Company registration number 04128579 (England and Wales)
LOVELLS (PETERBOROUGH) LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MAY 2023
LOVELLS (PETERBOROUGH) LIMITED
COMPANY INFORMATION
Directors
C L Hammond
D Exton
Secretary
C L Hammond
Company number
04128579
Registered office
Ruthlyn House
90 Lincoln Road
Peterborough
Cambridgeshire
United Kingdom
PE1 2SP
Auditor
Azets Audit Services
Thorpe House
93 Headlands
Kettering
Northamptonshire
United Kingdom
NN15 6BL
Business address
1 Fourth Drove
Fengate
Peterborough
United Kingdom
PE1 5UR
Bankers
HSBC Bank plc
Cathedral Square
Peterborough
United Kingdom
PE1 1XL
LOVELLS (PETERBOROUGH) LIMITED
CONTENTS
Page
Directors' report
1
Directors' responsibilities statement
2
Independent auditor's report
3 - 5
Profit and loss account
6
Statement of comprehensive income
7
Balance sheet
8
Statement of changes in equity
9
Notes to the financial statements
10 - 23
LOVELLS (PETERBOROUGH) LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 MAY 2023
- 1 -
The directors present their annual report and financial statements for the year ended 31 May 2023.
Principal activities
The principal activity of the company continued to be that of an auto accident repair centre and body shop.
Results and dividends
The results for the year are set out on page 6.
No ordinary dividends were paid. The directors do not recommend payment of a final dividend.
Directors
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
C L Hammond
D Exton
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
C L Hammond
Director
25 October 2023
LOVELLS (PETERBOROUGH) LIMITED
DIRECTORS' RESPONSIBILITIES STATEMENT
FOR THE YEAR ENDED 31 MAY 2023
- 2 -
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:
select suitable accounting policies and then apply them consistently;
make judgements and accounting estimates that are reasonable and prudent;
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.
The 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.
LOVELLS (PETERBOROUGH) LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBER OF LOVELLS (PETERBOROUGH) LIMITED
- 3 -
Opinion
We have audited the financial statements of Lovells (Peterborough) Limited (the 'company') for the year ended 31 May 2023 which comprise the profit and loss account, the statement of comprehensive income, the balance sheet, the statement of changes in equity 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:
give a true and fair view of the state of the company's affairs as at 31 May 2023 and of its profit for the year then ended;
have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
have been prepared in accordance with the requirements of the Companies Act 2006.
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the 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.
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:
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.
LOVELLS (PETERBOROUGH) LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBER OF LOVELLS (PETERBOROUGH) LIMITED
- 4 -
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:
adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or
the financial statements are not in agreement with the accounting records and returns; or
certain disclosures of remuneration specified by law are not made; or
we have not received all the information and explanations we require for our audit.
Responsibilities of 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.
LOVELLS (PETERBOROUGH) LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBER OF LOVELLS (PETERBOROUGH) LIMITED
- 5 -
Extent to which the audit was considered capable of detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above and on the Financial Reporting Council’s website, to detect material misstatements in respect of irregularities, including fraud.
We obtain and update our understanding of the entity, its activities, its control environment, and likely future developments, including in relation to the legal and regulatory framework applicable and how the entity is complying with that framework. Based on this understanding, we identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. This includes consideration of the risk of acts by the entity that were contrary to applicable laws and regulations, including fraud.
In response to the risk of irregularities and non-compliance with laws and regulations, including fraud, we designed procedures which included:
Enquiry of management and those charged with governance around actual and potential litigation and claims as well as actual, suspected and alleged fraud;
Reviewing minutes of meetings of those charged with governance;
Assessing the extent of compliance with the laws and regulations considered to have a direct material effect on the financial statements or the operations of the company through enquiry and inspection;
Reviewing financial statement disclosures and testing to supporting documentation to assess compliance with applicable laws and regulations;
Performing audit work over the risk of management bias and override of controls, including testing of journal entries and other adjustments for appropriateness, evaluating the business rationale of significant transactions outside the normal course of business and reviewing accounting estimates for indicators of potential bias.
Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading to a material misstatement in the financial statements or non-compliance with regulation. This risk increases the more that compliance with a law or regulation is removed from the events and transactions reflected in the financial statements, as we will be less likely to become aware of instances of non-compliance. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
This report is made solely to the company's member 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 member those matters we are required to state to the member 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 member, for our audit work, for this report, or for the opinions we have formed.
Richard Monkhouse
Senior Statutory Auditor
For and on behalf of Azets Audit Services
25 October 2023
Chartered Accountants
Statutory Auditor
Thorpe House
93 Headlands
Kettering
Northamptonshire
United Kingdom
NN15 6BL
LOVELLS (PETERBOROUGH) LIMITED
PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 31 MAY 2023
- 6 -
2023
2022
Notes
£
£
Turnover
3
16,952,838
12,701,441
Cost of sales
(11,343,577)
(9,312,189)
Gross profit
5,609,261
3,389,252
Administrative expenses
(4,468,145)
(3,545,861)
Other operating income
159,225
283,984
Operating profit
6
1,300,341
127,375
Interest payable and similar expenses
7
(133,943)
(20,916)
Amounts written off investments
8
(1,375)
-
Profit before taxation
1,165,023
106,459
Tax on profit
9
(279,605)
(11,433)
Profit for the financial year
885,418
95,026
The profit and loss account has been prepared on the basis that all operations are continuing operations.
LOVELLS (PETERBOROUGH) LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 MAY 2023
- 7 -
2023
2022
£
£
Profit for the year
885,418
95,026
Other comprehensive income
-
-
Total comprehensive income for the year
885,418
95,026
LOVELLS (PETERBOROUGH) LIMITED
BALANCE SHEET
- 8 -
2023
2022
Notes
£
£
£
£
Fixed assets
Tangible assets
11
1,822,996
1,473,716
Investments
12
1,575
1,822,996
1,475,291
Current assets
Stocks
13
781,254
530,285
Debtors
14
3,909,380
3,347,059
Cash at bank and in hand
496,098
366,026
5,186,732
4,243,370
Creditors: amounts falling due within one year
15
(3,853,573)
(3,631,910)
Net current assets
1,333,159
611,460
Total assets less current liabilities
3,156,155
2,086,751
Creditors: amounts falling due after more than one year
16
(636,994)
(519,015)
Provisions for liabilities
Deferred tax liability
19
255,605
189,598
(255,605)
(189,598)
Net assets
2,263,556
1,378,138
Capital and reserves
Called up share capital
22
30,000
30,000
Profit and loss reserves
2,233,556
1,348,138
Total equity
2,263,556
1,378,138
The financial statements were approved by the board of directors and authorised for issue on 25 October 2023 and are signed on its behalf by:
C L Hammond
Director
Company Registration No. 04128579
LOVELLS (PETERBOROUGH) LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 MAY 2023
- 9 -
Share capital
Profit and loss reserves
Total
£
£
£
Balance at 1 June 2021
30,000
1,253,112
1,283,112
Year ended 31 May 2022:
Profit and total comprehensive income for the year
-
95,026
95,026
Balance at 31 May 2022
30,000
1,348,138
1,378,138
Year ended 31 May 2023:
Profit and total comprehensive income for the year
-
885,418
885,418
Balance at 31 May 2023
30,000
2,233,556
2,263,556
LOVELLS (PETERBOROUGH) LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MAY 2023
- 10 -
1
Accounting policies
Company information
Lovells (Peterborough) Limited is a private company limited by shares incorporated in England and Wales. The registered office is Ruthlyn House, 90 Lincoln Road, Peterborough, Cambridgeshire, United Kingdom, PE1 2SP.
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.
This company is a qualifying entity for the purposes of FRS 102, being a member of a group where the parent of that group prepares publicly available consolidated financial statements, including this company, which are intended to give a true and fair view of the assets, liabilities, financial position and profit or loss of the group. The company has therefore taken advantage of exemptions from the following disclosure requirements:
Section 7 ‘Statement of Cash Flows’: Presentation of a statement of cash flow and related notes and disclosures;
Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instrument Issues: Interest income/expense and net gains/losses for financial instruments not measured at fair value; basis of determining fair values; details of collateral, loan defaults or breaches, details of hedges, hedging fair value changes recognised in profit or loss and in other comprehensive income;
Section 26 ‘Share based Payment’: Share-based payment expense charged to profit or loss, reconciliation of opening and closing number and weighted average exercise price of share options, how the fair value of options granted was measured, measurement and carrying amount of liabilities for cash-settled share-based payments, explanation of modifications to arrangements;
Section 33 ‘Related Party Disclosures’: Compensation for key management personnel.
The financial statements of the company are consolidated in the financial statements of Lovells Automotive Holdings Limited. These consolidated financial statements are available from its registered office, Ruthlyn House, 90 Lincoln Road, Peterborough, PE1 2SP.
The company has taken advantage of the exemption under section 400 of the Companies Act 2006 not to prepare consolidated accounts. The financial statements present information about the company as an individual entity and not about its group.
Lovells (Peterborough) Limited is a wholly owned subsidiary of Lovells Automotive Holdings Limited and the results of Lovells (Peterborough) Limited are included in the consolidated financial statements of Lovells Automotive Holdings Limited which are available from Ruthlyn House, 90 Lincoln Road, Peterborough, PE1 2SP.
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.
LOVELLS (PETERBOROUGH) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2023
1
Accounting policies
(Continued)
- 11 -
1.3
Turnover
Turnover is recognised at the fair value of the consideration received or receivable for goods and services provided in the normal course of business, and is shown net of VAT and other sales related taxes. The fair value of consideration takes into account trade discounts, settlement discounts and volume rebates.
When cash inflows are deferred and represent a financing arrangement, the fair value of the consideration is the present value of the future receipts. The difference between the fair value of the consideration and the nominal amount received is recognised as interest income.
Revenue from the sale of goods is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer (usually on dispatch of the goods), the amount of revenue can be measured reliably, it is probable that the economic benefits associated with the transaction will flow to the entity and the costs incurred or to be incurred in respect of the transaction can be measured reliably.
1.4
Intangible fixed assets - goodwill
Acquired goodwill is written off in equal annual instalments over its estimated useful economic life of 20 years.
1.5
Tangible fixed assets
Tangible fixed assets are initially measured at cost and subsequently measured at cost or valuation, net of depreciation and any impairment losses.
Depreciation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:
Land and buildings - freehold
Nil
Leasehold improvements
2% Straight line
Plant and machinery
10% Straight line
Fixtures, fittings and equipment
20% Straight line
Motor vehicles
20% Straight line
The company does not provide for depreciation on freehold and leasehold property which is a departure from FRS 102. The directors consider that the property is maintained in such a state of repair that the residual value is at least equal to the net book value. As a result, the corresponding depreciation would not be material and therefore is not charged to the profit and loss.
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.
1.6
Fixed asset investments
Interests in subsidiaries, associates and jointly controlled entities 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.
A subsidiary is an entity controlled by the company. Control is the power to govern the financial and operating policies of the entity so as to obtain benefits from its activities.
An associate is an entity, being neither a subsidiary nor a joint venture, in which the company holds a long-term interest and where the company has significant influence. The company considers that it has significant influence where it has the power to participate in the financial and operating decisions of the associate.
Entities in which the company has a long term interest and shares control under a contractual arrangement are classified as jointly controlled entities.
LOVELLS (PETERBOROUGH) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2023
1
Accounting policies
(Continued)
- 12 -
1.7
Impairment of fixed assets
At each reporting period end date, the company reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the company estimates the recoverable amount of the cash-generating unit to which the asset belongs.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.
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.
1.8
Stocks
Stocks are stated at the lower of cost and estimated selling price less costs to complete and sell. Cost comprises direct materials and, where applicable, direct labour costs and those overheads that have been incurred in bringing the stocks to their present location and condition.
Stocks held for distribution at no or nominal consideration are measured at the lower of cost and replacement cost, adjusted where applicable for any loss of service potential.
At each reporting date, an assessment is made for impairment. Any excess of the carrying amount of stocks over its estimated selling price less costs to complete and sell is recognised as an impairment loss in profit or loss. Reversals of impairment losses are also recognised in profit or loss.
1.9
Cash 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.
1.10
Financial instruments
The company has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.
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.
LOVELLS (PETERBOROUGH) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2023
1
Accounting policies
(Continued)
- 13 -
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.
LOVELLS (PETERBOROUGH) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2023
1
Accounting policies
(Continued)
- 14 -
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.
1.11
Equity instruments
Equity instruments issued by the company are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the company.
1.12
Taxation
The tax expense represents the sum of the tax currently payable and deferred tax.
Current tax
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the profit and loss account because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The company’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.
Deferred tax
Deferred tax liabilities are generally recognised for all timing differences and deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Such assets and liabilities are not recognised if the timing difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.
The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the profit and loss account, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset when the company has a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.
LOVELLS (PETERBOROUGH) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2023
1
Accounting policies
(Continued)
- 15 -
1.13
Employee benefits
The costs of short-term employee benefits are recognised as a liability and an expense, unless those costs are required to be recognised as part of the cost of stock or fixed assets.
The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received.
Termination benefits are recognised immediately as an expense when the company is demonstrably committed to terminate the employment of an employee or to provide termination benefits.
1.14
Retirement benefits
The company operates a defined contribution scheme for the benefit of its employees. Contributions payable are charged to the profit and loss account in the year they are payable.
1.15
Leases
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessees. All other leases are classified as operating leases.
Assets held under finance leases are recognised as assets at the lower of the assets fair value at the date of inception and the present value of the minimum lease payments. The related liability is included in the balance sheet as a finance lease obligation. Lease payments are treated as consisting of capital and interest elements. The interest is charged to profit or loss so as to produce a constant periodic rate of interest on the remaining balance of the liability.
Rentals payable under operating leases, including any lease incentives received, are charged to profit or loss on a straight line basis over the term of the relevant lease except where another more systematic basis is more representative of the time pattern in which economic benefits from the leases asset are consumed.
1.16
Government grants
Government grants are recognised at the fair value of the asset received or receivable when there is reasonable assurance that the grant conditions will be met and the grants will be received.
A grant that specifies performance conditions is recognised in income when the performance conditions are met. Where a grant does not specify performance conditions it is recognised in income when the proceeds are received or receivable. A grant received before the recognition criteria are satisfied is recognised as a liability.
1.17
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.
2
Judgements and key sources of estimation uncertainty
In the application of the company’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.
LOVELLS (PETERBOROUGH) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2023
- 16 -
3
Turnover and other revenue
An analysis of the company's turnover is as follows:
2023
2022
£
£
Other revenue
Grants received
31,303
91,801
4
Employees
The average monthly number of persons (including directors) employed by the company during the year was:
2023
2022
Number
Number
211
175
Their aggregate remuneration comprised:
2023
2022
£
£
Wages and salaries
5,633,924
4,514,556
Social security costs
526,976
399,983
Pension costs
117,279
89,093
6,278,179
5,003,632
5
Directors' remuneration
2023
2022
£
£
Remuneration for qualifying services
114,480
114,045
Company pension contributions to defined contribution schemes
2,642
3,082
117,122
117,127
The number of directors for whom retirement benefits are accruing under defined contribution schemes amounted to 2 (2022 - 2).
LOVELLS (PETERBOROUGH) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2023
- 17 -
6
Operating profit
2023
2022
Operating profit for the year is stated after charging/(crediting):
£
£
Exchange gains
(6)
Government grants
(31,303)
(91,801)
Fees payable to the company's auditor for the audit of the company's financial statements
15,750
15,000
Depreciation of owned tangible fixed assets
177,072
172,046
Depreciation of tangible fixed assets held under finance leases
71,214
43,890
Profit on disposal of tangible fixed assets
-
(187,256)
Amortisation of intangible assets
1
3,603
Operating lease charges
570,218
500,353
7
Interest payable and similar expenses
2023
2022
£
£
Interest on bank overdrafts and loans
118,945
12,229
Interest on finance leases and hire purchase contracts
14,998
7,276
Other interest
1,411
133,943
20,916
8
Amounts written off investments
2023
2022
£
£
Loss on disposal of investments held at fair value
(1,375)
-
9
Taxation
2023
2022
£
£
Current tax
UK corporation tax on profits for the current period
213,598
Deferred tax
Origination and reversal of timing differences
66,007
11,433
Total tax charge
279,605
11,433
LOVELLS (PETERBOROUGH) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2023
9
Taxation
(Continued)
- 18 -
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:
2023
2022
£
£
Profit before taxation
1,165,023
106,459
Expected tax charge based on the standard rate of corporation tax in the UK of 25.00% (2022: 19.00%)
291,256
20,227
Tax effect of expenses that are not deductible in determining taxable profit
377
50
Effect of change in corporation tax rate
(53,363)
Group relief
3,199
Permanent capital allowances in excess of depreciation
(24,672)
(23,476)
Deferred tax charge
66,007
11,433
Taxation charge for the year
279,605
11,433
10
Intangible fixed assets
Goodwill
£
Cost
At 1 June 2022 and 31 May 2023
200,966
Amortisation and impairment
At 1 June 2022
200,965
Amortisation charged for the year
1
At 31 May 2023
200,966
Carrying amount
At 31 May 2023
-
At 31 May 2022
1
LOVELLS (PETERBOROUGH) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2023
- 19 -
11
Tangible fixed assets
Land and buildings - freehold
Leasehold improvements
Plant and machinery
Fixtures, fittings and equipment
Motor vehicles
Total
£
£
£
£
£
£
Cost
At 1 June 2022
380,886
86,207
1,612,586
474,411
510,744
3,064,834
Additions
185,826
179,279
89,866
142,595
597,566
At 31 May 2023
380,886
272,033
1,791,865
564,277
653,339
3,662,400
Depreciation and impairment
At 1 June 2022
3,587
888,472
315,179
383,880
1,591,117
Depreciation charged in the year
2,999
116,836
59,160
69,291
248,286
At 31 May 2023
6,585
1,005,308
374,339
453,171
1,839,403
Carrying amount
At 31 May 2023
380,886
265,448
786,557
189,938
200,168
1,822,997
At 31 May 2022
380,886
82,620
724,114
159,232
126,864
1,473,716
The net carrying value of tangible fixed assets includes the following in respect of assets held under finance leases or hire purchase contracts.
2023
2022
£
£
Plant and machinery
160,854
90,928
Motor vehicles
134,725
93,591
295,579
184,519
12
Fixed asset investments
2023
2022
Notes
£
£
Investments in subsidiaries
200
Other investments
1,375
1,575
LOVELLS (PETERBOROUGH) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2023
12
Fixed asset investments
(Continued)
- 20 -
Movements in fixed asset investments
Shares in subsidiaries
Other investments
Total
£
£
£
Cost or valuation
At 1 June 2022
200
1,375
1,575
Disposals
(200)
(1,375)
(1,575)
At 31 May 2023
-
-
-
Carrying amount
At 31 May 2023
-
-
-
At 31 May 2022
200
1,375
1,575
13
Stocks
2023
2022
£
£
Raw materials and consumables
781,254
530,285
14
Debtors
2023
2022
Amounts falling due within one year:
£
£
Trade debtors
1,914,190
1,337,697
Other debtors
749,070
720,418
Prepayments and accrued income
246,120
288,944
2,909,380
2,347,059
2023
2022
Amounts falling due after more than one year:
£
£
Amounts owed by group undertakings
1,000,000
1,000,000
Total debtors
3,909,380
3,347,059
LOVELLS (PETERBOROUGH) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2023
- 21 -
15
Creditors: amounts falling due within one year
2023
2022
Notes
£
£
Bank loans and overdrafts
17
529,952
1,217,244
Obligations under finance leases
18
87,835
92,313
Trade creditors
1,793,626
1,396,756
Amounts owed to group undertakings
4
104
Corporation tax
213,598
Other taxation and social security
721,855
511,058
Government grants
20
7,200
Other creditors
214,520
242,863
Accruals and deferred income
284,983
171,572
3,853,573
3,631,910
The bank overdraft is secured by a legal charge dated 26th June 2001 and by a fixed and floating charge over the assets of the company dated 1st March 2001 and certain guarantees given by the directors. Hire purchase and lease contracts are secured on plant and machinery.
16
Creditors: amounts falling due after more than one year
2023
2022
Notes
£
£
Bank loans and overdrafts
17
183,230
326,462
Obligations under finance leases
18
182,931
192,553
Other creditors
270,833
636,994
519,015
17
Loans and overdrafts
2023
2022
£
£
Bank loans
328,895
481,274
Bank overdrafts
384,287
1,062,432
713,182
1,543,706
Payable within one year
529,952
1,217,244
Payable after one year
183,230
326,462
The bank overdraft is secured by a legal charge dated 26th June 2001 and by a fixed and floating charge over the assets of the company dated 1st March 2001 and certain guarantees given by the directors. Hire purchase and lease contracts are secured on plant and machinery.
LOVELLS (PETERBOROUGH) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2023
- 22 -
18
Finance lease obligations
2023
2022
Future minimum lease payments due under finance leases:
£
£
Within one year
87,835
92,313
In two to five years
182,931
192,553
270,766
284,866
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.
19
Deferred taxation
The following are the major deferred tax liabilities and assets recognised by the company and movements thereon:
Liabilities
Liabilities
2023
2022
Balances:
£
£
Accelerated capital allowances
255,605
189,598
2023
Movements in the year:
£
Liability at 1 June 2022
189,598
Charge to profit or loss
66,007
Liability at 31 May 2023
255,605
The deferred tax liability set out above is expected to reverse within 12 months and relates to accelerated capital allowances that are expected to mature within the same period.
20
Government grants
2023
2022
£
£
Arising from government grants
7,200
-
LOVELLS (PETERBOROUGH) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2023
- 23 -
21
Retirement benefit schemes
2023
2022
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
117,279
89,093
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.
22
Share capital
2023
2022
2023
2022
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Ordinary shares of £1 each
30,000
30,000
30,000
30,000
23
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:
2023
2022
£
£
Within one year
255,040
270,128
Between two and five years
456,514
711,554
711,554
981,682
24
Related party transactions
In accordance with the exemptions available under FRS 102 Section 33 'Related party disclosures', there is no disclosure in these financial statements of transactions between entities that are part of the Group.
25
Ultimate controlling party
The company's immediate parent company is Lovells Automotive Holdings Limited, a company incorporated in England and Wales. The registered office is Ruthlyn House, 90 Lincoln Road, Peterborough, PE1 2SP.
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