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COMPANY REGISTRATION NUMBER: 01458196
M.H.J. LIMITED AND SUBSIDIARIES
Financial Statements
31 December 2022
M.H.J. LIMITED AND SUBSIDIARIES
Financial Statements
Year ended 31 December 2022
Contents
Page
Officers and professional advisers
1
Strategic report
2
Directors' report
3
Independent auditor's report to the members
5
Consolidated statement of comprehensive income
9
Consolidated statement of financial position
10
Company statement of financial position
11
Consolidated statement of changes in equity
12
Company statement of changes in equity
13
Consolidated statement of cash flows
14
Notes to the financial statements
15
M.H.J. LIMITED AND SUBSIDIARIES
Officers and Professional Advisers
The board of directors
R E Melhuish
J A Maclean
T E Melhuish
Company secretary
K Bishop
Registered office
Numeric House
98 Station Road
Sidcup
Kent
DA15 7BY
Auditor
Opass Billings Wilson & Honey LLP
Chartered Certified Accountants & statutory auditor
Numeric House
98 Station Road
Sidcup
Kent
DA15 7BY
Bankers
HSBC
PO Box 160
168 High Street
Guildford
Surrey
GU1 3YU
Barclays Bank Plc
19 North Street
Guildford
Surrey
GU1 4AG
Solicitors
DMH Stallard
Griffin House
135 High Street
Crawley
West Sussex
RH10 1DQ
M.H.J. LIMITED AND SUBSIDIARIES
Strategic Report
Year ended 31 December 2022
Both the level of business and the year end financial position of the company and its subsidiaries show a significant improvement on the previous year. The directors expect the general level of activity and profitability to be maintained in the following year. The Board regards the following as the key performance indicators for the Group: 1. The revenue volumes as compared to the previous operating period Revenue volumes in 2022 increased by 16.60% from last year, it had been the Board's objectives to increase this and they hope to continue to increase this in the continuing years. 2. The rate of gross profit achieved on the revenues The gross profit percentage achieved in 2022 has decreased compared with 2021. The Board's target was to at least maintain the level that had been achieved last year and therefore aim to improve this going forward. 3. The rate of net profit In 2022 the group has made a net profit after tax of £2,078,994. The Board have been working hard in 2022 to improve the profitability of the companies in the group. The Board is confident that this will improve in the coming year.
This report was approved by the board of directors on 28 September 2023 and signed on behalf of the board by:
Mr R E Melhuish Director
M.H.J. LIMITED AND SUBSIDIARIES
Directors' Report
Year ended 31 December 2022
The directors present their report and the financial statements of the group for the year ended 31 December 2022 .
Directors
The directors who served the company during the year were as follows:
R E Melhuish
J A Maclean
T E Melhuish
Dividends
Particulars of recommended dividends are detailed in note 13 to the financial statements.
Future developments
The Group Board is focused on several strategic areas of expansion for the operating subsidiaries.
Directors' responsibilities statement
The directors are responsible for preparing the strategic report, directors' 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 group and the company and the profit or loss of the group for that period.
In preparing these financial statements, the directors are required to:
- select suitable accounting policies and then apply them consistently;
- make judgments 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 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.
Auditor
Each of the persons who is a director at the date of approval of this report confirms that:
- so far as they are aware, there is no relevant audit information of which the group and the company's auditor is unaware; and - they have taken all steps that they ought to have taken as a director to make themselves aware of any relevant audit information and to establish that the group and the company's auditor is aware of that information.
This report was approved by the board of directors on 28 September 2023 and signed on behalf of the board by:
Mr R E Melhuish Director
M.H.J. LIMITED AND SUBSIDIARIES
Independent Auditor's Report to the Members of M.H.J. Limited and subsidiaries
Year ended 31 December 2022
Opinion
We have audited the financial statements of M.H.J. Limited (the 'parent company') and its subsidiaries (the 'group') for the year ended 31 December 2022 which comprise the consolidated statement of comprehensive income, consolidated statement of financial position, company statement of financial position, consolidated statement of changes in equity, company statement of changes in equity, consolidated statement of cash flows and the related notes, including a summary of 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 group's and of the parent company's affairs as at 31 December 2022 and of the group's profit for the year then ended; - have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; - have been prepared in accordance with the requirements of the Companies Act 2006.
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 group 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 group's or the parent company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
Other information
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. 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. In connection with our audit of the financial statements, 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 audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the financial statements or a material misstatement of the other information. 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 the audit:
- the information given in the strategic report and the directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
- the strategic report and the directors' report have been prepared in accordance with applicable legal requirements.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the group and the parent company and its environment obtained in the course of the audit, we have not identified material misstatements in the strategic report or the directors' report. We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion: - adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received from branches not visited by us; or - the parent company financial statements are not in agreement with the accounting records and returns; or - certain disclosures of directors' remuneration specified by law are not made; or - we have not received all the information and explanations we require for our audit.
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 group's and the parent 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 group or the parent 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. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below: We identify and assess the key risk areas of material misstatement and then design and perform audit procedures in relation to those risks. Materiality has been calculated based on an average of the group's turnover, gross assets and profit before tax and has been assessed at a level of £389,050. The key risk areas was considered to be Going Concern, the appropriate audit approach was considered and applied to this area. We performed analytical procedures to identify any unusual or unexpected ratios or variances that may indicate risks of material misstatement due to fraud. We reviewed the financial statement disclosures and assessed compliance with relevant laws and regulations. Irregularities which result from fraud are inherently more difficult to detect than irregularities which result from error, however there have never been any instances of fraud encountered with the company and there are controls in place through the segregation of duties and regular reviews of management accounts which reduce the risk of fraud through management override. In addition we have also considered any transactions which are outside the normal course of the company. All audit team members were made aware of the relevant laws & regulations applicable to the company together with potential fraud risks and remained alert to any indications of fraud non-compliance with the laws & regulations throughout the audit. As part of an audit in accordance with ISAs (UK), we exercise professional judgment and maintain professional scepticism throughout the audit. We also: - 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. 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. - Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the group's internal control. - Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors. - Conclude on the appropriateness of the directors' use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the group's or the parent company's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the group or the parent company to cease to continue as a going concern. - Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation. - Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion. We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. Use of our report
This report is made solely to the company's members, as a body, in accordance with chapter 3 of part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's members as a body, for our audit work, for this report, or for the opinions we have formed.
Philip Benson Woodman FCCA
(Senior Statutory Auditor)
For and on behalf of
Opass Billings Wilson & Honey LLP
Chartered Certified Accountants & statutory auditor
Numeric House
98 Station Road
Sidcup
Kent
DA15 7BY
28 September 2023
M.H.J. LIMITED AND SUBSIDIARIES
Consolidated Statement of Comprehensive Income
Year ended 31 December 2022
2022
2021
Note
£
£
Turnover
4
54,792,237
46,993,525
Cost of sales
43,045,907
34,866,376
-------------
-------------
Gross profit
11,746,330
12,127,149
Administrative expenses
8,749,101
8,259,210
-------------
-------------
Operating profit
5
2,997,229
3,867,939
Deemed loss on disposal of shareholding
( 277,229)
Share of profit of associates
16
162,070
269,373
Interest receivable
9
3,601
12,775
Amounts written back to investments
10
319,144
Interest payable
11
248,012
173,841
-------------
-------------
Profit before taxation
2,637,659
3,657,102
Taxation on ordinary activities
12
558,665
685,751
------------
------------
Profit for the financial year and total comprehensive income
2,078,994
2,971,351
------------
------------
Profit for the financial year attributable to:
The owners of the parent company
1,868,444
2,682,131
Non-controlling interests
210,550
289,220
------------
------------
2,078,994
2,971,351
------------
------------
All the activities of the group are from continuing operations.
M.H.J. LIMITED AND SUBSIDIARIES
Consolidated Statement of Financial Position
31 December 2022
2022
2021
Note
£
£
Fixed assets
Intangible assets
14
1
1
Tangible assets
15
13,241,120
10,128,934
Investments:
16
Investments in associates
1,467,205
1,264,904
-------------
-------------
14,708,326
11,393,839
Current assets
Stocks
17
517,218
416,412
Debtors
18
14,763,228
12,827,630
Cash at bank and in hand
4,337,254
7,449,727
-------------
-------------
19,617,700
20,693,769
Creditors: amounts falling due within one year
19
12,864,336
13,901,939
-------------
-------------
Net current assets
6,753,364
6,791,830
-------------
-------------
Total assets less current liabilities
21,461,690
18,185,669
Creditors: amounts falling due after more than one year
20
4,474,669
3,761,594
Provisions
Taxation including deferred tax
22
1,744,671
1,054,807
-------------
-------------
Net assets
15,242,350
13,369,268
-------------
-------------
Capital and reserves
Called up share capital
25
48,650
48,650
Share premium account
26
406,694
406,694
Profit and loss account
26
13,436,225
11,992,967
-------------
-------------
Equity attributable to the owners of the parent company
13,891,569
12,448,311
Non-controlling interests
1,350,781
920,957
-------------
-------------
15,242,350
13,369,268
-------------
-------------
These financial statements were approved by the board of directors and authorised for issue on 28 September 2023 , and are signed on behalf of the board by:
R E Melhuish J A Maclean
Company registration number: 01458196
M.H.J. LIMITED AND SUBSIDIARIES
Company Statement of Financial Position
31 December 2022
2022
2021
Note
£
£
Fixed assets
Tangible assets
15
2,468,584
822,650
Investments
16
488,671
488,671
------------
------------
2,957,255
1,311,321
Current assets
Debtors
18
2,688,661
3,507,292
Cash at bank and in hand
631
28,593
------------
------------
2,689,292
3,535,885
Creditors: amounts falling due within one year
19
1,155,626
488,115
------------
------------
Net current assets
1,533,666
3,047,770
------------
------------
Total assets less current liabilities
4,490,921
4,359,091
Creditors: amounts falling due after more than one year
20
628,333
888,333
------------
------------
Net assets
3,862,588
3,470,758
------------
------------
Capital and reserves
Called up share capital
25
48,650
48,650
Share premium account
26
406,694
406,694
Profit and loss account
26
3,407,244
3,015,414
------------
------------
Shareholders funds
3,862,588
3,470,758
------------
------------
The profit for the financial year of the parent company was £ 816,630 (2021: £ 597,424 ).
These financial statements were approved by the board of directors and authorised for issue on 28 September 2023 , and are signed on behalf of the board by:
R E Melhuish J A Maclean
Company registration number: 01458196
M.H.J. LIMITED AND SUBSIDIARIES
Consolidated Statement of Changes in Equity
Year ended 31 December 2022
Called up share capital
Share premium account
Profit and loss account
Equity attributable to the owners of the parent company
Non-controlling interests
Total
£
£
£
£
£
£
At 1 January 2021
48,650
406,694
9,815,438
10,270,782
757,504
11,028,286
Profit for the year
2,682,131
2,682,131
289,220
2,971,351
--------
---------
------------
-------------
---------
-------------
Total comprehensive income for the year
2,682,131
2,682,131
289,220
2,971,351
Dividends paid and payable
13
( 504,602)
( 504,602)
( 125,767)
( 630,369)
--------
---------
------------
-------------
---------
-------------
Total investments by and distributions to owners
( 504,602)
( 504,602)
( 125,767)
( 630,369)
At 31 December 2021
48,650
406,694
11,992,967
12,448,311
920,957
13,369,268
Profit for the year
1,868,444
1,868,444
210,550
2,078,994
--------
---------
-------------
-------------
---------
-------------
Total comprehensive income for the year
1,868,444
1,868,444
210,550
2,078,994
Dividends paid and payable
13
( 425,186)
( 425,186)
( 137,043)
( 562,229)
Deemed gain on subsidiary issue of shares
356,317
356,317
----
----
---------
---------
---------
---------
Total investments by and distributions to owners
( 425,186)
( 425,186)
219,274
( 205,912)
--------
---------
-------------
-------------
------------
-------------
At 31 December 2022
48,650
406,694
13,436,225
13,891,569
1,350,781
15,242,350
--------
---------
-------------
-------------
------------
-------------
M.H.J. LIMITED AND SUBSIDIARIES
Company Statement of Changes in Equity
Year ended 31 December 2022
Called up share capital
Share premium account
Profit and loss account
Total
£
£
£
£
At 1 January 2021
48,650
406,694
2,882,790
3,338,134
Profit for the year
597,424
597,424
--------
---------
------------
------------
Total comprehensive income for the year
597,424
597,424
Dividends paid and payable
13
( 464,800)
( 464,800)
--------
---------
------------
------------
Total investments by and distributions to owners
( 464,800)
( 464,800)
At 31 December 2021
48,650
406,694
3,015,414
3,470,758
Profit for the year
816,630
816,630
--------
---------
------------
------------
Total comprehensive income for the year
816,630
816,630
Dividends paid and payable
13
( 424,800)
( 424,800)
----
----
---------
---------
Total investments by and distributions to owners
( 424,800)
( 424,800)
--------
---------
------------
------------
At 31 December 2022
48,650
406,694
3,407,244
3,862,588
--------
---------
------------
------------
M.H.J. LIMITED AND SUBSIDIARIES
Consolidated Statement of Cash Flows
Year ended 31 December 2022
2022
2021
£
£
Cash flows from operating activities
Profit for the financial year
2,078,994
2,971,351
Adjustments for:
Depreciation of tangible assets
1,637,926
1,659,757
Amounts written back to investments
319,144
Deemed loss on disposal of shareholding
277,229
Share of profit of associates
( 162,070)
( 269,373)
Interest receivable
( 3,601)
( 12,775)
Interest payable
248,012
173,841
(Gains)/loss on disposal of tangible assets
( 299,880)
397,233
Taxation on ordinary activities
558,665
685,751
Accrued income
( 915,656)
( 314,063)
Changes in:
Stocks
( 100,806)
( 130,397)
Trade and other debtors
( 1,936,544)
( 2,055,319)
Trade and other creditors
( 289,012)
3,221,188
------------
------------
Cash generated from operations
1,093,257
6,646,338
Interest paid
( 248,012)
( 173,841)
Interest received
3,601
12,775
Tax paid
( 246,843)
( 501,348)
------------
------------
Net cash from operating activities
602,003
5,983,924
------------
------------
Cash flows from investing activities
Purchase of tangible assets
( 2,294,161)
( 1,456,091)
Proceeds from sale of tangible assets
1,616,730
831,813
Acquisition of interests in associates and joint ventures
( 100)
------------
------------
Net cash used in investing activities
( 677,531)
( 624,278)
------------
------------
Cash flows from financing activities
Proceeds from issue of ordinary shares
176,060
Repayments of borrowings
( 260,000)
( 151,667)
Payments of finance lease liabilities
( 2,390,776)
( 1,221,928)
Dividends paid
( 562,229)
( 630,369)
------------
------------
Net cash used in financing activities
( 3,036,945)
( 2,003,964)
------------
------------
Net (decrease)/increase in cash and cash equivalents
( 3,112,473)
3,355,682
Cash and cash equivalents at beginning of year
7,449,727
4,094,045
------------
------------
Cash and cash equivalents at end of year
4,337,254
7,449,727
------------
------------
M.H.J. LIMITED AND SUBSIDIARIES
Notes to the Financial Statements
Year ended 31 December 2022
1. General information
The company is a private company limited by shares, registered in England and Wales. The address of the registered office is Numeric House, 98 Station Road, Sidcup, Kent, DA15 7BY.
2. Statement of compliance
These financial statements have been prepared in compliance with FRS 102, 'The Financial Reporting Standard applicable in the UK and the Republic of Ireland'.
3. Accounting policies
Basis of preparation
The financial statements have been prepared on the historical cost basis, as modified by the revaluation of certain financial assets and liabilities and investment properties measured at fair value through the statement of comprehensive income. The financial statements are prepared in sterling, which is the functional currency of the entity.
Debtors
Debtors are initially recorded at fair value and are assessed for impairment at each year end date. If any impairments exist the debtors are remeasured to the present value of the expected future cash inflows.
Creditors
Creditors are initially recorded at fair value and are then remeasured to the present value of the expected future cash outflows.
Equipment leased to customers
Equipment leased to customers under operating leases is capitalised. Operating lease income is accounted for on a straight line basis with rental income and any rental increases recognised during the period to which they relate.
Disclosure exemptions
The parent company satisfies the criteria of being a qualifying entity as defined in FRS 102. As such, advantage has been taken of the following reduced disclosures available under FRS 102:
(a) Disclosures in respect of each class of share capital have not been presented.
(b) No cash flow statement has been presented for the company.
(c) Disclosures in respect of financial instruments have not been presented.
(d) No disclosure has been given for the aggregate remuneration of key management personnel.
Consolidation
The financial statements consolidate the financial statements of M.H.J. Limited and all of its subsidiary undertakings. The results of subsidiaries acquired or disposed of during the year are included from or to the date that control passes. The parent company has applied the exemption contained in section 408 of the Companies Act 2006 and has not included its individual statement of comprehensive income.
Non-controlling interests
Non-controlling interests in the net assets of consolidated subsidiaries are identified separately from the Group’s equity. Non-controlling interests consist of the amount of those interests at the date of the original business combination and the minority’s share of changes in equity since the date of the combination.
The proportions of profit or loss and changes in equity allocated to the owners of the parent and to the non-controlling interests are determined on the basis of existing ownership interests and do not reflect the possible exercise or conversion of options or convertible instruments.
Judgements and key sources of estimation uncertainty
The preparation of the financial statements requires management to make judgements, estimates and assumptions that affect the amounts reported. These estimates and judgements are continually reviewed and are based on experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances .
Revenue recognition
Revenue refers to amounts earned from the Company's principal activity; operating as a holding company and the provision of plant hire and management services and the group activities of port and inland dredging, the provision of Management and Administration services, the provision of Marina and Property Management services, the provision of Environmental Contracting services, the hire of plant and machinery and online learning courses for British water safety. The revenue shown in the statement of comprehensive income represents amounts invoiced during the year, exclusive of Value Added Tax. In respect of long-term contracts and contracts for on-going services, revenue represents the value of work done in the year, including estimates of amounts not invoiced. Revenue in respect of long-term contracts and contracts for on-going services is recognised by reference to the stage of completion. Revenue from the rendering of services is measured by reference to the stage of completion of the service transaction at the end of the reporting period provided that the outcome can be reliably estimated. When the outcome cannot be reliably estimated, revenue is recognised only to the extent that it is probable the expenses recognised will be recovered.
Income tax
The taxation expense represents the aggregate amount of current and deferred tax recognised in the reporting period. Tax is recognised in the statement of comprehensive income, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case, tax is recognised in other comprehensive income or directly in equity, respectively. Current tax is recognised on taxable profit for the current and past periods. Current tax is measured at the amounts of tax expected to pay or recover using the tax rates and laws that have been enacted or substantively enacted at the reporting date. Deferred tax is recognised in respect of all timing differences at the reporting date. Unrelieved tax losses and other 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. Deferred tax is measured using the tax rates and laws that have been enacted or substantively enacted by the reporting date that are expected to apply to the reversal of the timing difference.
Goodwill
Goodwill arising on consolidation is written off over the three years following the year of acquisition.
Amortisation
Amortisation is calculated so as to write off the cost of an asset, less its estimated residual value, over the useful life of that asset as follows:
Goodwill
-
5 Year straight line
If there is an indication that there has been a significant change in amortisation rate, useful life or residual value of an intangible asset, the amortisation is revised prospectively to reflect the new estimates.
Tangible assets
Tangible assets are initially recorded at cost, and subsequently stated at cost less any accumulated depreciation and impairment losses. Any tangible assets carried at revalued amounts are recorded at the fair value at the date of revaluation less any subsequent accumulated depreciation and subsequent accumulated impairment losses. Tangible assets with a cost value in excess of £500 are capitalised, all items below this limit are expensed through the Statement of comprehensive income.
Depreciation
Depreciation is calculated so as to write off the cost or valuation of an asset, less its residual value, over the useful economic life of that asset as follows:
Leasehold Improvements
-
No depreciation
Plant & machinery
-
16% Straight line and 25% reducing balance
Equipment
-
3 Year straight line and 10% straight line
Motor vehicles
-
25% Reducing balance
Fixtures & fittings
-
25% Straight line and 15% reducing balance
Freehold land is not depreciated. Freehold properties are maintained to such a standard that their estimated residual values are not less than cost and as such depreciation is not charged. Although the Companies Act would normally require the systematic annual depreciation of freehold properties, the Directors believe that this policy of not providing depreciation is necessary in order for the accounts to give a true and fair view, since the current value of the freehold properties, and changes in that current value, are of prime importance rather than a calculation of systematic annual depreciation. Depreciation is only one of the many factors reflected in the annual valuation and the amount that might otherwise have been shown cannot be separately identified or quantified.
Investments
Fixed asset investments are initially recorded at cost, and subsequently stated at cost less any accumulated impairment losses.
Listed investments are measured at fair value with changes in fair value being recognised in profit or loss.
Investments in subsidiaries
Investments in subsidiaries accounted for in accordance with the cost model are recorded at cost less any accumulated impairment losses. Investments in subsidiaries accounted for in accordance with the fair value model are initially recorded at the transaction price. At each reporting date, the investments are measured at fair value, with changes in fair value recognised in the income statement. Where it is impracticable to measure fair value reliably without undue cost or effort, the cost model will be adopted. Dividends and other distributions received from the investment are recognised as income without regard to whether the distributions are from accumulated profits of the associate arising before or after the date of acquisition.
Investments in participating interests
Investments in participating interest accounted for in accordance with the cost model are recorded at cost less any accumulated impairment losses. Investments in participating interest accounted for in accordance with the fair value model are initially recorded at the transaction price. At each reporting date, the investments are measured at fair value, with changes in fair value recognised in the income statement. Where it is impracticable to measure fair value reliably without undue cost or effort, the cost model will be adopted. Dividends and other distributions received from the investment are recognised as income without regard to whether the distributions are from accumulated profits of the joint venture arising before or after the date of acquisition.
Impairment of fixed assets
A review for indicators of impairment is carried out at each reporting date, with the recoverable amount being estimated where such indicators exist. Where the carrying value exceeds the recoverable amount, the asset is impaired accordingly. Prior impairments are also reviewed for possible reversal at each reporting date. For the purposes of impairment testing, when it is not possible to estimate the recoverable amount of an individual asset, an estimate is made of the recoverable amount of the cash-generating unit to which the asset belongs. The cash-generating unit is the smallest identifiable group of assets that includes the asset and generates cash inflows that largely independent of the cash inflows from other assets or groups of assets. For impairment testing of goodwill, the goodwill acquired in a business combination is, from the acquisition date, allocated to each of the cash-generating units that are expected to benefit from the synergies of the combination, irrespective of whether other assets or liabilities of the company are assigned to those units.
Stocks
Stocks are measured at the lower of cost and estimated selling price less costs to complete and sell. Cost includes all costs of purchase, costs of conversion and other costs incurred in bringing the stock to its present location and condition.
Finance leases and hire purchase contracts
Assets held under finance leases and hire purchase contracts are recognised in the statement of financial position as assets and liabilities at the lower of the fair value of the assets and the present value of the minimum lease payments, which is determined at the inception of the lease term. Any initial direct costs of the lease are added to the amount recognised as an asset. Lease payments are apportioned between the finance charges and reduction of the outstanding lease liability using the effective interest method. Finance charges are allocated to each period so as to produce a constant rate of interest on the remaining balance of the liability.
Provisions
Provisions are recognised when the entity has an obligation at the reporting date as a result of a past event, it is probable that the entity will be required to transfer economic benefits in settlement and the amount of the obligation can be estimated reliably. Provisions are recognised as a liability in the statement of financial position and the amount of the provision as an expense. Provisions are initially measured at the best estimate of the amount required to settle the obligation at the reporting date and subsequently reviewed at each reporting date and adjusted to reflect the current best estimate of the amount that would be required to settle the obligation. Any adjustments to the amounts previously recognised are recognised in profit or loss unless the provision was originally recognised as part of the cost of an asset. When a provision is measured at the present value of the amount expected to be required to settle the obligation, the unwinding of the discount is recognised as a finance cost in profit or loss in the period it arises.
Financial instruments
Financial instruments are classified and accounted for, according to the substance of the contractual arrangement, as either financial assets, financial liabilities or equity instruments. An equity instrument is any contract that evidences a residual interest in the assets of the group after deducting all of its liabilities.
Defined contribution plans
Contributions to defined contribution plans are recognised as an expense in the period in which the related service is provided. Prepaid contributions are recognised as an asset to the extent that the prepayment will lead to a reduction in future payments or a cash refund. When contributions are not expected to be settled wholly within 12 months of the end of the reporting date in which the employees render the related service, the liability is measured on a discounted present value basis. The unwinding of the discount is recognised as a finance cost in profit or loss in the period in which it arises.
4. Turnover
Turnover arises from:
2022
2021
£
£
Rendering of services
14,947,262
14,344,947
Construction contracts
39,844,975
32,648,578
-------------
-------------
54,792,237
46,993,525
-------------
-------------
The whole of the turnover is attributable to the principal activity of the group wholly undertaken in the United Kingdom.
5. Operating profit
Operating profit or loss is stated after charging/crediting:
2022
2021
£
£
Depreciation of tangible assets
1,637,926
1,659,757
(Gains)/loss on disposal of tangible assets
( 299,880)
397,233
Impairment of trade debtors
91,151
36,975
------------
------------
6. Auditor's remuneration
2022
2021
£
£
Fees payable for the audit of the financial statements
32,500
25,000
--------
--------
7. Particulars of employees
The average number of persons employed by the group during the year, including the directors, amounted to:
2022
2021
No.
No.
Office and administration
93
95
Plant operators
60
60
Site management
30
26
----
----
183
181
----
----
The aggregate payroll costs incurred during the year, relating to the above, were:
2022
2021
£
£
Wages and salaries
10,317,794
9,404,412
Social security costs
800,179
697,367
Other pension costs
93,705
59,346
-------------
-------------
11,211,678
10,161,125
-------------
-------------
The average number of employees employed by undertakings that are proportionately consolidated are 9, (2021:8 ).
8. Directors' remuneration
The directors' aggregate remuneration in respect of qualifying services was:
2022
2021
£
£
Remuneration
598,223
715,173
---------
---------
The number of directors who accrued benefits under company pension plans was as follows:
2022
2021
No.
No.
Defined contribution plans
2
2
----
----
Remuneration of the highest paid director in respect of qualifying services:
2022
2021
£
£
Aggregate remuneration
164,626
152,219
---------
---------
9. Interest receivable
2022
2021
£
£
Interest on loans and receivables
12,636
Interest on cash and cash equivalents
3,601
139
-------
--------
3,601
12,775
-------
--------
10. Amounts written back to investments
2022
2021
£
£
Loan with participating interest write off
319,144
----
---------
11. Interest payable
2022
2021
£
£
Interest on banks loans and overdrafts
33,751
50,835
Interest on obligations under finance leases and hire purchase contracts
214,261
122,989
Other interest payable and similar charges
17
---------
---------
248,012
173,841
---------
---------
12. Taxation on ordinary activities
Major components of tax expense
2022
2021
£
£
Current tax:
UK current tax income
246,843
Adjustments in respect of prior periods
227
Share of associate tax charge
( 137,103)
164,045
---------
---------
Total current tax
( 136,876)
410,888
---------
---------
Deferred tax:
Origination and reversal of timing differences
695,541
274,863
---------
---------
Taxation on ordinary activities
558,665
685,751
---------
---------
Reconciliation of tax expense
The tax assessed on the profit on ordinary activities for the year is lower than (2021: lower than) the standard rate of corporation tax in the UK of 19 % (2021: 19 %).
2022
2021
£
£
Profit on ordinary activities before taxation
2,637,659
3,657,102
------------
------------
Profit on ordinary activities by rate of tax
858,213
694,849
Adjustment to tax charge in respect of prior periods
227
Effect of expenses not deductible for tax purposes
7,129
( 293,587)
Effect of capital allowances and depreciation
( 1,131,608)
( 156,819)
Unused tax losses
266,266
2,400
Share of associate tax charge
( 137,103)
164,045
Effect on deferred tax
695,541
274,863
------------
------------
Tax on profit
558,665
685,751
------------
------------
13. Dividends
Dividends paid during the year (excluding those for which a liability existed at the end of the prior year):
2022
2021
£
£
Equity dividends on ordinary shares
562,229
630,369
---------
---------
14. Intangible assets
Group
Goodwill
£
Cost
At 1 January 2022 and 31 December 2022
4,764
-------
Amortisation
At 1 January 2022 and 31 December 2022
4,763
-------
Carrying amount
At 1 January 2022 and 31 December 2022
1
-------
At 31 December 2021
1
-------
The company has no intangible assets.
15. Tangible assets
Group
Land and buildings
Plant and machinery
Fixtures, fittings and equipment
Motor vehicles
Total
£
£
£
£
£
Cost
At 1 January 2022
2,827,555
14,535,862
733,221
301,278
18,397,916
Additions
1,713,579
4,142,279
46,613
164,491
6,066,962
Disposals
( 3,154,521)
( 31,812)
( 3,186,333)
------------
-------------
---------
---------
-------------
At 31 December 2022
4,541,134
15,523,620
779,834
433,957
21,278,545
------------
-------------
---------
---------
-------------
Depreciation
At 1 January 2022
984,215
6,784,702
375,212
124,853
8,268,982
Charge for the year
417,340
1,024,763
128,701
67,122
1,637,926
Disposals
( 1,844,520)
( 24,963)
( 1,869,483)
------------
-------------
---------
---------
-------------
At 31 December 2022
1,401,555
5,964,945
503,913
167,012
8,037,425
------------
-------------
---------
---------
-------------
Carrying amount
At 31 December 2022
3,139,579
9,558,675
275,921
266,945
13,241,120
------------
-------------
---------
---------
-------------
At 31 December 2021
1,843,340
7,751,160
358,009
176,425
10,128,934
------------
-------------
---------
---------
-------------
Company
Land and buildings
Plant and machinery
Total
£
£
£
Cost
At 1 January 2022
822,650
1,425
824,075
Additions
1,645,934
1,645,934
------------
-------
------------
At 31 December 2022
2,468,584
1,425
2,470,009
------------
-------
------------
Depreciation
At 1 January 2022 and 31 December 2022
1,425
1,425
------------
-------
------------
Carrying amount
At 31 December 2022
2,468,584
2,468,584
------------
-------
------------
At 31 December 2021
822,650
822,650
------------
-------
------------
Assets held for use in operating leases originally cost £15,025,827 (2021: £14,552,714) and have a net book value of £9,036,653 (2021: £7,724,421).
Finance leases and hire purchase contracts
Included within the carrying value of tangible assets are the following amounts relating to assets held under finance leases or hire purchase agreements:
Group
Plant and machinery
Motor vehicles
Total
£
£
£
At 31 December 2022
5,203,079
5,203,079
------------
----
------------
At 31 December 2021
4,684,652
4,028
4,688,680
------------
-------
------------
The company has no tangible assets held under finance lease or hire purchase agreements.
16. Investments
Group
Interests in associates
£
Share of net assets/cost
At 1 January 2022
1,264,904
Additions
100
Share of profit or loss
202,201
------------
At 31 December 2022
1,467,205
------------
Impairment
At 1 January 2022 and 31 December 2022
------------
Carrying amount
At 31 December 2022
1,467,205
------------
At 31 December 2021
1,264,904
------------
Company
Shares in group undertakings
£
Cost
At 1 January 2022 and 31 December 2022
488,671
---------
Impairment
At 1 January 2022 and 31 December 2022
---------
Carrying amount
At 1 January 2022 and 31 December 2022
488,671
---------
At 31 December 2021
488,671
---------
Subsidiaries, associates and other investments
Details of the investments in which the group and the parent company have an interest of 20% or more are as follows:
Class of share
Percentage of shares held
Subsidiary undertakings
Land & Water Services Limited
Ordinary shares
87.5
Land & Water Plant Limited
Ordinary shares
90
Land & Water Remediation Limited
Ordinary shares
95
Land and Water Group Limited
Ordinary shares
100
Land & Water Estates Limited
Ordinary shares
90
Waterwise Training Limited
Ordinary shares
75
Sudstainability Limited
Ordinary shares
100
Charybdis Limited
Ordinary shares
100
Land & Water Services (Scotland) Limited
Ordinary shares
100
Terraqua Limited
Ordinary shares
100
Other significant holdings
LC Energy Limited
Ordinary shares
40
NTD National Tracked Dumper Hire Limited
Ordinary shares
45
Investments in associates
Summarised financial information of associates:
2022
2021
£
£
Fixed assets
2,581,134
2,860,664
Current assets
1,188,131
1,008,515
Non-current liabilities
( 976,277)
( 1,006,867)
Current liabilities
( 1,164,863)
( 1,250,569)
------------
------------
Revenues
3,363,225
3,158,928
Profit from continuing operations
225,527
419,645
Total comprehensive income
311,172
209,238
------------
------------
17. Stocks
Group
Company
2022
2021
2022
2021
£
£
£
£
Raw materials
517,218
416,412
---------
---------
----
----
18. Debtors
Group
Company
2022
2021
2022
2021
£
£
£
£
Trade debtors
4,331,795
3,655,949
4,389
1,778
Amounts owed by group undertakings
584,577
1,533,978
Amounts owed by undertakings in which the company has a participating interest
21,284
Deferred tax asset
2,151
7,827
1,791
2,106
Prepayments and accrued income
773,632
632,902
233,757
86,172
Corporation tax repayable
4,731
70
70
Directors loan account
307,741
404,505
294,415
538,084
Amounts recoverable on contracts
7,134,377
5,736,915
Other debtors
2,208,801
2,368,248
1,569,662
1,345,104
-------------
-------------
------------
------------
14,763,228
12,827,630
2,688,661
3,507,292
-------------
-------------
------------
------------
19. Creditors: amounts falling due within one year
Group
Company
2022
2021
2022
2021
£
£
£
£
Bank loans and overdrafts
260,000
260,000
857,249
260,000
Trade creditors
5,213,629
5,213,307
148,569
52,756
Amounts owed to group undertakings
73,178
90,692
Amounts owed to undertakings in which the company has a participating interest
30
30
30
30
Accruals and deferred income
4,070,415
4,986,071
10,001
66,196
Corporation tax
241,885
Social security and other taxes
1,481,088
991,759
Obligations under finance leases and hire purchase contracts
1,624,327
1,215,377
Other creditors
214,847
993,510
66,599
18,441
-------------
-------------
------------
---------
12,864,336
13,901,939
1,155,626
488,115
-------------
-------------
------------
---------
The group has entered into a composite accounting agreement with Natwest Bank Plc between Land & Water Services Limited, Land & Water Plant Limited, Land & Water Remediation Limited, Land & Water Estates Limited, M.H.J. Limited & Land and Water Group Limited. Under the terms of this agreement the bank is authorised in certain circumstances to seize bank account balances and apply them in reduction of liabilities including overdrawn bank accounts of the other group companies in the agreement. The total potential liability under the composite agreement at the year end is £1,389,139.
20. Creditors: amounts falling due after more than one year
Group
Company
2022
2021
2022
2021
£
£
£
£
Bank loans and overdrafts
628,333
888,333
628,333
888,333
Obligations under finance leases and hire purchase contracts
3,846,336
2,873,261
------------
------------
---------
---------
4,474,669
3,761,594
628,333
888,333
------------
------------
---------
---------
21. Finance leases and hire purchase contracts
The total future minimum lease payments under finance leases and hire purchase contracts are as follows:
Group
Company
2022
2021
2022
2021
£
£
£
£
Not later than 1 year
1,624,327
1,215,377
Later than 1 year and not later than 5 years
3,846,336
2,873,261
------------
------------
----
----
5,470,663
4,088,638
------------
------------
----
----
22. Provisions
Group
Deferred tax (note 23)
£
At 1 January 2022
1,054,807
Additions
689,864
------------
At 31 December 2022
1,744,671
------------
The company does not have any provisions.
23. Deferred tax
The deferred tax included in the statement of financial position is as follows:
Group
Company
2022
2021
2022
2021
£
£
£
£
Included in debtors (note 18)
2,151
7,827
1,791
2,106
Included in provisions (note 22)
( 1,744,671)
( 1,054,807)
------------
------------
-------
-------
( 1,742,520)
( 1,046,980)
1,791
2,106
------------
------------
-------
-------
The deferred tax account consists of the tax effect of timing differences in respect of:
Group
Company
2022
2021
2022
2021
£
£
£
£
Accelerated capital allowances
1,742,520
1,046,980
( 1,791)
( 2,106)
------------
------------
-------
-------
24. Employee benefits
Defined contribution plans
The amount recognised in profit or loss as an expense in relation to defined contribution plans was £ 93,705 (2021: £ 59,346 ).
25. Called up share capital
Authorised share capital
2022
2021
No.
£
No.
£
Ordinary shares of £ 1 each
48,650
48,650
48,650
48,650
--------
--------
--------
--------
Issued, called up and fully paid
2022
2021
No.
£
No.
£
Ordinary shares of £ 1 each
48,650
48,650
48,650
48,650
--------
--------
--------
--------
26. Reserves
Share premium account - This reserve records the amount above the nominal value received for shares sold, less transaction costs. Profit and loss account - This reserve records retained earnings and accumulated losses.
27. Analysis of changes in net debt
At 1 Jan 2022
Cash flows
At 31 Dec 2022
£
£
£
Cash at bank and in hand
7,449,727
(3,112,473)
4,337,254
Debt due within one year
(1,475,407)
(408,950)
(1,884,357)
Debt due after one year
(3,761,594)
(713,075)
(4,474,669)
------------
------------
------------
2,212,726
( 4,234,498)
( 2,021,772)
------------
------------
------------
28. Directors' advances, credits and guarantees
Advances brought forward and additional advances made during the year totalling £307,741 were made available to the directors. The balance outstanding at the year end was £307,741. The advances were made interest free and are repayable on demand (2021 : £404,505).
29. Ultimate controlling party
During the year the company was under control of R E Melhuish by virtue of his majority shareholding in M.H.J. Limited.