Company registration number 10282329 (England and Wales)
OTIF DISTRIBUTION LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 JULY 2022
OTIF DISTRIBUTION LIMITED
COMPANY INFORMATION
Directors
Mr G T Darnell
Miss K H Darnell
Company number
10282329
Registered office
c/o John Truswell & Sons (Garage) Ltd
Fall Bank Industrial Estate
Dodworth
Barnsley
S75 3LS
Auditor
MHA Moore and Smalley
Richard House
9 Winckley Square
Preston
PR1 3HP
OTIF DISTRIBUTION LIMITED
CONTENTS
Page
Strategic report
1 - 2
Directors' report
3
Directors' responsibilities statement
4
Independent auditor's report
5 - 7
Group statement of comprehensive income
8
Group balance sheet
9
Company balance sheet
10
Group statement of changes in equity
11
Company statement of changes in equity
12
Group statement of cash flows
13
Notes to the financial statements
14 - 36
OTIF DISTRIBUTION LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 31 JULY 2022
- 1 -

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

Review of the business

Performance over the year to 31 July 2022 was mixed. Having acquired John Truswell & Sons in December 2021 the Group looked to expand its network of sites across the UK. Truswell performed well during its first 7 months as part of OTIF Distribution with increased revenues of 5.8% and increases in Gross Margin from 16.4 to 19.24%.

The performance of John Truswell is one of the high points within the Group. The other subsidiaries within the group included Kenyon Road Haulage Limited which did not perform so well and Kenyon Warehousing Limited which faired more favourably.

 

Kenyon Road Haulage Limited really struggled during this period, as escalating fuel costs, the hangover from the driver shortage and covid severely affected the performance of the company. Market forces drove down margins as competitors offered cheaper and cheaper rates despite increased costs. Its site in Andover struggled to control its costs due to increased volumes through its pallet network operation. The higher the volumes the worse the position got for Andover given the territory it covered and associated costs in operating within a mainly rural location.

The deterioration in margins due to increased costs also affected the site at Blackburn for Kenyon Road Haulage and the directors decided to take steps to boost revenues and protect the business from a potential downturn in the UK economy from mid 2022. This involved targeting more blue-chip clients who were big enough to withstand the financial pressures of a predicted downturn in the UK economy and therefore enabling Kenyon Road Haulage to trade through this period.

Unfortunately the cost pressures brought on by the escalating fuel costs, the increased cost of drivers and the performance of its Andover operation resulted in KRH falling behind with its commitments to HMRC. The business took steps mid 2022 and agreed an 18 month Time To Pay arrangement with HMRC to clear the arrears. At the time given the blue-chip revenues it had secured, it was felt that maintaining the TTP payments was achievable for Kenyon Road Haulage.

The problems for Kenyon Road Haulage led to a significant post year end event in that funding through its Invoice Finance facility was lost for Kenyon Road Haulage on two of its main customers. The result was that in March 2023, despite trying to raise funding through refinancing of assets, Kenyon Road Haulage was unable to maintain its TTP commitment to HMRC. The arrangement was cancelled and Kenyon Road Haulage was placed into administration.

Given the significant intercompany balances owed by Kenyon Road Haulage to Kenyon Warehousing, this company also was placed into administration.

 

John Truswell continues to operate as the only trading subsidiary of OTIF Distribution Limited, and has since has taken over the operations of Kenyon Warehousing Ltd at Woodville.

Principal risks and uncertainties

Worldwide escalation of fuel prices as a result of the conflict in Ukraine, has been a major risk to the business and whilst the directors have worked to offset this by working with sub-contractors to minimize the impact of fuel increases as much as possible, this risk has been ever present throughout 2022.

 

Further economic challenges include the risk of Increasing interest rates which have risen during 2023. In anticipation of possible interest rate increases the Directors took steps including sensitivity analysis across all forecast to reflect various interest rate scenarios. Based on this and headroom created from Profits, the Directors are satisfied that the business can withstand interest rate increases over the next 12-18 months.

In addition to the above the business has seen other costs escalating including Electricity, Vehicle parts, Adblue and staff costs. All of these cannot be simply absorbed by the company and rather than simply passing on such increases to customers, the business is exploring ways where efficiencies can be realized.

OTIF DISTRIBUTION LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 JULY 2022
- 2 -
Development and performance

It is anticipated that the challenging market conditions will continue through 2022 and beyond. During such period, the haulage industry is severely affected with prices being driven down as haulage providers compete for less and less business. However is recent years we have seen driver costs increase by over 20% on average and fuel prices by over 40%. The strategy for OTIF Distribution via John Truswell will be to focus on what it is good at and continue to deliver service excellence to its customers.

If this means that turnover stagnates for a period and the business has to curtail its fleet strategy to save costs, if this means it can retain its customers that is the strategy this business will adopt.

Further investment in the fleet is part of future plans with replacement of the double deck trailer fleet and increases to the size of the 18T & 26T Truck fleet planned over the next few years.

Key performance indicators

The service level target is 98% which is being achieved. MPG targets for the fleet are also being achieved and are being measured and monitored using software provided by Wedfleet. The MPG improvement achieved since the introduction of Webfleet has averaged 9.5% across the fleet.

 

Further improvements are planned with the introduction of a rate calculator to support commercial activities within the business. This will assist the business in understanding the financial weakness of certain rates as well as justifying rate increases with customers.

 

Each truck type has revenue targets per day which are either based on a total revenue figure or the number of pallets the truck needs to deliver. These are monitored daily at a video conference across all sites as well as during flash report review that takes place each week where the gross margin is reported.

Events after the reporting period

The administration of Kenyon Road Haulage and Kenyon Warehousing occurred in March 2023 and as a subsidiary of OTIF Distribution Limited, this has had an impact on these financial statements. In terms of the balance sheet such an event subsequently leads to an impairment of the investments in the subsidiaries in the balance sheet of OTIF Distribution. An agreement has also been reached with administrators of both subsidiaries to write down the level of indebtedness that was owed by OTIF Distribution. This has meant that the group can continue to trade and thereby maintain employment for all staff within the remaining group companies. In the group figures, the remaining goodwill has not been impaired due to the portion of trade that has continued of Kenyon Warehousing Ltd under John Truswell & Son (Garage) Limited. More information is provided in Note 28 in the accounts

On behalf of the board

Mr G T Darnell
Director
23 February 2024
OTIF DISTRIBUTION LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 JULY 2022
- 3 -

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

Principal activities

The principal activity of the company and group continued to be that of road freight transporters and operation of storage facilities.

Results and dividends

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

No ordinary dividends were paid. The directors do not recommend payment of a further dividend.

Directors

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

Mr G T Darnell
Mr V P O'Shea
(Resigned 23 January 2022)
Mr L Webb
(Resigned 12 December 2022)
Mr J Gaskell
(Resigned 21 March 2023)
Miss K H Darnell
Mrs N Whittle
(Appointed 3 February 2022 and resigned 4 April 2023)
Auditor

The auditor, MHA Moore and Smalley, is deemed to be reappointed under section 487(2) of the Companies Act 2006.

Strategic report

The truegroup has chosen in accordance with Companies Act 2006, s. 414C(11) to set out in the group's strategic report information required by Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008, Sch. 7 to be contained in the directors' report. It has done so in respect of future developments and risk analysis.

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 auditor of the company 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 auditor of the company is aware of that information.

On behalf of the board
Mr G T Darnell
Director
23 February 2024
OTIF DISTRIBUTION LIMITED
DIRECTORS' RESPONSIBILITIES STATEMENT
FOR THE YEAR ENDED 31 JULY 2022
- 4 -

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 group and company, and of the profit or loss of the group for that period. In preparing these financial statements, the directors are required to:

 

 

The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the group’s and company’s transactions and disclose with reasonable accuracy at any time the financial position of the group and 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 group and company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

OTIF DISTRIBUTION LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF OTIF DISTRIBUTION LIMITED
- 5 -
Opinion

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

In our opinion the financial statements:

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the group and parent 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.

Material uncertainty relating to going concern

We draw attention to Note 1.4, which indicates that as two subsidiaries in the group went into administration post-year end, this has had a considerable effect on the group and even at year end the group was in a net liability position of £1,000,718. The administrators have proposed that the debts owing to the two subsidiaries by the parent company may be settled by paying £200,000, which would be funded by the remaining trading subsidiary, John Truswell & Sons (Garage) Limited. The group is expected to be financially stable if this figure is accurate, but if the settlement is significantly higher, then the group could struggle to continue for a period of 12 months following the signing of these financial statements.

 

The group is reliant on the successful completion of the sale and leaseback of the freehold property, the support of HMRC, a positive negotiation of the loan write off and a successful trading period as outlined in the projections.  Failure in any one or more of these would lead to uncertainty over whether the group can maintain its cashflow. This therefore indicates that a material uncertainty exists that may cast significant doubt over the group's ability to continue as a going concern. Our opinion is not modified in respect of this matter.

 

In auditing the financial statements, we have concluded that the director's use of the going concern basis of accounting in the preparation of the financial statements is appropriate. Projections prepared by the directors show that the company can meet its liabilities as and when they fall due over the next 12 months. Our evaluation of the director’s assessment of the entity’s ability to continue to adopt the going concern basis of accounting included auditing these projections and undertaking stress-testing of the figures included within. Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.

OTIF DISTRIBUTION LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF OTIF DISTRIBUTION LIMITED
- 6 -

Other information

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

 

We have nothing to report in this regard.

Opinions on other matters prescribed by the Companies Act 2006

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

Matters on which we are required to report by exception

In the light of the knowledge and understanding of the group and the parent company and their environment obtained in the course of the audit, we have not identified material misstatements in the strategic report or the directors' report.

 

We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:

Responsibilities of directors

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

Auditor's responsibilities for the audit of the financial statements

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

OTIF DISTRIBUTION LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF OTIF DISTRIBUTION LIMITED
- 7 -

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 specific procedures for this engagement and the extent to which these are capable of detecting irregularities, including fraud, are detailed below:

 

Because of the field in which the client operates, we identified the following areas as those most likely to have a material impact on the financial statements: Health and Safety, operator licencing and compliance with the UK Companies Act.

Owing to the inherent limitations of an audit, there is an unavoidable risk that some material misstatements in the financial statements may not be detected, even though the audit is properly planned and performed in accordance with the ISAs (UK). For instance, the further removed non-compliance is from the events and transactions reflected in the financial statements, the less likely the auditor is to become aware of it or to recognise the non-compliance.

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.

Use of our report

This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company’s members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company’s members as a body, for our audit work, for this report, or for the opinions we have formed.

Damian Walmsley
Senior Statutory Auditor
For and on behalf of MHA Moore and Smalley
Chartered Accountants
Statutory Auditor
Richard House
9 Winckley Square
Preston
PR1 3HP
23 February 2024
OTIF DISTRIBUTION LIMITED
GROUP STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 JULY 2022
- 8 -
Continuing
Discontinued
31 July
Continuing
Discontinued
31 July
operations
operations
2022
operations
operations
2021
Notes
£
£
£
£
£
£
Turnover
3
8,103,908
14,773,141
22,877,049
15,356,584
-
15,356,584
Cost of sales
(6,233,438)
(13,650,657)
(19,884,095)
(13,725,579)
-
(13,725,579)
Gross profit
1,870,470
1,122,484
2,992,954
1,631,005
-
1,631,005
Administrative expenses
(1,677,879)
(2,728,747)
(4,406,626)
(2,137,799)
-
(2,137,799)
Other operating income
(35,840)
721,653
685,813
539,309
-
539,309
Exceptional item
4
40,498
-
40,498
-
0
-
-
Operating (loss)/profit
5
197,249
(884,610)
(687,361)
32,515
-
32,515
Interest receivable and similar income
8
1,820
(3)
1,817
-
-
-
Interest payable and similar expenses
9
(190,272)
(251,131)
(441,403)
(158,863)
-
(158,863)
Loss before taxation
8,797
(1,135,744)
(1,126,947)
(126,348)
-
(126,348)
Tax on loss
12
(102,523)
-
(102,523)
(49,717)
-
(49,717)
Loss for the financial year
(93,726)
(1,135,744)
(1,229,470)
(176,065)
-
(176,065)
Other comprehensive income
Revaluation of tangible fixed assets
481,270
-
0
Tax relating to other comprehensive income
(144,231)
-
0
Total comprehensive income for the year
(892,431)
(176,065)
Loss for the financial year is all attributable to the owner of the parent company.
Total comprehensive income for the year is all attributable to the owner of the parent company.
OTIF DISTRIBUTION LIMITED
GROUP BALANCE SHEET
AS AT
31 JULY 2022
31 July 2022
- 9 -
2022
2021
Notes
£
£
£
£
Fixed assets
Goodwill
13
1,294,009
315,061
Tangible assets
14
9,671,725
2,717,314
Investments
15
33,120
-
0
10,998,854
3,032,375
Current assets
Stocks
17
178,689
20,928
Debtors
18
5,248,271
4,143,534
Cash at bank and in hand
40,711
59,532
5,467,671
4,223,994
Creditors: amounts falling due within one year
19
(10,556,931)
(5,676,378)
Net current liabilities
(5,089,260)
(1,452,384)
Total assets less current liabilities
5,909,594
1,579,991
Creditors: amounts falling due after more than one year
20
(5,842,418)
(1,284,151)
Provisions for liabilities
Deferred tax liability
23
1,067,894
402,444
(1,067,894)
(402,444)
Net liabilities
(1,000,718)
(106,604)
Capital and reserves
Called up share capital
25
100,000
100,000
Revaluation reserve
339,897
8,299
Profit and loss reserves
(1,440,615)
(214,903)
Total equity
(1,000,718)
(106,604)
The financial statements were approved by the board of directors and authorised for issue on 23 February 2024 and are signed on its behalf by:
23 February 2024
Mr G T Darnell
Director
Company registration number 10282329 (England and Wales)
OTIF DISTRIBUTION LIMITED
COMPANY BALANCE SHEET
AS AT 31 JULY 2022
31 July 2022
- 10 -
2022
2021
Notes
£
£
£
£
Fixed assets
Investments
15
6,444,955
3,079,805
Current assets
Cash at bank and in hand
78
-
0
Creditors: amounts falling due within one year
19
(5,834,624)
(2,971,463)
Net current liabilities
(5,834,546)
(2,971,463)
Total assets less current liabilities
610,409
108,342
Creditors: amounts falling due after more than one year
20
(700,000)
-
Net (liabilities)/assets
(89,591)
108,342
Capital and reserves
Called up share capital
25
100,000
100,000
Profit and loss reserves
(189,591)
8,342
Total equity
(89,591)
108,342

As permitted by s408 Companies Act 2006, the company has not presented its own profit and loss account and related notes. The company’s loss for the year was £197,933 (2021 - £18,841 profit).

The financial statements were approved by the board of directors and authorised for issue on 23 February 2024 and are signed on its behalf by:
23 February 2024
Mr G T Darnell
Director
Company registration number 10282329 (England and Wales)
OTIF DISTRIBUTION LIMITED
GROUP STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 JULY 2022
- 11 -
Share capital
Revaluation reserve
Profit and loss reserves
Total
Notes
£
£
£
£
Balance at 1 August 2020
100,000
9,740
(21,379)
88,361
Year ended 31 July 2021:
Loss and total comprehensive income
-
-
(176,065)
(176,065)
Dividends
11
-
-
(18,900)
(18,900)
Transfers
-
(1,441)
1,441
-
Balance at 31 July 2021
100,000
8,299
(214,903)
(106,604)
Year ended 31 July 2022:
Loss for the year
-
-
(1,229,470)
(1,229,470)
Other comprehensive income:
Revaluation of tangible fixed assets
-
481,270
-
481,270
Tax relating to other comprehensive income
-
(144,231)
-
0
(144,231)
Total comprehensive income
-
337,039
(1,229,470)
(892,431)
Transfers
-
(5,441)
3,758
(1,683)
Balance at 31 July 2022
100,000
339,897
(1,440,615)
(1,000,718)
OTIF DISTRIBUTION LIMITED
COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 JULY 2022
- 12 -
Share capital
Profit and loss reserves
Total
Notes
£
£
£
Balance at 1 August 2020
100,000
8,400
108,400
Year ended 31 July 2021:
Profit and total comprehensive income for the year
-
18,842
18,842
Dividends
11
-
(18,900)
(18,900)
Balance at 31 July 2021
100,000
8,342
108,342
Year ended 31 July 2022:
Profit and total comprehensive income
-
(197,933)
(197,933)
Balance at 31 July 2022
100,000
(189,591)
(89,591)
OTIF DISTRIBUTION LIMITED
GROUP STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 JULY 2022
- 13 -
2022
2021
Notes
£
£
£
£
Cash flows from operating activities
Cash generated from operations
31
4,280,811
386,572
Interest paid
(441,403)
(158,863)
Income taxes paid
(41,761)
-
0
Net cash inflow from operating activities
3,797,647
227,709
Investing activities
Purchase of business
(5,461,888)
-
Purchase of intangible assets
(4,800)
-
Purchase of tangible fixed assets
(967,202)
(68,001)
Proceeds from disposal of tangible fixed assets
891,283
41,917
Interest received
(3)
-
0
Other income received from investments
1,820
-
0
Net cash used in investing activities
(5,540,790)
(26,084)
Financing activities
Proceeds from new bank loans
2,481,250
-
Repayment of bank loans
(705,900)
(21,568)
Payment of finance leases obligations
(1,073,019)
(792,868)
Dividends paid to equity shareholders
-
0
(18,900)
Net cash generated from/(used in) financing activities
702,331
(833,336)
Net decrease in cash and cash equivalents
(1,040,812)
(631,711)
Cash and cash equivalents at beginning of year
(1,984,102)
(1,352,391)
Cash and cash equivalents at end of year
(3,024,914)
(1,984,102)
Relating to:
Cash at bank and in hand
40,711
59,532
Bank overdrafts included in creditors payable within one year
(3,065,625)
(2,043,634)
OTIF DISTRIBUTION LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 JULY 2022
- 14 -
1
Accounting policies
Company information

OTIF Distribution Limited (“the company”) is a private limited company domiciled and incorporated in England and Wales. The registered office is c/o John Truswell & Sons (Garage) Ltd, Fall Bank Industrial Estate, Dodworth, Barnsley, S75 3LS.

 

The group consists of OTIF Distribution Limited and all of its subsidiaries.

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 certain financial instruments at fair value. The principal accounting policies adopted are set out below.

The 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 for parent company information presented within the consolidated financial statements:

 

1.2
Business combinations

In the parent company financial statements, the cost of a business combination is the fair value at the acquisition date of the assets given, equity instruments issued and liabilities incurred or assumed, plus costs directly attributable to the business combination. The excess of the cost of a business combination over the fair value of the identifiable assets, liabilities and contingent liabilities acquired is recognised as goodwill. The cost of the combination includes the estimated amount of contingent consideration that is probable and can be measured reliably, and is adjusted for changes in contingent consideration after the acquisition date. Provisional fair values recognised for business combinations in previous periods are adjusted retrospectively for final fair values determined in the 12 months following the acquisition date. Investments in subsidiaries, joint ventures and associates are accounted for at cost less impairment.

 

Deferred tax is recognised on differences between the value of assets (other than goodwill) and liabilities recognised in a business combination accounted for using the purchase method and the amounts that can be deducted or assessed for tax, considering the manner in which the carrying amount of the asset or liability is expected to be recovered or settled. The deferred tax recognised is adjusted against goodwill or negative goodwill.

OTIF DISTRIBUTION LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JULY 2022
1
Accounting policies
(Continued)
- 15 -
1.3
Basis of consolidation

The consolidated group financial statements consist of the financial statements of the parent company OTIF Distribution Limited together with all entities controlled by the parent company (its subsidiaries) and the group’s share of its interests in joint ventures and associates.

 

All financial statements are made up to 31 July 2022. Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with those used by other members of the group.

 

All intra-group transactions, balances and unrealised gains on transactions between group companies are eliminated on consolidation. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.

Subsidiaries are consolidated in the group’s financial statements from the date that control commences until the date that control ceases.

1.4
Going concern

The Directors believe that the impact of the administrations after the year end of the two Kenyon companies to the group is a setback in that its effect on other group companies has been minimal, however the impact on the whole group has been more significant. The strategy of the group was to build a network of companies across the UK that could provide a high quality distribution solution to all group customers. However whilst these business worked together they were each ran by a local team focused on optimising profits and revenues for their companies. So whilst the ability to share freight is no longer available, the financial effect of the loss of both Kenyon businesses, on the other group companies has been minimal.

 

Furthermore the Directors have provided personal support to help support the remaining group companies financially to help the remaining group withstand the impact the loss of Kenyon Road Haulage Limited and Kenyon Warehousing Limited has had on the group. Other projects include refinancing of subsidiary assets including sale and leaseback projects to release funds. Both of these projects are edging towards a successful conclusion.

 

As has been outlined in the Strategic Report and above, the administration of both Kenyon businesses has affected OTIF Distribution Ltd significantly, in particular the post period end balance sheet. Impairment of the investments has been put through as a result of the administrations, but on a positive note, discussions have taken placewith the administrators to repay a proportion of the loan owed by OTIF Distribution Ltd to Kenyon Road Haulage Limited and Kenyon Warehousing Limited with the balance being written off.Agreement has not been formally reached yet butinitial reviews by the administrators have already been undertaken, which indicate acceptance of a £200,000 settlement. This gives stability to the remaining group to retain jobs and to allow it to recover financially and operationally following the loss of these two subsidiaries.

 

The group is reliant on the successful completion of the sale and leaseback, the support of HMRC, a positive negotiation of the loan write off and a successful trading period as outlined in the projections. Failure in any one or more of these would lead to uncertainty over whether the group can maintain its cashflow and the would indicate that a material uncertainty exists that may cast significant doubt over the group's ability to continue as a going concern.

 

Based on the above, the Directors believe that it remains appropriate to prepare the financial statements on a going concern basis.

OTIF DISTRIBUTION LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JULY 2022
1
Accounting policies
(Continued)
- 16 -
1.5
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. The following criteria must also be met before revenue is recognised:

Revenue from a contract to provide services is recognised in the period in which the services are provided in accordance with the stage of completion of the contract when all of the following conditions are satisfied:

 

1.6
Intangible fixed assets - goodwill

Goodwill represents the excess of the cost of acquisition of a business 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.

1.7
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:

Freehold land and buildings
2% straight line
Leasehold improvements
10% straight line
Plant and equipment
25% straight line or 10% reducing balance
Fixtures and fittings
25% straight line or 10% reudcing balance
Computers
25%-33% straight line
Motor vehicles
Variable based on useful economic life of individual asset

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 recognised in the profit and loss account.

OTIF DISTRIBUTION LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JULY 2022
1
Accounting policies
(Continued)
- 17 -
1.8
Fixed asset investments

Equity investments are measured at fair value through profit or loss, except for those equity investments that are not publicly traded and whose fair value cannot otherwise be measured reliably, which are recognised at cost less impairment until a reliable measure of fair value becomes available.

 

In the parent company financial statements, investments in subsidiaries, associates and jointly controlled entities are initially measured at cost and subsequently measured at cost less any accumulated impairment losses.

A subsidiary is an entity controlled by the group. Control is the power to govern the financial and operating policies of the entity so as to obtain benefits from its activities.

1.9
Impairment of fixed assets

At each reporting period end date, the group 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.

 

The carrying amount of the investments accounted for using the equity method is tested for impairment as a single asset. Any goodwill included in the carrying amount of the investment is not tested separately for impairment.

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.

1.10
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.

OTIF DISTRIBUTION LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JULY 2022
1
Accounting policies
(Continued)
- 18 -
1.11
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.

1.12
Financial instruments

The group 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 group's balance sheet when the group becomes party to the contractual provisions of the instrument.

 

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

Basic financial assets

Basic financial assets, which include debtors and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised.

Impairment of financial assets

Financial assets, other than those held at fair value through profit and loss, are assessed for indicators of impairment at each reporting end date.

 

Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected. If an asset is impaired, the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset’s original effective interest rate. The impairment loss is recognised in profit or loss.

 

If there is a decrease in the impairment loss arising from an event occurring after the impairment was recognised, the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been, had the impairment not previously been recognised. The impairment reversal is recognised in profit or loss.

Derecognition of financial assets

Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the group 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 group after deducting all of its liabilities.

OTIF DISTRIBUTION LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JULY 2022
1
Accounting policies
(Continued)
- 19 -
Basic financial liabilities

Basic financial liabilities, including creditors, bank loans, loans from fellow group companies and preference shares that are classified as debt, are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future payments discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.

 

Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.

 

Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Amounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.

Derecognition of financial liabilities

Financial liabilities are derecognised when the group's contractual obligations expire or are discharged or cancelled.

1.13
Equity instruments

Equity instruments issued by the group 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 group.

1.14
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 group’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 if, and only if, there is 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.

OTIF DISTRIBUTION LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JULY 2022
1
Accounting policies
(Continued)
- 20 -
1.15
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.

1.16
Retirement benefits

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

1.17
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 leased 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.

1.18
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.

1.19
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.

OTIF DISTRIBUTION LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JULY 2022
- 21 -
2
Judgements and key sources of estimation uncertainty

In the application of the group’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.

The useful economic life of tangible fixed assets is judged at the point of purchase and reviewed at each financial reporting date. This judgement is based upon the director's in depth knowledge of the industry in which the group operates and of the individual assets.

 

As standard, a useful economic life of 4 years is applied to fixtures and fittings and plant and machinery, between 8 and 10 years is applied to motor vehicle and 10 years for leasehold property and improvements.

At each balance sheet date, the directors undertake an assessment of the carrying amounts of its tangible fixed assets based upon their knowledge of the assets to determine whether there is any indication that the assets have suffered an impairment loss. Where necessary, an impairment is recorded as an impairment loss.

Key sources of estimation uncertainty

The estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are as follows.

At each balance sheet date and on a weekly basis the debtors are reviewed, and tactical decisions made to ensure payment is received from customers. A standard process is in place to pursue payment including the use a debt collection agencies, suspension of deliveries and retention of customer inventory, until payment is made.

 

Furthermore, the credit worthiness of each customer is checked monthly to review the validity of credit limits agreed and to establish the extent of any adjustment. This calculation is based on the financial position of the customers, the historical speed of payment and any ongoing discussions between relevant parties to the individual debtor.

3
Turnover and other revenue
2022
2021
£
£
Turnover analysed by class of business
Haulage
21,143,783
13,952,397
Storage & Handling fees
1,733,266
1,404,187
22,877,049
15,356,584
OTIF DISTRIBUTION LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JULY 2022
3
Turnover and other revenue
(Continued)
- 22 -
2022
2021
£
£
Other revenue
Interest income
(3)
-
Grants received
4,658
43,069
4
Exceptional item
2022
2021
£
£
Expenditure
Write off of loans owing to related parties
(40,498)
-
(40,498)
-
5
Operating (loss)/profit
2022
2021
£
£
Operating (loss)/profit for the year is stated after charging/(crediting):
Government grants
(4,658)
(43,069)
Depreciation of owned tangible fixed assets
507,829
342,864
Depreciation of tangible fixed assets held under finance leases
489,526
211,569
(Profit)/loss on disposal of tangible fixed assets
(13,308)
54,866
Amortisation of intangible assets
134,716
81,725
Operating lease charges
862,420
782,216
6
Auditor's remuneration
2022
2021
Fees payable to the company's auditor and associates:
£
£
For audit services
Audit of the financial statements of the group and company
3,000
1,500
Audit of the financial statements of the company's subsidiaries
24,917
9,200
27,917
10,700
OTIF DISTRIBUTION LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JULY 2022
- 23 -
7
Employees

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

Group
Company
2022
2021
2022
2021
Number
Number
Number
Number
Directors
4
4
-
-
Drivers
99
67
-
-
Garage staff
10
7
-
-
Office staff
43
27
-
-
Warehouse staff
23
22
-
-
Total
179
127
-
0
-
0

Their aggregate remuneration comprised:

Group
Company
2022
2021
2022
2021
£
£
£
£
Wages and salaries
6,585,185
3,827,341
-
0
-
0
Social security costs
602,084
370,096
-
-
Pension costs
200,499
131,669
-
0
-
0
7,387,768
4,329,106
-
0
-
0
8
Interest receivable and similar income
2022
2021
£
£
Interest income
Interest on bank deposits
(3)
-
0
Income from fixed asset investments
Income from other fixed asset investments
1,820
-
0
Total income
1,817
-
0
OTIF DISTRIBUTION LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JULY 2022
- 24 -
9
Interest payable and similar expenses
2022
2021
£
£
Interest on bank overdrafts and loans
107,511
11
Other interest on financial liabilities
374
2,289
Interest on finance leases and hire purchase contracts
223,999
156,422
Other interest
109,519
141
Total finance costs
441,403
158,863
10
Discontinued operations

Following the year end two of the subsidiaries of the group, Kenyon Road Haulage Limited and Kenyon Warehousing Limited, went into administration. Part of the trade of Kenyon Warehousing Limited has transferred to the new subsidiary on John Truswell & Sons (Garage) Limited.

 

Amounts from continuing operations include results of the portion of the trade that is continuing in Kenyon Warehousing Limited plus part year worth of the results of John Truswell & Sons (Garage) Limited, from the date of it's acquisition in the year.

11
Dividends
2022
2021
Recognised as distributions to equity holders:
£
£
Final paid
-
18,900
12
Taxation
2022
2021
£
£
Current tax
UK corporation tax on profits for the current period
(60,136)
-
0
Deferred tax
Origination and reversal of timing differences
81,608
53,529
Adjustment in respect of prior periods
81,051
(3,812)
Total deferred tax
162,659
49,717
Total tax charge
102,523
49,717
OTIF DISTRIBUTION LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JULY 2022
12
Taxation
(Continued)
- 25 -

The actual charge for the year can be reconciled to the expected credit for the year based on the profit or loss and the standard rate of tax as follows:

2022
2021
£
£
Loss before taxation
(1,126,947)
(126,348)
Expected tax credit based on the standard rate of corporation tax in the UK of 19.00% (2021: 19.00%)
(214,120)
(24,006)
Tax effect of expenses that are not deductible in determining taxable profit
25,106
14,506
Tax effect of income not taxable in determining taxable profit
(34,330)
(1,540)
Losses on discontinued operations not recognised
193,080
-
0
Change in unrecognised deferred tax assets
-
0
20
Adjustments in respect of prior years
78,202
-
0
Effect of change in corporation tax rate
(616)
64,549
Deferred tax adjustments in respect of prior years
-
0
(3,812)
Deferred tax on losses not previously recognised
55,201
-
0
Taxation charge
102,523
49,717

In addition to the amount charged to the profit and loss account, the following amounts relating to tax have been recognised directly in other comprehensive income:

2022
2021
£
£
Deferred tax arising on:
Revaluation of property
144,231
-
13
Intangible fixed assets
Group
Goodwill
£
Cost
At 1 August 2021
593,616
Additions - separately acquired
4,800
Additions - business combinations
1,108,864
At 31 July 2022
1,707,280
Amortisation and impairment
At 1 August 2021
278,555
Amortisation charged for the year
134,716
At 31 July 2022
413,271
OTIF DISTRIBUTION LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JULY 2022
13
Intangible fixed assets
(Continued)
- 26 -
Carrying amount
At 31 July 2022
1,294,009
At 31 July 2021
315,061
The company had no intangible fixed assets at 31 July 2022 or 31 July 2021.
OTIF DISTRIBUTION LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JULY 2022
- 27 -
14
Tangible fixed assets
Group
Freehold land and buildings
Leasehold improvements
Plant and equipment
Fixtures and fittings
Computers
Motor vehicles
Total
£
£
£
£
£
£
£
Cost
At 1 August 2021
-
0
99,298
29,367
328,544
26,824
4,302,814
4,786,847
Additions
-
0
49,645
-
0
82,475
474
2,752,666
2,885,260
Business combinations
2,500,000
-
0
100,053
145,206
42,575
7,993,322
10,781,156
Disposals
-
0
-
0
-
0
(6,266)
(981)
(1,626,317)
(1,633,564)
Revaluation
475,000
-
0
-
0
-
0
-
0
-
0
475,000
Transfers
-
0
-
0
-
0
(21,468)
21,468
-
0
-
0
At 31 July 2022
2,975,000
148,943
129,420
528,491
90,360
13,422,485
17,294,699
Depreciation and impairment
At 1 August 2021
-
0
17,998
28,407
253,739
26,595
1,742,794
2,069,533
Depreciation charged in the year
14,146
5,890
2,178
40,062
9,074
926,005
997,355
Eliminated in respect of disposals
-
0
-
0
-
0
(6,262)
(981)
(748,346)
(755,589)
Revaluation
(6,270)
-
0
-
0
-
0
-
0
-
0
(6,270)
Transfers
-
0
-
0
-
0
(16,561)
16,561
-
0
-
0
8,849
-
0
71,427
80,730
35,893
5,121,046
5,317,945
At 31 July 2022
16,725
23,888
102,012
351,708
87,142
7,041,499
7,622,974
Carrying amount
At 31 July 2022
2,958,275
125,055
27,408
176,783
3,218
6,380,986
9,671,725
At 31 July 2021
-
0
81,300
960
74,805
229
2,560,020
2,717,314
The company had no tangible fixed assets at 31 July 2022 or 31 July 2021.
OTIF DISTRIBUTION LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JULY 2022
14
Tangible fixed assets
(Continued)
- 28 -

The carrying value of land and buildings comprises:

Group
Company
2022
2021
2022
2021
£
£
£
£
Long leasehold
118,191
73,499
-
0
-
0

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

Group
Company
2022
2021
2022
2021
£
£
£
£
Plant and equipment
1,277,678
-
0
-
0
-
0
Motor vehicles
2,797,688
1,800,817
-
0
-
0
Computers
-
0
9,281
-
0
-
0
4,075,366
1,810,098
-
-
15
Fixed asset investments
Group
Company
2022
2021
2022
2021
Notes
£
£
£
£
Investments in subsidiaries
16
-
0
-
0
6,444,955
3,079,805
Unlisted investments
33,120
-
0
-
0
-
0
33,120
-
0
6,444,955
3,079,805
Movements in fixed asset investments
Group
Investments
£
Cost or valuation
At 1 August 2021
-
Additions - business combinations
33,120
At 31 July 2022
33,120
Carrying amount
At 31 July 2022
33,120
At 31 July 2021
-
OTIF DISTRIBUTION LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JULY 2022
15
Fixed asset investments
(Continued)
- 29 -
Movements in fixed asset investments
Company
Shares in subsidiaries
£
Cost or valuation
At 1 August 2021
3,079,805
Additions
6,444,955
At 31 July 2022
9,524,760
Impairment
At 1 August 2021
-
Impairment losses
3,079,805
At 31 July 2022
3,079,805
Carrying amount
At 31 July 2022
6,444,955
At 31 July 2021
3,079,805
16
Subsidiaries

Details of the company's subsidiaries at 31 July 2022 are as follows:

Name of undertaking
Registered office
Class of
% Held
shares held
Direct
Indirect
Kenyon Road Haulage Limited
Thornley Avenue Blackburn BB1 3HJ
Ordinary
100.00
-
Kenyon Warehousing Limited
Thornley Avenue Blackburn BB1 3HJ
Ordinary
100.00
-
John Truswell & Sons (Garage) Limited
Fall Bank Industrial Estate, Dodworth, Barnsley, S75 3LS
Ordinary
100.00
-
John Truswell & Sons (Haulage) Limited
Fall Bank Industrial Estate, Dodworth, Barnsley, S75 3LS
Ordinary
0
100.00
Steelfreight Limited
Fall Bank Industrial Estate, Dodworth, Barnsley, S75 3LS
Ordinary
0
100.00
D M Smith (Transport) Limited
Happendon Services, Carlisle Road, Lanarkshire, ML11 2RJ
Ordinary
0
100.00
17
Stocks
Group
Company
2022
2021
2022
2021
£
£
£
£
Raw materials and consumables
178,689
20,928
-
-
OTIF DISTRIBUTION LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JULY 2022
- 30 -
18
Debtors
Group
Company
2022
2021
2022
2021
Amounts falling due within one year:
£
£
£
£
Trade debtors
4,076,354
2,739,776
-
0
-
0
Corporation tax recoverable
42,617
42,617
-
0
-
0
Other debtors
6,955
811,095
-
0
-
0
Prepayments and accrued income
1,122,345
416,578
-
0
-
0
5,248,271
4,010,066
-
-
Deferred tax asset (note 23)
-
0
133,468
-
0
-
0
5,248,271
4,143,534
-
-
19
Creditors: amounts falling due within one year
Group
Company
2022
2021
2022
2021
Notes
£
£
£
£
Bank loans and overdrafts
21
3,463,725
2,093,634
-
0
21
Obligations under finance leases
22
1,849,356
669,086
-
0
-
0
Trade creditors
2,300,452
2,048,717
-
0
-
0
Amounts owed to group undertakings
-
0
-
0
5,584,382
2,930,903
Corporation tax payable
54,326
42,617
-
0
-
0
Other taxation and social security
2,167,009
527,124
-
-
Other creditors
371,097
251,820
250,242
40,539
Accruals and deferred income
350,966
43,380
-
0
-
0
10,556,931
5,676,378
5,834,624
2,971,463
20
Creditors: amounts falling due after more than one year
Group
Company
2022
2021
2022
2021
Notes
£
£
£
£
Bank loans and overdrafts
21
2,077,973
191,667
-
0
-
0
Obligations under finance leases
22
3,264,445
1,092,484
-
0
-
0
Amounts owed to group undertakings
-
0
-
0
200,000
-
0
Other creditors
500,000
-
0
500,000
-
0
5,842,418
1,284,151
700,000
-
OTIF DISTRIBUTION LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JULY 2022
- 31 -
21
Loans and overdrafts
Group
Company
2022
2021
2022
2021
£
£
£
£
Bank loans
2,476,073
241,667
-
0
-
0
Bank overdrafts
3,065,625
2,043,634
-
0
21
5,541,698
2,285,301
-
21
Payable within one year
3,463,725
2,093,634
-
0
21
Payable after one year
2,077,973
191,667
-
0
-
0

The long-term loan is unsecured and interest is payable at 4.9% over base. The invoice discounting facilities included within bank overdrafts are secured by way of a charge over the group's debtor's ledger.

22
Finance lease obligations
Group
Company
2022
2021
2022
2021
£
£
£
£
Future minimum lease payments due under finance leases:
Within one year
1,849,356
669,086
-
0
-
0
In two to five years
3,103,037
1,092,484
-
0
-
0
In over five years
161,408
-
0
-
0
-
0
5,113,801
1,761,570
-
-

Finance lease payments represent rentals payable by the company or group 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 4 years. All leases are on a fixed repayment basis and no arrangements have been entered into for contingent rental payments.

 

Finance leases are secured upon the asset to which they relate.

OTIF DISTRIBUTION LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JULY 2022
- 32 -
23
Deferred taxation

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

Liabilities
Liabilities
Assets
Assets
2022
2021
2022
2021
Group
£
£
£
£
Accelerated capital allowances
849,356
402,444
-
-
Tax losses
-
-
-
133,468
Revaluations
219,959
-
-
-
Short term timing differences - trading
(1,421)
-
-
-
1,067,894
402,444
-
133,468
The company has no deferred tax assets or liabilities.
Group
Company
2022
2022
Movements in the year:
£
£
Liability at 1 August 2021
268,976
-
Charge to profit or loss
678,601
-
Charge to other comprehensive income
120,317
-
Liability at 31 July 2022
1,067,894
-

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

24
Retirement benefit schemes
2022
2021
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
200,499
131,669

A defined contribution pension scheme is operated for all qualifying employees. The assets of the scheme are held separately from those of the group in an independently administered fund.

25
Share capital
Group and company
2022
2021
2022
2021
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Ordinary shares of £1 each
100,000
100,000
100,000
100,000
OTIF DISTRIBUTION LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JULY 2022
- 33 -
26
Acquisition of a business

On 21 December 2021 the group acquired 100 percent of the issued capital of John Truswell & Sons (Garage) Limited.

Book Value
Adjustments
Fair Value
Net assets acquired
£
£
£
Property, plant and equipment
5,463,211
-
5,463,211
Investments
33,173
-
33,173
Inventories
111,364
-
111,364
Trade and other receivables
2,889,396
-
2,889,396
Cash and cash equivalents
233,067
-
233,067
Borrowings
(459,056)
-
(459,056)
Obligations under finance leases
(762,690)
-
(762,690)
Trade and other payables
(1,566,687)
-
(1,566,687)
Tax liabilities
(113,606)
-
(113,606)
Deferred tax
(492,028)
-
(492,028)
Total identifiable net assets
5,336,144
-
5,336,144
Goodwill
1,108,811
Total consideration
6,444,955
The consideration was satisfied by:
£
Cash
5,694,955
Deferred consideration
750,000
6,444,955
Contribution by the acquired business for the reporting period included in the group statement of comprehensive income since acquisition:
£
Turnover
6,920,398
Loss after tax
(154,640)
OTIF DISTRIBUTION LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JULY 2022
- 34 -
27
Operating lease commitments
Lessee

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

Group
Company
2022
2021
2022
2021
£
£
£
£
Within one year
445,944
597,772
-
-
Between two and five years
839,601
946,686
-
-
In over five years
62,072
75,000
-
-
1,347,617
1,619,458
-
-
28
Events after the reporting date

The administration of Kenyon Road Haulage and Kenyon Warehousing occurred in March 2023 and as a subsidiary of OTIF Distribution Limited, this has had an impact on these financial statements. Since that point a profitable part of the trade of Kenyon Warehousing Ltd has been transferred to the remaining trading subsidiary in the group, John Truswell & Sons (Garage) Limited.

 

The investment in both companies by OTIF Distribution Limited has been fully impaired in the current year in respect of this and charged as a cost to the profit and loss account in the entity accounts. Likewise, OTIF Distribution Limited owed similar amounts to each company which the administrators have agreed to waive except for an amount of £200,000. The net decrease to the profit and loss account of OTIF Distribution Limited is £197,831.

 

These impairments and write offs have been reversed on consolidation. The goodwill on acquisition of the two subsidiaries has a net book value of £217,878 and was considered that no impairment would be necessary due to a portion of trade that has continued in the group which is expected to generate profits in the coming years.

29
Related party transactions
Transactions with related parties

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

Sales
Sales
Purchases
Purchases
2022
2021
2022
2021
£
£
£
£
Group
Other related parties
793,857
478,794
-
734,688
Company
Other related parties
721,940
-
1,202,588
-
OTIF DISTRIBUTION LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JULY 2022
29
Related party transactions
(Continued)
- 35 -
Payroll costs
2022
2021
£
£
Group
Other related parties
92,326
155,942
Company
Other related parties
92,326
-

The following amounts were outstanding at the reporting end date:

Amounts due to related parties
2022
2021
£
£
Group
Other related parties
-
199,573
Company
Other related parties
267,197
-

The following amounts were outstanding at the reporting end date:

Amounts due from related parties
2022
2022
2022
2021
Balance
Provision
Net
Balance
£
£
£
£
Group
Other related parties
-
-
-
524,000
Company
Other related parties
2,956,805
140,333
2,816,472
-
30
Directors' transactions

Dividends totalling £0 (2021 - £18,900) were paid in the year in respect of shares held by the company's directors.

OTIF DISTRIBUTION LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JULY 2022
- 36 -
31
Cash generated from group operations
2022
2021
£
£
Loss for the year after tax
(1,229,470)
(176,065)
Adjustments for:
Taxation charged
102,523
49,717
Finance costs
441,403
158,863
Investment income
(1,817)
-
0
(Gain)/loss on disposal of tangible fixed assets
(13,308)
54,866
Amortisation and impairment of intangible assets
134,716
81,725
Depreciation and impairment of tangible fixed assets
997,355
554,433
Movements in working capital:
Increase in stocks
(46,397)
(10,902)
Decrease/(increase) in debtors
1,651,191
(1,152,787)
Increase in creditors
2,244,615
826,722
Cash generated from operations
4,280,811
386,572
32
Analysis of changes in net debt - group
1 August 2021
Cash flows
New finance leases
Other non-cash changes
31 July 2022
£
£
£
£
£
Cash at bank and in hand
59,532
(18,821)
-
-
40,711
Bank overdrafts
(2,043,634)
(1,021,991)
-
-
(3,065,625)
(1,984,102)
(1,040,812)
-
-
(3,024,914)
Borrowings excluding overdrafts
(241,667)
(2,234,406)
-
-
(2,476,073)
Obligations under finance leases
(1,761,570)
310,329
(1,918,058)
(1,744,502)
(5,113,801)
(3,987,339)
(2,964,889)
(1,918,058)
(1,744,502)
(10,614,788)
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