GALLAGHER_GROUP_LTD - Accounts

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

The directors are satisfied with the results for the year to 30 September 2019 as they were in line with expectations, producing an operating profit of £0.6m on sales of £5.8m (10%). COVID 19 is expected to have an impact on business during 2019/20, however we consider we are well placed to react to prevailing market conditions given our strong client relationships, adaptable business model and strong financial position.

There are a number of potential risks and uncertainties which could impact the company’s performance and these are considered by the board on a regular basis. The Board of Directors and the relevant management teams consider the risks of all significant business decisions and changes in the external environment and in the company 's operations. The key risks affecting the business are as follows:

Personnel Risk - the company is a privately owned business and places great emphasis on recruiting, training, rewarding and retaining high quality people. The directors consider staff resourcing and succession planning on a regular basis. We promote from within whenever we can in order to maintain the company culture. We also embrace new people from elsewhere as they bring fresh ideas and the benefits of their experience.

Taxation Risk - the company is also exposed to financial risks from increases in tax rates and the basis of taxation including corporation tax and VAT. Principal controls include regular monitoring of legislative proposals and the engagement of experienced executives and the use of experienced sector-specific professional advisers to mitigate the impact of changes.

Health and Safety and Environmental Management

The company considers health and safety and environmental management to be priority issues. We approach the subject in a responsible, practical and pragmatic manner, concentrating on the things that make a difference and resisting the temptation to bring forward a never ending stream of new initiatives. We have a positive and professional attitude to these subjects led by the directors and senior managers who are required to set a good example.

The balance sheet on page 8 of the financial statements shows that the company's financial position at the year end is, in both net assets and liquidity terms, an improvement over the previous year.

Our financial key performance indicators are:

Revenue measure - the strength of revenue is an important measure of the success of the business plan but we value profit ahead of revenue.

• Revenue £5,819k (2018: £5,609k) an increase of 4%. The revenue is dependent on the costs recharged to associated companies.

Profit measure - the company’s gross profit margin and operating profit are important measures of the implementation of the business plan.

• Operating profit £606k (2018: £456k) an increase of 33%

Cash Measure - the net cash balance (Cash and cash equivalents less borrowings) is a measure of the strength of the balance sheet and to confirm that the company has the funds necessary to continue to grow organically.

• Net cash balance £3,097k (2018: £1,443k)

We measure one key non-financial criteria in order to identify our performance and to help spot trends, good or bad, that being;

Staff turnover – employees who leave and the reasons thereto.

By order of the board

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

The directors who held office during the year and up to the date of signature of the financial statements were as follows:

The results for the year are set out on page 7.

No ordinary dividends were paid. The directors do not recommend payment of a final dividend.

The company's principal financial instruments comprise bank balances, trade creditors, trade debtors, work in progress and loans from companies under common control . The main purpose of these instruments is to raise funds for the company's operations and to finance the company's operations.

The company manages its cash and borrowing requirements in order to maximise interest income and minimise interest expense, whilst ensuring the company has sufficient liquid resources to meet the operating needs of the business.

The company's operations have been subject to the risk of interest rate fluctuations, as it affects bank overdraft repayments and interest earning operations. In respect of loans from group undertakings and companies under common control, these are interest free.

In accordance with the company's articles, a resolution proposing that Goldblatts be reappointed as auditor of the company will be put at a General Meeting.

The directors are responsible for preparing the annual 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 then apply them consistently;

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

•     state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements;

•     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.

So far as each person who was a director at the date of approving this report is aware, there is no relevant audit information of which the company’s auditor is unaware. Additionally, the directors individually have taken all the necessary steps that they ought to have taken as directors in order to make themselves aware of all relevant audit information and to establish that the company’s auditor is aware of that information.

We have audited the financial statements of Gallagher Group Ltd (the 'company') for the year ended 30 September 2019 which comprise the statement of comprehensive income, the balance sheet, the statement of changes in equity, the statement of cash flows 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 FRS 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 September 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.

Conclusions relating to going concern

We have nothing to report in respect of the following matters in relation to which the ISAs (UK) require us to report to you where:

• the directors' use of the going concern basis of accounting in the preparation of the financial statements is not appropriate; or

• the directors have not disclosed in the financial statements any identified material uncertainties that may cast significant doubt about the company’s ability to continue to adopt the going concern basis of accounting for a period of at least twelve months from the date when the financial statements are authorised for issue.

Other information

The directors are responsible for the other information. The other information comprises the information included in the annual report, other than the financial statements and our auditor’s report thereon. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the financial statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.

We have nothing to report in this regard.

Opinions on other matters prescribed by the Companies Act 2006

In our opinion, based on the work undertaken in the course of our audit:

• the information given in the strategic report and the directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and

• the strategic report and the directors' report have been prepared in accordance with applicable legal requirements.

In the light of the 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.

As explained more fully in the directors' responsibilities statement, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the directors are responsible for assessing the company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council’s website at: http://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.

Use of our report

This report is made solely to the company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's members, as a body, for our audit work, for this report, or for the opinions we have formed.

The profit and loss account has been prepared on the basis that all operations are continuing operations.

Gallagher Group Ltd is a private company limited by shares incorporated in England and Wales. The registered office is Leitrim House, Little Preston, Coldharbour Lane, Aylesford, Maidstone, Kent, ME20 7NS.

These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006.

The financial statements have been prepared with early application of the FRS 102 Triennial Review 2017 amendments in full.

The financial statements are prepared in sterling, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £.

The financial statements have been prepared under the historical cost convention, modified to include the revaluation of freehold properties and to include investment properties and certain financial instruments at fair value. The principal accounting policies adopted are set out below.

The company has taken advantage of the exemption under section 400 of the Companies Act 2006 not to prepare consolidated accounts. The financial statements present information about the company as an individual entity and not about its group.

Gallagher Group Ltd is a wholly owned subsidiary of Gallagher Group Holdings Limited and the results of Gallagher Group Ltd are included in the consolidated financial statements of Gallagher Group Holdings Limited which are available from the registered office.

Atruet the time of approving the financial statements, the directors have a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future. Thus the directors continue to adopt the going concern basis of accounting in preparing the financial statements.

Turnover represents amounts receivable for management charges calculated on the group overheads incurred by the company which are recharged to the other group companies net of VAT. Income is recognised on the provision of the service.

Tangible fixed assets are initially measured at cost and subsequently measured at cost or valuation, net of depreciation and any impairment losses.

Depreciation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:

The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is credited or charged to profit or loss.

Interests in subsidiaries, associates and jointly controlled entities are initially measured at cost and subsequently measured at cost less any accumulated impairment losses. The investments are assessed for impairment at each reporting date and any impairment losses or reversals of impairment losses are recognised immediately in profit or loss.

A subsidiary is an entity controlled by the company. Control is the power to govern the financial and operating policies of the entity so as to obtain benefits from its activities.

An associate is an entity, being neither a subsidiary nor a joint venture, in which the company holds a long-term interest and where the company has significant influence. The company considers that it has significant influence where it has the power to participate in the financial and operating decisions of the associate.

The company has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.

Financial instruments are recognised in the company's balance sheet when the company becomes party to the contractual provisions of the instrument.

Financial assets and liabilities are offset, with the net amounts presented in the financial statements, when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.

The tax expense represents the sum of the tax currently payable and deferred tax.

The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the profit and loss account because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The company’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.

Deferred tax liabilities are generally recognised for all timing differences and deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Such assets and liabilities are not recognised if the timing difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.

The costs of short-term employee benefits are recognised as a liability and an expense, unless those costs are required to be recognised as part of the cost of stock or fixed assets.

The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received.

Rentals payable under operating leases, including any lease incentives received, are charged to the income statement on a straight line basis over the term of the relevant lease except where another more systematic basis is more representative of the time pattern in which economic benefits from the lease asset are consumed.

Transactions in currencies other than pounds sterling are recorded at the rates of exchange prevailing at the dates of the transactions. At each reporting end date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the reporting end date. Gains and losses arising on translation are included in the profit and loss account for the period.

In the application of the company’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.

The following judgements (apart from those involving estimates) have had the most significant effect on amounts recognised in the financial statements.

Management regularly review the depreciation rates given to each class of fixed asset to ensure they are carrying the asset at the appropriate value. Where necessary the impairment of assets is also considered where the net book value seems unrealisable.

Management regularly review the intercompany balances for recoverability.

An analysis of the company's turnover is as follows:

The total turnover of the company for the year has been derived from its principal activity wholly undertaken in the United Kingdom.

Exchange differences recognised in profit or loss during the year, except for those arising on financial instruments measured at fair value through profit or loss, amounted to £- (2018 - £2).

Investment income includes the following:

All labour was supplied by Gallagher Resources Limited.

Their aggregate remuneration comprised:

The actual charge for the year can be reconciled to the expected charge for the year based on the profit or loss and the standard rate of tax as follows:

Details of the company's subsidiaries at 30 September 2019 are as follows:

The registered office of the subsidiaries above is Leitrim House, Little Preston, Aylesford, Kent ME20 7NS.

The amounts owed by group undertakings, companies under common control and other related parties (included under other debtors) are interest free, with no security and no fixed repayment terms.

The amounts owed to group undertakings, companies under common control and other related parties (included under other creditors) are interest free, with no security and no fixed repayment terms.

Deferred tax assets and liabilities are offset where the company has a legally enforceable right to do so. The following is the analysis of the deferred tax balances (after offset) for financial reporting purposes:

We are expecting a net decrease in the deferred tax asset amounting to £857 in the next 12 months due to the written down allowances being in excess of the depreciation rate used.

The company has a contingent liability in respect of guarantees given on the bank overdraft facility of £1.5m between the company and its fellow subsidiaries. In terms of security held, the company is part of an unlimited composite company guarantee, and a supplemental fixed charge over goodwill, uncalled capital and intellectual property rights. As at the year-end, the amount of debt covered by these guarantees is £nil.

At the reporting end date the company had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:

During the year the company entered into the following transactions with related parties:

The sales above are provided in the course of normal operations.

Included in purchases from companies under common control are the following significant transactions concluded in the course of normal operations;

Advertising £200,000 (2018 - £400,000).

Included in purchases from other related parties are the following significant transactions concluded in the course of normal operations;

Labour £2,023,289 (2018 - £1,930,074 ).

Rent £250,000 (2018 - £270,676).

The following amounts were outstanding at the reporting end date:

The following amounts were outstanding at the reporting end date:

The parent company of Gallagher Group Limited is Gallagher Group Holdings Limited. Their registered office is Leitrim House, Little Preston, Aylesford, Kent ME20 7NS.

The company is ultimately controlled by Mr. P Gallagher, who owns 100% of the issued share capital of Gallagher Group Holdings Limited.

Gallagher Group Holdings Limited prepares group financial statements and copies can be obtained from - The Company Secretary, Gallagher Group Holdings Limited, Leitrim House, Little Preston, Aylesford, Kent ME20 7NS.