community at the core of construction€¦ · p cooke fciob cenv p h lewellen bsc fca s robinson...

HIGGINS CONSTRUCTION PLC

ANNUAL REPORT

2015

Community at the Core of

Construction

Myatts Field Community Centre, Lambeth (top) - Century House, Tanner Street (bottom)

Higgins Construction PLC Annual Report and Accounts 2015 1

Directors and Corporate Information

Strategic Report

Directors’ Report

Directors’ Responsibilities Statement

Independent Auditor’s Report

Profit and Loss Account

Statement of Total Recognised Gains and Losses

Balance Sheet

Notes to the Financial Statements

3

4

5-6

6

7

8

8

9

10-18

Maintaining a Focus on Housing, Care and Education

2 Higgins Construction PLC Annual Report and Accounts 2015


DirectorsR G Higgins ACIOB (Chairman) S P Higgins BA S J Leakey BSc FCIOB (Managing Director) S Bailess MCIOB A M Board FCIOB K Briggs BSc FCIOB P Burrows MCIOB P Cooke FCIOB CEnv P H Lewellen BSc FCA S Robinson BSC MCIOBM Bradbury MCIOB (appointed 1 January 2015)A Millidge (appointed 1 January 2015)

SecretaryM K Francis BSc (Hons) FCA

AuditorKPMG LLP15 Canada SquareLondon E14 5GL

BankersHSBC Bank PLCWest End Corporate Banking Centre2nd Floor, 70 Pall MallLondon SW1Y 5EZ

Registered OfficeOne Langston RoadLoughtonEssex IG10 3SD

Registered Number684617

Company Websitewww.higginsconstruction.co.uk

Directors and Corporate Information


Strategic Report

IntroductionThe Directors present their Annual Report and Financial Statements for the year ended 31st July 2015.

Business ReviewTurnover has increased by 12.8% in the year to £181.2m (2014: £160.6 million). Continued pressure placed on margins, due to a very competitive market and supply chain constraints, has reduced profit before taxation to£275,000 (2014: £434,000).

The Directors are pleased to report a strong order book and anticipate significant growth in turnover in the year ending July 2016 due to the high demand for housing which continues to outstrip supply. Our clients are expanding their private sale development programmes to subsidise their social housing activities in the face of recent rent reductions imposed at the post-election budget.

The Company continues to operate as “community contractor” in the key sectors of social housing and education - working in partnership with our clients to create environments in which communities can thrive.

Through working closely with Higgins Homes PLC the Directors are able to provide a “one stop shop” by providing finance solutions, design, construction, marketing and sales services to our Registered Social Landlord clients. We are well-placed to engage in joint venture partnerships to maximise the cross-subsidy return available from private development.

Principal Risks and UncertaintiesThe Directors are aware of the inherent risks within the Construction industry. The Directors monitor and manage these risks through internal controls and maintaining awareness of market conditions, availability of public funds and the contract tendering process. Market initiatives such as sustainable mixed use development and the maintenance of strong relationships with clients and suppliers will ensure that the Company can adapt to changing market demands.

Principal Activities of the CompanyThe principal activity of the Company during the year was that of building contracting.

There were no significant changes in the Company’s activities during the year and it is the Directors’ intention to develop the business taking account of prevailing market conditions.

This Report was Approved by the Board and Signed on its BehalfM K Francis BSc (Hons) FCACompany Secretary27th October 2015


The directors present their report and the financial statements for the year ended 31st July 2015.

Results and DividendsThe profit for the year, after taxation, amounted to £94,000 (2014 - £199,000).During the year no interim or final dividend was paid. (2014: Nil).

DirectorsThe directors who served during the year were:R G Higgins ACIOB (Chairman) S P Higgins BAS J Leakey BSc FCIOB (Managing Director) S Bailess MCIOBA M Board FCIOBK Briggs BSc FCIOB

P Burrows MCIOBP Cooke FCIOB CEnv P H Lewellen BSc FCA S Robinson BSc MCIOBM Bradbury MCIOB (appointed 1st January 2015) A Millidge (appointed 1st January 2015)

B Sabin resigned on 30th June 2015.

Creditor Payment PolicyThe Company’s current policy concerning creditors is to:a) agree payment terms with its suppliers when it enters into binding purchase contracts;b) ensure that suppliers are made aware of the terms of payment by inclusion of the relevant terms in contracts; andc) abide by the payment terms agreed whenever it is satisfied that the supplier has provided the goods or services in accordance with the contracts.For the year to 31st July 2015 the Company’s average payment period from date of invoice or agreement of valuation was 32 days (2014: 35 days).

Disabled EmployeesIt is the policy of the Company to employ disabled persons where they are suited to a particular vacancy and to develop their careers by means of training and promotion.

Employee InvolvementThe Company encourages disclosure of information and employee involvement in matters of concern to their employment. Special attention is paid to Health and Safety and Quality Assurance, as a result the Company has obtained the Platinum Standard ‘Certificate of Commitment’ for over 75% of employees holding health and safety CSCS Cards, accordingly industrial accidents remain at a level well below the industry norm. The Company actively promotes training programmes, the employment of trade apprentices and the participation in other youth training schemes; particularly within the London Boroughs’ neighbourhood centres.

Investors in PeopleDuring the period the Company continued to hold ‘Investors in People’ status confirming the Company’s commitment to its employees.

Quality AssuranceThe Company has received accreditation under IS0 9001 as a quality assured contractor and ISO 14001 showing the Company’s commitment to sustainability.

Directors’ Report


Statement of Directors’ Responsibilities

The directors are responsible for preparing the Strategic report, the Directors’ report and the financial statements in accordance with applicable law and regulations. Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with 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 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 judgments and accounting estimates that are reasonable and prudent;• State whether applicable UK Accounting Standards have been followed, subject to any material departures

disclosed and explained in the financial statements;• Prepare the financial statements on the going concern basis unless it is inappropriate to presume that

the company will continue in business. The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company’s transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

The directors are responsible for the maintenance and integrity of the corporate and financial information included on the company’s website. Legislation in the UK governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

In respect of the Directors’ Report and Financial Statements

Disclosure to AuditorEach of the persons who are directors at the time when this Directors’ report is approved has confirmed that:• so far as that director is aware, there is no relevant audit information of which the company’s auditor is

unaware, and• that director has taken all the steps that ought to have been taken as a director in order to be aware of any

relevant audit information and to establish that the company’s auditor is aware of that information.

AuditorUnder section 487(2) of the Companies Act 2006, KPMG LLP will be deemed to have been reappointed as auditor 28 days after these financial statements were sent to members or 28 days after the latest date prescribed for filing the accounts with the registrar, whichever is earlier.

This Report was Approved by the Board and Signed on its BehalfM K Francis BSc (Hons) FCACompany Secretary27th October 2015

Directors’ Report


Independent Auditor’s ReportTo the members of Higgins Construction PLC 31st July 2015

We have audited the financial statements of Higgins Construction PLC for the year ended 31st July 2015, set out on pages 8 to 18. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice).

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.

Respective Responsibilities of Directors and AuditorAs explained more fully in the Directors’ responsibilities statement set out in page 6, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit and express an opinion on the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board’s Ethical Standards for Auditors.

Scope of the Audit of the Financial StatementsA description of the scope of an audit of financial statements is provided on the Financial Reporting Council’s website at www.frc.org.uk/auditscopeukprivate.

Opinion on Financial StatementsIn our opinion the financial statements:• give a true and fair view of the state of the company’s affairs as at 31st July 2015 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.

Opinion on Other Matter Prescribed by the Companies Act 2006In our opinion 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.

Matters on Which We Are Required to Report by ExceptionWe have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion:• adequate accounting records have not been kept, or returns adequate for our audit have not been received

from branches not visited by us; or• the financial statements are not in agreement with the accounting records and returns; or• certain disclosures of directors’ remuneration specified by law are not made; or• we have not received all the information and explanations we require for our audit.

Shaun Kirby (Senior Statutory Auditor)For and on behalf of KPMG LLP Statutory Auditor, Chartered Accountants15 Canada Square, London E14 5GL 27th October 2015


Profit and Loss Account

Note 2015£000

2014£000

TurnoverCost of sales

2 181,183(176,520)

160,564(153,473)

Gross ProfitAdministrative expenses

4,663(4,431)

7,091

(6,738)

Operating ProfitInterest receivable and similar incomeInterest payable and similar charges

367

23252(9)

353

97 (16)

Profit on Ordinary Activities Before TaxationTax on profit on ordinary activities 8

275(181)

434

(235)

Profit for the Financial Year 16 94 199

All amounts relate to continuing operations.

2015£000

2014£000

Profit for the Financial YearUnrealised surplus on revaluation of tangible fixed assets

94 -

199 40

Total Recognised Gains and Losses Relating to the Year

94

239

There are no material differences between the profit on ordinary activities before taxation and the retained profit for the financial year stated above and their historical cost equivalent.

The notes on pages 10 to 18 form part of these financial statements.

For the year ended 31th July 2015

Statement of Total Recognised Gains and LossesFor the year ended 31th July 2015


Balance Sheet31th July 2015

2015 2014Note £000 £000 £000 £000

Fixed AssetsTangible assetsInvestments

910

20,9977

20,8027

Total Fixed Assets

Current AssetsStocksDebtorsCash at bank

1112

5,59143,02126,584

21,004

37054,16117,840

20,809

Creditors: Amounts falling due within one year 13

75,196

(63,689)

72,371

(60,763)

Net Current Assets 11,507 11,608

Total Assets Less Current LiabilitiesProvisions for LiabilitiesDeferred tax

1432,511

(359)

32,417

(359)

Net Assets 32,152 32,058

Capital and ReservesCalled up share capitalRevaluation reserveProfit and loss account

151616

2345,030

26,888

2345,030

26,794

Shareholders’ Funds 17 32,152 32,058

The financial statements were approved and authorised for issue by the board and were signed on its behalf on 27th October 2015.

S J Leakey BSc FCIOB Paul Lewellen BSc FCAManaging Director Director

The notes on pages 10 to 18 form part of these financial statements.


Notes to the Financial Statements31st July 2015

1. Accounting PoliciesThe following accounting policies have been applied consistently in dealing with items which are considered material in relation to the Company’s financial statements.

1.1 Basis of Preparation of Financial StatementsThe financial statements have been prepared under the historical cost convention as modified by the revaluation of the Head Office of the Company and in accordance with applicable accounting standards.

The Directors continue to maintain detailed forecasts for turnover and profit contribution for a period of 12 and 24 months. Having reviewed these forecasts, which take into account current market trends with reasonable judgements and estimates the Directors believe that the Company has adequate resources to continue in operation for the foreseeable future. The Directors, therefore, continue to adopt the going concern basis in preparing these financial statements.

1.2 Tangible Fixed Assets and Depreciation Freehold PropertyTangible fixed assets are stated at cost or valuation less depreciation. Depreciation is provided at rates calculated to write off the cost or valuation of fixed assets, less their estimated residual value, over their expected useful lives on the following bases:

Long-term leasehold property - Period of the Lease Plant and machinery - 25% per annum Motor vehicles - 25% per annum Office equipment - 15% per annum

Freehold PropertyFreehold properties held by the Company are included in fixed assets at their latest valuation plus subsequent additions at cost. It is the policy of the Company to revalue freehold properties at least every five years. Surpluses or deficits on revaluation are included in the revaluation reserve account. Provision for any impairment in the value of properties held as fixed assets is made in the profit and loss account.

Depreciation is not provided in respect of freehold properties occupied. This is because the estimated remaining useful economic lives of the fixed assets have been determined to be in excess of 50 years and consequently any depreciation would not be considered to be material. In accordance with Financial Reporting Standard (“FRS”) 11, Impairment of fixed assets and goodwill, the assets are reviewed for impairment at the end of each reporting period.

1.3 Turnover Recognition

Turnover is normally determined by external certification and is the gross value of work carried out for the period to the balance sheet date (including retentions) but excludes claims until they are actually certified.

1.4 Long-term Contract BalancesAmounts recoverable on contracts are valued at surveyors’ valuations, including attributable profit estimated to be earned to date less provision for any known or anticipated losses and are shown net of payments on account received or receivable. Attributable profit is based upon an assessment of the final outturn on contracts which includes forecast costs to complete and final anticipated valuations. Claims receivable are recognised as income once received or certified for payment.


1. Accounting Policies (continued)1.5 Deferred Taxation

Full provision is made for deferred tax assets and liabilities arising from all timing differences between the recognition of gains and losses in the financial statements and recognition in the tax computation.

Deferred tax is not provided on timing differences arising from the revaluation of fixed assets in the financial statements.

A net deferred tax asset is recognised only if it can be regarded as more likely than not that there will be suitable taxable profits from which the future reversal of the underlying timing differences can be deducted.

Deferred tax assets and liabilities are calculated at the tax rates expected to be effective at the time the timing differences are expected to reverse.

Deferred tax assets and liabilities are not discounted.

1.6 Pension CostThe Company is a participating company in a Group Pension Scheme which has both defined contribution and defined benefit sections but which was closed to future accrual on 30th April 2010. It also sponsors a defined contribution Personal Pension Scheme. All pensionable assets are held separately from those of the Company. Contributions in respect of defined contribution pension schemes are charged to the profit and loss account when they are payable. In respect of the defined benefit section of the Group Pension Scheme, the company cannot identify its share of assets and liabilities of the group scheme, and as such accounts for it as a defined contribution scheme.

1.7 Cash Flow

The company has taken advantage of the exemption in Financial Reporting Standard No.1 from the requirement to produce a cash flow statement on the grounds that it is a small company.

1.8 Group AccountsThe Company is exempt by virtue of S400 of the Companies Act 2006 from the requirement to prepare group financial statements. These financial statements present information about the company as an individual undertaking and not about its group.

1.9 LeasesOperating leases are charged to the profit and loss account on a straight line basis . Fixed assets under finance leases are capitalised and depreciated over their expected useful lives. The finance charges are allocated over the primary period of the lease in proportion to the capital outstanding.

1.10 InvestmentsInvestments held as fixed assets are shown at cost less provision for impairment.




2. TurnoverTurnover and profit on ordinary activities before taxation are attributable entirely to building contracting.

All turnover arose within the United Kingdom.

3. Operating ProfitThe operating profit is stated after charging/(crediting):

2015£000

2014£000

Depreciation of tangible fixed assets: - owned by the companyAuditor’s remunerationDirectors salariesLoss/(profit) on sale of tangible assetsManagement chargesHire of plant and machinery

55935

2,007(3)

(4,546)851

548

35 1,730 12 (3,546) 788

4. Staff CostsStaff costs, including directors’ remuneration, were as follows:

2015£000

2014£000

Wages and salariesSocial security costsOther pension costs

18,3212,1421,298

15,253 1,757 1,114

21,761 18,124

The average monthly number of employees, including the directors, during the year was as follows:

2015No.

2014No.

Office and managementContract staff

129194

123 186

323 309

Pension costs of the Company, as described in Note 1.6, are determined by the schemes operated by the ultimate parent company, Higgins Group PLC. Details are disclosed in that Company’s accounts.



5. Directors Remuneration 2015£000

2014£000

Remuneration 2,007 1,730

The aggregate emoluments (excluding pension contributions) of the highest paid Director amounted to £236,575 (2014: £230,337). This Director participated in a defined benefit pension scheme (closed to future accrual on April 2010) during the year and his accrued pension at 31st July 2015 amounted to £26,344 per annum (2014: £25,771 per annum). In addition £33,031 was contributed to a defined contribution pension scheme.

6. Interest Receivable2015£000

2014£000

Other interest receivable 52

97

7. Interest Payable2015£000

2014£000

On bank loans and overdrafts 9

16

8. Taxation2015£000

2014£000

Analysis of tax charge in the yearCurrent tax (see note below)UK corporation tax charge on profit for the year

Deferred tax (see note 14)Accelerated Capital Allowances

181

-

101

134

Tax on profit on ordinary activities 181 235



8. Taxation (continued)Factors affecting tax charge for the yearThe tax assessed for the year is higher than (2014 - higher than) the standard rate of corporation tax in the UK of 20.67% (2014 - 22.33%). The differences are explained below:

2015£000

2014£000

Profit on ordinary activities before tax 275 434

Profit on ordinary activities multiplied by standard rate of corporation tax in the UK of 20.67% (2014 - 22.33%)

Effects of:Expenses not deductible for tax purposesCapital allowances for year in excess of depreciationOther Adjustment

57

3292

-

97

23(44)25

Current tax charge for the year (see note above) 181 101

Factors that may affect future tax changesReductions in the UK corporation tax rate from 26% to 24% (effective from 1st April 2012) and to 23% (effective 1st April 2013) were substantively enacted on 26th March 2012 and 3rd July 2012 respectively.Further reductions to 21% (effective from 1st April 2014) and 20% (effective from 1st April 2015) were substantively enacted 2nd July 2013. This will reduce the Company’s future current tax charge accordingly.

9. Tangible Fixed Assets

Freehold property

£000

Long-term leasehold property

£000

Plant and machinery

£000

Motor vehicles

£000Total£000

Cost or valuationAt 1st August 2014AdditionsDisposals

18,400 - -

170 - -

7,149411(93)

1,517510

(450)

27,236921

(543)

At 31st July 2015 18,400 170 7,467 1,577 27,614

DepreciationAt 1st August 2014Charge for the yearOn disposals

---

6110

-

5,317380(72)

1,056169

(304)

6,434559

(376)

At 31st July 2015 - 71 5,625 921 6,617

Net book valueAt 31st July 2015 18,400 99 1,842 656 20,997

At 31st July 2014 18,400 109 1,832 461 20,802



9. Tangible Fixed Assets (continued)The freehold property is located at One Langston Road, Loughton, Essex and is the Company’s Head Office. This property was professionally valued at £18,400,000 by Glennys LLP, Chartered Surveyors, as at 31st July 2014 on an existing value basis in compliance with RICS Statement of Asset Valuation Practice and Guidance Notes.

The historical cost of the freehold property is £13,370,669 (2014: £13,370,669).

The leasehold property comprises: • Leasehold improvements undertaken at the Company’s Business Continuity Offices. The property is held on a 10 year lease commencing 30th May 2008. • Leasehold improvements undertaken at the Company’s Plant Yard Offices. The property is held on a 25 year lease commencing 1 October 1991.

10. Fixed Asset InvestmentsInvestments in subsidiary

companies£000

Cost or valuationAt 1st August 2014 and 31st July 2015 7

Net book valueAt 31st July 2015 7

At 31th July 2014 7

Subsidiary UndertakingsThe following were subsidiary undertakings of the company:

Name Class of shares Holding2015£000

2014£000

D J Higgins Construction LtdD J Higgins Building Works LtdStation Garage (Loughton) Ltd

£1 Ordinary£1 Ordinary£1 Ordinary

100%100%100%

115

115

7 7

Name Business

D J Higgins Construction LtdD J Higgins Building Works LtdStation Garage (Loughton) Ltd

DormantDormantDormant



11. Stocks2015£000

2014£000

Work in progress 5,591 370

Stocks relate to the purchase of unconditional land, valued at costs incurred to date less provisions for foreseeable losses.

12. Debtors2015£000

2014£000

Trade debtorsAmounts owed by group undertakingsOther debtorsPrepayments and accrued incomeAmounts recoverable on long term contracts

25,7837,8692,254

4466,669

18,374 26,726 2,638 434 5,989

43,021 54,161

Debtors include the following amounts falling due after more than one year: (a) £15,917 (2014: £15,917) falling due from a subsidiary undertaking, and (b) retentions totalling £4,085,000 (2014: £3,164,000) (included within trade debtors) on current contracts, where payment will not fall due until after completion of the contracts.

13. CreditorsAmounts falling due within one year

2015£000

2014£000

Bank loans and overdraftsPayments received on accountTrade creditorsAmounts owed to group undertakingsOther taxation and social securityOther creditorsAccruals and deferred income

-15,49819,361

81,075

18827,559

1,382 12,454 15,325 8 955 116 30,523

63,689 60,763



14. Deferred Taxation2015£000

2014£000

At beginning of yearOther movement (profit & loss)

359 -

225

134

At end of year 359 359

The provision for deferred taxation is made up as follows:

2015£000

2014£000

Accelerated capital allowances 359 359

15. Share Capital2015£000

2014£000

Allotted, called up and fully paid234,000 Ordinary shares of £1 each 234

234

16. ReservesRevaluation

reserve£000

Profit and loss account

£000

At 1st August 2014Profit for the financial year

5,030

-

26,794

94

At 31st July 2015 5,030

26,888



17. Reconciliation of Movement in Shareholders’ Funds2015£000

2014£000

Opening shareholders’ fundsProfit for the financial yearOther recognised gains and losses during the year

32,05894

-

31,819

199 40

Closing shareholders’ funds 32,152 32,058

18. Contingent Liabilities and Leasing Obligations(a) The Company has entered into counter indemnities in respect of performance bonds in the normal course of business.(b) At 31st July 2015 the Company had contractual liabilities in respect of operating leases

and contract hire agreements. The estimated future commitment in the next financial year is as follows:

2015Property

£000

2015Contract Hire

£000

2015Total £000

2014Property

£000

2014Contract Hire

£000

2014Total£000

Less than 1 year1 to 5 years

62-

56555

118555

-112

137398

137510

Total 62 611 673 112 535 647

19. Capital CommitmentsAt 31st July 2015 the company had capital commitments as follows:

2015£000

2014£000

Contracted for but not provided in these financial statements 80 153

20. Related Party TransactionsDuring the year the company generated turnover of £9.8 million from construction work carried out for a joint venture investment by a fellow subsidiary within the Higgins Group.

21. Ultimate Parent and Controlling CompanyThe Company is a subsidiary undertaking of Higgins Group PLC which is the ultimate Parent Company and is incorporated in England and Wales.

The only group in which the results of the Company are consolidated is that headed by Higgins Group PLC. The consolidated financial statements of the group are available to the public and may be obtained from the Company’s Registered Office.


Printed at Higgins HQ by the reprographics department.

Kings Crescent Estate, Hackney (top) - First Central, Brent (bottom)

Community at the Core of

Construction

community at the core of construction€¦ · p cooke fciob cenv p h lewellen bsc fca s robinson...

Documents