higgins construction plc

Registered number: 684617

HIGGINS CONSTRUCTION PLC

Annual report and financial statements

For the Year Ended 31 July 2019

Directors

Company secretary

Registered number

Registered office

Independent auditor

Banker


Company Information

R G Higgins ACIOB (Chairman) S J Leakey BSc FCIOB (Managing Director) S Bailess MCIOB P Burrows MCIOB D Higgins BSc (appointed 1 August 2018) MK Francis BSc FCA (appointed 3 December 2018) A Millidge S Robinson BSc MCIOB

M K Francis BSc FCA

684617

One Langston Road Laughton Essex IG10 3SD

KPMG LLP 15 Canada Square London E14 5GL

HSBC Bank PLC West End Corporate Banking Centre 2nd Floor 70 Pall Mall London

SW1Y5EZ

Strategic report

Directors' report


Contents

Directors' responsibilities statement

Independent Auditor's report to the members of Higgins Construction PLC

Statement of Comprehensive Income

Statement of Financial Position

Statement of Changes in Equity

Notes to the Financial Statements

Page

1 - 2

3-4

5

6-8

9

10

11

12 - 26


Strategic report For the Year Ended 31 July 2019

Introduction

The Directors present their annual report and financial statements for the year ended 31 July 2019.

Business review I

I Turnover in the year decreased from £282.4m to £164.4m. Underlying operating profit increased slightly from £112k to £275k following a restructuring of the business in 2018.

During the year the Company made provisions to the value of £1 m regarding potential insurance claims that may arise related to cladding work that has arisen post Grenfell.

The Directors are pleased to report a good quality order book and anticipate growth in margins for year ended July 2020 on a similar level of turnover. Demand continues to outstrip supply for good quality affordable housing and we are looking to work with our clients to deliver their investment and production targets.

The Company continues to operate as "community contractor" in the key sector of social housing - working in partnership with our clients to create environments in which communities can thrive. The company is well positioned to take advantage of the ongoing strong demand for affordable housing and is suitably placed to navigate any uncertainty that may arise as a result of Brexit. Through collaboration with our sister company Higgins Homes, we are able to offer a complete range of services combining finance solutions, design, construction, marketing and sales services to work with our clients in joint venture partnerships.

Principal risks and uncertainties

The 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.

The principle risks are: • Brexit • A change in the private housing market • A change in the affordable housing market • A change in consumer confidence • Changes in government policy • Changes in fiscal policy • Reputational risk

Financial key performance indicators

The Directors use a range of KPl's, as well as their experience and expertise, to measure the performance of the business. The key financial KPl's used are that of target margin and programme adherence. These are commercially sensitive and are not disclosed in this report. The shareholders, however, are continually updated on the expected and achieved performance.

Principal activities of the Company

The 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.

Page 1


Strategic report (continued) For the Year Ended 31 July 2019

This report was approved by the board on 16 December 2019 and signed on its behalf.

A/!~> M K Francis BSc FCA Secretary

Page 2


Directors' report For the Year Ended 31 July 2019

The directors present their report and the financial statements 2019,

Results and dividends

The profit for the year, after taxation, amounted to £294,000 (2018- £149,000).

A £nil dividend was declared and paid as at 31 July 2019 (2018-N/L).

Directors

The directors who served during the year were:

R G Higgins ACIOB (Chairman) SP Higgins BA (resigned 6 October 2018) SJ Leakey BSc FCIOB (Managing Director) S Bailess MCIOB M Bradbury FCIOB (resigned 7 June 2019) P Burrows MCIOB PH Lewellen BSc FCA (resigned 30 November 2018) M K Francis BSc FCA (appointed 3 December 2018) AMillidge S Robinson BSc MCIOB

Creditor payment policy

The 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; and c) abide by the payment terms agreed whenever it is satisfied that the supplier has provided the goods or services in accordance with the contracts.

Disabled employees

I It 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 involvement

I The 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 people

During the period the Company continued to hold 'Investors in People' status confirming the Company's commitment to its employees,

Page 3

Quality assurance


Directors' report (continued) For the Year Ended 31 July 2019

I The Company has received accreditation under ISO 9001 as a quality assured contractor and ISO 14001 showing the Company's commitment to sustainability.

Disclosure of information to auditor

Each of the persons who are directors at the time when this Directors' report is approved has confirmed that:

• so far as the director is aware, there is no relevant audit information of which the Company's auditor is unaware, and

• the director has taken all the steps that ought to have been taken as a director in order to be aware of an1 relevant audit information and to establish that the Company's auditor is aware of that information.

Auditor

The auditor, KPMG LLP, will be proposed for reappointment in accordance with section 485 of the Companies Act 2006.

This report was approved by the board and signed on its behalf.

M K Francis BSc FCA Secretary

Date: 16 December 2019

One Langston Road Laughton

Essex IG10 3SD

Page 4


Directors' responsibilities statement For the Year Ended 31 July 2019

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 th directors have elected to prepare the financial statements in accordance with applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice), including Financial Reporting Standard 102 'The Financial Reporting Standard applicable in the UK and Republic of Ireland'. Under com pan law the directors must not approve the financial statements unless they are satisfied that they give a true and fai 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 for the Company's financial statements and then apply them consistently;

• make judgments 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 to enable them to ensure that the financial statements comply with the Companies Act 2006. The are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection offraud and other irregularities.

Page 5


Independent auditor's report to the members of Higgins Construction PLC

Opinion We have audited the financial statements of Higgins Construction PLC ("the company") for the year ended 31 July 2019 which comprise the Statement of Comprehensive Income, Statement of Financial Position, Statement of Changes in Equity and related notes, including the accounting policies in note 1. In our opinion the financial statements: • give a true and fair view of the state of the company's affairs as at 31 July 2019 and of its profit for the

year then ended; • have been properly prepared in accordance with UK accounting standards, including FRS 102 The

Financial Reporting Standard applicable in the UK and Republic of Ireland; and • have been prepared in accordance with the requirements of the Companies Act 2006.

Basis for Opinion We conducted our audit in accordance with International Standards on Auditing (UK) ("ISAs (UK)") and applicable law. Our responsibilities are described below. We have fulfilled our ethical responsibilities under, and are independent of the company in accordance with, UK ethical requirements including the FRC Ethical Standard. We believe that the audit evidence we have obtained is a sufficient and appropriate basis for our opinion.

Brexit other matters Uncertainties related to the effects of Brexit are relevant to understanding our audit of the financial statements. All audits assess and challenge the reasonableness of estimates made by the directors, such as the appropriateness of the going concern basis of preparation of the financial statements. All of these depend on assessments of the future economic environment and the group's future prospects and performance.

Brexit is one of the most significant economic events for the UK, and at the date of this report its effects are subject to unprecedented levels of uncertainty of outcomes, with the full range of possible effects unknown. We applied a standardised firm-wide approach in response to that uncertainty when assessing the group's future prospects and performance. However, no audit should be expected to predict the unknowable factors or all possible future implications for a company and this is particularly the case in relation to Brexit.

Going concern The directors have prepared the financial statements on the going concern basis as they do not intend to liquidate the group or the company or to cease their operations, and as they have concluded that the group and the company's financial position means that this is realistic. They have also concluded that there are no material uncertainties that could have cast significant doubt over their ability to continue as a going concern for at least a year from the date of approval of the financial statements ("the going concern period").

We are required to report to you if we have concluded that the use of the going concern basis of accounting is inappropriate or there is an undisclosed material uncertainty that may cast significant doubt over the use of that basis for a period of at least a year from the date of approval of the financial statements. In our evaluation of the directors' conclusions, we considered the inherent risks to the group's business model, including the impact of Brexit, and analysed how those risks might affect the group and company's financial resources or ability to continue operations over the going concern period. We have nothing to report in these respects.

However, as we cannot predict all future events or conditions and as subsequent events may result in outcomes that are inconsistent with judgements that were reasonable at the time they were made, the absence of reference to a material uncertainty in this auditor's report is not a guarantee that the group or the company will continue in operation.

Strategic report and directors' report The directors are responsible for the strategic report and the directors' report. Our opinion on the financial statements does not cover those reports and we do not express an audit opinion thereon.

Our responsibility is to read the strategic report and the directors' report and, in doing so, consider whether,

Page 6



based on our financial statements audit work, the information therein is materially misstated or inconsistent with the financial statements or our audit knowledge. Based solely on that work: • we have not identified material misstatements in the strategic report and the directors' report; • in our opinion the information giveh in those reports for the financial year is consistent with the financial

statements; and • in our opinion those reports have been prepared in accordance with the Companies Act 2006.

Matter on which we are required to report by exception Under the Companies Act 2006, we are required to report to you if, in our opinion: • adequate accounting records have not been kept by the parent company, or returns adequate for our audit

have not been received from branches not visited by us; or • the parent company financial statements are not in agreement with the accounting records and returns; or

• certain disclosures of directors' remuneration specified by law are not made; or • we have not received all the information and explanations we require for our audit. We have nothing to report in these respects.

Directors' responsibilities As explained more fully in their statement set out on page 5, the directors are responsible for: the preparation of the financial statements and for being satisfied that they give a true and fair view; such internal control as they determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error; assessing the group and parent company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern; and using the going concern basis of accounting unless they either intend to liquidate the group or the parent company or to cease operations, or have no realistic alternative but to do so.

Auditor's responsibilities 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 our opinion in an auditor's report. Reasonable assurance is a high level of assurance, but does not 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 aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the financial statements. A fuller description of our responsibilities is provided on the FRC's website at www.frc.org.uk/auditorsresponsibilities.

The purpose of our audit work and to whom we owe our responsibilities 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.

Nicholas Willis (Senior statutory auditor)

for and on behalf of KPMG LLP

15 Canada Square London

Page 7



E14 5GL

17 December 2019

Page 8

Turnover

Cost of sales

Gross profit

Administrative expenses

Operating profit


Statement of comprehensive income For the Year Ended 31 July 2019

Interest receivable and similar income

Interest payable and expenses

Profit before tax

Tax on profit

Profit for the financial year

Other comprehensive income for the year

Total comprehensive income for the year

The notes on pages 12 to 26 form part of these financial statements.

All comprehensive income is the result of continuing operations.

Note

2

3

6

7

8

2019 2018 £000 £000

171,188 282,377

(163,569) (276,426)

7,619 5,951

(7,344) (5,839)

275 112

26 45

(3) (5)

298 152

(4) (3)

294 149

294 149

Page 9

HIGGINS CONSTRUCTION PLC Registered number:684617

Statement of financial position As at 31 July 2019

Fixed assets

Tangible assets

Investments in subsidiaries

Current assets

Note

11

Stocks 12

Debtors: Amounts falling due within one year 13

Debtors: Amounts falling due after more than one year 13

Cash at bank and in hand 14

Creditors: amounts falling due within one year

Net current assets

Total assets less current liabilities

Provisions for liabilities

Deferred tax

Net assets

Capital and reserves

Called up share capital

Revaluation reserve

Profit and loss account

Date: 16 December 2019

15

g

16

2,773

72,106

911

7,364

83,154

(71,508)

(1,685)

2019 £000

21,988

7

21,995

11,646

33,641

(1,685)

31,956

234

1,600

30,122

31,956

3,844

74,236

5,508

14,525

98,113

(87,162)

(1,685)

2018 £000

22,389

7

22,396

10,951

33,347

(1,685)

31,662

234

1,600

29,828

31,662

Page 10


Statement of changes in equity For the Year Ended 31 July 2019

Called up Revaluation

At 1 August 2018

Total Comprehensive income for the year

Profit for the year


Total transactions with owners

At 31 July 2019

share capital

£000

234

234

reserve

£000

1,600

1,600

Statement of changes in equity For the Year Ended 31 July 2018

At 1 August 2017

Total Comprehensive income for the year

Profit for the year


Total transactions with owners

At 31 July 2018

Called up share capital

£000

234

234

The notes on pages 12 to 26 form part of these financial statements.

Revaluation reserve

£000

1,600

1,600

Profit and loss account Total equity

£000 £000

29,828 31,662

294 294

294 294

30,122 31,956

Profit and loss account Total equity

£000 £000

29,679 31,513

149 149

149 149

29,828 31,662

Page 11

1. Accounting policies


Notes to the financial statements For the Year Ended 31 July 2019

1.1 Basis of preparation of financial statements

The financial statements have been prepared under the historical cost convention unless otherwise specfied within these accounting policies and in accordance with Financial Reporting Standard 102, the Financial Reporting Standard applicable in the UK and the Republic of Ireland and the Companies Act 2006.

The preparation of financial statements in compliance with FRS 102 requires the use of certain critical accounting estimates. It also requires management to exercise judgment in applying the Company's accounting policies.

These financial statements were prepared in accordance with Financial Reporting Standard 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland ("FRS 102") as issued in September 2015. The presentation currency of these financial statements is sterling. All amounts in the financial statements have been rounded to the nearest £1.

The Company's ultimate parent undertaking, Higgins Group PLC, includes the Company in its consolidated financial statements. The consolidated financial statements of Higgins Group PLC are available to the public and may be obtained from the Company's Registered Office.

1.2 Tangible fixed assets

Tangible fixed assets under the cost model are stated at historical cost less accumulated depreciation and any accumulated impairment losses. Historical cost includes expenditure that is directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management.

Page 12



1. Accounting policies (continued)

1.2 Tangible fixed assets (continued)

Depreciation is charged so as to allocate the cost of assets less their residual value over their estimated useful lives, on a reducing balance basis.

Depreciation is provided on the following basis:

Long-term leasehold property Plant and machinery Motor vehicles Office equipment

- Period of the Lease - 25% per annum - 25% per annum - 15% per annum

The assets' residual values, useful lives and depreciation methods are reviewed, and adjusted prospectively if appropriate, or if there is an indication of a significant change since the last reporting date.

Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised in the Statement of comprehensive income.

Freehold Property

Freehold 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 three years and carry out a Directors' revaluation assessment annually. Surpluses or deficits on revaluation are included in Other Comprehensive Income.

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 FRS102, Impairment of fixed assets and goodwill, the assets are reviewed for impairment at the end of each reporting period.

1.3 Turnover Recognition

When the outcome of individual contracts can be estimated reliably, contract turnover and contract costs are recognised as turnover and expenses respectively by reference to the stage of completion at the reporting date. Costs are recognised as incurred and revenue is recognised on the basis of the proportion of total costs at the reporting date to the estimate total costs of the contract. Estimates of final out-turn on each contract may include cost contingencies to take account of the specific risks within each contract that have been identified during the early stages of the contract. The costs contingencies are reviewed on a regular basis throughout the contract life and are adjusted where appropriate. Turnover in respect of variations to contracts and claims is recognised when it is agreed by the customer.

1.4 Long term contracts

Amounts recoverable on contracts are valued at surveyors' valuations, including attributable profit estimated to be earned to date less provision for any known or anticiapted 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.

Page 13




1.5 Revaluation of tangible fixed assets

Individual freehold and leasehold properties are carried at current year value at fair value at the date of the revaluation less any subsequent accumulated depreciation and subsequent accumulated impairment losses. Revaluations are undertaken with sufficient regularity to ensure the carrying amount does not differ materially from that which would be determined using fair value at the Statement offinancial position date.

Fair values are determined from market based evidence normally undertaken by professionally qualified valuers.

Revaluation gains and losses are recognised in the Statement of comprehensive income unless losses exceed the previously recognised gains or reflect a clear consumption of economic benefits, in which case the excess losses are recognised in profit or loss.

1.6 Stocks

Stocks are stated at the lower of cost and net realisable value, being the estimated selling price less costs to complete and sell. Cost is based on the cost of purchase on a first in, first out basis. Work in progress and finished goods include labour and attributable overheads.

At each reporting date, stocks are assessed for impairment. If stock is impaired, the carrying amount is reduced to its selling price less costs to complete and sell. The impairment loss is recognised immediately in profit or loss.

1.7 Debtors

Short term debtors are measured at transaction price, less any impairment. Loans receivable are measured initially at fair value, net of transaction costs, and are measured subsequently at amortised cost using the effective interest method, less any impairment.

Page 14




1.8 Cash and cash equivalents

Cash is represented by cash in hand and deposits with financial institutions repayable without penalty on notice of not more than 24 hours. Cash equivalents are highly liquid investments that mature in no more than three months from the date of acquisition and that are readily convertible to known amounts of cash with insignificant risk of change in value.

1.9 Financial instruments

The Company only enters into basic financial instrument transactions that result in the recognition of financial assets and liabilities like trade and other debtors and creditors, loans from banks and other third parties, loans to related parties and investments in non-puttable ordinary shares.

Debt instruments (other than those wholly repayable or receivable within one year), including loans and other accounts receivable and payable, are initially measured at present value of the future cash flows and subsequently at amortised cost using the effective interest method. Debt instruments that are payable or receivable within one year, typically trade debtors and creditors, are measured, initially and subsequently, at the undiscounted amount of the cash or other consideration expected to be paid or received. However, if the arrangements of a short-term instrument constitute a financing transaction, like the payment of a trade debt deferred beyond normal business terms or financed at a rate of interest that is not a market rate or in the case of an out-right short-term loan not at market rate, the financial asset or liability is measured, initially, at the present value of the future cash flow discounted at a market rate of interest for a similar debt instrument and subsequently at amortised cost.

1.1 O Creditors

Short term creditors are measured at the transaction price. Other financial liabilities, including bank loans, are measured initially at fair value, net of transaction costs, and are measured subsequently at amortised cost using the effective interest method.

1.11 Leased assets: the Company as lessee

Assets obtained under hire purchase contracts and finance leases are capitalised as tangible fixed assets. Assets acquired by finance lease are depreciated over the shorter of the lease term and their useful lives. Assets acquired by hire purchase are depreciated over their useful lives. Finance leases are those where substantially all of the benefits and risks of ownership are assumed by the company. Obligations under such agreements are included in creditors net of the finance charge allocated to future periods. The finance element of the rental payment is charged to the Statement of comprehensive income so as to produce a constant periodic rate of charge on the net obligation outstanding in each period.

Page 15




1.12 Provisions for liabilities

Provisions are made where an event has taken place that gives the Company a legal or constructive obligation that probably requires settlement by a transfer of economic benefit, and a reliable estimate can be made of the amount of the obligation.

Provisions are charged as an expense to the Statement of comprehensive income in the year that the Company becomes aware of the obligation, and are measured at the best estimate at the Statement of financial position date of the expenditure required to settle the obligation, taking into account relevant risks and uncertainties.

When payments are eventually made, they are charged to the provision carried in the Statement of financial position.

1.13 Current and deferred taxation

The tax expense for the year comprises current and deferred tax. Tax is recognised in the Statement of comprehensive income, except that a charge attributable to an item of income and expense recognised as other comprehensive income or to an item recognised directly in equity is also recognised in other comprehensive income or directly in equity respectively.

The current income tax charge is calculated on the basis of tax rates and laws that have been enacted or substantively enacted by the reporting date in the countries where the Company operates and generates income.

Deferred tax balances are recognised in respect of all timing differences that have originated but not reversed by the Statement of financial position date, except that: • The recognition of deferred tax assets is limited to the extent that it is probable that they will be

recovered against the reversal of deferred tax liabilities or other future taxable profits; and

• Any deferred tax balances are reversed if and when all conditions for retaining associated tax allowances have been met.

Deferred tax balances are not recognised in respect of permanent differences except in respect of business combinations, when deferred tax is recognised on the differences between the fair values of assets acquired and the future tax deductions available for them and the differences between the fair values of liabilities acquired and the amount that will be assessed for tax. Deferred tax is determined using tax rates and laws that have been enacted or substantively enacted by the reporting date.

1.14 Pension costs I

The 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 30 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.

Page 16




1.15 Cash flow

In these financial statements, the company is considered to be a qualifying entity (for the purposes of this FRS) and has applied the exemptions available under FRS 102 in respect of the Cash Flow Statement and related notes disclosure.

1.16 Leases

Operating 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.

1.17 Investments in subsidiaries

Investments in subsidiaries are shown at cost less provision for impairment.

1.18 Significant accounting estimates and judgements

The Group makes accounting estimates and judgements on assets and liabilities at the balance sheet date. The Group's estimates and assumptions are based on historical experience and expectation of future events and are reviewed periodically.

2. Turnover

3.

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

Turnover from the sale of private units at Colville amounted to £20.5 million (2018 £0.0m)

All turnover arose within the United Kingdom.

Operating profit

The operating profit is stated after charging:

2019 2018 £000 £000

Depreciation of tangible fixed assets 415 640 Auditors Remuneration 66 36 Directors Salaries 2,130 (Profit)/Loss on sale of tangible asset 18 38 Management Charges (5,723) (4,377) Hire of Plant and Machinery 371 534

There were no non-audit services provided by the auditor during the year (2018: £nil).

Page 17

4. Staff costs



Staff costs, including directors' remuneration, were as follows:

Wages and salaries

Social security costs

Cost of defined contribution scheme

2019 2018 £000 £000

14,636 16,966

1,649 1,926

1,201 1,595

17,486 20,487

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

Office and management

Contract staff

5. Directors' remuneration

Directors' emoluments

Directors pension costs - defined contrib'n sch.

2019 2018 No. No.

94

141

118

188

235 306

2019 2018 £000 £000

2,070

119

2,491

221

2,189 2,712

Two Construction Directors pension benefits are accruing under Defined Benefit scheme. Directors remuneration includes qualifying services provided by the directors of the ultimate parent company, Higgins Group Pie. The highest paid director received remuneration of £351,267 (2018 - £351,267).

The total accrued pension provision of the highest paid director at 31 July 2019 amounted to £27,004 (2018 - £26,366). In addition £14,804 (2018 £14,804) was contributed to a defined contribution pension scheme.

Page 18



6. Interest receivable

Other interest receivable

7. Interest payable and similar expenses

Bank interest payable

8. Taxation

Corporation tax

Current tax on profits for the year

Taxation on profit on ordinary activities

2019 2018 £000 £000

26 45

2019 2018 £000 £000

3 5

3 5

2019 2018 £000 £000

4 3

4 3

Page 19

8. Taxation (continued)



Factors affecting tax charge for the year

The tax assessed for the year is lower than (2018 - lower than) the standard rate of corporation tax in the UK of 19% (2018- 19%). The differences are explained below:

2019 2018 £000 £000

Profit on ordinary activities before tax 298 152

Profit on ordinary activities before tax multiplied by standard rate of corporation tax in the UK of 19% (2018 - 19%) 56 29

Effects of:

Expenses not deductible for tax purposes, other than goodwill amortisation and impairment 89 19

Capital allowances (145) (51)

Other differences leading to an increase (decrease) in the tax charge 4 6

Total tax charge/ (credit) for the year 4 3

Factors that may affect future tax charges

A reduction in the UK Corporation tax rate from 20% to 19% (effective from 1 April 2017) was substantively enacted on 26 October 2015. A further reduction to 17% (effective 1 April 2020) was substantively enacted on 6 September 2016. This will reduce the company's future tax charge accordingly.

9. Deferred taxation

At beginning of year

At end of year

Deferred tax liability relates to revaluation of Freehold properties.

2019 2018 £000 £000

(1,685) (1,685)

(1,685) (1,685)

Page 20

9. Deferred taxation ( continued)



The provision for deferred taxation is made up as follows:

Accelerated capital allowances

10. Tangible fixed assets

Long-term Freehold leasehold Plant and property property machinery

£000 £000 £000

Cost or valuation

At 1 August 2018 20,000 170 7,254

Additions 168 Disposals (596)

At 31 July 2019 20,000 170 6,826

Depreciation

At 1 August 2018 102 5,471

Charge for the year on owned assets 10 380

Disposals (574)

At 31 July 2019 112 5,277

Net book value

At 31 July 2019 20,000 58 1,549

At 31 July 2018 20,000 68 1,783

2019 2018 £000 £000

(1,685) (1,685)

Motor vehicles Total

£000 £000

1,604 29,028

100 268

(129) (725)

1,575 28,571

1,066 6,639

127 517

(574)

1,193 6,582

382 21,989

538 22,389

Page 21



11. Fixed asset investments

Cost

At 1 August 2018

At 31 July 2019

Subsidiary undertakings

The following were subsidiary undertakings of the Company:

Name

D J Higgins Construction Lid* DJ Higgins Building Works Ltd* Station Garage (Laughton) Ltd*

Class of shares

Investments in

subsidiary companies

£000

7

7

£1 ordinary £1 ordinary £1 ordinary

Holding

100% 100% 100%

*Dormant. The registered address of all entities is One Langston Road, Laughton, Essex, IG10 3SD.

Page 22

12. Stocks

Work in progress

13. Debtors

Due after more than one year

Trade debtors



Amounts owed by group undertakings

Due within one year

Trade debtors

Amounts owed by group undertakings

Other debtors

Prepayments and accrued income

Amounts recoverable on long term contracts

2019 2018 £000 £000

2,773 3,844

2019 2018 £000 £000

895 5,492

16 16

911 5,508

2019 2018 £000 £000

16,160 25,022

46,613 41,557

2,287 2,046

562 406

6,484 5,205

72,106 74,236

Amounts due from group undertaking are interest free, repayable on demand and unsecured.

14. Cash and cash equivalents

2019 2018 £000 £000

Cash at bank and in hand 7,364 14,525

7,364 14,525

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15. Creditors: Amounts falling due within one year

Bank overdrafts

Payments received on account

Trade creditors

Amounts owed to group undertakings

Other taxation and social security

Accruals and deferred income

2019 £000

1

18,501

18,142

8

965

33,891

71,508

Amounts due to group undertaking are interest free, repayable on demand and unsecured.

2018 £000

23,988

23,590

8

1,185

38,392

87,163

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16. Share capital

2019 2018 £000 £000

Allotted, called up and fully paid

234,000 (2018 - 234,000) Ordinary shares shares of £1.00 each 234 234

17. 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 31 July 2019 the Company had contractual liabilities in respect of operating leases and contract hire agreements. The non-cancellable contractual cash flows are estimated future commitment in the next financial year is as follows:

2019 2018 Contract Hire Contract Hire

£000 £000

Less than 1 year 312 465 1 to 5 years 126 258

Total 438 723

18. Capital commitments

I At 31 July 2019 the Company had capital commitments as follows:

2019 2018 £000 £000

Contracted for but not provided in these financial statements 24

24

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19. Related party transactions



During the year the company generated turnover of £25.1 million (2018 £6.2m) from construction work carried out at Chobham Farm site, a development for Higgins Homes (Chobham Farm) Pie who's ultimate parent is Higgins Group Pie.

20. Post balance sheet events

There were no post balance sheet events.

21. Ultimate parent and controlling company

The Ultimate Parent and Controlling Company is Higgins Group PLC, registered in England and Wales. The consolidated financial statements of the group are available to the public and may be obtained from the Company's registered Office.

The registered address is One Langston Road, Laughton, Essex, IG10 3S0.

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higgins construction plc

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