Moorhead Excavations Limited - Limited company accounts 23.2

REGISTERED NUMBER: 01975558 (England and Wales)

STRATEGIC REPORT, REPORT OF THE DIRECTORS AND

FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2023

FOR

MOORHEAD EXCAVATIONS LIMITED

Page

Company Information

1

Strategic Report

2

Report of the Directors

3

Report of the Independent Auditors

5

Income Statement

8

Balance Sheet

9

Statement of Changes in Equity

10

Notes to the Financial Statements

11

DIRECTORS:

C Fitton

P Horsnall

J M Prutton

SECRETARY:

REGISTERED OFFICE:

Westfield Court

Lower Wortley Road

Leeds

LS12 4PX

REGISTERED NUMBER:

01975558 (England and Wales)

AUDITORS:

Hollis and Co Limited

Chartered Accountants

Statutory Auditor

35 Wilkinson Street

Sheffield

South Yorkshire

S10 2GB

The directors present their strategic report for the year ended 31 March 2023.

REVIEW OF BUSINESS

The results of the company for the year and the financial position of the company are as shown in the annexed financial statements.

In respect of the year ended 31 March 2023 the company achieved a profit before tax of £5,154,883 (2022 £2,381,510) on turnover of £18,007,781 (2022 £13,843,692)

Whilst the company enjoyed an exceptional year of activity it continues to maintain a strong focus on cost control,

maintaining a low fixed cost base and engineering the most efficient and cost effective way to complete contracts in a market hit by changes in duty on fuel and exceptionally high costs of diesel. The directors and management team continually monitor all costs against budgets which are set to reflect continually changing levels of business activity experienced in the construction industry.

During the year the company continued to reinvest in updating Plant, Machinery and Trucks to take advantage of business opportunities as and when they arise whilst maintaining a strong bank balance to counter the turbulent market in which it operates.

The directors recognise that it has been an exceptional year and that operating costs need to be kept to a bare minimum.

PRINCIPAL RISKS AND UNCERTAINTIES

Due to the current high costs of borrowing and inflation along with the continued high costs of diesel the construction industry is going through a period of uncertainty putting exceptional strain on contractors.

The company has also had to absorb in its cash flow the adverse effect of reverse VAT which was introduced by the government in 2021.

The directors and management team are continually working on contingency plans to cover fixed costs until the uncertainty clears.

CURRENT AND FUTURE DEVELOPMENT

On 24 February 2023 the shares of the parent company transitioned to an Employee Ownership Trust (EOT).

By being ultimately owned by an Employee-Owned Trust (EOT) the directors believe that the company can best serve its customers, employees and all other stakeholders by retaining the values and culture which sit at the heart of the business.

The directors undertake to continue to maintain and adapt the strategies that have been developed to grow the business and look for new markets and innovative ways to undertake contracts to further compliment the existing portfolio of high quality customers and services.

ON BEHALF OF THE BOARD:

J M Prutton - Director

2 November 2023

The directors present their report with the financial statements of the company for the year ended 31 March 2023.

PRINCIPAL ACTIVITY

The principal activity of the company in the year under review was that of an excavations and demolitions contractor.

DIVIDENDS

Interim dividends per share were paid as follows:

33.33333p

- 17 August 2022

233.33334p

- 3 February 2023

266.66667p

The directors recommend that no final dividend be paid.

The total distribution of dividends for the year ended 31 March 2023 will be £ 4,000,000 .

DIRECTORS

The directors shown below have held office during the whole of the period from 1 April 2022 to the date of this report.

C Fitton

P Horsnall

J M Prutton

QUALIFYING THIRD PARTY INDEMNITY PROVISION

During the financial year, a Qualifying Third Party Indemnity Provision for the benefit of the directors was in force.

DISCLOSURE IN THE STRATEGIC REPORT

Certain items required under Schedule 7 of the Large and Medium-sized Companies and Groups (Accounts and Reports Regulations) 2008 to be disclosed in the directors' report are set out in the Strategic Report in accordance with Section 414C(11) Companies Act 2006.

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, Hollis and Co Limited, will be proposed for re-appointment at the forthcoming Annual General Meeting.

ON BEHALF OF THE BOARD:

J M Prutton - Director

2 November 2023

Opinion

We have audited the financial statements of Moorhead Excavations Limited (the 'company') for the year ended 31 March 2023 which comprise the Income Statement, Other 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 31 March 2023 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

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 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 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 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.

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

We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:

- Enquiry of management and those charged with governance around actual and potential litigation and claims;

- Enquiry of entity staff in compliance functions to identify any instances of non-compliance with laws and regulations;

- Reviewing minutes of meetings of those charged with governance;

- Reviewing financial statement disclosures and testing to supporting documentation to assess compliance with applicable laws and regulations.

- Performing audit work over the risk of management override of controls, including testing of journal entries and other adjustments for appropriateness, evaluating the business rationale of significant transactions outside the normal course of business and reviewing accounting estimates for bias.

Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading to a material misstatement in the financial statements or non-compliance with regulation. This risk increases the further that compliance with a law or regulation is removed from the events and transactions reflected in the financial statements, as we will be less likely to become aware of instances of non-compliance. The risk is also greater regarding irregularities occurring due to fraud rather than error, as fraud involves intentional concealment, forgery, collusion, omission or misrepresentation.

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 Hollis (Senior Statutory Auditor)

for and on behalf of Hollis and Co Limited

Chartered Accountants

Statutory Auditor

35 Wilkinson Street

Sheffield

South Yorkshire

S10 2GB

6 November 2023

TURNOVER

4

18,007,781

13,843,692

Cost of sales

10,164,434

9,402,682

GROSS PROFIT

7,843,347

4,441,010

Administrative expenses

2,634,344

2,023,683

5,209,003

2,417,327

Other operating income

20,000

20,000

OPERATING PROFIT

6

5,229,003

2,437,327

Interest receivable and similar income

1,003

661

5,230,006

2,437,988

Interest payable and similar expenses

7

75,123

56,478

PROFIT BEFORE TAXATION

5,154,883

2,381,510

Tax on profit

8

785,632

1,013,757

PROFIT FOR THE FINANCIAL YEAR

4,369,251

1,367,753

FIXED ASSETS

Tangible assets

10

2,205,129

1,989,528

CURRENT ASSETS

Debtors

11

2,708,440

4,176,040

Cash at bank and in hand

2,203,591

1,344,017

4,912,031

5,520,057

CREDITORS

Amounts falling due within one year

12

2,535,421

3,366,609

NET CURRENT ASSETS

2,376,610

2,153,448

TOTAL ASSETS LESS CURRENT LIABILITIES

4,581,739

4,142,976

CREDITORS

Amounts falling due after more than one year

13

(943,232

)

(928,138

)

PROVISIONS FOR LIABILITIES

16

(553,147

)

(498,729

)

NET ASSETS

3,085,360

2,716,109

CAPITAL AND RESERVES

Called up share capital

17

15,000

15,000

Retained earnings

18

3,070,360

2,701,109

SHAREHOLDERS' FUNDS

3,085,360

2,716,109

The financial statements were approved by the Board of Directors and authorised for issue on 2 November 2023 and were signed on its behalf by:

J M Prutton - Director

Called up

share

Retained

Total

capital

earnings

equity

£

£

£

Balance at 1 April 2021

15,000

2,283,356

2,298,356

Changes in equity

Dividends

-

(950,000

)

(950,000

)

Total comprehensive income

-

1,367,753

1,367,753

Balance at 31 March 2022

15,000

2,701,109

2,716,109

Changes in equity

Dividends

-

(4,000,000

)

(4,000,000

)

Total comprehensive income

-

4,369,251

4,369,251

Balance at 31 March 2023

15,000

3,070,360

3,085,360

1.	STATUTORY INFORMATION

Moorhead Excavations 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.

The presentation currency of the financial statements is the Pound Sterling (£).

These financial statements cover the entity as an individual company.

The figures in the financial statements are rounded to the nearest £.

2.	STATEMENT OF COMPLIANCE

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.

3.	ACCOUNTING POLICIES

Basis of preparing the financial statements

The financial statements have been prepared under the historical cost convention.

Financial Reporting Standard 102 - reduced disclosure exemptions

The company has taken advantage of the following disclosure exemption in preparing these financial statements, as permitted by FRS 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland":

•

the requirements of Section 7 Statement of Cash Flows.

Related party exemption

The company has taken advantage of exemption, under the terms of Financial Reporting Standard 102 'The Financial Reporting Standard applicable in the UK and Republic of Ireland', not to disclose related party transactions with wholly owned subsidiaries within the group.

Turnover

Turnover represents the amounts ( excluding value added tax) derived from the provision of goods and services to customers during the year, other than on certain long term contracts, where the estimated sales value of work performed in the year is included. Turnover is recognised when the company has transferred the significant risks and rewards of ownership to the buyer and it is probable that the company will receive the invoiced amount.

Long term contracts are those exceeding 12 months and any other shorter duration which are material to the activity of the period. Attributable profit is recognised once the outcome of a long term contract can be assessed with reasonable certainty. Attributable profit is recognised on the cost percentage completion method. Immediate provision is made for all foreseeable losses if a contract is assessed as unprofitable.

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

-

20% on cost

Fixtures and fittings

-

20% on cost

Motor vehicles

-

25% on reducing balance

Tangible fixed assets are stated at the historical cost less accumulated depreciation and any accumulated impairment losses. Historical cost includes expenditure that is directly attributable to bringing the asset to its present location and condition.

Financial instruments

Financial Assets and Liabilities

The company's group loans receivable and payable meet the definition of a basic financial instrument, so they are originally recognised at the transaction price.

Debt instruments which are financing transactions at a rate of interest that is not a market rate.

Where debt instruments are classified as assets due after more than one year or long term liabilities, then the company measures these at the present value of the future payments discounted at a market rate of interest for a similar debt instrument.

Where debt instruments are classified as current assets or current liabilities, then there is no present value adjustment to the initial measurement based on amortised cost.

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.

Pension costs and other post-retirement benefits

The company operates a defined contribution pension scheme. Contributions payable to the company's pension scheme are charged to profit or loss in the period to which they relate.

4.

TURNOVER

The turnover and profit before taxation are attributable to the one principal activity of the company.

5.	EMPLOYEES AND DIRECTORS

2023

2022

£

£

Wages and salaries

1,640,940

1,371,425

Social security costs

181,332

144,257

Other pension costs

30,933

52,944

1,853,205

1,568,626

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

2023

2022

Office and administration

8

8

Operational

29

28

37

36

2023

2022

£

£

Directors' remuneration

-

-

6.	OPERATING PROFIT

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

2023

2022

£

£

Depreciation - owned assets

132,319

76,512

Depreciation - assets on hire purchase contracts

571,316

531,179

Profit on disposal of fixed assets

(106,593

)

(154,725

)

Auditors remuneration - audit of the company

15,000

12,500

Auditors remuneration - audit of other group entities

9,000

6,000

Operating lease payments

228,443

219,223

7.

INTEREST PAYABLE AND SIMILAR EXPENSES

2023

2022

£

£

Hire purchase and bank loans

75,123

56,478

8.

TAXATION

Analysis of the tax charge

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

2023

2022

£

£

Current tax:

UK corporation tax

910,849

367,272

Adjustment to prior year

(179,637

)

588,538

Total current tax

731,212

955,810

Deferred tax

54,420

57,947

Tax on profit

785,632

1,013,757

Reconciliation of total tax charge included in profit and loss

The tax assessed for the year is lower than the standard rate of corporation tax in the UK. The difference is explained below:

2023

2022

£

£

Profit before tax

5,154,883

2,381,510

Profit multiplied by the standard rate of corporation tax in the UK of 19% (2022 - 19%)

979,428

452,487

Effects of:

Expenses not deductible for tax purposes

11,297

5,428

Capital allowances in excess of depreciation

(79,876

)

(90,643

)

Adjustments to tax charge in respect of previous periods

(179,637

)

588,538

Increase in deferred tax provision

54,420

57,947

Total tax charge

785,632

1,013,757

9.

DIVIDENDS

2023

2022

£

£

Ordinary shares of £1 each

Interim

4,000,000

950,000

10.	TANGIBLE FIXED ASSETS

Fixtures

Plant and

and

Motor

machinery

fittings

vehicles

Totals

£

£

£

£

COST

At 1 April 2022

4,341,909

51,786

88,737

4,482,432

Additions

967,476

4,765

40,501

1,012,742

Disposals

(563,575

)

-

(27,321

)

(590,896

)

At 31 March 2023

4,745,810

56,551

101,917

4,904,278

DEPRECIATION

At 1 April 2022

2,419,222

46,200

27,482

2,492,904

Charge for year

686,202

2,972

14,461

703,635

Eliminated on disposal

(482,875

)

-

(14,515

)

(497,390

)

At 31 March 2023

2,622,549

49,172

27,428

2,699,149

NET BOOK VALUE

At 31 March 2023

2,123,261

7,379

74,489

2,205,129

At 31 March 2022

1,922,687

5,586

61,255

1,989,528

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

Plant and

Motor

machinery

vehicles

Totals

£

£

£

COST

At 1 April 2022

2,602,632

88,737

2,691,369

Additions

921,453

40,501

961,954

Disposals

(236,100

)

(27,321

)

(263,421

)

Transfer to ownership

(307,500

)

(29,071

)

(336,571

)

At 31 March 2023

2,980,485

72,846

3,053,331

DEPRECIATION

At 1 April 2022

895,262

27,482

922,744

Charge for year

556,855

14,461

571,316

Eliminated on disposal

(155,400

)

(14,515

)

(169,915

)

Transfer to ownership

(220,376

)

(17,319

)

(237,695

)

At 31 March 2023

1,076,341

10,109

1,086,450

NET BOOK VALUE

At 31 March 2023

1,904,144

62,737

1,966,881

At 31 March 2022

1,707,370

61,255

1,768,625

11.

DEBTORS

2023

2022

£

£

Amounts falling due within one year:

Trade debtors

1,087,801

147,324

Amounts owed by group undertakings

664,172

999,490

Amounts recoverable on contract

582,009

2,513,140

Other debtors

131,756

81,766

VAT

46,889

209,662

Prepayments

115,523

50,197

2,628,150

4,001,579

Amounts falling due after more than one year:

Trade debtors

80,290

174,461

Aggregate amounts

2,708,440

4,176,040

12.

CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR

2023

2022

£

£

Hire purchase contracts (see note 14)

686,106

596,818

Trade creditors

1,047,765

1,996,160

Amounts owed to group undertakings

84,967

30,027

Tax

347,330

367,272

Social security and other taxes

33,781

64,870

Other creditors

1,351

2,507

Accrued expenses

334,121

308,955

2,535,421

3,366,609

13.

CREDITORS: AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR

2023

2022

£

£

Hire purchase contracts (see note 14)

943,232

928,138

14.	LEASING AGREEMENTS

Minimum lease payments fall due as follows:

Hire purchase contracts

2023

2022

£

£

Net obligations repayable:

Within one year

686,106

596,818

Between one and five years

943,232

928,138

1,629,338

1,524,956