The directors present the strategic report for the period ended 31 March 2025.
Hargreaves Contracting Group Limited was incorporated on 10 June 2024 and acquired shares in Hargreaves Contracting Limited on 8 August 2024. These group consolidated financial statements reflect the results and performance of the group for the period ended 31 March 2025, from the date the new corporate group was formed.
The 2025 financial statements for the trading subsidiary, Hargreaves Contracting Limited reflect a contraction in both turnover and profitability, with gross margin decreasing from 11.81% to 5.13% and profit before tax falling to £113,390.
The year did have continued delivery of major schemes within our established framework and client base; however, the industrial and commercial markets remained subdued. Activity levels in the latter part of the year were lower than anticipated, placing further pressure on margins. Nonetheless, our strong associations with registered providers continued to provide a reliable pipeline of work.
Shareholder funds as reported in the trading subsidiary, Hargreaves Contracting Limited, have correspondingly reduced during 2025, influenced not only by reduced profit levels but also following the sale of an amount of shares by a founding director back to the company, resulting in a commensurate reduction in shareholder funds.
At the balance sheet date, the trading subsidiary, Hargreaves Contracting Limited, continues to report significant net assets of £1,912,847, which the directors believes places the company in a strong and stable financial position.
From a group balance sheet perspective, the group reports significant net assets of £7,858,418. The group loss reported for the period is due to a partial period of trade and amortisation of goodwill on consolidation. The underlying trading subsidiary remains profitable.
Objectives and Strategy
The objectives of the group are to deliver long term value to the owners. The Board’s strategy to achieve this is based upon the following principles:
Growth by continuing to tender for relevant, competitively priced contracts into core markets, underpinned by high quality service for customers.
To attract, retain and develop exceptional staff to continuously improve the organisation’s capabilities.
Diversification into new market segments or adjacent markets to support and spread growth.
The group seeks to manage risk through a combination of Board oversight, operational routines, and policies and the principal risks are aggregated as follows:
Contract risk
Price risk being the risk of volatility in the contract values in the construction industry. Whilst the market remains at times variable, we continue to take a cautious and prudent approach to the pricing of tenders particularly single stage and design and build opportunities. We remain intrinsically risk averse and continue to concentrate on maintaining, reinforcing and cultivating our long term alliances with our much valued client base.
Liquidity/cash flow
The group seeks to manage financial risk by ensuring liquidity is available to meet foreseeable needs and to invest cash assets safely and profitably. For short to medium term flexibility, from time to time related parties provide cash loans.
Credit risk
The group's principal financial assets are cash and trade debtors. The principal credit risk arises therefore from its trade debtors. To help manage this risk the group usually has in place within its terms and conditions, liens against the assets which they supply. The group has policies in place such that credit checks are made on all potential customers as part of the due diligence credit account procedures which are operating well.
The directors review the group’s KPIs at the monthly board meetings. These include operational and financial measurements.
| 2025 |
|
Turnover | £15.7m |
|
Gross profit margin | 5.1% |
|
Profit/(loss) before tax | (£793k) |
|
Cash at bank | £3.8m |
|
Shareholder funds | £7.9m |
|
The group continues to build new and existing customer relationships as revenue continues to be a key focus.
The success of the business continues to be measured by the realisation of consistent profit margins, strong net asset levels and the effective control of overhead costs. This is clearly demonstrated by the reduction in gross profit margin from 11.81% to 5.13% during the year when compared to Hargreaves Contracting Limited as an individual company, reflecting the more challenging trading environment and lower activity levels.
Repeat business remains the cornerstone of our operations, and we continue to focus on expanding our Blue-Chip client portfolio while increasing average contract values and restoring the balance between our industrial/commercial and residential workload.
As the balance sheet date, the group’s cash position was substantial. That, with net current assets, demonstrates the company's strong liquidity position.
On behalf of the board
The directors present their annual report and financial statements for the period ended 31 March 2025.
The results for the period are set out on page 8.
Ordinary dividends were paid amounting to £900,000. The directors do not recommend payment of a further dividend.
The directors who held office during the period and up to the date of signature of the financial statements were as follows:
The focus remains very much on carefully managed strategic growth along with an effective succession plan achieved through the strengthening of the Board and the recruitment of suitably experienced personnel to ensure we develop and hone the skillsets needed to meet the technical challenges of the industry.
Sumer Auditco Limited were appointed as auditor to the company and are deemed to be reappointed under section 487(2) of the Companies Act 2006.
This report has been prepared in accordance with the provisions applicable to companies entitled to the medium-sized companies exemption.
We have audited the financial statements of Hargreaves Contracting Group Limited (the 'parent company') and its subsidiaries (the 'group') for the period ended 31 March 2025 which comprise the group profit and loss account, the group balance sheet, the company balance sheet, the group statement of changes in equity, the company statement of changes in equity, the group 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 group's and parent company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
Other information
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 period 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.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below.
We identified areas of laws and regulations that could reasonably be expected to have a material effect on the financial statements from our general commercial and sector experience, and through discussions with the Directors (as required by auditing standards) and discussed with the Directors the policies and procedures regarding compliance with laws and regulations. We communicated identified laws and regulations throughout our team and remained alert to any indications of non-compliance throughout the audit. The potential effect of these laws and regulations on the financial statements varies considerably.
Firstly, the Group is subject to laws and regulations that directly affect the financial statements including financial reporting legislation and taxation legislation. We assessed the extent of compliance with these laws and regulations as part of our procedures on the related financial statement items.
Secondly, the Group is subject to many other laws and regulations where the consequences of non-compliance could have a material effect on amounts or disclosures in the financial statements, for instance through the imposition of fines or litigation. We identified the following areas as those most likely to have such an effect; laws related to Health and Safety, Employment, UK Companies Act, Pension Legislation, Tax Legislation and Construction Regulations.
Auditing standards limit the required audit procedures to identify non-compliance with these laws and regulations to enquiry of the Directors and inspection of regulatory and legal correspondence, if any. Through these procedures we did not become aware of any actual or suspected non-compliance.
Owing to the inherent limitations of an audit, there is an unavoidable risk that we may not have detected some material misstatements in the financial statements, even though we have properly planned and performed our audit in accordance with auditing standards. For example, the further removed non-compliance with laws and regulations (irregularities) is from the events and transactions reflected in the financial statements, the less likely the inherently limited procedures required by auditing standards would identify it. In addition, as with any audit, there remained a higher risk of non-detection of irregularities, as these may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal controls. We are not responsible for preventing non-compliance and cannot be expected to detect non-compliance with all laws and regulations.
We design procedures in line with our responsibilities, outline below to detect material misstatement due to fraud:
Matters are discussed amongst the audit engagement team regarding how and where fraud might occur in the financial statements and potential indicators of fraud
Identifying and assessing the design and effectiveness of controls that management have in place to prevent and detect fraud
Detecting and responding to the risks of fraud following discussions with management and enquiring as to whether management have knowledge of any actual, suspected or alleged fraud.
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 parent 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 parent 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 parent company and the parent company’s members as a body, for our audit work, for this report, or for the opinions we have formed.
As permitted by section 408 of the Companies Act 2006, the company has not presented its own profit and loss account and related notes. The company’s loss for the year was £1,120,806.
These financial statements have been prepared in accordance with the provisions relating to medium-sized companies.
Hargreaves Contracting Group Limited (“the company”) is a private limited company domiciled and incorporated in England and Wales. The registered office is Fourth Floor, Unit 5B, The Parklands, Bolton, BL6 4SD.
The group consists of Hargreaves Contracting Group Limited and all of its subsidiaries.
The company was incorporated on 10 June 2024. The accounting reference date has been shortened to 31 March 2025, to be aligned to fellow group companies.
These financial statements have been prepared in accordance 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 company. Monetary amounts in these financial statements are rounded to the nearest £.
The financial statements have been prepared under the historical cost convention, modified to include certain financial instruments at fair value. The principal accounting policies adopted are set out below.
The consolidated group financial statements consist of the financial statements of the parent company Hargreaves Contracting Group Limited together with all entities controlled by the parent company (its subsidiaries) and the group’s share of its interests in joint ventures and associates.
All financial statements are made up to 31 March 2025. Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with those used by other members of the group.
All intra-group transactions, balances and unrealised gains on transactions between group companies are eliminated on consolidation. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.
Subsidiaries are consolidated in the group’s financial statements from the date that control commences until the date that control ceases.
At the time of approving the financial statements, the directors have a reasonable expectation that the group has adequate resources to continue in operational existence for the foreseeable future. Thus the directors continue to adopt the going concern basis of accounting in preparing the financial statements.
Where the outcome of a construction contract can be estimated reliably, revenue and costs are recognised by reference to the stage of completion of the contract activity at the reporting end date. Variations in contract work, claims and incentive payments are included to the extent that the amount can be measured reliably and its receipt is considered probable.
When it is probable that total contract costs will exceed total contract turnover, the expected loss is recognised as an expense immediately.
Where the outcome of a construction contract cannot be estimated reliably, contract revenue is recognised to the extent of contract costs incurred where it is probable that they will be recoverable. Contract costs are recognised as expenses in the period in which they are incurred. When costs incurred in securing a contract are recognised as an expense in the period in which they are incurred, they are not included in contract costs if the contract is obtained in a subsequent period.
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.
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.
Equity investments are measured at fair value through profit or loss, except for those equity investments that are not publicly traded and whose fair value cannot otherwise be measured reliably, which are recognised at cost less impairment until a reliable measure of fair value becomes available.
In the parent company financial statements, investments in subsidiaries are initially measured at cost and subsequently measured at cost less any accumulated impairment losses.
A subsidiary is an entity controlled by the group. Control is the power to govern the financial and operating policies of the entity so as to obtain benefits from its activities.
At each reporting period end date, the group reviews the carrying amounts of its tangible and intangible 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 company estimates the recoverable amount of the cash-generating unit to which the asset belongs.
The carrying amount of the investments accounted for using the equity method is tested for impairment as a single asset. Any goodwill included in the carrying amount of the investment is not tested separately for impairment.
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.
The group 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 group's balance sheet when the group 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, 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.
Other financial assets, including investments in equity instruments which are not subsidiaries, associates or joint ventures, are initially measured at fair value, which is normally the transaction price. Such assets are subsequently carried at fair value and the changes in fair value are recognised in profit or loss, except that investments in equity instruments that are not publicly traded and whose fair values cannot be measured reliably are measured at cost less impairment.
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.
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the group 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.
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 group after deducting all of its 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.
Financial liabilities are derecognised when the group's contractual obligations expire or are discharged or cancelled.
Equity instruments issued by the group are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the group.
The tax expense represents the sum of the tax currently payable and deferred tax.
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the profit and loss account because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The group’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.
Deferred tax liabilities are generally recognised for all timing differences and deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Such assets and liabilities are not recognised if the timing difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.
The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the profit and loss account, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset if, and only if, there is a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.
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 company is demonstrably committed to terminate the employment of an employee or to provide termination benefits.
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
As lessee
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.
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.
Dividend income
Dividend income receivable from subsidiary companies is recognised in the period they are voted.
In the application of the group’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 estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are as follows.
In line with accounting standards for construction contracts, the company recognises revenue and profit based on the stage of completion and costs to complete. In doing so, management must make certain estimations. The management review all contracts on a monthly basis and assess financial and operational performance versus budget as well as physically inspecting the work to corroborate the stage of completion.
At the balance sheet date, amounts recoverable on long term contracts of £765,860 (2024: £410,477) has been recognised.
Refer to note 17 for the amounts recoverable on long term contracts balance impacted by this key accounting estimate.
Investments in subsidiary undertakings of £8,850,000 are stated at fair value based upon valuations and related transaction evidence.
Annual impairment reviews are undertaken by the board considering both the net assets of the subsidiaries, current and future profitability linked to the EBITDA multiple established on acquisition. Impairment indicators may include a reduction in turnover or profitability.
Refer to Note 14 for the investments in subsidiaries impacted by this key accounting estimate.
The average monthly number of persons (including directors) employed by the group and company during the period was:
Their aggregate remuneration comprised:
The number of directors for whom retirement benefits are accruing under defined contribution schemes amounted to 2.
The actual charge for the period can be reconciled to the expected credit for the period based on the profit or loss and the standard rate of tax as follows:
The net carrying value of tangible fixed assets includes the following in respect of assets held under finance leases or hire purchase contracts.
Shares held in respect of group undertakings have a historical cost of £2,427,402. These were revalued to a fair value of £12,000,000, in accordance with a professional valuation dated 29th May 2024.
At the balance sheet date, the carrying value of shares held in group undertakings has been reassess by the directors on a like-for-like basis, resulting in an impairment of the professional fair value assessment by (£3,150,000). This results in the carrying value reducing to £8,850,000 assessed on a EBITDA basis by the directors.
The directors consider that the carrying amounts of financial assets carried at amortised cost in the financial statements approximate to their fair values.
Details of the company's subsidiaries at 31 March 2025 are as follows:
Registered office addresses (all UK unless otherwise indicated):
At the balance sheet date, £1,250,000 is held within other debtors in relation to cash which has been pledged as security on a group loan facility drawdown.
Bank loans are secured.
Obligations under finance leases are secured against the fixed assets to which they relate.
Bank loans are secured.
Obligations under finance leases are secured against the fixed assets to which they relate.
A bank loan of £1,250,000 is repayable in full by monthly instalments by August 2029 and is subject to interest at a rate of 1.75% p.a. above the Bank of England base rate of interest.
The long-term loans are secured against cash pledged as security which is held within other debtors in the financial statements.
Finance lease payments represent rentals payable by the company or group for certain items held within tangible fixed assets. 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 4 years. All leases are on a fixed repayment basis and no arrangements have been entered into for contingent rental payments.
The following are the major deferred tax liabilities and assets recognised by the group and company, and movements thereon:
The deferred tax liability set out above predominately relates to accelerated capital allowances that are expected to mature over the associated fixed assets useful economic life. Pension contributions will attract tax relief in the year paid.
A defined contribution pension scheme is operated for all qualifying employees. The assets of the scheme are held separately from those of the group in an independently administered fund.
As at the balance sheet date, contributions due to the schemes in respect of the current reporting period were £5,430.
On 10 June 2024, the following shares issues occurred:
- 3 Ordinary shares of £0.01 each were issued at par
On 8 August 2024, the following shares issues occurred;
- 99 Ordinary A1 shares of £0.01 each were issued at par
- 49 Ordinary A2 shares of £0.01 each were issued at par
- 49 Ordinary B shares of £0.01 each were issued at par
On 8 August 2024, the initial share issue was redesignated as below:
- 1 Ordinary A1 shares of £0.01 each
- 1 Ordinary A2 shares of £0.01 each
- 1 Ordinary B shares of £0.01 each
All share classes rank pari passu.
Other debtors includes £2 of unpaid share capital.
As detailed in note 14, during the period a merger reserve of £9,572,598 has been recognised.
At the balance sheet date, an impairment of £3,150,000 has arisen and been charged through the profit and loss account. A subsequent transfer from the profit and loss account to the merger reserve has been processed for £3,150,000.
On 8 August 2024 the group acquired 100% of the issued capital of Hargreaves Contracting Limited.
The goodwill arising on the acquisition of the business is attributable to the surplus fair value of the entity acquired from compared to the net net assets of the company received on the amounts paid, and totals £7,831,110.
At the reporting end date the group had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:
Dividends totalling £900,000 were paid in the period in respect of shares held by the group's directors.
During the period, rent has been paid to a pension scheme of the directors of the group in respect of the lease of the office building of £27,200.