Hannon Brothers Limited - Limited company accounts 20.1

REGISTERED NUMBER: 05660221 (England and Wales)

STRATEGIC REPORT, REPORT OF THE DIRECTORS AND

FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 AUGUST 2019

FOR

HANNON BROTHERS LIMITED

Page

Company Information

1

Strategic Report

2

Report of the Directors

3

Report of the Independent Auditors

4

Income Statement

6

Other Comprehensive Income

7

Balance Sheet

8

Statement of Changes in Equity

9

Cash Flow Statement

10

Notes to the Cash Flow Statement

11

Notes to the Financial Statements

12

DIRECTORS:

C Clark

D W Hannon

A Llewellyn

W J Hannon

SECRETARY:

D W Hannon

REGISTERED OFFICE:

319 Wolverhampton Road

Heath Town

Wolverhampton

West Midlands

WV10 0QQ

REGISTERED NUMBER:

05660221 (England and Wales)

AUDITORS:

Flint & Thompson

Statutory Auditors

Logistics House

1325a Stratford Road

Hall Green

Birmingham

West Midlands

B28 9HH

ACCOUNTANTS:

Thursfield & Co

Holbeche House

437 Shirley Road

Birmingham

B27 7NX

The directors present their strategic report for the year ended 31 August 2019.

REVIEW OF BUSINESS

Hannon Brothers Limited's principal activity continues to be that of Groundworks and Civil Engineering.

Whilst there was a reduction in turnover and profits compared to last year, the company continues to trade profitably and

as such the business is in a healthy position.

We consider that our key financial performance indicators are those that communicate the financial performance and

strength of the business as a whole, these being turnover and operating margin.

The company had a turnover of £14.8 million (2018: £18.3 million), gross profit margin of 12% (2018: 12.9%) and

operating profit of 3.7% (2018: 8%). Net assets increased by £0.4 million.

PRINCIPAL RISKS AND UNCERTAINTIES

We continue to monitor the principal risks and uncertainties which the business and the wider industry are subject to

such as:-

- Unforeseen events or circumstances and one such event which occurred post year end was the spread of COVID-19

which has severely impacted many local economies around the globe. However the company has continued to trade at

capacity post year end and is expected to continue making profits, therefore the impact of COVID-19 has not had a

severe effect on the business

- Risk of bad debts

- Slow down or recession in the economy

The outlook for the business is promising as it continues to be engaged in profitable contracts.

ON BEHALF OF THE BOARD:

A Llewellyn - Director

28 August 2020

The directors present their report with the financial statements of the company for the year ended 31 August 2019.

DIVIDENDS

No dividends will be distributed for the year ended 31 August 2019.

DIRECTORS

The directors shown below have held office during the whole of the period from 1 September 2018 to the date of this

report.

C Clark

D W Hannon

A Llewellyn

W J Hannon

CHARITABLE DONATIONS AND EXPENDITURE

During the year the company made charitable donations of £6,205 (2019: £2,000).

STATEMENT OF DIRECTORS' RESPONSIBILITIES

The directors are responsible for preparing the 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 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;

-	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.

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 company'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 company's

auditors are aware of that information.

AUDITORS

The auditors, Flint & Thompson, will be proposed for re-appointment at the forthcoming Annual General Meeting.

ON BEHALF OF THE BOARD:

A Llewellyn - Director

28 August 2020

Opinion

We have audited the financial statements of Hannon Brothers Limited (the 'company') for the year ended

31 August 2019 which comprise the Income Statement, Other Comprehensive Income, Balance Sheet, Statement of

Changes in Equity, Cash Flow Statement and Notes to the 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 company's affairs as at 31 August 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 Auditors' 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 in the 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 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 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 company and its environment obtained in the course of the audit,

we have not identified material misstatements in the 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, 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 three, 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 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.

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.

Peter Georgiades BA FCA (Senior Statutory Auditor)

for and on behalf of Flint & Thompson

Statutory Auditors

Logistics House

1325a Stratford Road

Hall Green

Birmingham

West Midlands

B28 9HH

28 August 2020

TURNOVER

14,773,498

18,261,791

Cost of sales

12,999,536

15,897,688

GROSS PROFIT

1,773,962

2,364,103

Administrative expenses

1,224,155

910,143

OPERATING PROFIT

4

549,807

1,453,960

Interest payable and similar expenses

5

2,673

1,740

PROFIT BEFORE TAXATION

547,134

1,452,220

Tax on profit

6

105,614

277,741

PROFIT FOR THE FINANCIAL YEAR

441,520

1,174,479

PROFIT FOR THE YEAR

441,520

1,174,479

OTHER COMPREHENSIVE INCOME

-

-

TOTAL COMPREHENSIVE INCOME FOR THE YEAR

441,520

1,174,479

FIXED ASSETS

Tangible assets

8

308,084

361,715

CURRENT ASSETS

Debtors

9

4,321,107

4,997,503

Cash at bank

927,880

868,675

5,248,987

5,866,178

CREDITORS

Amounts falling due within one year

10

3,106,868

4,240,821

NET CURRENT ASSETS

2,142,119

1,625,357

TOTAL ASSETS LESS CURRENT LIABILITIES

2,450,203

1,987,072

CREDITORS

Amounts falling due after more than one year

11

(28,579

)

-

PROVISIONS FOR LIABILITIES

13

(58,536

)

(65,504

)

NET ASSETS

2,363,088

1,921,568

CAPITAL AND RESERVES

Called up share capital

14

100

100

Retained earnings

15

2,362,988

1,921,468

SHAREHOLDERS' FUNDS

2,363,088

1,921,568

The financial statements were approved by the Board of Directors and authorised for issue on 28 August 2020 and were signed on its behalf by:

A Llewellyn - Director

Called up

share

Retained

Total

capital

earnings

equity

£

£

£

Balance at 1 September 2017

100

1,292,989

1,293,089

Changes in equity

Dividends

-

(546,000

)

(546,000

)

Total comprehensive income

-

1,174,479

1,174,479

Balance at 31 August 2018

100

1,921,468

1,921,568

Changes in equity

Total comprehensive income

-

441,520

441,520

Balance at 31 August 2019

100

2,362,988

2,363,088

Cash flows from operating activities

Cash generated from operations

1

585,865

412,328

Interest element of hire purchase payments paid

(2,673

)

(1,740

)

Tax paid

(269,314

)

(215,860

)

Net cash from operating activities

313,878

194,728

Cash flows from investing activities

Purchase of tangible fixed assets

(40,392

)

(125,173

)

Sale of tangible fixed assets

25,749

-

Net cash from investing activities

(14,643

)

(125,173

)

Cash flows from financing activities

Capital repayments in year

48,916

5,270

Amount introduced by directors

22,419

394,072

Amount withdrawn by directors

(311,365

)

-

Equity dividends paid

-

(546,000

)

Net cash from financing activities

(240,030

)

(146,658

)

Increase/(decrease) in cash and cash equivalents

59,205

(77,103

)

Cash and cash equivalents at beginning of year

2

868,675

945,778

Cash and cash equivalents at end of year

2

927,880

868,675

1.	RECONCILIATION OF PROFIT BEFORE TAXATION TO CASH GENERATED FROM OPERATIONS

2019

2018

£

£

Profit before taxation

547,134

1,452,220

Depreciation charges

70,307

64,787

Profit on disposal of fixed assets

(2,033

)

-

Finance costs

2,673

1,740

618,081

1,518,747

Decrease in stocks

-

854,368

Decrease/(increase) in trade and other debtors

676,396

(3,733,052

)

(Decrease)/increase in trade and other creditors

(708,612

)

1,772,265

Cash generated from operations

585,865

412,328

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 August 2019

31.8.19

1.9.18

£

£

Cash and cash equivalents

927,880

868,675

Year ended 31 August 2018

31.8.18

1.9.17

£

£

Cash and cash equivalents

868,675

945,778

1.	STATUTORY INFORMATION

Hannon Brothers Limited is a private company, limited by shares , registered in England and Wales. The

company's registered number and registered office address can be found on the Company Information page.

2.	ACCOUNTING POLICIES

Basis of preparing the financial statements

These financial statements have been prepared in accordance with Financial Reporting Standard 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland" and the Companies Act 2006. The financial statements have been prepared under the historical cost convention.

Turnover

Revenue is recognised on construction contracts by reference to the services performed to date. Where the

outcome of the contract can be estimated reliably, revenue and costs are recognised by reference to the stage of

completion of the contract at the balance sheet date (determined by surveys of work performed by quantity

surveyors in conjunction with clients).

Tangible fixed assets

Depreciation is provided at the following annual rates in order to write off each asset over its estimated useful life or, if held under a finance lease, over the lease term, whichever is the shorter.

Plant and machinery

-

15% per annum of net book value

Fixtures and fittings

-

25% per annum of net book value

Taxation

Taxation for the year comprises current and deferred tax. Tax is recognised in the Income Statement, except to

the extent that it relates to items recognised in other comprehensive income or directly in equity.

Current or deferred taxation assets and liabilities are not discounted.

Current tax is recognised at the amount of tax payable using the tax rates and laws that have been enacted or

substantively enacted by the balance sheet date.

Deferred tax

Deferred tax is recognised in respect of all timing differences that have originated but not reversed at the balance

sheet date.

Timing differences arise from the inclusion of income and expenses in tax assessments in periods different from

those in which they are recognised in financial statements. Deferred tax is measured using tax rates and laws that

have been enacted or substantively enacted by the year end and that are expected to apply to the reversal of the

timing difference.

Unrelieved tax losses and other deferred tax assets are recognised only to the extent that it is probable that they

will be recovered against the reversal of deferred tax liabilities or other future taxable profits.

Hire purchase and leasing commitments

Assets obtained under hire purchase contracts or finance leases are capitalised in the balance sheet. Those held

under hire purchase contracts are depreciated over their estimated useful lives. Those held under finance leases

are depreciated over their estimated useful lives or the lease term, whichever is the shorter.

The interest element of these obligations is charged to profit or loss over the relevant period. The capital element

of the future payments is treated as a liability.

Rentals paid under operating leases are charged to profit or loss on a straight line basis over the period of the

lease.

Impairment

A review for indicators of impairment is carried out at each reporting date, with the recoverable amount being

estimated where such indicators exist. Where the carrying value exceeds the recoverable amount, the asset is

impaired accordingly. Prior impairments are also reviewed for possible reversal at each reporting date.

When it is not possible to estimate the recoverable amount of an individual asset, an estimate is made of the

recoverable amount of the cash generating unit to which the asset belongs. the cash generating unit is the

smallest identifiable group of assets that includes the asset and generates cash inflows that are largely

independent of the cash inflows from other assets or group of assets.

3.	EMPLOYEES AND DIRECTORS

2019

2018

£

£

Wages and salaries

218,764

112,234

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

2019

2018

Managerial and office

6

4

2019

2018

£

£

Directors' remuneration

-

5,750

4.	OPERATING PROFIT

The operating profit is stated after charging/(crediting):

2019

2018

£

£

Hire of plant and machinery

1,675,193

1,701,954

Depreciation - owned assets

52,728

64,787

Depreciation - assets on hire purchase contracts

17,579

-

Profit on disposal of fixed assets

(2,033

)

-

Auditors' remuneration

7,500

-

5.

INTEREST PAYABLE AND SIMILAR EXPENSES

2019

2018

£

£

Hire purchase

2,673

1,740

6.

TAXATION

Analysis of the tax charge

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

2019

2018

£

£

Current tax:

UK corporation tax

112,758

269,490

Under/(over) provision in prior years

(176

)

-

Total current tax

112,582

269,490

Deferred tax

(6,968

)

8,251

Tax on profit

105,614

277,741

Reconciliation of total tax charge included in profit and loss

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

explained below:

2019

2018

£

£

Profit before tax

547,134

1,452,220

Profit multiplied by the standard rate of corporation tax in the UK of 19% (2018 - 19%)

103,955

275,922

Effects of:

Expenses not deductible for tax purposes

1,883

1,644

Capital allowances in excess of depreciation

(49

)

-

Depreciation in excess of capital allowances

-

175

Adjustments to tax charge in respect of previous periods

(175

)

-

Total tax charge

105,614

277,741

7.

DIVIDENDS

2019

2018

£

£

Ordinary shares of £1 each

Final

-

546,000

8.	TANGIBLE FIXED ASSETS

Fixtures

Plant and

and

machinery

fittings

Totals

£

£

£

COST

At 1 September 2018

622,505

10,502

633,007

Additions

40,392

-

40,392

Disposals

(51,781

)

-

(51,781

)

At 31 August 2019

611,116

10,502

621,618

DEPRECIATION

At 1 September 2018

266,887

4,405

271,292

Charge for year

69,707

600

70,307

Eliminated on disposal

(28,065

)

-

(28,065

)

At 31 August 2019

308,529

5,005

313,534

NET BOOK VALUE

At 31 August 2019

302,587

5,497

308,084

At 31 August 2018

355,618

6,097

361,715

Fixed assets, included in the above, which are held under hire purchase contracts are as follows:

Plant and

machinery

£

COST

Additions

36,792

Reclassification/transfer

39,117

At 31 August 2019

75,909

DEPRECIATION

Charge for year

17,579

At 31 August 2019

17,579

NET BOOK VALUE

At 31 August 2019

58,330

9.

DEBTORS: AMOUNTS FALLING DUE WITHIN ONE YEAR

2019

2018

£

£

Trade debtors

3,978,090

4,935,203

Other debtors

272,015

-

Prepayments

71,002

62,300

4,321,107

4,997,503