ASTON_SERVICES_GROUP_LIMI - Accounts
ASTON_SERVICES_GROUP_LIMI - Accounts
The directors present the strategic report for the year ended 31 December 2018.
Legislative and regulatory risk
Legislative risk is managed by the directors on a continual basis with all contracts having the facility written in to them that allows Aston Service Group Limited to pass on any costs that occur due to government legislation.
Actions of competitors
The directors believe the policy of tendering competitively but realistically on price, as well as offering an excellent service delivery with highly skilled staff will underpin the company’s future growth and profits.
Financial risk
The company continues to have the full support of its bankers and directors in addition to a substantial personal guarantee from Ian Gilston.
Business review
Aston Services Group continues to attract quality personnel throughout all positions within the company.
The investment in training and I.T. systems reflected positively in the results achieved with new contracts being awarded, including our largest single site contract which commenced in February 2018, and high levels of retention within existing contracts.
Gross profit margin increased from 17.32% to 18.27% which was a good result considering the ever-competitive environment of the cleaning and security markets.
The company has significantly improved profit before taxation in the year having gone from a loss of £241,765 in 2017 to return to a profit of £110,783 in 2018. With regard to 2019, whilst the company is confident that it will return a profit for the year it will be less than that reported for 2018. This is largely due to the fact of it taking on a large and challenging contract that has proved far less profitable than anticipated and from which the company has reversed and learned from.
A new and experienced Managing Director was appointed in March who has made significant progress in debtor control, the introduction of reporting structures and the implementation of new company procedures to create a stronger foundation from which the company can expand. A new three-year growth strategy has been put into place that incorporates both organic growth and carefully targeted potential acquisitions. The company’s Chairman Ian Gilston will be injecting £280,000 into the business in November 2019 to underpin the growth of the business in addition to having the continued full support of the Yorkshire Bank. Additionally, the new Managing Director will be investing a sum of money for an equity stake which is presently being negotiated.
Turnover increased by £780,554 from 2017 to 2018, a 5.18% increase, and continues to grow on the back of new accounts and the retention of existing clients.
EBITDA improved from a loss of £67,627 in 2017 to a profit of £289,720 in 2018. EBITDA continues to improve month by month going forward due to the new Operations Director's management skills and job flow IT platform.
The merger costs with associated with the hive of Care Facility Management Limited in early 2017 and the rebranding during 2017 has a substantial impact to the 2017 net profit which has not re-occurred in 2018.
The new Managing Director has set out a new 3 years growth strategy that is seeing the business experience significant organic growth from January 2020 onwards. He has revised the end of year 2019 sales forecast to £14,549,184 and taking into account the poor profit performance of the major contract that has had a significant impact on the company’s financial performance for the year, has downgraded the end of year net profit figure to between £30,000 - £50,000.
However, for the year end 2020 the company is forecasting a turnover of £17,732,887 and a net profit of circa £300,000.
On behalf of the board
The directors present their annual report and financial statements for the year ended 31 December 2018.
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
The results for the year are set out on page 9.
No ordinary dividends were paid. The directors do not recommend payment of a final dividend.
The company manages its borrowing requirements in order to minimise interest expense, whilst ensuring the company has sufficient liquid resources to meet the operating needs of the business.
The company is exposed to cash flow interest rate risk on bank overdrafts and loans. The Board reviews the exposure to interest rate risk on a regular basis to reduce exposure to changes in interest rates.
Credit terms are offered to customers with an average credit term of approximately 45 days across the board, but are subject to credit verification procedures before services commence and there is regular credit control monitoring. In 2017 there was an approximate £800,000 debt collection each month which has improved to £1,400,000-£1,600,000 from the start of 2018 to April 2018. Provisions are made for doubtful debts where necessary.
The auditor, MHA Moore and Smalley, is deemed to be reappointed under section 487(2) of the Companies Act 2006.
select suitable accounting policies and then apply them consistently; make judgements and accounting estimates that are reasonable and prudent; prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.
give a true and fair view of the state of the company's affairs as at 31 December 2018 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.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Conclusions relating to going concern
We have nothing to report in respect of the following matters in relation to which the ISAs (UK) require us to report to you where:
the directors' use of the going concern basis of accounting in the preparation of the financial statements is not appropriate; or
the directors have not disclosed in the financial statements any identified material uncertainties that may cast significant doubt about the company’s ability to continue to adopt the going concern basis of accounting for a period of at least twelve months from the date when the financial statements are authorised for issue.
Other information
The directors are responsible for the other information. The other information comprises the information included in the annual report, other than the financial statements and our auditor’s report thereon. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the financial statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of our audit:
the information given in the strategic report and the directors' 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.
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.
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.
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council’s website at: http://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.
Use of our 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.
The Profit And Loss Account has been prepared on the basis that all operations are continuing operations.
Aston Services Group Limited is a private company limited by shares incorporated in England and Wales. The registered office is Aston Way, Moss Side Development Park, Leyland, PR26 7UX.
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 £.
The financial statements have been prepared under the historical cost convention. The principal accounting policies adopted are set out below.
This company is a qualifying entity for the purposes of FRS 102, being a member of a group where the parent of that group prepares publicly available consolidated financial statements, including this company, which are intended to give a true and fair view of the assets, liabilities, financial position and profit or loss of the group. The company has therefore taken advantage of exemptions from the following disclosure requirements:
Section 4 ‘Statement of Financial Position’ – Reconciliation of the opening and closing number of shares;
Section 7 ‘Statement of Cash Flows’ – Presentation of a statement of cash flow and related notes and disclosures;
Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instrument Issues’ – Carrying amounts, interest income/expense and net gains/losses for each category of financial instrument; basis of determining fair values; details of collateral, loan defaults or breaches, details of hedges, hedging fair value changes recognised in profit or loss and in other comprehensive income;
Section 33 ‘Related Party Disclosures’ – Compensation for key management personnel.
The financial statements of the company are consolidated in the financial statements of Hardy Group Limited. These consolidated financial statements are available from Companies House.
For the year ended 31 December 2018 the company made a profit after taxation of £88,652 (2017: loss £199,950). This led to a reduction in the balance of net current liabilities, which at 31 December 2018 was £253,909 (2017: £407,356) and a surplus on shareholders' funds of £17,904 (2017: £70,748 deficit).
At present, the company is reliant on the continued financial support of the directors and the bank to meet its short-term financial obligations as they fall due.
These factors alone could be considered to be indications of the existence of a material uncertainty in respect of the company's ability to continue as a going concern.
The company and the group of which it is member continues to have the full support of its bankers and directors in addition to a substantial personal guarantee from Ian Gilston.
After making appropriate enquiries the directors have concluded that the company will be able to meet its financial obligations and will continue to generate positive free cash flow for the foreseeable future.
At the time of approving the financial statements, the directors therefore have a reasonable expectation that the company has adequate resources to continue in operational existence foreseeable future. The directors therefore continue to consider it appropriate to adopt the going concern basis in preparing the financial statements.
Revenue from the sale of goods is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer (usually on dispatch of the goods), the amount of revenue can be measured reliably, it is probable that the economic benefits associated with the transaction will flow to the entity and the costs incurred or to be incurred in respect of the transaction can be measured reliably.
Revenue from industrial cleaning contracts for the provision of professional services is recognised by reference to the stage of completion when the stage of completion, costs incurred and costs to complete can be estimated reliably.
Unbilled revenue from contracts represents the value of the work done in the year, including estimates of amounts not invoiced. Unbilled revenue is recognised by reference to the stage of completion of the contract.
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.
At each reporting period end date, the company reviews the carrying amounts of its tangible and intangible 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.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
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.
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.
All of the company's financial assets fall to be classed as basic financial assets and the company therefore has no other 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.
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, including creditors and loans from fellow group companies, 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 receipts 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.
All of the company's financial liabilities fall to be classed as basic financial liabilities and the company therefore has no other financial liabilities.
Financial liabilities are derecognised when the company’s contractual obligations expire or are discharged or cancelled.
Equity instruments issued by the company are recorded at the proceeds received, net of direct issue costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the company.
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.
The following judgements (apart from those involving estimates) have had the most significant effect on amounts recognised in the financial statements.
At each balance sheet date, management undertake an assessment of the recoverability of trade debtors based upon their knowledge of the customers, ageing of the balances outstanding and previous write off history. Where necessary, an impairment is recorded as a doubtful debt.
The actual level of debt collected may differ from the estimated level of recovery.
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.
The depreciation rate used for fixed asset's owned by the business is management's best estimate at acquisition of the useful economic life of each asset type held by the business. Upon disposal, the profit or loss on each asset is recognised in the profit and loss account in the year of disposal. Management review these figures on a global basis to ensure that assets are not being under- or over-depreciated.
An analysis of the company's turnover is as follows:
The average monthly number of persons (including directors) employed by the company during the year was:
Their aggregate remuneration comprised:
The number of directors for whom retirement benefits are accruing under defined contribution schemes amounted to 2 (2017 - 2).
The actual charge/(credit) for the year can be reconciled to the expected charge/(credit) for the year based on the profit or loss and the standard rate of tax as follows:
The net carrying value of tangible fixed assets includes the following in respect of assets held under finance leases or hire purchase contracts.
Included within creditors due less than one year is a bank overdraft and hire purchase liability which are secured over the assets of the company. Included in other creditors due less than one year is invoice financing of £1,234,307 (2017: £1,291,241) secured over the trade debtors of the company.
The hire purchase liability is secured over the assets of the company.
Finance lease payments represent rentals payable by the company for certain items of plant and machinery. Leases include purchase options at the end of the lease period, and no restrictions are placed on the use of the assets. The average lease term is 3 years. All leases are on a fixed repayment basis and no arrangements have been entered into for contingent rental payments.
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:
The deferred tax liability set out above is expected to reverse within 3 years and relates to accelerated capital allowances that are expected to mature within the same period.
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.
At the reporting end date the company had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:
During the year the company entered into the following transactions with related parties:
The following amounts were outstanding at the reporting end date:
The following amounts were outstanding at the reporting end date:
No guarantees have been given or received.
The company has taken advantage of the exemption permitted under Section 33 'Related Party Disclosures' paragraph 33.1A from disclosing transactions with the parent company.
Advances or credits have been granted by the company to its directors as follows:
The company is a wholly owned subsidiary of Hardy Group Limited, a company incorporated in England and Wales. The smallest and largest group into which the company is consolidated is that of Hardy Group Limited, the ultimate parent company. Copies of the consolidated accounts for this group are available and can be obtained from Companies House.
The ultimate controlling party is the director, Mr I Gilston.