Limited Liability Partnership registration number OC348998 (England and Wales)
MCHALE CONTRACTS AND PLANT ENVIRONMENTAL LLP
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
MCHALE CONTRACTS AND PLANT ENVIRONMENTAL LLP
LIMITED LIABILITY PARTNERSHIP INFORMATION
Designated members
MCP Environmental Limited
MCP Environmental Services Limited
LLP registration number
OC348998
Registered office
South Bradford Trading Estate
Spartan Road
Low Moor
Bradford
BD12 0RY
Auditor
Azets Audit Services Limited
Triune Court
Monks Cross Drive
York
YO32 9GZ
MCHALE CONTRACTS AND PLANT ENVIRONMENTAL LLP
CONTENTS
Page
Members' report
1 - 2
Members' responsibilities statement
3
Independent auditor's report
4 - 6
Statement of comprehensive income
7
Balance sheet
8
Statement of changes in equity
9
Notes to the financial statements
10 - 21
MCHALE CONTRACTS AND PLANT ENVIRONMENTAL LLP
MEMBERS' REPORT
FOR THE YEAR ENDED 31 DECEMBER 2023
- 1 -

The members present their annual report and financial statements for the year ended 31 December 2023.

Principal activities

The principal activity of the limited liability partnership continued to be that of the provision of contracting services and civil engineering works.

Designated members

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

MCP Environmental Limited
MCP Environmental Services Limited
Auditor

Azets Audit Services Limited were appointed as auditor to the limited liability partnership and are deemed to be reappointed under section 487(2) of the Companies Act 2006.

Statement of disclosure to auditor

Each of the members in office at the date of approval of this annual report confirms that:

 

MCHALE CONTRACTS AND PLANT ENVIRONMENTAL LLP
MEMBERS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 2 -
Going concern

This trading entity is part of a larger group with MCP Environmental Holdings Ltd (registration number 09757284) being the ultimate parent company. The directors have prepared the going concern report on a group basis to appropriately reflect the group wide forecasting and treasury functions that they operate.

 

The directors have prepared forecasts to December 2025 and have taken into consideration known events and conditions falling outside the immediate twelve month period. These forecasts were approved by both the board and external investors in May 2024. The directors have adopted the going concern basis in preparing the financial statements after evaluating the impact of the many challenges facing the business including the ongoing conflict between Russia and Ukraine, the increasing costs of labour and materials during a period of high inflation and labour shortages during times of political uncertainty.

 

Forecasts for the group have been prepared along with a sensitised forecast and tested against banking covenants and the directors are satisfied that there is adequate headroom to allow business operations to continue for twelve months from the date of signing. The assumptions underpinning the budget are based on reasonable assumptions based on historical performance, current trading, interest rate stability, and also consider the future development, performance and financial position, including cashflows and liquidity position. The directors have applied a server but plausible downside scenario to this forecasting and have found no indication of material uncertainty in relation to the Group's ability to continue as a going concern.

 

Post balance sheet, the group has secured an extension to its mezzanine debt facility (which sits in MCP Environmental Ltd registration number 09757273) until 30th November 2025 providing additional support to the decision that it is correct to prepare the accounts on a going concern basis.

 

During this year, the principal outstanding of the A loan notes of £2,373,100 and the B loan notes of £625,000 (which sit in MCP Environmental Group Ltd registration no 09757275) have been novated to the ultimate parent entity and converted into preference shares with a zero percent coupon rate. This reduced the overall interest burden on the group and provides a stable financial basis on which to build.

 

Consequently, the directors are confident that the Group and this entity will have sufficient funds to continue to meet its liabilities as they fall due for at least 12 months from the date of approval of the financial statement, which have therefore been prepared on a going concern basis.

Members' capital and interests

Members are remunerated from the profits of the LLP in proportion as set out in the members' agreement and are required to make their own provision for pensions and other benefits. The proportion of profit allocated to each member is set out in the members' agreement. Profits are allocated and divided between members after finalisation of the financial statements. Under the terms of the LLP agreement the members have no liability for any losses of the LLP. Following retirement or resignation of a member, the LLP has no obligation to repay amounts subscribed or otherwise contributed by members. Each member may draw on account of his share of profits where approval has been obtained from the designated members and in line with the agreement with the Group's lenders.

Approved by the members on 10 September 2024 and signed on behalf by:
10 September 2024
MCP Environmental Limited
Designated Member
MCHALE CONTRACTS AND PLANT ENVIRONMENTAL LLP
MEMBERS' RESPONSIBILITIES STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2023
- 3 -

The members are responsible for preparing the annual report and the financial statements in accordance with applicable law and regulations.

 

Company law (as applied by The Limited Liability Partnerships (Accounts and Audit) (Application of Companies Act 2006) Regulations 2008) requires the members to prepare financial statements for each financial year. Under that law the members have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice. Under company law (as applied by The Limited Liability Partnerships (Accounts and Audit) (Application of Companies Act 2006) Regulations 2008) the members 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 limited liability partnership and of the profit or loss of the limited liability partnership for that period. In preparing these financial statements, the members are required to:

 

The members are responsible for keeping adequate accounting records that are sufficient to show and explain the limited liability partnership’s transactions and disclose with reasonable accuracy at any time the financial position of the limited liability partnership and enable them to ensure that the financial statements comply with the Companies Act 2006 (as applied by The Limited Liability Partnerships (Accounts and Audit) (Application of Companies Act 2006) Regulations 2008). They are also responsible for safeguarding the assets of the limited liability partnership and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

MCHALE CONTRACTS AND PLANT ENVIRONMENTAL LLP
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF MCHALE CONTRACTS AND PLANT ENVIRONMENTAL LLP
- 4 -
Opinion

We have audited the financial statements of McHale Contracts and Plant Environmental LLP (the 'limited liability partnership') for the year ended 31 December 2023 which comprise the statement of comprehensive income, the balance sheet, the statement of changes in equity and notes to the financial statements, including 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:

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the limited liability partnership 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 members' 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 limited liability partnership’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 members with respect to going concern are described in the relevant sections of this report.

Other information

The other information comprises the information included in the annual report other than the financial statements and our auditor's report thereon. The members are responsible for the other information contained within the annual report. 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. 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 course of 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.

MCHALE CONTRACTS AND PLANT ENVIRONMENTAL LLP
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF MCHALE CONTRACTS AND PLANT ENVIRONMENTAL LLP
- 5 -
Matters on which we are required to report by exception

We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 as applied to limited liability partnerships requires us to report to you if, in our opinion:

 

Responsibilities of members

As explained more fully in the members' responsibilities statement, the members 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 members determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the members are responsible for assessing the limited liability partnership'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 members either intend to liquidate the limited liability partnership or to cease operations, or have no realistic alternative but to do so.

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

A further description of our responsibilities is available on the Financial Reporting Council’s website at: https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.

MCHALE CONTRACTS AND PLANT ENVIRONMENTAL LLP
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF MCHALE CONTRACTS AND PLANT ENVIRONMENTAL LLP
- 6 -

Extent to which the audit was considered capable of detecting irregularities, including fraud

Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above and on the Financial Reporting Council’s website, to detect material misstatements in respect of irregularities, including fraud.

 

We obtain and update our understanding of the entity, its activities, its control environment, and likely future developments, including in relation to the legal and regulatory framework applicable and how the entity is complying with that framework.  Based on this understanding, we identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion.  This includes consideration of the risk of acts by the entity that were contrary to applicable laws and regulations, including fraud.

 

In response to the risk of irregularities and non-compliance with laws and regulations, including fraud, we designed procedures which included:

 

 

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 more 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 of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

Use of our report

This report is made solely to the limited liability partnership's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006 as applied by the Limited Liability Partnerships (Accounts and Audit) (Application of Companies Act 2006) Regulations 2008. Our audit work has been undertaken so that we might state to the limited liability partnership's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the limited liability partnership and the limited liability partnership's members as a body, for our audit work, for this report, or for the opinions we have formed.

Chris Woodroffe
Senior Statutory Auditor
For and on behalf of Azets Audit Services Limited
11 September 2024
Chartered Accountants
Statutory Auditor
Triune Court
Monks Cross Drive
York
YO32 9GZ
MCHALE CONTRACTS AND PLANT ENVIRONMENTAL LLP
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2023
- 7 -
2023
2022
Notes
£
£
Turnover
3
12,182,174
11,386,954
Cost of sales
(9,025,005)
(8,548,481)
Gross profit
3,157,169
2,838,473
Administrative expenses
(2,871,292)
(2,782,778)
Operating profit
5
285,877
55,695
Interest receivable and similar income
7
2,241
449
Interest payable and similar expenses
8
(59,451)
(47,707)
Profit for the financial year before members' remuneration and profit shares
228,667
8,437
Members' remuneration charged as an expense
(1,716,077)
(1,567,919)
Loss for the financial year available for discretionary division among members
9
(1,487,410)
(1,559,482)

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

MCHALE CONTRACTS AND PLANT ENVIRONMENTAL LLP
BALANCE SHEET
AS AT
31 DECEMBER 2023
31 December 2023
- 8 -
2023
2022
Notes
£
£
£
£
Fixed assets
Tangible assets
10
242,282
306,369
Current assets
Stocks
11
177,479
130,201
Debtors
12
3,105,093
3,401,764
Cash at bank and in hand
572,666
172,498
3,855,238
3,704,463
Creditors: amounts falling due within one year
13
(1,895,493)
(1,175,206)
Net current assets
1,959,745
2,529,257
Total assets less current liabilities
2,202,027
2,835,626
Creditors: amounts falling due after more than one year
14
-
(31,010)
Net assets attributable to members
2,202,027
2,804,616
Represented by:
Loans and other debts due to members within one year
18
Amounts due in respect of profits
1,082,484
1,082,484
Other amounts
6,516,887
5,632,066
7,599,371
6,714,550
Members' other interests
18
Other reserves classified as equity
(5,397,344)
(3,909,934)
2,202,027
2,804,616
The financial statements were approved by the members and authorised for issue on 10 September 2024 and are signed on their behalf by:
10 September 2024
MCP Environmental Limited
Designated member
Limited Liability Partnership Registration No. OC348998
MCHALE CONTRACTS AND PLANT ENVIRONMENTAL LLP
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2023
- 9 -
Other reserves
£
Balance at 1 January 2022
(2,350,452)
Year ended 31 December 2022:
Profit and total comprehensive income for the year
8,437
Profit allocations
(1,567,919)
Balance at 31 December 2022
(3,909,934)
Year ended 31 December 2023:
Profit and total comprehensive income for the year
228,667
Profit allocations
(1,716,077)
Balance at 31 December 2023
(5,397,344)
MCHALE CONTRACTS AND PLANT ENVIRONMENTAL LLP
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
- 10 -
1
Accounting policies
Limited liability partnership information

McHale Contracts and Plant Environmental LLP is a limited liability partnership incorporated in England and Wales. The registered office is South Bradford Trading Estate, Spartan Road, Low Moor, Bradford, BD12 0RY.

 

The limited liability partnership's principal activities are disclosed in the Members' Report.

1.1
Accounting convention

These financial statements have been prepared in accordance with the Statement of Recommended Practice "Accounting by Limited Liability Partnerships" issued in December 2021, together with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006.

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

The financial statements have been prepared under the historical cost convention. The principal accounting policies adopted are set out below.

This limited liability partnership is a qualifying entity for the purposes of FRS 102, being a member of a group where the parent of that group prepares publicly available consolidated financial statements, including this limited liability partnership, which are intended to give a true and fair view of the assets, liabilities, financial position and profit or loss of the group. The limited liability partnership has therefore taken advantage of exemptions from the following disclosure requirements:

 

 

The financial statements of the limited liability partnership are consolidated in the financial statements of MCP Holdings Limited. These consolidated financial statements are available from its registered office, Enviro House, Spartan Road, Low Moor, Bradford, BD12 0RY.

MCHALE CONTRACTS AND PLANT ENVIRONMENTAL LLP
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 11 -
1.2
Going concern

This trading entity is part of a larger group with MCP Environmental Holdings Ltd (registration number 09757284) being the ultimate parent company. The directors have prepared the going concern report on a group basis to appropriately reflect the group wide forecasting and treasury functions that they operate.

 

The directors have prepared forecasts to December 2025 and have taken into consideration known events and conditions falling outside the immediate twelve month period. These forecasts were approved by both the board and external investors in May 2024. The directors have adopted the going concern basis in preparing the financial statements after evaluating the impact of the many challenges facing the business including the ongoing conflict between Russia and Ukraine, the increasing costs of labour and materials during a period of high inflation and labour shortages during times of political uncertainty.

 

Forecasts for the group have been prepared along with a sensitised forecast and tested against banking covenants and the directors are satisfied that there is adequate headroom to allow business operations to continue for twelve months from the date of signing. The assumptions underpinning the budget are based on reasonable assumptions based on historical performance, current trading, interest rate stability, and also consider the future development, performance and financial position, including cashflows and liquidity position. The directors have applied a server but plausible downside scenario to this forecasting and have found no indication of material uncertainty in relation to the Group's ability to continue as a going concern.

 

Post balance sheet, the group has secured an extension to its mezzanine debt facility (which sits in MCP Environmental Ltd registration number 09757273) until 30th November 2025 providing additional support to the decision that it is correct to prepare the accounts on a going concern basis.

 

During this year, the principal outstanding of the A loan notes of £2,373,100 and the B loan notes of £625,000 (which sit in MCP Environmental Group Ltd registration no 09757275) have been novated to the ultimate parent entity and converted into preference shares with a zero percent coupon rate. This reduced the overall interest burden on the group and provides a stable financial basis on which to build.

 

Consequently, the directors are confident that the Group and this entity will have sufficient funds to continue to meet its liabilities as they fall due for at least 12 months from the date of approval of the financial statement, which have therefore been prepared on a going concern basis.

1.3
Turnover

Turnover represents the amounts recoverable for the services provided to clients, excluding value added tax, under contractual obligations which are performed gradually over time.

If, at the balance sheet date, completion of contractual obligations is dependent on external factors (and thus outside the control of the Limited Liability Partnership), then revenue is recognised only when the event occurs. In such cases, costs incurred up to the balance sheet date are carried forward as work in progress.

1.4
Members' participating interests

Members' participation rights are the rights of a member against the LLP that arise under the members' agreement (for example, in respect of amounts subscribed or otherwise contributed remuneration and profits).

 

Members' participation rights in the earnings or assets of the LLP are analysed between those that are, from the LLP's perspective, either a financial liability or equity, in accordance with section 22 of FRS 102. A member's participation rights including amounts subscribed or otherwise contributed by members, for example members' capital, are classed as liabilities unless the LLP has an unconditional right to refuse payment to members, in which case they are classified as equity.

MCHALE CONTRACTS AND PLANT ENVIRONMENTAL LLP
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 12 -

All amounts due to members that are classified as liabilities are presented within 'Loans and other debts due to members' and, where such an amount relates to current year profits, they are recognised within ‘Members' remuneration charged as an expense’ in arriving at the relevant year’s result. Undivided amounts that are classified as equity are shown within ‘Members' other interests’. Amounts recoverable from members are presented as debtors and shown as amounts due from members within members’ interests.

Once an unavoidable obligation has been created in favour of members through allocation of profits or other means, any undrawn profits remaining at the reporting date are shown as ‘Loans and other debts due to members’ to the extent they exceed debts due from a specific member.

1.5
Tangible fixed assets

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

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

Leasehold property
10% straight line
Plant and Machinery
25% reducing balance
Other fixed assets
25% reducing balance
Computer Equipment
25% reducing balance
Motor Vehicles
25% reducing balance

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

1.6
Impairment of fixed assets

At each reporting period end date, the limited liability partnership reviews the carrying amounts of its tangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the limited liability partnership estimates the recoverable amount of the cash-generating unit to which the asset belongs.

Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.

 

If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.

 

Recognised impairment losses are reversed if, and only if, the reasons for the impairment loss have ceased to apply. Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.

MCHALE CONTRACTS AND PLANT ENVIRONMENTAL LLP
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 13 -
1.7
Stocks

Raw materials and consumables are stated at the lower of cost and net realisable value, being the estimated selling price less costs to complete and sell. Cost is based on the cost of purchase on a first in, first out basis.

1.8
Cash and cash equivalents

Cash and cash equivalents are basic financial assets and include cash in hand, deposits held at call with banks, other short-term liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities.

1.9
Financial instruments

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

 

Financial instruments are recognised in the limited liability partnership's statement of financial position when the limited liability partnership becomes party to the contractual provisions of the instrument.

 

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

Basic financial assets

Basic financial assets, which include debtors and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised.

Impairment of financial assets

Financial assets, other than those held at fair value through profit and loss, are assessed for indicators of impairment at each reporting end date.

 

Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected. If an asset is impaired, the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset’s original effective interest rate. The impairment loss is recognised in profit or loss.

 

If there is a decrease in the impairment loss arising from an event occurring after the impairment was recognised, the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been, had the impairment not previously been recognised. The impairment reversal is recognised in profit or loss.

Derecognition of financial assets

Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the limited liability partnership transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.

Classification of financial liabilities

Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the limited liability partnership after deducting all of its liabilities.

MCHALE CONTRACTS AND PLANT ENVIRONMENTAL LLP
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 14 -
Basic financial liabilities

Basic financial liabilities, including creditors, bank loans, loans from fellow group companies and preference shares that are classified as debt, are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future payments discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.

 

Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.

 

Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Amounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.

Other financial liabilities

Derivatives, including interest rate swaps and forward foreign exchange contracts, are not basic financial instruments. Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured at their fair value. Changes in the fair value of derivatives are recognised in profit or loss in finance costs or finance income as appropriate, unless hedge accounting is applied and the hedge is a cash flow hedge.

 

Debt instruments that do not meet the conditions in FRS 102 paragraph 11.9 are subsequently measured at fair value through profit or loss. Debt instruments may be designated as fair value through profit or loss to eliminate or reduce an accounting mismatch or if the instruments are measured and their performance evaluated on a fair value basis in accordance with a documented risk management or investment strategy.

Derecognition of financial liabilities

Financial liabilities are derecognised when the limited liability partnership’s obligations expire or are discharged or cancelled.

1.10
Employee benefits

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

 

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

 

Termination benefits are recognised immediately as an expense when the limited liability partnership is demonstrably committed to terminate the employment of an employee or to provide termination benefits.

1.11
Retirement benefits and post retirement payments to members

Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.

1.12
Leases

Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessees. All other leases are classified as operating leases.

 

Assets held under finance leases are recognised as assets at the lower of the assets fair value at the date of inception and the present value of the minimum lease payments. The related liability is included in the balance sheet as a finance lease obligation. Lease payments are treated as consisting of capital and interest elements. The interest is charged to profit or loss so as to produce a constant periodic rate of interest on the remaining balance of the liability.

MCHALE CONTRACTS AND PLANT ENVIRONMENTAL LLP
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 15 -

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

2
Judgements and key sources of estimation uncertainty

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

 

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

Key sources of estimation uncertainty

The estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are as follows.

Contract income

A proportion of the company's activities are undertaken via long-term contracts spanning the accounting period. These contracts are accounted for in accordance with FRS 102 which requires estimates to be made for the contract costs and revenue.

 

Management base their judgement of contract costs and revenue on the latest available information, which includes detailed contract valuations. Contract costs and revenue are affected by a variety of uncertainties that depend on the outcome of future events and often need to be revised as events unfold and uncertainties are resolved. The estimates are updated regularly and any impact reflected as appropriate.

3
Turnover

An analysis of the limited liability partnership's turnover is as follows:

2023
2022
£
£
Turnover analysed by class of business
Contracting services and civil engineering works
12,182,174
11,386,954
2023
2022
£
£
Turnover analysed by geographical market
United Kingdom
12,182,174
11,386,954
2023
2022
£
£
Other significant revenue
Interest income
2,241
449
MCHALE CONTRACTS AND PLANT ENVIRONMENTAL LLP
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 16 -
4
Exceptional item
2023
2022
£
£
Expenditure
Exceptional item - Admin costs
28,131
62,331
5
Operating profit
2023
2022
Operating profit for the year is stated after charging:
£
£
Fees payable to the LLP's auditor for the audit of the LLP's financial statements
25,000
23,000
Depreciation of owned tangible fixed assets
79,689
88,744
Operating lease charges
264,222
203,056
6
Employees

The average number of persons (excluding members) employed by the partnership during the year was:

2023
2022
Number
Number
Directors and Senior Management
10
12
Admin
34
33
Site staff
79
77
Total
123
122

Their aggregate remuneration comprised:

2023
2022
£
£
Wages and salaries
5,472,167
4,807,507
Social security costs
557,240
533,103
Pension costs
112,161
99,578
6,141,568
5,440,188
7
Interest receivable and similar income
2023
2022
£
£
Interest income
Interest on bank deposits
2,241
449
MCHALE CONTRACTS AND PLANT ENVIRONMENTAL LLP
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 17 -
8
Interest payable and similar expenses
2023
2022
£
£
Interest on bank overdrafts and loans
52,774
47,707
Other finance costs:
Interest on finance leases and hire purchase contracts
6,677
-
Total finance costs
59,451
47,707
9
Members' remuneration
2023
2022
Number
Number
Average number of members during the year
2
2
2023
2022
£
£
Loss attributable to the member with the highest entitlement
1,485,823
1,557,923
10
Tangible fixed assets
Leasehold property
Plant and Machinery
Other fixed assets
Computer Equipment
Motor Vehicles
Total
£
£
£
£
£
£
Cost
At 1 January 2023
152,428
332,777
97,842
338,576
112,125
1,033,748
Additions
-
5,032
-
10,570
-
15,602
At 31 December 2023
152,428
337,809
97,842
349,146
112,125
1,049,350
Depreciation and impairment
At 1 January 2023
107,274
244,978
78,848
247,808
48,471
727,379
Depreciation charged in the year
15,273
24,778
4,087
21,340
14,211
79,689
At 31 December 2023
122,547
269,756
82,935
269,148
62,682
807,068
Carrying amount
At 31 December 2023
29,881
68,053
14,907
79,998
49,443
242,282
At 31 December 2022
45,154
87,799
18,994
90,768
63,654
306,369

Included in the above value of fixed assets are assets held under finance leases or hire purchase contracts, with net book value £42,431 (2022: £96,456),

MCHALE CONTRACTS AND PLANT ENVIRONMENTAL LLP
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 18 -
11
Stocks
2023
2022
£
£
Finished goods and goods for resale
177,479
130,201
12
Debtors
2023
2022
Amounts falling due within one year:
£
£
Trade debtors
1,177,577
1,436,386
Amounts owed by group undertakings
816,019
773,019
Other debtors
711,602
1,018,633
Prepayments and accrued income
399,895
173,726
3,105,093
3,401,764

Amounts owed by the group undertakings are unsecured, interest free, have no fixed date of repayment and are repayable on demand.

13
Creditors: amounts falling due within one year
2023
2022
Notes
£
£
Obligations under finance leases
15
31,010
44,098
Trade creditors
700,673
450,103
Amounts owed to group undertakings
99,430
96,221
Other taxation and social security
6,704
8,957
Deferred income
16
14,362
942
Other creditors
760,196
148,192
Accruals and deferred income
283,118
426,693
1,895,493
1,175,206

Obligations under finance lease and hire purchases contracts are secured upon the assets to which they relate.

 

Amounts owed to group undertakings are unsecured, interest free, have no fixed date of repayment and are repayable on demand.

 

Other creditors relates to an invoice discounting balance of £760,196 (2022: £148,192) which is secured on certain trade debtors of the LLP.

14
Creditors: amounts falling due after more than one year
2023
2022
Notes
£
£
Obligations under finance leases
15
-
31,010
MCHALE CONTRACTS AND PLANT ENVIRONMENTAL LLP
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 19 -
15
Finance lease obligations
2023
2022
Future minimum lease payments due under finance leases:
£
£
Within one year
31,010
44,098
Within two and five years
-
31,010
31,010
75,108

Finance lease payments represent rentals payable by the limited liability partnership for certain items of plant and machinery. Leases include purchase options at the end of the lease period, and no restrictions are placed on the use of the assets. The average lease term is 3 years. All leases are on a fixed repayment basis and no arrangements have been entered into for contingent rental payments.

16
Deferred income
2023
2022
£
£
Other deferred income
14,362
942
17
Retirement benefit schemes
2023
2022
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
112,161
99,578

The limited liability partnership operates a defined contribution pension scheme for all qualifying employees. The assets of the scheme are held separately from those of the limited liability partnership in an independently administered fund.

MCHALE CONTRACTS AND PLANT ENVIRONMENTAL LLP
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 20 -
18
Reconciliation of Members' Interests
EQUITY
DEBT
TOTAL
Members' other interests
Loans and other debts due to members less any amounts due from members in debtors
MEMBERS'
INTERESTS
Other reserves
Other amounts
Total
Total
2023
£
£
£
£
Members' interests at 1 January 2023
(3,909,934)
6,714,550
6,714,550
2,804,616
Profit for the financial year available for discretionary division among members
228,667
-
-
228,667
Members' interests after profit for the year
(3,681,267)
6,714,550
6,714,550
3,033,283
Allocation of profit for the financial year
(1,716,077)
-
-
(1,716,077)
Services received by members
-
7,857,645
7,857,645
7,857,645
Repayment of debt (including members' capital classified as a liability)
-
(6,972,824)
(6,972,824)
(6,972,824)
Members' interests at 31 December 2023
(5,397,344)
7,599,371
7,599,371
2,202,027
19
Loans and other debts due to members
2023
2022
£
£
Analysis of loans
Amounts falling due within one year
7,599,371
6,714,550

In the event of a winding up the amounts included in "Loans and other debts due to members" will rank equally with unsecured creditors.

20
Financial commitments, guarantees and contingent liabilities

Beechbrook Mezzanine II GP LP has a fixed and floating charge over the assets of the LLP in respect of a loan to the designated member MCP Environmental Limited.

 

Shawbrook Bank Ltd has a fixed and floating charge on certain assets of the business in respect of the discounting facility,

 

Leszek Litwinowicz has a fixed and floating charge over certain assets of the business.

 

On the 8th February 2023, as part of extending loan facilities to the wider group, Beechbrook Mezzanine II Jersey obtained a fixed and floating charge covering all propertis and undertakings of the ultimate parent company MCP Environmental Holdings Ltd.

MCHALE CONTRACTS AND PLANT ENVIRONMENTAL LLP
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 21 -
21
Operating lease commitments
Lessee

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

2023
2022
£
£
Within one year
185,781
264,203
Between two and five years
187,246
373,206
373,027
637,409
22
Related party transactions

The LLP has taken advantage of the exemption within FRS 102 not to disclose transactions with other group undertakings where the companies are fully consolidated within the group financial statements.

23
Ultimate controlling party

MCP Environmental Limited and MCP Environmental Services Limited are the designated members of the LLP. Both the entities are owned and controlled by MCP Environmental Holdings Limited. The ultimate controlling party is Beachbrook Capital LLP.

 

McHale Contracts and Plant Environmental LLP is included in the consolidated financial statement of MCP Environmental Holdings Limited, which is the largest and smallest group to be consolidated.

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