Company Registration No. 03642932 (England and Wales)
HORTON COMMERCIALS LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
HORTON COMMERCIALS LIMITED
COMPANY INFORMATION
Director
D Wolfenden
Secretary
J Wolfenden
Company number
03642932
Registered office
C/O Azets
Lulworth Close
Chandlers Ford
Hampshire
SO53 3TL
Auditor
Azets Audit Services
Secure House
Lulworth Close
Chandlers Ford
Southampton
Hampshire
SO53 3TL
HORTON COMMERCIALS LIMITED
CONTENTS
Page
Strategic report
1
Director's report
2 - 3
Independent auditor's report
4 - 6
Statement of comprehensive income
7
Balance sheet
8
Statement of changes in equity
9
Statement of cash flows
10
Notes to the financial statements
11 - 26
HORTON COMMERCIALS LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2021
- 1 -
The director presents the strategic report for the year ended 31 December 2021.
Fair review of the business
The business achieved excellent results in 2021 following the lifting of COVID-19 restrictions seen during 2020, with sales increasing by 55% over sales achieved in 2020.
The results for the company show a pre-tax profit of £2,578,594 (2020 - £1,222,611) for the year and sales of £13,828,488 (2020 - £8,895,135).
At the year end the company had increased the total assets less current liabilities from £12,431,595 in 2020 to £14,163,769 in 2021.
The company's key financial and other performance indicators during the year were as follows:
Principal risks and uncertainties
The vehicle rental market in the South of England is highly competitive and the company strives to distinguish itself from its competitors by providing exceptional customer service.
Appropriate consideration is given to risk management objectives and policies. Facilities are in place to deal with cashflow and liquidity risk. Risk to pricing is mitigated by a diverse supplier portfolio. Credit risk is managed through the adoption of a rigorous credit policy.
D Wolfenden
Director
9 August 2022
HORTON COMMERCIALS LIMITED
DIRECTOR'S REPORT
FOR THE YEAR ENDED 31 DECEMBER 2021
- 2 -
The director presents his annual report and financial statements for the year ended 31 December 2021.
Principal activities
The principal activity of the company is the rental and sale of cars, vans and motorhomes, and the maintenance and repair of motor vehicles.
Results and dividends
The results for the year are set out on page 7.
Ordinary dividends were paid amounting to £423,500. The director does not recommend payment of a final dividend.
Director
The director who held office during the year and up to the date of signature of the financial statements was as follows:
D Wolfenden
Financial instruments
Price risk, credit risk, liquidity risk and cash flow risk
The business' principal financial instruments comprise bank balances, trade debtors, trade creditors and finance lease agreements. The main purpose of these instruments is to finance the business' operations.
All of the business' cash balances are held in such a way that achieves a competitive rate of interest.
Trade debtors are managed in respect of credit and cash flow risk by policies concerning the credit offered to customers and the regular monitoring of amounts outstanding for both time and credit limits.
Trade creditors liquidity risk is managed by ensuring sufficient funds are available to meet amounts due.
The business is a lessee in respect of finance leased assets. The liquidity risk in respect of these is managed by ensuring that there are sufficient funds to meet the payments.
Statement of director's responsibilities
The director is responsible for preparing the annual report and the financial statements in accordance with applicable law and regulations.
Company law requires the director to prepare financial statements for each financial year. Under that law the director has 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 director must not approve the financial statements unless he is 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 director is required to:
select suitable accounting policies and then apply them consistently;
make judgements and accounting estimates that are reasonable and prudent;
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.
The director is 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. He is 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.
HORTON COMMERCIALS LIMITED
DIRECTOR'S REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
- 3 -
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
D Wolfenden
Director
9 August 2022
HORTON COMMERCIALS LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF HORTON COMMERCIALS LIMITED
- 4 -
Opinion
We have audited the financial statements of Horton Commercials 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:
give a true and fair view of the state of the company's affairs as at 31 December 2021 and of its profit for the year then ended;
have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
have been prepared in accordance with the requirements of the Companies Act 2006.
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 director's 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 director with respect to going concern are described in the relevant sections of this report.
The other information comprises the information included in the annual report other than the financial statements and our auditor's report thereon. The director is 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.
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 director's report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
the strategic report and the director's report have been prepared in accordance with applicable legal requirements.
HORTON COMMERCIALS LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF HORTON COMMERCIALS LIMITED
- 5 -
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 director's 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:
adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or
the financial statements are not in agreement with the accounting records and returns; or
certain disclosures of remuneration specified by law are not made; or
we have not received all the information and explanations we require for our audit.
Responsibilities of director
As explained more fully in the director's responsibilities statement, the director is 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 director determines 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 director is 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 director either intends to liquidate the company or to cease operations, or has no realistic alternative but to do so.
Auditor's responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
A further description of our responsibilities is available on the Financial Reporting Council’s website at: https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.
HORTON COMMERCIALS LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF HORTON COMMERCIALS LIMITED
- 6 -
Extent to which the audit was considered capable of detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above and on the Financial Reporting Council’s website, to detect material misstatements in respect of irregularities, including fraud.
We obtain and update our understanding of the entity, its activities, its control environment, and likely future developments, including in relation to the legal and regulatory framework applicable and how the entity is complying with that framework. Based on this understanding, we identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. This includes consideration of the risk of acts by the entity that were contrary to applicable laws and regulations, including fraud.
In response to the risk of irregularities and non-compliance with laws and regulations, including fraud, we designed procedures which included:
Enquiry of management and those charged with governance around actual and potential litigation and claims as well as actual, suspected and alleged fraud;
Assessing the extent of compliance with the laws and regulations considered to have a direct material effect on the financial statements or the operations of the company through enquiry and inspection;
Reviewing financial statement disclosures and testing to supporting documentation to assess compliance with applicable laws and regulations;
Performing audit work over the risk of management bias and override of controls, including testing of journal entries and other adjustments for appropriateness, evaluating the business rationale of significant transactions outside the normal course of business and reviewing accounting estimates for indicators of potential bias.
Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading to a material misstatement in the financial statements or non-compliance with regulation. This risk increases the more that compliance with a law or regulation is removed from the events and transactions reflected in the financial statements, as we will be less likely to become aware of instances of non-compliance. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
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 him 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.
Michael Wesley FCA (Senior Statutory Auditor)
For and on behalf of Azets Audit Services
10 August 2022
Chartered Accountants
Statutory Auditor
Secure House
Lulworth Close
Chandlers Ford
Southampton
Hampshire
SO53 3TL
HORTON COMMERCIALS LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2021
- 7 -
2021
2020
Notes
£
£
Turnover
3
13,828,488
8,895,135
Cost of sales
(6,646,569)
(4,493,002)
Gross profit
7,181,919
4,402,133
Administrative expenses
(4,472,688)
(3,420,497)
Other operating income
52,927
402,000
Operating profit
4
2,762,158
1,383,636
Interest receivable and similar income
7
3,270
Interest payable and similar expenses
8
(183,564)
(164,295)
Profit before taxation
2,578,594
1,222,611
Tax on profit
9
(423,084)
(278,727)
Profit for the financial year
2,155,510
943,884
The Profit And Loss Account has been prepared on the basis that all operations are continuing operations.
The company has no recognised gains or losses for the year other than the results above.
HORTON COMMERCIALS LIMITED
BALANCE SHEET
AS AT
31 DECEMBER 2021
31 December 2021
- 8 -
2021
2020
Notes
£
£
£
£
Fixed assets
Goodwill
11
150,254
225,386
Other intangible assets
11
2,001
Total intangible assets
150,254
227,387
Tangible assets
12
16,056,689
13,567,023
16,206,943
13,794,410
Current assets
Stocks
13
379,297
111,262
Debtors
14
2,548,266
1,076,670
Cash at bank and in hand
303,212
1,027,142
3,230,775
2,215,074
Creditors: amounts falling due within one year
15
(5,273,949)
(3,577,889)
Net current liabilities
(2,043,174)
(1,362,815)
Total assets less current liabilities
14,163,769
12,431,595
Creditors: amounts falling due after more than one year
16
(3,631,923)
(3,634,832)
Provisions for liabilities
Deferred tax liability
19
329,816
326,743
(329,816)
(326,743)
Net assets
10,202,030
8,470,020
Capital and reserves
Called up share capital
21
100
100
Profit and loss reserves
10,201,930
8,469,920
Total equity
10,202,030
8,470,020
The financial statements were approved and signed by the director and authorised for issue on 9 August 2022
D Wolfenden
Director
Company Registration No. 03642932
HORTON COMMERCIALS LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2021
- 9 -
Share capital
Profit and loss reserves
Total
Notes
£
£
£
Balance at 1 January 2020
100
7,927,036
7,927,136
Year ended 31 December 2020:
Profit and total comprehensive income for the year
-
943,884
943,884
Dividends
10
-
(401,000)
(401,000)
Balance at 31 December 2020
100
8,469,920
8,470,020
Year ended 31 December 2021:
Profit and total comprehensive income for the year
-
2,155,510
2,155,510
Dividends
10
-
(423,500)
(423,500)
Balance at 31 December 2021
100
10,201,930
10,202,030
HORTON COMMERCIALS LIMITED
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2021
- 10 -
2021
2020
Notes
£
£
£
£
Cash flows from operating activities
Cash generated from operations
29
5,142,128
3,168,813
Interest paid
(183,564)
(164,295)
Income taxes paid
(32,718)
(142,514)
Net cash inflow from operating activities
4,925,846
2,862,004
Investing activities
Purchase of tangible fixed assets
(2,762,440)
(1,973,763)
Proceeds on disposal of tangible fixed assets
1,737,638
1,963,448
(Payments)/receipts arising from loans made
(1,225,583)
15,834
Interest received
3,270
Net cash (used in)/generated from investing activities
(2,250,385)
8,789
Financing activities
Proceeds of new bank loans
350,000
250,000
Repayment of bank loans
(446,430)
(46,779)
Payment of finance leases obligations
(3,071,118)
(2,130,690)
Dividends paid
(423,500)
(401,000)
Net cash used in financing activities
(3,591,048)
(2,328,469)
Net (decrease)/increase in cash and cash equivalents
(915,587)
542,324
Cash and cash equivalents at beginning of year
1,027,142
484,818
Cash and cash equivalents at end of year
111,555
1,027,142
Relating to:
Cash at bank and in hand
303,212
1,027,142
Bank overdrafts included in creditors payable within one year
(191,657)
HORTON COMMERCIALS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
- 11 -
1
Accounting policies
Company information
Horton Commercials Limited is a private company limited by shares incorporated in England and Wales. The registered office is C/O Azets, Lulworth Close, Chanders Ford, Hampshire, SO53 3TL.
The principal place of business is:
13-19 Johnson Road
Ferndown Industrial Estate
Ferndown
Dorset
BH21 7SE
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 under the historical cost convention except that as disclosed in the accounting policies certain items are shown at fair value. The principal accounting policies are set out below.
1.2
Going concern
Atruet the time of approving the financial statements, the director has a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future. The director has considered the likely future cash flows of the business and has considered the balance sheet and the facilities available at this point in time. The full impact of Covid-19 on the business and general economy is difficult to quantify at this time, however, the company has reviewed its cash flow requirements for the coming months and the director considers that the company can continue in business and on that basis, the financial statements are prepared on a going concern basis.
1.3
Turnover
Turnover is recognised at the fair value of the consideration received or receivable for services provided in the normal course of business, and is shown net of VAT and other sales related taxes. The fair value of consideration takes into account discounts and rebates.
Revenue from the renting of hire cars, vans and motorhomes is recognised over the length of the hire period. Revenue from maintenance and repair of motor vehicles is recognised on completion of the works.
1.4
Intangible fixed assets - goodwill
Goodwill represents the excess of the cost of acquisition of unincorporated businesses over the fair value of net assets acquired. It is initially recognised as an asset at cost and is subsequently measured at cost less accumulated amortisation and accumulated impairment losses. Goodwill is considered to have a finite useful life and is amortised on a systematic basis over its expected life, which is 10 years.
HORTON COMMERCIALS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
1
Accounting policies
(Continued)
- 12 -
1.5
Intangible fixed assets other than goodwill
Intangible assets acquired separately from a business are recognised at cost and are subsequently measured at cost less accumulated amortisation and accumulated impairment losses.
Intangible assets acquired on business combinations are recognised separately from goodwill at the acquisition date where it is probable that the expected future economic benefits that are attributable to the asset will flow to the entity and the fair value of the asset can be measured reliably; the intangible asset arises from contractual or other legal rights; and the intangible asset is separable from the entity.
Amortisation 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:
Software
33 1/3% straight line
1.6
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:
Buildings
2% straight line
Plant and machinery
25% reducing balance
Fixtures and fittings
33 1/3% straight line
Office equipment
33 1/3% straight line
Motor vehicles
25% reducing balance
Freehold land and buildings
10% 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.
1.7
Impairment of fixed assets
At each reporting period end date, the company 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.
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.
HORTON COMMERCIALS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
1
Accounting policies
(Continued)
- 13 -
1.8
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.
1.9
Cash at bank and in hand
Cash and cash equivalents are basic financial assets and include cash in hand, deposits held at call with banks and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities.
1.10
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. The company does not hold any financial instruments under Section 12.
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.
Impairment of financial assets
Financial assets, other than those held at fair value through profit and loss, are assessed for indicators of impairment at each reporting end date.
Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected. If an asset is impaired, the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset’s original effective interest rate. The impairment loss is recognised in profit or loss.
If there is a decrease in the impairment loss arising from an event occurring after the impairment was recognised, the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been, had the impairment not previously been recognised. The impairment reversal is recognised in profit or loss.
Derecognition of financial assets
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the company 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.
HORTON COMMERCIALS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
1
Accounting policies
(Continued)
- 14 -
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
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.
Derecognition of financial liabilities
Financial liabilities are derecognised when the company’s contractual obligations expire or are discharged or cancelled.
1.11
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.
1.12
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.
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. 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 when the company has 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.
HORTON COMMERCIALS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
1
Accounting policies
(Continued)
- 15 -
1.13
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.
1.14
Retirement benefits
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
1.15
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.
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 leases asset are consumed.
1.16
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.
HORTON COMMERCIALS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
- 16 -
2
Judgements and key sources of estimation uncertainty
In the application of the company’s accounting policies, the director is 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 preparing these financial statements, the directors have made the following judgements:
Determine whether leases entered into by the company are operating or finance leases. These decisions depend on an assessment of whether the risks and rewards of ownership have been transferred from the lessor to the lessee on a lease by lease basis.
Determine whether there are any indicators of impairment of the company's tangible fixed assets. Factors taken into consideration in reaching such a decision include the economic viability and expected future financial performance of the asset.
Determine whether other borrowings are classified as current or non-current borrowings. These decisions depend on the cash flow requirements of the company and whether the other borrowings can be repaid.
Key sources of estimation uncertainty
Tangible fixed assets, other that land and properties under construction, are depreciated over their useful lives taking into account residual values, where appropriate. The actual lives of the assets and residual values are assessed annually and may vary depending on a number of factors. In re-assessing assets lives, factors such as technological innovation, product life cycles and maintenance programmes are taken into account. Residual value assessments consider issues such as future market conditions, the remaining life of the asset and projected disposal values.
3
Turnover and other revenue
2021
2020
£
£
Turnover analysed by geographical market
UK
13,828,488
8,895,135
2021
2020
£
£
Other significant revenue
Grants received - CJRS
52,927
402,000
HORTON COMMERCIALS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
- 17 -
4
Operating profit
2021
2020
Operating profit for the year is stated after charging/(crediting):
£
£
Government grants
(52,927)
(402,000)
Fees payable to the company's auditor for the audit of the company's financial statements
13,000
8,000
Depreciation of owned tangible fixed assets
367,559
626,692
Depreciation of tangible fixed assets held under finance leases
2,802,698
1,762,550
Profit on disposal of tangible fixed assets
(825,740)
(667,118)
Amortisation of intangible assets
77,133
87,134
Operating lease charges
275,167
273,500
5
Employees
The average monthly number of persons (including directors) employed by the company during the year was:
2021
2020
Number
Number
Director
1
1
Production
31
49
Administration and support
45
28
Total
77
78
Their aggregate remuneration comprised:
2021
2020
£
£
Wages and salaries
2,131,555
1,950,032
Social security costs
190,667
185,204
Pension costs
84,949
73,301
2,407,171
2,208,537
6
Director's remuneration
2021
2020
£
£
Remuneration for qualifying services
10,510
5,460
HORTON COMMERCIALS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
- 18 -
7
Interest receivable and similar income
2021
2020
£
£
Interest income
Other interest income
3,270
8
Interest payable and similar expenses
2021
2020
£
£
Interest on financial liabilities measured at amortised cost:
Interest on bank overdrafts and loans
12,654
11,441
Other interest on financial liabilities
8,230
9,374
20,884
20,815
Other finance costs:
Interest on finance leases and hire purchase contracts
162,680
143,480
183,564
164,295
9
Taxation
2021
2020
£
£
Current tax
UK corporation tax on profits for the current period
420,011
117,668
Adjustments in respect of prior periods
48
Total current tax
420,011
117,716
Deferred tax
Origination and reversal of timing differences
3,073
161,011
Total tax charge
423,084
278,727
HORTON COMMERCIALS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
9
Taxation
(Continued)
- 19 -
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:
2021
2020
£
£
Profit before taxation
2,578,594
1,222,611
Expected tax charge based on the standard rate of corporation tax in the UK of 19.00% (2020: 19.00%)
489,933
232,296
Tax effect of expenses that are not deductible in determining taxable profit
9,841
407
Depreciation on assets not qualifying for tax allowances
(90,965)
31,701
Amortisation on assets not qualifying for tax allowances
14,275
14,275
Under/(over) provided in prior years
48
Taxation charge for the year
423,084
278,727
10
Dividends
2021
2020
£
£
Interim paid
423,500
401,000
11
Intangible fixed assets
Goodwill
Software
Total
£
£
£
Cost
At 1 January 2021 and 31 December 2021
1,502,630
162,510
1,665,140
Amortisation and impairment
At 1 January 2021
1,277,244
160,509
1,437,753
Amortisation charged for the year
75,132
2,001
77,133
At 31 December 2021
1,352,376
162,510
1,514,886
Carrying amount
At 31 December 2021
150,254
150,254
At 31 December 2020
225,386
2,001
227,387
HORTON COMMERCIALS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
- 20 -
12
Tangible fixed assets
Fixtures and fittings
Motor vehicles
Freehold land and buildings
Other Property, plant and equipment
Total
£
£
£
£
£
Cost
At 1 January 2021
359,618
14,816,526
4,673,278
697,072
20,546,494
Additions
143,004
5,195,812
1,128,556
101,243
6,568,615
Disposals
(2,309,595)
(18,945)
(2,328,540)
At 31 December 2021
502,622
17,702,743
5,782,889
798,315
24,786,569
Depreciation and impairment
At 1 January 2021
342,677
5,941,801
185,834
509,159
6,979,471
Depreciation charged in the year
34,986
2,945,113
110,637
79,521
3,170,257
Eliminated in respect of disposals
(1,419,290)
(558)
(1,419,848)
At 31 December 2021
377,663
7,467,624
295,913
588,680
8,729,880
Carrying amount
At 31 December 2021
124,959
10,235,119
5,486,976
209,635
16,056,689
At 31 December 2020
16,941
8,874,725
4,487,444
187,913
13,567,023
The net carrying value of tangible assets includes the following amounts in respect of assets held under finance leases and hire purchase contracts.
2021
2020
£
£
Motor vehicles
9,900,079
8,036,172
Depreciation charge for the year in respect of leased assets
2,802,698
1,762,550
13
Stocks
2021
2020
£
£
Work in progress
127,514
111,262
Finished goods and goods for resale
251,783
379,297
111,262
HORTON COMMERCIALS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
- 21 -
14
Debtors
2021
2020
Amounts falling due within one year:
£
£
Trade debtors
1,040,095
919,446
Other debtors
1,449,055
91,955
Prepayments and accrued income
59,116
65,269
2,548,266
1,076,670
15
Creditors: amounts falling due within one year
2021
2020
Notes
£
£
Bank loans and overdrafts
17
312,385
79,549
Obligations under finance leases
18
3,110,010
2,497,421
Trade creditors
800,658
634,098
Corporation tax
505,269
117,668
Other taxation and social security
242,572
11,883
Other creditors
127,675
131,744
Accruals and deferred income
175,380
105,526
5,273,949
3,577,889
Included within other creditors are borrowings of £77,533 (2020 - £74,911) secured by a fixed charge over property owned by the company.
16
Creditors: amounts falling due after more than one year
2021
2020
Notes
£
£
Bank loans and overdrafts
17
221,185
378,417
Obligations under finance leases
18
3,330,491
3,098,635
Other creditors
80,247
157,780
3,631,923
3,634,832
Included within other creditors are borrowings of £80,247 (2020 - £157,780) secured by a fixed charge over property owned by the company.
HORTON COMMERCIALS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
- 22 -
17
Loans and overdrafts
2021
2020
£
£
Bank loans
341,913
457,966
Bank overdrafts
191,657
533,570
457,966
Payable within one year
312,385
79,549
Payable after one year
221,185
378,417
Bank loans
Bank loans of £91,913 (2020 - £207,966) are secured by a fixed charge over properties owned by the company.
Coronavirus Business Interruption Loan
The Coronavirus Business Interruption Loan of £250,000 (2020 - £250,000) is guaranteed by the United Kingdom government whom will cover 80% of the finance to the lender in the event of default.
Overdraft facility
The company has an overdraft facility that is secured by fixed and floating charges over the undertaking and all property and assets present and future including book and all other debts.
18
Finance lease obligations
2021
2020
Future minimum lease payments due under finance leases:
£
£
Within one year
3,110,010
2,497,421
In two to five years
3,330,491
3,098,635
6,440,501
5,596,056
All finance lease and hire purchase agreements are secured by a first fixed charge over the asset purchased.
HORTON COMMERCIALS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
- 23 -
19
Deferred taxation
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:
Liabilities
Liabilities
2021
2020
Balances:
£
£
Accelerated capital allowances
329,816
326,743
2021
Movements in the year:
£
Liability at 1 January 2021
326,743
Charge to profit or loss
3,073
Liability at 31 December 2021
329,816
The deferred tax liability set out above relates to accelerated capital allowances that are expected to mature in more than 12 months.
20
Retirement benefit schemes
2021
2020
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
84,949
73,301
The company operates a defined contribution pension scheme for all qualifying employees. The pension cost for the year represents contributions payable by the company to the scheme.
21
Share capital
2021
2020
2021
2020
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Ordinary A shares of £1 each
75
75
75
75
Ordinary B shares of £1 each
10
10
10
10
Ordinary C shares of £1 each
5
5
5
5
Ordinary D shares of £1 each
5
5
5
5
Ordinary E shares of £1 each
5
5
5
5
100
100
100
100
Each share is entitled to one vote in any circumstances and each share is also entitled pari passu to any distributions, including a distribution arising from a winding up of the company, except that the Directors may pay interim or final dividends on one or several classes of shares to the exclusion of any class or classes and may pay these dividends at different rates on the respective classes of shares.
HORTON COMMERCIALS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
- 24 -
22
Reserves
Profit and loss account
The profit and loss account is cumulative profits generated by the company less distributions to shareholders via dividends. These are either reinvested in the business or kept as a reserve for specific objectives.
23
Operating lease commitments
Lessee
The total of future minimum lease payments is as follows:
2021
2020
£
£
Within one year
240,417
273,500
Between two and five years
75,167
309,083
315,584
582,583
The amount of non-cancellable operating lease payments recognised as an expenses during the year was £275,167 (2020 - £273,500).
24
Events after the reporting date
Subsequent to the year end, one ordinary B share was reclassified as an ordinary F share. Following this change, there has been no change to the ultimate controlling party.
25
Related party transactions
Transactions with related parties
During the year the company entered into the following transactions with related parties:
D J Wolfenden, the director; J M Wolfenden, the company secretary and the Horton Commercial Pension Scheme
The company was charged a commercial rent of £280,000 (2020 - £273,500) paid partly to D J Wolfenden, J M Wolfenden and the Horton Commercial Pension Scheme.
During 2019, a loan of £375,000 was made to the company from the Horton Commercial Pension Scheme. The loan is repaid by equal instalments with interest charged at 3.5% per annum. It is due to be fully repaid by 1 September 2023. During the year, interest of £8,230 (2020 - £9,374) was paid. At the year end the total liability to the company in respect of this loan was £157,780 (2020 - £232,691).
Other related parties
Dividends totalling £142,500 (2020 - £120,000) were paid in the year in respect of shares held by other related parties.
During the year, £786,949 (2020 - £112,198) was advanced in respect of other related parties loans and amounts of £482,500 (2020 - £120,000) were repaid in respect of other related parties loans. At the year end the total amounts due to be paid to other related parties by the company were £41,502 (2020 - £30,667) and amounts due to be paid by other related parties to the company were £345,951 (2020 - £2,790).
HORTON COMMERCIALS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
- 25 -
26
Directors' transactions
Dividends totalling £250,000 (2020 - £250,000) were paid in the year in respect of shares held by the company's director.
Interest free loans have been granted by the company to its director as follows:
Description
Opening balance
Amounts advanced
Amounts repaid
Closing balance
£
£
£
£
Director's loan
47,948
3,534,580
(2,663,431)
919,097
47,948
3,534,580
(2,663,431)
919,097
27
Ultimate controlling party
The company is controlled by the director who owns 75% of the called up share capital.
28
Capital Commitments
The company renews its fleet of vehicles throughout the year. At any point in time, capital commitments exist for the acquisition of new vehicles. The period from the date of commitment to the delivery of the vehicle is in general up to three months, with the monthly commitment being approximately £350,000.
29
Cash generated from operations
2021
2020
£
£
Profit for the year after tax
2,155,510
943,884
Adjustments for:
Taxation charged
423,084
278,727
Finance costs
183,564
164,295
Investment income
(3,270)
Gain on disposal of tangible fixed assets
(825,740)
(667,118)
Amortisation and impairment of intangible assets
77,133
87,134
Depreciation and impairment of tangible fixed assets
3,170,257
2,389,242
Movements in working capital:
(Increase)/decrease in stocks
(268,035)
387
(Increase)/decrease in debtors
(234,750)
65,979
Increase/(decrease) in creditors
461,105
(90,447)
Cash generated from operations
5,142,128
3,168,813
HORTON COMMERCIALS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
- 26 -
30
Analysis of changes in net debt
1 January 2021
Cash flows
New finance leases
31 December 2021
£
£
£
£
Cash at bank and in hand
1,027,142
(723,930)
-
303,212
Bank overdrafts
(191,657)
-
(191,657)
1,027,142
(915,587)
-
111,555
Borrowings excluding overdrafts
(457,966)
116,053
-
(341,913)
Obligations under finance leases
(5,596,056)
3,071,118
(3,915,563)
(6,440,501)
(5,026,880)
2,271,584
(3,915,563)
(6,670,859)
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