Company registration number SC072669 (Scotland)
H.R.N. Tractors Limited
Annual report and financial statements
for the year ended 31 December 2023
H.R.N. Tractors Limited
Company information
Directors
Neil Barclay
Stuart Barclay
(Appointed 24 October 2024)
Company number
SC072669
Registered office
South Road
Insch
Aberdeenshire
AB52 6XF
Auditor
Henderson Loggie LLP
The Stamp Office
Level 5
10 - 14 Waterloo Place
Edinburgh
EH1 3EG
H.R.N. Tractors Limited
Contents
Page
Strategic report
1 - 2
Directors' report
3
Directors' responsibilities statement
4
Independent auditor's report
5 - 8
Statement of comprehensive income
9
Balance sheet
10
Statement of changes in equity
11
Statement of cash flows
12
Notes to the financial statements
13 - 28
H.R.N. Tractors Limited
Strategic Report
for the year ended 31 December 2023
- 1 -

The directors present the strategic report for the year ended 31 December 2023.

Review of the business

The company's trading performance during the period was consistent with the directors expectations given the difficult trading conditions in the industry. Turnover has seen a decrease to £34.9m (2022 - £36.3m), margins have also decreased slightly from last year to 15.3% (2022– 16.1%).

A loss before taxation of £929,522 has been incurred for the year (2022: profit of £751,418). Although this is a significant movement from the prior year, this is not solely down to tough trading conditions in the current economic environment and the below table provides further context:

2023
2022
£
£
Turnover
34,865,580
36,349,492
Cost of sales
(29,518,006)
(30,503,411)
Gross Profit
5,347,574
5,846,081
Adminisrative expenses
(5,322,746)
(5,108,411)
Other operating income
13,283
21,404
Operating profit
38,111
759,074
Interest payable and similar expenses
(17,787)
(7,656)
Trading profit
20,324
751,418
Share of loss on farm partnership
(949,846)
-
(Loss)/profit before taxation
(929,522)
751,418
Principal risks and uncertainties

The principal risks and uncertainties of the business currently centre around increasing costs due to the current economic climate and the impact on our supply chain. The company is exposed to minimal foreign exchange risk and cash flow risk is mitigated through stock control.

 

Financial Risk Management

The company monitors working capital management strictly. Financial management risk is largely negated due to the net worth and financial viability of the company.

 

Competitive Risk Assessment

The company operates in a competitive environment, however, the directors believes that the company through continued focus on cost reduction and continued investment in new products is well placed to continue developing its market share.

H.R.N. Tractors Limited
Strategic Report (continued)
for the year ended 31 December 2023
- 2 -
Key performance indicators

Financial KPI's

The directors use Financial Key Performance Indicators of gross and net profit margins as well as Return On Capital Employed (ROCE), Return on Investment (ROI), overhead absorption, stocking levels and current ratios to review the company's development and performance during the period and position at period end.

 

The KPI's assessed were in line with management expectations.

 

Non Financial KPI's

Non Financial Key Performance Indicators are also used by the directors and include statistical information relating to staff hours and service levels. The directors believe that monitoring non financial KPI's contributes substantially in assessing non-financial business performance which inevitably leads to increase in customer satisfaction and an increase in profitability.

Future prospects

The company's balance sheet remains strong and plans are in place to reduce stock levels and improve working capital. The continued investment in cost management and efficiencies should ensure that the company maintains and continues to improve its performance and customer service levels going forward.

 

Opportunities for growth gives the directors confidence that the company is well placed to continue its strong position going forward.

On behalf of the board

Stuart Barclay
Director
20 February 2025
H.R.N. Tractors Limited
Directors' report
for the year ended 31 December 2023
- 3 -

The directors present their annual report and financial statements for the year ended 31 December 2023.

Principal activities

The principal activity of the company continued to be that of selling agricultural machinery and equipment.

Results and dividends

The results for the year are set out on page 9.

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

Directors

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

Neil Barclay
Stuart Barclay
(Appointed 24 October 2024)
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 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.

Strategic report

Included within the strategic report is an indication of the principal risks and uncertainties including the risks associated with working capital management, and the competitive environment.

On behalf of the board
Stuart Barclay
Director
20 February 2025
H.R.N. Tractors Limited
Directors' responsibilities statement
for the year ended 31 December 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 period. 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:

 

 

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.

H.R.N. Tractors Limited
Independent auditor's report
to the members of H.R.N. Tractors Limited
- 5 -
Opinion

We have audited the financial statements of H.R.N. Tractors Limited (the 'company') for the year ended 31 December 2023 which comprise the statement of comprehensive income, the balance sheet, the statement of changes in equity, the statement of cash flows and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).

In our opinion the financial statements:

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.

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.

H.R.N. Tractors Limited
Independent auditor's report (continued)
to the members of H.R.N. Tractors Limited
- 6 -

Opinions on other matters prescribed by the Companies Act 2006

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

Matters on which we are required to report by exception

In the light of the knowledge and understanding of the 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:

Responsibilities of directors

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

Auditor's responsibilities for the audit of the financial statements

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

Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The specific procedures for this engagement and the extent to which these are capable of detecting irregularities, including fraud, are detailed below.

H.R.N. Tractors Limited
Independent auditor's report (continued)
to the members of H.R.N. Tractors Limited
- 7 -

As part of our planning process:

The key procedures we undertook to detect irregularities including fraud during the course of the audit included:

Owing to the inherent limitations of an audit, there is an unavoidable risk that some material misstatements in the financial statements may not be detected, even though the audit is properly planned and performed in accordance with the ISAs (UK). For instance, the further removed non-compliance is from the events and transactions reflected in the financial statements, the less likely the auditor is to become aware of it or to recognise the non-compliance. The risk is also greater regarding irregularities occurring due to fraud rather than error, as fraud involves intentional concealment, forgery, collusion, omission or misrepresentation. The primary responsibility for the prevention and detection of irregularities and fraud rests with the directors.

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.

H.R.N. Tractors Limited
Independent auditor's report (continued)
to the members of H.R.N. Tractors Limited
- 8 -

Use of our report

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

Diana Penny
Senior Statutory Auditor
For and on behalf of Henderson Loggie LLP
20 February 2025
Chartered Accountants
Statutory Auditor
The Stamp Office
Level 5
10 - 14 Waterloo Place
Edinburgh
EH1 3EG
H.R.N. Tractors Limited
Statement of comprehensive income
for the year ended 31 December 2023
- 9 -
2023
2022
Notes
£
£
Turnover
3
34,865,580
36,349,492
Cost of sales
(29,518,006)
(30,503,411)
Gross profit
5,347,574
5,846,081
Administrative expenses
(5,322,746)
(5,108,411)
Other operating income
13,283
21,404
Operating profit
4
38,111
759,074
Interest payable and similar expenses
6
(17,787)
(7,656)
Share of loss on partnership
8
(949,846)
-
(Loss)/profit before taxation
(929,522)
751,418
Tax on (loss)/profit
7
(32,616)
(111,915)
(Loss)/profit for the financial year
(962,138)
639,503

The profit and loss account has been prepared on the basis that all operations are continuing operations.

H.R.N. Tractors Limited
Balance sheet
as at 31 December 2023
- 10 -
2023
2022
Notes
£
£
£
£
Fixed assets
Tangible assets
9
4,181,237
4,479,566
Investments
10
2,058,879
3,008,725
6,240,116
7,488,291
Current assets
Stocks
12
12,682,783
14,151,840
Debtors
13
2,966,394
3,861,905
Cash at bank and in hand
5,060
1,015,882
15,654,237
19,029,627
Creditors: amounts falling due within one year
14
(8,534,023)
(11,985,293)
Net current assets
7,120,214
7,044,334
Total assets less current liabilities
13,360,330
14,532,625
Creditors: amounts falling due after more than one year
15
(188,181)
(298,369)
Provisions for liabilities
Deferred tax liability
18
(216,971)
(316,940)
(216,971)
(316,940)
Net assets
12,955,178
13,917,316
Capital and reserves
Called up share capital
20
15,000
15,000
Profit and loss reserves
12,940,178
13,902,316
Total equity
12,955,178
13,917,316
The financial statements were approved by the board of directors and authorised for issue on 20 February 2025 and are signed on its behalf by:
Stuart Barclay
Director
Company Registration No. SC072669
H.R.N. Tractors Limited
Statement of changes in equity
for the year ended 31 December 2023
- 11 -
Share capital
Profit and loss reserves
Total
£
£
£
Balance at 1 January 2022
15,000
13,262,813
13,277,813
Year ended 31 December 2022:
Profit and total comprehensive income for the year
-
639,503
639,503
Balance at 31 December 2022
15,000
13,902,316
13,917,316
Year ended 31 December 2023:
Loss and total comprehensive income for the year
-
(962,138)
(962,138)
Balance at 31 December 2023
15,000
12,940,178
12,955,178
H.R.N. Tractors Limited
Statememt of cash flows
for the year ended 31 December 2023
- 12 -
2023
2022
Notes
£
£
£
£
Cash flows from operating activities
Cash (absorbed by)/generated from operations
26
(493,203)
652,806
Interest paid
(17,787)
(7,656)
Income taxes paid
(256,372)
-
0
Net cash (outflow)/inflow from operating activities
(767,362)
645,150
Investing activities
Purchase of tangible fixed assets
(541,374)
(346,841)
Proceeds from disposal of tangible fixed assets
412,245
591,221
Net cash (used in)/generated from investing activities
(129,129)
244,380
Financing activities
Payment of finance leases obligations
(164,351)
(225,611)
Net cash used in financing activities
(164,351)
(225,611)
Net (decrease)/increase in cash and cash equivalents
(1,060,842)
663,919
Cash and cash equivalents at beginning of year
1,015,882
351,963
Cash and cash equivalents at end of year
(44,960)
1,015,882
Relating to:
Cash at bank and in hand
5,060
1,015,882
Bank overdrafts included in creditors payable within one year
(50,020)
-
0
H.R.N. Tractors Limited
Notes to the financial statements
for the year ended 31 December 2023
- 13 -
1
Accounting policies
Company information

H.R.N. Tractors Limited is a private company limited by shares incorporated in Scotland. The registered office is South Road, Insch, Aberdeenshire, AB52 6XF.

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.

1.2
Going concern

The financial statements have been prepared on a going concern basis. The Directortrues have considered relevant information, including the annual budget, forecast future cash flows and the impact of subsequent events in making the assessment. The Directors have performed a robust analysis of forecast future cash flows taking into account the potential impact on the business of possible future scenarios. This analysis also considers the effectiveness of available measures to assist in mitigating the impact.

 

Based on these assessments and having regard to the resources available to the entity, the Directors have concluded that there is no material uncertainty and that they can continue to adopt the going concern basis in preparing the annual report and accounts.

1.3
Turnover

Turnover is recognised at the fair value of the consideration received or receivable for goods provided in the normal course of business, and is shown net of VAT and other sales related taxes. The fair value of consideration takes into account trade discounts, settlement discounts and volume rebates.

Revenue from the sale of goods is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer (usually on dispatch of the goods), the amount of revenue can be measured reliably, it is probable that the economic benefits associated with the transaction will flow to the entity and the costs incurred or to be incurred in respect of the transaction can be measured reliably.

1.4
Tangible fixed assets

Tangible fixed assets are initially measured at cost and subsequently measured at cost or valuation, net of depreciation and any impairment losses.

Depreciation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:

Freehold land and buildings
2% on a straight line basis
Leasehold improvements
over the period of the lease
Plant and equipment
20% on a straight line basis
Fixtures and fittings
20% on a straight line basis
Computers
25% on a straight line basis
Motor vehicles
25% on a straight line basis
H.R.N. Tractors Limited
Notes to the financial statements (continued)
for the year ended 31 December 2023
1
Accounting policies (continued)
- 14 -

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
Fixed asset investments

Interests in associates are initially measured at cost and subsequently measured at cost less any accumulated impairment losses. The investments are assessed for impairment at each reporting date and any impairment losses or reversals of impairment losses are recognised immediately in profit or loss.

An associate is an entity, being neither a subsidiary nor a joint venture, in which the company holds a long-term interest and where the company has significant influence. The company considers that it has significant influence where it has the power to participate in the financial and operating decisions of the associate.

1.6
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.

1.7
Stocks

Stocks are stated at the lower of cost and estimated selling price less costs to complete and sell. Cost comprises direct materials and, where applicable, direct labour costs and those overheads that have been incurred in bringing the stocks to their present location and condition.

At each reporting date, an assessment is made for impairment. Any excess of the carrying amount of stocks over its estimated selling price less costs to complete and sell is recognised as an impairment loss in profit or loss. Reversals of impairment losses are also recognised in profit or loss.

1.8
Cash and cash equivalents

Cash at bank and in hand are basic financial assets and include cash in hand, deposits held at call with banks, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities.

H.R.N. Tractors Limited
Notes to the financial statements (continued)
for the year ended 31 December 2023
1
Accounting policies (continued)
- 15 -
1.9
Financial instruments

The company has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ 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.

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.

H.R.N. Tractors Limited
Notes to the financial statements (continued)
for the year ended 31 December 2023
1
Accounting policies (continued)
- 16 -
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.

Other financial liabilities

Derivatives, including interest rate swaps and forward foreign exchange contracts, are not basic financial instruments. Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured at their fair value. Changes in the fair value of derivatives are recognised in profit or loss in finance costs or finance income as appropriate, unless hedge accounting is applied and the hedge is a cash flow hedge.

 

Debt instruments that do not meet the conditions in FRS 102 paragraph 11.9 are subsequently measured at fair value through profit or loss. Debt instruments may be designated as being measured at fair value through profit or loss to eliminate or reduce an accounting mismatch or if the instruments are measured and their performance evaluated on a fair value basis in accordance with a documented risk management or investment strategy.

Derecognition of financial liabilities

Financial liabilities are derecognised when the company’s contractual obligations expire or are discharged or cancelled.

1.10
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.

1.11
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.

H.R.N. Tractors Limited
Notes to the financial statements (continued)
for the year ended 31 December 2023
1
Accounting policies (continued)
- 17 -
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.

1.12
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.

1.13
Retirement benefits

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

1.14
Leases

Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessees. All other leases are classified as operating leases.

 

Assets held under finance leases are recognised as assets at the lower of the assets fair value at the date of inception and the present value of the minimum lease payments. The related liability is included in the balance sheet as a finance lease obligation. Lease payments are treated as consisting of capital and interest elements. The interest is charged to profit or loss so as to produce a constant periodic rate of interest on the remaining balance of the liability.

Rentals payable under operating leases, including any lease incentives received, are charged to profit or loss on a straight line basis over the term of the relevant lease except where another more systematic basis is more representative of the time pattern in which economic benefits from the leases asset are consumed.

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.

H.R.N. Tractors Limited
Notes to the financial statements (continued)
for the year ended 31 December 2023
1
Accounting policies (continued)
- 18 -
1.15
Foreign exchange

Transactions in currencies other than pounds sterling are recorded at the rates of exchange prevailing at the dates of the transactions. At each reporting end date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the reporting end date. Gains and losses arising on translation in the period are included in profit or loss.

2
Judgements and key sources of estimation uncertainty

In the application of the company’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.

 

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.

Critical judgements

The following judgements (apart from those involving estimates) have had the most significant effect on amounts recognised in the financial statements.

Debtor recoverability

Credit control is an important function within the company which requires management to assess on an ongoing basis the recoverability of amounts due from trade debtors. Where recovery is in doubt management will adequately provide against this debt and will arrive at such conclusions based on internal and external knowledge of that customers performance and "ability to pay". Management adopt a prudent approach to credit control.

Stock

In arriving at the valuation of stock it may be necessary for management to make an assessment over the carrying value of stock items and, where applicable, apply a provision to amend this carrying value to a more accurate level. These provisions are arrived at using management's knowledge and understanding of the business and the industry in which it operates and focuses on potentially obsolete or old items for which the full value may no longer be recoverable.

Accruals and deferred income

Management estimate requirements for accruals using post year end information and information available from detailed budgets. This identifies costs and income that are expected to be incurred or received for goods/services provided by and to other parties. Accruals are only released when there is a reasonable expectation that these costs will not be invoiced in the future.

Carrying value of investments

The valuation of investments relating to the farm partnership are held at cost less impairment. Management consider the need for impairment of investments based on the financial performance of the entity and adjust for impairment when considered prudent.

 

 

 

 

H.R.N. Tractors Limited
Notes to the financial statements (continued)
for the year ended 31 December 2023
- 19 -
3
Turnover and other revenue

Turnover is all from the company's principal activity undertaken in the United Kingdom.

 

2023
2022
£
£
Other significant revenue
Commissions received
1,749
7,664
Rental income
11,534
13,740
4
Operating profit
2023
2022
Operating profit for the year is stated after charging/(crediting):
£
£
Exchange losses
61
862
Fees payable to the company's auditor for the audit of the company's financial statements
24,000
19,500
Depreciation of owned tangible fixed assets
241,963
324,220
Depreciation of tangible fixed assets held under finance leases
242,328
129,023
Profit on disposal of tangible fixed assets
(23,100)
(116,038)
Operating lease charges
377,242
387,796
5
Employees

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

2023
2022
Number
Number
Full-time
89
90

Their aggregate remuneration comprised:

2023
2022
£
£
Wages and salaries
3,291,950
3,250,165
Social security costs
325,481
340,524
Pension costs
139,125
142,772
3,756,556
3,733,461

During the period the director received remuneration amounting to £Nil (2022 - £Nil).

H.R.N. Tractors Limited
Notes to the financial statements (continued)
for the year ended 31 December 2023
- 20 -
6
Interest payable and similar expenses
2023
2022
£
£
Other finance costs:
Interest on finance leases and hire purchase contracts
17,787
7,656
7
Taxation
2023
2022
£
£
Current tax
UK corporation tax on profits for the current period
132,585
108,584
Deferred tax
Origination and reversal of timing differences
(125,518)
3,331
Adjustment in respect of prior periods
25,549
-
0
Total deferred tax
(99,969)
3,331
Total tax charge
32,616
111,915

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

2023
2022
£
£
(Loss)/profit before taxation
(929,522)
751,418
Expected tax (credit)/charge based on the standard rate of corporation tax in the UK of 24% (2022: 19%)
(218,438)
142,769
Tax effect of expenses that are not deductible in determining taxable profit
3,475
3,396
Effect of revaluations of investments
223,413
-
0
Deferred tax adjustments in respect of prior years
25,549
-
0
Difference in deferred tax rate
(1,383)
(34,250)
Taxation charge for the year
32,616
111,915
H.R.N. Tractors Limited
Notes to the financial statements (continued)
for the year ended 31 December 2023
- 21 -
8
Impairments

Impairment tests have been carried out where appropriate and the following impairment losses have been recognised in profit or loss:

2023
2022
Notes
£
£
In respect of:
Fixed asset investments
10
949,846
-
Recognised in:
Share of loss on partnership
949,846
-

The impairment losses in respect of financial assets are recognised in other gains and losses in the profit and loss account.

H.R.N. Tractors Limited
Notes to the financial statements (continued)
for the year ended 31 December 2023
- 22 -
9
Tangible fixed assets
Freehold land and buildings
Leasehold improvements
Plant and equipment
Fixtures and fittings
Computers
Motor vehicles
Total
£
£
£
£
£
£
£
Cost
At 1 January 2023
3,202,081
1,103,071
996,665
313,499
198,353
1,544,922
7,358,591
Additions
33,636
84,325
6,135
7,946
21,236
421,829
575,107
Disposals
(30,102)
-
0
(459,345)
(18,003)
(7,728)
(215,903)
(731,081)
At 31 December 2023
3,205,615
1,187,396
543,455
303,442
211,861
1,750,848
7,202,617
Depreciation and impairment
At 1 January 2023
799,663
132,182
635,724
293,065
134,448
883,943
2,879,025
Depreciation charged in the year
63,421
22,484
76,074
7,559
38,637
276,116
484,291
Eliminated in respect of disposals
(3,573)
-
0
(248,191)
(18,003)
(7,728)
(64,441)
(341,936)
At 31 December 2023
859,511
154,666
463,607
282,621
165,357
1,095,618
3,021,380
Carrying amount
At 31 December 2023
2,346,104
1,032,730
79,848
20,821
46,504
655,230
4,181,237
At 31 December 2022
2,402,418
970,889
360,941
20,434
63,905
660,979
4,479,566
H.R.N. Tractors Limited
Notes to the financial statements (continued)
for the year ended 31 December 2023
9
Tangible fixed assets (continued)
- 23 -

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
-
0
66,524
Motor vehicles
382,762
541,058
382,762
607,582
10
Fixed asset investments
2023
2022
£
£
Farm partnership
2,058,879
3,008,725
Movements in fixed asset investments
Investments
£
Cost or valuation
At 1 January 2023 & 31 December 2023
3,008,725
Impairment
At 1 January 2023
-
Impairment losses
949,846
At 31 December 2023
949,846
Carrying amount
At 31 December 2023
2,058,879
At 31 December 2022
3,008,725
11
Financial instruments

Debt instruments measured at amortised cost comprise trade debtors, and other debtors.

 

Liabilities measured at amortised cost comprise trade creditors, bank overdraft, accruals and other creditors.

H.R.N. Tractors Limited
Notes to the financial statements (continued)
for the year ended 31 December 2023
- 24 -
12
Stocks
2023
2022
£
£
Work in progress
95,265
138,877
Finished goods and goods for resale
12,587,518
14,012,963
12,682,783
14,151,840
13
Debtors
2023
2022
Amounts falling due within one year:
£
£
Trade debtors
951,569
1,518,038
Other debtors
1,097,216
1,833,570
Prepayments and accrued income
917,609
510,297
2,966,394
3,861,905
14
Creditors: amounts falling due within one year
2023
2022
Notes
£
£
Bank loans and overdrafts
16
50,020
-
0
Obligations under finance leases
17
145,169
165,599
Trade creditors
4,228,785
7,252,680
Corporation tax
132,585
256,372
Other taxation and social security
575,406
316,512
Other creditors
2,784,285
3,115,061
Accruals and deferred income
617,773
879,069
8,534,023
11,985,293
15
Creditors: amounts falling due after more than one year
2023
2022
Notes
£
£
Obligations under finance leases
17
188,181
298,369

 

H.R.N. Tractors Limited
Notes to the financial statements (continued)
for the year ended 31 December 2023
- 25 -
16
Loans and overdrafts
2023
2022
£
£
Bank overdrafts
50,020
-
0
Payable within one year
50,020
-
0

The bank overdraft facilities are secured by a bond and floating charge over the whole of the company's assets and by standard security over certain of the company's freehold property.

17
Finance lease obligations
2023
2022
Future minimum lease payments due under finance leases:
£
£
Within one year
139,268
165,599
In two to five years
194,082
298,369
333,350
463,968

Finance lease payments represent rentals payable by the company for certain items of plant and machinery. Leases include purchase options at the end of the lease period, and no restrictions are placed on the use of the assets. The average lease term is 3-4 years. All leases are on a fixed repayment basis and no arrangements have been entered into for contingent rental payments.

18
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
256,596
354,438
Provisions
(39,625)
(37,498)
216,971
316,940
2023
Movements in the year:
£
Liability at 1 January 2023
316,940
Credit to profit or loss
(99,969)
Liability at 31 December 2023
216,971
H.R.N. Tractors Limited
Notes to the financial statements (continued)
for the year ended 31 December 2023
- 26 -
19
Retirement benefit schemes
2023
2022
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
139,125
142,772

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.

20
Share capital
2023
2022
2023
2022
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Ordinary of £1 each
15,000
15,000
15,000
15,000

The Ordinary shares carry full ownership, voting and dividend rights.

21
Profit and loss reserves

Profit and loss reserves include all current and prior period retained profits and losses.

22
Operating lease commitments
Lessee

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

2023
2022
£
£
Within one year
113,788
124,455
Between two and five years
137,111
216,316
In over five years
50,000
75,000
300,899
415,771
23
Events after the reporting date

HRN Tractors Limited announced the closures of the Turriff, Kinloss and Brechin depots to consolidate trading activities at their remaining depots. The sale of the Turriff depot generated proceeds of £800k whilst the leases for Kinloss and Brechin were not renewed. Furthermore, the sale of the main street property at the Balbeggie depot generated proceeds of £400k.

In October 2024 a special resolution was passed for 4,500 ordinary £1 shares to be purchased by the company for a total consideration of £1.5 million. The remaining 10,500 ordinary £1 shares were then transferred to S Barclay from N Barclay.

H.R.N. Tractors Limited
Notes to the financial statements (continued)
for the year ended 31 December 2023
- 27 -
24
Related party transactions
Transactions with related parties

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

Sales
Sales
Purchases
Purchases
2023
2022
2023
2022
£
£
£
£
Other related parties
3,089,117
2,833,077
3,952,963
4,404,337

The following amounts were outstanding at the reporting end date:

2023
2022
Amounts due to related parties
£
£
Other related parties
1,301,648
390,384

The following amounts were outstanding at the reporting end date:

2023
2022
Amounts due from related parties
£
£
Other related parties
2,396,714
1,977,171
25
Ultimate controlling party

The controlling party during the year was Neil Barclay.

 

On 23 October 2024, Neil Barclay ceased as the ultimate controlling party with Stuart Barclay then becoming ultimate controlling party of the entity.

H.R.N. Tractors Limited
Notes to the financial statements (continued)
for the year ended 31 December 2023
- 28 -
26
Cash (absorbed by)/generated from operations
2023
2022
£
£
(Loss)/profit for the year after tax
(962,138)
639,503
Adjustments for:
Taxation charged
32,616
111,915
Finance costs
17,787
7,656
Gain on disposal of tangible fixed assets
(23,100)
(116,038)
Depreciation and impairment of tangible fixed assets
484,291
453,243
Share of loss on partnership
949,846
-
Movements in working capital:
Decrease/(increase) in stocks
1,469,057
(1,656,668)
Decrease in debtors
895,511
1,619,432
Decrease in creditors
(3,357,073)
(406,237)
Cash (absorbed by)/generated from operations
(493,203)
652,806
27
Analysis of changes in net funds/(debt)
1 January 2023
Cash flows
New finance leases
31 December 2023
£
£
£
£
Cash at bank and in hand
1,015,882
(1,010,822)
-
5,060
Bank overdrafts
-
0
(50,020)
-
(50,020)
1,015,882
(1,060,842)
-
0
(44,960)
Obligations under finance leases
(463,968)
164,351
(33,733)
(333,350)
551,914
(896,491)
(33,733)
(378,310)
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