HURST ACCOUNTANTS LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
Company registration number 12035107 (England and Wales)
HURST ACCOUNTANTS LIMITED
COMPANY INFORMATION
Directors
N Mistry
S Brownbill BCS (Hons), DipM, MCiM
M Jackson ACA
T J Potter BA (Hons) FCA
H Besant Roberts BA (Hons), FCA
A R Young
(Appointed 19 July 2022)
Secretary
N Mistry
Company number
12035107
Registered office
Lancashire Gate
21 Tiviot Dale
Stockport
Cheshire
SK1 1TD
Auditor
Hunter Gee Holroyd
Club Chambers
Museum Street
York
YO1 7DN
HURST ACCOUNTANTS LIMITED
CONTENTS
Page
Strategic report
1
Directors' report
2 - 3
Independent auditor's report
4 - 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
HURST ACCOUNTANTS LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 31 MARCH 2023
- 1 -
The directors present the strategic report for the year ended 31 March 2023.
Review of the business
Throughout the period the company has provided audit, accountancy, tax and advisory services.
The company has reported its results for the period. The directors use various financial key performance indicators (KPIs) to ensure that the company is meeting its targets. These include turnover, which for the year ending 31 March 2023 was £7.901m, and profit before tax, which for the year was £1.047m.
Principal risks and uncertainties
Market Risks
The major risks faced by the company are the loss of status to operate in a regulated area, the risk of a client claim and risk of losing clients. The company reviews the level of risk on all assignments before commencing work and completes extensive quality control checks on all assignments. Additionally, the company has professional indemnity insurance to cover any claim that may arise from the operating activities. The company is not reliant on income from a single client and currently works with a large and varied client base.
Financial Risk
Interest Rate Risk – The company is exposed to interest rate risk on its variable rate borrowings. This is managed by entering into fixed rate borrowings where possible.
Credit Risk – The company monitors credits risk continuously and the current policy of credit checks meets its objectives of managing exposure to credit risk. Debtors are reviewed periodically to ensure that client debts are not at risk of becoming bad debts. Provisions are made, where appropriate, for doubtful debts.
Liquidity Risk – The company manages its cash so that all liabilities can be paid when due and, where possible, interest income is maximised and interest expense minimised.
Compliance Risk – The company has invested heavily in systems and training to educate all staff on relevant regulations such as Practice Assurance requirements, Ethical standards, Anti Money Laundering and GDPR to ensure that no breaches occur. The company has also joined up with an external Anti Money Laundering system provider to help us ensure continued compliance.
Key performance indicators
The key performance indicators are as follows:
2023 2022
Turnover £7,901,126 £6,853,465
EBITDA £1,618,249 £1,131,099
Employee Numbers 92 84
N Mistry
Director
23 October 2023
HURST ACCOUNTANTS LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 MARCH 2023
- 2 -
The directors present their annual report and financial statements for the year ended 31 March 2023.
Principal activities
The principal activity of the company is that of the provision of business advice and accountancy, tax and related services to its clients.
Results and dividends
The results for the year are set out on page 8.
Ordinary dividends were paid amounting to £1,027,000. 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:
N Mistry
S Brownbill BCS (Hons), DipM, MCiM
M Jackson ACA
R Murphy BA (Hons) ACA CTA
(Resigned 19 July 2022)
T J Potter BA (Hons) FCA
H Besant Roberts BA (Hons), FCA
A R Young
(Appointed 19 July 2022)
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:
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.
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.
HURST ACCOUNTANTS LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
- 3 -
On behalf of the board
N Mistry
Director
23 October 2023
HURST ACCOUNTANTS LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF HURST ACCOUNTANTS LIMITED
- 4 -
Opinion
We have audited the financial statements of Hurst Accountants Limited (the 'company') for the year ended 31 March 2023 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:
give a true and fair view of the state of the company's affairs as at 31 March 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.
HURST ACCOUNTANTS LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF HURST ACCOUNTANTS LIMITED
- 5 -
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identified material misstatements in the strategic report 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.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below.
HURST ACCOUNTANTS LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF HURST ACCOUNTANTS LIMITED
- 6 -
Our approach to identifying and assessing the risks of material misstatement in respect of irregularities, including fraud and non-compliance with laws and regulations, was as follows:
the engagement partner ensured that the engagement team collectively had the appropriate competence, capabilities and skills to identify or recognise non-compliance with applicable laws and regulations;
we identified the laws and regulations applicable to the company through discussions with directors and other management, and from our commercial knowledge and experience of the accountancy sector;
we focused on specific laws and regulations which we considered may have a direct material effect on the financial statements or the operations of the company, including the Companies Act 2006, taxation legislation, data protection, anti-bribery and employment legislation;
we assessed the extent of compliance with the laws and regulations identified above through making enquiries of management and inspecting legal correspondence; and
identified laws and regulations were communicated within the audit team regularly and the team remained alert to instances of non-compliance throughout the audit.
We assessed the susceptibility of the company’s financial statements to material misstatement, including obtaining an understanding of how fraud might occur, by:
making enquiries of management as to where they considered there was susceptibility to fraud, their knowledge of actual, suspected and alleged fraud; and
considering the internal controls in place to mitigate risks of fraud and non-compliance with laws and regulations;
To address the risk of fraud through management bias and override of controls, we:
performed analytical procedures to identify any unusual or unexpected relationships;
tested journal entries to identify unusual transactions;
assessed whether judgements and assumptions made in determining accounting estimates were indicative of potential bias; and
investigated the rationale behind significant or unusual transactions;
In response to the risk of irregularities and non-compliance with laws and regulations, we designed procedures which included, but were not limited to:
There are inherent limitations in our audit procedures described above. The more removed that laws and regulations are from financial transactions, the less likely it is that we would become aware of non-compliance. Auditing standards also limit the audit procedures required to identify non-compliance with laws and regulations to enquiry of the directors and other management and the inspection of regulatory and legal correspondence, if any.
Material misstatements that arise due to fraud can be harder to detect than those that arise from error as they may involve deliberate concealment or collusion.
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.
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.
HURST ACCOUNTANTS LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF HURST ACCOUNTANTS LIMITED
- 7 -
Nigel Everard
Senior Statutory Auditor
For and on behalf of Hunter Gee Holroyd
26 October 2023
Chartered Accountants
Statutory Auditor
Club Chambers
Museum Street
York
YO1 7DN
HURST ACCOUNTANTS LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 MARCH 2023
- 8 -
Continuing
31 March
Continuing
Discontinued
31 March
operations
2023
operations
operations
2022
Notes
£
£
£
£
£
Turnover
3
7,901,125
7,901,125
6,551,942
301,523
6,853,465
Cost of sales
(4,616,913)
(4,616,913)
(4,735,155)
(100,173)
(4,835,328)
Gross profit
3,284,212
3,284,212
1,816,787
201,350
2,018,137
Administrative expenses
(2,230,658)
(2,230,658)
(1,249,574)
(851,392)
(2,100,966)
Other operating income
30,000
30,000
22,663
22,663
Operating profit/(loss)
4
1,083,554
1,083,554
589,876
(650,042)
(60,166)
Interest receivable and similar income
7
609,000
609,000
Interest payable and similar expenses
8
(36,669)
(36,669)
(26,282)
(26,282)
Amounts written off investments
(609,000)
(609,000)
-
-
-
Profit on disposal of operations
-
-
-
840,101
840,101
Profit/(loss) before taxation
1,046,885
1,046,885
563,594
190,059
753,653
Tax on profit
9
(315,860)
(315,860)
(123,871)
(123,871)
Profit/(loss) for the financial year
731,025
731,025
439,723
190,059
629,782
HURST ACCOUNTANTS LIMITED
BALANCE SHEET
AS AT 31 MARCH 2023
31 March 2023
- 9 -
2023
2022
Notes
£
£
£
£
Fixed assets
Goodwill
13
2,887,177
3,343,047
Tangible assets
14
121,559
152,825
Investments
15
1,000
610,000
3,009,736
4,105,872
Current assets
Stocks
17
19,019
17,380
Debtors
18
2,796,299
2,849,288
Cash at bank and in hand
200,306
1,110,084
3,015,624
3,976,752
Creditors: amounts falling due within one year
19
(2,402,746)
(3,620,203)
Net current assets
612,878
356,549
Total assets less current liabilities
3,622,614
4,462,421
Creditors: amounts falling due after more than one year
20
(327,554)
(884,243)
Provisions for liabilities
Deferred tax liability
22
12,857
(12,857)
-
Net assets
3,282,203
3,578,178
Capital and reserves
Called up share capital
24
10,000
10,000
Share premium account
1,290,000
1,290,000
Non-distributable profits reserve
25
1,234,240
1,234,240
Distributable profit and loss reserves
747,963
1,043,938
Total equity
3,282,203
3,578,178
These financial statements have been prepared in accordance with the provisions relating to medium-sized companies.true
The financial statements were approved by the board of directors and authorised for issue on 23 October 2023 and are signed on its behalf by:
T J Potter BA (Hons) FCA
Director
Company registration number 12035107 (England and Wales)
HURST ACCOUNTANTS LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 MARCH 2023
- 10 -
Share capital
Share premium account
Non-distri-butable profits
Profit and loss reserves
Total
Notes
£
£
£
£
£
Balance at 1 April 2021
10,000
1,290,000
1,234,240
914,156
3,448,396
Year ended 31 March 2022:
Profit and total comprehensive income
-
-
-
629,782
629,782
Dividends
11
-
-
-
(500,000)
(500,000)
Balance at 31 March 2022
10,000
1,290,000
1,234,240
1,043,938
3,578,178
Year ended 31 March 2023:
Profit and total comprehensive income
-
-
-
731,025
731,025
Dividends
11
-
-
-
(1,027,000)
(1,027,000)
Balance at 31 March 2023
10,000
1,290,000
1,234,240
747,963
3,282,203
HURST ACCOUNTANTS LIMITED
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 MARCH 2023
- 11 -
2023
2022
Notes
£
£
£
£
Cash flows from operating activities
Cash generated from operations
27
689,998
494,459
Interest paid
(36,669)
(26,282)
Income taxes paid
(235,965)
(224,694)
Net cash inflow from operating activities
417,364
243,483
Investing activities
Proceeds of disposal of business
1,233,334
Purchase of tangible fixed assets
(47,558)
(59,286)
Net cash (used in)/generated from investing activities
(47,558)
1,174,048
Financing activities
Repayment of bank loans
(252,584)
(296,750)
Dividends paid
(1,027,000)
(500,000)
Net cash used in financing activities
(1,279,584)
(796,750)
Net (decrease)/increase in cash and cash equivalents
(909,778)
620,781
Cash and cash equivalents at beginning of year
1,110,084
489,303
Cash and cash equivalents at end of year
200,306
1,110,084
HURST ACCOUNTANTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
- 12 -
1
Accounting policies
Company information
Hurst Accountants Limited is a private company limited by shares incorporated in England and Wales. The registered office is Lancashire Gate, 21 Tiviot Dale, Stockport, Cheshire, SK1 1TD.
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, [modified to include the revaluation of freehold properties and to include investment properties and certain financial instruments at fair value]. The principal accounting policies adopted are set out below.
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.
1.2
Going concern
The Company currently meets its working capital requirements through its cash balances and bank loans. Based on the Company’s forecasts and projections, the directors believe they have sufficient facilities to trade through the next 12 month period.true
Therefore, the directors believe it is appropriate to prepare the accounts to 31 March 2023 on a going concern basis and there will be no adverse effect on solvency for more than 12 months after the date of approval of the financial statements.
1.3
Turnover
Turnover represents amounts chargeable to clients for professional services provided during the year, inclusive of direct expenses incurred on client assignments but excluding value added tax. Turnover is recognised when a right to consideration has been obtained through performance under each contract. Consideration accrues as contract activity progresses by reference to the value of the work performed. Where work is substantially completed it has been valued at net realisable value including an estimate of attributable profit.
Contingent fees
This will include projects where the right to consideration is conditional on a specified future event. In this circumstance profit should not be recognised until the contingent event has occurred and, therefore, the right to consideration has been earned.
Unbilled turnover is included in debtors as ‘amounts recoverable on contracts’. Where individual on-account billing exceeds revenue recognised on client assignments the excess is classified as deferred income within creditors.
HURST ACCOUNTANTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
1
Accounting policies
(Continued)
- 13 -
1.4
Intangible fixed assets - goodwill
Goodwill represents the excess of the cost of acquisition of unincorporated businesses over the fair value of net assets acquired. It is initially recognised as an asset at cost and is subsequently measured at cost less accumulated amortisation and accumulated impairment losses. Goodwill is considered to have a finite useful life and is amortised on a systematic basis over its expected life, which is 10 years.
For the purposes of impairment testing, goodwill is allocated to the cash-generating units expected to benefit from the acquisition. Cash-generating units to which goodwill has been allocated are tested for impairment at least annually, or more frequently when there is an indication that the unit may be impaired. If the recoverable amount of the cash-generating unit is less than the carrying amount of the unit, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro-rata on the basis of the carrying amount of each asset in the unit.
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:
Fixtures and fittings
25% reducing balance
Computers
33% straight line
The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is credited or charged to profit or loss.
1.6
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.
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.
HURST ACCOUNTANTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
1
Accounting policies
(Continued)
- 14 -
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
Work in progress is stated at the lower of cost and net realisable value. Cost includes employees' remuneration costs, other direct expenses and proportion of overheads. Net realisable value is based on estimated selling price less further cost expected to be incurred to completion. Where work is carried our on a contingent fee basis full provision is made against the cost involved until the likely outcome of work can be foreseen.
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
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.
HURST ACCOUNTANTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
1
Accounting policies
(Continued)
- 15 -
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.
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.
HURST ACCOUNTANTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
1
Accounting policies
(Continued)
- 16 -
1.13
Employee benefits
The costs of short-term employee benefits are recognised as a liability and an expense, unless those costs are required to be recognised as part of the cost of stock or fixed assets.
The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received.
Termination benefits are recognised immediately as an expense when the company is demonstrably committed to terminate the employment of an employee or to provide termination benefits.
1.14
Retirement benefits
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
1.15
Leases
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.
Rental income from operating leases is recognised on a straight line basis over the term of the relevant lease. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised on a straight line basis over the lease term.
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.
HURST ACCOUNTANTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
- 17 -
2
Judgements and key sources of estimation uncertainty
In the application of the company’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.
Critical judgements
The following judgements (apart from those involving estimates) have had the most significant effect on amounts recognised in the financial statements.
Provision for impairment loss on trade receivables
The management of the company exercises judgement in providing for impairment loss on trade receivables. At the year end, the value of trade receivables was £2,014,639.
Provision for impairment of investments
The management of the company exercised judgement in providing for an impairment loss on investments. The amount written off in the year was £609,000.
3
Turnover and other revenue
2023
2022
£
£
Turnover analysed by class of business
Accountancy services
7,901,125
6,853,465
2023
2022
£
£
Turnover analysed by geographical market
UK
7,901,125
6,853,465
2023
2022
£
£
Other revenue
Dividends received
609,000
-
Grants received
12,000
12,500
Rent receivable
18,000
10,163
HURST ACCOUNTANTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
- 18 -
4
Operating profit/(loss)
2023
2022
Operating profit/(loss) for the year is stated after charging/(crediting):
£
£
Government grants
(12,000)
(12,500)
Fees payable to the company's auditor for the audit of the company's financial statements
3,200
3,000
Depreciation of owned tangible fixed assets
66,821
60,253
Loss on disposal of tangible fixed assets
12,003
-
Amortisation of intangible assets
455,870
480,970
Operating lease charges
90,000
90,000
5
Employees
The average monthly number of persons (including directors) employed by the company during the year was:
2023
2022
Number
Number
92
84
Their aggregate remuneration comprised:
2023
2022
£
£
Wages and salaries
4,448,763
4,710,275
Social security costs
541,920
486,136
Pension costs
87,836
78,268
5,078,519
5,274,679
6
Directors' remuneration
2023
2022
£
£
Remuneration for qualifying services
671,138
1,266,363
Remuneration disclosed above include the following amounts paid to the highest paid director:
2023
2022
£
£
Remuneration for qualifying services
141,230
282,021
HURST ACCOUNTANTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
- 19 -
7
Interest receivable and similar income
2023
2022
£
£
Income from fixed asset investments
Income from shares in group undertakings
609,000
8
Interest payable and similar expenses
2023
2022
£
£
Interest on financial liabilities measured at amortised cost:
Interest on bank loans
16,669
26,282
Other interest on financial liabilities
20,000
36,669
26,282
9
Taxation
2023
2022
£
£
Current tax
UK corporation tax on profits for the current period
207,470
235,965
Adjustments in respect of prior periods
(3,160)
Total current tax
207,470
232,805
Deferred tax
Origination and reversal of timing differences
108,390
(108,934)
Total tax charge
315,860
123,871
HURST ACCOUNTANTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
9
Taxation
(Continued)
- 20 -
The actual charge for the year can be reconciled to the expected charge/(credit) for the year based on the profit or loss and the standard rate of tax as follows:
2023
2022
£
£
Profit before taxation
1,046,885
753,653
Expected tax charge based on the standard rate of corporation tax in the UK of 19.00% (2022: 19.00%)
198,908
143,194
Tax effect of expenses that are not deductible in determining taxable profit
9,520
187,597
Tax effect of income not taxable in determining taxable profit
(76,923)
Adjustments in respect of prior years
(3,160)
Permanent capital allowances in excess of depreciation
(958)
(8,836)
Deferred tax movement
108,390
(108,934)
R & D additional deduction
(9,067)
Taxation charge for the year
315,860
123,871
10
Discontinued operations
Payroll Department
In the prior year the company entered into a sale agreement to dispose of its payroll department. The disposal was effected for strategic reasons. The sale was completed on 1 October 2021.
A profit of £840,101 arose on the disposal, being the proceeds of the sale, less the carrying amount of the business assets and attributable goodwill.
11
Dividends
2023
2022
£
£
Final paid
1,027,000
500,000
12
Impairments
Impairment tests have been carried out where appropriate and the following impairment losses have been recognised in profit or loss:
2023
2022
Notes
£
£
In respect of:
Fixed asset investments
15
609,000
-
Recognised in:
Amounts written off investments
609,000
-
HURST ACCOUNTANTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
12
Impairments
(Continued)
- 21 -
The impairment losses in respect of financial assets are recognised in other gains and losses in the profit and loss account.
13
Intangible fixed assets
Goodwill
£
Cost
At 1 April 2022 and 31 March 2023
4,558,700
Amortisation and impairment
At 1 April 2022
1,215,653
Amortisation charged for the year
455,870
At 31 March 2023
1,671,523
Carrying amount
At 31 March 2023
2,887,177
At 31 March 2022
3,343,047
14
Tangible fixed assets
Fixtures and fittings
Computers
Total
£
£
£
Cost
At 1 April 2022
87,861
187,993
275,854
Additions
8,757
38,801
47,558
Disposals
(27,654)
(30,855)
(58,509)
At 31 March 2023
68,964
195,939
264,903
Depreciation and impairment
At 1 April 2022
34,868
88,161
123,029
Depreciation charged in the year
12,624
54,197
66,821
Eliminated in respect of disposals
(15,651)
(30,855)
(46,506)
At 31 March 2023
31,841
111,503
143,344
Carrying amount
At 31 March 2023
37,123
84,436
121,559
At 31 March 2022
52,993
99,832
152,825
HURST ACCOUNTANTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
- 22 -
15
Fixed asset investments
2023
2022
Notes
£
£
Investments in subsidiaries
16
1,000
610,000
Movements in fixed asset investments
Shares in subsidiaries
£
Cost or valuation
At 1 April 2022
610,000
Impairment
(609,000)
At 31 March 2023
1,000
Carrying amount
At 31 March 2023
1,000
At 31 March 2022
610,000
16
Subsidiaries
Details of the company's subsidiaries at 31 March 2023 are as follows:
Name of undertaking
Registered office
Class of shares held
% Held
Direct
Hurst Advisors & Accountants Ltd
England & Wales
Ordinary shares
100
The aggregate capital and reserves and the result for the year of the subsidiaries noted above was as follows:
Name of undertaking
Capital and Reserves
Profit/(Loss)
£
£
Hurst Advisors & Accountants Ltd
1,000
-
17
Stocks
2023
2022
£
£
Work in progress
19,019
17,380
HURST ACCOUNTANTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
- 23 -
18
Debtors
2023
2022
Amounts falling due within one year:
£
£
Trade debtors
2,014,446
1,926,646
Gross amounts owed by contract customers
140,975
64,554
Other debtors
35,372
286,667
Prepayments and accrued income
605,506
475,888
2,796,299
2,753,755
2023
2022
Amounts falling due after more than one year:
£
£
Deferred tax asset (note 22)
95,533
Total debtors
2,796,299
2,849,288
19
Creditors: amounts falling due within one year
2023
2022
Notes
£
£
Bank loans
21
258,715
243,754
Other borrowings
21
1,000
610,000
Trade creditors
56,114
99,980
Corporation tax
207,470
235,965
Other taxation and social security
565,386
514,890
Other creditors
297,034
559,318
Accruals and deferred income
1,017,027
1,356,296
2,402,746
3,620,203
20
Creditors: amounts falling due after more than one year
2023
2022
Notes
£
£
Bank loans
21
138,394
405,939
Other creditors
189,160
478,304
327,554
884,243
HURST ACCOUNTANTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
- 24 -
21
Loans and overdrafts
2023
2022
£
£
Bank loans
397,109
649,693
Loans from group undertakings
1,000
610,000
398,109
1,259,693
Payable within one year
259,715
853,754
Payable after one year
138,394
405,939
Creditors include bank loans of £397,109 (2022 £649,693) secured by way of debentures and personal guarantees of the directors.
22
Deferred taxation
The following are the major deferred tax liabilities and assets recognised by the company and movements thereon:
Liabilities
Liabilities
Assets
Assets
2023
2022
2023
2022
Balances:
£
£
£
£
Accelerated capital allowances
19,857
-
-
(18,967)
Bonus Provision
(7,000)
-
-
114,500
12,857
-
-
95,533
2023
Movements in the year:
£
Asset at 1 April 2022
(95,533)
Charge to profit or loss
108,390
Liability at 31 March 2023
12,857
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.
HURST ACCOUNTANTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
- 25 -
23
Retirement benefit schemes
2023
2022
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
87,836
78,268
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.
The amount outstanding at the year is £14,938 (2022 £6,396).
24
Share capital
2023
2022
2023
2022
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Ordinary shares of £1 each
10,000
10,000
10,000
10,000
25
Non-distributable profits reserve
2023
2022
£
£
At the beginning and end of the year
1,234,240
1,234,240
26
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
90,000
90,000
Between two and five years
90,000
90,000
180,000
HURST ACCOUNTANTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
- 26 -
27
Cash generated from operations
2023
2022
£
£
Profit for the year after tax
731,025
629,782
Adjustments for:
Taxation charged
315,860
123,871
Finance costs
36,669
26,282
Investment income
(609,000)
Loss on disposal of tangible fixed assets
12,003
-
Gain on disposal of business
-
(840,101)
Amortisation and impairment of intangible assets
455,870
480,970
Depreciation and impairment of tangible fixed assets
66,821
60,253
Amounts written off investments
609,000
-
Movements in working capital:
(Increase)/decrease in stocks
(1,639)
7,277
Increase in debtors
(42,544)
(864,983)
(Decrease)/increase in creditors
(884,067)
871,108
Cash generated from operations
689,998
494,459
28
Analysis of changes in net debt
1 April 2022
Cash flows
31 March 2023
£
£
£
Cash at bank and in hand
1,110,084
(909,778)
200,306
Borrowings excluding overdrafts
(1,259,693)
861,584
(398,109)
(149,609)
(48,194)
(197,803)
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