PP O'Connor Group Limited - Limited company accounts 20.1

REGISTERED NUMBER: 02545561 (England and Wales)

PP O'CONNOR GROUP LIMITED

GROUP STRATEGIC REPORT, REPORT OF THE DIRECTORS AND

CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 OCTOBER 2021

Page

Company Information

1

Group Strategic Report

2

Report of the Directors

5

Report of the Independent Auditors

7

Consolidated Income Statement

10

Consolidated Other Comprehensive Income

11

Consolidated Statement of Financial Position

12

Company Statement of Financial Position

13

Consolidated Statement of Changes in Equity

14

Company Statement of Changes in Equity

15

Consolidated Statement of Cash Flows

16

Notes to the Consolidated Statement of Cash Flows

17

Notes to the Consolidated Financial Statements

18

DIRECTORS:

P P O'Connor

C M O'Connor

J P O'Connor

SECRETARY:

C H O'Connor

REGISTERED OFFICE:

The Exchange

5 Bank Street

Bury

BL9 0DN

REGISTERED NUMBER:

02545561 (England and Wales)

AUDITORS:

DTE Business Advisers Limited

Chartered Accountants

Statutory Auditors

The Exchange

5 Bank Street

Bury

BL9 0DN

The directors present their strategic report of the company and the group for the year ended 31 October 2021.

BUSINESS OVERVIEW

Established in 1990 PP O'Connor Group Limited is a leading force in the construction industry specialising in civil engineering, bulk earthworks, remediation, complex deconstruction and demolition.

Following on from last year's results, the group has maintained its strategy to increase the proportion of work won directly with customers and be more selective in the type of work undertaken. In the financial year ended 31 October 2021 this strategy has been successful in increasing revenue and margin.

The effects of the Covid-19 pandemic have marginally affected the group's performance for most of the financial year, as the business adapted to managing the longer-term impact of the pandemic in more settled conditions.

Turnover during the financial year has recovered, with an increase of 82.1% in turnover as projects initiated and restarted.

MARKETS AND TRENDS

Although the group's main geographic area of operation remains in the Northwest of England it has continued to operate outside of this core area when profitable opportunities have arisen.

The group's impressive record of delivering projects safely and on time is continuing to generate opportunities both within its core geographic area and beyond.

BUSINESS MODEL

The group continues to maintain good working relationships with both customers and suppliers. It is the intention of the directors to maintain, consolidate and build upon this position going forward by focusing on winning new profitable contracts and continuing to deliver high quality services to its customers to ensure that it continues to have a significant presence in the construction and excavation industry. The current order book indicates that almost half of the work needed for next year has already been won.

The group's key differentiators are its project delivery capability, its operational excellence and its investment in its people, its technology and its equipment which enable the group to remain at the forefront of new developments.

PEOPLE

The group continues to invest in its people, through both on the job training and through more formal external training programmes, to ensure staff have the appropriate skills to deliver the level of excellence to customers which the group expects. PP O'Connor is committed to providing the right experience and tools to an elevated level of excellence.

Headcount in the year decreased by 18.

OBJECTIVES

The group's objective for 2022 is to grow revenue through profitable projects with a managed and controlled risk profile of the work to be done.

A fundamental priority of the directors is to provide a safe working environment for all employees and subcontractors, especially given the effects of the Covid-19 pandemic. Such a policy commitment, is perceived as a deciding factor in the growth of the business, demonstrating industry leadership.

Through the management of integrated value chains, the group can combine the ability to meet increasing market demands and challenges to deliver projects effectively and efficiently in line with client requirements with the objective of delivering growth to the business.

RISK FACTORS

The group is always cognisant of the principal risks and uncertainties that are present within the industry. All financial and operational risks inherent in contracts are managed through the careful selection and appropriate due diligence when tendering for a contract.

The group is exposed to various elements which can have an adverse effect on its operational performance, financial performance, and cash flows. Examples being fuel costs, aggregate prices, and supply of materials. PP O'Connor Group seek to manage the impact of such risks without eroding their competitive position.

The group seeks to minimise financial loss from credit failure. The credit worthiness of new customers is rated by the group prior to entering a contract and all customers are managed to ensure prompt payment is in line with the contract terms. In certain exceptional circumstances the group may consider insuring customers against default, but this continues to be the exception rather than the norm.

The nature of the industry in which the group operates requires careful cash-flow management. The business monitors and forecasts cash requirements on a regular basis, both for tactical short-term cash flow purposes but also for its medium and longer-term forecasting and reporting. The group continues to use an invoice discounting facility for its main source of funding.

The nature of construction projects means they have inherent health, safety and environment risks. Any breach of laws and regulations would incur fines, penalties and costs, whilst also damaging the reputation of the group. The group ensures that they employ, either directly or by way of professional services contracts, the relevant professionals to provide the oversight to all activities and that where appropriate they carry suitable levels of insurance to indemnify the company against financial loss.

The other key business risks affecting the group are related to competition, regulation, customer acquisition and working capital management. The directors actively monitor trends in trading and, with the help of management, makes strategic decisions to mitigate any material threat to the long-term stability of the group.

PERFORMANCE

The group analyses its financial performance in the year by its ability to make an accounting profit, and to generate a sustainable cash flow.

As stated in the business overview the group revenue and profit has improved dramatically despite the Covid-19 pandemic still having a reduced impact. The business has moved to a profit generating position for the financial year.

The operating profit margin for the year is 3.8% and cash generated in the year £345k.

The group continues to work extensively on the management of its operational performance and the management of costs and will endeavour to increase the performance from capital employed in the business thus improving its financial returns and cash flows.

The directors are confident that the results for the financial year ending October 2022 will show controlled growth and good liquidity, as the business continues to grow in line with economic expectations.

In addition, the group looks to project management to enhance capability of delivering projects to cost and schedule as a key indicator and is investing in new systems to make that more efficient and timelier.

PP O'Connor Group are confident that their strategy, together with the dedication of the workforce and the easing of Covid-19 restrictions, will allow delivery of all targets and objectives for the coming year.

CORONAVIRUS

The company has continued to trade throughout the pandemic, ensuring that wherever it was safe to do so the activities of the company remained operational. New office and site procedures have been implemented in line with the most up to date Government guidance.

To maintain adequate liquidity levels, the business has taken advantage of the Government support for business for example in the form of the employee furlough scheme and VAT deferral option to help manage the cost base.

The directors are confident that their strategy, together with the dedication of the workforce will allow to Company to develop into a key player within the industry over the next few years.

ON BEHALF OF THE BOARD:

C M O'Connor - Director

30 July 2022

The directors present their report with the financial statements of the company and the group for the year ended 31 October 2021.

PRINCIPAL ACTIVITY

The principal activity of the group in the year under review was that of civil engineering, bulk earthworks, excavation and demolition and the selling of aggregates.

DIVIDENDS

No dividends will be distributed for the year ended 31 October 2021.

DIRECTORS

The directors shown below have held office during the whole of the period from 1 November 2020 to the date of this report.

P P O'Connor

C M O'Connor

J P O'Connor

STATEMENT OF DIRECTORS' RESPONSIBILITIES

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

Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and the group and of the profit or loss of the group for that period. In preparing these financial statements, the directors are required to:

-	select suitable accounting policies and then apply them consistently;

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

-	prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.

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

STATEMENT AS TO DISCLOSURE OF INFORMATION TO AUDITORS

So far as the directors are aware, there is no relevant audit information (as defined by Section 418 of the Companies Act 2006) of which the group's auditors are unaware, and each director has taken all the steps that he or she ought to have taken as a director in order to make himself or herself aware of any relevant audit information and to establish that the group's auditors are aware of that information.

AUDITORS

DTE Business Advisers Limited has indicated its willingness to be reappointed for another term and appropriate arrangements are being made for it to be deemed reappointed as auditor in the absence of an Annual General Meeting.

ON BEHALF OF THE BOARD:

C M O'Connor - Director

30 July 2022

Opinion

We have audited the financial statements of PP O'Connor Group Limited (the 'parent company') and its subsidiaries (the 'group') for the year ended 31 October 2021 which comprise the Consolidated Income Statement, Consolidated Other Comprehensive Income, Consolidated Statement of Financial Position, Company Statement of Financial Position, Consolidated Statement of Changes in Equity, Company Statement of Changes in Equity, Consolidated Statement of Cash Flows and Notes to the Consolidated Statement of Cash Flows, Notes to the Financial Statements, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 'The Financial Reporting Standard applicable in the UK and Republic of Ireland' (United Kingdom Generally Accepted Accounting Practice).

In our opinion the financial statements:

-	give a true and fair view of the state of the group's and of the parent company affairs as at 31 October 2021 and of the group's profit for the year then ended;

-	have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and

-	have been prepared in accordance with the requirements of the Companies Act 2006.

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditors' responsibilities for the audit of the financial statements section of our report. We are independent of the group in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC's Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Conclusions relating to going concern

In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.

Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the group's and the parent company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.

Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.

Other information

The directors are responsible for the other information. The other information comprises the information in the Group Strategic Report and the Report of the Directors, but does not include the financial statements and our Report of the Auditors thereon.

Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

Opinions on other matters prescribed by the Companies Act 2006

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

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

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

Matters on which we are required to report by exception

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

We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion:

-	adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received from branches not visited by us; or

-	the parent company financial statements are not in agreement with the accounting records and returns; or

-	certain disclosures of directors' remuneration specified by law are not made; or

-	we have not received all the information and explanations we require for our audit.

Responsibilities of directors

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

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

Auditors' responsibilities for the audit of the financial statements

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

The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:

As part of our planning process:

-

We enquired of management the systems and controls the group has in place, the areas of the financial statements that are mostly susceptible to the risk of irregularities and fraud, and whether there was any known, suspected or alleged fraud. The group did not inform us of any known, suspected or alleged fraud.

-

We obtained an understanding of the legal and regulatory frameworks applicable to the group. We determined that the following were most relevant: FRS 102, Companies Act 2006, Health and Safety At Work 1974, Employment Act 2008, Environmental Protection Act 1990 and General Data Protection Regulations (GDPR).

-

We considered the incentives and opportunities that exist in the group, including the extent of management bias, which present a potential for irregularities and fraud to be perpetuated, and tailored our risk assessment accordingly.

-

Using our knowledge of the group, together with the discussions held with the group at the planning stage, we formed a conclusion on the risk of misstatement due to irregularities including fraud and tailored our procedures according to this risk assessment.

The key procedures we undertook to detect irregularities including fraud during the course of the audit included:

-

Identifying and testing journal entries, in particular those that were significant and unusual.

-

Reviewing the financial statement disclosures and determining whether accounting policies have been appropriately applied.

-

Reviewing and challenging the assumptions and judgements used by management in their significant accounting estimates, in particular in relation to determining the useful life and residual values of plant and equipment, determining the expected outcome of long term contracts, categorising leases as finance or operation leases, and assessing the recoverability of related party debt.

-

Assessing the extent of compliance, or lack of, with the relevant laws and regulations in particular those that are central to the entity's ability to continue in operation.

-

Testing key revenue lines, in particular cut-off, for evidence of management bias.

-

Obtaining third-party confirmation of material bank and loan balances.

-

Documenting and verifying all significant related party and consolidated balances and transactions.

-

Reviewing documentation such as the group board minutes, correspondence with solicitors, for discussions of irregularities including fraud.

-

Testing all material consolidation adjustments.

Owing to the inherent limitations of an audit, there is an unavoidable risk that we may not have detected some material misstatements in the financial statements even though we have properly planned and performed our audit in accordance with auditing standards. The primary responsibility for the prevention and detection of irregularities and fraud rests with the directors.

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.

Fiona O'Loughlin (Senior Statutory Auditor)

for and on behalf of DTE Business Advisers Limited

Chartered Accountants

Statutory Auditors

The Exchange

5 Bank Street

Bury

BL9 0DN

30 July 2022

REVENUE

3

47,186,371

25,914,551

Cost of sales

(41,507,684

)

(23,951,682

)

GROSS PROFIT

5,678,687

1,962,869

Administrative expenses

(3,961,767

)

(2,841,298

)

1,716,920

(878,429

)

Other operating income

60,200

202,273

OPERATING PROFIT/(LOSS)

5

1,777,120

(676,156

)

Interest receivable and similar income

-

853

1,777,120

(675,303

)

Interest payable and similar expenses

6

(141,460

)

(202,851

)

PROFIT/(LOSS) BEFORE TAXATION

1,635,660

(878,154

)

Tax on profit/(loss)

7

(80,814

)

402,651

PROFIT/(LOSS) FOR THE FINANCIAL YEAR

1,554,846

(475,503

)

Profit/(loss) attributable to:

Owners of the parent

1,554,846

(475,503

)

PROFIT/(LOSS) FOR THE YEAR

1,554,846

(475,503

)

OTHER COMPREHENSIVE INCOME

-

-

TOTAL COMPREHENSIVE INCOME FOR THE YEAR

1,554,846

(475,503

)

Total comprehensive income attributable to:

Owners of the parent

1,554,846

(475,503

)

FIXED ASSETS

Property, plant and equipment

10

5,114,668

55,680

Investments

11

-

-

5,114,668

55,680

CURRENT ASSETS

Inventories

12

108,731

104,084

Debtors

13

15,782,688

12,880,519

Cash at bank

2,860,981

2,516,060

18,752,400

15,500,663

CREDITORS

Amounts falling due within one year

14

(15,842,462

)

(8,646,608

)

NET CURRENT ASSETS

2,909,938

6,854,055

TOTAL ASSETS LESS CURRENT LIABILITIES

8,024,606

6,909,735

CREDITORS

Amounts falling due after more than one year

15

(1,880,000

)

(2,320,000

)

PROVISIONS FOR LIABILITIES

18

(25

)

-

NET ASSETS

6,144,581

4,589,735

CAPITAL AND RESERVES

Called up share capital

19

100

100

Retained earnings

6,144,481

4,589,635

SHAREHOLDERS' FUNDS

6,144,581

4,589,735

The financial statements were approved by the Board of Directors and authorised for issue on 30 July 2022 and were signed on its behalf by:

C M O'Connor - Director

FIXED ASSETS

Property, plant and equipment

10

5,114,668

55,680

Investments

11

100

100

5,114,768

55,780

CURRENT ASSETS

Inventories

12

75,266

16,444

Debtors

13

14,289,220

13,024,765

Cash at bank

2,854,521

2,483,340

17,219,007

15,524,549

CREDITORS

Amounts falling due within one year

14

(13,707,267

)

(8,055,743

)

NET CURRENT ASSETS

3,511,740

7,468,806

TOTAL ASSETS LESS CURRENT LIABILITIES

8,626,508

7,524,586

CREDITORS

Amounts falling due after more than one year

15

(1,880,000

)

(2,320,000

)

PROVISIONS FOR LIABILITIES

18

(2,094

)

-

NET ASSETS

6,744,414

5,204,586

CAPITAL AND RESERVES

Called up share capital

19

100

100

Retained earnings

6,744,314

5,204,486

SHAREHOLDERS' FUNDS

6,744,414

5,204,586

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

1,539,828

(326,685

)

The financial statements were approved by the Board of Directors and authorised for issue on 30 July 2022 and were signed on its behalf by:

C M O'Connor - Director

Called up

share

Retained

Total

capital

earnings

equity

£

£

£

Balance at 1 November 2019

100

5,085,763

5,085,863

Changes in equity

Dividends

-

(20,625

)

(20,625

)

Total comprehensive income

-

(475,503

)

(475,503

)

Balance at 31 October 2020

100

4,589,635

4,589,735

Changes in equity

Total comprehensive income

-

1,554,846

1,554,846

Balance at 31 October 2021

100

6,144,481

6,144,581

Called up

share

Retained

Total

capital

earnings

equity

£

£

£

Balance at 1 November 2019

100

5,551,796

5,551,896

Changes in equity

Dividends

-

(20,625

)

(20,625

)

Total comprehensive income

-

(326,685

)

(326,685

)

Balance at 31 October 2020

100

5,204,486

5,204,586

Changes in equity

Total comprehensive income

-

1,539,828

1,539,828

Balance at 31 October 2021

100

6,744,314

6,744,414

Cash flows from operating activities

Cash generated from operations

1

1,702,664

(16,004

)

Interest paid

(141,460

)

(192,527

)

Interest element of hire purchase or finance lease rental payments paid

-

(10,324

)

Government grants

60,200

202,272

Net cash from operating activities

1,621,404

(16,583

)

Cash flows from investing activities

Purchase of property plant and equipment

(111,631

)

(21,565

)

Sale of property plant and equipment

19,794

-

Construction of own property

(1,091,907

)

(2,081,388

)

Net cash from investing activities

(1,183,744

)

(2,102,953

)

Cash flows from financing activities

New loans in year

-

2,400,000

Capital repayments in year

-

(1,836

)

Amount introduced by directors

4,801

121,528

Amount withdrawn by directors

(97,540

)

(237,095

)

Amounts advanced by related party

-

1,252,741

Equity dividends paid

-

(20,625

)

Net cash from financing activities

(92,739

)

3,514,713

Increase in cash and cash equivalents

344,921

1,395,177

Cash and cash equivalents at beginning of year

2

2,516,060

1,120,883

Cash and cash equivalents at end of year

2

2,860,981

2,516,060

1.	RECONCILIATION OF PROFIT/(LOSS) BEFORE TAXATION TO CASH GENERATED FROM OPERATIONS

2021

2020

£

£

Profit/(loss) before taxation

1,635,660

(878,154

)

Depreciation charges

65,209

19,566

Profit on disposal of fixed assets

(4,879

)

-

Government grants

(60,200

)

(202,273

)

Finance costs

141,460

202,851

Finance income

-

(853

)

1,777,250

(858,863

)

(Increase)/decrease in inventories

(4,647

)

14,019

(Increase)/decrease in trade and other debtors

(6,811,915

)

1,497,792

Increase/(decrease) in trade and other creditors

6,741,976

(668,952

)

Cash generated from operations

1,702,664

(16,004

)

2.	CASH AND CASH EQUIVALENTS

The amounts disclosed on the Statement of Cash Flows in respect of cash and cash equivalents are in respect of these Statement of Financial Position amounts:

Year ended 31 October 2021

31.10.21

1.11.20

£

£

Cash and cash equivalents

2,860,981

2,516,060

Year ended 31 October 2020

31.10.20

1.11.19

£

£

Cash and cash equivalents

2,516,060

1,120,883

3.	ANALYSIS OF CHANGES IN NET FUNDS/(DEBT)

At 1.11.20

Cash flow

At 31.10.21

£

£

£

Net cash

Cash at bank

2,516,060

344,921

2,860,981

2,516,060

344,921

2,860,981

Debt

Debts falling due within 1 year

(80,000

)

(440,000

)

(520,000

)

Debts falling due after 1 year

(2,320,000

)

440,000

(1,880,000

)

(2,400,000

)

-

(2,400,000

)

Total

116,060

344,921

460,981