S & F Hutton (Holdings) Limited Group accounts (Group and Company)

S & F Hutton (Holdings) Limited Group accounts (Group and Company)

S & F HUTTON (HOLDINGS) LIMITED - Company Information

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COMPANY REGISTRATION NUMBER: 10330006
S & F Hutton (Holdings) Limited
Financial Statements
For the year ended
31 December 2020
S & F Hutton (Holdings) Limited
Financial Statements
Year ended 31 December 2020
Contents
Page
Officers and professional advisers
1
Strategic report
2
Directors' report
4
Independent auditor's report to the members
6
Consolidated statement of comprehensive income
10
Consolidated statement of financial position
11
Company statement of financial position
12
Consolidated statement of changes in equity
13
Company statement of changes in equity
14
Consolidated statement of cash flows
15
Notes to the financial statements
16
S & F Hutton (Holdings) Limited
Officers and Professional Advisers
The board of directors
F Hutton (Resigned 2 March 2021)
S Hutton
C Ramsey (Appointed 12 April 2021)
R Watson (Appointed 12 April 2021)
Registered office
The Barn
Charity Street
Carlton Scroop
Grantham
Lincolnshire
NG32 3AT
Auditor
Streets Audit LLP
Chartered Accountants & statutory auditor
Enterprise House
38 Tyndall Court
Commerce Road
Lynch Wood
Peterborough
Cambridgeshire
PE2 6LR
Bankers
HSBC Bank Plc
Stonebow
221 High Street
Lincoln
LN1 1TS
S & F Hutton (Holdings) Limited
Strategic Report
Year ended 31 December 2020
We aim to present a balanced and comprehensive review of the development and performance of the group during the year and its position at the year end. Our review is consistent with the size and non-complex nature of the business and is written in the context of the risks and uncertainties we face. The group's core operations are that of specialist growers of turf and construction, installation and contract maintenance of sports pitches. Operation Performance and Key Performance Indicators The directors of the group consider the key performance indicators (KPI's) of the company to be turnover, gross margin and net profit. The group reported turnover in the year of £11.8m (2019 - £10.2m) and a gross margin of 33.2% (2019 - 30.2%) resulting in a net profit of £2.0m (2019 - £1.4m). As for many businesses of our size, the business environment in which we operate continues to be challenging but we are confident that the company will maintain or increase its market share during 2021 through the continued investment in its core operations. Principal Risks and Uncertainties The group's principal financial instruments comprise cash, bank borrowings and various items, such as trade debtors and trade creditors, which arise directly from its operations. The main purpose of these financial instruments is to provide finance for the group's operations. The existence of these financial instruments exposes the group to a number of financial risks. The main risks arising from the group's financial risks are credit risk, liquidity risk and interest rate risk. The directors review and agree policies for managing each of these risks and they are summarised below. These policies have remained unchanged from previous years. Credit risk The group seeks to manage its credit risk by dealing with established customers or otherwise checking the credit-worthiness of new customers, establishing clear contractual relationships with those customers and by identifying and addressing any credit issues arising in a timely manner. Liquidity risk The group seeks to manage liquidity risk by ensuring sufficient liquidity is available to meet foreseeable needs and to invest cash assets safely and profitably. Short term flexibility is achieved by overdraft facilities. The main functional currency of the business is Sterling and the group does not have material exposure to foreign-denominated currency. Interest rate risk The group's exposure to market risk for the changes in interest rates relates primarily to its bank borrowings. The group seeks to manage this risk by keeping bank borrowings to a minimum. Outlook The group continues to seek to grow across all core operations by the continued investment in land and machinery. The directors will continue to react to market conditions whilst managing the risks noted above. During the year the COVID-19 pandemic spread to the UK and resulted in national and then local lockdowns. Given the nature of the business, the company was able to remain open and trading throughout this period. Both Financial, and Health and Safety risks are being continually reviewed by the directors who remain dedicated to the protection and retention of staff. In addition the directors are mindful of the significant ongoing support being offered by the Government. Brexit also continues to affect he UK economy however so far we have not been affected in any way but we continue to monitor whether there may be any impact on the business. After the year end, the company also entered into a binding agreement to repurchase all of the shares of one of the shareholders for £3.6m. The agreement is to repurchase the shares over the next 7 years.
This report was approved by the board of directors on 30 September 2021 and signed on behalf of the board by:
S Hutton
Director
Registered office:
The Barn
Charity Street
Carlton Scroop
Grantham
Lincolnshire
NG32 3AT
S & F Hutton (Holdings) Limited
Directors' Report
Year ended 31 December 2020
The directors present their report and the financial statements of the group for the year ended 31 December 2020 .
Directors
The directors who served the company during the year were as follows:
F Hutton
S Hutton
Dividends
Particulars of recommended dividends are detailed in note 13 to the financial statements.
Events after the end of the reporting period
Particulars of events after the reporting date are detailed in note 30 to the financial statements.
Disclosure of information in the strategic report
The company has chosen to set out in the strategic report information about the future developments of the company and the financial instruments.
Directors' responsibilities statement
The directors are responsible for preparing the strategic report, directors' report and the financial statements in accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with 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 group and the company and the profit or loss of the group for that period.
In preparing these financial statements, the directors are required to:
- select suitable accounting policies and then apply them consistently;
- make judgments and accounting estimates that are reasonable and prudent;
- prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company's transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
Auditor
Each of the persons who is a director at the date of approval of this report confirms that:
- so far as they are aware, there is no relevant audit information of which the group and the company's auditor is unaware; and - they have taken all steps that they ought to have taken as a director to make themselves aware of any relevant audit information and to establish that the group and the company's auditor is aware of that information.
This report was approved by the board of directors on 30 September 2021 and signed on behalf of the board by:
S Hutton
Director
Registered office:
The Barn
Charity Street
Carlton Scroop
Grantham
Lincolnshire
NG32 3AT
S & F Hutton (Holdings) Limited
Independent Auditor's Report to the Members of S & F Hutton (Holdings) Limited
Year ended 31 December 2020
Opinion
We have audited the financial statements of S & F Hutton (Holdings) Limited (the 'parent company') and its subsidiaries (the 'group') for the year ended 31 December 2020 which comprise the consolidated statement of comprehensive income, consolidated statement of financial position, company statement of financial position, consolidated statement of changes in equity, company statement of changes in equity, consolidated statement of cash flows and the related notes, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice). In our opinion the financial statements: - give a true and fair view of the state of the group's and of the parent company's affairs as at 31 December 2020 and of the group's profit for the year then ended; - have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; - have been prepared in accordance with the requirements of the Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the group 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 group's or the parent company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
Other information
The other information comprises the information included in the annual report, other than the financial statements and our auditor’s report thereon. The directors are responsible for the other information. 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. In connection with our audit of the financial statements, 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 audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the financial statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of the audit:
- the information given in the strategic report and the directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
- the strategic report and the directors' report have been prepared in accordance with applicable legal requirements.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the group and the parent 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 by the parent company, or returns adequate for our audit have not been received from branches not visited by us; or - the parent company financial statements are not in agreement with the accounting records and returns; or - certain disclosures of directors' remuneration specified by law are not made; or - we have not received all the information and explanations we require for our audit.
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 group's and the parent 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 group or the parent 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 extent to which our procedures are capable of detecting irregularities, including fraud is detailed below: Our approach to identifying and assessing the risks of material misstatement in respect of irregularities, including fraud and non-compliance with laws and regulations, was as follows: - the engagement partner ensured that the engagement team collectively had the appropriate competence, capabilities and skills to identify or recognise non-compliance with applicable laws and regulations; - we identified the laws and regulations applicable to the company through discussions with directors and other management, and from our commercial knowledge and experience of the company and sector in which it operates; - we focused on specific laws and regulations which we considered may have a direct material effect on the financial statements or the operations of the company, including the Companies Act 2006, taxation legislation, data protection, anti-bribery, employment, environmental and health and safety legislation; - we assessed the extent of compliance with the laws and regulations identified above through making enquiries of management and inspecting legal correspondence; and - identified laws and regulations were communicated within the audit team regularly and the team remained alert to instances of non-compliance throughout the audit. We assessed the susceptibility of the company's financial statements to material misstatement, including obtaining an understanding of how fraud might occur, by: - making enquiries of management as to where they considered there was susceptibility to fraud, their knowledge of actual, suspected and alleged fraud; and - considering the internal controls in place to mitigate risks of fraud and non-compliance with laws and regulations. To address the risk of fraud through management bias and override of controls, we: - performed analytical procedures to identify any unusual or unexpected relationships; - tested journal entries to identify unusual transactions; - assessed whether judgements and assumptions made in determining the accounting estimates set out in Note 1 were indicative of potential bias; and - investigated the rationale behind significant or unusual transactions. In response to the risk of irregularities and non-compliance with laws and regulations, we designed procedures which included, but were not limited to: - agreeing financial statement disclosures to underlying supporting documentation; - reading the minutes of meetings of those charged with governance; - enquiring of management as to actual and potential litigation and claims; and - reviewing correspondence with HMRC, relevant regulators and the company's legal advisors. There are inherent limitations in our audit procedures described above. The more removed that laws and regulations are from financial transactions, the less likely it is that we would become aware of non-compliance. Auditing standards also limit the audit procedures required to identify non-compliance with laws and regulations to enquiry of the directors and other management and the inspection of regulatory and legal correspondence, if any. Material misstatements that arise due to fraud can be harder to detect than those that arise from error as they may involve deliberate concealment or collusion. A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council’s website at www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report. Use of our report
This report is made solely to the company's members, as a body, in accordance with chapter 3 of part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's members as a body, for our audit work, for this report, or for the opinions we have formed.
Jonathan Day
(Senior Statutory Auditor)
For and on behalf of
Streets Audit LLP
Chartered Accountants & statutory auditor
Enterprise House
38 Tyndall Court
Commerce Road
Lynch Wood
Peterborough
Cambridgeshire
PE2 6LR
30 September 2021
S & F Hutton (Holdings) Limited
Consolidated Statement of Comprehensive Income
Year ended 31 December 2020
2020
2019
Note
£
£
Turnover
4
11,784,175
10,167,026
Cost of sales
7,832,745
7,090,366
-------------
-------------
Gross profit
3,951,430
3,076,660
Distribution costs
298,705
92,037
Administrative expenses
1,681,903
1,608,580
Other operating income
5
119,025
97,834
------------
------------
Operating profit
6
2,089,847
1,473,877
Share of profit of associates
16
36,791
6,970
Other interest receivable and similar income
10
5,622
97
Amounts written off investments
17,768
–
Interest payable and similar expenses
11
87,404
98,217
------------
------------
Profit before taxation
2,027,088
1,382,727
Tax on profit
12
375,798
300,940
------------
------------
Profit for the financial year and total comprehensive income
1,651,290
1,081,787
------------
------------
Profit for the financial year attributable to:
The owners of the parent company
1,613,499
1,072,575
Non-controlling interests
37,791
9,212
------------
------------
1,651,290
1,081,787
------------
------------
All the activities of the group are from continuing operations.
S & F Hutton (Holdings) Limited
Consolidated Statement of Financial Position
31 December 2020
2020
2019
Note
£
£
Fixed assets
Tangible assets
15
6,185,782
5,500,557
Investments:
16
Investments in associates
99,162
80,139
Other fixed asset investments
682,854
682,854
------------
------------
6,967,798
6,263,550
Current assets
Stocks
17
1,951,162
2,356,892
Debtors
18
2,100,020
1,555,359
Cash at bank and in hand
1,468,473
79,141
------------
------------
5,519,655
3,991,392
Creditors: amounts falling due within one year
19
2,164,850
1,885,225
------------
------------
Net current assets
3,354,805
2,106,167
-------------
------------
Total assets less current liabilities
10,322,603
8,369,717
Creditors: amounts falling due after more than one year
20
2,495,870
2,169,087
Provisions
22
382,932
263,119
-------------
------------
Net assets
7,443,801
5,937,511
-------------
------------
Capital and reserves
Called up share capital
26
2
2
Profit and loss account
27
7,396,837
5,928,338
------------
------------
Equity attributable to the owners of the parent company
7,396,839
5,928,340
Non-controlling interests
46,962
9,171
------------
------------
7,443,801
5,937,511
------------
------------
These financial statements were approved by the board of directors and authorised for issue on 30 September 2021 , and are signed on behalf of the board by:
S Hutton
Director
Company registration number: 10330006
S & F Hutton (Holdings) Limited
Company Statement of Financial Position
31 December 2020
2020
2019
Note
£
£
Fixed assets
Tangible assets
15
5,415,114
4,355,325
Investments
16
2,302,709
2,216,463
------------
------------
7,717,823
6,571,788
Current assets
Debtors
18
6,425
160,031
Cash at bank and in hand
425,120
–
---------
---------
431,545
160,031
Creditors: amounts falling due within one year
19
1,291,004
1,117,152
------------
------------
Net current liabilities
859,459
957,121
------------
------------
Total assets less current liabilities
6,858,364
5,614,667
Creditors: amounts falling due after more than one year
20
2,219,463
1,979,728
Provisions
22
296,416
142,855
------------
------------
Net assets
4,342,485
3,492,084
------------
------------
Capital and reserves
Called up share capital
26
2
2
Profit and loss account
27
4,342,483
3,492,082
------------
------------
Shareholders funds
4,342,485
3,492,084
------------
------------
The profit for the financial year of the parent company was £ 995,401 (2019: £ 681,957 ).
These financial statements were approved by the board of directors and authorised for issue on 30 September 2021 , and are signed on behalf of the board by:
S Hutton
Director
Company registration number: 10330006
S & F Hutton (Holdings) Limited
Consolidated Statement of Changes in Equity
Year ended 31 December 2020
Called up share capital
Profit and loss account
Equity attributable to the owners of the parent company
Non-controlling interests
Total
£
£
£
£
£
At 1 January 2019
2
4,990,763
4,990,765
( 41)
4,990,724
Profit for the year
1,072,575
1,072,575
9,212
1,081,787
----
------------
------------
-------
------------
Total comprehensive income for the year
–
1,072,575
1,072,575
9,212
1,081,787
Dividends paid and payable
13
–
( 135,000)
( 135,000)
–
( 135,000)
----
------------
------------
-------
------------
Total investments by and distributions to owners
–
( 135,000)
( 135,000)
–
( 135,000)
At 31 December 2019
2
5,928,338
5,928,340
9,171
5,937,511
Profit for the year
1,613,499
1,613,499
37,791
1,651,290
----
------------
------------
--------
------------
Total comprehensive income for the year
–
1,613,499
1,613,499
37,791
1,651,290
Dividends paid and payable
13
–
( 145,000)
( 145,000)
–
( 145,000)
----
---------
---------
----
---------
Total investments by and distributions to owners
–
( 145,000)
( 145,000)
–
( 145,000)
----
------------
------------
--------
------------
At 31 December 2020
2
7,396,837
7,396,839
46,962
7,443,801
----
------------
------------
--------
------------
S & F Hutton (Holdings) Limited
Company Statement of Changes in Equity
Year ended 31 December 2020
Called up share capital
Profit and loss account
Total
£
£
£
At 1 January 2019
2
2,945,125
2,945,127
Profit for the year
681,957
681,957
----
------------
------------
Total comprehensive income for the year
–
681,957
681,957
Dividends paid and payable
13
–
( 135,000)
( 135,000)
----
------------
------------
Total investments by and distributions to owners
–
( 135,000)
( 135,000)
At 31 December 2019
2
3,492,082
3,492,084
Profit for the year
995,401
995,401
----
------------
------------
Total comprehensive income for the year
–
995,401
995,401
Dividends paid and payable
13
–
( 145,000)
( 145,000)
----
---------
---------
Total investments by and distributions to owners
–
( 145,000)
( 145,000)
----
------------
------------
At 31 December 2020
2
4,342,483
4,342,485
----
------------
------------
S & F Hutton (Holdings) Limited
Consolidated Statement of Cash Flows
Year ended 31 December 2020
2020
2019
£
£
Cash flows from operating activities
Profit for the financial year
1,651,290
1,081,787
Adjustments for:
Depreciation of tangible assets
415,529
314,493
Amounts written back to investments
17,768
–
Government grant income
( 37,044)
–
Share of profit of associates
( 36,791)
( 6,970)
Other interest receivable and similar income
( 5,622)
( 97)
Interest payable and similar expenses
87,404
98,217
Gains on disposal of tangible assets
( 34,763)
( 6,248)
Tax on profit
375,798
300,940
Accrued (income)/expenses
( 138,955)
108,109
Changes in:
Stocks
405,730
( 114,085)
Trade and other debtors
( 517,846)
( 103,887)
Trade and other creditors
572,062
( 440,419)
------------
------------
Cash generated from operations
2,754,560
1,231,840
Interest paid
( 87,404)
( 98,217)
Interest received
5,622
97
Tax paid
( 255,984)
( 120,986)
------------
------------
Net cash from operating activities
2,416,794
1,012,734
------------
------------
Cash flows from investing activities
Purchase of tangible assets
( 1,183,471)
( 866,830)
Proceeds from sale of tangible assets
117,479
20,400
Purchases of other investments
–
( 4,980)
------------
------------
Net cash used in investing activities
( 1,065,992)
( 851,410)
------------
------------
Cash flows from financing activities
Proceeds from borrowings
( 233,976)
( 185,232)
Proceeds from loans from participating interests
( 3,517)
18,253
Government grant income
37,044
–
Payments of finance lease liabilities
383,979
( 8,471)
Dividends paid
( 145,000)
( 135,000)
------------
------------
Net cash from/(used in) financing activities
38,530
( 310,450)
------------
------------
Net increase/(decrease) in cash and cash equivalents
1,389,332
( 149,126)
Cash and cash equivalents at beginning of year
79,141
228,267
------------
---------
Cash and cash equivalents at end of year
1,468,473
79,141
------------
---------
S & F Hutton (Holdings) Limited
Notes to the Financial Statements
Year ended 31 December 2020
1. General information
The company is a private company limited by shares, registered in England and Wales. The address of the registered office is The Barn, Charity Street, Carlton Scroop, Grantham, Lincolnshire, NG32 3AT.
2. Statement of compliance
These financial statements have been prepared in compliance with FRS 102, 'The Financial Reporting Standard applicable in the UK and the Republic of Ireland'.
3. Accounting policies
Basis of preparation
The financial statements have been prepared on the historical cost basis as modified by the revaluation of certain financial assets and liabilities and investment properties measured at fair value through profit or loss.
Going concern
During the year the COVID-19 pandemic spread to the UK and resulted in national and then local lockdowns. Given the nature of the business, the company was able to remain open and trading throughout this period. The directors remain committed to the protection of the business and are mindful of the significant ongoing support being offered by the Government and where appropriate the directors will seek to ensure the company receives all available support. For these reasons the financial statements have been prepared on a going concern basis.
Disclosure exemptions
No disclosure exemptions are available under FRS102.
Consolidation
As a consolidated statement of income and retained earnings is published, a separate statement of income and retained earnings for the parent company is omitted from the group financial statements by virtue of section 408 of the Companies Act 2006.
Non-controlling interests
Minority interests in the net assets of consolidated subsidiaries are identified separately from the Group’s equity. Minority interests consist of the amount of those interests at the date of the original business combination and the minority’s share of changes in equity since the date of the combination.
The proportions of profit or loss and changes in equity allocated to the owners of the parent and to the minority interests are determined on the basis of existing ownership interests and do not reflect the possible exercise or conversion of options or convertible instruments.
Judgements and key sources of estimation uncertainty
The preparation of the financial statements requires management to make judgements, estimates and assumptions that affect the amounts reported. These estimates and judgements are continually reviewed and are based on experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. The judgements (apart from those involving estimations) are those that management has made in the process of applying the entity's accounting policies and that have the most significant effect on the amounts recognised in the financial statements. Accounting estimates and assumptions are made concerning the future and, by their nature, will rarely equal the related actual outcome. The key assumptions and other sources of estimation uncertainty that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are as follows:- Depreciation The annual depreciation charge for each class of tangible fixed asset is based on an estimate of the useful economic life of the respective assets. This is reviewed periodically by the directors to ensure that they reflect both the external and internal factors.
Revenue recognition
Revenue from the sale of goods is recognised when the significant risks and rewards of ownership of the goods have transferred to the buyer, usually on completion of work done, the amount of revenue can be measured reliably, it is probable that the associated economic benefits will flow to the entity, and the costs incurred or to be incurred in respect of the transactions can be measured reliably.
Income tax
The taxation expense represents the aggregate amount of current and deferred tax recognised in the reporting period. Tax is recognised in profit or loss, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case, tax is recognised in other comprehensive income or directly in equity, respectively. Current tax is recognised on taxable profit for the current and past periods. Current tax is measured at the amounts of tax expected to pay or recover using the tax rates and laws that have been enacted or substantively enacted at the reporting date. Deferred tax is recognised in respect of all material timing differences at the reporting date. Unrelieved tax losses and other 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. Deferred tax is measured using the tax rates and laws that have been enacted or substantively enacted by the reporting date that are expected to apply to the reversal of the timing difference.
Foreign currencies
Foreign currency transactions are initially recorded in the functional currency, by applying the spot exchange rate as at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are translated at the exchange rate ruling at the reporting date, with any gains or losses being taken to the income statement.
Operating leases
Lease payments are recognised as an expense over the lease term on a straight-line basis. The aggregate benefit of lease incentives is recognised as a reduction to expense over the lease term, on a straight-line basis.
Goodwill
Goodwill arises on business acquisitions and represents the excess of the cost of the acquisition over the company's interest in the net amount of the identifiable assets, liabilities and contingent liabilities of the acquired business. Goodwill is measured at cost less accumulated amortisation and accumulated impairment losses. It is amortised on a straight-line basis over its useful life. Where a reliable estimate of the useful life of goodwill or intangible assets cannot be made, the life is presumed not to exceed ten years.
Amortisation
Amortisation is calculated so as to write off the cost of an asset, less its estimated residual value, over the useful life of that asset as follows:
Goodwill
-
5 years straight line
If there is an indication that there has been a significant change in amortisation rate, useful life or residual value of an intangible asset, the amortisation is revised prospectively to reflect the new estimates.
Tangible assets
Tangible assets are initially recorded at cost, and subsequently stated at cost less any accumulated depreciation and impairment losses. Any tangible assets carried at revalued amounts are recorded at the fair value at the date of revaluation less any subsequent accumulated depreciation and subsequent accumulated impairment losses.
Depreciation
Depreciation is calculated so as to write off the cost or valuation of an asset, less its residual value, over the useful economic life of that asset as follows:
Freehold property
-
2% - 5% straight line
Long leasehold property
-
5 - 20 years
Plant and machinery
-
20% - 33% straight line, 25% reducing balance
Freehold land is not depreciated.
Investment property
Investment property is initially recorded at cost, which includes purchase price and any directly attributable expenditure.
Investment property is revalued to its fair value at each reporting date and any changes in fair value are recognised in profit or loss.
Investments
Fixed asset investments are initially recorded at cost, and subsequently stated at cost less any accumulated impairment losses.
Research and development expenditure
Research and development expenditure is written off in the period in which it is incurred.
Investments in associates
Investments in associates are accounted for using the equity method of accounting, whereby the investment is initially recognised at the transaction price and subsequently adjusted to reflect the group's share of the profit or loss, other comprehensive income and equity of the associate.
Impairment of fixed assets
A review for indicators of impairment is carried out at each reporting date, with the recoverable amount being estimated where such indicators exist. Where the carrying value exceeds the recoverable amount, the asset is impaired accordingly. Prior impairments are also reviewed for possible reversal at each reporting date.
Stocks
Stocks are measured at the lower of cost and estimated selling price less costs to complete and sell. Cost includes all costs of purchase, costs of conversion and other costs incurred in bringing the stock to its present location and condition.
Finance leases and hire purchase contracts
Assets held under finance leases are recognised in the statement of financial position as assets and liabilities at the lower of the fair value of the assets and the present value of the minimum lease payments, which is determined at the inception of the lease term. Any initial direct costs of the lease are added to the amount recognised as an asset.
Government grants
Government grants are recognised at the fair value of the asset received or receivable. Grants are not recognised until there is reasonable assurance that the company will comply with the conditions attaching to them and the grants will be received. Government grants are recognised using the accrual model. Under the accrual model, government grants relating to revenue are recognised on a systematic basis over the periods in which the company recognises the related costs for which the grant is intended to compensate. Grants that are receivable as compensation for expenses or losses already incurred or for the purpose of giving immediate financial support to the entity with no future related costs are recognised in income in the period in which it it becomes receivable.
Provisions
Provisions are recognised when the entity has an obligation at the reporting date as a result of a past event, it is probable that the entity will be required to transfer economic benefits in settlement and the amount of the obligation can be estimated reliably. Provisions are recognised as a liability in the statement of financial position and the amount of the provision as an expense.
Financial instruments
The group only holds basic financial instruments as defined in FRS 102. The financial assets and financial liabilities of the group and their measurement basis are as follows: Financial assets - trade and other debtors are basic financial instruments and are debt instruments measured at amortised cost. Prepayments are not financial instruments. Cash at bank is classified as a basic financial instrument and is measured at amortised cost. Financial liabilities - trade creditors, accruals and other creditors are financial instruments, and are measured at amortised cost. Taxation and social security are not included in the financial instruments disclosure definition.
Defined contribution plans
Contributions to defined contribution plans are recognised as an expense in the period in which the related service is provided. Prepaid contributions are recognised as an asset to the extent that the prepayment will lead to a reduction in future payments or a cash refund.
4. Turnover
Turnover arises from:
2020
2019
£
£
Sale of goods and services
11,784,175
10,167,026
-------------
-------------
The turnover is attributable to the one principal activity of the group. An analysis of turnover by the geographical markets that substantially differ from each other is given below:
2020
2019
£
£
United Kingdom
11,215,681
9,704,940
Overseas
568,494
462,086
-------------
-------------
11,784,175
10,167,026
-------------
-------------
5. Other operating income
2020
2019
£
£
Rental income
18,566
54,132
Government grant income
37,044
–
Other operating income
63,415
43,702
---------
--------
119,025
97,834
---------
--------
6. Operating profit
Operating profit or loss is stated after charging/crediting:
2020
2019
£
£
Depreciation of tangible assets
415,530
314,493
Gains on disposal of tangible assets
( 34,763)
( 6,248)
Impairment of trade debtors
964
–
Research and development expenditure written off
–
6,609
Foreign exchange differences
218
245
---------
---------
7. Auditor's remuneration
2020
2019
£
£
Fees payable for the audit of the financial statements
16,000
16,000
--------
--------
Fees payable to the company's auditor and its associates for other services:
Other non-audit services
–
750
--------
--------
8. Staff costs
The average number of persons employed by the group during the year, including the directors, amounted to:
2020
2019
No.
No.
Production staff
49
52
Administrative staff
4
9
Management staff
11
5
----
----
64
66
----
----
The aggregate payroll costs incurred during the year, relating to the above, were:
2020
2019
£
£
Wages and salaries
2,021,721
1,918,052
Social security costs
196,089
177,826
Other pension costs
47,219
43,377
------------
------------
2,265,029
2,139,255
------------
------------
The average number of employees employed by undertakings that are proportionately consolidated was 2 (2019 - 2).
9. Directors' remuneration
The directors' aggregate remuneration in respect of qualifying services was:
2020
2019
£
£
Remuneration
15,239
16,000
Company contributions to defined contribution pension plans
107
112
--------
--------
15,346
16,112
--------
--------
The number of directors who accrued benefits under company pension plans was as follows:
2020
2019
No.
No.
Defined contribution plans
2
2
----
----
10. Other interest receivable and similar income
2020
2019
£
£
Interest on cash and cash equivalents
5,622
97
-------
----
11. Interest payable and similar expenses
2020
2019
£
£
Interest on banks loans and overdrafts
65,782
81,772
Interest on obligations under finance leases and hire purchase contracts
21,622
15,918
Other interest payable and similar charges
–
527
--------
--------
87,404
98,217
--------
--------
12. Tax on profit
Major components of tax expense
2020
2019
£
£
Current tax:
UK current tax income
258,451
133,467
Adjustments in respect of prior periods
( 2,467)
( 12,481)
---------
---------
Total current tax
255,984
120,986
---------
---------
Deferred tax:
Origination and reversal of timing differences
119,814
179,954
---------
---------
Tax on profit
375,798
300,940
---------
---------
Reconciliation of tax expense
The tax assessed on the profit on ordinary activities for the year is lower than (2019: higher than) the standard rate of corporation tax in the UK of 19 % (2019: 19 %).
2020
2019
£
£
Profit on ordinary activities before taxation
2,027,088
1,382,727
------------
------------
Profit on ordinary activities by rate of tax
524,032
261,394
Adjustment to tax charge in respect of prior periods
( 2,467)
( 12,481)
Effect of expenses not deductible for tax purposes
( 140,943)
3,963
Effect of capital allowances and depreciation
( 4,974)
48,439
Other tax adjustment to tax liability
150
( 375)
------------
------------
Tax on profit
375,798
300,940
------------
------------
13. Dividends
2020
2019
£
£
Dividends paid during the year (excluding those for which a liability existed at the end of the prior year )
145,000
135,000
---------
---------
14. Intangible assets
Group
Goodwill
£
Cost
At 1 January 2020 and 31 December 2020
189,233
---------
Amortisation
At 1 January 2020 and 31 December 2020
189,233
---------
Carrying amount
At 1 January 2020 and 31 December 2020
–
---------
At 31 December 2019
–
---------
The company has no intangible assets.
15. Tangible assets
Group
Freehold property
Long leasehold property
Plant and machinery
Total
£
£
£
£
Cost
At 1 January 2020
3,266,792
462,405
5,588,888
9,318,085
Additions
9,849
–
1,173,622
1,183,471
Disposals
–
–
( 178,460)
( 178,460)
------------
---------
------------
-------------
At 31 December 2020
3,276,641
462,405
6,584,050
10,323,096
------------
---------
------------
-------------
Depreciation
At 1 January 2020
109,834
127,013
3,580,681
3,817,528
Charge for the year
30,571
–
384,959
415,530
Disposals
–
–
( 95,744)
( 95,744)
------------
---------
------------
-------------
At 31 December 2020
140,405
127,013
3,869,896
4,137,314
------------
---------
------------
-------------
Carrying amount
At 31 December 2020
3,136,236
335,392
2,714,154
6,185,782
------------
---------
------------
-------------
At 31 December 2019
3,156,958
335,392
2,008,207
5,500,557
------------
---------
------------
-------------
Company
Freehold property
Plant and machinery
Total
£
£
£
Cost
At 1 January 2020
3,229,216
1,281,062
4,510,278
Additions
9,849
1,119,567
1,129,416
Disposals
–
( 1,925)
( 1,925)
Transfers
–
233,183
233,183
------------
------------
------------
At 31 December 2020
3,239,065
2,631,887
5,870,952
------------
------------
------------
Depreciation
At 1 January 2020
24,441
130,511
154,952
Charge for the year
24,441
276,517
300,958
Disposals
–
( 72)
( 72)
------------
------------
------------
At 31 December 2020
48,882
406,956
455,838
------------
------------
------------
Carrying amount
At 31 December 2020
3,190,183
2,224,931
5,415,114
------------
------------
------------
At 31 December 2019
3,204,775
1,150,551
4,355,326
------------
------------
------------
Finance leases and hire purchase contracts
Included within the carrying value of tangible assets are the following amounts relating to assets held under finance leases or hire purchase agreements:
Group
Plant and machinery
£
At 31 December 2020
988,925
---------
At 31 December 2019
560,190
---------
Company
Plant and machinery
£
At 31 December 2020
787,046
---------
At 31 December 2019
235,304
---------
16. Investments
Group
Interests in associates
Other investments other than loans
Total
£
£
£
Share of net assets/cost
At 1 January 2020
115,265
682,854
798,119
Share of profit or loss
36,791
36,791
---------
---------
---------
At 31 December 2020
152,056
682,854
834,910
---------
---------
---------
Impairment
At 1 January 2020
35,126
–
35,126
Impairment losses
17,768
–
17,768
---------
---------
---------
At 31 December 2020
52,894
–
52,894
---------
---------
---------
Carrying amount
At 31 December 2020
99,162
682,854
782,016
---------
---------
---------
At 31 December 2019
80,139
682,854
762,993
---------
---------
---------
Company
Shares in group undertakings
Shares in participating interests
Other investments other than loans
Total
£
£
£
£
Cost
At 1 January 2020 and 31 December 2020
1,619,705
150
682,854
2,302,709
------------
----
---------
------------
Impairment
At 1 January 2020
86,246
–
–
86,246
Reversal of impairment losses
( 86,246)
–
–
( 86,246)
------------
----
---------
------------
At 31 December 2020
–
–
–
–
------------
----
---------
------------
Carrying amount
At 31 December 2020
1,619,705
150
682,854
2,302,709
------------
----
---------
------------
At 31 December 2019
1,533,459
150
682,854
2,216,463
------------
----
---------
------------
Subsidiaries, associates and other investments
Details of the investments in which the group and the parent company have an interest of 20% or more are as follows:
Registered office
Class of share
Percentage of shares held
Subsidiary undertakings
S Hutton Limited
The Barn, Charity Street, Carlton Scroop, Grantham, Lincolnshire, NG32 3AT
Ordinary
100
Tillers Turf Company Limited
The Barn, Charity Street, Carlton Scroop, Grantham, Lincolnshire, NG32 3AT
Ordinary
100
Fineturf Machinery Limited
The Barn, Charity Street, Carlton Scroop, Grantham, Lincolnshire, NG32 3AT
Ordinary
90
Hutton (Ancaster) Limited
Ordinary
1
Other significant holdings
Lakeland Construction (Special Earthworks) Limited
The Barn, Charity Street, Carlton Scroop, Grantham, Lincolnshire, NG32 3AT
Ordinary
49
17. Stocks
Group
Company
2020
2019
2020
2019
£
£
£
£
Raw materials and consumables
293,384
313,420
–
–
Work in progress
1,657,778
2,043,472
–
–
------------
------------
----
----
1,951,162
2,356,892
–
–
------------
------------
----
----
18. Debtors
Group
Company
2020
2019
2020
2019
£
£
£
£
Trade debtors
1,727,170
1,338,552
1,250
1,250
Amounts owed by group undertakings
–
–
2,500
95,881
Prepayments and accrued income
113,521
106,546
1,675
–
Directors loan account
212,015
109,161
–
–
Other debtors
47,314
1,100
1,000
62,900
------------
------------
-------
---------
2,100,020
1,555,359
6,425
160,031
------------
------------
-------
---------
Please see note 29 for further details on the directors loan account.
19. Creditors: amounts falling due within one year
Group
Company
2020
2019
2020
2019
£
£
£
£
Bank loans and overdrafts
273,817
526,836
243,274
631,579
Trade creditors
544,062
386,852
218,342
46,654
Amounts owed to group undertakings
–
–
479,611
364,410
Amounts owed to undertakings in which the company has a participating interest
47,425
50,942
–
–
Accruals and deferred income
289,187
401,327
3,260
3,900
Social security and other taxes
773,945
357,466
146,697
–
Obligations under finance leases and hire purchase contracts
232,757
156,518
199,820
70,609
Other creditors
3,657
5,284
–
–
------------
------------
------------
------------
2,164,850
1,885,225
1,291,004
1,117,152
------------
------------
------------
------------
Bank loans and overdrafts are secured against the assets within the group. Obligations under finance leases and hire purchase contracts are secured against assets to which they relate.
20. Creditors: amounts falling due after more than one year
Group
Company
2020
2019
2020
2019
£
£
£
£
Bank loans and overdrafts
1,982,338
1,963,295
1,710,762
1,811,703
Obligations under finance leases and hire purchase contracts
513,532
205,792
508,701
168,025
------------
------------
------------
------------
2,495,870
2,169,087
2,219,463
1,979,728
------------
------------
------------
------------
Amounts due after more than 5 years are payable by annual repayments of £1,214,903 (2019: £1,271,189) at a current interest rate of 2.54% (2019: 2.37%).
Bank loans and overdrafts are secured against the assets within the group. Obligations under finance leases and hire purchase contracts are are secured against assets to which they relate.
21. Finance leases and hire purchase contracts
The total future minimum lease payments under finance leases and hire purchase contracts are as follows:
Group
Company
2020
2019
2020
2019
£
£
£
£
Not later than 1 year
255,858
156,518
222,207
70,609
Later than 1 year and not later than 5 years
541,879
226,595
536,921
185,732
---------
---------
---------
---------
797,737
383,113
759,128
256,341
Less: future finance charges
( 51,448)
( 20,803)
( 50,607)
( 17,707)
---------
---------
---------
---------
Present value of minimum lease payments
746,289
362,310
708,521
238,634
---------
---------
---------
---------
22. Provisions
Group
Deferred tax (note 23)
£
At 1 January 2020
263,119
Additions
119,813
---------
At 31 December 2020
382,932
---------
Company
Deferred tax (note 23)
£
At 1 January 2020
142,855
Additions
153,561
---------
At 31 December 2020
296,416
---------
23. Deferred tax
The deferred tax included in the statement of financial position is as follows:
Group
Company
2020
2019
2020
2019
£
£
£
£
Included in provisions (note 22)
382,932
263,119
296,416
142,855
---------
---------
---------
---------
The deferred tax account consists of the tax effect of timing differences in respect of:
Group
Company
2020
2019
2020
2019
£
£
£
£
Accelerated capital allowances
382,932
263,119
296,416
142,855
---------
---------
---------
---------
24. Employee benefits
Defined contribution plans
The amount recognised in profit or loss as an expense in relation to defined contribution plans was £ 47,112 (2019: £ 41,949 ).
25. Government grants
The amounts recognised in the financial statements for government grants are as follows:
Group
Company
2020
2019
2020
2019
£
£
£
£
Recognised in other operating income:
Government grants recognised directly in income
37,044
–
–
–
--------
----
----
----
26. Called up share capital
Issued, called up and fully paid
2020
2019
No.
£
No.
£
Ordinary shares of £ 1 each
2
2
2
2
----
----
----
----
27. Reserves
Profit and loss account - this reserve records retained earnings and accumulated losses.
28. Analysis of changes in net debt
At 1 Jan 2020
Cash flows
At 31 Dec 2020
£
£
£
Cash at bank and in hand
79,141
1,389,332
1,468,473
Debt due within one year
(734,296)
180,297
(553,999)
Debt due after one year
(2,169,087)
(326,783)
(2,495,870)
------------
------------
------------
( 2,824,242)
1,242,846
( 1,581,396)
------------
------------
------------
29. Operating leases
The total future minimum lease payments under non-cancellable operating leases are as follows:
Group
Company
2020
2019
2020
2019
£
£
£
£
Not later than 1 year
39,600
217,960
–
–
Later than 1 year and not later than 5 years
–
79,364
–
–
--------
---------
----
----
39,600
297,324
–
–
--------
---------
----
----
30. Events after the end of the reporting period
After the year end, the company entered into a binding agreement to repurchase all of the shares from one shareholder. The agreement is to repurchase the shares over 7 years for a total consideration of £3.6m.
31. Directors' advances, credits and guarantees
During the year one of the directors operated a loan account with the company. The balance owed to the company at the year end was £212,015 (2019 - £109,161) as £102,854 was advanced to the directors. The balance at the year end was the maximum balance outstanding during the year. No interest was charged and the loan was repayable on demand. Repayment terms have been agreed with the director post year end.
32. Related party transactions
Group
The following related party transactions took place with subsidiaries which are not wholly owned: Sales to group companies £45,321 (2019 - £80,694). Costs from group companies for management fees, payroll recharges and rent £83,273 (2019 - £61,138). Closing balances owed to group companies £268,939 (2019 - £302,243). The following related party transactions took place with associated companies: Sales to group companies £3,515 (2019 - £8,599). Purchases from group companies £342,837 (2019 - £228,101). Closing balances owed to group companies £47,425 (2019 - £50,942). The total remuneration of key management personnel was £15,346 (2019 - £16,112).