Company registration number 03908728 (England and Wales)
TSG BUILDING SERVICES PLC
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
TSG BUILDING SERVICES PLC
COMPANY INFORMATION
Directors
B L Rees
A J Thrussell
R J Glendinning
E R Panagi
A Pellow
R J Moore
(Appointed 1 April 2023)
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 - 4
Directors' responsibilities statement
5
Independent auditor's report
6 - 8
Statement of comprehensive income
9
Balance sheet
10
Statement of changes in equity
11
Statement of cash flows
12
Notes to the financial statements
13 - 25
TSG BUILDING SERVICES PLC
STRATEGIC REPORT
FOR THE YEAR ENDED 31 MARCH 2023
- 1 -
The directors present the strategic report for the year ended 31 March 2023.
Fair review of the business
Turnover for TSG Building Services PLC increased in the year by 5.5% to £54,364,798 (2022 - £51,515,098). Growth in the newer areas of the business have continued and we have resecured existing long term contracts as well as secured new contracts across all the business divisions.
Gross margins for the year were 19.5% of turnover (2022 – 21.5%). Operating profit was 9.4% of turnover (2022 – 10.6%) at £5,101,399 (2022 - £5,435,986). 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 on its newer contracts.
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 2023
- 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 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: 2023 2022 2021
Gross Profit (%) 19.5% 21.5% 26.4%
Profit before Tax (%) 9.5% 10.6% 16.5%
EMPLOYEE RATIOS:
No. of Employees 222 220 236
Profit/Employee (£'000) 23.2 24.8 29.9
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
17 August 2023
TSG BUILDING SERVICES PLC
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 MARCH 2023
- 3 -
The directors present their annual report and financial statements for the year ended 31 March 2023.
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 9.
Ordinary dividends were paid amounting to £1,000,000. 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:
B L Rees
A J Thrussell
R J Glendinning
E R Panagi
A Pellow
R J Moore
(Appointed 1 April 2023)
Business relationships
The Board recognises the significance of maintaining and developing strong and positive relationships with its supply chain partners which help us enhance the value derived from our supply chain. We monitor our subcontractors' performance against set criteria and provide them with constructive feedback. Where possible we use local resources to ensure we harness innovation, achieve consistent quality and meet our responsible business goals. In addition, we remain committed to working together with our customers to deliver where possible social value initiatives or agree on reasonable actions we can take to minimise our impact on the environment.
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.
Energy and carbon report
As the company is a UK subsidiary, information under the SECR framework has been included in the parent's group level report.
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. | | | | | |
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. |
| | |
TSG BUILDING SERVICES PLC
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
- 4 -
On behalf of the board
R J Glendinning
Director
17 August 2023
TSG BUILDING SERVICES PLC
DIRECTORS' RESPONSIBILITIES STATEMENT
FOR THE YEAR ENDED 31 MARCH 2023
- 5 -
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;
state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements;
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company’s transactions and disclose with reasonable accuracy at any time the financial position of the company and 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
- 6 -
Opinion
We have audited the financial statements of TSG BUILDING SERVICES PLC (the 'company') for the year ended 31 March 2023 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 2023 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' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
the strategic report and the directors' report have been prepared in accordance with applicable legal requirements.
TSG BUILDING SERVICES PLC
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF TSG BUILDING SERVICES PLC
- 7 -
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 identified material misstatements in the strategic report or the directors' report.
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' responsibilities statement, 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
- 8 -
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
17 August 2023
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 2023
- 9 -
2023
2022
Notes
£
£
Turnover
3
54,364,798
51,515,098
Cost of sales
(43,788,737)
(40,422,820)
Gross profit
10,576,061
11,092,278
Administrative expenses
(5,763,604)
(5,718,215)
Other operating income
288,942
61,923
Operating profit
4
5,101,399
5,435,986
Interest receivable and similar income
7
80,632
1,627
Interest payable and similar expenses
8
(40,027)
(15,917)
Fair value gains and losses on investment properties
12
35,000
Profit before taxation
5,142,004
5,456,696
Tax on profit
9
(763,636)
(1,086,890)
Profit for the financial year
4,378,368
4,369,806
Other comprehensive income
Tax relating to other comprehensive income
(133,000)
Total comprehensive income for the year
4,378,368
4,236,806
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 2023
31 March 2023
- 10 -
2023
2022
Notes
£
£
£
£
Fixed assets
Tangible assets
11
2,125,515
2,176,050
Investment property
12
285,000
285,000
2,410,515
2,461,050
Current assets
Stocks
13
84,572
81,898
Debtors
14
19,163,632
14,901,412
Cash at bank and in hand
8,690,925
8,799,178
27,939,129
23,782,488
Creditors: amounts falling due within one year
15
(10,939,454)
(10,214,910)
Net current assets
16,999,675
13,567,578
Total assets less current liabilities
19,410,190
16,028,628
Provisions for liabilities
Deferred tax liability
16
252,060
260,946
(252,060)
(260,946)
Net assets
19,158,130
15,767,682
Capital and reserves
Called up share capital
18
50,000
17,820
Revaluation reserve
982,643
982,643
Capital redemption reserve
42,180
42,180
Profit and loss reserves
18,083,307
14,725,039
Total equity
19,158,130
15,767,682
The financial statements were approved by the board of directors and authorised for issue on 17 August 2023 and are signed on its behalf by:
A J Thrussell
Director
Company registration number 03908728 (England and Wales)
TSG BUILDING SERVICES PLC
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 MARCH 2023
- 11 -
Share capital
Revaluation reserve
Capital redemption reserve
Profit and loss reserves
Total
Notes
£
£
£
£
£
Balance at 1 April 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
Year ended 31 March 2023:
Profit and total comprehensive income for the year
-
-
-
4,378,368
4,378,368
Dividends
10
-
-
-
(1,000,000)
(1,000,000)
Other movements
32,180
-
-
(20,100)
12,080
Balance at 31 March 2023
50,000
982,643
42,180
18,083,307
19,158,130
TSG BUILDING SERVICES PLC
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 MARCH 2023
- 12 -
2023
2022
Notes
£
£
£
£
Cash flows from operating activities
Cash generated from operations
23
2,161,317
3,233,839
Interest paid
(40,027)
(15,917)
Income taxes paid
(1,289,629)
(1,064,453)
Net cash inflow from operating activities
831,661
2,153,469
Investing activities
Purchase of tangible fixed assets
(32,626)
(99,645)
Interest received
80,632
1,627
Net cash generated from/(used in) investing activities
48,006
(98,018)
Financing activities
Proceeds from issue of shares
32,180
Redemption of shares
(20,100)
Repayment of bank loans
(21,651)
Dividends paid
(1,000,000)
Net cash used in financing activities
(987,920)
(21,651)
Net (decrease)/increase in cash and cash equivalents
(108,253)
2,033,800
Cash and cash equivalents at beginning of year
8,799,178
6,765,378
Cash and cash equivalents at end of year
8,690,925
8,799,178
TSG BUILDING SERVICES PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
- 13 -
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 amounts 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
Atruet the time of approving the financial statements, the directors have a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future. Thus the directors continue to adopt the going concern basis of accounting in preparing the financial statements.
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 2023
1
Accounting policies
(Continued)
- 14 -
1.5
Investment property
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 at 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 2023
1
Accounting policies
(Continued)
- 15 -
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 payments discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.
Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.
Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Amounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.
TSG BUILDING SERVICES PLC
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
1
Accounting policies
(Continued)
- 16 -
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 subsequently 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 through 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 2023
1
Accounting policies
(Continued)
- 17 -
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 leases 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 received 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 2023
- 18 -
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 2023.
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.
Other income
During the period, the company instigated proceedings against a supplier of the company, through a class action lawsuit. Total compensation to the company has been estimated at £180,598 and this amount is being claimed by the company.
The company's lawyers have advised that they consider that the suit has merit, and therefore an amount has been recognised in these financial statements, held within other income, as the management consider there to be a high probable chance of compensation.
There is a possibility that a proportion of this estimated income will also be paid out over several years. At this stage it is uncertain on the level and timing of the inflow.
3
Turnover and other revenue
An analysis of the company's turnover is as follows:
2023
2022
£
£
Turnover analysed by class of business
Building services
54,364,798
51,515,098
TSG BUILDING SERVICES PLC
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
3
Turnover and other revenue
(Continued)
- 19 -
2023
2022
£
£
Grants received
-
51,055
4
Operating profit
2023
2022
Operating profit for the year is stated after charging/(crediting):
£
£
Government grants
-
(51,055)
Fees payable to the company's auditors for the audit of the company's financial statements
40,000
45,000
Depreciation of owned tangible fixed assets
83,161
71,845
Loss on disposal of tangible fixed assets
-
2,674
Operating lease charges
620,742
555,981
5
Employees
The average monthly number of persons (including directors) employed by the company during the year was:
2023
2022
Number
Number
Office and administration
87
88
Production and site
135
132
Total
222
220
Their aggregate remuneration comprised:
2023
2022
£
£
Wages and salaries
8,668,084
8,450,849
Social security costs
991,680
918,864
Pension costs
202,679
199,631
9,862,443
9,569,344
6
Directors' remuneration
2023
2022
£
£
Remuneration for qualifying services
674,254
679,672
Company pension contributions to defined contribution schemes
47,763
47,761
722,017
727,433
TSG BUILDING SERVICES PLC
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
6
Directors' remuneration
(Continued)
- 20 -
The number of directors for whom retirement benefits are accruing under defined contribution schemes amounted to 5.
Remuneration disclosed above include the following amounts paid to the highest paid director:
2023
2022
£
£
Remuneration for qualifying services
200,000
200,000
Company pension contributions to defined contribution schemes
31,800
31,800
7
Interest receivable and similar income
2023
2022
£
£
Interest income
Interest on bank deposits
80,632
1,627
8
Interest payable and similar expenses
2023
2022
£
£
Interest on bank overdrafts and loans
-
199
Other interest
40,027
15,718
40,027
15,917
9
Taxation
2023
2022
£
£
Current tax
UK corporation tax on profits for the current period
1,011,728
1,059,747
Adjustments in respect of prior periods
(239,206)
Group tax relief
14,868
Total current tax
772,522
1,074,615
Deferred tax
Origination and reversal of timing differences
(8,886)
12,275
Total tax charge
763,636
1,086,890
TSG BUILDING SERVICES PLC
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
9
Taxation
(Continued)
- 21 -
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:
2023
2022
£
£
Profit before taxation
5,142,004
5,456,696
Expected tax charge based on the standard rate of corporation tax in the UK of 19.00% (2022: 19.00%)
976,981
1,036,772
Tax effect of expenses that are not deductible in determining taxable profit
27,723
55,082
Adjustments in respect of prior years
(239,206)
Permanent capital allowances in excess of depreciation
(1,862)
(4,964)
Taxation charge for the year
763,636
1,086,890
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:
2023
2022
£
£
Deferred tax arising on:
Revaluation of property
-
133,000
10
Dividends
2023
2022
£
£
Interim paid
1,000,000
TSG BUILDING SERVICES PLC
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
- 22 -
11
Tangible fixed assets
Land and buildings Freehold
Plant and machinery
Fixtures, fittings & equipment
Motor vehicles
Total
£
£
£
£
£
Cost or valuation
At 1 April 2022
1,950,000
301,814
14,351
162,100
2,428,265
Additions
30,683
1,943
32,626
At 31 March 2023
1,950,000
332,497
16,294
162,100
2,460,891
Depreciation and impairment
At 1 April 2022
168,439
7,336
76,440
252,215
Depreciation charged in the year
45,620
1,548
35,993
83,161
At 31 March 2023
214,059
8,884
112,433
335,376
Carrying amount
At 31 March 2023
1,950,000
118,438
7,410
49,667
2,125,515
At 31 March 2022
1,950,000
133,375
7,015
85,660
2,176,050
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 2023.
2023
2022
£
£
Cost
727,567
727,567
12
Investment property
2023
£
Fair value
At 1 April 2022 and 31 March 2023
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 2023.
13
Stocks
2023
2022
£
£
Raw materials and consumables
84,572
81,898
TSG BUILDING SERVICES PLC
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
- 23 -
14
Debtors
2023
2022
Amounts falling due within one year:
£
£
Trade debtors
9,861,221
7,090,794
Gross amounts owed by contract customers
5,903,035
5,163,845
Other debtors
1,922,186
1,390,529
Prepayments and accrued income
1,477,190
1,256,244
19,163,632
14,901,412
All debtors fall due within one year, except for £1,114,585 (2022 - £1,123,532), which falls due after more than one year.
15
Creditors: amounts falling due within one year
2023
2022
£
£
Trade creditors
9,063,018
7,344,123
Amounts owed to group undertakings
63,254
124,749
Corporation tax
542,640
1,059,747
Other taxation and social security
998,455
1,331,844
Other creditors
39,231
192,140
Accruals and deferred income
232,856
162,307
10,939,454
10,214,910
16
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
2023
2022
Balances:
£
£
ACAs
28,588
37,475
Revaluations
223,472
223,471
252,060
260,946
TSG BUILDING SERVICES PLC
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
16
Deferred taxation
(Continued)
- 24 -
2023
Movements in the year:
£
Liability at 1 April 2022
260,946
Credit to profit or loss
(8,886)
Liability at 31 March 2023
252,060
17
Retirement benefit schemes
2023
2022
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
202,679
199,631
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.
18
Share capital
2023
2022
2023
2022
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Ordinary shares of £1 each
50,000
17,820
50,000
17,820
On 11th April 2022, the parent company, WP Group Holdings Ltd, issued and allotted to TSG Building Services PLC, a total of 32,180 ordinary shares of £1.00 each.
19
Operating lease commitments
Lessee
2023
2022
£
£
Within one year
547,280
182,081
Between two and five years
356,948
26,511
904,228
208,592
20
Events after the reporting date
On 1st August 2023, WP Group Holdings Ltd (“the parent company”) entered into an agreement to sell 80% of its shares to Viessmann Investment UK Holding Limited, a company owned by Viessmann Group GmbH & Co KG and registered in Germany.
21
Related party transactions
TSG BUILDING SERVICES PLC
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
21
Related party transactions
(Continued)
- 25 -
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 £6,090. There is a balance owed at the year end from related parties of £1,700,367 which is included within other debtors.
22
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
23
Cash generated from operations
2023
2022
£
£
Profit for the year after tax
4,378,368
4,369,806
Adjustments for:
Taxation charged
763,636
1,086,890
Finance costs
40,027
15,917
Investment income
(80,632)
(1,627)
(Gain)/loss on disposal of tangible fixed assets
-
2,674
Fair value gain on investment properties
(35,000)
Depreciation and impairment of tangible fixed assets
83,161
71,845
Movements in working capital:
(Increase)/decrease in stocks
(2,674)
45,410
Increase in debtors
(4,262,220)
(1,525,585)
Increase/(decrease) in creditors
1,241,651
(796,491)
Cash generated from operations
2,161,317
3,233,839
24
Analysis of changes in net funds
1 April 2022
Cash flows
31 March 2023
£
£
£
Cash at bank and in hand
8,799,178
(108,253)
8,690,925
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