Gallagher Topco Limited - Limited company accounts 18.2

REGISTERED NUMBER: 10060006 (England and Wales)

Group Strategic Report,

Report of the Directors and

Consolidated Financial Statements

for the Year Ended 31 March 2019

for

GALLAGHER TOPCO LIMITED

Page

Company Information

1

Group Strategic Report

2

Report of the Directors

5

Report of the Independent Auditors

7

Consolidated Statement of Comprehensive Income

9

Consolidated Balance Sheet

10

Company Balance Sheet

11

Consolidated Statement of Changes in Equity

12

Company Statement of Changes in Equity

13

Consolidated Cash Flow Statement

14

Notes to the Consolidated Cash Flow Statement

15

Notes to the Consolidated Financial Statements

16

Directors:

P J Birchall

S A Fraser

D L Holland

Registered office:

Weaste Works

James Corbett Road

Salford

Manchester

M50 1DE

Registered number:

10060006 (England and Wales)

Auditors:

Haines Watts Manchester Limited, Statutory Auditor

Northern Assurance Buildings

9-21 Princess Street

Manchester

M2 4DN

The directors present their strategic report of the company and the group for the year ended 31 March 2019.

We provide essential engineering services to maintain, renew and connect critical infrastructure in regulated markets.

These markets are driven by long term programmes of spending on asset renewal and maintenance.

Results for the year ended 31 March 2019

The group announces a strong performance with growth in revenue and trading profit.

£   's

£   's

Revenue

165,756

101,916

Gross profit

42,139

24,264

%

25.4

23.8

Operating profit

9,806

4,823

%

8.1

7.7

Review of business

2019 has been a successful and important year for our business. We have made decisive progress in safely delivering

our strategic objectives and further strengthening our position in our chosen markets. We have achieved this by

implementing a policy to 'protect and grow' the business.

Our priority is to deliver organic growth by delivering to existing customers' expectations and selectively bidding for new

work in adjacent markets and geographies. Focusing on those activities that are most suited to our core skills and

capabilities enables us to provide efficient and effective services to customers and consumers.

This approach has been key to delivering an excellent set of results. We continue to improve our trading performance

with an increase in operating profit of 103.3% to £9.8m (2018: 30.1% £4.8m).

These results demonstrate that we are well placed to achieve further sustainable growth. The Board is committed to

continue to grow the business in our current markets whilst maintaining a disciplined approach to pursuing new

opportunities in adjacent ones. We will ensure that the appropriate levels of corporate governance are in place and that

succession planning, training and development opportunities remain key areas of focus. We have also made a number

of appointments to strengthen the senior management team and continue to invest in our IT system.

During the reporting period, we implemented a phased change in ownership and leadership at director level. The final

phase has now been completed and all Board members are grateful to have the opportunity to build upon the

significant growth and successes achieved by their predecessors.

Principal risks and uncertainties

The principal business risks affecting the group are:

Carrying out works in the public highway is more onerous as Local Authorities continue to raise additional revenue

from: fixed penalty notices, permit to work schemes, section 74 fines for prolonged stays on the highway, and the

activity of coring for air voidage in reinstatement against a specification from HAUC introduced in 1991. Whilst there

has been significant work with material suppliers to develop enhanced products, this remains a risk to the business.

Bad Debts / Poor Margins - Principal contractors are tendering and securing works on very tight margins and the tier 2

and 3 supply chain have to guard against taking on works with limited commercial appeal.

Health & Safety - Managing and eliminating risks to our people in the environments they work in continues to be a

major part of our responsibility. This is an area in which the business continues to invest and focus upon.

Plant & Fleet Risk - Managing our fleet drivers and driver risk together with securing our plant from theft continues to

be a risk for the business.

The group maintains a comprehensive risk register and has in place mitigation measures for each risk identified

including all of those above.

Competition - The loss of business to competitors is a significant threat. The business works closely with customers to

achieve and maintain a competitive advantage in securing work. The business is always looking for ways to improve

efficiency and maintain its competitive position. The business uses its own labour and plant, together with the GTM

(Go Traffic Management) and GRS (Gallagher Recycling Services) offerings which enable the business to have far

greater control of its previously outsourced costs.

The group's activities expose it to a number of financial risks including credit risk and liquidity risk. As a matter of

policy the group does not trade in financial instruments nor does it enter into any derivative transactions.

In addition to the risks outlined above, the group addresses other financial risks as follows:

Credit risk - credit checks are carried out where appropriate for new and existing customers and for suppliers to whom

payments on account are made.

Liquidity risk - the group takes account of cash flow requirements when determining the period of time for which funds

are placed on deposit with financial institutions.

Cash flow risk - the Board monitors the level of funds held within the business to ensure that there are sufficient funds

available for working capital requirements, capital expenditure and the payment of tax and dividends. Consideration is

also given to the impact of potential downturns in the level of business.

Future developments

The trading prospects for the group are positive. Its order book is strong having been successful in a number of new

work tenders during the year, with more tenders currently ongoing, and increasing delivery to many of its existing

clients.

The group is well positioned to embark on the next phase of its development and the directors will continue to focus on

a number of areas which offer the greatest potential for future growth and efficiency in its operations.

The directors and management of the group continue to focus on maintaining an appropriate control environment to

ensure the group is protected against potential future failure costs.

Employees

It is the company's policy to provide employees with relevant information on a regular basis and to seek their views on

matters that concern them. The company's aims, objectives and financial performance are communicated through

management briefings and other less formal communications.

The company's policy is to provide, whenever possible, employment opportunities for disabled people to encourage

and assist their recruitment, training, career development and promotion, and to retain employees who become

disabled. The company also operates an equal opportunities policy.

On behalf of the board:

D L Holland - Director

17 December 2019

The directors present their report with the financial statements of the company and the group for the year ended

31 March 2019.

Principal activity

The principal activity of the group in the year under review was that of civil engineering and ancillary services, including

traffic management.

Gallagher Topco Limited is the holding company for the group and does not trade.

Dividends

The total distribution of dividends for the year ended 31 March 2019 will be £ 2,000,000 .

Directors

The directors who have held office during the period from 1 April 2018 to the date of this report are as follows:

S J Alderson - resigned 29 March 2019

P J Birchall - appointed 29 March 2019

S A Fraser - appointed 19 September 2018

D L Holland - appointed 19 September 2018

T J Gallagher ceased to be a director after 31 March 2019 but prior to the date of this report.

Financial instruments

Objectives and policies

The group’s activities expose it to a number of financial risks including credit risk and liquidity risk. As a matter of

policy the group does not trade in financial instruments nor does it enter into any derivative transactions.

Price risk, credit risk, liquidity risk and cash flow risk

In addition to the risks outlined in the strategic report the group addresses other financial risks as follows:

Credit risk

Credit checks are carried out where appropriate for new and existing customers and to suppliers to whom payments on

account are made.

Liquidity risk

The group takes account of cash flow requirements when determining the period of time for which funds are placed on

deposit with financial institutions.

Cashflow risk

The Board monitors the level of funds held within the business to ensure that there are sufficient funds available for

working capital requirements, capital expenditure and the payment of tax and dividends. Consideration is also given to

the impact of potential downturns in the level of business.

Statement of directors' responsibilities

The directors are responsible for preparing the Group Strategic Report, the Report of the Directors 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 group and of the profit or loss of the group for that period. In preparing these financial

statements, the directors are required to:

-	select suitable accounting policies and then apply them consistently;

-	make judgements and accounting estimates that are reasonable and prudent;

-	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 and the group's transactions and disclose with reasonable accuracy at any time the financial position of the

company and the group 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 the group and hence for taking reasonable

steps for the prevention and detection of fraud and other irregularities.

Statement as to disclosure of information to auditors

So far as the directors are aware, there is no relevant audit information (as defined by Section 418 of the Companies

Act 2006) of which the group's auditors are unaware, and each director has taken all the steps that he ought to have

taken as a director in order to make himself aware of any relevant audit information and to establish that the group's

auditors are aware of that information.

Auditors

The auditors, Haines Watts Manchester Limited, Statutory Auditor, will be proposed for re-appointment at the

forthcoming Annual General Meeting.

On behalf of the board:

D L Holland - Director

17 December 2019

Opinion

We have audited the financial statements of Gallagher Topco Limited (the 'parent company') and its subsidiaries (the

'group') for the year ended 31 March 2019 which comprise the Consolidated Statement of Comprehensive Income,

Consolidated Balance Sheet, Company Balance Sheet, Consolidated Statement of Changes in Equity, Company

Statement of Changes in Equity, Consolidated Cash Flow Statement and Notes to the Consolidated Cash Flow

Statement, Notes to the Financial Statements, including a summary of significant accounting policies. The financial

reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting

Standards, including Financial Reporting Standard 102 'The Financial Reporting Standard applicable in the UK and

Republic of Ireland' (United Kingdom Generally Accepted Accounting Practice).

In our opinion the financial statements:

-	give a true and fair view of the state of the group's and of the parent company affairs as at 31 March 2019 and of the group's 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 Auditors' responsibilities for the audit of the

financial statements section of our report. We are independent of the group 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 group'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 in the Group

Strategic Report and the Report of the Directors, but does not include the financial statements and our Report of the

Auditors 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 the audit:

-	the information given in the Group Strategic Report and the Report of the Directors for the financial year for which the financial statements are prepared is consistent with the financial statements; and

-	the Group Strategic Report and the Report of the Directors have been prepared in accordance with applicable legal requirements.

Matters on which we are required to report by exception

In the light of the knowledge and understanding of the group and the parent company and its environment obtained in

the course of the audit, we have not identified material misstatements in the Group Strategic Report or the Report of

the Directors.

We 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 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.

Responsibilities of directors

As explained more fully in the Statement of Directors' Responsibilities set out on pages five and six, 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 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 group's and the 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 the directors either intend to liquidate the group or the parent company or to cease

operations, or have no realistic alternative but to do so.

Auditors' responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from

material misstatement, whether due to fraud or error, and to issue a Report of the Auditors 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 www.frc.org.uk/auditorsresponsibilities. This description forms part of our Report of the Auditors.

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 a Report of the Auditors 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.

David Fort FCA (Senior Statutory Auditor)

for and on behalf of Haines Watts Manchester Limited, Statutory Auditor

Northern Assurance Buildings

9-21 Princess Street

Manchester

M2 4DN

19 December 2019

Turnover

165,755,961

101,915,958

Cost of sales

(123,617,415

)

(77,651,693

)

Gross profit

42,138,546

24,264,265

Administrative expenses

(32,332,495

)

(19,441,241

)

Operating profit

5

9,806,051

4,823,024

Interest receivable and similar income

3

(417

)

9,806,054

4,822,607

Interest payable and similar expenses

6

(934,587

)

(1,092,312

)

Profit before taxation

8,871,467

3,730,295

Tax on profit

7

(2,421,921

)

(912,607

)

Profit for the financial year

6,449,546

2,817,688

Other comprehensive income

Purchase of own shares

2

-

Income tax relating to other comprehensive income

-

-

Other comprehensive income for the year, net of income tax

2

-

Total comprehensive income for the year

6,449,548

2,817,688

Profit attributable to:

Owners of the parent

6,449,546

2,817,688

Total comprehensive income attributable to:

Owners of the parent

6,449,548

2,817,688

Fixed assets

Intangible assets

10

22,853,074

25,711,104

Tangible assets

11

3,229,807

3,088,558

Investments

12

-

-

26,082,881

28,799,662

Current assets

Stocks

13

2,143,748

1,357,867

Debtors

14

31,859,282

18,244,747

Cash at bank and in hand

8,263,420

5,873,604

42,266,450

25,476,218

Creditors

Amounts falling due within one year

15

40,996,236

29,657,190

Net current assets/(liabilities)

1,270,214

(4,180,972

)

Total assets less current liabilities

27,353,095

24,618,690

Creditors

Amounts falling due after more than one year

16

18,264,794

19,979,942

Net assets

9,088,301

4,638,748

Capital and reserves

Called up share capital

20

107

102

Capital redemption reserve

21

77

75

Retained earnings

21

9,088,117

4,638,571

Shareholders' funds

9,088,301

4,638,748

The financial statements were approved by the Board of Directors on 17 December 2019 and were signed on its behalf

by:

D L Holland - Director

Fixed assets

Intangible assets

10

-

-

Tangible assets

11

-

-

Investments

12

34,379,933

34,379,773

34,379,933

34,379,773

Current assets

Debtors

14

1,154,716

1,968,865

Cash at bank and in hand

146,521

20,072

1,301,237

1,988,937

Creditors

Amounts falling due within one year

15

10,095,796

6,197,057

Net current liabilities

(8,794,559

)

(4,208,120

)

Total assets less current liabilities

25,585,374

30,171,653

Creditors

Amounts falling due after more than one year

16

17,512,353

18,857,142

Net assets

8,073,021

11,314,511

Capital and reserves

Called up share capital

20

107

102

Capital redemption reserve

77

75

Retained earnings

8,072,837

11,314,334

Shareholders' funds

8,073,021

11,314,511

Company's (loss)/profit for the financial year

(1,241,497

)

4,975,727

The financial statements have been prepared in accordance with the provisions applicable to companies subject to the small companies regime.

The financial statements were approved by the Board of Directors on 17 December 2019 and were signed on its behalf by:

D L Holland - Director

Called up

Capital

share

Retained

redemption

Total

capital

earnings

reserve

equity

£

£

£

£

Balance at 1 April 2017

100

1,820,958

-

1,821,058

Changes in equity

Issue of share capital

2

-

-

2

Total comprehensive income

-

2,817,613

75

2,817,688

Balance at 31 March 2018

102

4,638,571

75

4,638,748

Changes in equity

Issue of share capital

5

-

-

5

Dividends

-

(2,000,000

)

-

(2,000,000

)

Total comprehensive income

-

6,449,546

2

6,449,548

Balance at 31 March 2019

107

9,088,117

77

9,088,301

Called up

Capital

share

Retained

redemption

Total

capital

earnings

reserve

equity

£

£

£

£

Balance at 1 April 2017

100

6,338,682

-

6,338,782

Changes in equity

Issue of share capital

2

-

-

2

Total comprehensive income

-

4,975,652

75

4,975,727

Balance at 31 March 2018

102

11,314,334

75

11,314,511

Changes in equity

Issue of share capital

5

-

-

5

Dividends

-

(2,000,000

)

-

(2,000,000

)

Total comprehensive income

-

(1,241,497

)

2

(1,241,495

)

Balance at 31 March 2019

107

8,072,837

77

8,073,021

Cash flows from operating activities

Cash generated from operations

1

10,809,884

11,987,557

Interest paid

(916,576

)

(1,004,851

)

Interest element of hire purchase payments paid

(18,011

)

(87,461

)

Tax paid

(1,739,494

)

(401,201

)

Net cash from operating activities

8,135,803

10,494,044

Cash flows from investing activities

Purchase of intangible fixed assets

(260,277

)

(2,001,910

)

Purchase of tangible fixed assets

(1,183,092

)

(1,741,737

)

Sale of tangible fixed assets

194,930

262,547

Cash acquired

-

227,292

Net assets acquired

-

(804,405

)

Interest received

3

(417

)

Net cash from investing activities

(1,248,436

)

(4,058,630

)

Cash flows from financing activities

New loans in year

15,000,000

1,500,000

Loan repayments in year

(16,726,169

)

(5,014,286

)

Capital repayments in year

(765,026

)

(736,184

)

Amount introduced by directors

141,470

-

Amount withdrawn by directors

(147,833

)

-

Share issue

7

2

Equity dividends paid

(2,000,000

)

-

Net cash from financing activities

(4,497,551

)

(4,250,468

)

Increase in cash and cash equivalents

2,389,816

2,184,946

Cash and cash equivalents at beginning of year

2

5,873,604

3,688,658

Cash and cash equivalents at end of year

2

8,263,420

5,873,604

1.	Reconciliation of profit before taxation to cash generated from operations

2019

2018

£

£

Profit before taxation

8,871,467

3,730,295

Depreciation charges

4,944,420

4,731,915

Profit on disposal of fixed assets

(136,813

)

(189,684

)

Finance costs

934,587

1,092,312

Finance income

(3

)

417

14,613,658

9,365,255

Increase in stocks

(785,881

)

(470,648

)

Increase in trade and other debtors

(13,608,172

)

(3,968,651

)

Increase in trade and other creditors

10,590,279

7,061,601

Cash generated from operations

10,809,884

11,987,557

2.	Cash and cash equivalents

The amounts disclosed on the Cash Flow Statement in respect of cash and cash equivalents are in respect of

these Balance Sheet amounts:

Year ended 31 March 2019

31/3/19

1/4/18

£

£

Cash and cash equivalents

8,263,420

5,873,604

Year ended 31 March 2018

31/3/18

1/4/17

£

£

Cash and cash equivalents

5,873,604

3,688,658