Fairfax Plant Hire Limited
Registered number: 01953454
Annual report and
financial statements
For the year ended 30 September 2023
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FAIRFAX PLANT HIRE LIMITED
COMPANY INFORMATION
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The Old Brickworks, Hull Road
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Chartered Accountants & Statutory Auditor
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FAIRFAX PLANT HIRE LIMITED
CONTENTS
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Independent Auditor's Report
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Statement of Comprehensive Income
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Statement of Financial Position
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Statement of Changes in Equity
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Notes to the Financial Statements
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FAIRFAX PLANT HIRE LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 30 SEPTEMBER 2023
The Directors present their strategic report for the year ended 30 September 2023. The principal activity of the Company is that of a plant hire company.
The Directors are pleased with the Company's performance for the year, with growth in turnover and net assets. This has been due to continued investment in hire equipment undertaken by the Company, for which there was continued strong demand in the year.
Key Performance Indicators
The Directors consider the key performance indicators of the business to be Turnover and Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA). Turnover for the year was £22.4m (2022: £21.2m) an increase of £1.2m (5.7%) as the business experienced more stable demand.
EBITDA for the year was £13.4m (2022: £12.8m), an increase of £0.6m (4.7%). Continued investment in the Company's hire fleet and customer demand becoming more stable resulted in good overall performance.
Financial position
The Company has generated profit after tax in the year of £3.2m and declared dividends totalling £0.2m. As such the net assets of the Company have increased to £20.5m (2022: £17.5m).
The Company has fixed assets with a book value of £58.8m (2022: £46.4m) at the year end and associated hire purchase liabilities totalling £40.9m (2022: £26.6m) which equates to 70% (2022: 57%) of the book value.
Although the Company shows net current liabilities of £4.0m (2022: £6.9m) this reflects the fact that its revenue generating assets are shown as fixed assets whilst the cost of financing them is shown in part as a current liability.
Principal risks and uncertainties
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Market risk – the principal risk to the Company is a significant downturn in the economy which could substantially reduce the demand for hiring the Company’s plant. The Company mitigates this risk by working with a large number of customers who operate in varying sectors.
Liquidity risk – the Company purchases its assets using asset finance and has a facility in place to provide its working capital. This helps the Company to maintain liquidity to ensure sufficient funds are available for its ongoing operations.
This report was approved by the board on 11 March 2024 and signed on its behalf.
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FAIRFAX PLANT HIRE LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 30 SEPTEMBER 2023
The Directors present their report and the financial statements for the year ended 30 September 2023.
Directors' responsibilities statement
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The Directors are responsible for preparing the Strategic Report, the Directors' Report and the financial statements in accordance with applicable law and regulations.
Company law requires the Directors to prepare financial statements for each financial year. Under that law the Directors have elected to prepare the financial statements in accordance with applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice), including Financial Reporting Standard 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland'. 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 for the Company's financial statements and then apply them consistently;
∙make judgments and accounting estimates that are reasonable and prudent; and
∙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 to 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.
The profit for the year, after taxation, amounted to £3,190,612 (2022 - £4,071,203).
Dividends totalling £232,000 (2022: £244,000) were declared and paid during the period.
The Directors who served during the year were:
In the current economic climate the Directors will continue to monitor business risks and take mitigating action where necessary. Capital expenditure will be monitored closely. The Directors will continue to work closely with suppliers and customers to ensure best quality service is maintained.
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FAIRFAX PLANT HIRE LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 30 SEPTEMBER 2023
The directors have performed a robust forecasting exercise taking into account the probable and possible business impacts associated with the business risks. The period of assessment covers a period of at least 12 months from the date of the audit report. The Company has worked closely with the bank and other providers of finance to ensure the sufficient working capital facilities are in place over this period. As such the directors are satisfied that the Company remains a going concern and the financial statements have been prepared on the going concern basis.
Economic impact of global events
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The Directors have carried out an assessment of the potential impact of current economic uncertainties on the business, including the impact of mitigation measures, and have taken account of these potential impacts in their going concern assessment.
Fairfax Plant Hire Limited continues to work with its partners to minimise any impacts of these events and maximise the realisation of any opportunities they may provide to the business.
Matters covered in the Strategic Report
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Certain information is not shown in the Director's Report because it is shown in the Strategic Report on page 1 of the financial statements in accordance with the provisions of Section 414C(11) of the Companies Act 2006. The Strategic Report includes a business review, principal risks and uncertainties and information on the Company's key performance indicators.
Disclosure of information to auditor
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Each of the persons who are Directors at the time when this Directors' Report is approved has confirmed that:
∙so far as the Directors are aware, there is no relevant audit information of which the Company's auditor is unaware, and
∙the Directors have taken all the steps that ought to have been taken as Directors in order to be aware of any relevant audit information and to establish that the Company's auditor is aware of that information.
Post balance sheet events
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Post year-end dividends of £110,000 were declared to shareholders.
The auditor, Mazars LLP, will be proposed for reappointment in accordance with section 485 of the Companies Act 2006.
This report was approved by the board on 11 March 2024 and signed on its behalf.
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FAIRFAX PLANT HIRE LIMITED
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF FAIRFAX PLANT HIRE LIMITED
Opinion
We have audited the financial statements of Fairfax Plant Hire Limited (the ‘Company’) for the year ended 30 September 2023 which comprise the Statement of Comprehensive Income, the Statement of Financial Position, the Statement of Changes in Equity and notes to the financial statements, including a summary of significant accounting policies.
The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (United Kingdom Generally Accepted Accounting Practice).
In our opinion, the financial statements:
∙give a true and fair view of the state of the Company’s affairs as at 30 September 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.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the "Auditor’s responsibilities for the audit of the financial statements" section of our report. We are independent of the Company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the Company’s ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
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FAIRFAX PLANT HIRE LIMITED
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF FAIRFAX PLANT HIRE LIMITED
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 the audit:
∙the information given in the Strategic Report and the Directors' Report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
∙the Strategic Report and the Directors' Report have been prepared in accordance with applicable legal requirements.
Matters on which we are required to report by exception
In 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 directors' remuneration specified by law are not made; or
∙we have not received all the information and explanations we require for our audit.
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FAIRFAX PLANT HIRE LIMITED
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF FAIRFAX PLANT HIRE LIMITED
Responsibilities of Directors
As explained more fully in the Directors' Responsibilities Statement set out on page 2, 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 intend either 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.
The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below.
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.
Based on our understanding of the company and its industry, we considered that non-compliance with the following laws and regulations might have a material effect on the financial statements: employment regulation, health and safety regulation, anti-money laundering regulation.
To help us identify instances of non-compliance with these laws and regulations, and in identifying and assessing the risks of material misstatement in respect to non-compliance, our procedures included, but were not limited to:
∙Inquiring of management and, where appropriate, those charged with governance, as to whether the company is in compliance with laws and regulations, and discussing their policies and procedures regarding compliance with laws and regulations;
∙Inspecting correspondence, if any, with relevant licensing or regulatory authorities;
∙Communicating identified laws and regulations to the engagement team and remaining alert to any indications of non-compliance throughout our audit; and
∙Considering the risk of acts by the company which were contrary to applicable laws and regulations, including fraud.
We also considered those laws and regulations that have a direct effect on the preparation of the financial statements, such as tax legislation, pension legislation, the Companies Act 2006.
In addition, we evaluated the directors' and management’s incentives and opportunities for fraudulent manipulation of the financial statements (including the risk of override of controls) and determined that the principal risks were related to posting manual journal entries to manipulate financial performance, management bias through judgements and assumptions in significant accounting estimates, in particular in relation to depreciation rates, revenue recognition (which we pinpointed to the cut-off assertion), and significant one-off or unusual transactions.
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FAIRFAX PLANT HIRE LIMITED
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF FAIRFAX PLANT HIRE LIMITED
Our audit procedures in relation to fraud included but were not limited to:
∙Making enquiries of the directors and management on whether they had knowledge of any actual, suspected or alleged fraud;
∙Gaining an understanding of the internal controls established to mitigate risks related to fraud;
∙Discussing amongst the engagement team the risks of fraud; and
∙Addressing the risks of fraud through management override of controls by performing journal entry testing.
There are inherent limitations in the audit procedures described above and the primary responsibility for the prevention and detection of irregularities including fraud rests with management. As with any audit, there remained a risk of non-detection of irregularities, as these may involve collusion, forgery, intentional omissions, misrepresentations or the override of internal controls.
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council’s website at www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.
Use of the audit 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.
Christopher Hudson (Senior Statutory Auditor)
for and on behalf of
Mazars LLP
Chartered Accountants and Statutory Auditor
5th Floor
3 Wellington Place
Leeds
LS1 4AP
11 March 2024
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FAIRFAX PLANT HIRE LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 SEPTEMBER 2023
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Exceptional administrative expenses
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Interest payable and similar expenses
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Profit for the financial year
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There were no recognised gains and losses for 2023 or 2022 other than those included in the statement of comprehensive income.
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There was no other comprehensive income for 2023 (2022:£NIL).
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The notes on pages 11 to 31 form part of these financial statements.
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FAIRFAX PLANT HIRE LIMITED
REGISTERED NUMBER: 01953454
STATEMENT OF FINANCIAL POSITION
AS AT 30 SEPTEMBER 2023
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Debtors: amounts falling due within one year
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Creditors: amounts falling due within one year
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Total assets less current liabilities
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Creditors: amounts falling due after more than one year
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Provisions for liabilities
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The financial statements were approved and authorised for issue by the board and were signed on its behalf on 11 March 2024.
The notes on pages 11 to 31 form part of these financial statements.
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FAIRFAX PLANT HIRE LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 SEPTEMBER 2023
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Comprehensive income for the year
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Total comprehensive income for the year
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Contributions by and distributions to owners
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Dividends: Equity capital
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Total transactions with owners
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Comprehensive income for the year
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Total comprehensive income for the year
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Contributions by and distributions to owners
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Dividends: Equity capital
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Total transactions with owners
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The notes on pages 11 to 31 form part of these financial statements.
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FAIRFAX PLANT HIRE LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 SEPTEMBER 2023
Fairfax Plant Hire Limited (the 'Company') is a private company, limited by shares and registered in England and Wales, registered number 01953454. The registered address is The Old Brickworks, Hull Road, Hemingbrough, Selby, YO8 6QG.
The principal activity is that of hire of plant and machinery.
2.Accounting policies
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Basis of preparation of financial statements
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The financial statements have been prepared under the historical cost convention unless otherwise specified within these accounting policies and in accordance with Financial Reporting Standard 102, the Financial Reporting Standard applicable in the UK and the Republic of Ireland and the Companies Act 2006.
These financial statements have been presented in pound sterling which is the functional currency of the Company, and rounded to the nearest £.
The preparation of financial statements in compliance with FRS 102 requires the use of certain critical accounting estimates. It also requires management to exercise judgment in applying the Company's accounting policies (see note 3).
The following principal accounting policies have been applied:
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Financial Reporting Standard 102 - reduced disclosure exemptions
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The Company has taken advantage of the following disclosure exemptions in preparing these financial statements, as permitted by the FRS 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland":
∙the requirements of Section 7 Statement of Cash Flows;
∙the requirements of Section 3 Financial Statement Presentation paragraph 3.17(d);
∙the requirements of Section 11 Financial Instruments paragraphs 11.42, 11.44 to 11.45, 11.47, 11.48(a)(iii), 11.48(a)(iv), 11.48(b) and 11.48(c);
∙the requirements of Section 12 Other Financial Instruments paragraphs 12.26 to 12.27, 12.29(a), 12.29(b) and 12.29A;
∙the requirements of Section 33 Related Party Disclosures paragraph 33.7.
This information is included in the consolidated financial statements of K and C Love Limited as at 30 September 2023 and these financial statements may be obtained from the Company's registered office.
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FAIRFAX PLANT HIRE LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 SEPTEMBER 2023
2.Accounting policies (continued)
The Company has adequate resources to continue in operational existence for the foreseeable future. Accordingly the going concern basis of accounting continues to be appropriate in preparing the financial statements. The directors have considered a period in excess of twelve months from the date of approval of these financial statements in making their assessment.
The directors have performed a robust forecasting exercise taking into account the probable and possible business impacts associated with the business risks. The period of assessment covers a period of at least 12 months from the date of the audit report. The Company has worked closely with the bank and other providers of finance to ensure the sufficient working capital facilities are in place over this period. As such the directors are satisfied that the Company remains a going concern and the financial statements have been prepared on the going concern basis.
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured. Revenue is measured as the fair value of the consideration received or receivable, excluding discounts, rebates, value added tax and other sales taxes. The following criteria must also be met before revenue is recognised:
Sale of goods
Revenue from the sale of goods is recognised when all of the following conditions are satisfied:
∙the Company has transferred the significant risks and rewards of ownership to the buyer;
∙the Company retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold;
∙the amount of revenue can be measured reliably;
∙it is probable that the Company will receive the consideration due under the transaction; and
∙the costs incurred or to be incurred in respect of the transaction can be measured reliably.
Rendering of services
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:
∙the amount of revenue can be measured reliably;
∙it is probable that the Company will receive the consideration due under the contract;
∙the stage of completion of the contract at the end of the reporting period can be measured reliably; and
∙the costs incurred and the costs to complete the contract can be measured reliably.
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FAIRFAX PLANT HIRE LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 SEPTEMBER 2023
2.Accounting policies (continued)
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Operating leases: the Company as lessee
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Rentals paid under operating leases are charged to profit or loss on a straight-line basis over the lease term.
Benefits received and receivable as an incentive to sign an operating lease are recognised on a straight-line basis over the lease term, unless another systematic basis is representative of the time pattern of the lessee's benefit from the use of the leased asset.
Finance costs are charged to profit or loss over the term of the debt using the effective interest method so that the amount charged is at a constant rate on the carrying amount. Issue costs are initially recognised as a reduction in the proceeds of the associated capital instrument.
All borrowing costs are recognised in profit or loss in the year in which they are incurred.
Defined contribution pension plan
The Company operates a defined contribution plan for its employees. A defined contribution plan is a pension plan under which the Company pays fixed contributions into a separate entity. Once the contributions have been paid the Company has no further payment obligations.
The contributions are recognised as an expense in profit or loss when they fall due. Amounts not paid are shown in accruals as a liability in the Statement of Financial Position. The assets of the plan are held separately from the Company in independently administered funds.
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FAIRFAX PLANT HIRE LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 SEPTEMBER 2023
2.Accounting policies (continued)
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Current and deferred taxation
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The tax expense for the year comprises current and deferred tax. Tax is recognised in profit or loss except that a charge attributable to an item of income and expense recognised as other comprehensive income or to an item recognised directly in equity is also recognised in other comprehensive income or directly in equity respectively.
The current income tax charge is calculated on the basis of tax rates and laws that have been enacted or substantively enacted by the reporting date in the countries where the Company operates and generates income.
Deferred tax balances are recognised in respect of all timing differences that have originated but not reversed by the reporting date, except that:
∙The recognition of deferred tax assets is limited to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits; and
∙Any deferred tax balances are reversed if and when all conditions for retaining associated tax allowances have been met.
Deferred tax balances are not recognised in respect of permanent differences except in respect of business combinations, when deferred tax is recognised on the differences between the fair values of assets acquired and the future tax deductions available for them and the differences between the fair values of liabilities acquired and the amount that will be assessed for tax. Deferred tax is determined using tax rates and laws that have been enacted or substantively enacted by the reporting date.
Exceptional items are transactions that fall within the ordinary activities of the Company but are presented separately due to their size or incidence.
Intangible assets are initially recognised at cost. After recognition, under the cost model, intangible assets are measured at cost less any accumulated amortisation and any accumulated impairment losses.
All intangible assets are considered to have a finite useful life. If a reliable estimate of the useful life cannot be made, the useful life shall not exceed ten years.
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FAIRFAX PLANT HIRE LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 SEPTEMBER 2023
2.Accounting policies (continued)
Tangible fixed assets under the cost model are stated at historical cost less accumulated depreciation and any accumulated impairment losses. Historical cost includes expenditure that is directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management.
Depreciation is charged so as to allocate the cost of assets less their residual value over their estimated useful lives, using the straight-line method.
Depreciation is provided on the following basis:
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Leasehold Property improvements
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The assets' residual values, useful lives and depreciation methods are reviewed, and adjusted prospectively if appropriate, or if there is an indication of a significant change since the last reporting date.
Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised in profit or loss.
Stocks are stated at the lower of cost and net realisable value, being the estimated selling price less costs to complete and sell. Cost is based on the cost of purchase on a first in, first outbasis.
Short-term debtors are measured at transaction price, less any impairment. Loans receivable are measured initially at fair value, net of transaction costs, and are measured subsequently at amortised cost using the effective interest method, less any impairment.
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Cash and cash equivalents
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Cash is represented by cash in hand and deposits with financial institutions repayable without penalty on notice of not more than 24 hours. Cash equivalents are highly liquid investments that mature in no more than three months from the date of acquisition and that are readily convertible to known amounts of cash with insignificant risk of change in value.
Short-term creditors are measured at the transaction price. Other financial liabilities, including bank loans, are measured initially at fair value, net of transaction costs, and are measured subsequently at amortised cost using the effective interest method.
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FAIRFAX PLANT HIRE LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 SEPTEMBER 2023
2.Accounting policies (continued)
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Provisions for liabilities
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Provisions are made where an event has taken place that gives the Company a legal or constructive obligation that probably requires settlement by a transfer of economic benefit, and a reliable estimate can be made of the amount of the obligation.
Provisions are charged as an expense to profit or loss in the year that the Company becomes aware of the obligation, and are measured at the best estimate at the reporting date of the expenditure required to settle the obligation, taking into account relevant risks and uncertainties.
When payments are eventually made, they are charged to the provision carried in the Statement of Financial Position.
The Company has elected to apply the provisions of Section 11 “Basic Financial Instruments” of FRS 102 to all of its financial instruments.
The Company has elected to apply the recognition and measurement provisions of IFRS 9 Financial Instruments (as adopted by the UK Endorsement Board) with the disclosure requirements of Sections 11 and 12 and the other presentation requirements of FRS 102.
Financial instruments are recognised in the Company's Statement of Financial Position when the Company becomes party to the contractual provisions of the instrument.
Financial assets and liabilities are offset, with the net amounts presented in the financial statements, when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.
Basic financial assets
Basic financial assets, which include trade and other receivables, cash and bank balances, are initially measured at their transaction price including transaction costs and are subsequently carried at their amortised cost using the effective interest method, less any provision for impairment, 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.
Discounting is omitted where the effect of discounting is immaterial. The Company's cash and cash equivalents, trade and most other receivables due with the operating cycle fall into this category of financial instruments.
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FAIRFAX PLANT HIRE LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 SEPTEMBER 2023
2.Accounting policies (continued)
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Financial instruments (continued)
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Other financial assets
Other financial assets, which includes investments in equity instruments which are not classified as subsidiaries, associates or joint ventures, are initially measured at fair value, which is normally the recognised transaction price. Such assets are subsequently measured at fair value with the changes in fair value being recognised in the profit or loss. Where other financial assets are not publicly traded, hence their fair value cannot be measured reliably, they are measured at cost less impairment.
Impairment of financial assets
Financial assets are assessed for indicators of impairment at each reporting date.
Financial assets are impaired when events, subsequent to their initial recognition, indicate the estimated future cash flows derived from the financial asset(s) have been adversely impacted. The impairment loss will be the difference between the current carrying amount and the present value of the future cash flows at the asset(s) original effective interest rate.
If there is a favourable change in relation to the events surrounding the impairment loss then the impairment can be reviewed for possible reversal. The reversal will not cause the current carrying amount to exceed the original carrying amount had the impairment not been recognised. The impairment reversal is recognised in the profit or loss.
Financial liabilities
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instruments any contract that evidences a residual interest in the assets of the Company after the deduction of all its liabilities.
Basic financial liabilities, which include trade and other payables, bank loans and other loans are initially measured at their transaction price after transaction costs. When this constitutes a financing transaction, whereby the debt instrument is measured at the present value of the future receipts discounted at a market rate of interest. Discounting is omitted where the effect of discounting is immaterial.
Debt instruments are subsequently carried at their amortised cost using the effective interest rate method.
Trade payables are obligations to pay for goods and services that have been acquired in the ordinary course of business from suppliers. Trade payables are classified as current liabilities if the payment is due within one year. If not, they represent non-current liabilities. Trade payables are initially recognised at their transaction price and subsequently are measured at amortised cost using the effective interest method. Discounting is omitted where the effect of discounting is immaterial.
- 17 -
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FAIRFAX PLANT HIRE LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 SEPTEMBER 2023
2.Accounting policies (continued)
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Financial instruments (continued)
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Other financial instruments
Derivatives, including forward exchange contracts, futures contracts and interest rate swaps, are not classified as basic financial instruments. These are initially recognised at fair value on the date the derivative contract is entered into, with costs being charged to the profit or loss. They are subsequently measured at fair value with changes in the profit or loss.
Debt instruments that do not meet the conditions as set out in FRS 102 paragraph 11.9 are subsequently measured at fair value through the profit or loss. This recognition and measurement would also apply to financial instruments where the performance is evaluated on a fair value basis as with a documented risk management or investment strategy.
Derecognition of financial instruments
Derecognition of financial assets
Financial assets are derecognised when their contractual right to future cash flow expire, or are settled, or when the Company transfers the asset and substantially all the risks and rewards of ownership to another party. If significant risks and rewards of ownership are retained after the transfer to another party, then the Company will continue to recognise the value of the portion of the risks and rewards retained.
Derecognition of financial liabilities
Financial liabilities are derecognised when the Company's contractual obligations expire or are discharged or cancelled.
Equity dividends are recognised when they become legally payable. Interim equity dividends are recognised when paid. Final equity dividends are recognised when approved by the shareholders at an annual general meeting.
- 18 -
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FAIRFAX PLANT HIRE LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 SEPTEMBER 2023
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Judgements in applying accounting policies and key sources of estimation uncertainty
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Critical judgements in applying the Company’s accounting policies
The critical judgements that management have made in the process of applying the Company’s accounting policies that have the most significant effect on the amounts recognised in the statutory financial statements are discussed below.
Assessing indicators of impairment
In assessing whether there have been any indicators of impairment to assets, management have considered both external and internal sources of information such as market conditions, counterparty credit ratings and experience of recoverability and where applicable, the ability of the asset to be operated as planned.
Key sources of estimation uncertainty
The key assumptions concerning the future, and other key sources of estimation uncertainty surrounding the carrying amounts of assets and liabilities within the next financial year are discussed below.
(i) Determining residual values and useful economic lives of tangible assets
The Company depreciates tangible assets, over their estimated useful lives. The estimation of the useful lives of tangible assets is based on historic performance as well as expectations about future use and therefore requires estimates and assumptions to be applied. The actual lives of these assets can vary depending on a variety of factors, including technological innovation, product life cycles and maintenance programmes.
Judgement is also applied, when determining the residual values for fixed assets. When determining the residual value, the directors have assessed the amount that the Company would currently obtain for the disposal of the asset, if it were already of the condition expected at the end of its useful life. Where possible this is done with reference to external market prices.
Analysis of turnover by country of destination:
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The entire turnover related to the Company's principal activity.
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- 19 -
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FAIRFAX PLANT HIRE LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 SEPTEMBER 2023
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The operating profit is stated after charging/(crediting):
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Profit on disposal of fixed assets (included as exceptional items)
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Other operating lease rentals
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Fees payable to the Company's auditor for the audit of the Company and Group's annual financial statements
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Staff costs, including Directors' remuneration, were as follows:
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Cost of defined contribution scheme
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The average monthly number of employees, including directors, during the year was 110 (2022 - 101).
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- 20 -
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FAIRFAX PLANT HIRE LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 SEPTEMBER 2023
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Company contributions to defined contribution pension schemes
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During the year retirement benefits were accruing to 2 Directors (2022 - 2) in respect of defined contribution pension schemes.
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The highest paid Director received remuneration of £123,596 (2022 - £49,824).
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The value of the Company's contributions paid to a defined contribution pension scheme in respect of the highest paid Director amounted to £2,635 (2022 - £1,283).
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Interest payable and similar expenses
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Finance leases and hire purchase contracts
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- 21 -
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FAIRFAX PLANT HIRE LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 SEPTEMBER 2023
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Current tax on profits for the year
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Adjustments in respect of previous periods
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Origination and reversal of timing differences
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Effect of tax rate change on opening balance
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Adjustment in respect of prior periods
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Taxation on profit on ordinary activities
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- 22 -
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FAIRFAX PLANT HIRE LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 SEPTEMBER 2023
10.Taxation (continued)
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Factors affecting tax charge for the year
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The tax assessed for the year is higher than (2022 - higher than) the standard rate of corporation tax in the UK of 22.01% (2022 - 19%). The differences are explained below:
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Profit on ordinary activities before tax
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Profit on ordinary activities multiplied by standard rate of corporation tax in the UK of 22.01% (2022 - 19%)
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Expenses not deductible for tax purposes
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Adjustments to tax charge in respect of previous periods
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Adjustment to tax charge in respects of previous periods - deferred tax
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Remeasurement of deferred tax for changes in tax rates
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Total tax charge for the year
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Factors that may affect future tax charges
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From 1 April 2023, the rate of corporation tax in the United Kingdom has increased from 19% to 25%. Companies with profits of £50,000 or less will continue to be taxed at 19%, which is a new small profits rate. Where taxable profits are between £50,000 and £250,000, the higher 25% rate will apply but with a marginal relief applying as profits increase.
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Dividends paid on ordinary share capital
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- 23 -
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FAIRFAX PLANT HIRE LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 SEPTEMBER 2023
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Profit on sale of tangible assets
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- 24 -
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FAIRFAX PLANT HIRE LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 SEPTEMBER 2023
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Leasehold Property improvements
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Charge for the year on financed assets
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The net book value of assets held under finance leases or hire purchase contracts, included above, are as follows:
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- 25 -
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FAIRFAX PLANT HIRE LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 SEPTEMBER 2023
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Finished goods and goods for resale
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Amounts owed by group undertakings
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Prepayments and accrued income
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Amounts owed by group undertakings are unsecured, interest free and repayable on demand.
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Cash and cash equivalents
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- 26 -
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FAIRFAX PLANT HIRE LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 SEPTEMBER 2023
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Creditors: Amounts falling due within one year
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Amounts owed to group undertakings
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Other taxation and social security
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Obligations under finance lease and hire purchase contracts
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Accruals and deferred income
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Amounts owed to group undertakings are unsecured, interest free and repayable on demand.
Hire purchase liabilities are secured upon the assets to which they relate. Hire purchase liabilities and the bank loan are also secured by a debenture creating a fixed and floating charge over the assets of the Company and a first legal charge over the Company’s freehold land.
The Company is party to an unlimited inter company cross guarantee between Fairfax Plant Hire Limited, K and C Love Limited and K and C Love Asset Management Limited.
The total liabilities secured by the cross guarantee in K and C Love Limited and K and C Love Asset Management Limited total £1,207,376 (2022: £1,270,315).
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Creditors: Amounts falling due after more than one year
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Net obligations under finance leases and hire purchase contracts
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Hire purchase liabilities are secured upon the assets to which they relate. Hire purchase liabilities and the bank loan are also secured by a debenture creating a fixed and floating charge over the assets of the Company and a first legal charge over the Company’s freehold land.
The Company is party to an unlimited inter company gross guarantee between Fairfax Plant Hire Limited, K and C Love Limited and K and C Love Asset Management Limited.
The total liabilities secured by the cross guarantee in K and C Love Limited and K and C Love Asset Management Limited total £1,207,376 (2022: £1,270,315).
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- 27 -
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FAIRFAX PLANT HIRE LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 SEPTEMBER 2023
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Analysis of the maturity of loans is given below:
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Amounts falling due within one year
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Amounts falling due 1-2 years
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Amounts falling due 2-5 years
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Hire purchase and finance leases
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Minimum lease payments under hire purchase fall due as follows:
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- 28 -
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FAIRFAX PLANT HIRE LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 SEPTEMBER 2023
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Charged to profit or loss
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The provision for deferred taxation is made up as follows:
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Fixed asset timing differences
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Short term timing differences
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The deferred tax provision has arisen primarily due to the accelerated capital allowances on fixed assets acquired by the Company. As such the net reversal of deferred tax expected to occur in future periods will be in line with the estimated useful life of the fixed assets.
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Allotted, called up and fully paid
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200 (2022 - 200) Ordinary shares of £0.01 each
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Profit and loss account
This reserve represents cumulative profits and losses less dividends declared.
The Company operates a defined contribution pension plan for its employees. The pension cost charged in the period represents contributions payable by the Company to the funds and amounted to £68,508 (2022: £57,470). Contributions amounting to £15,029 (2022: £16,460) were outstanding at the reporting date and are included within creditors.
- 29 -
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FAIRFAX PLANT HIRE LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 SEPTEMBER 2023
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Commitments under operating leases
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At 30 September 2023 the Company had future minimum lease payments due under non-cancellable operating leases for each of the following periods:
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Later than 1 year and not later than 5 years
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The lease cost charged to the Statement of Comprehensive Income during the period was £239,213 (2022: £154,981).
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Related party transactions
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The Company has taken advantage of the exemption available under FRS 102 section 33 'Related Party Disclosures' not to disclose related party transactions entered into between wholly owned members of the group headed by K and C Love Limited.
During the year advances were made totalling £20,000 (2022: repayments of £287) on the Directors loan account.
The directors' loan accounts where these balances have arisen are active accounts with both payments and receipts as such balances are always repayable on demand. No interest is charged on outstanding balances. During the year there were times when the directors loan accounts were overdrawn. The maximum level of indebtedness of the directors to the Company in the year was £19,912 (2022: £Nil).
The Company declared dividends totalling £232,000 (2022: £244,000) in the period.
The Company paid rent totalling £48,000 (2022: £48,000) to the ultimate controlling parties in respect of the use of the head office site.
Balances due from/(owed to) related parties at the reporting date were as follows:
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Post balance sheet events
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Post year-end dividends of £110,000 were declared to shareholders.
- 30 -
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FAIRFAX PLANT HIRE LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 SEPTEMBER 2023
The Company is a wholly owned subsidiary of K and C Love Limited. The ultimate controlling parties of K and C Love Limited are Mr K & Mrs C Love.
The smallest and largest group in which the results for Fairfax Plant Hire Limited are consolidated for the current financial period is that headed by K and C Love Limited.
- 31 -
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