Company registration number 04257011 (England and Wales)
HILLS PROSPECT PLC
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 30 SEPTEMBER 2024
HILLS PROSPECT PLC
COMPANY INFORMATION
Directors
Mr E K Mukadam
Mr R M Gray
Secretary
M P Cowen
Company number
04257011
Registered office
Greenside Way
Middleton
Manchester
M24 1SW
Auditor
Royce Peeling Green Limited
The Copper Room
Deva City Office Park
Trinity Way
Manchester
M3 7BG
HILLS PROSPECT PLC
CONTENTS
Page
Strategic report
1 - 5
Directors' report
6
Independent auditor's report
7 - 9
Statement of comprehensive income
10
Balance sheet
11
Statement of changes in equity
12
Notes to the financial statements
13 - 25
HILLS PROSPECT PLC
STRATEGIC REPORT
FOR THE PERIOD ENDED 30 SEPTEMBER 2024
- 1 -
The directors are pleased to present their Strategic Report for nine month period ended 30th September 2024.
The Company has chosen in accordance with Companies Act 2006 s 414C (11) to set out in the Company’s Strategic Report information required by Large & Medium-sized companies. The results for the year and financial position of the Company are shown in the annexed financial statements and are prepared in accordance with FRS102.
Principal activities
Hills Prospect Plc is an independent drinks distributor operating solely within the UK and is a wholly owned subsidiary of LWC Drinks Limited. We supply alcoholic & non-alcoholic beverages to all types of hospitality venue. Our accounts periods are now aligned with our parent company.
Review of the business
2024 trade continued to reflect the challenging economic environment. Margin increased against 2023 levels by 0.6%. We will continue to focus on the operating margin and associated costs through the coming year. As part of a larger business, the Company will actively continue to focus on continuing to improve the performance of the business. Considerable focus has and continues to be applied to buying opportunities to assist with maximising margins.
Principal risks and uncertainties
We consider that the Company has few risks associated with its trade other than the economic environment (as proven by COVID-19) but is always mindful of the risks of transporting goods and the overall recovery of our trade debts. Our bad debt for 2024 increased by 0.14% from 2023 levels due to increase in liquidations (0.19% of turnover). Our strong credit control processes will continue to minimise controllable bad debt. We continue to evaluate the Business Continuity Plan which includes a full review of the operational risk register and strategies to be applied.
Post balance sheet events
There are no notable post balance sheet events that would materially affect the accounts for nine month period ended 30th September 2024.
Environmental
As a business we are continually aware of our impact on the environment, and we continually look for ways to reduce our carbon footprint. We generate significant volumes of electricity via solar panel array installed at our site. We have installed LED lighting throughout our offices & warehouse and have installed motion sensors. We actively support cycle to work schemes for our employees and we continue to recognise that the company’s products are contained in recyclable containers and that where the suppliers charge deposits the company will collect containers for recycling. Other containers are left with the customers to recycle but all packaging is returned to the warehouse for recycling. We have continued to invest in sustainability during 2024 and we have developed a sustainability strategy covering our targets for the next 10 years to help reduce our carbon footprint and become a sustainable company aligning itself to relevant UN SDG’s, whilst still ensuring the continued commerciality of the business.
Future Developments
The Company is mindful as to the overt current cost pressures that will have an impact on overall profit expectations for 2025 onwards as we actively compete in the market. As a whole the business is in a strong position to deliver on its strategic ambitions for the future, especially now being we are part of LWC.
HILLS PROSPECT PLC
STRATEGIC REPORT (CONTINUED)
FOR THE PERIOD ENDED 30 SEPTEMBER 2024
- 2 -
Other information and explanations
Streamlined Energy & Carbon Reporting (SECR)
In accordance with The Companies and Limited Liability Partnerships Regulations 2018, the business has prepared a Streamlined Energy & Carbon Report (SECR) for the financial year. This Measurement and reporting of environmental performance will drive direct benefits for the business such as lower energy and resource costs, improved understanding of exposure to the risks of climate change and by allowing the business to demonstrate sustainable leadership within the drinks distribution industry.
Hills Prospect PLC total energy consumption for this financial period (9 months) was 1,772 MWh, resulting in gross carbon emissions of 422.05 tCO2e. We also generated 165 MWh, 34.19 tCO2e from our solar panel array.
Our normalised gross emissions were 7.15 tCO2e/£m for 2024 vs 6.97 tCO2e/£m for 2023.
The bulk of our emissions (around 86%) arise from fuel consumed in our transport operations. This is an area of focus over the next few years for the Company as we explore alternative fuels or vehicles that provide a commercially viable carbon reduction option.
Quantification and reporting methodology
This report has been prepared following the GHG Reporting Protocol – Corporate Standard and using the guidance set out in Environmental Reporting Guidelines: Including streamlined energy and carbon reporting guidance – HM Government (March 2019). Energy consumption data has been sourced from utility supplier invoices presented to us by our landlord, invoices from our direct suppliers and travel expense data.
Measures taken to improve energy efficiency
We have always been mindful of our carbon footprint and the business’ effect on the environment. We installed solar panels in December 2015, fitted LED lighting throughout our warehouse and offices in March 2016, cycle to work schemes have been running since January 2018, introduced electric powered pallet trucks & forklifts in August 2018 and implemented improved telematics system in January 2021 to improve efficiencies in route planning across our fleet. All of our HGV’s are Euro 6 and ULEZ compliant.
During 2024 we have continued investigative work on the viability of alternative fuels across the business and we continue to investigate our waste management options to improve recycling opportunities.
We have continued using ORN’s Earthpro range for our uniforms, which is made from 65% GRS recycled polyester & 35% cotton and a project is underway to introduce more sustainable uniforms across the group.
For a broader view of LWC Drinks' climate-related risk management, please refer to the Metrics & Targets section of the TCFD Report.”
HILLS PROSPECT PLC
STRATEGIC REPORT (CONTINUED)
FOR THE PERIOD ENDED 30 SEPTEMBER 2024
- 3 -
HILLS PROSPECT PLC
STRATEGIC REPORT (CONTINUED)
FOR THE PERIOD ENDED 30 SEPTEMBER 2024
- 4 -
Engagement with suppliers, customers and others
Engagement with Customers
The business engages with its customers on a daily basis via its sales and telesales teams to provide a broad range of products that is constantly evolving to suit customer requirements. We provide multiple ordering platforms/options to enhance the ordering experience for the customer. The Company also provides comprehensive support packages, wine tasting experiences, a wine list design service plus wine and cellar training for our customers where appropriate. We also act in conjunction with our suppliers to provide additional support packages.
Engagement with Employees
The Company recognises that its employees are integral to the success of the business and as such we look to attract, retain and motivate our employees. We consider ourselves a responsible employer and therefore consider pay, benefits, wellbeing and health & safety of our employees as paramount to enable retention of knowledge and experience for the furtherment of the business success. The business engages with its employees in using formal tools for policy updates using its payroll self service platform to ensure full employee awareness and engagement along with regular discussions with management to offer opportunities to voice ideas, recommendations or discuss issues.
Engaging with Banks and Insurers
The Company has a well-managed balance sheet and as a result, bank borrowings are low relative to the net assets. Despite this the financial controller provides monthly management information to our bank to keep them up to date with trading performance and our relationship manager from our bank attends at least one meeting per year. Strong relationships are also maintained by the financial controller, operations manager and HR business partner with our insurance brokers to facilitate the periodic review of the insurance portfolio.
Engagement with Shareholders
The Company’s equity shareholders are also directors of the business and are demonstrably engaged in the decision-making process at strategic level.
Engagement with Suppliers
The business engages with its trade suppliers frequently to ensure that they are actively involved with the supply, demand & promotion of their brands enabling the best product/brand is matched to the right customer offering. Meetings are held regularly between brand owners and management to promote effective marketing strategies and foster relationship management. We negotiate a full commercial package with our suppliers to provide benefits to our customers, ourselves and our suppliers.
Engagement with the Community
Throughout 2024 we have worked closely with St Francis Hospice. We continued with our site wide clothing donation programme which saw approx. 489kg of clothes donated and saved from landfill for the period January to September 2024, contributing to a circular economy. Our staff also volunteered at St Francis Hospice helping with projects such as Christmas Tree Recycling Campaign, gardening, and repurposing old and broken pallets into sustainable bird & insect boxes.
HILLS PROSPECT PLC
STRATEGIC REPORT (CONTINUED)
FOR THE PERIOD ENDED 30 SEPTEMBER 2024
- 5 -
Promoting the success of the company
The directors of the Company confirm that they have acted in a way that they consider to be in good faith, and to promote the success of the Company for the benefit of all stakeholders. In doing so, they have regard (amongst other matters) to issues below:-
The interest of the Company’s employees
The business relationships with our customers, suppliers and others
The impact of the Company’s operations on the environment and the communities in which we operate
The reputation of the Company with regard to its standards of business conduct
The need to act fairly between all stakeholders of the Company
The directors understand the need to act fairly between employees and the Company. Regular meetings ensure that our employees have the ability to raise suggestions and issues. The Company has invested in the health and safety of all its stakeholders – employees, customers, suppliers and others – to provide a safe and welcoming environment to engage with the Company.
Maintaining strong and effective relationships with our supplier base is critical to the success of the business. The directors and colleagues keep in regular contact with our suppliers to agree supply terms, provide information when required, and act on any feedback or concerns.
Mr E K Mukadam
Director
20 March 2025
HILLS PROSPECT PLC
DIRECTORS' REPORT
FOR THE PERIOD ENDED 30 SEPTEMBER 2024
- 6 -
The directors present their annual report and financial statements for the period ended 30 September 2024.
Results and dividends
The results for the period are set out on page 10.
No ordinary dividends were paid. The directors do not recommend payment of a final dividend.
Directors
The directors who held office during the period and up to the date of signature of the financial statements were:
Mr E K Mukadam
Mr R M Gray
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.
Other information
The Company has chosen in accordance with Companies Act 2006 s 414C (11) to set out in the Company’s Strategic Report information required by Large & Medium-sized companies.
On behalf of the board
Mr E K Mukadam
Director
20 March 2025
HILLS PROSPECT PLC
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF HILLS PROSPECT PLC
- 7 -
Opinion
We have audited the financial statements of Hills Prospect PLC (the 'company') for the period ended 30 September 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 30 September 2024 and of its profit for the period 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 period 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.
HILLS PROSPECT PLC
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF HILLS PROSPECT PLC (CONTINUED)
- 8 -
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.
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:
At the planning stage of the audit we gain an understanding of the laws and regulations which apply to the company and how management seek to comply with them. This helps us to make appropriate risk assessments.
During the audit we focus on relevant risk areas and review compliance with laws and regulations through making relevant enquiries and corroboration by, for example, reviewing Board Minutes and other documentation.
We assess the risk of material misstatement in the financial statements including as a result of fraud and undertake procedures such as:
Review of controls set in place by management
Enquiry of management as to whether they consider fraud or other irregularities may have occurred or where such opportunity might exist
Challenge of management assumptions with regard to accounting estimates
Identification and testing of journal entries, particularly those which may appear to be unusual by size or nature.
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 are less likely to become aware of instances of 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.
HILLS PROSPECT PLC
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF HILLS PROSPECT PLC (CONTINUED)
- 9 -
A further description of our responsibilities is located on the Financial Reporting Council’s website at: https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's 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.
Martin Chatten
Senior Statutory Auditor
For and on behalf of Royce Peeling Green Limited
20 March 2025
Chartered Accountants
Statutory Auditor
The Copper Room
Deva City Office Park
Trinity Way
Manchester
M3 7BG
HILLS PROSPECT PLC
STATEMENT OF COMPREHENSIVE INCOME
FOR THE PERIOD ENDED 30 SEPTEMBER 2024
- 10 -
Period
Year
ended
ended
30 September
31 December
2024
2023
Notes
£
£
Turnover
3
58,528,272
80,054,058
Cost of sales
(44,855,650)
(61,826,037)
Gross profit
13,672,622
18,228,021
Administrative expenses
(10,620,884)
(12,107,802)
Other operating income
13,185
10,925
Operating profit
4
3,064,923
6,131,144
Interest receivable and similar income
9
465,907
435,197
Interest payable and similar expenses
(11,390)
(20,823)
Profit before taxation
3,519,440
6,545,518
Tax on profit
10
(933,119)
(1,527,617)
Profit for the financial period
2,586,321
5,017,901
The profit and loss account has been prepared on the basis that all operations are continuing operations.
HILLS PROSPECT PLC
BALANCE SHEET
AS AT
30 SEPTEMBER 2024
30 September 2024
- 11 -
30 September 2024
31 December 2023
Notes
£
£
£
£
Fixed assets
Tangible assets
11
1,295,157
1,479,206
Current assets
Stocks
12
4,389,222
4,376,714
Debtors
13
19,662,445
15,104,227
Cash at bank and in hand
1,925,629
6,043,858
25,977,296
25,524,799
Creditors: amounts falling due within one year
14
(8,501,190)
(10,754,996)
Net current assets
17,476,106
14,769,803
Total assets less current liabilities
18,771,263
16,249,009
Creditors: amounts falling due after more than one year
15
(151,836)
(242,983)
Provisions for liabilities
Deferred tax liability
17
214,685
187,605
(214,685)
(187,605)
Net assets
18,404,742
15,818,421
Capital and reserves
Called up share capital
18
395,287
395,287
Profit and loss reserves
18,009,455
15,423,134
Total equity
18,404,742
15,818,421
The financial statements were approved by the board of directors and authorised for issue on 20 March 2025 and are signed on its behalf by:
Mr E K Mukadam
Director
Company registration number 04257011 (England and Wales)
HILLS PROSPECT PLC
STATEMENT OF CHANGES IN EQUITY
FOR THE PERIOD ENDED 30 SEPTEMBER 2024
- 12 -
Share capital
Profit and loss reserves
Total
Notes
£
£
£
Balance at 1 January 2023
395,287
10,711,633
11,106,920
Year ended 31 December 2023:
Profit and total comprehensive income
-
5,017,901
5,017,901
Dividends
-
(306,400)
(306,400)
Balance at 31 December 2023
395,287
15,423,134
15,818,421
Period ended 30 September 2024:
Profit and total comprehensive income
-
2,586,321
2,586,321
Balance at 30 September 2024
395,287
18,009,455
18,404,742
HILLS PROSPECT PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 30 SEPTEMBER 2024
- 13 -
1
Accounting policies
Company information
Hills Prospect PLC is a private company limited by shares incorporated in England and Wales. The registered office is Greenside Way, Middleton, Manchester, M24 1SW.
1.1
Reporting period
The company's financial statements are presented for the nine month period to 30 September 2024. The company's year end date has been changed from 31 December to 30 September to tie in with its ultimate parent company Licensed Wholesale Company Limited. Comparative amounts presented in the financial statements (including the related notes) are therefore not entirely comparable.
1.2
Accounting convention
These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006.
The financial statements are prepared in sterling, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £.
The financial statements have been prepared under the historical cost convention. The principal accounting policies adopted are set out below.
This company is a qualifying entity for the purposes of FRS 102, being a member of a group where the parent of that group prepares publicly available consolidated financial statements, including this company, which are intended to give a true and fair view of the assets, liabilities, financial position and profit or loss of the group.
The company has therefore taken advantage of exemptions from the following disclosure requirements:
· Section 4 ‘Statement of Financial Position’ – Reconciliation of opening/ closing number of shares;
· Section 7 ‘Statement of Cash Flows’:
· Section 11 ‘Basic Financial Instruments’;
· Section 12 ‘Other Financial Instrument Issues’; and
· Section 33 ‘Related Party Disclosures’ – Compensation for key management personnel.
The financial statements of the company are consolidated in the financial statements of Licensed Wholesale Company Limited which are available from Companies House.
1.3
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.
1.4
Turnover
Turnover is recognised at the fair value of the consideration received or receivable for goods and services provided in the normal course of business, and is shown net of VAT and other sales related taxes. The fair value of consideration takes into account trade discounts, settlement discounts and volume rebates.
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.
HILLS PROSPECT PLC
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 30 SEPTEMBER 2024
1
Accounting policies
(Continued)
- 14 -
1.5
Tangible fixed assets
Tangible fixed assets are initially measured at cost and subsequently measured at cost, net of depreciation and any impairment losses.
Depreciation is recognised so as to write off the cost of assets less their residual values over their useful lives on the following bases:
Leasehold land and buildings
in accordance with the property
Plant and equipment
25% on reducing balance
Fixtures and fittings
25% on reducing balance
Computers
33% on reducing balance
Motor vehicles
25% on reducing balance
The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is credited or charged to profit or loss.
1.6
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.
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 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.
HILLS PROSPECT PLC
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 30 SEPTEMBER 2024
1
Accounting policies
(Continued)
- 15 -
1.9
Financial instruments
The company has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.
Financial instruments are recognised in the company's balance sheet when the company becomes party to the contractual provisions of the instrument.
Financial assets and liabilities are offset, with the net amounts presented in the financial statements, when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.
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.
HILLS PROSPECT PLC
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 30 SEPTEMBER 2024
1
Accounting policies
(Continued)
- 16 -
Basic financial liabilities
Basic financial liabilities, including creditors, bank loans and loans from fellow group companies 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 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.
HILLS PROSPECT PLC
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 30 SEPTEMBER 2024
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. 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.
1.15
Liability limitation agreement
The company has entered into a liability limitation agreement with Royce Peeling Green Limited, the statutory auditor for the period ended 30 September 2024. The proportionate liability agreement follows the standard terms in Appendix B to the FRC's June 2008 Guidance on Auditor Liability Agreements, and has been approved by the shareholders.
HILLS PROSPECT PLC
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 30 SEPTEMBER 2024
- 18 -
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 periods.
Critical judgements
The following judgements (apart from those involving estimates) have had the most significant effect on amounts recognised in the financial statements.
Depreciation
The depreciation expense is the recognition of the decline in the value of the asset and allocation of the cost of the asset over the periods in which the asset will be used. Judgments are made as to the estimated useful life of the assets; these are regularly reviewed to reflect the changing environment.
Stock provision
The provision is based on a review of old/ slow moving stock lines and the estimated realisation of that stock. The estimated realisation is based on past experience and subsequent recovery after the year end. These judgements are regularly reviewed to reflect the changing environment.
Bad debt provisions
The bad debt provision is based on a review of old/slow paying customer balances and the estimated recoverability of those balances. Estimated recoverability is based on past experience and subsequent recovery after the year end. These judgements are regularly reviewed to reflect the changing environment.
Purchase rebates/overiders
Provision for purchase rebates and overiders are based on estimated amounts due based on quantities purchased during the year. The estimated recoverability is based on past experience and amounts subsequently recovered after the year end. These judgements are regularly reviewed to reflect the changing environment.
3
Turnover
All the Company's turnover derives from its principal activities, entirely in the UK. Other significant revenue is shown in note 9.
4
Operating profit
Sept 30,
Dec 31,
2024
2023
Operating profit for the period is stated after charging/(crediting):
£
£
Exchange (gains)/losses
(702)
502
Depreciation of owned tangible fixed assets
187,759
158,037
Depreciation of tangible fixed assets held under finance leases
95,270
227,213
Loss/(profit) on disposal of tangible fixed assets
7,897
(12,706)
Amortisation of intangible assets
-
1,778
(Profit)/loss on disposal of intangible assets
-
26,076
Operating lease charges
645,080
860,107
HILLS PROSPECT PLC
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 30 SEPTEMBER 2024
- 19 -
5
Auditor's remuneration
Sept 30,
Dec 31,
2024
2023
Fees payable to the company's auditor and associates:
£
£
For audit services
Audit of the financial statements of the company
27,500
21,500
6
Employees
The average monthly number of persons (including directors) employed by the company during the period was:
Sept 30,
Dec 31,
2024
2023
Number
Number
Selling and distribution
171
164
Administration
16
18
187
182
Their aggregate remuneration comprised:
£
£
Wages and salaries
5,036,011
6,455,693
Social security costs
524,844
669,925
Pension costs
431,816
786,527
5,992,671
7,912,145
7
Retirement benefit schemes
Sept 30,
Dec 31,
2024
2023
£
£
Charge to profit or loss in respect of defined contribution schemes
431,816
786,527
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.
HILLS PROSPECT PLC
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 30 SEPTEMBER 2024
- 20 -
8
Directors' remuneration
Sept 30,
Dec 31,
2024
2023
£
£
Remuneration for qualifying services
332,035
Company pension contributions to defined contribution schemes
-
527,606
859,641
The number of directors for whom retirement benefits are accruing under defined contribution schemes amounted to 0 (2023 - 4).
Remuneration disclosed above include the following amounts paid to the highest paid director:
£
£
Remuneration for qualifying services
n/a
68,900
Company pension contributions to defined contribution schemes
n/a
206,267
As total directors' remuneration was less than £200,000 in the current period, no disclosure is provided for that period.
9
Interest receivable and similar income
Sept 30,
Dec 31,
2024
2023
£
£
Interest income
Interest on bank deposits
165,230
335,660
Other interest income
300,677
99,537
Total income
465,907
435,197
HILLS PROSPECT PLC
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 30 SEPTEMBER 2024
- 21 -
10
Taxation
Sept 30,
Dec 31,
2024
2023
£
£
Current tax
UK corporation tax on profits for the current period
906,039
1,564,666
Deferred tax
Origination and reversal of timing differences
(31,385)
(37,049)
Adjustment in respect of prior periods
58,465
Total deferred tax
27,080
(37,049)
Total tax charge
933,119
1,527,617
The actual charge for the period can be reconciled to the expected charge for the period based on the profit or loss and the standard rate of tax as follows:
Sept 30,
Dec 31,
2024
2023
£
£
Profit before taxation
3,519,440
6,545,518
Expected tax charge based on the standard rate of corporation tax in the UK of 25.00% (2023: 23.50%)
879,860
1,538,197
Tax effect of expenses that are not deductible in determining taxable profit
(5,206)
(10,580)
Deferred tax adjustments in respect of prior years
58,465
Taxation charge for the period
933,119
1,527,617
HILLS PROSPECT PLC
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 30 SEPTEMBER 2024
- 22 -
11
Tangible fixed assets
Leasehold land and buildings
Plant and equipment
Fixtures and fittings
Computers
Motor vehicles
Total
£
£
£
£
£
£
Cost
At 1 January 2024
140,889
92,782
608,480
202,257
2,483,884
3,528,292
Additions
1,474
18,538
173,440
193,452
Disposals
(226,840)
(226,840)
At 30 September 2024
140,889
94,256
608,480
220,795
2,430,484
3,494,904
Depreciation and impairment
At 1 January 2024
32,414
79,449
404,156
131,075
1,401,992
2,049,086
Depreciation charged in the period
8,676
2,531
39,996
24,755
207,071
283,029
Revaluation
(132,368)
(132,368)
At 30 September 2024
41,090
81,980
444,152
155,830
1,476,695
2,199,747
Carrying amount
At 30 September 2024
99,799
12,276
164,328
64,965
953,789
1,295,157
At 31 December 2023
108,475
13,333
204,324
71,182
1,081,892
1,479,206
The net carrying value of tangible fixed assets includes the following in respect of assets held under finance leases or hire purchase contracts.
Sept 30,
Dec 31,
2024
2023
£
£
Motor vehicles
400,409
629,325
12
Stocks
Sept 30,
Dec 31,
2024
2023
£
£
Finished goods and goods for resale
4,389,222
4,376,714
HILLS PROSPECT PLC
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 30 SEPTEMBER 2024
- 23 -
13
Debtors
Sept 30,
Dec 31,
2024
2023
Amounts falling due within one year:
£
£
Trade debtors
3,810,772
5,004,129
Amounts owed by group undertakings
13,582,569
7,588,950
Other debtors
1,354,181
1,953,227
Prepayments and accrued income
914,923
557,921
19,662,445
15,104,227
14
Creditors: amounts falling due within one year
Sept 30,
Dec 31,
2024
2023
Notes
£
£
Obligations under finance leases
16
121,530
124,816
Trade creditors
6,225,938
8,113,517
Corporation tax
323,721
912,683
Other taxation and social security
933,897
689,045
Other creditors
91,220
103,516
Accruals and deferred income
804,884
811,419
8,501,190
10,754,996
15
Creditors: amounts falling due after more than one year
Sept 30,
Dec 31,
2024
2023
Notes
£
£
Obligations under finance leases
16
151,836
242,983
16
Finance lease obligations
Sept 30,
Dec 31,
2024
2023
Future minimum lease payments due under finance leases:
£
£
Within one year
136,515
139,942
In two to five years
185,943
273,344
322,458
413,286
Less: future finance charges
(49,092)
(45,487)
273,366
367,799
Finance lease payments represent rentals payable by the company for certain motor vehicles. 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 four years. All leases are on a fixed repayment basis and no arrangements have been entered into for contingent rental payments. All amounts are secured on the assets financed.
HILLS PROSPECT PLC
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 30 SEPTEMBER 2024
- 24 -
17
Deferred taxation
The following are the major deferred tax liabilities and assets recognised by the company and movements thereon:
Restated
Liabilities
Liabilities
Sept 30,
Dec 31,
2024
2023
Balances:
£
£
Accelerated capital allowances
244,370
212,503
Short term timing differences
(29,685)
(24,898)
214,685
187,605
2024
Movements in the period:
£
Liability at 1 January 2024
187,605
Charge to profit or loss
27,080
Liability at 30 September 2024
214,685
Deferred tax assets and liabilities are offset where the company has a legally enforceable right to do so.
18
Share capital
Sept 30,
Dec 31,
Sept 30,
Dec 31,
2024
2023
2024
2023
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Ordinary Shares of £1 each
395,272
395,272
395,287
395,287
19
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:
Sept 30,
Dec 31,
2024
2023
£
£
Within one year
970,413
977,801
Between two and five years
3,819,813
2,949,783
In over five years
6,766,310
7,480,303
11,556,536
11,407,887
HILLS PROSPECT PLC
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 30 SEPTEMBER 2024
- 25 -
20
Related party transactions
The company has taken advantage of the exemption available under FRS 102 not to disclose transactions with its parent company, Hills Prospect Holdings Limited, or with LWC Drinks Limited post acquisition.
21
Directors' transactions
Dividends totalling £0 (2023 - £3,000) were paid in the period in respect of shares held by the company's directors.
22
Ultimate controlling party
The company is a wholly owned subsidiary of Hills Prospect Holdings Limited.
On 31 August 2023 that company was acquired by LWC Drinks Limited, itself a wholly owned subsidiary of Licensed Wholesale Company Limited.
Licensed Wholesale Company Limited is regarded by the directors as being the company's ultimate parent company; its registered office address is Greenside Way, Middleton, Manchester, M24 1SW.
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