HMH Civils Limited - Limited company accounts 18.2

REGISTERED NUMBER: 08801287 (England and Wales)

Strategic Report, Report of the Directors and

Audited Financial Statements for the Year Ended 31 December 2017

for

HMH Civils Limited

Page

Company Information

1

Strategic Report

2

Report of the Directors

3

Report of the Independent Auditors

5

Profit and loss account

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:

Mr J P Hughes

Mr G May

Mr M A Hammond

REGISTERED OFFICE:

The Rakish

Ayton Road

Stokesley

Middlesbrough

TS9 5JN

REGISTERED NUMBER:

08801287 (England and Wales)

SENIOR STATUTORY AUDITOR:

Mr John Benson FCA

AUDITORS:

JBC Accountants Limited

Statutory Auditor

3B Lockheed Court

Preston Farm

Stockton on Tees

TS18 3SH

The directors present their strategic report for the year ended 31 December 2017.

REVIEW OF BUSINESS

Even though HMH Civils Limited faces the many challenges that the construction industry offers, it continues to grow

and cement its roots as one of the leading civil engineering companies in Teesside.

It has continued to win large contracts in the North East area on a number of self-build housing developments. These

contracts have resulted in the company creating jobs for local construction workers and assisting the local economy.

Turnover grew from £30.8m in 2016 to £40.7m in 2017, an increase of 31.9%. This has produced a profitable

performance and a continued strong cash balance.

Total operating profit has fallen from £3.5m to £2.9m, a fall of 17%. This is largely due to an increase in the provision

for doubtful debt and retentions and payroll costs.

The cash movement of £1.4m during the year is largely as a result of investment in plant and machinery and dividend

payments.

Working capital has increased slightly from the previous year and is considered sufficient for existing business

requirements.

Shareholders' funds have increased from £4.9m at 31.12.16 to £6.1m at 31.12.17.

PRINCIPAL RISKS AND UNCERTAINTIES

The company operates within the inherently volatile construction industry. Policies are designed to identify, manage and

limit both existing and possible risks that the company may face and these are applied at various management levels.

Financial risk is an integral risk faced by management; in particular, credit risk, largely in respect of trade debtors.

Cash flow risks are managed through the preparation and monitoring of records, forecasts and management accounts,

however, the strong cash balances held help to alleviate any potential problems.

Price risk is considered when tendering for new projects and this is reviewed on an ongoing basis. Procedures are in

place for each new contract, to identify and assess potential risks.

Also when tendering for contracts, there is a risk of competition. The company hopes that this is alleviated by the strong

reputation it has built within the local construction industry.

Business continuity is always a risk, however, there have been no events that would cast any doubt that the company

would not be able to continue to operate in the foreseeable future.

The company is required to comply with relevant legislation, including building standards for construction and the

Construction Industry Scheme. Best practice procedures have been established and third party specialists have been

engaged to ensure compliance.

ON BEHALF OF THE BOARD:

Mr J P Hughes - Director

16 July 2018

The directors present their report with the financial statements of the company for the year ended 31 December 2017.

PRINCIPAL ACTIVITY

The principal activity of the company in the year under review was that of civil engineering works. It was largely

involved with construction work in respect of roads and sewers and the groundworks of new housing developments.

DIVIDENDS

An interim dividend of £116,666.65 per share was paid on 6 September 2017. The directors recommend that no final dividend be paid.

The total distribution of dividends for the year ended 31 December 2017 will be £ 1,166,667 .

FUTURE DEVELOPMENTS

The company intends to build further on the reputation it has developed in the area and continue to grow its customer

base and in turn, its level of turnover.

DIRECTORS

The directors shown below have held office during the whole of the period from 1 January 2017 to the date of this

report.

Mr J P Hughes

Mr G May

Mr M A Hammond

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), including Financial Reporting Standard 102 'The

Financial Reporting Standard applicable in the UK and Republic of Ireland'. 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, JBC Accountants Limited, will be proposed for re-appointment at the forthcoming Annual General

Meeting.

ON BEHALF OF THE BOARD:

Mr J P Hughes - Director

16 July 2018

Opinion

We have audited the financial statements of HMH Civils Limited (the 'company') for the year ended 31 December 2017

which comprise the Profit and loss account, 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 December 2017 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 we do not express any form of

assurance conclusion thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing

so, consider whether the other information is materially inconsistent with the financial statements or our knowledge

obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or

apparent material misstatements, we are required to determine whether there is a material misstatement in the financial

statements or a material misstatement of the other information. If, based on the work we have performed, we conclude

that there is a material misstatement of this other information, we are required to report that fact. We have nothing to

report in this regard.

Opinion on other 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.

Mr John Benson FCA (Senior Statutory Auditor)

for and on behalf of JBC Accountants Limited

Statutory Auditor

3B Lockheed Court

Preston Farm

Stockton on Tees

TS18 3SH

16 August 2018

TURNOVER

40,707,164

30,856,177

Cost of sales

34,348,581

25,377,262

GROSS PROFIT

6,358,583

5,478,915

Administrative expenses

3,447,572

1,950,949

2,911,011

3,527,966

Other operating income

3,000

67

OPERATING PROFIT

2,914,011

3,528,033

Interest receivable and similar income

3,249

5,005

Interest payable and similar expenses

4

(16,730

)

(16,079

)

PROFIT BEFORE TAXATION

5

2,900,530

3,516,959

Tax on profit

6

570,161

711,094

PROFIT FOR THE FINANCIAL YEAR

2,330,369

2,805,865

OTHER COMPREHENSIVE INCOME

-

-

TOTAL COMPREHENSIVE INCOME FOR THE YEAR

2,330,369

2,805,865

FIXED ASSETS

Tangible assets

8

1,489,530

1,051,373

CURRENT ASSETS

Stocks

9

30,000

30,000

Debtors

10

6,691,483

4,861,401

Cash at bank and in hand

2,306,619

3,059,308

9,028,102

7,950,709

CREDITORS

Amounts falling due within one year

11

4,046,304

3,804,783

NET CURRENT ASSETS

4,981,798

4,145,926

TOTAL ASSETS LESS CURRENT LIABILITIES

6,471,328

5,197,299

CREDITORS

Amounts falling due after more than one year

12

(239,243

)

(131,464

)

PROVISIONS FOR LIABILITIES

16

(118,633

)

(116,085

)

NET ASSETS

6,113,452

4,949,750

CAPITAL AND RESERVES

Called up share capital

17

300

300

Retained earnings

6,113,152

4,949,450

SHAREHOLDERS' FUNDS

6,113,452

4,949,750

The financial statements were approved by the Board of Directors on 16 July 2018 and were signed on its behalf by:

Mr J P Hughes - Director

Called up

share

Retained

Total

capital

earnings

equity

£

£

£

Balance at 1 January 2016

300

2,143,585

2,143,885

Changes in equity

Total comprehensive income

-

2,805,865

2,805,865

Balance at 31 December 2016

300

4,949,450

4,949,750

Changes in equity

Dividends

-

(1,166,667

)

(1,166,667

)

Total comprehensive income

-

2,330,369

2,330,369

Balance at 31 December 2017

300

6,113,152

6,113,452

Cash flows from operating activities

Cash generated from operations

1

1,096,884

3,117,463

Interest element of hire purchase payments paid

(16,730

)

(16,079

)

Tax paid

(903,185

)

(292,294

)

Net cash from operating activities

176,969

2,809,090

Cash flows from investing activities

Purchase of tangible fixed assets

(437,684

)

(285,476

)

Sale of tangible fixed assets

4,537

4,000

Interest received

3,249

5,005

Net cash from investing activities

(429,898

)

(276,471

)

Cash flows from financing activities

New loans in year

155,750

-

Capital repayments in year

(456,025

)

(347,878

)

Amount introduced by directors

350,000

-

Amount withdrawn by directors

(9,318

)

(350,000

)

Equity dividends paid

(1,166,667

)

-

Net cash from financing activities

(1,126,260

)

(697,878

)

(Decrease)/increase in cash and cash equivalents

(1,379,189

)

1,834,741

Cash and cash equivalents at beginning of year

2

2,699,329

864,588

Cash and cash equivalents at end of year

2

1,320,140

2,699,329

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

2017

2016

£

£

Profit before taxation

2,900,530

3,516,959

Depreciation charges

286,761

256,812

(Profit)/loss on disposal of fixed assets

(61

)

500

Finance costs

16,730

16,079

Finance income

(3,249

)

(5,005

)

3,200,711

3,785,345

Increase in trade and other debtors

(2,170,764

)

(1,379,247

)

Increase in trade and other creditors

66,937

711,365

Cash generated from operations

1,096,884

3,117,463

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 December 2017

31/12/17

1/1/17

£

£

Cash and cash equivalents

2,306,619

3,059,308

Bank overdrafts

(986,479

)

(359,979

)

1,320,140

2,699,329

Year ended 31 December 2016

31/12/16

1/1/16

£

£

Cash and cash equivalents

3,059,308

864,588

Bank overdrafts

(359,979

)

-

2,699,329

864,588

1.	STATUTORY INFORMATION

HMH Civils 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 (£).

It's place of business is Kingfisher Way, Stockton-on-Tees.

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

Turnover is measured at the fair value of the consideration received or receivable, excluding discounts, rebates,

value added tax and other sales taxes.

Turnover from the rendering of services is recognised by reference to the stage of completion of the contract.

The company invoices on a monthly basis throughout the duration of a contract based on work carried out and

recognises income at the date of the invoice.

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.

Freehold property

-

2% on cost

Plant and machinery

-

15% on reducing balance

Motor vehicles

-

25% on reducing balance

Computer equipment

-

25% on cost

Depreciation of freehold property will begin on the date that the property is brought into use in February 2018.

Stocks

Stocks and work in progress have been valued at the lower of cost and estimated selling price less costs to sell.

Taxation

Taxation for the year comprises current and deferred tax. Tax is recognised in the Profit and loss account, 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.

3.	EMPLOYEES AND DIRECTORS

2017

2016

£

£

Wages and salaries

2,491,493

1,860,854

Social security costs

189,410

131,686

2,680,903

1,992,540

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

2017

2016

Management

3

3

Office

27

14

Site

85

67

115

84

2017

2016

£

£

Directors' remuneration

159,624

18,533

4.

INTEREST PAYABLE AND SIMILAR EXPENSES

2017

2016

£

£

Hire purchase

16,730

16,079

5.	PROFIT BEFORE TAXATION

The profit is stated after charging/(crediting):

2017

2016

£

£

Depreciation - owned assets

86,075

74,738

Depreciation - assets on hire purchase contracts

200,686

182,074

(Profit)/loss on disposal of fixed assets

(61

)

500

Auditors' remuneration

8,000

6,000

6.

TAXATION

Analysis of the tax charge

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

2017

2016

£

£

Current tax:

UK corporation tax

567,612

703,185

Deferred tax

2,549

7,909

Tax on profit

570,161

711,094

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:

2017

2016

£

£

Profit before tax

2,900,530

3,516,959

Profit multiplied by the standard rate of corporation tax in the UK of 19.246% (2016 - 20%)

558,236

703,392

Effects of:

Expenses not deductible for tax purposes

16,278

9,007

Adjustments to tax charge in respect of previous periods

(4,353

)

(1,305

)

Total tax charge

570,161

711,094

7.

DIVIDENDS

2017

2016

£

£

Ordinary shares of £1 each

Interim

1,166,667

-

8.	TANGIBLE FIXED ASSETS

Fixtures

Freehold

Plant and

and

property

machinery

fittings

£

£

£

COST

At 1 January 2017

-

783,666

15,776

Additions

324,863

181,155

7,482

At 31 December 2017

324,863

964,821

23,258

DEPRECIATION

At 1 January 2017

-

183,743

3,257

Charge for year

-

117,161

3,000

Eliminated on disposal

-

-

-

At 31 December 2017

-

300,904

6,257

NET BOOK VALUE

At 31 December 2017

324,863

663,917

17,001

At 31 December 2016

-

599,923

12,519

Motor

Computer

vehicles

equipment

Totals

£

£

£

COST

At 1 January 2017

691,968

35,116

1,526,526

Additions

167,670

48,224

729,394

Disposals

(10,610

)

-

(10,610

)

At 31 December 2017

849,028

83,340

2,245,310

DEPRECIATION

At 1 January 2017

272,098

16,055

475,153

Charge for year

145,765

20,835

286,761

Eliminated on disposal

(6,134

)

-

(6,134

)

At 31 December 2017

411,729

36,890

755,780

NET BOOK VALUE

At 31 December 2017

437,299

46,450

1,489,530

At 31 December 2016

419,870

19,061

1,051,373