Company registration number 03908728 (England and Wales)
TSG BUILDING SERVICES PLC
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2022
TSG BUILDING SERVICES PLC
COMPANY INFORMATION
Directors
B L Rees
A J Thrussell
R J Glendinning
E R Panagi
A Pellow
Secretary
R J Glendinning
Company number
03908728
Registered office
TSG House
Cranbourne Industrial Estate
Cranborne Road
Potters Bar
Herts
EN6 3JN
Auditor
Newton & Garner Limited
Building 2
30 Friern Park
North Finchley
London
N12 9DA
TSG BUILDING SERVICES PLC
CONTENTS
Page
Strategic report
1 - 2
Directors' report
3
Directors' responsibilities statement
4
Independent auditor's report
5 - 7
Statement of comprehensive income
8
Balance sheet
9
Statement of changes in equity
10
Statement of cash flows
11
Notes to the financial statements
12 - 25
TSG BUILDING SERVICES PLC
STRATEGIC REPORT
FOR THE YEAR ENDED 31 MARCH 2022
- 1 -
The directors present the strategic report for the year ended 31 March 2022.
Fair review of the business
Turnover for TSG Building Services PLC (TSG) increased in the year to £51,515,098 (2021 - £42,768,707). Growth in the newer areas of the business have continued and we have secured new contracts across all of the business divisions. These have also maintained a good level of contribution in the year.
Gross margins for the year were 21.5% of turnover (2021 – 26.4%). Operating profit was 10.6% of turnover (2021 – 16.8%) at £5,435,986 (2021 - £7,167,951). Although these are lower than 2021, they are well above prior year’s levels. The businesses continued use of the technologies available to it and the ongoing improvements made to the business’s operations carry on adding greater value and have continued to create greater returns for the business.
Growth across the business’s operating divisions has continued. The ongoing focus of the directors and employees of the business has again directly resulted in another good year. The drive from the board and the operating divisions in seeking greater operating efficiencies whilst maintaining a strong service to our customers has been evident in the performance for the year. The continued ownership of key direct costs and overheads by the divisions has again delivered a positive result for the business in a challenging economic environment. The management of key resources, both human and technological and the ongoing investment and development of those resources are a key strategy for the business.
The company’s ability to adapt and provide solutions for the services and products our clients demand provides the agility of service that is required in a thriving and changing sector. We have successfully added new contracts throughout the year whilst maintaining a strong focus on sustainable growth, excellent customer care and provision of service. The directors continue to seek new opportunities with improved margins and maintain their view that the market is still very competitive.
Principal risks and uncertainties
The UK market place remains highly competitive and losing sales to key competitors is a continued risk to the company. The company manages this risk by ensuring the high-quality levels of its products and services are sustained and that it continues to build and hold strong relationships with its customers, supply chain and employees.
The current economic uncertainty in the UK economy with the growing level of inflation and threat of recession adds additional pressures to the business in terms of its supply chain and its employees cost of living. In response to this environment the business has become extremely agile and can adapt quickly utilising its full resources both human and technological. It has been able to maintain a flexible and agile approach to the working environment while maintaining a highly productive and responsive workforce focused on delivering.
TSG BUILDING SERVICES PLC
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2022
- 2 -
Development and performance
Current UK economic, market conditions and the highly competitive nature of the sector that the company operates in remain challenging. It is likely that this economic uncertainty will continue to challenge not only our market sector but the UK market as a whole and no doubt will continue to add to those challenges in the year ahead. The company has grown in the year, taking on more contracts and the number of new and innovative opportunities open to it have also grown. As greater efficiencies in both technology and human resources are directed at service enhancement and operational improvements on an ongoing basis, we expect that these will continue to enhance the services we provide and the work life balance of our employees.
The company constantly reviews and develops its resources across all of its operations. These reviews have continued to prove beneficial and its ability to adapt has driven the greater efficiencies in its operations in the year. Sustained investment in new technologies and the ongoing development of our staff will see the business capitalise in further cost benefits and stronger margins. The company maintains a strong order book in the medium term.
The company will continue to add value with further developments in the services and products we provide our clients. Sustained investment in our core business and new areas; Commercial Gas Installations and Maintenance, Electrical, New Build and the developing Renewables and Decarbonisation market is expanding the company’s work streams.
Ongoing and future investment in infrastructure including technology and training in the key divisions, Renewable Energy, Commercial Heating and Electrical is starting to prove beneficial with the newer Decarbonisation work streams adding newer contracts and revenue streams. In addition, the development of a key strategic partnerships for the delivery of planned Renewables installations for the Green Homes Grant scheme and future large-scale renewables and Decarbonisation programmes with our clients will put us at the forefront of this market, helping the UK to achieve its target of zero-carbon by 2050.
Key performance indicators
PROFITABILITY RATIOS: 2022
2021
2020
Gross Profit (%) 21.5% 26.4% 18.6%
Profit before Tax (%) 10.6% 16.5% 7.0%
EMPLOYEE RATIOS:
No. of Employees 220 236 246
Profit/Employee (£'000) 24.8 29.9 11.0
The directors monitor the gross margin achieved on each project and utilise the resources available to maximise profits for the company.
R J Glendinning
Director
28 September 2022
TSG BUILDING SERVICES PLC
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 MARCH 2022
- 3 -
The directors present their annual report and financial statements for the year ended 31 March 2022.
Principal activities
The principal activity of the company
was that of the provision of building services to Social Housing groups.
Results and dividends
The results for the year are set out on page 8.
No ordinary dividends were paid. The directors do not recommend payment of a final dividend.
Directors
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
J P Holloway
(Resigned 24 June 2021)
B L Rees
A J Thrussell
R J Glendinning
E R Panagi
A Pellow
Auditor
In accordance with the company's articles, a resolution proposing that Newton & Garner Limited be reappointed as auditor of the company 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.
Financial instruments and risk management
The company's financial assets and liabilities consist of trade debtors and creditors, cash balances,
|
finance leases and bank borrowings.
|
|
|
|
|
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The directors manage the company's exposure to financial risk by researching the credit worthiness of
customers and by seeking advice from the company's providers of finance.
|
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On behalf of the board
R J Glendinning
Director
28 September 2022
TSG BUILDING SERVICES PLC
DIRECTORS' RESPONSIBILITIES STATEMENT
FOR THE YEAR ENDED 31 MARCH 2022
- 4 -
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.
TSG BUILDING SERVICES PLC
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF TSG BUILDING SERVICES PLC
- 5 -
Opinion
We have audited the financial statements of TSG BUILDING SERVICES PLC (the 'company') for the year ended 31 March 2022 which comprise the statement of comprehensive income, the balance sheet, the statement of changes in equity, the statement of cash flows and notes to the financial statements, including 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).
In our opinion the financial statements:
-
give a true and fair view of the state of the company's affairs as at 31 March 2022 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
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 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.
TSG BUILDING SERVICES PLC
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF TSG BUILDING SERVICES PLC
- 6 -
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 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, 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
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
.
The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below
.
Extent to which the audit was considered capable of detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. The objectives of our audit were to identify and assess the risks of material misstatement of the financial statements from irregularities, whether due to fraud or error, and discussed these risks between our audit team members. We then designed and performed audit procedures responsive to those risks, including obtaining sufficient appropriate audit evidence to provide a basis for our opinion, and to respond appropriately to any instances of identified or suspected non-compliance of laws and regulations.
To identify and assess such risks, the audit team:
-
Obtained an understanding of the nature of the company’s industry and its control environment and reviewed the company’s documentation of their policies and procedures relating to fraud and compliance with laws and regulations.
-
Inquired of management about their own identification and assessments of the risks of irregularities.
-
Obtained an understanding of the legal and regulatory frameworks within which the company operates, focusing on those laws and regulations that have a direct effect on the determination of material amounts and disclosures in the financial statements. The main law and regulation we considered in this context was The Financial Reporting Standards applicable in the UK and Republic of Ireland (FRS 102). We assessed the required compliance with these as part of our audit procedures on the related financial statement items.
-
Considered the opportunities and incentives that may exist within the company for fraud and how and where the financial statements may be susceptible to fraud. Auditing standards limit the required audit procedures to identify non-compliance.
TSG BUILDING SERVICES PLC
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF TSG BUILDING SERVICES PLC
- 7 -
Audit response to risks identified
The audit team identified the greatest risk of material impact on the financial statements from irregularities, including fraud, to be within the recording of income and the override of controls by management. Our audit procedures to respond to these risks included, but were not limited to, testing manual journal entries and other adjustments for appropriateness, and evaluating the business rationale of significant transactions outside the normal course of business. We also enquired with management around actual and potential litigation and claims, and reviewed assumptions and judgements made by management in their accounting estimates, particularly in relation to contract accounting, including the expected margin through assessment of post year end performance and stage of completion. We have also performed analytical procedures to identify any unusual relationships that may indicate any risk of material misstatement due to fraud and reviewed minutes of meetings of those charged with governance.
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. We are not responsible for preventing non-compliance and cannot be expected to detect non-compliance with all laws and regulations.
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.
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.
Robert Knight, FCCA, ATII
Senior Statutory Auditor
For and on behalf of Newton & Garner Limited
28 September 2022
Chartered Accountants
Statutory Auditor
Building 2
30 Friern Park
North Finchley
London
N12 9DA
TSG BUILDING SERVICES PLC
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 MARCH 2022
- 8 -
2022
2021
Notes
£
£
Turnover
3
51,515,098
42,768,707
Cost of sales
(40,422,820)
(31,485,480)
Gross profit
11,092,278
11,283,227
Administrative expenses
(5,718,215)
(5,444,149)
Other operating income
61,923
1,328,873
Operating profit
4
5,435,986
7,167,951
Interest receivable and similar income
7
1,627
9,427
Interest payable and similar expenses
8
(15,917)
(152,203)
Fair value gains and losses on investment properties
12
35,000
Profit before taxation
5,456,696
7,025,175
Tax on profit
9
(1,086,890)
(1,082,724)
Profit for the financial year
4,369,806
5,942,451
Other comprehensive income
Tax relating to other comprehensive income
(133,000)
Total comprehensive income for the year
4,236,806
5,942,451
The profit and loss account has been prepared on the basis that all operations are continuing operations.
TSG BUILDING SERVICES PLC
BALANCE SHEET
AS AT
31 MARCH 2022
31 March 2022
- 9 -
2022
2021
Notes
£
£
£
£
Fixed assets
Tangible assets
11
2,176,050
1,450,924
Investment properties
12
285,000
250,000
2,461,050
1,700,924
Current assets
Stocks
13
81,898
127,308
Debtors
14
14,901,412
13,375,827
Cash at bank and in hand
8,799,178
6,765,378
23,782,488
20,268,513
Creditors: amounts falling due within one year
15
(10,214,910)
(11,022,890)
Net current assets
13,567,578
9,245,623
Total assets less current liabilities
16,028,628
10,946,547
Provisions for liabilities
Deferred tax liability
17
260,946
115,671
(260,946)
(115,671)
Net assets
15,767,682
10,830,876
Capital and reserves
Called up share capital
19
17,820
17,820
Revaluation reserve
982,643
415,643
Capital redemption reserve
42,180
42,180
Profit and loss reserves
14,725,039
10,355,233
Total equity
15,767,682
10,830,876
The financial statements were approved by the board of directors and authorised for issue on 28 September 2022 and are signed on its behalf by:
A J Thrussell
Director
Company Registration No. 03908728
TSG BUILDING SERVICES PLC
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 MARCH 2022
- 10 -
Share capital
Revaluation reserve
Capital redemption reserve
Profit and loss reserves
Total
Notes
£
£
£
£
£
Balance at 1 April 2020
17,820
415,643
42,180
6,412,782
6,888,425
Year ended 31 March 2021:
Profit and total comprehensive income for the year
-
-
-
5,942,451
5,942,451
Dividends
10
-
-
-
(2,000,000)
(2,000,000)
Balance at 31 March 2021
17,820
415,643
42,180
10,355,233
10,830,876
Year ended 31 March 2022:
Profit for the year
-
-
-
4,369,806
4,369,806
Other comprehensive income:
Tax relating to other comprehensive income
-
(133,000)
-
(133,000)
Total comprehensive income for the year
(133,000)
4,369,806
4,236,806
Other movements
-
700,000
-
-
700,000
Balance at 31 March 2022
17,820
982,643
42,180
14,725,039
15,767,682
TSG BUILDING SERVICES PLC
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 MARCH 2022
- 11 -
2022
2021
Notes
£
£
£
£
Cash flows from operating activities
Cash generated from operations
24
3,233,839
7,115,320
Interest paid
(15,917)
(152,203)
Income taxes paid
(1,064,453)
(33,703)
Net cash inflow from operating activities
2,153,469
6,929,414
Investing activities
Purchase of tangible fixed assets
(99,645)
(128,098)
Interest received
1,627
9,427
Net cash used in investing activities
(98,018)
(118,671)
Financing activities
Repayment of borrowings
(2,754,104)
Repayment of bank loans
(21,651)
(43,383)
Dividends paid
(2,000,000)
Net cash used in financing activities
(21,651)
(4,797,487)
Net increase in cash and cash equivalents
2,033,800
2,013,256
Cash and cash equivalents at beginning of year
6,765,378
4,752,122
Cash and cash equivalents at end of year
8,799,178
6,765,378
TSG BUILDING SERVICES PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2022
- 12 -
1
Accounting policies
Company information
TSG BUILDING SERVICES PLC is a
private
company
limited by shares
incorporated in
England and Wales
.
The registered office is
TSG House, Cranbourne Industrial Estate, Cranborne Road, Potters Bar, Herts, EN6 3JN.
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
pound
.
The financial statements have been prepared under the historical cost convention, [modified to include the revaluation of freehold properties and to include investment properties and certain financial instruments at fair value]. The principal accounting policies adopted are set out below.
1.2
Going concern
A
true
t the time of approving the financial statements
,
t
he directors have a reasonable expectation that the
company
has adequate resources to continue in operational existence for the foreseeable future. Thus
t
he directors continue to adopt the going concern basis of accounting in preparing the financial statements.
1.3
Turnover
Turnover is recognised at the fair value of the consideration received or receivable for 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.
When cash inflows are deferred and represent a financing arrangement, the fair value of the consideration is the present value of the future receipts. The difference between the fair value of the consideration and the nominal amount received is recognised as interest income.
Revenue from contracts is recognised by reference to the state of completion when the
state 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 labour 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.
1.4
Tangible fixed assets
Tangible fixed assets
are initially measured at cost and subsequently measured at cost or valuation, net of depreciation and any impairment losses.
Depreciation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:
Land and buildings Freehold
Held at open market value
Plant and machinery
10% - 25% of cost per annum
Fixtures, fittings & equipment
10% of cost per annum
Motor vehicles
25% of cost per annum
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
.
TSG BUILDING SERVICES PLC
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2022
1
Accounting policies
(Continued)
- 13 -
1.5
Investment properties
Investment property, which is property held to earn rentals and/or for capital appreciation, is initially recognised at cost, which includes the purchase cost and any directly attributable expenditure
. Subsequently it is measured
at fair value a
t
the reporting end date.
Changes in fair value are recognised in profit or loss.
1.6
Impairment of fixed assets
At each reporting 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.
Recognised impairment losses are reversed if, and only if, the reasons for the impairment loss have ceased to apply. Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit)
in
prior years. A reversal of an impairment loss is recognised immediately in
profit
or
loss
, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.
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
Cash and cash equivalents
Cash and cash equivalents include cash in hand, deposits held at call with banks, other short-term liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in
creditors falling due within one year
.
1.9
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.
TSG BUILDING SERVICES PLC
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2022
1
Accounting policies
(Continued)
- 14 -
Other financial assets
Other financial assets, including investments in equity instruments which are not subsidiaries, associates or joint ventures, are initially measured at fair value, which is normally the transaction price. Such assets are subsequently carried at fair value and the changes in fair value are recognised in
profit
or
loss
, except that investments in equity instruments that are not publicly traded and whose fair values cannot be measured reliably are measured at cost less impairment.
Impairment of financial assets
Financial assets, other than those
held
at
fair value through profit and loss
, are assessed for indicators of impairment at each reporting end date.
Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected.
If an asset is impaired, the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset’s original effective interest rate. The impairment loss is recognised in profit or loss.
If there is a decrease in the impairment loss arising from an event occurring after the impairment was recognised, the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been, had the impairment not previously been recognised. The impairment reversal is recognised in profit or loss.
Derecognition of financial assets
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when
the company
transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.
Classification of financial liabilities
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the company after deducting all of its liabilities.
Basic financial liabilities
Basic financial liabilities, including
creditors
, bank loans, loans from
fellow group companies and preference shares that are classified as debt, are
initially recognised at transaction price unless the arrangement constitutes a
financing transaction, where the debt instrument is measured at the present value of
the future
paymen
ts discounted at a market rate of interest.
Financial liabilities classified as payable within one year are not amortised.
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.
TSG BUILDING SERVICES PLC
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2022
1
Accounting policies
(Continued)
- 15 -
Other financial liabilities
Derivatives, including interest rate swaps and forward foreign exchange contracts,
are not basic financial instruments. Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are
s
ubsequently re-measured at their fair value. Changes in the fair value of derivatives are recognised in
profit
or
loss
in finance costs or finance income as appropriate, unless hedge accounting is applied and the hedge is a cash flow hedge.
Debt instruments that do not meet the conditions in FRS 102 paragraph 11.9 are subsequently measured at fair value through profit or loss. Debt instruments may be designated as
being measured at
fair value th
r
ough profit or loss to eliminate or reduce an accounting mismatch or if the instruments are measured and their performance evaluated on a fair value basis in accordance with a documented risk management or investment strategy.
Derecognition of financial liabilities
Financial liabilities are derecognised when the company’s contractual obligations
expire or are discharged or cancelled.
1.10
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.
1.11
Derivatives
Derivatives are initially recognised at fair value at the date a derivative contract is entered into and are subsequently remeasured to fair value at each reporting end date. The resulting gain or loss is recognised in
profit
or
loss
immediately unless the derivative is designated and effective as a hedging instrument, in which event the timing of the recognition in
profit
or
loss
depends on the nature of the hedge relationship.
A derivative with a positive fair value is recognised as a financial asset, whereas a derivative with a negative fair value is recognised as a financial liability.
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.
TSG BUILDING SERVICES PLC
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2022
1
Accounting policies
(Continued)
- 16 -
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.
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 when the
company
has 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.
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.
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.
1.17
Foreign exchange
Transactions in currencies other than
pounds sterling
are recorded at the rates of exchange prevailing at the dates of the transactions. At each reporting end date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the reporting end date. Gains and losses arising on translation
in the period
are included in profit or loss.
TSG BUILDING SERVICES PLC
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2022
- 17 -
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
and estimates
have had the most significant
effect on amounts recognised in the financial statements.
Revenue Recognition
The company assess the most likely outcome of each contract based on a number of technical & contractual factors. The company applies a prudent approach in assessing the carrying value in amounts recoverable on contracts and will provide for any debts not deemed recoverable.
Freehold and Investment Properties
The properties were valued at open market during 2021 using independent valuations from Copping Joyce Chartered Surveyors and JR Property Services. In the directors' opinion the same valuation applies at 31st March 2022.
3
Turnover and other revenue
An analysis of the company's turnover is as follows:
2022
2021
£
£
Turnover analysed by class of business
Building services
51,515,098
42,768,707
2022
2021
£
£
Grants received
51,055
1,046,128
4
Operating profit
2022
2021
Operating profit for the year is stated after charging/(crediting):
£
£
Government grants
(51,055)
(1,046,128)
Fees payable to the company's auditors for the audit of the company's financial statements
45,000
37,500
Depreciation of owned tangible fixed assets
71,845
58,598
Loss on disposal of tangible fixed assets
2,674
77
Operating lease charges
555,981
424,508
TSG BUILDING SERVICES PLC
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2022
- 18 -
5
Employees
The average monthly number of persons (including directors) employed by the company during the year was:
2022
2021
Number
Number
Office and administration
88
92
Production and site
132
144
Total
220
236
Their aggregate remuneration comprised:
2022
2021
£
£
Wages and salaries
8,450,849
8,323,477
Social security costs
918,864
883,242
Pension costs
199,631
209,949
9,569,344
9,416,668
6
Directors' remuneration
2022
2021
£
£
Remuneration for qualifying services
679,672
686,467
Company pension contributions to defined contribution schemes
47,761
48,724
727,433
735,191
The number of directors for whom retirement benefits are accruing under defined contribution schemes amounted to 6.
Remuneration disclosed above include the following amounts paid to the highest paid director:
2022
2021
£
£
Remuneration for qualifying services
200,000
154,700
Company pension contributions to defined contribution schemes
31,800
31,800
TSG BUILDING SERVICES PLC
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2022
- 19 -
7
Interest receivable and similar income
2022
2021
£
£
Interest income
Interest on bank deposits
1,627
5,085
Other interest income
4,342
Total income
1,627
9,427
8
Interest payable and similar expenses
2022
2021
£
£
Interest on bank overdrafts and loans
199
2,596
Other interest
15,718
149,607
15,917
152,203
9
Taxation
2022
2021
£
£
Current tax
UK corporation tax on profits for the current period
1,059,747
1,039,158
Group tax relief
14,868
29,361
Total current tax
1,074,615
1,068,519
Deferred tax
Origination and reversal of timing differences
12,275
14,205
Total tax charge
1,086,890
1,082,724
TSG BUILDING SERVICES PLC
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2022
9
Taxation
(Continued)
- 20 -
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:
2022
2021
£
£
Profit before taxation
5,456,696
7,025,175
Expected tax charge based on the standard rate of corporation tax in the UK of 19.00% (2021: 19.00%)
1,036,772
1,334,783
Tax effect of expenses that are not deductible in determining taxable profit
55,082
(2,263)
Permanent capital allowances in excess of depreciation
(4,964)
14,205
Research and development tax credit
(264,001)
Taxation charge for the year
1,086,890
1,082,724
In addition to the amount charged to the profit and loss account, the following amounts relating to tax have been recognised directly in other comprehensive income:
2022
2021
£
£
Deferred tax arising on:
Revaluation of property
133,000
-
10
Dividends
2022
2021
£
£
Interim paid
2,000,000
TSG BUILDING SERVICES PLC
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2022
- 21 -
11
Tangible fixed assets
Land and buildings Freehold
Plant and machinery
Fixtures, fittings & equipment
Motor vehicles
Total
£
£
£
£
£
Cost or valuation
At 1 April 2021
1,250,000
225,279
11,272
149,517
1,636,068
Additions
83,983
3,079
12,583
99,645
Disposals
(7,448)
(7,448)
Revaluation
700,000
700,000
At 31 March 2022
1,950,000
301,814
14,351
162,100
2,428,265
Depreciation and impairment
At 1 April 2021
139,516
6,004
39,624
185,144
Depreciation charged in the year
33,697
1,332
36,816
71,845
Eliminated in respect of disposals
(4,774)
(4,774)
At 31 March 2022
168,439
7,336
76,440
252,215
Carrying amount
At 31 March 2022
1,950,000
133,375
7,015
85,660
2,176,050
At 31 March 2021
1,250,000
85,763
5,268
109,893
1,450,924
Land and buildings were valued during 2021 at open market value using an independent valuation from Copping Joyce Chartered Surveyors. In the directors opinion the same valuation applies at 31st March 2022.
2022
2021
£
£
Cost
727,567
727,567
12
Investment property
2022
£
Fair value
At 1 April 2021
250,000
Net gains or losses through fair value adjustments
35,000
At 31 March 2022
285,000
The property was valued at open market value during 2021 using an independent valuation from JR Property Services. In the directors opinion the same valuation applies at 31st March 2022.
TSG BUILDING SERVICES PLC
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2022
- 22 -
13
Stocks
2022
2021
£
£
Raw materials and consumables
81,898
127,308
14
Debtors
2022
2021
Amounts falling due within one year:
£
£
Trade debtors
7,090,794
8,515,609
Gross amounts owed by contract customers
5,163,845
2,949,368
Amounts owed by group undertakings
683,713
Other debtors
1,390,529
127,820
Prepayments and accrued income
1,256,244
1,099,317
14,901,412
13,375,827
All debtors fall due within one year, except for £1,123,532 (2021 - £865,770), which falls due after more than one year.
15
Creditors: amounts falling due within one year
2022
2021
Notes
£
£
Bank loans
16
21,651
Trade creditors
7,344,123
6,976,726
Amounts owed to group undertakings
124,749
1,560,214
Corporation tax
1,059,747
1,049,585
Other taxation and social security
1,331,844
992,437
Other creditors
192,140
185,536
Accruals and deferred income
162,307
236,741
10,214,910
11,022,890
16
Loans and overdrafts
2022
2021
£
£
Bank loans
21,651
Payable within one year
21,651
TSG BUILDING SERVICES PLC
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2022
- 23 -
17
Deferred taxation
Deferred tax assets and liabilities are offset where the company has a legally enforceable right to do so. The following is the analysis of the deferred tax balances (after offset) for financial reporting purposes:
Liabilities
Liabilities
2022
2021
Balances:
£
£
ACAs
37,475
31,849
Revaluations
223,471
83,822
260,946
115,671
2022
Movements in the year:
£
Liability at 1 April 2021
115,671
Charge to profit or loss
145,275
Liability at 31 March 2022
260,946
18
Retirement benefit schemes
2022
2021
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
199,631
209,949
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
2022
2021
2022
2021
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Ordinary shares of £1 each
17,820
17,820
17,820
17,820
TSG BUILDING SERVICES PLC
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2022
- 24 -
20
Operating lease commitments
Lessee
2022
2021
£
£
Within one year
182,081
314,792
Between two and five years
26,511
134,897
208,592
449,689
21
Events after the reporting date
On 11
th
April 2022, the parent company, WP Group Holdings Ltd, has issued and allotted to TSG Building Services PLC, a total of 32,180 ordinary shares of £1.00 each.
22
Related party transactions
The company entered into transactions with related parties during the course of the year. The related parties exists as they are under control of directors of the company. During the year the company had the following transactions with related parties:
The company made sales of £405,562 and received services of £66,000. There is a balance owed at the year end of £1,301,152 which is included within other debtors.
23
Ultimate controlling party
The company's accounts will be consolidated within the accounts of the parent company, WP Group Holdings Ltd. The registered office of its parent company is Heathcroft, Back Lane, Letchmore Heath, Herts, WD25 8EF
24
Cash generated from operations
2022
2021
£
£
Profit for the year after tax
4,369,806
5,942,451
Adjustments for:
Taxation charged
1,086,890
1,082,724
Finance costs
15,917
152,203
Investment income
(1,627)
(9,427)
Loss on disposal of tangible fixed assets
2,674
77
Fair value gain on investment properties
(35,000)
Depreciation and impairment of tangible fixed assets
71,845
58,598
Movements in working capital:
Decrease in stocks
45,410
3,546
Increase in debtors
(1,525,585)
(893,040)
(Decrease)/increase in creditors
(796,491)
778,188
Cash generated from operations
3,233,839
7,115,320
TSG BUILDING SERVICES PLC
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2022
- 25 -
25
Analysis of changes in net funds
1 April 2021
Cash flows
31 March 2022
£
£
£
Cash at bank and in hand
6,765,378
2,033,800
8,799,178
Borrowings excluding overdrafts
(21,651)
21,651
-
6,743,727
2,055,451
8,799,178
2022-03-31
2021-04-01
false
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