertainty
(Continued)
- 16 -
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.
Provision for irrecoverable trade debtors
At each balance sheet date, management undertake a review of the outstanding trade debtor balances and estimate the balance that should either be impaired or provided against.
This calculation is based on the financial position of the customers, the historical speed of payment and any ongoing discussions.
3
Turnover and other revenue
2020
2019
£
£
Turnover analysed by class of business
Construction contracts
8,891,435
9,213,849
2020
2019
£
£
Other significant revenue
Interest income
82
3
Grants received
117,228
-
4
Operating profit
2020
2019
Operating profit for the year is stated after charging/(crediting):
£
£
Government grants
(117,228)
-
Fees payable to the company's auditor for the audit of the company's financial statements
5,100
-
Depreciation of owned tangible fixed assets
386,810
453,666
Loss on disposal of tangible fixed assets
20,000
13,284
Operating lease charges
2,316
2,316
5
Employees
The average monthly number of persons (including directors) employed by the company during the year was:
2020
2019
Number
Number
57
60
J.L.C. GROUNDWORKS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2020
5
Employees
(Continued)
- 17 -
Their aggregate remuneration comprised:
2020
2019
£
£
Wages and salaries
1,774,336
1,818,444
Social security costs
175,177
173,366
Pension costs
120,264
114,450
2,069,777
2,106,260
6
Directors' remuneration
2020
2019
£
£
Remuneration for qualifying services
95,576
136,609
Company pension contributions to defined contribution schemes
83,795
77,400
179,371
214,009
7
Interest receivable and similar income
2020
2019
£
£
Interest income
Other interest income
82
3
8
Interest payable and similar expenses
2020
2019
£
£
Other finance costs:
Other interest
1,978
83
9
Taxation
2020
2019
£
£
Current tax
UK corporation tax on profits for the current period
328,880
345,471
Adjustments in respect of prior periods
(9,529)
2,031
Total current tax
319,351
347,502
J.L.C. GROUNDWORKS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2020
9
Taxation
(Continued)
- 18 -
Deferred tax
Origination and reversal of timing differences
90,048
(20,252)
Changes in tax rates
20,474
-
Adjustment in respect of prior periods
-
(64)
Total deferred tax
110,522
(20,316)
Total tax charge
429,873
327,186
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:
2020
2019
£
£
Profit before taxation
2,161,106
1,692,995
Expected tax charge based on the standard rate of corporation tax in the UK of 19.00% (2019: 19.00%)
410,610
321,669
Tax effect of expenses that are not deductible in determining taxable profit
800
2,166
Tax effect of income not taxable in determining taxable profit
-
(185)
Effect of change in corporation tax rate
-
2,383
Depreciation on assets not qualifying for tax allowances
822
1,032
Other permanent differences
6,696
(1,846)
Under/(over) provided in prior years
(9,529)
2,031
Deferred tax adjustments in respect of prior years
20,474
(64)
Taxation charge for the year
429,873
327,186
The Chancellor stated his intention to maintain the main rate of corporation tax at 19%. This change to previously announced policy was substantively enacted on 17 March 2020.
10
Dividends
2020
2019
£
£
Final paid
1,600,000
1,200,000
J.L.C. GROUNDWORKS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2020
- 19 -
11
Tangible fixed assets
Freehold land and buildings
Plant and machinery
Fixtures, fittings & equipment
Motor vehicles
Total
£
£
£
£
£
Cost
At 1 June 2019
198,000
2,438,312
26,262
319,489
2,982,063
Additions
-
333,808
240
-
334,048
Disposals
-
(119,650)
-
-
(119,650)
At 31 May 2020
198,000
2,652,470
26,502
319,489
3,196,461
Depreciation and impairment
At 1 June 2019
39,523
1,415,199
20,811
190,376
1,665,909
Depreciation charged in the year
3,960
347,827
1,678
33,345
386,810
Eliminated in respect of disposals
-
(99,650)
-
-
(99,650)
At 31 May 2020
43,483
1,663,376
22,489
223,721
1,953,069
Carrying amount
At 31 May 2020
154,517
989,094
4,013
95,768
1,243,392
At 31 May 2019
158,477
1,023,114
5,450
129,113
1,316,154
12
Investment property
2020
£
Fair value
At 1 June 2019
1,496,692
Additions through external acquisition
182,000
Net gains or losses through fair value adjustments
400,000
At 31 May 2020
2,078,692
Investment property comprises various land banks and properties owned by the company. The fair value of the company's investment properties has been arrived at on the basis of a valuation carried out by Mr J L Cookson, director. The valuation was made on an open market value basis by reference to market evidence of transaction prices for similar properties/land banks.
13
Stocks
2020
2019
£
£
Finished goods and goods for resale
14,649
14,964
J.L.C. GROUNDWORKS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2020
- 20 -
14
Debtors
2020
2019
Amounts falling due within one year:
£
£
Trade debtors
2,113,053
1,857,501
Other debtors
315,682
313,405
Prepayments and accrued income
15,697
21,836
2,444,432
2,192,742
15
Creditors: amounts falling due within one year
2020
2019
£
£
Trade creditors
366,093
430,128
Amounts owed to group undertakings
2,680,398
1,158,834
Corporation tax
233,351
265,471
Other taxation and social security
35,813
43,355
Other creditors
159
1,194
Accruals and deferred income
216,640
103,335
3,532,454
2,002,317
16
Provisions for liabilities
2020
2019
Notes
£
£
Deferred tax liabilities
17
284,553
174,031
17
Deferred taxation
The following are the major deferred tax liabilities and assets recognised by the company and movements thereon:
Liabilities
Liabilities
2020
2019
Balances:
£
£
Accelerated capital allowances
111,323
174,031
Investment property
173,668
-
Short term timing differences
(438)
-
284,553
174,031
J.L.C. GROUNDWORKS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2020
17
Deferred taxation
(Continued)
- 21 -
2020
Movements in the year:
£
Liability at 1 June 2019
174,031
Charge to profit or loss
110,522
Liability at 31 May 2020
284,553
The company has not finalised its capital expenditure programme for the next financial year and therefore an assessment as to the likely movement of timing differences cannot reasonably be made.
18
Retirement benefit schemes
2020
2019
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
120,264
114,450
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
2020
2019
£
£
Ordinary share capital
Issued and fully paid
50 A Ordinary shares of £1 each
50
50
40 B Ordinary shares of £1 each
40
40
5 C Ordinary shares of £1 each
5
5
5 D Ordinary shares of £1 each
5
5
100
100
Each class of shares has equal voting rights and ranks pari passu in all respects except for that a dividend may be declared in respect of one class of shares and not the other.
J.L.C. GROUNDWORKS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2020
- 22 -
20
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:
2020
2019
£
£
Within one year
1,262
1,262
Between two and five years
1,879
3,141
3,141
4,403
J.L.C. GROUNDWORKS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2020
- 23 -
21
Related party transactions
The company has taken advantage of the exemption permitted under FRS102, Section33 'Related Party Disclosures' paragraph 33.1A, from disclosing transactions with group companies, on the basis that it is a wholly owned subsidiary.
22
Ultimate controlling party
The immediate and ultimate parent company of JLC Groundworks Limited is JLC Groundworks (Holdings) Limited, a company registered in England and Wales.
23
Cash generated from operations
2020
2019
£
£
Profit for the year after tax
1,731,233
1,365,809
Adjustments for:
Taxation charged
429,873
327,186
Finance costs
1,978
83
Investment income
(82)
(3)
Loss on disposal of tangible fixed assets
20,000
13,284
Fair value gains and losses on foreign exchange contracts and investment properties
(400,000)
-
Depreciation and impairment of tangible fixed assets
386,810
453,666
Movements in working capital:
Decrease in stocks
315
215
(Increase) in debtors
(251,690)
(616,778)
Increase in creditors
1,562,257
1,056,411
Cash generated from operations
3,480,694
2,599,873
24
Analysis of changes in net funds
1 June 2019
Cash flows
31 May 2020
£
£
£
Cash at bank and in hand
2,178,923
1,011,279
3,190,202
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