Haydon Mechanical & Electrical Limited - Period Ending 2019-06-30

Registration number: 00988409

Haydon Mechanical & Electrical Limited

Annual Report and Financial Statements

for the Year Ended 30 June 2019

Haydon Mechanical & Electrical Limited

Contents

Company Information	1
Strategic Report	2
Directors' Report	3
Statement of Directors' Responsibilities	4
Independent Auditor's Report	5 to 6
Profit and Loss Account	7
Statement of Comprehensive Income	8
Balance Sheet	9
Statement of Changes in Equity	10
Notes to the Financial Statements	11 to 22

Haydon Mechanical & Electrical Limited

Company Information

Directors

D R Cutler P Graham A L Keogh G T Mays A J Percival R M Terry G Young

Registered office

City Reach 5 Greenwich View Place Docklands London E14 9NN

Auditors

Hazlewoods LLP Staverton Court Staverton Cheltenham GL51 0UX

- 1 -

Haydon Mechanical & Electrical Limited

Strategic Report for the Year Ended 30 June 2019

The directors present their strategic report for the year ended 30 June 2019.

Principal activity

The principal activity of the company is the provision of mechanical, electrical and building services.

Fair review of the business

The results for the year which are set out in the profit and loss account show turnover of £56,384,932 (2018 - £43,523,194) and an operating profit of £1,515,938 (2018 - £1,023,667). At 30 June 2019 the company had net assets of £3,735,704 (2018 - £2,737,568). The directors consider the performance for the year and the financial position at the year end to be satisfactory.

The company's key financial and other performance indicators during the year were as follows:

	Unit	2019	2018
Turnover	£'000s	56,385	43,523
Gross profit	£'000s	4,784	4,936
Profit before tax	£'000s	1,012	1,029
Net Assets	£'000s	3,736	2,738

Other information and explanations
Haydon maintains the following stand-alone accreditations, all of which form part of a high quality integrated management system giving the client assurance of our commitment to quality and safety.

Achilles Level 5
ISO 9001
ISO 14001
OSHAS 18001
CHAS
CHAS Design
SSIP

Principal risks and uncertainties

The residential sector (specifically the construction of luxury apartments in high rise towers) is a specialist market where Haydon is one of only few niche MEP Subcontractors' with a successful track record in delivery of these complex projects. Haydon has developed an excellent reputation in the industry. The company prides itself on using a highly qualified workforce providing a competitive advantage within the industry.

Haydon is confident that its strong relationships with both customers and suppliers will allow the company to grow in the coming years.

The risks and uncertainties in the industry include, but are not limited to:

- Shortage of skilled and experienced management and supervision;

- Increasing labour material costs; and

- Potential implications of Brexit.

COVID-19
As at 31 December 2019, China alerted the World Health Organisation (WHO) of several cases of an unusual form of pneumonia in Wuhan. Since this date, the virus has spread globally. It is difficult to evaluate all of the potential implications of the current COVID-19 outbreak on the company's trade, employees, customers, suppliers and the wider economy. The directors have prepared forecasts that take into account the expected effects of the COVID-19 outbreak which indicate that the company will continue to operate within its existing facilities.

Approved by the Board on 31 March 2020 and signed on its behalf by:

.........................................
A J Percival
Director

- 2 -

Haydon Mechanical & Electrical Limited

Directors' Report for the Year Ended 30 June 2019

The directors present their report and the financial statements for the year ended 30 June 2019.

Directors of the company

The directors who held office during the year were as follows:

D R Cutler

P Graham

A L Keogh

G T Mays

A J Percival

R M Terry

G Young

Financial Instruments
The company's financial instruments comprise borrowings, cash and liquid resources, and various other items such as trade debtors, trade creditors, etc that arise directly from its operations. The main purpose of these financial instruments is to finance the operations of the company.

The company is exposed to the usual credit risk and cash flow risk associated with selling on credit and manages these through credit control procedures.

The directors have a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future and therefore continue to adopt the going concern basis of accounting.

Future developments

The company is looking to continue to grow further and is currently in negotiations to secure significant new contracts.

It is expected that business growth will cement the company's strong position in the market and allow it to negotiate favourable rates with suppliers.

Going concern

The company meets its day to day working capital requirements through careful cash management and loan facilities, including a facility with Mears Group PLC (former parent company) which is repayable under certain conditions, as detailed in note18.

The nature of the company's business is such that there can be considerable unpredictable variation in the timing of cash inflows. The directors have prepared projected cash flow information, which takes into account expected loan repayment profiles and the COVID-19 outbreak, as detailed in note 2. On the basis of this information and on the assumption that Mears Group PLC will, if required, defer or refinance amounts owing on no less favourable terms than current arrangements, the directors consider it appropriate to prepare the financial statements on a going concern basis.

Disclosure of information to the auditors

Each director has taken the steps that they ought to have taken as a director in order to make themselves aware of any relevant audit information and to establish that the company's auditors are aware of that information. The directors confirm that there is no relevant information that they know of and of which they know the auditors are unaware.

Reappointment of auditors

In accordance with section 485 of the Companies Act 2006, a resolution for the re-appointment of Hazlewoods LLP as auditors of the company is to be proposed at the forthcoming Annual General Meeting.

Approved by the Board on 31 March 2020 and signed on its behalf by:

.........................................
A J Percival
Director

- 3 -

Haydon Mechanical & Electrical Limited

Statement of Directors' Responsibilities

The directors are responsible for preparing the Strategic Report, Directors' Report and the financial statements in accordance with applicable law and regulations.

Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and 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 and apply them consistently;
•	make judgements and accounting estimates that are reasonable and prudent;
•	state whether applicable UK Accounting Standards has been followed, subject to any material departures disclosed and explained in the financial statements; and
•	prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.

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

- 4 -

Haydon Mechanical & Electrical Limited

Independent Auditor's Report to the Members of Haydon Mechanical & Electrical Limited

Opinion

We have audited the financial statements of Haydon Mechanical & Electrical Limited (the 'company') for the year ended 30 June 2019, which comprise the Profit and Loss Account, Statement of Comprehensive Income, Balance Sheet, Statement of Changes in Equity, and 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 company's affairs as at 30 June 2019 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.

Emphasis of matter

We draw attention to note 2 in the financial statements, which indicate that the company could suffer short term cash flow issues due to the current COVID-19 outbreak. As stated in note 2, these events or conditions indicate that a material uncertainty exists that may cast significant doubt on the company’s ability to continue as a going concern. Our opinion is not modified in respect of this matter.

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.

Opinion on other matter 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 Strategic Report and Directors' Report for the financial year for which the financial statements are prepared is consistent with the financial statements; and

- 5 -

Haydon Mechanical & Electrical Limited

Independent Auditor's Report to the Members of Haydon Mechanical & Electrical Limited

•	the Strategic Report and Directors' Report have been prepared in accordance with applicable legal requirements.

Matters on which we are required to report by exception

In the light of our knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identified material misstatements in the Strategic Report and the Directors' Report.

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, 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.

Responsibilities of directors

As explained more fully in the Statement of Directors' Responsibilities set out on page 4, 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.

Auditor’s 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 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 www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.

Use of this 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.

......................................
Paul Fussell (Senior Statutory Auditor)
For and on behalf of Hazlewoods LLP, Statutory Auditor

Staverton Court
Staverton
Cheltenham
GL51 0UX

31 March 2020

- 6 -

Haydon Mechanical & Electrical Limited

Profit and Loss Account for the Year Ended 30 June 2019

	Note	2019  £	2018  £
Turnover	3	56,384,932	43,523,194
Cost of sales		(51,601,136)	(38,587,376)
Gross profit		4,783,796	4,935,818
Administrative expenses		(3,373,262)	(3,916,540)
Other operating income	4	105,404	4,389
Operating profit	5	1,515,938	1,023,667
Exceptional items		(390,214)	125,696
Other interest receivable and similar income	7	1,319	1,059
Interest payable and similar charges	8	(115,001)	(121,701)
		(503,896)	5,054
Profit before tax		1,012,042	1,028,721
Taxation	11	(13,906)	(205,924)
Profit for the financial year		998,136	822,797

The above results were derived from continuing operations.

The notes on pages 11 to 22 form an integral part of these financial statements.
- 7 -

Haydon Mechanical & Electrical Limited

Statement of Comprehensive Income for the Year Ended 30 June 2019

	2019 £	2018 £
Profit for the year	998,136	822,797
Total comprehensive income for the year	998,136	822,797

The notes on pages 11 to 22 form an integral part of these financial statements.
- 8 -

Haydon Mechanical & Electrical Limited

(Registration number: 00988409)
Balance Sheet as at 30 June 2019

	Note	2019  £	2018  £
Fixed assets
Intangible assets	13	8,534	12,482
Tangible assets	14	171,735	155,162
		180,269	167,644
Current assets
Debtors	15	18,841,116	14,142,406
Cash at bank and in hand	16	3,444,740	2,484,575
		22,285,856	16,626,981
Creditors: Amounts falling due within one year	17	(16,821,129)	(11,682,529)
Net current assets		5,464,727	4,944,452
Total assets less current liabilities		5,644,996	5,112,096
Creditors: Amounts falling due after more than one year	17	(1,909,292)	(2,374,528)
Net assets		3,735,704	2,737,568
Capital and reserves
Called up share capital	19, 20	5,555,044	5,555,044
Profit and loss account	20	(1,819,340)	(2,817,476)
Total equity		3,735,704	2,737,568

Approved and authorised by the Board on 31 March 2020 and signed on its behalf by:
 

.........................................

A J Percival
Director

The notes on pages 11 to 22 form an integral part of these financial statements.
- 9 -

Haydon Mechanical & Electrical Limited

Statement of Changes in Equity for the Year Ended 30 June 2019

	Share capital £	Profit and loss account £	Total £
At 1 July 2018	5,555,044	(2,817,476)	2,737,568
Profit for the year	-	998,136	998,136
At 30 June 2019	5,555,044	(1,819,340)	3,735,704

	Share capital £	Profit and loss account £	Total £
At 1 July 2017	5,555,044	(3,640,273)	1,914,771
Profit for the year	-	822,797	822,797
At 30 June 2018	5,555,044	(2,817,476)	2,737,568

The notes on pages 11 to 22 form an integral part of these financial statements.
- 10 -

Haydon Mechanical & Electrical Limited

Notes to the Financial Statements for the Year Ended 30 June 2019

1

General information

The company is a private company limited by share capital, incorporated in England and Wales.

The address of its registered office is:
City Reach
5 Greenwich View Place
Docklands
London
E14 9NN

2

Accounting policies

Summary of significant accounting policies and key accounting estimates

The principal accounting policies applied in the preparation of these financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated.

Statement of compliance

These financial statements were prepared in accordance with Financial Reporting Standard 102 'The Financial Reporting Standard applicable in the UK and Republic of Ireland'.

Basis of preparation

These financial statements have been prepared using the historical cost convention except for, where disclosed in these accounting policies, certain items that are shown at fair value.

The presentational currency of the financial statements is Pounds Sterling, being the functional currency of the primary economic environment in which the company operates. Monetary amounts in these financial statements are rounded to the nearest Pound.

Summary of disclosure exemptions

Haydon Mechanical and Electrical Limited meets the definition of a qualifying entity under FRS 102 and has therefore taken advantage of the disclosure exemptions available to it in respect of its financial statements. Exemptions have been taken in relation to the preparation of a statement of cash flows, financial instruments, key management compensation.

Name of parent of group

These financial statements are consolidated in the financial statements of Curzon 3003 Limited.

The financial statements of Curzon 3003 Limited may be obtained from City Reach, 5 Greenwich View Place, Docklands, London, E14 9NN.

Going concern

The company meets its day to day working capital requirements through careful cash management and loan facilities, including a facility with Mears Group PLC (former parent company) which is repayable under certain conditions, as detailed in note 18.

The nature of the company's business is such that there can be considerable unpredictable variation in the timing of cash inflows. The directors have prepared projected cash flow information which take into account expected loan repayments and the current COVID-19 outbreak and its potential impact on the business. Like many businesses in the current environment, COVID-19 is expected to result in a period of reduced activity, resulting in a projected decrease in sales and cash inflows in the short term. Whilst the company will be able to reduce direct costs, there will still be a level of fixed costs that cannot be avoided. In addition, the collection of debtors and recovery of work performed on contracts is more uncertain. The projections indicate that the company will remain within its existing facilities. On the basis of this information and on the assumption that Mears Group PLC will, if required, defer or refinance amounts owing on no less favourable terms than current arrangements, the directors consider it appropriate to prepare the financial statements on a going concern basis. As with a number of such businesses, however, it is difficult to accurately forecast the effect that COVID-19 will have on the company in the next 12 months, resulting in a material uncertainty.

- 11 -

Haydon Mechanical & Electrical Limited

Notes to the Financial Statements for the Year Ended 30 June 2019

Critical accounting judgements and key sources of estimation uncertainty
In the application of the company’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amounts 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 if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.
 

Judgements

No significant judgements have been made by management in preparing these financial statements.

Key sources of estimation uncertainty

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:

Contract revenue
Revenue from contracts is assessed on an individual basis with revenue earned being ascertained based on the stage of completion of the contract which is estimated using a combination of the milestones in the contract and the costs incurred to date compared to the total costs required to complete the contract. Estimates of the total costs to complete are made on a regular basis and subject to management review. These estimates may differ from the actual results due to a variety of factors such as efficiency of working, accuracy of assessment of progress to date and client decision making.

Recoverability of trade debtors
The company makes an estimate of the recoverable value of trade debtors, including historic retention balances. When assessing impairment of trade and other debtors, management considers factors including the current credit rating of the debtor, the ageing profile of debtors and historical experience.

Revenue recognition

Turnover comprises the fair value of the consideration received or receivable for the sale of goods and provision of services in the ordinary course of the company’s activities. Turnover is shown net of sales/value added tax, returns, rebates and discounts and after eliminating sales within the company.

The company recognises revenue when the amount of revenue can be reliably measured, it is probable that future economic benefits will flow to the entity and specific criteria have been met for each of the company's activities.

Where the outcome of a construction contract can be estimated reliably, revenue and costs are recognised by reference to the stage of completion of the contract activity at the balance sheet date. This is measured by the proportion that costs incurred to date bear to the anticipated final contract costs. Variations in contract work, claims and incentive payments are included to the extent that the amount can be measured reliably and its receipt is considered probable. Where the outcome of a construction contract cannot be estimated reliably, contract revenue is recognised to the extent of contract costs incurred where it is probable that they will be recoverable. Contract costs are recognised as expenses in the period in which they are incurred. When it is probable that total contract costs will exceed total contract revenue, the expected loss is recognised as an expense immediately.

Tax

The tax expense for the period comprises current and deferred tax. Tax is recognised in the profit and loss account, except that a charge attributable to an item of income or expense recognised as other comprehensive income is also recognised directly in other comprehensive income.

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 taxable income.

Deferred income tax is recognised on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements and on unused tax losses or tax credits in the company. Deferred income tax is determined using tax rates and laws that have been enacted or substantively enacted by the reporting date.

- 12 -

Haydon Mechanical & Electrical Limited

Notes to the Financial Statements for the Year Ended 30 June 2019

The carrying amount of deferred tax assets are reviewed at each reporting date and a valuation allowance is set up against deferred tax assets so that the net carrying amount equals the highest amount that is more likely than not to be recovered based on current or future taxable profit.

Tangible assets

Tangible assets are stated in the statement of financial position at cost, less any subsequent accumulated depreciation and subsequent accumulated impairment losses.

The cost of tangible assets includes directly attributable incremental costs incurred in their acquisition and installation.

Depreciation

Depreciation is charged so as to write off the cost of assets, other than land and properties under construction over their estimated useful lives, as follows:

Asset class	Depreciation method and rate
Leasehold land and buildings	Over the period of the lease
Computer equipment	25% per annum reducing balance
Motor vehicles	4 years straight line

Intangible assets

Intangible assets are stated in the balance sheet at cost, less any subsequent accumulated amortisation and subsequent accumulated impairment losses.

The cost of intangible assets includes directly attributable incremental costs incurred in their acquisition and installation.

Amortisation

Amortisation is provided on intangible assets so as to write off the cost, less any estimated residual value, over their useful life as follows:

Asset class	Amortisation method and rate
Software Costs	6 years straight line

Trade debtors

Trade debtors are amounts due from customers for merchandise sold or services performed in the ordinary course of business.

Trade debtors are recognised initially at the transaction price. All trade debtors are repayable within one year and hence are included at the undiscounted cost of cash expected to be received. A provision for the impairment of trade debtors is established when there is objective evidence that the company will not be able to collect all amounts due according to the original terms of the debtors.

Trade creditors

Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Accounts payable are classified as current liabilities if the company does not have an unconditional right, at the end of the reporting period, to defer settlement of the creditor for at least twelve months after the reporting date. If there is an unconditional right to defer settlement for at least twelve months after the reporting date, they are presented as non-current liabilities.

Trade creditors are recognised initially at the transaction price and all are repayable within one year and hence are included at the undiscounted amount of cash expected to be paid.

Borrowings

Interest-bearing borrowings are initially recorded at fair value, net of transaction costs. Interest-bearing borrowings are subsequently carried at amortised cost, with the difference between the proceeds, net of transaction costs, and the amount due on redemption being recognised as a charge to the Profit and Loss Account over the period of the relevant borrowing.

Interest expense is recognised on the basis of the effective interest method and is included in interest payable and similar charges.

Borrowings are classified as current liabilities unless the company has an unconditional right to defer settlement of the liability for at least twelve months after the reporting date.

- 13 -

Haydon Mechanical & Electrical Limited

Notes to the Financial Statements for the Year Ended 30 June 2019

Defined contribution pension obligation

A defined contribution plan is a pension plan under which fixed contributions are paid into a pension fund and the company has no legal or constructive obligation to pay further contributions even if the fund does not hold sufficient assets to pay all employees the benefits relating to employee service in the current and prior periods.

Contributions to defined contribution plans are recognised as employee benefit expense when they are due. If contribution payments exceed the contribution due for service, the excess is recognised as a prepayment.

Leases

Leases in which substantially all the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases are charged to profit or loss on a straight-line basis over the period of the lease.

Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee.

Assets held under finance leases are recognised at the lower of their fair value at inception of the lease and the present value of the minimum lease payments. These assets are depreciated on a straight-line basis over the shorter of the useful life of the asset and the lease term. The corresponding liability to the lessor is included in the Balance Sheet as a finance lease obligation.

Lease payments are apportioned between finance costs in the Profit and Loss Account and reduction of the lease obligation so as to achieve a constant periodic rate of interest on the remaining balance of the liability.

Share capital

Ordinary shares are classified as equity. Equity instruments are measured at the fair value of the cash or other resources received or receivable, net of the direct costs of issuing the equity instruments. If payment is deferred and the time value of money is material, the initial measurement is on a present value basis.

Financial instruments

Classification
Financial instruments are classified and accounted for according to the substance of the contractual arrangement, as financial assets, financial liabilities or equity instruments. An equity instrument is any contract that evidences a residual interest in the assets of the company after deducting all of its liabilities. Where shares are issued, any component that creates a financial liability of the company is presented as a liability on the balance sheet. The corresponding dividends relating to the liability component are charged as interest expenses in the profit and loss account.

 Recognition and measurement
All financial assets and liabilities are initially measured at transaction price (including transaction costs), except for those financial assets classified as at fair value through profit or loss, which are initially measured at fair value (which is normally the transaction price excluding transaction costs), unless the arrangement constitutes a financing transaction. If an arrangement constitutes a financing transaction, the financial asset or financial liability is measured at the present value of the future payments discounted at a market rate of interest for a similar debt instrument.

 Impairment
Assets, other than those measured at fair value, are assessed for indicators of impairment at each balance sheet date. If there is objective evidence of impairment, an impairment loss is recognised in profit or loss as described below.

A non financial asset is impaired where there is objective evidence that, as a result of one or more events that occurred after initial recognition, the estimated recoverable value of the asset has been reduced. The recoverable amount of an asset is the higher of its fair value less costs to sell and its value in use.

The recoverable amount of goodwill is derived from measurement of the present value of the future cash flows of the cash-generating units ('CGUs') of which the goodwill is a part. Any impairment loss in respect of a CGU is allocated first to the goodwill attached to that CGU, and then to other assets within that CGU on a pro-rata basis.
 

- 14 -

Haydon Mechanical & Electrical Limited

Notes to the Financial Statements for the Year Ended 30 June 2019

Where indicators exist for a decrease in impairment loss, the prior impairment loss is tested to determine reversal. An impairment loss is reversed on an individual impaired asset to the extent that the revised recoverable value does not lead to a revised carrying amount higher than the carrying value had no impairment been recognised. Where a reversal of impairment occurs in respect of a CGU, the reversal is applied first to the assets (other than goodwill) of the CGU on a pro-rata basis and then to any goodwill allocated to that CGU.

For financial assets carried at amortised cost, the amount of an impairment is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the financial asset’s original effective interest rate.

For financial assets carried at cost less impairment, the impairment loss is the difference between the asset’s carrying amount and the best estimate of the amount that would be received for the asset if it were to be sold at the reporting date.

Where indicators exist for a decrease in impairment loss, and the decrease can be related objectively to an event occurring after the impairment was recognised, the prior impairment loss is tested to determine reversal. An impairment loss is reversed on an individual impaired financial asset to the extent that the revised recoverable value does not lead to a revised carrying amount higher than the carrying value had no impairment been recognised.

3

Revenue

The analysis of the company's revenue for the year from continuing operations is as follows:

	2019 £	2018 £
Mechanical, electrical and building services	56,384,932	43,523,194

The analysis of the company's turnover for the year by market is as follows:

	2019 £	2018 £
United Kingdom	56,384,932	43,523,194

4

Other operating income

The analysis of the company's other operating income for the year is as follows:

	2019 £	2018 £
Management fees	105,404	4,389

5

Operating profit

Arrived at after charging:

	2019  £	2018  £
Depreciation expense	64,095	58,273
Amortisation expense	3,948	3,948
Operating lease expense - property	321,471	308,810
Operating lease expense - other	137,266	121,753

6

Exceptional items

	2019  £	2018  £
Exceptional expenses	(390,214)	-
Exceptional income	-	125,696

- 15 -

Haydon Mechanical & Electrical Limited

Notes to the Financial Statements for the Year Ended 30 June 2019

Exceptional expenses in the current year relate to the provision for balances due from companies under common control, whose recoverability is considered to be uncertain. Exceptional income in the prior year relates to amounts recovered from the fraudulent activities identified during the 2016 financial year. No comparable income was received in the current year.

7

Other interest receivable and similar income

	2019 £	2018 £
Interest on bank deposits	1,319	1,059

8

Interest payable and similar expenses

	2019 £	2018 £
Interest on bank overdrafts and borrowings	5,840	1,227
Interest on obligations under finance leases and hire purchase contracts	1,713	1,559
Interest expense on other finance liabilities	107,448	118,915
	115,001	121,701

9

Staff costs

The aggregate payroll costs (including directors' remuneration) were as follows:

	2019  £	2018  £
Wages and salaries	5,951,097	5,067,913
Social security costs	690,183	569,534
Pension costs, defined contribution scheme	284,036	196,464
	6,925,316	5,833,911

The average number of persons employed by the company (including directors) during the year, analysed by category was as follows:

	2019  No.	2018  No.
Operational	95	80
Administrative	18	15
Directors	7	7
	120	102

10

Directors' remuneration

The directors' remuneration for the year was as follows:

	2019 £	2018 £
Remuneration	653,529	667,221
Contributions paid to money purchase schemes	44,049	45,464
	697,578	712,685

During the year the number of directors who were receiving benefits and share incentives was as follows:

	2019 No.	2018 No.
Accruing benefits under money purchase scheme	6	6

- 16 -

Haydon Mechanical & Electrical Limited

Notes to the Financial Statements for the Year Ended 30 June 2019

In respect of the highest paid director:

	2019 £	2018 £
Remuneration	140,098	140,482
Company contributions to money purchase pension schemes	10,625	10,625

11

Taxation

Tax charged/(credited) in the profit and loss account

	2019  £	2018  £
Current taxation
UK corporation tax	115,820	130,994
UK corporation tax adjustment to prior periods	(115,174)	-
	646	130,994
Deferred taxation
Arising from origination and reversal of timing differences	14,504	64,820
Arising from changes in tax rates and laws	-	10,110
Adjustments in respect of prior periods	(1,244)	-
Total deferred taxation	13,260	74,930
Tax expense in the income statement	13,906	205,924

The tax on profit before tax for the year is lower than the standard rate of corporation tax in the UK (2018 - higher than the standard rate of corporation tax in the UK) of 19% (2018 - 19%).

The differences are reconciled below:

	2019 £	2018 £
Profit before tax	1,012,042	1,028,721
Corporation tax at standard rate	192,288	195,457
Effect of expense not deductible in determining taxable profit (tax loss)	1,173	2,675
Adjustments to tax charge in respect of previous periods - corporation tax	(115,174)	-
Adjustments to tax charge in respect of previous periods - deferred tax	(1,244)	-
Adjust opening deferred tax to average rate of 19%	(2,834)	-
Adjust closing deferred tax to average rate of 19%	1,128	1,688
Additional deduction for R&D expenditure	(65,000)	-
Deferred tax not recognised	-	2,535
Fixed asset differences	3,569	3,569
Total tax charge	13,906	205,924

Deferred tax

Deferred tax assets and liabilities

2019	Asset £
Accelerated capital allowances	3,795
Short term timing differences	4,051
	7,846

- 17 -

Haydon Mechanical & Electrical Limited

Notes to the Financial Statements for the Year Ended 30 June 2019

2018	Asset £
Accelerated capital allowances	10,693
Short term timing differences	10,413
	21,106

12

Auditors' remuneration

	2019 £	2018 £
Audit of the financial statements	30,000	30,000
Other fees to auditors
Taxation compliance services	4,500	4,500
All other non-audit services	8,838	8,500
	13,338	13,000

13

Intangible assets

	Software Costs  £
Cost
At 1 July 2018	197,290
Disposals	(173,131)
At 30 June 2019	24,159
Amortisation
At 1 July 2018	184,808
Amortisation charge	3,948
Amortisation eliminated on disposals	(173,131)
At 30 June 2019	15,625
Carrying amount
At 30 June 2019	8,534
At 30 June 2018	12,482

- 18 -

Haydon Mechanical & Electrical Limited

Notes to the Financial Statements for the Year Ended 30 June 2019

14

Tangible assets

	Leasehold land and buildings £	Computer equipment  £	Motor vehicles  £	Total £
Cost
At 1 July 2018	435,349	1,739,203	41,384	2,215,936
Additions	-	59,506	40,991	100,497
Disposals	(259,183)	(1,463,896)	(41,384)	(1,764,463)
At 30 June 2019	176,166	334,813	40,991	551,970
Depreciation
At 1 July 2018	403,691	1,643,288	13,795	2,060,774
Charge for the year	19,330	34,443	10,322	64,095
Eliminated on disposal	(259,183)	(1,463,896)	(21,555)	(1,744,634)
At 30 June 2019	163,838	213,835	2,562	380,235
Carrying amount
At 30 June 2019	12,328	120,978	38,429	171,735
At 30 June 2018	31,658	95,915	27,589	155,162

Assets held under finance leases and hire purchase contracts

The net carrying amount of tangible assets includes the following amounts in respect of assets held under finance leases and hire purchase contracts:

	2019 £	2018 £
Motor vehicles	38,429	27,590

15

Debtors

	Note	2019  £	2018  £
Trade debtors		8,028,399	4,805,264
Other debtors		1,106,088	905,673
Prepayments		194,808	282,453
Accrued income		9,503,975	8,127,910
Deferred tax assets	11	7,846	21,106
Total current trade and other debtors		18,841,116	14,142,406

16

Cash and cash equivalents

	2019 £	2018 £
Cash on hand	250	250
Cash at bank	3,444,490	2,484,325
	3,444,740	2,484,575

- 19 -

Haydon Mechanical & Electrical Limited

Notes to the Financial Statements for the Year Ended 30 June 2019

17

Creditors

	Note	2019  £	2018  £
Due within one year
Loans and borrowings	18	911,940	548,494
Trade creditors		13,731,993	8,923,044
Social security and other taxes		278,364	221,821
Outstanding defined contribution pension costs		41,529	30,120
Other creditors		301,263	240,659
Accrued expenses		1,555,400	1,587,397
Corporation tax liability	11	640	130,994
		16,821,129	11,682,529
Due after one year
Loans and borrowings	18	1,909,292	2,374,528

18

Loans and borrowings

	2019 £	2018 £
Current loans and borrowings
Finance lease liabilities	6,277	7,550
Other borrowings	905,663	540,944
	911,940	548,494

	2019 £	2018 £
Non-current loans and borrowings
Finance lease liabilities	38,474	24,528
Other borrowings	1,870,818	2,350,000
	1,909,292	2,374,528

Other borrowings
Other borrowings in the current and prior year comprise:

• A loan of £2,412,485 (2018 - £2,500,000) from Mears Group PLC, the former parent of the company. The loan is denominated in Sterling and bears interest at a rate of 2% above the Barclays Bank base rate, with interest charges commencing on 1 January 2018. The loan is repayable in monthly instalments over a period of 5 years commencing in April 2019, with the final instalment falling due in March 2024. The carrying amount of the loan at the year end is £2,412,485 (2018 - £2,500,000) of which £541,667 (2018 - £150,000) falls due within one year.

The loan is secured by way of a fixed and floating charge over the assets and undertakings of the company.

• Short term loans of £nil (2018 - £390,944) advanced from Sancus Finance Limited. These loans are denominated in Sterling and incur transactions fees at a rate of 1.5%.

• Short term loans of £363,996 (2018 - £nil) advanced from TradeRiver UK Limited. These loans are denominated in Sterling and incur transactions fees at a rate of 1.0%. These loans bear varying maturity dates, with all loans outstanding at 30 June 2019 falling due for repayment within one year.

Finance lease liabilities
Obligations under finance lease liabilities are secured over the assets to which they relate.

- 20 -

Haydon Mechanical & Electrical Limited

Notes to the Financial Statements for the Year Ended 30 June 2019

19

Share capital

Allotted, called up and fully paid shares

	2019		2018
	No.	£	No.	£
Ordinary of £1 each	5,555,044	5,555,044	5,555,044	5,555,044

20

Reserves

Share capital
Share capital represents the issued share capital of the company.

Retained earnings
This represents the cumulative profit or losses, net of dividends paid and other adjustments.

21

Obligations under leases and hire purchase contracts

Finance leases

The total of future minimum lease payments is as follows:

	2019 £	2018 £
Not later than one year	6,277	7,550
Later than one year and not later than five years	38,474	24,528
	44,751	32,078

Operating leases

The total of future minimum lease payments is as follows:

	2019 £	2018 £
Not later than one year	497,807	376,996
Later than one year and not later than five years	1,537,150	49,294
	2,034,957	426,290

The amount of non-cancellable operating lease payments recognised as an expense during the year was £458,737 (2018 - £430,563).

22

Pension and other schemes

Defined contribution pension scheme

The company operates a defined contribution pension scheme. The pension cost charge for the year represents contributions payable by the company to the scheme and amounted to £284,036 (2018 - £196,464).

Contributions totalling £41,529 (2018 - £30,120) were payable to the scheme at the end of the year and are included in creditors.

23

Related party transactions

Summary of transactions with key management
Key management personnel are considered to be the directors of the company and key management personnel compensation is disclosed in note 10 to the financial statements.

- 21 -

Haydon Mechanical & Electrical Limited

Notes to the Financial Statements for the Year Ended 30 June 2019

Summary of transactions with companies under common control
Included within trade and other debtors at 30 June 2019 is an amount of £784,663 (2018 - £570,170) due from companies under common control. The balances are interest free and repayable on demand. At 30 June 2019 debts amounting to £390,214 from companies under common control, have been provided for as their recoverability is considered to be uncertain

Included within trade and other creditors at 30 June 2019 is an amount of £407,044 (2018 - £693,768) due to companies under common control. The balances are interest free and repayable on demand.

During the year the company made purchases of £624,474 (2018 - £2,536,261) from and sales of £97 (2018 - £63,362) to companies under common control.

During the year the company received management fees of £94,327 (2018 - £4,389) from companies under common control.

24

Investments in subsidiaries, joint ventures and associates

Details of the investments in which the company holds 20% or more of the nominal value of any class of share capital are as follows:

Undertaking	Country of incorporation	Holding	Proportion of voting rights and shares held
			2019	2018

Subsidiary undertakings
Haydon Energy Limited	England and Wales	Ordinary	100%	100%

Associates
Sinergy LLC	Arab Emirates	Ordinary	49%	49%

The principal activity of Haydon Energy Limited is that of a dormant company.

The principal activity of Sinergy LLC is that of a dormant company.

The registered address of Haydon Energy Limited is City Reach, 5 Greenwich View Place, Dockland, London, E14 9NN.

25

Parent and ultimate parent undertaking

The company's immediate and ultimate parent is Curzon 3003 Limited, incorporated in England & Wales.

  These financial statements are available upon request from City Reach, 5 Greenwich View Place, Docklands, London, E14 9NN

Curzon 3003 Limited has no ultimate controlling party.

- 22 -