Company registration number 01198620 (England and Wales)
J. T. HUGHES (OSWESTRY) LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MAY 2024
J. T. HUGHES (OSWESTRY) LIMITED
COMPANY INFORMATION
Directors
Mr J E Hughes
Mr P W Tench
Secretary
Mrs C E Hughes
Company number
01198620
Registered office
5 Battlefield Road
Shrewsbury
Shropshire
United Kingdom
SY1 4AB
Auditor
Azets Audit Services
St Davids Court
Union Street
Wolverhampton
West Midlands
United Kingdom
WV1 3JE
J. T. HUGHES (OSWESTRY) LIMITED
CONTENTS
Page
Strategic report
1 - 3
Directors' report
4 - 5
Independent auditor's report
6 - 8
Statement of comprehensive income
9
Balance sheet
10
Statement of changes in equity
11
Notes to the financial statements
12 - 25
J. T. HUGHES (OSWESTRY) LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 31 MAY 2024
- 1 -
The directors present the strategic report for the year ended 31 May 2024.
Fair review of the business
We aim to present a balanced and comprehensive review of the development and performance of our business during the year and its position at the year end. Our review is consistent with the size and non-complex nature of our business and is written in the context of the risks and uncertainties we face.
Product lines and developments
We are main dealers for Honda, Hyundai, Kia, KGM, Mitsubishi and Isuzu franchises. The company deals in both new and used motor vehicles, provides vehicle servicing, bodyshop repairs and associated services.
The business has been successful in adopting new franchises and continues to do so, specifically it has recently agreed terms with Mazda to provide a full sales and service offering.
Our fleet sales line has also continued to grow across all brands, resulting in an improved contribution.
Generally, we are continuing to invest in our showrooms to enhance our customer experience.
Principal risks and uncertainties
As for many businesses of our size and our industry in general, the business environment continues to be challenging. The car market in the UK is highly competitive, margins continue to be tight and, of course, subject to consumer spending patterns and consumers' overall level of disposable income. The directors believe that the key risks and uncertainties are that of the general economic and market conditions. With the change of government and uncertainty over inflation and high interest rates, the directors are keeping this under constant review.
J. T. HUGHES (OSWESTRY) LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2024
- 2 -
Performance
We consider that our key performance indicators are those that communicate the financial performance and strength of the company as a whole, these being turnover, gross margin and return on capital employed.
During the year to 31 May 2024 vehicle sales turnover increased by 30.4%, showing a substantial increase compared to the last accounting period. The increase was driven by new vehicle sales, enhanced by the growth in fleet sales. Used vehicle sales showed a modest increase and remained steady.
Gross profit has gone from £4,867,998 (GM 5.0%) to £5,143,869 (GM 4.0%). This was expected with higher volumes of new vehicle sales, but on which margins are continuing to be tightened.
Trade operating profit has gone from £1,410,408 to £1,362,220. Profitability has reduced, not only due to the slight reduction in gross margin, but also due to increased administrative expenses.
The company's balance sheet continues to show an improving strong position.
Return on capital employed is calculated as profit before interest and tax, divided by capital employed, which constitutes total assets, less current liabilities, less cash, plus overdrafts and other short-term borrowings. The return on capital employed has reduced slightly to just over 14%, from prior year averages. This was anticipated due to tighter margins on the higher volumes of new car and fleet sales.
Future strategy
The company continues to be busy strategically in terms of looking to the future and considering how to best operate. The new Mazda franchise and fleet sales are particular areas where the company expects future growth.
The sales growth is combined with internal investment in our dealer management system, which we expect to have huge long term benefits for all stakeholders.
We are aware that plans for the future development of the business may be subject to unforeseen future events outside our control and that the economic conditions will continue to provide a challenging environment in which to operate, but we are confident that with effective forward planning and constant review of performance we will be able to meet these challenges and prosper.
J. T. HUGHES (OSWESTRY) LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2024
- 3 -
Promoting the success of the company
Section 172 of the Companies Act 2006 requires a director of a company to act in the way they consider, in good faith and that would most likely promote the success of the Company for the benefit of its members and stakeholders.
In doing this, Section 172 requires a director to have regard, amongst other matters, to the:
- likely consequences of any decisions in the long-term;
- interests of the company's employees;
- need to foster the company's business relationships with suppliers, customers and others;
- impact of the company's operations on the community and environment;
- maintenance of its reputation for high standards of business conduct; and
- the need to act fairly as between the different stakeholders of the company. In discharging its s172 duties, J T Hughes (Oswestry) Limited (the ‘Company’) has regard to the interests and views of its internal and external stakeholders.
By considering the Company's purpose, vision, and values, together with its strategic priorities, the directors aim to make sure its decisions are consistent and equitable. The Company has established policies and procedures that reflect its commitment to responsible business practices.
These policies are communicated clearly and consistently across the staff base. The Company seeks to foster a culture of open communication and transparency, encouraging feedback from all stakeholders. As is normal for large companies, the Company delegates authority for day-to-day management to its executives and engages management in setting, approving, and overseeing the execution of the business strategy and related policies.
The Company reviews the financial and operational performance of the business on a monthly basis with formal reporting and review, at both board and executive level, supplemented by daily, weekly and monthly reporting and assessment of various KPIs across all areas of the operations.
Engagement with customers and suppliers is at the heart of our policies and procedures. Continued dialogue and communication is key to maintaining customer satisfaction, and compliance with suppliers to meet our technical, contractual, and legal commitments.
Regular Company meetings are held throughout the year with directors, Company executives and other senior employees. Through these and other means the Company reviews a variety of important matters over the course of the financial year including risk and compliance, corporate governance, environmental, legal, pensions, and health and safety matters, as well as stakeholder-related diversity and inclusivity, corporate social responsibility, and other stakeholder related matters. This ensures the Company has an overview of engagement with stakeholders and complies with its s172 duty to promote the success of the Company and wider Group.
Mr J E Hughes
Director
25 February 2025
J. T. HUGHES (OSWESTRY) LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 MAY 2024
- 4 -
The directors present their annual report and financial statements for the year ended 31 May 2024.
Principal activities
The principal activity of the company continued to be that of motor vehicle dealerships and garage proprietors.
Results and dividends
The results for the year are set out on page 9.
Interim dividends of £100,000 for the year ended 31 May 2024 were declared and distributed.
Directors
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
Mr J E Hughes
Mr P W Tench
Mr C I Jones
(Resigned 1 August 2024)
Auditor
The auditor, Azets Audit Services, is deemed to be reappointed under section 487(2) of the Companies Act 2006.
Statement of directors' responsibilities
The directors are responsible for preparing the annual report and the financial statements in accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period. In preparing these financial statements, the directors are required to:
select suitable accounting policies and then apply them consistently;
make judgements and accounting estimates that are reasonable and prudent;
state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements;
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company’s transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
Statement of disclosure to auditor
So far as each person who was a director at the date of approving this report is aware, there is no relevant audit information of which the company’s auditor is unaware. Additionally, the directors individually have taken all the necessary steps that they ought to have taken as directors in order to make themselves aware of all relevant audit information and to establish that the company’s auditor is aware of that information.
J. T. HUGHES (OSWESTRY) LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2024
- 5 -
Energy and Carbon Report
Compliance Overview
This report covers JT Hughes for the financial year 1st June 2023 to 31st May 2024. The report details annual GHG emissions (Scope 1 & 2) from activities for which the company is directly responsible. Having considered the potential metrics within the business, we have concluded that Gross Internal Area (GIA square meters) is the most appropriate to achieve a benchmark which aligns with the carbon reduction policy and methodology that JT Hughes are currently working towards. The facilities owned by JT Hughes comprises of Vehicle sales buildings in Telford, Shrewsbury and Newtown. There is a small fleet of company vehicles. The key environmental risks identified include waste management, provision of utilities and fuel for the company vehicles. The management recognise their responsibility to monitor and control the impact of these risks.
Methodology and Estimates
The methodology used to calculate total energy consumption and carbon emissions has been through the extraction of consumption data from invoices and meter reads for the financial years stated. Where data was not available, estimates have been calculated using historical profiles and details kept in the client's evidence pack. Energy and fuel consumption has been converted to carbon (TCO2e) using 2023 Government published conversion factors (Greenhouse gas reporting: conversion factors 2023). It is assumed all Electric Vehicles (EV) are charged on JT Hughes sites and thus emissions are included within the sites overall electricity consumption.
Energy Performance Benchmarking
This is the first year that JT Hughes have needed to comply with the requirements of SECR. Therefore previous year comparisons is not possible.
Energy Efficiency Action Plan
• We will continue with our plan to reduce emissions by converting our vehicle fleet to electric. We have significantly reduced our Petrol usage in the last 4 years.
• We continue to benefit from our solar array on our showroom in Shrewsbury, and are looking to fit this to other facilities where appropriate.
• We have deployed a number of energy saving initiatives including workshop heater interlocks to hold off the heaters when the doors are open and optimised off settings on our heating systems to turn them off before closing time, knowing the temperatures will hold until closing.
Statistics
On behalf of the board
Mr J E Hughes
Director
25 February 2025
J. T. HUGHES (OSWESTRY) LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF J. T. HUGHES (OSWESTRY) LIMITED
- 6 -
Opinion
We have audited the financial statements of J. T. Hughes (Oswestry) Limited (the 'company') for the year ended 31 May 2024 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 May 2024 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.
J. T. HUGHES (OSWESTRY) LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF J. T. HUGHES (OSWESTRY) LIMITED
- 7 -
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.
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.
J. T. HUGHES (OSWESTRY) LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF J. T. HUGHES (OSWESTRY) LIMITED
- 8 -
Extent to which the audit was considered capable of detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above and on the Financial Reporting Council’s website, to detect material misstatements in respect of irregularities, including fraud.
We obtain and update our understanding of the entity, its activities, its control environment, and likely future developments, including in relation to the legal and regulatory framework applicable and how the entity is complying with that framework. Based on this understanding, we identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. This includes consideration of the risk of acts by the entity that were contrary to applicable laws and regulations, including fraud.
In response to the risk of irregularities and non-compliance with laws and regulations, including fraud, we designed procedures which included:
Enquiry of management and those charged with governance around actual and potential litigation and claims as well as actual, suspected and alleged fraud;
Assessing the extent of compliance with the laws and regulations considered to have a direct material effect on the financial statements or the operations of the company through enquiry and inspection;
Reviewing financial statement disclosures and testing to supporting documentation to assess compliance with applicable laws and regulations;
Performing audit work over the risk of management bias and override of controls, including testing of journal entries and other adjustments for appropriateness, evaluating the business rationale of significant transactions outside the normal course of business and reviewing accounting estimates for indicators of potential bias.
Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading to a material misstatement in the financial statements or non-compliance with regulation. This risk increases the more that compliance with a law or regulation is removed from the events and transactions reflected in the financial statements, as we will be less likely to become aware of instances of non-compliance. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
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.
Lee Meredith BFP ACA
Senior Statutory Auditor
For and on behalf of Azets Audit Services
25 February 2025
Chartered Accountants
Statutory Auditor
St Davids Court
Union Street
Wolverhampton
West Midlands
United Kingdom
WV1 3JE
J. T. HUGHES (OSWESTRY) LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 MAY 2024
- 9 -
2024
2023
Notes
£
£
Turnover
4
127,766,833
97,986,284
Cost of sales
(122,622,964)
(93,118,286)
Gross profit
5,143,869
4,867,998
Administrative expenses
(3,842,310)
(3,462,880)
Other operating income
4
60,661
5,290
Operating profit
6
1,362,220
1,410,408
Interest receivable and similar income
3
5,016
4,409
Interest payable and similar expenses
11
(141,384)
(52,853)
Fair value gains and losses on investment properties
10
240,349
Profit before taxation
1,225,852
1,602,313
Tax on profit
7
(380,199)
(252,786)
Profit for the financial year
845,653
1,349,527
The profit and loss account has been prepared on the basis that all operations are continuing operations.
J. T. HUGHES (OSWESTRY) LIMITED
BALANCE SHEET
AS AT 31 MAY 2024
31 May 2024
- 10 -
2024
2023
Notes
£
£
£
£
Fixed assets
Goodwill
12
(23,469)
(46,939)
Tangible assets
13
1,910,384
1,928,128
Investment properties
10
1,532,523
1,434,000
3,419,438
3,315,189
Current assets
Stocks
14
9,020,038
6,385,091
Debtors
15
11,473,139
6,458,445
Cash at bank and in hand
660,500
2,030,709
21,153,677
14,874,245
Creditors: amounts falling due within one year
16
(14,276,502)
(8,735,483)
Net current assets
6,877,175
6,138,762
Total assets less current liabilities
10,296,613
9,453,951
Provisions for liabilities
Deferred tax liability
18
209,210
112,201
(209,210)
(112,201)
Net assets
10,087,403
9,341,750
Capital and reserves
Called up share capital
22
112
112
Revaluation reserve
19
392,220
403,082
Other reserves
23
978,181
978,181
Profit and loss reserves
8,716,890
7,960,375
Total equity
10,087,403
9,341,750
The notes on pages 12 to 25 form part of these financial statements.
The financial statements were approved by the board of directors and authorised for issue on 25 February 2025 and are signed on its behalf by:
Mr J E Hughes
Director
Company Registration No. 01198620
J. T. HUGHES (OSWESTRY) LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 MAY 2024
- 11 -
Share capital
Revaluation reserve
Other reserves
Profit and loss reserves
Total
£
£
£
£
£
Balance at 1 June 2022
112
378,127
978,181
6,894,403
8,250,823
Year ended 31 May 2023:
Profit and total comprehensive income for the year
-
-
-
1,349,527
1,349,527
Dividends
-
-
-
(258,600)
(258,600)
Transfers
-
24,955
-
(24,955)
-
Balance at 31 May 2023
112
403,082
978,181
7,960,375
9,341,750
Year ended 31 May 2024:
Profit and total comprehensive income for the year
-
-
-
845,653
845,653
Dividends
-
-
-
(100,000)
(100,000)
Transfers
-
(10,862)
-
10,862
-
Balance at 31 May 2024
112
392,220
978,181
8,716,890
10,087,403
The notes on pages 12 to 25 form part of these financial statements.
J. T. HUGHES (OSWESTRY) LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MAY 2024
- 12 -
1
Accounting policies
Company information
J. T. Hughes (Oswestry) Limited is a private company limited by shares incorporated in England and Wales. The registered office is 5 Battlefield Road, Shrewsbury, Shropshire, United Kingdom, SY1 4AB.
1.1
Accounting convention
These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006.
The financial statements are prepared in sterling, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £.
The financial statements have been prepared under the historical cost convention, modified to include the revaluation of freehold property and certain financial instruments at fair value. 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 each category of financial instrument; 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 33 ‘Related Party Disclosures’: Compensation for key management personnel.
The financial statements of the company are consolidated in the financial statements of its parent JTH (Oswestry) Holdings Limited. These consolidated financial statements are available from the Registrar of Companies, Cardiff.
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 net invoiced sales of goods, excluding value added tax.
Revenue from the sale of vehicles is recognised at the point when the sales contract has been signed by the buyer and the buyer has paid a deposit.
1.4
Intangible fixed assets - negative goodwill
Negative goodwill represents the difference between the cost of acquisition of unincorporated businesses and the fair value of net assets acquired. It is initially recognised as an asset at cost and is subsequently measured at cost less accumulated amortisation and accumulated impairment losses. Goodwill was not considered to have a finite useful life and is being amortised over a 5 year period from the year ending 31 May 2021.
J. T. HUGHES (OSWESTRY) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2024
1
Accounting policies
(Continued)
- 13 -
1.5
Tangible fixed assets
Tangible fixed assets are initially measured at cost and subsequently measured at cost or valuation, net of depreciation and any impairment losses.
Depreciation is provided at the following annual rates in order to write off each asset over its estimated useful life.
Freehold land and property
2.5% on cost of buildings
Leasehold property improvements
2.5% on cost
Plant and vehicles
10% - 20% on cost
The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is credited or charged to profit or loss.
1.6
Investment properties
Investment property, which is property held to earn rentals and/or for capital appreciation, is initially recognised at cost, which includes the purchase cost and any directly attributable expenditure. Subsequently it is measured at fair value at the reporting end date. Changes in fair value are recognised in profit or loss.
1.7
Impairment of fixed assets
At each reporting period end date, the company reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the company estimates the recoverable amount of the cash-generating unit to which the asset belongs.
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.
J. T. HUGHES (OSWESTRY) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2024
1
Accounting policies
(Continued)
- 14 -
1.8
Stocks
Stocks are stated at the lower of cost and net realisable value. Cost comprises the purchase price, net of any specific trade discounts, and any expenditure incurred in bringing the stocks to their present location and condition. Net realisable value represents the estimated selling price less costs to complete and sell.
Stocks are assessed for impairment at each balance sheet date and, where an item of stock is found to be impaired, its carrying amount is reduced to its net realisable value, with the provision for the impairment loss being recognised in the profit and loss account.
Vehicles held on consignment have been recognised on the balance sheet where, in substance, they are deemed to be assets of the group. The principal criterion applied is whether the vehicles are interest-bearing. The corresponding liabilities have been included in creditors.
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.
1.9
Cash at bank and in hand
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.
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.
Derecognition of financial liabilities
Financial liabilities are derecognised when the company’s contractual obligations expire or are discharged or cancelled.
J. T. HUGHES (OSWESTRY) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2024
1
Accounting policies
(Continued)
- 15 -
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.
Deferred tax
Deferred taxation is recognised in respect of all timing differences that have originated but not reversed at the balance sheet date.
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 unless the figure is immaterial.
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
The company operates a defined contribution pension scheme. The assets of the scheme are held separately from those of the company in an independently administered fund. Contributions payable for the year are charged in the profit and loss account.
1.14
Leases
Rentals payable under operating leases, including any lease incentives received, are charged to profit or loss on a straight line basis over the term of the relevant lease except where another more systematic basis is more representative of the time pattern in which economic benefits from the leases asset are consumed.
Operating leases where the company is the lessee
Rentals payable for assets held on operating leases are charged to the profit and loss account on a straight line basis over the term of the lease.
Operating leases where the company is the lessor
Assets held for use in operating leases are included in fixed assets and depreciated over their useful economic lives. Rental income is recognised on a straight line basis in the profit and loss account.
J. T. HUGHES (OSWESTRY) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2024
1
Accounting policies
(Continued)
- 16 -
1.15
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.
Valuation of stock
A provision is made by management to reflect the depreciation of vehicles held in stock. The provision is calculated with reference to industry data.
3
Interest receivable and similar income
2024
2023
£
£
Interest income
Other interest income
5,016
4,409
4
Turnover and other revenue
An analysis of the company's turnover is as follows:
2024
2023
£
£
Turnover analysed by class of business
Vehicles sales, parts and services
127,766,833
97,986,284
2024
2023
£
£
Other revenue
Grants received
-
5,290
Rental income arising from investment properties
58,741
Service charges receivable
891
-
Insurance claims receivable
1,029
-
J. T. HUGHES (OSWESTRY) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2024
- 17 -
5
Auditor's remuneration
2024
2023
Fees payable to the company's auditor and associates:
£
£
For audit services
Audit of the financial statements of the company
41,000
33,000
For other services
All other non-audit services
42,501
11,534
6
Operating profit
2024
2023
Operating profit for the year is stated after charging/(crediting):
£
£
Government grants
-
(5,290)
Fees payable to the company's auditor for the audit of the company's financial statements
41,000
33,000
Depreciation of tangible fixed assets
171,670
159,981
Other operating income
60,661
Release of negative goodwill
(23,470)
(23,470)
Operating lease charges
22,808
20,299
7
Taxation
2024
2023
£
£
Current tax
UK corporation tax on profits for the current period
282,309
281,762
Adjustments in respect of prior periods
881
Total current tax
283,190
281,762
Deferred tax
Origination and reversal of timing differences
97,009
(28,976)
Total tax charge
380,199
252,786
J. T. HUGHES (OSWESTRY) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2024
7
Taxation
(Continued)
- 18 -
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:
2024
2023
£
£
Profit before taxation
1,225,852
1,602,313
Expected tax charge based on the standard rate of corporation tax in the UK of 25.00% (2023: 20.00%)
306,463
320,463
Tax effect of expenses that are not deductible in determining taxable profit
1,138
805
Tax effect of income not taxable in determining taxable profit
(53,829)
Adjustments in respect of prior years
881
Depreciation on assets not qualifying for tax allowances
3,986
Deferred tax adjustments in respect of prior years
67,731
Chargeable gains/(losses)
(126,589)
Fixed asset differences
(2,705)
Remeasurement of deferred tax for changes in tax rates
(35,879)
Movement in deferred tax not recognised
150,520
Taxation charge for the year
380,199
252,786
8
Employees
The average monthly number of persons (including directors) employed by the company during the year was:
2024
2023
Number
Number
Salesmen and clerical
61
54
Labour
42
42
Total
103
96
Their aggregate remuneration comprised:
2024
2023
£
£
Wages and salaries
3,585,067
3,147,783
Social security costs
344,545
301,259
Pension costs
377,697
456,641
4,307,309
3,905,683
J. T. HUGHES (OSWESTRY) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2024
- 19 -
9
Directors' remuneration
2024
2023
£
£
Remuneration for qualifying services
215,265
211,934
Company pension contributions to defined contribution schemes
152,700
245,300
367,965
457,234
The number of directors for whom retirement benefits are accruing under defined contribution schemes amounted to 3 (2023 - 3).
Remuneration disclosed above include the following amounts paid to the highest paid director:
2024
2023
£
£
Remuneration for qualifying services
83,973
83,973
Company pension contributions to defined contribution schemes
46,350
87,650
130,323
171,623
10
Investment property
2024
£
Fair value
At 1 June 2023
1,434,000
Additions through external acquisition
98,523
At 31 May 2024
1,532,523
Investment property comprises of land acquired during 2022 and investment property acquired during the year.
On 2 October 2023 the company had its investment property valued by Halls Holdings Limited, independent valuers, not connected with the company, on the basis of open market value.
The valuations conform to International Valuation Standards and was based on recent market transactions on arm's length terms for similar properties.
11
Interest payable and similar expenses
2024
2023
£
£
Interest on bank overdrafts and loans
3,128
-
Stocking interest
138,256
52,853
141,384
52,853
J. T. HUGHES (OSWESTRY) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2024
- 20 -
12
Intangible fixed assets
Negative goodwill
£
Cost
At 1 June 2023 and 31 May 2024
(117,349)
Amortisation and impairment
At 1 June 2023
(70,410)
Amortisation charged for the year
(23,470)
At 31 May 2024
(93,880)
Carrying amount
At 31 May 2024
(23,469)
At 31 May 2023
(46,939)
13
Tangible fixed assets
Freehold land and property
Leasehold property improvements
Plant and vehicles
Total
£
£
£
£
Cost or valuation
At 1 June 2023
940,000
735,045
2,258,452
3,933,497
Additions
45,647
175,479
221,126
Disposals
(67,200)
(67,200)
At 31 May 2024
940,000
713,492
2,433,931
4,087,423
Depreciation
At 1 June 2023
69,911
144,536
1,790,922
2,005,369
Depreciation charged in the year
23,500
19,763
128,407
171,670
At 31 May 2024
93,411
164,299
1,919,329
2,177,039
Carrying amount
At 31 May 2024
846,589
549,193
514,602
1,910,384
At 31 May 2023
870,089
590,509
467,530
1,928,128
Freehold land and property was revalued to £940,000 in October 2019 by Chivers Commercial, independent surveyors not connected with the company on the basis of market value.
The valuation conformed to International Valuation Standards and was based on recent market transactions on arm's length terms for similar properties.
The Freehold land and property is depreciated over 40 years.
The Directors consider that the value of the freehold land and property at 31 May 2024 is appropriate.
If freehold land and properties were stated on an historical cost basis rather than a revalued basis, the amounts would have been included as follows:
J. T. HUGHES (OSWESTRY) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2024
13
Tangible fixed assets
(Continued)
- 21 -
2024
2023
£
£
Cost
693,745
693,745
Accumulated depreciation
(292,295)
(274,951)
Carrying value
401,450
418,794
The revaluation surplus is disclosed in note 19.
Included in freehold land and property is freehold land with a historical cost of £200,000 (2023: £200,000) which has not been depreciated.
14
Stocks
2024
2023
£
£
Vehicles
8,524,683
6,096,756
Parts and other stock
495,355
288,335
9,020,038
6,385,091
In addition at 31 May 2024 the company held £7,033,997 (2023 - £2,133,415) of consignment stock which is not recorded on the balance sheet.
The principle terms of the consignment agreements, which can generally be terminated by either side, are such that the company may return to the supplier or transfer to another dealership any of the stock without financial or commercial penalty, and the supplier can vary stock prices.
15
Debtors
2024
2023
Amounts falling due within one year:
£
£
Trade debtors
9,546,962
4,710,284
Corporation tax recoverable
22,920
21,227
Amounts owed by group undertakings
1,514,702
1,469,002
Other debtors
69,741
64,725
Prepayments and accrued income
318,814
193,207
11,473,139
6,458,445
J. T. HUGHES (OSWESTRY) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2024
- 22 -
16
Creditors: amounts falling due within one year
2024
2023
£
£
Trade creditors
11,282,544
7,369,159
Corporation tax
(998)
281,762
Other taxation and social security
924,204
497,155
Other creditors
1,618,758
106,068
Accruals
451,994
481,339
14,276,502
8,735,483
17
Secured debts
At the year end the company was using its overdraft facility, the facility is available to them as it will be required on a seasonable basis due to the nature of the trade. Various types of security are still in place:
- Legal charges over the premises owned by the company at the Telford site.
- A debenture comprising fixed and floating charges over company assets.
- A cross guarantee and debenture in connection with the related party Courtyard Property (Shropshire) Limited (a fellow 100% subsidiary of JTH (Oswestry) Holdings Limited) containing a fixed and floating charge dated 22 August 2014.
18
Deferred taxation
Deferred tax assets and liabilities are offset where the company has a legally enforceable right to do so. The following is the analysis of the deferred tax balances (after offset) for financial reporting purposes:
Liabilities
Liabilities
2024
2023
Balances:
£
£
Accelarated capital allowances
175,393
169,121
Retirement benefit obligations
(26,271)
-
Investment property
60,088
-
General provisions
-
(56,920)
209,210
112,201
2024
Movements in the year:
£
Liability at 1 June 2023
112,201
Charge to profit or loss
97,009
Liability at 31 May 2024
209,210
J. T. HUGHES (OSWESTRY) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2024
- 23 -
19
Revaluation reserve
2024
2023
£
£
At the beginning of the year
403,082
378,127
Transfer to retained earnings
(10,862)
24,955
At the end of the year
392,220
403,082
20
Deferred income
2024
2023
£
£
Refurbishment grant brought forward
-
5,290
Released during the year
-
(5,290)
-
-
During 2006 the company received grants towards the refurbishment of the Telford freehold property and the Shrewsbury leasehold property. This is being recognised over their estimated useful life per the Accounting Policies - Tangible Fixed Assets, note 1 to the Financial Statements.
21
Retirement benefit schemes
2024
2023
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
377,697
456,641
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.
22
Share capital
2024
2023
£
£
Ordinary share capital
Issued and fully paid
100 Ordinary of £1 each
100
100
12 Ordinary A of £1 each
12
12
112
112
J. T. HUGHES (OSWESTRY) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2024
- 24 -
23
Other reserves
£
At 1 June 2023
978,181
At 31 May 2024
978,181
The other reserve balance relates to the profit gained on the sale of the Oswestry site and is not available for distribution to holders of Ordinary A shares.
24
Capital commitments
Amounts contracted for but not provided in the financial statements:
2024
2023
£
£
Acquisition of tangible fixed assets
80,000
36,000
25
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:
2024
2023
£
£
Within one year
308,000
279,000
Between two and five years
1,009,397
1,000,000
In over five years
548,696
41,667
1,866,093
1,320,667
26
Related party transactions
Transactions with related parties
The following amounts were outstanding at the reporting end date:
Purchases
Purchases
2024
2023
£
£
Other related parties
58,000
58,000
J. T. HUGHES (OSWESTRY) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2024
26
Related party transactions
(Continued)
- 25 -
During the year rent of £58,000 (2023: £58,000) was paid to Sian Price (A family member of Director J E Hughes) in respect of property occupied by J T Hughes (Oswestry) Limited in Newtown.
One of the company's outlets is operated from premises in Telford which is rented from the J T Hughes (Oswestry) Limited Executive Pension Scheme, of which one (previously two) of the directors are trustees and members. During the year rent of £79,000 (2023: £79,000) was paid to the pension scheme.
The company provided a loan to a director on which interest is being charged annually at 2.5% above the Bank of England base rate.
The following amounts were outstanding at the reporting end date:
2024
2023
Amounts due from related parties
£
£
Courtyard Property (Shropshire) Limited
1,519,002
1,469,002
Directors' loan
69,741
64,725
27
Ultimate controlling party
JTH (Oswestry) Holdings Limited is the ultimate parent company of J T Hughes (Oswestry) Limited by virtue of its 100% shareholding in the company.
Mr J E Hughes is the ultimate controlling party by virtue of this majority shareholding in JTH (Oswestry) Holdings Limited.
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