Company registration number 08323590 (England and Wales)
J F HUTCHINGS LTD
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
J F HUTCHINGS LTD
COMPANY INFORMATION
Directors
Mr S J Hutchings
Mr S P Magee
Secretary
Mr S P Magee
Company number
08323590
Registered office
The Hyundai Centre
Severn Road
Treforest Industrial Estate,
Pontypridd
United Kingdom
CF37 5YH
Auditor
Azets Audit Services
Ty Derw
Lime Tree Court
Cardiff Gate Business Park
Cardiff
Wales
CF23 8AB
J F HUTCHINGS LTD
CONTENTS
Page
Strategic report
1 - 2
Directors' report
3 - 4
Independent auditor's report
5 - 7
Statement of comprehensive income
8
Balance sheet
9
Statement of changes in equity
10
Statement of cash flows
11
Notes to the financial statements
12 - 26
J F HUTCHINGS LTD
STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2022
- 1 -

The directors present the strategic report for the year ended 31 December 2022.

Review of business and key performance indicators

The principle activity of the business was that of a motor dealership. With branches in Pontypridd, Bridgend & Swansea, we represent the motor manufacturer Hyundai along the South Wales corridor.

 

The Directors are pleased to present the financial statements for the 12 months ending 31 December 2022. There have been many challenges during the year that have had an impact on the business, including the supply restraints continuing from last year. There is still the energy and cost of living crisis and increasing cost of borrowing, that has had and continues to have a direct impact on our customers. Despite this, the business has successfully generated a profit over the reporting period, indicating effective sales management, cost control and operational efficiency. Key financial statements, such as the statement of comprehensive income, balance sheet and statement of cashflows, confirm the positive financial performance.

 

The directors will continue to maintain these controls to ensure that we have a strong business as well as actively seek new opportunities that will promote and secure the longevity of the business.

 

For the purpose of simple performance measurement, there are three key measures that show changes from 2021, as follows:

 

2022 2021

New Cars sold 1312 935

Used Cars sold      857      989

Service Labour Hours sold 17,227 18,086

Principal risks and uncertainties

The management of the Business and the nature of the Company's strategy are subject to a number of risks. The Directors have set out below the principal risks facing the Business.

 

Franchise Agreements

The Company operates franchised motor vehicles dealerships. Franchises are awarded by the vehicle Manufacturers. Failure to continue to hold franchises could result in a significant reduction in the profits of the Company as this would end its rights to source new vehicles directly from the Manufacturer to sell, to perform warranty repairs and display the vehicle Manufacturer trademarks.

 

Manufacturer supply of new and improved products

The Company is reliant on new vehicle products from Hyundai. This exposes the Company to risks in a number of areas as the Company is dependent on Hyundai in respect of:

- Availability of new vehicle products,

- Quality of new vehicle products,

- Pricing of new vehicle products.

 

The Directors are confident that future new products from its Manufacturer/Supplier will continue to be competitively priced and of high quality, therefore consider that this "Manufacturer Risk" is minimal, it is, in any case, mitigated by other core business areas of the company, including used vehicle sales, parts sales, service and repair work.

 

Used vehicle prices

Used vehicle price volatility can present a significant risk in the event that the market price moves rapidly between the point of purchase and the point of sale of a used vehicle. This leads to reduced margins and increased provisions on unsold stock. This risk is mitigated by a combination of regular monitoring of the used vehicle market by the Company used car buyers, a focus on stock turnover to reduce the length of time that used vehicles are held in stock, and regular review and re-pricing to ensure that vehicles are priced competitively in the market.

Company people and reputation

The Company has invested heavily in its people and its reputation over a number of years. It is therefore reliant on these individuals to a degree in delivering the company result and reinforcing the underlying Hutchings brand. The company undertakes a regular review of remuneration and packages to ensure that it attracts and retains the best people.

J F HUTCHINGS LTD
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
- 2 -
The competitive environment

The overall competitive landscape in motor retail has changed as the Block Exemption legislation has been modified, opening the market to authorised repairers which could impact on the group market penetration and profitability. We are alert to this threat and work hard to provide a level and quality of customer service and experience which exceeds that of the Independent operations and therefore encourages customer loyalty.

Economic downturn

The success of the business is reliant on consumer spending. An economic downturn, resulting in reduction of consumer spending power will have a direct impact on the income achieved by the company.

 

In response to this risk, senior management aim to keep abreast of economic conditions. In cases of severe economic downturn, marketing and pricing strategies are modified to reflect the new market conditions.

 

On behalf of the board

Mr S P Magee
Director
29 September 2023
J F HUTCHINGS LTD
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 DECEMBER 2022
- 3 -

The directors present their annual report and financial statements for the year ended 31 December 2022.

Principal activities

The principal activity of the company continued to be that of a motor dealership, involving the sale, maintenance and repair of motor vehicles and the supply of related accessories.

Results and dividends

The results for the year are set out on page 8.

Ordinary dividends were paid amounting to £220,000. The directors do not recommend payment of a further dividend.

Directors

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

Mr S J Hutchings
Mr S P Magee
Financisl risk management policies and objectives
The company uses a number of financial instruments which include loans, cash, and other various items such as trade debtors and trade creditors which arise directly from its operations. The existence of these financial instruments exposes the company to a number of financial risks, which are described in more detail below. These policies are consistent with those from the previous year.
Liquidity risk

The company manages its cash and borrowing requirements in order to maximise interest income and minimise interest expense, whilst ensuring the company has sufficient liquid resources to meet the operating needs of the business.

Interest rate risk

The company's liquidity position does place reliance on short term borrowings. Policies are in place to control and limited such borrowings and hence such perceived risk is considered to be minimal.

Credit risk
The company's principal financial assets include its trade debtors. In order to manage credit risk the directors set limits for customers based on a combination of payment histpory and third party credit references. These credit limits are reviewed regularly by the directors together with the aged debtors and collection history.
J F HUTCHINGS LTD
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
- 4 -
Statement of directors' responsibilities

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

 

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

 

 

The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company’s transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

Statement of disclosure to auditor

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

On behalf of the board
Mr S P Magee
Director
29 September 2023
J F HUTCHINGS LTD
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF J F HUTCHINGS LTD
- 5 -
Opinion

We have audited the financial statements of J F Hutchings Ltd (the 'company') for the year ended 31 December 2022 which comprise the statement of comprehensive income, the balance sheet, the statement of changes in equity, the statement of cash flows and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).

In our opinion the financial statements:

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Conclusions relating to going concern

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

 

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

 

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

Other information

The other information comprises the information included in the annual report other than the financial statements and our auditor's report thereon. The directors are responsible for the other information contained within the annual report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.

 

We have nothing to report in this regard.

Opinions on other matters prescribed by the Companies Act 2006

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

J F HUTCHINGS LTD
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF J F HUTCHINGS LTD
- 6 -
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 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:

 

Responsibilities of directors

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

Auditor's responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

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.

J F HUTCHINGS LTD
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF J F HUTCHINGS LTD
- 7 -

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:

 

 

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.

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.

Andrew Howells (Senior Statutory Auditor)
For and on behalf of Azets Audit Services
2 October 2023
Chartered Accountants
Statutory Auditor
Ty Derw
Lime Tree Court
Cardiff Gate Business Park
Cardiff
Wales
CF23 8AB
J F HUTCHINGS LTD
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2022
- 8 -
2022
2021
Notes
£
£
Turnover
2
47,546,781
36,471,775
Cost of sales
(43,101,191)
(32,298,010)
Gross profit
4,445,590
4,173,765
Administrative expenses
(3,401,643)
(3,040,782)
Other operating income
396,619
427,458
Operating profit
3
1,440,566
1,560,441
Interest payable and similar expenses
6
(61,170)
(55,309)
Profit before taxation
1,379,396
1,505,132
Tax on profit
7
(286,194)
(298,062)
Profit for the financial year
1,093,202
1,207,070

The profit and loss account has been prepared on the basis that all operations are continuing operations.

J F HUTCHINGS LTD
BALANCE SHEET
AS AT
31 DECEMBER 2022
31 December 2022
- 9 -
2022
2021
Notes
£
£
£
£
Fixed assets
Tangible assets
10
2,277,261
2,517,320
Investments
11
11,900
11,900
2,289,161
2,529,220
Current assets
Stocks
12
4,458,991
4,322,416
Debtors
13
1,148,450
572,225
Cash at bank and in hand
2,319,126
1,830,966
7,926,567
6,725,607
Creditors: amounts falling due within one year
14
(5,079,991)
(4,261,100)
Net current assets
2,846,576
2,464,507
Total assets less current liabilities
5,135,737
4,993,727
Creditors: amounts falling due after more than one year
15
-
0
(731,192)
Net assets
5,135,737
4,262,535
Capital and reserves
Called up share capital
20
100
100
Profit and loss reserves
5,135,637
4,262,435
Total equity
5,135,737
4,262,535
The financial statements were approved by the board of directors and authorised for issue on 29 September 2023 and are signed on its behalf by:
Mr S J Hutchings
Director
Company Registration No. 08323590
J F HUTCHINGS LTD
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2022
- 10 -
Share capital
Profit and loss reserves
Total
Notes
£
£
£
Balance at 1 January 2021
100
3,201,798
3,201,898
Year ended 31 December 2021:
Profit and total comprehensive income for the year
-
1,207,070
1,207,070
Dividends
8
-
(146,433)
(146,433)
Balance at 31 December 2021
100
4,262,435
4,262,535
Year ended 31 December 2022:
Profit and total comprehensive income for the year
-
1,093,202
1,093,202
Dividends
8
-
(220,000)
(220,000)
Balance at 31 December 2022
100
5,135,637
5,135,737
J F HUTCHINGS LTD
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2022
- 11 -
2022
2021
Notes
£
£
£
£
Cash flows from operating activities
Cash generated from operations
25
1,574,204
937,519
Interest paid
(61,170)
(55,309)
Income taxes refunded/(paid)
1,152
(158,489)
Net cash inflow from operating activities
1,514,186
723,721
Investing activities
Purchase of tangible fixed assets
(23,078)
(130,011)
Proceeds on disposal of tangible fixed assets
44,423
883
Net cash generated from/(used in) investing activities
21,345
(129,128)
Financing activities
Repayment of bank loans
(818,215)
(43,182)
Payment of finance leases obligations
(9,156)
(19,378)
Dividends paid
(220,000)
(146,433)
Net cash used in financing activities
(1,047,371)
(208,993)
Net increase in cash and cash equivalents
488,160
385,600
Cash and cash equivalents at beginning of year
1,830,966
1,445,366
Cash and cash equivalents at end of year
2,319,126
1,830,966
J F HUTCHINGS LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
- 12 -
1
Accounting policies
Company information

J F Hutchings Ltd is a private company limited by shares incorporated in England and Wales. The registered office is The Hyundai Centre Severn Road, Treforest Industrial Estate,, Pontypridd, United Kingdom, CF37 5YH.

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. The principal accounting policies adopted are set out below.

1.2
Going concern

Atruet the time of approving the financial statements, the directors have a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future. Thus the directors continue to adopt the going concern basis of accounting in preparing the financial statements.

1.3
Turnover

Turnover from the sale of goods is recognised net of discounts and value added tax, when the significant risks and rewards of ownership have been transferred to the buyer. In general, this occurs when vehicles or parts have been supplied or when a service has been completed.

 

Commission income is accounted for on a receivable basis.

1.4
Tangible fixed assets

Tangible fixed assets are initially measured at cost and subsequently measured at cost or valuation, net of depreciation and any impairment losses.

Depreciation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:

Leasehold land and buildings
4% on cost
Leasehold improvements
20% on cost
Plant and equipment
20-33% on cost
Fixtures and fittings
20-33% on cost
Computers
20-33% on cost
Motor vehicles
20-33% on cost

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.

1.5
Fixed asset investments

Investments are initially measured at cost and subsequently measured at cost less any accumulated impairment losses. The investments are assessed for impairment at each reporting date and any impairment losses or reversals of impairment losses are recognised immediately in profit or loss.

J F HUTCHINGS LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
1
Accounting policies
(Continued)
- 13 -
1.6
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.

Recognised impairment losses are reversed if, and only if, the reasons for the impairment loss have ceased to apply. Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.

1.7
Stocks

Stocks are stated at the lower of cost and estimated selling price less costs to complete and sell.

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.

 

Consignment stock vehicles that are regarded effectively as being under control of the company and, in accordance with FRS 102, are included within stocks on the Balance Sheet, although legal title has not passed to the company. The corresponding liability is included in trade creditors and is secured directly on the vehicles to which it relates.

1.8
Cash and cash equivalents

Cash and cash equivalents are basic financial assets and include cash in hand, deposits held at call with banks, other short-term liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities.

1.9
Financial instruments

The company has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.

 

Financial instruments are recognised in the company's balance sheet when the company becomes party to the contractual provisions of the instrument.

 

Financial assets and liabilities are offset, with the net amounts presented in the financial statements, when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.

J F HUTCHINGS LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
1
Accounting policies
(Continued)
- 14 -
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.

Other financial assets

Other financial assets, including investments in equity instruments which are not subsidiaries, associates or joint ventures, are initially measured at fair value, which is normally the transaction price. Such assets are subsequently carried at fair value and the changes in fair value are recognised in profit or loss, except that investments in equity instruments that are not publicly traded and whose fair values cannot be measured reliably are measured at cost less impairment.

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.

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.

J F HUTCHINGS LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
1
Accounting policies
(Continued)
- 15 -
Other financial liabilities

Derivatives, including interest rate swaps and forward foreign exchange contracts, are not basic financial instruments. Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured at their fair value. Changes in the fair value of derivatives are recognised in profit or loss in finance costs or finance income as appropriate, unless hedge accounting is applied and the hedge is a cash flow hedge.

 

Debt instruments that do not meet the conditions in FRS 102 paragraph 11.9 are subsequently measured at fair value through profit or loss. Debt instruments may be designated as being measured at fair value through profit or loss to eliminate or reduce an accounting mismatch or if the instruments are measured and their performance evaluated on a fair value basis in accordance with a documented risk management or investment strategy.

Derecognition of financial liabilities

Financial liabilities are derecognised when the company’s contractual obligations expire or are discharged or cancelled.

1.10
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.

1.11
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.

J F HUTCHINGS LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
1
Accounting policies
(Continued)
- 16 -
1.12
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.

1.13
Retirement benefits

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

1.14
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.

1.15
Government grants

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

 

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

1.16
Foreign exchange

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

J F HUTCHINGS LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
- 17 -
2
Turnover and other revenue
2022
2021
£
£
Turnover analysed by class of business
Sale of goods
46,109,248
34,961,223
Rendering of services
1,437,533
1,510,552
47,546,781
36,471,775
2022
2021
£
£
Turnover analysed by geographical market
UK
47,546,781
36,471,775
2022
2021
£
£
Other revenue
Commissions received
110,305
167,841
Grants received
-
0
117,287
3
Operating profit
2022
2021
Operating profit for the year is stated after charging/(crediting):
£
£
Government grants
-
0
(117,287)
Fees payable to the company's auditor for the audit of the company's financial statements
17,327
18,282
Depreciation of owned tangible fixed assets
230,454
212,928
Depreciation of tangible fixed assets held under finance leases
-
13,919
Profit on disposal of tangible fixed assets
(11,740)
(883)
Operating lease charges
150,517
132,142
J F HUTCHINGS LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
- 18 -
4
Employees

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

2022
2021
Number
Number
45
44

Their aggregate remuneration comprised:

2022
2021
£
£
Wages and salaries
1,654,589
1,595,243
Social security costs
140,745
125,198
Pension costs
149,513
57,771
1,944,847
1,778,212
5
Directors' remuneration
2022
2021
£
£
Remuneration for qualifying services
10,020
10,000
Company pension contributions to defined contribution schemes
79,391
400
89,411
10,400
6
Interest payable and similar expenses
2022
2021
£
£
Interest on financial liabilities measured at amortised cost:
Interest on bank overdrafts and loans
57,399
52,467
Other finance costs:
Interest on finance leases and hire purchase contracts
3,771
2,842
61,170
55,309
J F HUTCHINGS LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
- 19 -
7
Taxation
2022
2021
£
£
Current tax
UK corporation tax on profits for the current period
296,000
331,440
Deferred tax
Origination and reversal of timing differences
(9,806)
(33,378)
Total tax charge
286,194
298,062

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:

2022
2021
£
£
Profit before taxation
1,379,396
1,505,132
Expected tax charge based on the standard rate of corporation tax in the UK of 19.00% (2021: 19.00%)
262,085
285,975
Tax effect of expenses that are not deductible in determining taxable profit
27,250
27,508
Adjustments in respect of prior years
-
0
307
Effect of change in corporation tax rate
(2,354)
(13,466)
Permanent capital allowances in excess of depreciation
(787)
(2,262)
Taxation charge for the year
286,194
298,062
8
Dividends
2022
2021
£
£
Final paid
220,000
146,433
J F HUTCHINGS LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
- 20 -
9
Intangible fixed assets
Goodwill
£
Cost
At 1 January 2022 and 31 December 2022
162,000
Amortisation and impairment
At 1 January 2022 and 31 December 2022
162,000
Carrying amount
At 31 December 2022
-
0
At 31 December 2021
-
0
10
Tangible fixed assets
Leasehold land and buildings
Leasehold improvements
Plant and equipment
Fixtures and fittings
Computers
Motor vehicles
Total
£
£
£
£
£
£
£
Cost
At 1 January 2022
2,616,296
381,046
331,093
167,439
64,258
39,220
3,599,352
Additions
-
0
9,249
6,376
908
6,545
-
0
23,078
Disposals
-
0
-
0
-
0
-
0
-
0
(39,220)
(39,220)
At 31 December 2022
2,616,296
390,295
337,469
168,347
70,803
-
0
3,583,210
Depreciation and impairment
At 1 January 2022
446,285
226,658
227,293
125,323
52,115
4,358
1,082,032
Depreciation charged in the year
104,652
56,059
42,226
18,424
6,914
2,179
230,454
Eliminated in respect of disposals
-
0
-
0
-
0
-
0
-
0
(6,537)
(6,537)
At 31 December 2022
550,937
282,717
269,519
143,747
59,029
-
0
1,305,949
Carrying amount
At 31 December 2022
2,065,359
107,578
67,950
24,600
11,774
-
0
2,277,261
At 31 December 2021
2,170,011
154,388
103,800
42,116
12,143
34,862
2,517,320

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

2022
2021
£
£
Plant and equipment
-
0
10,062
J F HUTCHINGS LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
- 21 -
11
Fixed asset investments
2022
2021
£
£
Unlisted investments
11,900
11,900
12
Stocks
2022
2021
£
£
Parts stocks
133,706
69,108
Vehicles stocks
4,325,285
4,253,308
4,458,991
4,322,416
13
Debtors
2022
2021
Amounts falling due within one year:
£
£
Trade debtors
941,821
328,016
Other debtors
82,381
148,433
Prepayments and accrued income
58,333
39,667
1,082,535
516,116
2022
2021
Amounts falling due after more than one year:
£
£
Deferred tax asset (note 18)
65,915
56,109
Total debtors
1,148,450
572,225
J F HUTCHINGS LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
- 22 -
14
Creditors: amounts falling due within one year
2022
2021
Notes
£
£
Bank loans
17
-
0
87,023
Obligations under finance leases
16
-
0
9,156
Trade creditors
2,972,092
2,425,199
Corporation tax
613,796
316,644
Other taxation and social security
192,583
486,468
Other creditors
866,933
517,443
Accruals and deferred income
434,587
419,167
5,079,991
4,261,100

Trade creditors include vehicle funding that is secured over the vehicles to which it relates.

 

Other creditors include hire purchase contracts that are directly secured over the assets to which they relate.

15
Creditors: amounts falling due after more than one year
2022
2021
Notes
£
£
Bank loans and overdrafts
17
-
0
731,192
16
Finance lease obligations
2022
2021
Future minimum lease payments due under finance leases:
£
£
Within one year
-
0
9,156

Finance lease payments represent rentals payable by the company for certain items of plant and machinery. Leases include purchase options at the end of the lease period, and no restrictions are placed on the use of the assets. The average lease term is 5 years. All leases are on a fixed repayment basis and no arrangements have been entered into for contingent rental payments.

J F HUTCHINGS LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
- 23 -
17
Loans and overdrafts
2022
2021
£
£
Bank loans
-
0
818,215
Payable within one year
-
0
87,023
Payable after one year
-
0
731,192

The bank loan bears interest at a rate of 2.35% above the bank base rate.

 

The loan is secured by a fixed charged over the property of the company together with a fixed and floating charge over all the assets of the company.

 

The bank loan has been repaid in full during the year.

18
Deferred taxation

The following are the major deferred tax liabilities and assets recognised by the company and movements thereon:

Assets
Assets
2022
2021
Balances:
£
£
Accelerated capital allowances
42,202
33,384
Short term timing differences
23,713
22,725
65,915
56,109
2022
Movements in the year:
£
Liability at 1 January 2022
56,109
Charge to profit or loss
9,806
Liability at 31 December 2022
65,915

The deferred tax asset set out above is expected to reverse within 12 months and relates to the utilisation of tax losses against future expected profits of the same period.

19
Retirement benefit schemes
2022
2021
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
149,513
57,771

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

J F HUTCHINGS LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
- 24 -
20
Share capital
2022
2021
2022
2021
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Ordinary shares of £1 each
100
100
100
100
21
Operating lease commitments
Lessee

At the reporting end date the company had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:

2022
2021
£
£
Within one year
162,000
75,000
Between two and five years
498,945
217,500
In over five years
4,172,384
4,202,500
4,833,329
4,495,000
22
Related party transactions
Remuneration of key management personnel

The remuneration of key management personnel is as follows.

2022
2021
£
£
Aggregate compensation
89,411
10,400
Transactions with related parties

During the year the company entered into the following transactions with related parties:

Sales
Sales
Purchases
Purchases
2022
2021
2022
2021
£
£
£
£
Other related parties
167,736
118,568
658,664
533,036
2022
2021
Amounts due to related parties
£
£
Other related parties
127,071
6,302
J F HUTCHINGS LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
22
Related party transactions
(Continued)
- 25 -

The following amounts were outstanding at the reporting end date:

2022
2021
Amounts due from related parties
£
£
Other related parties
66,056
115,534
23
Ultimate controlling party

The ultimate controlling party is S J Hutchings by virtue of him owning 68% of the share capital within the company.

24
Directors' transactions

Dividends totalling £149,600 (2021 - £85,000) were paid in the year in respect of shares held by the company's directors.

Description
% Rate
Opening balance
Amounts advanced
Amounts repaid
Closing balance
£
£
£
£
Directors transactions
-
(21,250)
85,567
(149,600)
(85,283)
(21,250)
85,567
(149,600)
(85,283)
25
Cash generated from operations
2022
2021
£
£
Profit for the year after tax
1,093,202
1,207,070
Adjustments for:
Taxation charged
286,194
298,062
Finance costs
61,170
55,309
Gain on disposal of tangible fixed assets
(11,740)
(883)
Depreciation and impairment of tangible fixed assets
230,454
226,847
Movements in working capital:
Increase in stocks
(136,575)
(1,053,861)
(Increase)/decrease in debtors
(566,419)
13,192
Increase in creditors
617,918
191,783
Cash generated from operations
1,574,204
937,519
J F HUTCHINGS LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
- 26 -
26
Analysis of changes in net funds
1 January 2022
Cash flows
31 December 2022
£
£
£
Cash at bank and in hand
1,830,966
488,160
2,319,126
Borrowings excluding overdrafts
(818,215)
818,215
-
Obligations under finance leases
(9,156)
9,156
-
1,003,595
1,315,531
2,319,126
2022-12-312022-01-01falseCCH SoftwareCCH Accounts Production 2023.100Mr S J HutchingsMr S P MageeS Magee083235902022-01-012022-12-3108323590bus:Director12022-01-012022-12-3108323590bus:CompanySecretaryDirector12022-01-012022-12-3108323590bus:Director22022-01-012022-12-3108323590bus:CompanySecretary12022-01-012022-12-3108323590bus:RegisteredOffice2022-01-012022-12-31083235902022-12-31083235902021-01-012021-12-3108323590core:RetainedEarningsAccumulatedLosses2021-01-012021-12-3108323590core:RetainedEarningsAccumulatedLosses2022-01-012022-12-31083235902021-12-3108323590core:LandBuildingscore:LeasedAssetsHeldAsLessee2022-12-3108323590core:LeaseholdImprovements2022-12-3108323590core:PlantMachinery2022-12-3108323590core:FurnitureFittings2022-12-3108323590core:ComputerEquipment2022-12-3108323590core:MotorVehicles2022-12-3108323590core:LandBuildingscore:LeasedAssetsHeldAsLessee2021-12-3108323590core:LeaseholdImprovements2021-12-3108323590core:PlantMachinery2021-12-3108323590core:FurnitureFittings2021-12-3108323590core:ComputerEquipment2021-12-3108323590core:MotorVehicles2021-12-3108323590core:CurrentFinancialInstrumentscore:WithinOneYear2022-12-3108323590core:CurrentFinancialInstrumentscore:WithinOneYear2021-12-3108323590core:Non-currentFinancialInstrumentscore:AfterOneYear2022-12-3108323590core:Non-currentFinancialInstrumentscore:AfterOneYear2021-12-3108323590core:CurrentFinancialInstruments2022-12-3108323590core:CurrentFinancialInstruments2021-12-3108323590core:ShareCapital2022-12-3108323590core:ShareCapital2021-12-3108323590core:RetainedEarningsAccumulatedLosses2022-12-3108323590core:RetainedEarningsAccumulatedLosses2021-12-3108323590core:ShareCapital2020-12-3108323590core:RetainedEarningsAccumulatedLosses2020-12-31083235902020-12-310832359012022-01-012022-12-310832359012021-01-012021-12-31083235902021-12-3108323590core:LandBuildingscore:LongLeaseholdAssets2022-01-012022-12-3108323590core:LeaseholdImprovements2022-01-012022-12-3108323590core:PlantMachinery2022-01-012022-12-3108323590core:FurnitureFittings2022-01-012022-12-3108323590core:ComputerEquipment2022-01-012022-12-3108323590core:MotorVehicles2022-01-012022-12-3108323590core:UKTax2022-01-012022-12-3108323590core:UKTax2021-01-012021-12-3108323590core:Goodwill2021-12-3108323590core:Goodwill2022-12-3108323590core:Goodwill2021-12-3108323590core:LandBuildingscore:LeasedAssetsHeldAsLessee2021-12-3108323590core:LeaseholdImprovements2021-12-3108323590core:PlantMachinery2021-12-3108323590core:FurnitureFittings2021-12-3108323590core:ComputerEquipment2021-12-3108323590core:MotorVehicles2021-12-3108323590core:LandBuildingscore:LeasedAssetsHeldAsLessee2022-01-012022-12-3108323590core:Non-currentFinancialInstrumentscore:UnlistedNon-exchangeTraded2022-12-3108323590core:Non-currentFinancialInstrumentscore:UnlistedNon-exchangeTraded2021-12-3108323590core:Non-currentFinancialInstruments2022-12-3108323590core:Non-currentFinancialInstruments2021-12-3108323590core:WithinOneYear2022-12-3108323590core:WithinOneYear2021-12-3108323590core:BetweenTwoFiveYears2022-12-3108323590core:BetweenTwoFiveYears2021-12-3108323590core:MoreThanFiveYears2022-12-3108323590core:MoreThanFiveYears2021-12-3108323590core:OtherRelatedPartiescore:SaleOrPurchaseGoods2022-01-012022-12-3108323590core:OtherRelatedPartiescore:SaleOrPurchaseGoods2021-01-012021-12-3108323590bus:PrivateLimitedCompanyLtd2022-01-012022-12-3108323590bus:FRS1022022-01-012022-12-3108323590bus:Audited2022-01-012022-12-3108323590bus:FullAccounts2022-01-012022-12-31xbrli:purexbrli:sharesiso4217:GBP