Company Registration No. 01180441 (England and Wales)
HILL BROTHERS (CHICHESTER) LIMITED
FINANCIAL STATEMENTS
FOR THE YEAR ENDED
31 DECEMBER 2021
3 Acorn Business Centre
Northarbour Road
Cosham
Portsmouth
Hampshire
United Kingdom
PO6 3TH
HILL BROTHERS (CHICHESTER) LIMITED
CONTENTS
Page
Strategic report
1 - 2
Directors' report
3 - 4
Independent auditor's report
5 - 8
Statement of total comprehensive income
9
Balance sheet
10
Statement of changes in equity
11
Statement of cash flows
12
Notes to the financial statements
13 - 25
HILL BROTHERS (CHICHESTER) LIMITED
COMPANY INFORMATION
Directors
Mr. K Hill
Mr. P Hill
Mr. G Hill
Company number
01180441
Registered office
Lagness Road
Runcton
Chichester
West Sussex
United Kingdom
PO20 1NL
Auditors
TC Group
3 Acorn Business Centre
Northarbour Road
Cosham
Portsmouth
Hampshire
United Kingdom
PO6 3TH
Business address
Lagness Road
Runcton
Chichester
West Sussex
United Kingdom
PO20 1NL
HILL BROTHERS (CHICHESTER) LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2021
- 1 -

The directors have the pleasure of presenting their report and financial statements of the company for the year ended 31st of December 2021.

PRINCIPAL ACTIVITIES AND BUSINESS REVIEW

The principle activity of the company during the year remains unchanged with the production and sale of flowering and tropical houseplants.

The results for the company show a pre-tax profit of £238,906 (2020: Loss £117,335) for the year on sales of £13,151,225 (2020: £11,238,014).

The customer base has remained broadly similar with direct accounts into major UK Multiples and Online D2C sales.

The ongoing pandemic restrictions saw continued demand for tropical and flowering houseplants and outdoor horticulture continued to see a strong performance as many people continued to improve their outdoor spaces.

This year’s results were a positive improvement as subtle changes in the cropping strategy were realised. This result matched our expectations as we continue to invest in our online offering and restructure the business to face future challenges and embrace new opportunities. The business continues to perform well through this period allowing us to grow our gross margin which will improve the businesses resilience as we move through the ongoing inflationary and energy challenges that we are now facing.

The two years of the pandemic saw increased focus on horticulture as a wellbeing and lifestyle choice and the lessons learned through the initial lockdown challenges meant that the business made the most of the opportunities available during 2021. However, performance was hindered towards the later part of the year with unprecedented Gas prices which it now appears will continue for the next few years.

 

FUTURE OUTLOOK

The Future outlook is varied with numerous uncertainties. There are huge challenges around the cost of energy which has significant implications for a high energy horticultural business. We are fortunate to have invested heavily in biomass with further investment planned for the end of 2022 will see our exposure reduced. Whilst we are confident that we have mitigated much of the energy increase there is no doubt that it’s impact on the wider economy will be felt as discretionary spend is impacted.

FX rates have remained broadly level but with the current inflationary pressures appearing worse in the UK they are likely to dip. This will put additional pressure on imports above those already being felt through shortages in raw materials.

Whilst the pressures facing the industry are significant, horticulture has weathered recessions better than many other industries. Efficient production using more sustainable energy will offer good opportunities once the current inflationary pressures stabilise and we are confident that we will remain competitive against imports.

 

PRINCIPAL RISKS AND UNCERTAINTIES

The principle risks to the business have remained unchanged. Fluctuating commodity prices, fluctuating exchange rates and huge inflation in energy prices. A downturn in the economy will also make maintaining sales in a shrinking market challenging.

 

HILL BROTHERS (CHICHESTER) LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
- 2 -
DEVELOPMENT AND PERFORMANCE

As the trend in tropical plants has grown over the last few years, we have transitioned a large part of our production towards foliage product. This larger assortment of product has enabled us to continue expanding our value added range and create a new range of larger, value focused, lines to grow the current houseplant trend into new markets.

 

On behalf of the board

Mr. P Hill
Director
2 September 2022
HILL BROTHERS (CHICHESTER) LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 DECEMBER 2021
- 3 -

The directors present their annual report and financial statements for the year ended 31 December 2021.

Results and dividends

The results for the year are set out on page 9.

No ordinary dividends were paid. The directors do not recommend payment of a final dividend.

Directors

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

Mr. K Hill
Mr. P Hill
Mr. G Hill
Statement of directors' responsibilities

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

 

Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period. In preparing these financial statements, the directors are required to:

 

 

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.

HILL BROTHERS (CHICHESTER) LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
- 4 -
Auditor

The auditor, TC Group, is deemed to be reappointed under section 487(2) of the Companies Act 2006.

Statement of disclosure to auditor

So far as each person who was a director at the date of approving this report is aware, there is no relevant audit information of which the company’s auditor is unaware. Additionally, the directors individually have taken all the necessary steps that they ought to have taken as directors in order to make themselves aware of all relevant audit information and to establish that the company’s auditor is aware of that information.

On behalf of the board
Mr. P Hill
Director
2 September 2022
HILL BROTHERS (CHICHESTER) LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF HILL BROTHERS (CHICHESTER) LIMITED
- 5 -
Opinion

We have audited the financial statements of Hill Brothers (Chichester) Limited (the 'company') for the year ended 31 December 2021 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 FRS 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 company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Conclusions relating to going concern

In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.

 

Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.

 

Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.

Other information

The other information comprises the information included in the annual report other than the financial statements and our auditor's report thereon. The directors 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.

HILL BROTHERS (CHICHESTER) LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF HILL BROTHERS (CHICHESTER) LIMITED
- 6 -

Opinions on other matters prescribed by the Companies Act 2006

In our opinion, based on the work undertaken in the course of our audit:

Matters on which we are required to report by exception

In the light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identified material misstatements in the strategic report and the directors' report.

 

We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion:

 

Responsibilities of directors

As explained more fully in the directors' responsibilities statement, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine 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 directors are responsible for assessing the company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.

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.

 

Irregularities, including fraud, are instances of non-compliance with laws and regulations. The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below.

 

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

The objectives of our audit, in respect to fraud, are: to identify and assess the risks of material misstatement of the financial statements due to fraud; to obtain sufficient appropriate audit evidence regarding the assessed risks of material misstatement due to fraud, through designing and implementing appropriate responses; and to respond appropriately to fraud or suspected fraud identified during the audit. However, the primary responsibility for the prevention and detection of fraud rests with both those charged with governance of the entity and its management.

HILL BROTHERS (CHICHESTER) LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF HILL BROTHERS (CHICHESTER) LIMITED
- 7 -

Our approach was as follows:

 

 

Based on this understanding we designed our audit procedures to identify non-compliance with such laws and regulations. Where the risk was considered to be higher, we performed audit procedures to address each identified fraud risk. These procedures included: testing manual journals; reviewing the financial statement disclosures and testing to supporting documentation; performing analytical procedures; and enquiring of management, and were designed to provide reasonable assurance that the financial statements were free from fraud or error.

 

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. The risk is also greater regarding irregularities occurring due to fraud rather than error, as fraud involves intentional concealment, forgery, collusion, omission or misrepresentation. We are not responsible for preventing non-compliance and cannot be expected to detect non-compliance with all laws and regulations.

A further description of our responsibilities is available on the Financial Reporting Council’s website at: https://www.frc.org.uk/Our-Work/Audit/Audit-and-assurance/Standards-and-guidance/Standards-and-guidance-for-auditors/Auditors-responsibilities-for-audit/Description-of-auditors-responsibilities-for-audit.aspx. This description forms part of our auditor’s report.

 

 

 

HILL BROTHERS (CHICHESTER) LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF HILL BROTHERS (CHICHESTER) LIMITED
- 8 -

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.

Graham Figgins FCA (Senior Statutory Auditor)
For and on behalf of TC Group
Statutory Auditor
5 September 2022
Office: Portsmouth
HILL BROTHERS (CHICHESTER) LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2021
- 9 -
2021
2020
Notes
£
£
Turnover
3
13,151,225
11,238,014
Cost of sales
(11,486,676)
(10,361,810)
Gross profit
1,664,549
876,204
Administrative expenses
(1,540,482)
(1,118,084)
Other operating income
124,009
140,404
Operating profit/(loss)
4
248,076
(101,476)
Interest payable and similar expenses
7
(10,961)
(15,859)
Amounts written off investments
8
1,791
-
0
Profit/(loss) before taxation
238,906
(117,335)
Taxation
9
(49,407)
42,967
Profit/(loss) for the financial year
189,499
(74,368)
Other comprehensive income
-
-
Total comprehensive income for the year
189,499
(74,368)

The statement of comprehensive income has been prepared on the basis that all operations are continuing operations.

The notes on pages 13 to 25 form part of these financial statements
HILL BROTHERS (CHICHESTER) LIMITED
BALANCE SHEET
AS AT 31 DECEMBER 2021
31 December 2021
- 10 -
2021
2020
Notes
£
£
£
£
Fixed assets
Tangible assets
11
1,721,258
1,723,338
Investments
12
-
0
70
1,721,258
1,723,408
Current assets
Stocks
13
1,306,345
718,845
Debtors
14
2,629,940
3,154,649
Cash at bank and in hand
39,991
31,920
3,976,276
3,905,414
Creditors: amounts falling due within one year
15
(2,509,650)
(2,559,440)
Net current assets
1,466,626
1,345,974
Total assets less current liabilities
3,187,884
3,069,382
Creditors: amounts falling due after more than one year
16
(122,616)
(197,680)
Provisions for liabilities
17
(273,985)
(256,385)
Net assets
2,791,283
2,615,317
Capital and reserves
Called up share capital
19
103,632
104,304
Capital redemption reserve
1,196
524
Profit and loss reserves
2,686,455
2,510,489
Total equity
2,791,283
2,615,317
The financial statements were approved by the board of directors and authorised for issue on 2 September 2022 and are signed on its behalf by:
Mr. P Hill
Mr. G Hill
Director
Director
Company Registration No. 01180441
The notes on pages 13 to 25 form part of these financial statements
HILL BROTHERS (CHICHESTER) LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2021
- 11 -
Share capital
Capital redemption reserve
Profit and loss reserves
Total
Notes
£
£
£
£
Balance at 1 January 2020
104,304
524
2,609,857
2,714,685
Year ended 31 December 2020:
Loss and total comprehensive income for the year
-
-
(74,368)
(74,368)
Dividends
10
-
-
(25,000)
(25,000)
Balance at 31 December 2020
104,304
524
2,510,489
2,615,317
Year ended 31 December 2021:
Profit and total comprehensive income for the year
-
-
189,499
189,499
Redemption of shares
19
(672)
672
(13,533)
(13,533)
Balance at 31 December 2021
103,632
1,196
2,686,455
2,791,283
The notes on pages 13 to 25 form part of these financial statements
HILL BROTHERS (CHICHESTER) LIMITED
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2021
- 12 -
2021
2020
Notes
£
£
£
£
Cash flows from operating activities
Cash generated from operations
22
304,235
281,778
Interest paid
(10,961)
(15,859)
Income taxes (paid)/refunded
-
0
17,953
Net cash inflow from operating activities
293,274
283,872
Investing activities
Purchase of tangible fixed assets
(161,378)
(53,865)
Proceeds on disposal of fixed asset investments
1,861
-
0
Net cash used in investing activities
(159,517)
(53,865)
Financing activities
Redemption of shares
(13,533)
-
0
Proceeds of new bank loans
-
0
50,000
Repayment of bank loans
(163,202)
(116,739)
Payment of hire purchase obligations
(22,549)
(18,482)
Dividends paid
-
0
(25,000)
Net cash used in financing activities
(199,284)
(110,221)
Net (decrease)/increase in cash and cash equivalents
(65,527)
119,786
Cash and cash equivalents at beginning of year
(186,924)
(306,710)
Cash and cash equivalents at end of year
(252,451)
(186,924)
Relating to:
Cash at bank and in hand
39,991
31,920
Bank overdrafts included in creditors payable within one year
(292,442)
(218,844)
The notes on pages 13 to 25 form part of these financial statements
HILL BROTHERS (CHICHESTER) LIMITED
NOTES TO THE  FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
- 13 -
1
Accounting policies
Company information

Hill Brothers (Chichester) Limited is a private company limited by shares incorporated in England and Wales. The registered office is Lagness Road, Runcton, Chichester, West Sussex, United Kingdom, PO20 1NL.

1.1
Accounting convention

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 on the historical cost convention. The principal accounting policies adopted are set out below.

1.2
Going concern

These financial statements are prepared on the going concern basis. The Directors have considered the position of the company for a period of 12 months from the date of signing these accounts. As a result of this review the Directors are satisfied that the company will be in a position for a period of at least 12 months to meet its debt as they fall due.

1.3
Turnover

Turnover comprises the invoice value of sales of goods carried out in the year, excluding value added tax, and is only recognised on the day the plants are delivered to customers.

1.4
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:

Land and buildings Freehold
4% straight line, no depreciation is charged on land
Plant and machinery
10/25% reducing balance
Office equipment
33% straight line
Motor vehicles
25% straight line

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.

HILL BROTHERS (CHICHESTER) LIMITED
NOTES TO THE  FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
1
Accounting policies
(Continued)
- 14 -
1.5
Impairment of fixed assets

At each reporting period end date, the company 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 company estimates the recoverable amount of the cash-generating unit to which the asset belongs.

1.6
Stocks

Stocks are stated at the lower of cost and estimated selling price less costs to complete and sell. Cost comprises direct materials and, where applicable, direct labour costs and those overheads that have been incurred in bringing the stocks to their present location and condition.

At each reporting date, an assessment is made for impairment. Any excess of the carrying amount of stocks over its estimated selling price less costs to complete and sell is recognised as an impairment loss in profit or loss. Reversals of impairment losses are also recognised in profit or loss.

1.7
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.

1.8
Financial instruments

The company 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 company's balance sheet when the company becomes party to the contractual provisions of the instrument.

 

Financial assets and liabilities are offset, with 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.

HILL BROTHERS (CHICHESTER) LIMITED
NOTES TO THE  FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
1
Accounting policies
(Continued)
- 15 -
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.

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 company after deducting all of its liabilities.

Basic financial liabilities, including creditors and bank loans 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.

 

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.

1.9
Equity instruments

Equity instruments issued by the company 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 company.

1.10
Taxation

The tax expense represents the sum of the tax currently payable and deferred tax.

Current 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 company’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.

HILL BROTHERS (CHICHESTER) LIMITED
NOTES TO THE  FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
1
Accounting policies
(Continued)
- 16 -
Deferred tax

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.

 

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.

1.11
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 company is demonstrably committed to terminate the employment of an employee or to provide termination benefits.

1.12
Retirement benefits

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

1.13
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.

1.14
Government grants

Government grants are recognised at the fair value of the asset received or receivable when there is reasonable assurance that the grant conditions will be met and the grants will be received.

 

A grant that specifies performance conditions is recognised in income when the performance conditions are met. Where a grant does not specify performance conditions it is recognised in income when the proceeds are received or receivable. A grant received before the recognition criteria are satisfied is recognised as a liability.

1.15
Foreign exchange

Transactions in currencies other than pounds sterling are recorded at the rates of exchange prevailing at the dates of the transactions. At each reporting end date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the reporting end date. Gains and losses arising on translation in the period are included in profit or loss.

HILL BROTHERS (CHICHESTER) LIMITED
NOTES TO THE  FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
- 17 -
2
Judgements and key sources of estimation uncertainty

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.

 

In the opinion of the directors there are no significant judgements or areas of estimation uncertainty.

Critical judgements

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

Stock wastage provision

A stock provision is included within the financial statements to account for the wasted growing stock. The provision is calculated based on prior year wastage levels.

Valuation of growing stock

The valuation of growing stock includes costs directly related to the units of production, such as direct labour and production overheads such as heat/electricity. The amounts allocated to each plant is based on normal capacity of production expected to be achieved under normal circumstances. An absorption rate has been set for each week a different type of plant is grown in the greenhouses.

3
Turnover and other revenue

An analysis of the company's turnover is as follows:

2021
2020
£
£
United Kingdom
13,151,225
11,238,014
HILL BROTHERS (CHICHESTER) LIMITED
NOTES TO THE  FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
- 18 -
4
Operating profit/(loss)
2021
2020
Operating profit/(loss) for the year is stated after charging/(crediting):
£
£
Exchange losses/(gains)
147,597
1,078
Government grants - Coronavirus related
(729)
(25,315)
Fees payable to the company's auditors for the audit of the company's financial statements
6,300
6,000
Depreciation of owned tangible fixed assets
193,827
192,064
Depreciation of tangible fixed assets held under hire purchase
4,831
14,248
5
Employees

The average monthly number of persons (including directors) employed by the company during the year was:

2021
2020
Number
Number
Number of production staff
32
26
Number of administrative staff
13
14
Total
45
40

Their aggregate remuneration comprised:

2021
2020
£
£
Wages and salaries
2,441,925
2,222,027
Social security costs
135,303
111,663
Pension costs
28,941
26,068
2,606,169
2,359,758
HILL BROTHERS (CHICHESTER) LIMITED
NOTES TO THE  FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
- 19 -
6
Directors' remuneration
2021
2020
£
£
Remuneration for qualifying services
157,150
140,177
Company pension contributions to defined contribution schemes
5,250
5,250
162,400
145,427

The number of directors for whom retirement benefits are accruing under defined contribution schemes amounted to 1 (2020 - 1).

 

7
Interest payable and similar expenses
2021
2020
£
£
Interest on financial liabilities measured at amortised cost:
Interest on bank overdrafts and loans
8,783
14,377
Other finance costs:
Interest on hire purchase contracts
2,178
1,482
10,961
15,859
8
Amounts written off investments
2021
2020
£
£
Gain on disposal of fixed asset investments
1,791
-
0
9
Taxation
2021
2020
£
£
Current tax
UK corporation tax on profits for the current period
31,807
-
0
Tax losses carried back
-
0
(2,671)
Research and Development claim for prior year
-
0
(30,963)
Total current tax
31,807
(33,634)
HILL BROTHERS (CHICHESTER) LIMITED
NOTES TO THE  FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
9
Taxation
(Continued)
- 20 -
Deferred tax
Origination and reversal of timing differences
17,600
(9,333)
Total tax charge/(credit)
49,407
(42,967)

The actual charge/(credit) for the year can be reconciled to the expected charge/(credit) for the year based on the profit or loss and the standard rate of tax as follows:

2021
2020
£
£
Profit/(loss) before taxation
238,906
(117,335)
Expected tax charge/(credit) based on the standard rate of corporation tax in the UK of 19.00% (2020: 19.00%)
45,392
(22,294)
Tax effect of expenses that are not deductible in determining taxable profit
4,015
10,290
Research and Development claim
-
0
(30,963)
Taxation charge/(credit) for the year
49,407
(42,967)
10
Dividends
2021
2020
£
£
Paid on ordinary shares
-
0
25,000
-
25,000
HILL BROTHERS (CHICHESTER) LIMITED
NOTES TO THE  FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
- 21 -
11
Tangible fixed assets
Land and buildings Freehold
Plant and machinery
Office equipment
Motor vehicles
Total
£
£
£
£
£
Cost
At 1 January 2021
471,950
4,759,401
30,230
190,799
5,452,380
Additions
84,024
96,265
16,289
-
0
196,578
At 31 December 2021
555,974
4,855,666
46,519
190,799
5,648,958
Depreciation and impairment
At 1 January 2021
134,461
3,410,222
14,833
169,526
3,729,042
Depreciation charged in the year
16,527
151,698
10,436
19,997
198,658
At 31 December 2021
150,988
3,561,920
25,269
189,523
3,927,700
Carrying amount
At 31 December 2021
404,986
1,293,746
21,250
1,276
1,721,258
At 31 December 2020
337,489
1,349,179
15,397
21,273
1,723,338

The net carrying value of tangible fixed assets includes the following in respect of assets held under finance leases or hire purchase contracts.

2021
2020
£
£
Plant and machinery
35,145
3,838
Motor vehicles
1,081
14,049
36,226
17,887
12
Fixed asset investments
2021
2020
£
£
Unlisted investments
-
0
70

The investment was sold on 04/08/2021.

HILL BROTHERS (CHICHESTER) LIMITED
NOTES TO THE  FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
- 22 -
13
Stocks
2021
2020
£
£
Stock
1,306,345
718,845
14
Debtors
2021
2020
Amounts falling due within one year:
£
£
Trade debtors
2,508,596
3,017,210
Corporation tax recoverable
-
0
2,671
Other debtors
52,822
55,529
Prepayments and accrued income
68,522
79,239
2,629,940
3,154,649
15
Creditors: amounts falling due within one year
2021
2020
£
£
Loans and overdrafts
373,482
378,028
Hire purchase agreements
11,481
8,824
Directors current accounts
-
39,862
Trade creditors
1,285,992
1,281,429
Corporation tax
29,136
-
0
Other taxation and social security
494,463
573,225
Other creditors
3,512
3,575
Accruals and deferred income
311,584
274,497
2,509,650
2,559,440
HILL BROTHERS (CHICHESTER) LIMITED
NOTES TO THE  FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
- 23 -
16
Creditors: amounts falling due after more than one year
2021
2020
£
£
Loans and overdrafts
111,654
196,712
Hire purchase agreements
10,962
968
122,616
197,680

Bank loans and overdrafts are secured by a fixed charge over the freehold property and a fixed and floating charge over all the other assets held by the company.

 

Hire purchase liabilities are secured on the assets to which they relate.

17
Provisions for liabilities
2021
2020
£
£
Deferred tax accelerated capital allowances
273,985
256,385
273,985
256,385
2021
Movements in the year:
£
Liability at 1 January 2021
256,385
Charge to profit or loss
17,600
Liability at 31 December 2021
273,985
18
Retirement benefit schemes
2021
2020
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
28,941
26,068

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

HILL BROTHERS (CHICHESTER) LIMITED
NOTES TO THE  FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
- 24 -
19
Share capital
2021
2020
2021
2020
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Ordinary A of £1 each
47,110
47,110
47,110
47,110
Ordinary B of £1 each
47,110
47,110
47,110
47,110
Ordinary C of £1 each
9,412
10,084
9,412
10,084
103,632
104,304
103,632
104,304

During the period the company purchased 672 Ordinary C shares for £13,533. These shares were then cancelled on 12/07/2021.

20
Directors' transactions

Dividends totalling £0 (2020 - £25,000) were paid in the year in respect of shares held by the company's directors and their close family.

The directors maintain a loan account with the company. At the year end the directors owed £1,826 (2020 - £(39,862)). An interest rate of 2.75% is paid to the directors.

21
Ultimate controlling party

The company was under the control of the directors, Mr K Hill, Mr P Hill and Mr G Hill throughout the current and previous year.

22
Cash generated from operations
2021
2020
£
£
Profit/(loss) for the year after tax
189,499
(74,368)
Adjustments for:
Taxation charged/(credited)
49,407
(42,967)
Finance costs
10,961
15,859
Depreciation and impairment of tangible fixed assets
198,658
206,312
Gain on sale of investments
(1,791)
-
Movements in working capital:
(Increase)/decrease in stocks
(587,500)
31,089
Decrease in debtors
522,038
422,052
(Decrease) in creditors
(77,037)
(276,199)
Cash generated from operations
304,235
281,778
HILL BROTHERS (CHICHESTER) LIMITED
NOTES TO THE  FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
- 25 -
23
Analysis of changes in net debt
1 January 2021
Cash flows
New hire purchases
31 December 2021
£
£
£
£
Cash at bank and in hand
31,920
8,071
-
39,991
Bank overdrafts
(218,844)
(73,598)
-
(292,442)
(186,924)
(65,527)
-
(252,451)
Borrowings excluding overdrafts
(355,896)
163,202
-
(192,694)
Obligations under hire purchase
(9,792)
22,549
(35,200)
(22,443)
(552,612)
120,224
(35,200)
(467,588)
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