D T HUGHES BUILDING CONTRACTORS LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 AUGUST 2023
Company Registration No. 05200991 (England and Wales)
D T HUGHES BUILDING CONTRACTORS LIMITED
COMPANY INFORMATION
Directors
Mrs S A Hughes
Mr D T Hughes
Mr D T Hughes
(Appointed 7 December 2023)
Secretary
Mrs S A Hughes
Company number
05200991
Registered office
48-52 Penny Lane
Mossley Hill
Liverpool
L18 1DG
Auditor
DSG
Castle Chambers
43 Castle Street
Liverpool
L2 9TL
D T HUGHES BUILDING CONTRACTORS LIMITED
CONTENTS
Page
Strategic report
1
Directors' report
2 - 3
Directors' responsibilities statement
4
Independent auditor's report
5 - 7
Statement of comprehensive income
8
Balance sheet
9
Statement of changes in equity
10
Notes to the financial statements
11 - 22
D T HUGHES BUILDING CONTRACTORS LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 31 AUGUST 2023
- 1 -
The directors present the strategic report for the year ended 31 August 2023.
Review of the business
The results for the year and the financial position at the end were considered satisfactory by the directors, despite sales decreasing from the prior year. The results for the company show a pre-tax profit of £2,455,195 (2022: £783,562) for the year and turnover of £18,323,536 (2022: £14,080,132). The company has net assets of £3,298,017 (2022: £1,918,435).
Principal risks and uncertainties
We have set out below a number of risk factors that we believe could cause our actual future results to differ materially from expected results. However, other factors could adversely affect the results so the factors set out below should not be considered to be a complete set of all potential risks and uncertainties.
Business conditions and the general economy
The profitability of the company could be adversely affected by a worsening of general economic conditions in the United Kingdom. Whilst a short term worsening in the economic conditions in the United Kingdom should not significantly adversely impact profitability, a sustained downturn over a number of years would be likely to lead to reduced profit in this area.
Credit risk
Credit risk is a constant risk and all new customers are reviewed and their financial position assessed before acceptance. The debt from existing customers is monitored on a regular basis to reduce the cash flow risk.
Liquidity risk
The company manages its cash and borrowing requirements in order to maximise interest income and minimise interest expense, whilst ensuring the company has sufficient liquid resources to meet the operating needs of the business.
Interest rate risk
The company is exposed to fair value interest rate risk on its fixed rate borrowings and cash flow interest rate risk on floating rate deposits, bank overdrafts and loans.
Regulatory compliance risk
The company is subject to regulatory compliance risk which can arise from a failure to comply fully with the laws, regulations or codes applicable, for example health and safety, licensing and fire regulations. Non-compliance can lead to fines, enforced suspension from sale of certain products or public reprimand.
Key performance indicators
Measure 2023 2022
Turnover £18.3m £14.1m
Gross profit £9.3m £5.6m
Operating profit £2.6m £0.9m
Mrs S A Hughes
Director
20 August 2024
D T HUGHES BUILDING CONTRACTORS LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 AUGUST 2023
- 2 -
The directors present their annual report and financial statements for the year ended 31 August 2023.
Principal activities
The principal activity of the company continued to be that of building contractors.
Results and dividends
The results for the year are set out on page 8.
Ordinary dividends were paid amounting to £555,756. 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:
Mrs S A Hughes
Mr D T Hughes
Mr D T Hughes
(Appointed 7 December 2023)
Post reporting date events
There are no adjusting or non-adjusting events which have come to light at this current time.
Future developments
The company plans to continue to grow the business and its reputation throughout the industry. The external commercial environment is expected to remain competitive but management remain confident that the company will maintain or increase its market share going forward.
Auditor
In accordance with the company's articles, a resolution proposing that DSG be reappointed as auditor of the company will be put at a General Meeting.
Strategic report
The company has chosen in accordance with Companies Act 2006, s. 414C(11) to set out in the company'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.
Statement of disclosure to auditor
So far as each person who was a director at the date of approving this report is aware, there is no relevant audit information of which the company’s auditor is unaware. Additionally, the directors individually have taken all the necessary steps that they ought to have taken as directors in order to make themselves aware of all relevant audit information and to establish that the company’s auditor is aware of that information.
Medium-sized companies exemption
This report has been prepared in accordance with the provisions applicable to companies entitled to the medium-sized companies exemption.
D T HUGHES BUILDING CONTRACTORS LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 AUGUST 2023
- 3 -
On behalf of the board
Mrs S A Hughes
Director
20 August 2024
D T HUGHES BUILDING CONTRACTORS LIMITED
DIRECTORS' RESPONSIBILITIES STATEMENT
FOR THE YEAR ENDED 31 AUGUST 2023
- 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 company and of the profit or loss of the company for that period. In preparing these financial statements, the directors are required to:
select suitable accounting policies and then apply them consistently;
make judgements and accounting estimates that are reasonable and prudent;
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company’s transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
D T HUGHES BUILDING CONTRACTORS LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF D T HUGHES BUILDING CONTRACTORS LIMITED
- 5 -
Opinion
We have audited the financial statements of D T Hughes Building Contractors Limited (the 'company') for the year ended 31 August 2023 which comprise the statement of comprehensive income, the balance sheet, the statement of changes in equity and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).
In our opinion the financial statements:
give a true and fair view of the state of the company's affairs as at 31 August 2023 and of its profit for the year then ended;
have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
have been prepared in accordance with the requirements of the Companies Act 2006.
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
The other information comprises the information included in the annual report other than the financial statements and our auditor's report thereon. The directors are responsible for the other information contained within the annual report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of our audit:
the information given in the strategic report and the directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
the strategic report and the directors' report have been prepared in accordance with applicable legal requirements.
D T HUGHES BUILDING CONTRACTORS LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF D T HUGHES BUILDING CONTRACTORS LIMITED (CONTINUED)
- 6 -
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identified material misstatements in the strategic report or the directors' report.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:
adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or
the financial statements are not in agreement with the accounting records and returns; or
certain disclosures of remuneration specified by law are not made; or
we have not received all the information and explanations we require for our audit.
Responsibilities of directors
As explained more fully in the directors' responsibilities statement, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the directors are responsible for assessing the company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.
Auditor's responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below.
D T HUGHES BUILDING CONTRACTORS LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF D T HUGHES BUILDING CONTRACTORS LIMITED (CONTINUED)
- 7 -
Capability of the audit in detecting irregularities, including fraud
Discussions with and enquiries of management and those charged with governance were held with a view to identifying those laws and regulations that could be expected to have a material impact on the financial statements. During the engagement team briefing, the outcomes of these discussions and enquiries were shared with the team, as well as consideration as to where and how fraud may occur in the entity. The following laws and regulations were identified as being of significance to the entity:
Those laws and regulations considered to have a direct effect on the financial statements include UK financial reporting standards, Company Law, Tax and Pensions legislation, and distributable profits legislation.
Those laws and regulations for which non-compliance may be fundamental to the operating aspects of the business and therefore may have a material effect on the financial statements include environmental and fire regulations, health and safety legislation, trades description act, employment legislation and licensing.
Audit procedures undertaken in response to the potential risks relating to irregularities (which include fraud and non-compliance with laws and regulations) comprised of: enquiries of management and those charged with governance as to whether the entity complies with such laws and regulations; enquiries with the same concerning any actual or potential litigation or claims; inspection of relevant legal correspondence; testing the appropriateness of journal entries; and the performance of analytical review to identify unexpected movements in account balances which may be indicative of fraud.
No instances of material non-compliance were identified. However, the likelihood of detecting irregularities, including fraud, is limited by the inherent difficulty in detecting irregularities, the effectiveness of the entity’s controls, and the nature, timing and extent of the audit procedures performed. Irregularities that result from fraud might be inherently more difficult to detect than irregularities that result from error. As explained above, there is an unavoidable risk that material misstatements may not be detected, even though the audit has been planned and performed in accordance with ISAs (UK).
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.
Other matters which we are required to address
There was no requirement for an audit of the financial statements in the prior period. The comparative figure are therefore unaudited.
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.
Jean Ellis BA FCA CTA
Senior Statutory Auditor
For and on behalf of DSG
20 August 2024
Chartered Accountants
Statutory Auditor
Castle Chambers
43 Castle Street
Liverpool
L2 9TL
D T HUGHES BUILDING CONTRACTORS LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 AUGUST 2023
- 8 -
2023
2022
Notes
£
£
Turnover
3
18,323,536
14,080,132
Cost of sales
(9,067,205)
(8,433,001)
Gross profit
9,256,331
5,647,131
Administrative expenses
(6,713,165)
(4,808,993)
Other operating income
36,639
73,351
Operating profit
4
2,579,805
911,489
Interest receivable and similar income
7
24,690
973
Interest payable and similar expenses
8
(149,300)
(128,900)
Profit before taxation
2,455,195
783,562
Tax on profit
9
(519,857)
(182,241)
Profit for the financial year
1,935,338
601,321
The notes on pages 11 to 22 form part of these financial statements.
D T HUGHES BUILDING CONTRACTORS LIMITED
BALANCE SHEET
AS AT
31 AUGUST 2023
31 August 2023
- 9 -
2023
2022
Notes
£
£
£
£
Fixed assets
Tangible assets
11
2,432,447
2,513,349
Current assets
Debtors
12
3,372,545
2,469,744
Cash at bank and in hand
4,423,080
2,057,282
7,795,625
4,527,026
Creditors: amounts falling due within one year
13
(5,237,583)
(3,181,313)
Net current assets
2,558,042
1,345,713
Total assets less current liabilities
4,990,489
3,859,062
Creditors: amounts falling due after more than one year
14
(1,318,624)
(1,558,455)
Provisions for liabilities
Deferred tax liability
17
373,848
382,172
(373,848)
(382,172)
Net assets
3,298,017
1,918,435
Capital and reserves
Called up share capital
20
1
1
Profit and loss reserves
3,298,016
1,918,434
Total equity
3,298,017
1,918,435
These financial statements have been prepared in accordance with the provisions relating to medium-sized companies.
The financial statements were approved by the board of directors and authorised for issue on 20 August 2024 and are signed on its behalf by:
Mrs S A Hughes
Director
Company registration number 05200991 (England and Wales)
D T HUGHES BUILDING CONTRACTORS LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 AUGUST 2023
- 10 -
Share capital
Profit and loss reserves
Total
Notes
£
£
£
Balance at 1 September 2021
1
1,879,443
1,879,444
Year ended 31 August 2022:
Profit and total comprehensive income
-
601,321
601,321
Dividends
10
-
(562,330)
(562,330)
Balance at 31 August 2022
1
1,918,434
1,918,435
Year ended 31 August 2023:
Profit and total comprehensive income
-
1,935,338
1,935,338
Dividends
10
-
(555,756)
(555,756)
Balance at 31 August 2023
1
3,298,016
3,298,017
D T HUGHES BUILDING CONTRACTORS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 AUGUST 2023
- 11 -
1
Accounting policies
Company information
D T Hughes Building Contractors Limited is a private company limited by shares incorporated in England and Wales. The registered office is 48-52 Penny Lane, Mossley Hill, Liverpool, L18 1DG.
1.1
Accounting convention
These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006.
The financial statements are prepared in sterling, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £.
The financial statements have been prepared under the historical cost convention. The principal accounting policies adopted are set out below.
This company is a qualifying entity for the purposes of FRS 102, being a member of a group where the parent of that group prepares publicly available consolidated financial statements, including this company, which are intended to give a true and fair view of the assets, liabilities, financial position and profit or loss of the group. The company has therefore taken advantage of exemptions from the following disclosure requirements:
Section 7 ‘Statement of Cash Flows’: Presentation of a statement of cash flow and related notes and disclosures;
Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instrument Issues: Interest income/expense and net gains/losses for financial instruments not measured at fair value; basis of determining fair values; details of collateral, loan defaults or breaches, details of hedges, hedging fair value changes recognised in profit or loss and in other comprehensive income;
Section 26 ‘Share based Payment’: Share-based payment expense charged to profit or loss, reconciliation of opening and closing number and weighted average exercise price of share options, how the fair value of options granted was measured, measurement and carrying amount of liabilities for cash-settled share-based payments, explanation of modifications to arrangements;
Section 33 ‘Related Party Disclosures’: Compensation for key management personnel.
The financial statements of the company are consolidated in the financial statements of D T Hughes Holdings Limited.
D T Hughes Holdings Limited is a company incorporated in Great Britain and registered in England and Wales. The registered office is 48 - 52 Penny Lane Mossley Hill, Liverpool, Merseyside, United Kingdom, L18 1DG.
1.2
Going concern
Atruet the time of approving the financial statements, the directors have a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future. Thus the directors continue to adopt the going concern basis of accounting in preparing the financial statements.
1.3
Turnover
Turnover represents the invoiced value of work done during the period stated net of value added tax.
1.4
Tangible fixed assets
Tangible fixed assets are initially measured at cost and subsequently measured at cost or valuation, net of depreciation and any impairment losses.
D T HUGHES BUILDING CONTRACTORS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 AUGUST 2023
1
Accounting policies
(Continued)
- 12 -
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
Plant and equipment
25% reducing balance
Computers
25% reducing balance
The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is credited or charged to profit or loss.
1.5
Impairment of fixed assets
At each reporting period end date, the company reviews the carrying amounts of its tangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the company estimates the recoverable amount of the cash-generating unit to which the asset belongs.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.
Recognised impairment losses are reversed if, and only if, the reasons for the impairment loss have ceased to apply. Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.
1.6
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.
1.7
Financial instruments
The company has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.
Financial instruments are recognised in the company's balance sheet when the company becomes party to the contractual provisions of the instrument.
Financial assets and liabilities are offset, with the net amounts presented in the financial statements, when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.
D T HUGHES BUILDING CONTRACTORS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 AUGUST 2023
1
Accounting policies
(Continued)
- 13 -
Basic financial assets
Basic financial assets, which include debtors and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised.
Other financial assets
Other financial assets, including investments in equity instruments which are not subsidiaries, associates or joint ventures, are initially measured at fair value, which is normally the transaction price. Such assets are subsequently carried at fair value and the changes in fair value are recognised in profit or loss, except that investments in equity instruments that are not publicly traded and whose fair values cannot be measured reliably are measured at cost less impairment.
Impairment of financial assets
Financial assets, other than those held at fair value through profit and loss, are assessed for indicators of impairment at each reporting end date.
Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected. If an asset is impaired, the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset’s original effective interest rate. The impairment loss is recognised in profit or loss.
If there is a decrease in the impairment loss arising from an event occurring after the impairment was recognised, the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been, had the impairment not previously been recognised. The impairment reversal is recognised in profit or loss.
Derecognition of financial assets
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the company transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.
Classification of financial liabilities
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the company after deducting all of its liabilities.
Basic financial liabilities
Basic financial liabilities, including creditors, bank loans, loans from fellow group companies and preference shares that are classified as debt, are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future payments discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.
Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.
Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Amounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.
D T HUGHES BUILDING CONTRACTORS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 AUGUST 2023
1
Accounting policies
(Continued)
- 14 -
Other financial liabilities
Debt instruments that do not meet the conditions in FRS 102 paragraph 11.9 are subsequently measured at fair value through profit or loss. Debt instruments may be designated as being measured at fair value through profit or loss to eliminate or reduce an accounting mismatch or if the instruments are measured and their performance evaluated on a fair value basis in accordance with a documented risk management or investment strategy.
Derecognition of financial liabilities
Financial liabilities are derecognised when the company’s contractual obligations expire or are discharged or cancelled.
1.8
Equity instruments
Equity instruments issued by the company are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the company.
1.9
Taxation
The tax expense represents the sum of the tax currently payable and deferred tax.
Current tax
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the profit and loss account because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The company’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.
Deferred tax
Deferred tax liabilities are generally recognised for all timing differences and deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Such assets and liabilities are not recognised if the timing difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.
The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the profit and loss account, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset when the company has a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.
1.10
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.
1.11
Retirement benefits
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
D T HUGHES BUILDING CONTRACTORS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 AUGUST 2023
1
Accounting policies
(Continued)
- 15 -
1.12
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.
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.
1.13
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.
2
Judgements and key sources of estimation uncertainty
In the application of the company’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.
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.
Determining and reassessing residual values and useful economic lives of tangible assets
The company depreciates tangible assets over their estimated useful lives. In determining appropriate useful lives of assets, the directors have considered historic performance as well as future expectations for factors such as expected usage of the asset, physical wear and tear, technical and commercial obsolescence and legal limitations of the usage of the asset, such as lease terms. 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 applied to determine the residual values for tangible assets. When determining the residual values, the directors have assessed the amount that the group would currently obtain for the disposal of the asset, if it were already of the condition expected at the end of its useful economic life. At each reporting date, the directors have also assessed whether there have been any indicators, such as a change in how the asset is used, significant unexpected wear and tear and changes in market prices, which suggest previous estimates may differ from current expectations. Where this is the case, the residual value and/or useful life is amended and accounted for on a prospective basis.
D T HUGHES BUILDING CONTRACTORS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 AUGUST 2023
- 16 -
3
Turnover and other revenue
2023
2022
£
£
Turnover analysed by class of business
Services
18,323,536
14,080,132
2023
2022
£
£
Turnover analysed by geographical market
United Kingdom
18,323,536
14,080,132
2023
2022
£
£
Other revenue
Interest income
24,690
973
Grants received
2,900
3,806
4
Operating profit
2023
2022
Operating profit for the year is stated after charging/(crediting):
£
£
Government grants
(2,900)
(3,806)
Fees payable to the company's auditor for the audit of the company's financial statements
6,325
5,750
Depreciation of owned tangible fixed assets
109,650
111,831
Depreciation of tangible fixed assets held under finance leases
478,515
493,308
Loss on disposal of tangible fixed assets
13,777
-
Operating lease charges
452,010
187,835
5
Employees
The average monthly number of persons (including directors) employed by the company during the year was:
2023
2022
Number
Number
Administration
63
63
D T HUGHES BUILDING CONTRACTORS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 AUGUST 2023
5
Employees
(Continued)
- 17 -
Their aggregate remuneration comprised:
2023
2022
£
£
Wages and salaries
2,244,592
2,132,754
Social security costs
240,322
223,967
Pension costs
46,095
43,557
2,531,009
2,400,278
6
Directors' remuneration
2023
2022
£
£
Remuneration for qualifying services
26,050
18,388
Company pension contributions to defined contribution schemes
306
-
26,356
18,388
7
Interest receivable and similar income
2023
2022
£
£
Interest income
Interest on bank deposits
24,263
973
Other interest income
427
Total income
24,690
973
8
Interest payable and similar expenses
2023
2022
£
£
Interest on bank overdrafts and loans
38,345
55,482
Interest on finance leases and hire purchase contracts
110,536
73,418
Other interest
419
149,300
128,900
9
Taxation
2023
2022
£
£
Current tax
UK corporation tax on profits for the current period
528,181
1,690
D T HUGHES BUILDING CONTRACTORS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 AUGUST 2023
9
Taxation
2023
2022
£
£
(Continued)
- 18 -
Deferred tax
Origination and reversal of timing differences
(8,324)
180,551
Total tax charge
519,857
182,241
The actual charge for the year can be reconciled to the expected charge for the year based on the profit or loss and the standard rate of tax as follows:
2023
2022
£
£
Profit before taxation
2,455,195
783,562
Expected tax charge based on the standard rate of corporation tax in the UK of 25.00% (2022: 19.00%)
613,799
148,877
Tax effect of expenses that are not deductible in determining taxable profit
(2,286)
153
Effect of change in corporation tax rate
(147,312)
Permanent capital allowances in excess of depreciation
55,656
33,211
Taxation charge for the year
519,857
182,241
10
Dividends
2023
2022
£
£
Final paid
555,756
562,330
D T HUGHES BUILDING CONTRACTORS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 AUGUST 2023
- 19 -
11
Tangible fixed assets
Freehold land and buildings
Plant and equipment
Computers
Total
£
£
£
£
Cost
At 1 September 2022
810,151
3,752,167
188,302
4,750,620
Additions
481,769
39,271
521,040
Disposals
(67,646)
(1,637)
(69,283)
At 31 August 2023
810,151
4,166,290
225,936
5,202,377
Depreciation and impairment
At 1 September 2022
63,610
2,050,864
122,797
2,237,271
Depreciation charged in the year
16,203
545,768
26,194
588,165
Eliminated in respect of disposals
(54,257)
(1,249)
(55,506)
At 31 August 2023
79,813
2,542,375
147,742
2,769,930
Carrying amount
At 31 August 2023
730,338
1,623,915
78,194
2,432,447
At 31 August 2022
746,541
1,701,303
65,505
2,513,349
The net carrying value of tangible fixed assets includes the following in respect of assets held under finance leases or hire purchase contracts.
2023
2022
£
£
Plant and equipment
990,977
1,469,492
12
Debtors
2023
2022
Amounts falling due within one year:
£
£
Trade debtors
2,343,911
1,513,441
Amounts owed by group undertakings
640,576
664,580
Other debtors
360,661
240,052
Prepayments and accrued income
27,397
51,671
3,372,545
2,469,744
Amounts owed by group undertakings are interest free, have no fixed repayment date and are repayable on demand.
D T HUGHES BUILDING CONTRACTORS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 AUGUST 2023
- 20 -
13
Creditors: amounts falling due within one year
2023
2022
Notes
£
£
Bank loans and overdrafts
15
756,063
458,018
Obligations under finance leases
16
483,029
569,350
Trade creditors
1,487,161
1,316,293
Corporation tax
538,211
167,661
Other taxation and social security
564,402
218,178
Government grants
18
130,481
132,917
Other creditors
24,217
17,914
Accruals and deferred income
1,254,019
300,982
5,237,583
3,181,313
Details of security on finance leases are disclosed in note 16.
Included in creditors are £229,982 (2022: £202,265) of loans secured by way of a fixed and floating charge over the land and buildings of the company.
14
Creditors: amounts falling due after more than one year
2023
2022
Notes
£
£
Bank loans
15
282,707
475,151
Obligations under finance leases
16
1,035,917
1,083,304
1,318,624
1,558,455
Details of security on finance leases are disclosed in note 16.
Included in bank loans is £282,707 (2022: £475,151). This loan is secured by way of a fixed and floating charge over the land and buildings of the company.
15
Loans and overdrafts
2023
2022
£
£
Bank loans
512,689
677,416
Bank overdrafts
526,081
255,753
1,038,770
933,169
Payable within one year
756,063
458,018
Payable after one year
282,707
475,151
D T HUGHES BUILDING CONTRACTORS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 AUGUST 2023
- 21 -
16
Finance lease obligations
2023
2022
Future minimum lease payments due under finance leases:
£
£
Within one year
483,029
569,350
In two to five years
1,035,917
1,083,304
1,518,946
1,652,654
Finance lease payments represent rentals payable by the company for certain items of plant and machinery. Leases include purchase options at the end of the lease period, and no restrictions are placed on the use of the assets. All leases are on a fixed repayment basis and no arrangements have been entered into for contingent rental payments. The finance lease obligations are secured against the assets to which they relate.
17
Deferred taxation
The following are the major deferred tax liabilities and assets recognised by the company and movements thereon:
Liabilities
Liabilities
2023
2022
Balances:
£
£
Accelerated capital allowances
373,848
382,172
2023
Movements in the year:
£
Liability at 1 September 2022
382,172
Credit to profit or loss
(8,324)
Liability at 31 August 2023
373,848
18
Government grants
2023
2022
£
£
Arising from government grants
130,481
132,917
19
Retirement benefit schemes
2023
2022
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
46,095
43,557
The company operates a defined contribution pension scheme for all qualifying employees. The assets of the scheme are held separately from those of the company in an independently administered fund.
D T HUGHES BUILDING CONTRACTORS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 AUGUST 2023
- 22 -
20
Share capital
2023
2022
2023
2022
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Ordinary shares of £1 each
1
1
1
1
21
Related party transactions
The company has taken advantage of the reduced disclosure exemption available under Financial Reporting Standard 102 relating to the disclosure of related party transactions between wholly owned group companies.
The company engages Site Safe Traffic Solutions Limited for services. D T Hughes is a director of both companies. During the year, the company paid for services for £339,093 (2022: £1,109,612) and provided services of £251,096 (2022: £nil). Amounts outstanding at the year end, included in creditors, is £571,723 (2022: £398,374). Amounts receivable at the year end, included in debtors, is £75,855 (2022: £nil).
22
Ultimate controlling party
The ultimate parent company is D T Hughes Holdings Limited, a company incorporated in Great Britain and registered in England and Wales. The registered office is 48 - 52 Penny Lane Mossley Hill, Liverpool, Merseyside, United Kingdom, L18 1DG. D T Hughes Holdings Limited prepares consolidated financial statements which includes D T Hughes Building Contractors Limited.
The smallest and largest group into which the results of this entity are consolidated is that headed by D T Hughes Holdings Limited
There is no ultimate controlling party of D T Hughes Holdings Limited.
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