report of the directors & financial statements · opco ltd annual report 2002 3 above and...

REPORT OF THE DIRECTORS & FINANCIAL STATEMENTS

for the Period 13th July 2001 to 31st August 2002for Opco Limited

Annual report 2002 21/10/04 11:07 am

Company Information 3

Chairman’s Statement 4

Report of the Directors 6

Report of the Independent Auditors 8

Profit and Loss Account 10

Balance Sheet 11

Cash Flow Statement 12

Notes to the Cash Flow Statement 13

Notes to the Financial Statements 14

Annual report 2002 21/10/04 11:07 am

COMPANY INFORMATION

FOR THE PERIOD 13th JULY 2001 TO 31st AUGUST2002

DIRECTORS: P I Jones

N Kelly

S Gay

SECRETARY: P I Jones

REGISTERED OFFICE: 54 Rhiwbina Hill

Cardiff

CF14 6UQ

REGISTERED NUMBER: 04252113 (England and Wales)

AUDITORS: Broomfield & Alexander

Registered Auditors

Chartered Accountants

Pendragon House

Caxton Place

Pentwyn

Cardiff

CF23 8XE

Opco Ltd Annual Report 2002 3

Above and right:DePuy CMW (UK), Blackpool

Annual report 2002 21/10/04 11:07 am

As Chairman and Managing Director

of Opco Limited I am delighted to

present the company's first annual

report and accounts for the period

ended 31st August 2002. It has

always been my belief that good

margins can be achieved in the

construction sector from the right

business mix coupled with the

appropriate management disciplines.

This belief is fully reflected in our

first year results.CHAIR

MAN’S

STA

TEM

ENT

for

the

Period

13th

July

200

1 to

31st

Aug

ust

2002

4 Opco Ltd Annual Report 2002

Annual report 2002 21/10/04 11:07 am

PERFORMANCE

Our financial performance for the year was in line

with expectations producing an operating profit of

£177,486 on sales of £11,367,105. The operating

margin of 1.6% reflects the strategic development of

our business mix and the long term partnering

relationships we have with our core customers. In

addition this reflects our continued focus on the

management of the overhead burden and the

determination to return value to shareholders.

PROJECTS

Our principal operations have been centred on two

key repeat business clients, Westbury Holdings

Limited and Johnson & Johnson Plc.

In the year we have completed phase one of

Westbury Holdings Century Wharf project, a

development of 179 luxury apartments in Cardiff Bay.

From this successful starting point we have been

appointed as main contractor for phases two and

three of the development. These phases constitute a

further 145 apartments and 39 town houses, together

with a leisure complex and swimming pool which are

due for completion in late 2003.

During the year we were also appointed to design

and construct offices, laboratories, clean rooms and

warehousing for Johnson & Johnson Plc at a site in

the North of England. Opco have assumed full

responsibility for the development of the design and

act as main contractor. Following the successful

completion of phases one & two of the project, the

site team are set to deliver the concluding phases

over the coming year.

On behalf of Opco, I would like to take this

opportunity to thank both Westbury Holdings Limited

and Johnson & Johnson Plc for the continued support

that they have shown to our business managers in

their new corporate structure.

PEOPLE

During the year 5% of the ordinary shares of the

business has passed to the newly appointed

Financial Director and the company has plans to pass

a further 10.5% of the ordinary shares of the

business to other senior staff, this reflects the

owners commitment to full participation by the

executive management in the business. We anticipate

a further increase in share ownership by the staff

over the coming years.

I would like to personally thank all the staff for their

efforts over the year and particularly those that had

the faith in their own ability and faith in our

customers, to create a business against the backdrop

of the events of September 11.

PROCESSES

Innovation in the management and development of

our business processes has been at the forefront of

our thinking during the year. We have critically

reviewed the assembly of the product at our Century

Wharf project to assess both the cost base and site

productivity. This has resulted in several refinements

to the traditional construction process, the cost

benefits of which have been passed on to the client.

We have also further developed the process for

identification and management of defects, in a real

attempt to generate meaningful feedback on the

functionality of the design and construction process.

TECHNOLOGY

We continue to seek to use innovative technology

which is easily and cheaply deployed at project

level and which can produce immediate returns

on investment to our customers.

We have, in the year, linked our back office account

systems with our materials received process and the

system now accepts receipt of material advice

through palm held computing at point of delivery.

We have also completed the research and

development of our Defects Recording and Activity

Monitoring systems, both of which will be deployed

at our Century Wharf project early next year.

We fully expect our clients to significantly

benefit from the productivity increases that

these innovations bring.

PROSPECTS

The construction industry offers enormous scope for

the creation of competitive advantage and real

customer benefit through the improvement of

business processes. We also believe our forward

order book of £27 million reflects the confidence our

relationship customers place on our ability to deliver

these benefits.

Our business is characterised by a prudent and a

close financial management with strong operating

cash flow. Our strategy to achieve long term growth

and predictability of margins is underpinned by our

ability to deliver to our customers while continuing

to differentiate our business proposition from

our competitors.

ON BEHALF OF THE BOARD:

N Kelly - Chairman

Date: 29th November 2002

Opco'smanagement teamhas one objective- to createsustainablegrowth in ourearnings by:

• focusing on theneeds of ourcustomers;

• developing ourmanagementteams throughtraining;

• continuallyimproving ourbusinessprocesses; and

• the deploymentof appropriatetechnology.


Annual report 2002 21/10/04 11:07 am

REVIEW OF BUSINESS

See Chairman's statement on page 1.

DIVIDENDS

No dividends were declared for the period ended

31st August 2002.

INCORPORATION

The company was incorporated on 13th July 2001 and

commenced trading on 4th September 2001. The

company passed a special resolution on 10th October

2001 changing its name from Nevrus (884) Limited to

Opco Limited.

PRINCIPAL ACTIVITY

The principal activity of the company in the period

under review was that of general construction and

civil engineering.

The directors present their report with the financial statements of the company forthe period 13th July to 31st August 2002.


REP

ORT

OF

THE

DIR

ECTO

RS

Peter JonesNick Kelly Steve Gay

Annual report 2002 21/10/04 11:07 am


STATEMENT OF DIRECTORS’ RESPONSIBILITIES

Company law requires the directors to prepare

financial statements for each financial year which

give a true and fair view of the state of affairs of the

company and of the profit or loss of the company for

that period. In preparing those financial statements,

the directors are required to

• select suitable accounting policies and then

apply them consistently;

• make judgements and 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 proper

accounting records which 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

1985. 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.

AUDITORS

The auditors, Broomfield & Alexander were

appointed during the year and will be proposed

for re-appointment in accordance with Section 385

of the Companies Act 1985.


P I Jones – Secretary

Date: 29th November 2002

DIRECTORSThe directors as at 31st August 2002 were:P I Jones - appointed 7.9.01N Kelly - appointed 7.9.01S Gay - appointed 1.6.02

The beneficial interests of the directors holding office on 31st August2002 in the issued share capital of the company were as follows:

Ordinary £ 1 shares 31.8.02 at date of appointmentP I Jones 63,333 66,666N Kelly 126,667 133,334S Gay 10,000 10,000

Annual report 2002 21/10/04 11:07 am


We have audited the financial statements of

Opco Limited for the period ended 31st August

2002 on pages seven to fifteen. These financial

statements have been prepared under the historical

cost convention and the accounting policies set

out therein.

Respective responsibilities of directors and auditors

As described on page four the company's directors

are responsible for the preparation of financial

statements in accordance with applicable law and

United Kingdom Accounting Standards.

Our responsibility is to audit the financial statements

in accordance with relevant legal and regulatory

requirements and United Kingdom Auditing

Standards.

We report to you our opinion as to whether the

financial statements give a true and fair view and are

properly prepared in accordance with the Companies

Act 1985. We also report to you if, in our opinion,

the Report of the Directors is not consistent with the

financial statements, if the company has not kept

proper accounting records, if we have not received all

the information and explanations we require for our

audit, or if information specified by law regarding

directors' remuneration and transactions with the

company is not disclosed.

We read the Report of the Directors and consider the

implications for our report if we become aware of

any apparent misstatements within it.

REP

ORT

OF

THE

INDEP

ENDEN

T AU

DIT

ORS

Danone Water Bottling Factory

Annual report 2002 21/10/04 11:07 am


DePuy CMW, Blackpool

Basis of audit opinion

We conducted our audit in accordance with United

Kingdom Auditing Standards issued by the Auditing

Practices Board. An audit includes examination, on a

test basis, of evidence relevant to the amounts and

disclosures in the financial statements. It also

includes an assessment of the significant estimates

and judgements made by the directors in the

preparation of the financial statements, and of

whether the accounting policies are appropriate to the

company's circumstances, consistently applied and

adequately disclosed.

We planned and performed our audit so as to obtain

all the information and explanations which we

considered necessary in order to provide us with

sufficient evidence to give reasonable assurance that

the financial statements are free from material

misstatement, whether caused by fraud or other

irregularity or error. In forming our opinion we also

evaluated the overall adequacy of the presentation of

information in the financial statements.

Opinion

In our opinion the financial statements give a true

and fair view of the state of the company's affairs as

at 31st August 2002 and of its profit for the period

then ended and have been properly prepared in

accordance with the Companies Act 1985.

Broomfield & Alexander, Registered Auditors

Chartered Accountants, Pendragon House

Caxton Place, Pentwyn, Cardiff CF23 8XE

Date: 2nd December 2002

Annual report 2002 21/10/04 11:07 am

PRO

FIT

AND L

OSS A

CCO

UNT

for

the

Period

13th

July

200

1 to

31st

Aug

ust

2002

Notes £

TURNOVER 11,367,105

Cost of sales 10,361,069

GROSS PROFIT 1,006,036

Administrative expenses 828,550

OPERATING PROFIT 3 177,486

Interest receivable and similar income 16,032

PROFIT ON ORDINARY ACTIVITIES

BEFORE TAXATION 193,518

Tax on profit on ordinary activities 4 57,000

PROFIT FOR THE FINANCIAL PERIOD

AFTER TAXATION 136,518

RETAINED PROFIT CARRRIED FORWARD 136,518

CONTINUING OPERATIONS

None of the company’s activities were acquired or

discontinued during the current period.

TOTAL RECOGNISED GAINS AND LOSSES

The company has no recognised gains or losses other

than the profit for the current period.


Annual report 2002 21/10/04 11:07 am

BALA

NCE

SHEE

T31

stAug

ust

2002

Notes £ £

FIXED ASSETS

Tangible assets 5 6,128

CURRENT ASSETS

Debtors 6 2,460,215

Cash at bank and in hand 1,269,342

3,729,557

CREDITORS

Amount falling due within one year 7 3,399,167

NET CURRENT ASSETS 330,390

TOTAL ASSETS LESS CURRENT LIABILITIES 336,518

CAPITAL AND RESERVES

Called up share capital 9 200,000

Profit and loss account 136,518

SHAREHOLDERS’ FUNDS 10 £336,518


N Kelly – Director

Approved by the board on 29th November 2002


Century Wharf, Cardiff during construction

Annual report 2002 21/10/04 11:07 am

CASH F

LOW

STA

TEM

ENT

for

the

Period

13th

July

200

1 to

31st

Aug

ust

2002

Notes £

Net cash inflow from

operating activities 1 1,065,566

Returns on investments and

servicing of finance 2 16,032

Capital expenditure 2 (12,256)

1,069,342

Financing 2 200,000

Increase in cash in the period 1,269,342

Reconciliation of net cash flow

to movement in net debt 3

Increase in cash in the period 1,269,342

Change in net funds resulting

from cash flows 1,269,342

Movement in net funds in the period 1,269,342

Net debt at 13th July -

Net funds at 31st August 1,269,342


Century Wharf Development, Cardiff Century Wharf Development, Cardiff

Annual report 2002 21/10/04 11:07 am

NOTE

S T

O T

HE

CASH F

LOW

STA

TEM

ENT

for

the

Period

13th

July

200

1 to

31st

Aug

ust

2002 1. RECONCILIATION OF OPERATING PROFIT TO NET CASH INFLOW FROM OPERATING ACTIVITIES

£

Operating profit 177,486

Depreciation charges 6,128

Increase in debtors (2,460,215)

Increase in creditors 3,342,167

Net cash inflow from operating activities 1,065,566

2. ANALYSIS OF CASH FLOWS FOR HEADINGS NETTED IN THE CASH FLOW STATEMENT

£

Returns on investments and servicing of finance

Interest received 16,032

Net cash inflow for returns on investments and servicing of finance 16,032

Capital expenditure

Purchase of tangible fixed assets (12,256)

Net cash outflow for capital expenditure (12,256)

Financing

Cash receipt re share issue 200,000

Net cash inflow from financing 200,000

3. ANALYSIS OF CHANGES IN NET DEBT

AT 31.7.01 CASH FLOW AT 31.8.02

£ £ £

Net cash:

Cash at bank and in hand – 1,269,342 1,269,342

– 1,269,342 1,269,342

Total – 1,269,342 1,269,342

Analysed in Balance Sheet

Cash at bank and in hand – 1,269,342

– 1,269,342


Annual report 2002 21/10/04 11:07 am

1. ACCOUNTING POLICIES

Accounting convention

The financial statements have been prepared under

the historical cost convention.

Turnover

Turnover represents amounts invoiced to outside

customers, except in respect of contracting activities

where turnover represents the value of work carried

out during the year including amounts not invoiced.

Turnover is recognised on property developments

when they are subject to substantially unconditional

contracts for sale. Turnover excludes value added and

similar sales-based taxes.

Tangible fixed assets

Depreciation is provided at the following annual rates

in order to write off each asset over its estimated

useful life.

Computer equipment 50% straight line

Leasing commitments

Rentals paid under operating leases are charged to

the profit and loss account as incurred.

Profit recognition on contracting activities

Profit on individual contracts is taken only when their

outcome can be forseen with reasonable certainty,

based on the lower of the percentage margin earned

to date and that prudently forecast at completion,

taking account of agreed claims. Full provision is

made for all known or expected losses on individual

contracts, taking a prudent view of future claims

income, immediately such losses are foreseen.

Deferred taxation

Provision is made in full for all taxation deferred

in respect of timing differences that have originated

but not reversed by the balance sheet date. No

provision is made for taxation on permanent

differences. At 31st August 2002, no provision is

required in respect of deferred taxation.

Deferred tax assets are recognised to the extent that

it is more likely than not that they will be recovered.

Pensions

The company operates a defined contribution

pension scheme. Contributions payable for the

year are charged to the profit and loss account.

Comparatives

There are no comparatives as this is the company's

first period of activity.

NOTE

S T

O T

HE

FINANCI

AL

STA

TEM

ENTS

for

the

Period

13th

July

200

1 to

31st

Aug

ust

2002


Century Wharf, Westbury Homes, Cardiff

Annual report 2002 21/10/04 11:07 am

2. STAFF COSTS

£

Wages and salaries 284,349

Social security 21,886

306,235

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

£

Operational staff 18

Administrative staff 8

26

3. OPERATING PROFIT

The operating profit is stated after charging:

£

Hire of plant, machinery and motor vehicles 393,423

Depreciation – owned assets 6,128

Auditors’ remuneration 9,000

Directors’ emoluments 50,625

The number of directors to whom retirement benefits were accruing was as follows:

Money purchase schemes 1


Annual report 2002 21/10/04 11:07 am

4. TAXATION

Analysis of the tax charge

The tax charge on the profit on ordinary activities for the year was as follows:

£

Current tax:

UK corporation tax 57,000

Tax on profit on ordinary activities 57,000

UK corporation tax has been charged at 24.40%.

Factors affecting the tax charge

The tax assessed for the year is higher than the standard rate of corporation tax in the UK. The difference is

explained below:

£

Profit on ordinary activities before tax 193,518

Profit on ordinary activities

multiplied by the standard rate of corporation tax

in the UK of 24.40% 47,218

Effects of:

Depreciation in excess of capital allowances 374

Non deductible expenses 7,910

Expensive leased vehicles 1,498

Current tax charge 57,000


Century Wharf, CardiffPenthouse Sales Suite, Kitchen

Century Wharf, CardiffPenthouse Sales Suite, Bedroom

Annual report 2002 21/10/04 11:07 am

5. TANGIBLE FIXED ASSETS

COMPUTEREQUIPMENT

£

COST

Additions 12,256

At 31st August 2002 12,256

DEPRECIATION

Charge for year 6,128

At 31st August 2002 6,128

NET BOOK VALUE

At 31st August 2002 6,128

6. DEBTORS

£

Amounts falling due within one year:

Trade debtors 1,673,203

Other debtors 657,964

Prepayments 6,048

2,337,215

Amounts falling due after more than one year:

Amounts due from related party 123,000

Aggregate amounts 2,460,215


Annual report 2002 21/10/04 11:07 am

7. CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR

£

Trade creditors 136,470

Other creditors 218,247

Advance progress applications 801,050

Social security and other taxes 95,673

Corporation tax 57,000

Accruals 2,090,727

3,399,167

8. OBLIGATIONS UNDER LEASING AGREEMENTS

The following payments are committed to be paid within one year:

OPERATING LEASES

Expiring:

Within one year 65,641

9. CALLED UP SHARE CAPITAL

Authorised:

NUMBER CLASS NOMINAL VALUE 2002

£

250,000 Ordinary £1 250,000

Allotted, issued and fully paid:

NUMBER CLASS NOMINAL VALUE 2002

£

200,000 Ordinary £1 200,000

The following shares were allotted and fully paid for cash at par during the period:

200,000 Ordinary shares of £1 each.


Annual report 2002 21/10/04 11:07 am

10. RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS’ FUNDS

£

Profit for the financial year 136,518

Shares issued 200,000

Net addition to shareholders’ funds 336,518

Opening shareholders’ funds —

Closing shareholders’ funds 336,518

Equity interests 336,518

11. ULTIMATE PARENT PARTY

The ultimate controlling party is N Kelly, as disclosed in the directors’ report.


Century Wharf, CardiffPenthouse Sales Suite, Living Room

Century Wharf, CardiffPenthouse Sales Suite, Study

Annual report 2002 21/10/04 11:07 am

OPCO LimitedSuite 21-24

65 Penarth RoadCardiffCF10 5DLwww.opco-construction.co.uk

3516/03

Annual report 2002 21/10/04 11:07 am

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