The directors present the strategic report for the year ended 30 September 2024.
During the year, the Company generated turnover of £121 million (2023: £109 million), a gross profit of £26.2 million (2023: £24.0 million) and an operating profit of £14.1 million (2023: £11.5 million), providing an 11.6% return on sales (2023: 10.6%).
Market conditions remained challenging in the year, however inflation dropped from peaks in 2022 and interest rates have started to reduce. Even with these conditions, turnover increased by 12%. The increase in turnover is largely due to our continued emphasis on delivering “excellence” for our customers which enables us to win work with trusted clients. We have also broadened our geographical reach without compromising on service and quality levels. The Company remains very proud of its staff and contractors who continue to work to a very high standard.
Gross profit at 22% is in line with the 22% achieved last year as we continue to control and minimise the inflationary impact of cost increases on materials and labour. Overheads decreased marginally by £0.3 million; during 2023 we undertook an exercise to strengthen the back office team to ensure higher value projects can be delivered efficiently. Our net operating profit of £14.1 million is up £2.6 million on the previous year.
A dividend of £10 million was declared and paid to the Parent Company during the year, with a further £8.5m paid after the year end in December 2024.
Future Prospects
The Company has entered the new financial year with a strong order book and a good level of tenders. General inflation levels have reduced, which should provide some confidence to the market, however are still above target levels. Obtaining good quality labour is easier than it once was because the demand from the residential market has reduced, releasing some good quality operatives, however the wider industry is still under pressure of skills shortages. Interest rates remain high, however have fallen recently, albeit at a slower rate than previously expected. We expect trading levels to be at slightly higher levels during 24/25 than in 23/24.
Gallagher has positioned itself as the “go to” contractor in Kent and the Southeast if you want a high-quality solution. We work in a variety of sectors, and for numerous clients predominantly in Kent and the South-East but also, and increasingly so, outside this area with existing clients.
There are a number of potential risks and uncertainties which could impact the Company’s performance, and these are considered by the Board on a regular basis. The Board of Directors and the relevant management teams consider the risks of all significant business decisions and changes in the external environment and in the Company’s operations. The key risks affecting the business are as follows:
Operating Risk – the Company’s reputation and continued success depends on its ability to provide services which are valued by its customers. The Company regularly reviews the quality of its services both internally and externally through client feedback and evaluation to ensure the reputation of the Company is maintained at a high level with all stakeholders.
Market Risk – the Company operates in a specialised market and seeks to maintain a competitive advantage by offering an appropriate and relevant service range and providing a high level of customer service from professional and dedicated staff. The Company keeps abreast of developments in the market through maintaining regular dialogue with its clients and monitoring competitors and the wider economic environment.
Personnel Risk – the Company is a privately-owned business and places great emphasis on recruiting, training, rewarding and retaining high quality people. The Directors consider staff resourcing and succession planning on a regular basis. We promote from within whenever we can to maintain the Company culture. We also embrace new people from elsewhere as they bring fresh ideas and the benefits of their experience.
Financial Risk – the Company is principally funded from retained profits. Financial monitoring, forecasting, and planning are ever present processes with the care taken to achieve a reasonable profit margin and investment in resources whilst maintaining delivery of a high-quality service to customers.
Taxation Risk – the Company is exposed to financial risks from increases in tax rates and the basis of taxation including corporation tax and VAT. Principal controls include regular monitoring of legislative proposals, the engagement of executives and the use of experienced sector specific professional advisers to mitigate the impact of any changes and ensure compliance.
Information Technology – the Company relies heavily on systems to operate its business, ordering goods, paying suppliers, ensuring health and safety records are accurate, accounting and payroll. The risk of cyber-attacks is ever present and an increasing risk to every business. Ensuring we have robust and up-to-date cyber security measures and vigilant users is critical to the successful running of these systems, as well as employing appropriately skilled and experienced staff and external specialist support as required.
Health and Safety and Environmental Management
The Company considers health, safety, and environmental management to be a top priority within the business. We approach the subjects in a responsible, practical and pragmatic manner, concentrating on the things that make a difference. We are ISO45001 accredited, have reformed our QA systems through Flowforma; use Chime time and attendance which has provided a live training matrix for our projects in addition to using Skillko to assist management of our training needs. We have a positive and professional attitude to these subjects led by the Directors and senior managers who are required to set a good example.
To achieve high standards, we make sure we have the correct, competent, trained people and modern well-maintained plant and equipment. Our management systems and policies provide clear guidance and monitoring/reporting and analysis of performance and incidents. Our internal resources are audited and supported by external industry experts, with “prevention”, “learning from experience” and “continuous improvement” being the underlying themes. During 2023, the HSQE management systems have been reassessed and externally certified as compliant by Achilles Building Confidence, ISO 9001 and ISO 14001 and Construction line Level 3 Gold. In 2021 we also gained certification to ISO 45001. We continue to focus on the Health and Safety requirements of the business and believe we have put in place processes and procedures that ensure a high level of safety for our staff, customers and suppliers.
The balance sheet on page 11 of the financial statements show that the company's financial position at the year end is strong, in both net assets and liquidity terms.
2024 2023 2022 2021 2020
Turnover £ m 121.2 108.7 92.2 120.6 70.5
Gross Profit £’m 26.2 24.0 15.4 21.5 13.0
Gross Profit % 21.6% 22.1% 16.7% 17.8% 18.5%
Operating Profit £’m 14.1 11.5 8.0 12.3 6.0
Operating Margin % 11.6% 10.6% 8.6% 10.2% 8.5%
We measure and analyse a number of non-financial criteria in order to monitor our performance and to help identify trends, good or bad, including:
Health & Safety – RIDDOR accidents, minor accidents, Tool Box Talks, Near Miss reports, Service strikes and rolling AFR (Accident Frequency Rate)
Staff turnover – staff who leave and the reasons thereto.
Enquiry success rate for tenders and price estimates.
Payments to suppliers
We respect the role that suppliers play in the success of the business and as such we aim to pay suppliers to the agreed terms. Our policy is to pay suppliers 45 days from the end of the month of delivery. Other terms can be agreed.
The Company is owned by Gallagher Group Limited which is in turn owned by Gallagher Group Holdings Limited. Within the legal Group of companies is also Gallagher Plant Limited. Gallagher Group Holdings Limited is owned by P Gallagher Limited, which is ultimately controlled by a family of shareholders. The same shareholders also ultimately control Gallagher Aggregates Limited, they are not part of the same legal Group of companies.
The principal activity of Gallagher Limited is that of groundwork, civil engineering and principal sub- contracting. The management define the success of the business as long-term value creation for all parts of the Gallagher Group and associated companies. Working together to provide efficient solutions that can use all elements of the group of companies’ resources, contracting, aggregates, concrete, masonry, recycling, property investment and property development.
The Board is committed to and actively encourages effective relationships and communications with all the Company’s stakeholders to obtain a greater understanding of each other’s needs and objectives. This way we can optimise the long-term value creation and success of the Company. The Company has identified the following key stakeholders and explains how the Board considers their interests.
Shareholders: The Company is ultimately controlled by a family of shareholders, who also take an active role in managing the business along with the Executives. The Board has a very close dialogue with the shareholders through regular discussions, Board meetings and routine financial and operational reporting. These processes ensure that the long-term strategy of the business is aligned with their expectations. Annual detailed Budgets and 3-year Business plans are prepared, presented, discussed and approved by the Board that are aligned to the shareholders' goals. Decisions are made at regular Board and Management meetings. Governance is established using an Authority Schedule and the inclusion of 2 experienced non-executive Directors who liaise closely with the shareholders and Executive team and family members through the Family Council forum.
Colleagues: The Company is a family business and recognises the hugely important role that staff have in making the business successful. It prides itself on having the best people to create strong teams and who all essentially care for the business. We aim to be the employer of choice offering both formal and informal training for all. Gallagher’s culture is to instill pride in our work and ensure quality workmanship prevails throughout the workplace. We want everyone to feel part of the family by making people feel valued, engaged, and safe.
Customers and Suppliers: The Company wants to be first choice for value-minded clients, our values state that we are customer-focused, we listen and are eager to learn, we are passionate and confident, we are solution-driven, we are a business of character, and we work as a team. This will ensure that our customers’ needs are met. Delivering high-quality solutions will lead to repeat business. We equally recognise that along with our staff we rely heavily on like-minded suppliers of materials and services. We aim to treat our suppliers with respect and will work with them to ensure their needs are met. Suppliers delivering high levels of service and quality are met with loyalty from the Company.
Environment: The Company is aware of the increasing need to protect the environment and has recently completed its fifth Streamlined Energy and Carbon report. It aims to be carbon neutral and is reviewing its use of fuels as well as other carbon reduction related projects. Our Social Value report has also just been updated and shows that the Group continues to add significant economic and social value to the area in which it operates, South East England. The Company is a large employer of local people and a large user of local suppliers and services. It also makes material donations to local and national charities and encourages employees to complete charitable work across the community.
By order of the board
The directors present their annual report and financial statements for the year ended 30 September 2024.
The results for the year are set out on page 10.
Ordinary dividends were paid amounting to £10,000,000. The directors do not recommend payment of a final dividend.
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
The company's principal financial instruments comprise bank balances, trade creditors, trade debtors and work in progress. The main purpose of these instruments is to raise funds for the company's operations and to finance the company's operations.
The company manages its cash and borrowing requirements in order to maximise interest income and minimise interest expense, whilst ensuring the company has sufficient liquid resources to meet the operating needs of the business.
The company is subject to the risk of interest rate fluctuations, with it affecting its interest earning operations. In respect of loans from group undertakings and companies under common control, these are interest free.
In accordance with the company's articles, a resolution proposing that Goldblatts be reappointed as auditor of the company will be put at a General Meeting.
The company has consumed more than 40,000 kWh of energy in this reporting period and has therefore prepared a SECR report for the financial year to September 2024 on its emissions, energy consumption and energy efficiency activities. The information from this report has been included in the consolidated financial statements prepared by Gallagher Group Holdings Limited.
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;
state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements; and
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.
We have audited the financial statements of Gallagher Limited (the 'company') for the year ended 30 September 2024 which comprise the statement of comprehensive income, the balance sheet, the statement of changes in equity, the statement of cash flows 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).
Basis for 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
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of our audit:
the information given in the strategic report and the directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
the strategic report and the directors' report have been prepared in accordance with applicable legal requirements.
The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below.
Our approach to identifying and assessing the risks of material misstatement in respect of irregularities, including fraud and non-compliance with laws and regulations, was as follows;
the engagement partner ensured the engagement team had the appropriate competence, capabilities and skills to identify or recognise possible non-compliance with applicable laws and regulations.
we identify significant laws and regulations applicable to the company through discussions with directors, along with our commercial knowledge and experience of the construction industry in which our client provides construction services to its customers.
we focused on specific laws and regulations which we consider may have a material effect on the financial statements or operations of the company, including Health & Safety regulations, Companies Act 2006, taxation legislation, data protection and employment law.
we assessed the extent of compliance with the laws and regulations identified above through making enquiries of management and inspecting legal correspondence; and
identified laws and regulations were communicated within the audit team regularly and the team remained alert to instances of non-compliance throughout the audit.
We assessed the susceptibility of the company’s financial statements to material misstatement, including obtaining an understanding of how fraud might occur, by:
making enquiries of management as to where they considered there was susceptibility to fraud, their knowledge of actual, suspected and alleged fraud;
considered the internal controls in place to mitigate risks of fraud and non-compliance with laws and regulations.
To address the risk of fraud through management bias and override of controls, we:
have performed analytical procedures to identify any unusual variances
reviewed and tested journal entries and other adjustments to identify any unusual transactions
assessed judgements and assumptions used in determining the accounting estimates which could indicate any potential bias
investigated the rationale behind significant or unusual transactions.
In response to the risk of irregularities and non-compliance with laws and regulations, we designed procedures which included, but were not limited to:
reviewing disclosures in the financial statements and testing to supporting documentation.
reviewing meeting minutes where available
discussions with management regarding actual or potential litigations and / or claims.
reviewing correspondence with HMRC and other relevant regulators
There are inherent limitations in our audit procedures described above. The more removed that laws and regulations are from the financial transactions, the less likely it is that we would become aware or any possible non-compliance. Auditing standards also limit the audit procedures required to identify non-compliance with laws and regulations to enquiry of directors and other management and the inspection of regulatory and legal correspondence, if any.
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.
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 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 company and the company's members as a body, for our audit work, for this report, or for the opinions we have formed.
The profit and loss account has been prepared on the basis that all operations are continuing operations.
Gallagher Limited is a private company limited by shares incorporated in England and Wales. The registered office is Leitrim House, Little Preston, Coldharbour Lane, Aylesford, Maidstone, Kent, ME20 7NS.
The financial statements are prepared in sterling, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £.
The “percentage of completion method” is used to determine the appropriate amount to recognise in a given period. The stage of completion is measured by the proportion of contract costs incurred for work performed to date compared to the estimated total contract costs. Costs incurred in the year in connection with future activity on a contract are excluded from contract costs in determining the stage of completion. These costs are presented as stocks, prepayments or other assets depending on their nature, and provided it is probable they will be recovered. Bank interest accruing on capital borrowed to fund the production of long term contracts is carried forward within long term contract balances.
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 credited or charged to profit or loss.
In the application of the company’s accounting policies, the directors 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.
The following judgements (apart from those involving estimates) have had the most significant effect on amounts recognised in the financial statements.
The amounts due from contract customers requires the company to make a judgement in relation to the stage of completion of the contracts ongoing at the year end. Management are provided with internal valuations by experienced personnel based on the costs incurred to date and the terms and conditions of the contract.
An analysis of the company's turnover is as follows:
The total turnover of the company for the year has been derived from its principal activity wholly undertaken in the United Kingdom.
The average monthly number of persons (including directors) employed by the company during the year was:
The company has no direct employees, all labour was supplied by Gallagher Resources Limited, including those paid under contract of service agreements.
The aggregate remuneration comprised:
The number of directors for whom retirement benefits are accruing under defined contribution schemes amounted to 2 (2023 - 2).
The actual charge for the year can be reconciled to the expected charge for the year based on the profit or loss and the standard rate of tax as follows:
The amounts owed by group undertakings, companies under common control and other related parties (included within other debtors) are interest free, with no security and no fixed repayment terms.
The amounts owed to group undertakings, companies under common control and other related parties (included in other creditors) are interest free, with no security, and no fixed repayment terms.
Deferred tax assets and liabilities are offset where the company has a legally enforceable right to do so. The following is the analysis of the deferred tax balances (after offset) for financial reporting purposes:
We are expecting a net increase in the deferred tax asset amounting to £4,234 in the next 12 months due to the depreciation rate used being in excess of the written down allowances.
During the year the company entered into the following transactions with related parties:
The sales above are provided in the course of normal operations.
The loan interest received in 2023 was inline with the loan agreement.
Included in the purchases from companies under common control are the following significant transactions concluded in the course of normal operations.
Materials £4,021,379 (2023 - £3,478,419).
Included in the purchases from related parties are the following significant transactions concluded in the course of normal operations.
Labour £4,883,070 (2023 - £4,315,500).
The following amounts were outstanding at the reporting end date:
The following amounts were outstanding at the reporting end date:
The following are the parents of the largest and smallest groups in which this company's results are consolidated: