Les Smith Haulage Limited - Limited company accounts 23.2

REGISTERED NUMBER: 06972530 (England and Wales)

LES SMITH HAULAGE LIMITED

STRATEGIC REPORT, REPORT OF THE DIRECTORS AND

AUDITED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31ST JULY 2023

Page

Company Information

1

Strategic Report

2

Report of the Directors

3

Report of the Independent Auditors

4

to

6

Statement of Income and Retained Earnings

7

Statement of Financial Position

8

Statement of Cash Flows

9

Notes to the Statement of Cash Flows

10

Notes to the Financial Statements

11

to

19

DIRECTORS:

Mr A L Smith

Mr D B Smith

Mr N L Smith

REGISTERED OFFICE:

Kelvin Road

Greenbridge Industrial Estate

SWINDON

Wiltshire

SN3 3JW

REGISTERED NUMBER:

06972530 (England and Wales)

AUDITORS:

Sumer Audit

Hermes House

Fire Fly Avenue

SWINDON

Wiltshire

SN2 2GA

BANKERS:

HSBC Bank Plc

1 Marlborough Road

SWINDON

Wiltshire

SN3 1QN

The directors present their strategic report for the year ended 31st July 2023.

REVIEW OF BUSINESS

The directors are pleased with the results the company is reporting for the year, turnover increased in the year from £7,834,013 to £8,172,808 and profit before tax increased from £624,031 to £684,465.

Over the past 12 months the company continued to invest in their fleet of vehicles and their work force in order to achieve their financial targets and other objectives of the directors. The directors are particularly pleased in meeting their annual sales target despite the ongoing economic challenges.

In November 2021, the company purchased freehold land and buildings known as 2 Pavilion, Stirling Road, South Marston, Swindon for a consideration of £1.2 million. The property is being developed as a further trading site for the company and will facilitate further expansion and cost saving. The acquisition was funded via a secured, 15 year term, bank loan of £1.1 million with development costs being funded from existing cash reserves and a further bank loan advance of £1.32 million. The directors are optimistic that the site will be operational in February 2024.

PRINCIPAL RISKS AND UNCERTAINTIES

Increase in fuel prices, labour shortages and increase in the cost of labour have the potential to impact the business. The directors continue to monitor costs on a regular basis and have worked hard to ensure they have the right amount of labour in the company.

The pandemic and periods of lockdown that we have experienced over the past couple of years have changed the world, possibly forever. The directors believe through the good business management they have showed they have the ability to evolve in a safe and controlled manner which will put the company in a strong position for the future.

The effects of BREXIT have not been as bad as first thought, although the company does not carry out extensive trade outside of the UK. The directors will continue to monitor the position to ensure they can act to mitigate and negative effects and capitalise on any opportunities that might arise.

KEY PERFORMANCE INDICATORS

The directors use the following key performance indicators (KPI's) in reviewing business performance:

Turnover - £8,172,808 (2022: £7,834,013)

Gross profit - £1,894,925 (2022: £1,782,634)

Gross profit margin - 23.2% (2022: 22.8%)

The company prepare and review financial information and management accounts on a regular basis.

The directors believe the company is in a strong position at the year end.

ON BEHALF OF THE BOARD:

Mr A L Smith - Director

1st February 2024

The directors present their report with the financial statements of the company for the year ended 31st July 2023.

PRINCIPAL ACTIVITY

The principal activity of the company in the year under review was that of transport and haulier services.

DIVIDENDS

No dividends will be distributed for the year ended 31st July 2023.

DIRECTORS

The directors shown below have held office during the whole of the period from 1st August 2022 to the date of this report.

Mr A L Smith

Mr D B Smith

Mr N L Smith

STATEMENT OF DIRECTORS' RESPONSIBILITIES

The directors are responsible for preparing the Strategic Report, the Report of the Directors 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), including Financial Reporting Standard 102 'The Financial Reporting Standard applicable in the UK and Republic of Ireland'. Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period. In preparing these financial statements, the directors are required to:

-	select suitable accounting policies and then apply them consistently;

-	make judgements and accounting estimates that are reasonable and prudent;

-	prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.

The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company's transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

STATEMENT AS TO DISCLOSURE OF INFORMATION TO AUDITORS

So far as the directors are aware, there is no relevant audit information (as defined by Section 418 of the Companies Act 2006) of which the company's auditors are unaware, and each director has taken all the steps that he ought to have taken as a director in order to make himself aware of any relevant audit information and to establish that the company's auditors are aware of that information.

AUDITORS

The auditors, Sumer Audit, will not be proposed for re-appointment at the forthcoming Annual General Meeting.

ON BEHALF OF THE BOARD:

Mr A L Smith - Director

1st February 2024

Opinion

We have audited the financial statements of Les Smith Haulage Limited (the 'company') for the year ended 31st July 2023 which comprise the Statement of Income and Retained Earnings, Statement of Financial Position, Statement of Cash Flows and Notes to the Statement of Cash Flows, Notes to the Financial Statements, 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 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 31st July 2023 and of its profit for the year then ended;

-	have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and

-	have been prepared in accordance with the requirements of the Companies Act 2006.

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 Auditors' responsibilities for the audit of the financial statements section of our report. We are independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC's Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Conclusions relating to going concern

In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.

Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.

Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.

Other information

The directors are responsible for the other information. The other information comprises the information in the Strategic Report and the Report of the Directors, but does not include the financial statements and our Report of the Auditors thereon.

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 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 the audit:

-	the information given in the Strategic Report and the Report of the Directors for the financial year for which the financial statements are prepared is consistent with the financial statements; and

-	the Strategic Report and the Report of the Directors 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 company and its environment obtained in the course of the audit, we have not identified material misstatements in the Strategic Report or the Report of the Directors.

We have nothing to report in respect of the following matters where 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 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 Statement of Directors' Responsibilities set out on page three, 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 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.

Auditors' 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 a Report of the Auditors 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.

Based on our understanding of the Company, we identified that the principal risks of non-compliance with laws and regulations related to health and safety, anti-bribery, employment law and company legislation, and we considered the extent to which non-compliance might have a material effect on the financial statements of the Company. We also considered those laws and regulations that have a direct impact on the preparation of the financial statements such as the Companies Act 2006 and taxation legislation. We evaluated management's incentives and opportunities for fraudulent manipulation of the financial statements (including the risk of override of controls), and determined that the principal risks were related to posting inappropriate journal entries to increase revenue or reduce expenditure, and management bias in accounting estimates and judgemental areas of the financial statements. Audit procedures performed by the audit engagement team included:

- Discussions with management, including consideration of known or suspected instances of non-compliance with laws and regulations and fraud;

- Understanding of management's internal controls designed to prevent and detect irregularities, and fraud;

- Reviewing the Company's legal costs to check for non-compliance with laws and regulations and fraud;

- Review of tax compliance with the involvement of our tax specialists in the audit;

- Designing audit procedures to incorporate unpredictability around the nature, timing or extent of our testing of expenses and sales;

- Testing any transactions entered into outside of the normal course of the Company's business;

- Identifying and testing journal entries, in particular any journal entries with fraud characteristics such as journals with round numbers.

There are inherent limitations in the audit procedures described above and the further removed non-compliance with laws and regulations is from the events and transactions reflected in the financial statements, the less likely we would become aware of it. Also, the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery or intentional misrepresentations, or through 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 Report of the Auditors.

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 a Report of the Auditors 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.

David Iain Black (Senior Statutory Auditor)

for and on behalf of Sumer Audit

Hermes House

Fire Fly Avenue

SWINDON

Wiltshire

SN2 2GA

15th February 2024

TURNOVER

3

8,172,808

7,834,013

Cost of sales

6,278,513

6,051,379

GROSS PROFIT

1,894,295

1,782,634

Administrative expenses

1,053,605

1,117,926

840,690

664,708

Other operating income

3,063

39,319

OPERATING PROFIT

5

843,753

704,027

Interest receivable and similar income

1,603

72

845,356

704,099

Interest payable and similar expenses

6

160,891

80,068

PROFIT BEFORE TAXATION

684,465

624,031

Tax on profit

7

135,139

223,332

PROFIT FOR THE FINANCIAL YEAR

549,326

400,699

Retained earnings at beginning of year

3,565,128

3,164,429

RETAINED EARNINGS AT END OF YEAR

4,114,454

3,565,128

FIXED ASSETS

Intangible assets

8

-

-

Tangible assets

9

6,550,441

5,471,072

6,550,441

5,471,072

CURRENT ASSETS

Stocks

10

34,969

43,558

Debtors

11

1,707,851

1,679,160

Cash at bank and in hand

666,995

1,155,936

2,409,815

2,878,654

CREDITORS

Amounts falling due within one year

12

2,066,057

1,979,064

NET CURRENT ASSETS

343,758

899,590

TOTAL ASSETS LESS CURRENT LIABILITIES

6,894,199

6,370,662

CREDITORS

Amounts falling due after more than one year

13

(2,397,678

)

(2,455,811

)

PROVISIONS FOR LIABILITIES

17

(381,967

)

(349,623

)

NET ASSETS

4,114,554

3,565,228

CAPITAL AND RESERVES

Called up share capital

18

100

100

Retained earnings

19

4,114,454

3,565,128

SHAREHOLDERS' FUNDS

4,114,554

3,565,228

The financial statements were approved by the Board of Directors and authorised for issue on 1st February 2024 and were signed on its behalf by:

Mr A L Smith - Director

Cash flows from operating activities

Cash generated from operations

1

1,356,159

780,824

Interest paid

(143,493

)

(67,169

)

Interest element of hire purchase payments paid

(17,398

)

(12,899

)

Tax paid

(130,988

)

(9,480

)

Net cash from operating activities

1,064,280

691,276

Cash flows from investing activities

Purchase of tangible fixed assets

(1,150,844

)

(1,562,998

)

Sale of tangible fixed assets

500

58,667

Interest received

1,603

72

Net cash from investing activities

(1,148,741

)

(1,504,259

)

Cash flows from financing activities

New loans in year

-

1,100,000

Loan repayments in year

(182,544

)

(170,544

)

Capital repayments in year

(221,936

)

(277,771

)

Amount withdrawn by directors

-

(260

)

Net cash from financing activities

(404,480

)

651,425

Decrease in cash and cash equivalents

(488,941

)

(161,558

)

Cash and cash equivalents at beginning of year

2

1,155,936

1,317,494

Cash and cash equivalents at end of year

2

666,995

1,155,936

1.	RECONCILIATION OF PROFIT BEFORE TAXATION TO CASH GENERATED FROM OPERATIONS

2023

2022

£

£

Profit before taxation

684,465

624,031

Depreciation charges

382,863

385,502

Loss on disposal of fixed assets

1,863

9,204

Finance costs

160,891

80,068

Finance income

(1,603

)

(72

)

1,228,479

1,098,733

Decrease/(increase) in stocks

8,589

(7,236

)

Increase in trade and other debtors

(28,691

)

(345,989

)

Increase in trade and other creditors

147,782

35,316

Cash generated from operations

1,356,159

780,824

2.	CASH AND CASH EQUIVALENTS

The amounts disclosed on the Statement of Cash Flows in respect of cash and cash equivalents are in respect of these Statement of Financial Position amounts:

Year ended 31st July 2023

31.7.23

1.8.22

£

£

Cash and cash equivalents

666,995

1,155,936

Year ended 31st July 2022

31.7.22

1.8.21

£

£

Cash and cash equivalents

1,155,936

1,317,494

3.	ANALYSIS OF CHANGES IN NET DEBT

Other

non-cash

At 1.8.22

Cash flow

changes

At 31.7.23

£

£

£

£

Net cash

Cash at bank

and in hand

1,155,936

(488,941

)

666,995

1,155,936

(488,941

)

666,995

Debt

Finance leases

(313,829

)

221,936

-

(405,644

)

Debts falling due

within 1 year

(184,952

)

9,160

-

(175,792

)

Debts falling due

after 1 year

(2,332,921

)

173,384

-

(2,159,537

)

(2,831,702

)

404,480

-

(2,740,973

)

Total

(1,675,766

)

(84,461

)

-

(2,073,978

)

1.	STATUTORY INFORMATION

Les Smith Haulage Limited is a private company, limited by shares, registered in England and Wales. The company's registered number and registered office address are as below:

Registered number: 06972530

Registered office: Kelvin Road, Greenbridge Industrial Estate, Swindon, Wiltshire SN3 3JW

The presentation currency of the financial statements is the Pound Sterling (£) rounded to the nearest pound.

2.	ACCOUNTING POLICIES

Basis of preparing the financial statements

These financial statements have been prepared in accordance with Financial Reporting Standard 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland" and the Companies Act 2006. The financial statements have been prepared under the historical cost convention.

Significant judgements and estimates

In preparing these financial statements, the directors have made the following judgements:

- Determine whether leases entered into by the company as a lessee are operating leases or finance leases. These decisions depend on an assessment of whether the risks and rewards of ownership have been transferred from the lessor to the lessee on a lease by lease basis.

- Determine the period of useful economic life and any residual value of all tangible fixed assets order to write off the value of each asset over that period.

- Determine an appropriate provision for bad and doubtful debts by assessing the recoverability of all balances on a balance by balance basis.

Turnover

Turnover is recognised to the extent that the company obtains the right to consideration in exchange for its performance. Turnover is measured at the fair value of consideration received, excluding discounts, rebates, VAT and other sales taxes or duty.

Goodwill

Goodwill, being the amount paid in connection with the acquisition of a business in 2009, is being amortised evenly over its estimated useful life of ten years.

Intangible assets

Intangible assets are initially measured at cost. After initial recognition, intangible assets are measured at cost less any accumulated amortisation and any accumulated impairment losses.

Tangible fixed assets

Depreciation is provided at the following annual rates in order to write off each asset over its estimated useful life or, if held under a finance lease, over the lease term, whichever is the shorter.

Freehold property

-

2% - 20% on cost

Plant and machinery

-

15% on reducing balance

Fixtures and fittings

-

15% on reducing balance

Motor vehicles

-

25% on reducing balance

Computer equipment

-

33% on cost

Government grants

Government grants have been accounted for on an accruals basis. Grant income of £Nil (2022: £8,670) in the profit or loss account relates to the Covid related rates relief.

Stocks

Stocks are valued at the lower of cost and net realisable value, after making due allowance for obsolete and slow moving items.

Financial instruments

Short term debtors are measured at transaction price, less any impairment. Loans receivable are measured initially at fair value, net of transaction costs, and are measured subsequently at amortised cost using the effective interest method, less any impairment.

Short term trade creditors are measured at the transaction price. Other financial liabilities, including loans, are measured initially at fair value, net of transaction costs, and are measured subsequently at amortised cost using the effective interest method.

Taxation

Taxation for the year comprises current and deferred tax. Tax is recognised in the Statement of Comprehensive Income, except to the extent that it relates to items recognised in other comprehensive income or directly in equity.

Current or deferred taxation assets and liabilities are not discounted.

Current tax is recognised at the amount of tax payable using the tax rates and laws that have been enacted or substantively enacted by the statement of financial position date.

Deferred tax

Deferred tax is recognised in respect of all timing differences that have originated but not reversed at the statement of financial position date.

Timing differences arise from the inclusion of income and expenses in tax assessments in periods different from those in which they are recognised in financial statements. Deferred tax is measured using tax rates and laws that have been enacted or substantively enacted by the year end and that are expected to apply to the reversal of the timing difference.

Unrelieved tax losses and other deferred tax assets are recognised only to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits.

Hire purchase and leasing commitments

Assets obtained under hire purchase contracts or finance leases are capitalised in the balance sheet. Those held under hire purchase contracts are depreciated over their estimated useful lives. Those held under finance leases are depreciated over their estimated useful lives or the lease term, whichever is the shorter.

The interest element of these obligations is charged to profit or loss over the relevant period. The capital element of the future payments is treated as a liability.

Pension costs and other post-retirement benefits

The company operates a defined contribution pension scheme. Contributions payable to the company's pension scheme are charged to profit or loss in the period to which they relate.

3.

TURNOVER

The turnover and profit before taxation are attributable to the one principal activity of the company.

An analysis of turnover by class of business is given below:

2023

2022

£

£

Services

8,172,808

7,834,013

8,172,808

7,834,013

4.	EMPLOYEES AND DIRECTORS

2023

2022

£

£

Wages and salaries

2,753,124

2,672,494

Social security costs

294,422

286,619

Other pension costs

56,600

134,325

3,104,146

3,093,438

The average number of employees during the year was as follows:

2023

2022

Staff

65

65

2023

2022

£

£

Directors' remuneration

308,415

303,117

Directors' pension contributions to money purchase schemes

3,977

83,964

The number of directors to whom retirement benefits were accruing was as follows:

Money purchase schemes

3

3

Information regarding the highest paid director is as follows:

2023

2022

£

£

Emoluments etc

109,430

128,578

Pension contributions to money purchase schemes

1,325

1,322

5.	OPERATING PROFIT

The operating profit is stated after charging:

2023

2022

£

£

Depreciation - owned assets

256,110

250,196

Depreciation - assets on hire purchase contracts

126,753

135,306

Loss on disposal of fixed assets

1,863

9,204

Auditors' remuneration

9,750

10,000

Lease payments recognised as an expense

371,939

324,373

6.

INTEREST PAYABLE AND SIMILAR EXPENSES

2023

2022

£

£

Bank loan interest

143,493

66,838

Corporation tax interest payable

-

331

Hire purchase

17,398

12,899

160,891

80,068

7.

TAXATION

Analysis of the tax charge

The tax charge on the profit for the year was as follows:

2023

2022

£

£

Current tax:

UK corporation tax

102,795

130,988

Under/over provision

-

80

Total current tax

102,795

131,068

Deferred tax

32,344

92,264

Tax on profit

135,139

223,332

Reconciliation of total tax charge included in profit and loss

The tax assessed for the year is lower than the standard rate of corporation tax in the UK. The difference is explained below:

2023

2022

£

£

Profit before tax

684,465

624,031

Profit multiplied by the standard rate of corporation tax in the UK of 21.010% (2022 - 19%)

143,806

118,566

Effects of:

Expenses not deductible for tax purposes

467

890

Capital allowances in excess of depreciation

(41,478

)

-

Depreciation in excess of capital allowances

-

11,532

Adjustments to tax charge in respect of previous periods

-

80

Deferred tax charge

32,344

92,264

Total tax charge

135,139

223,332

The standard rate of corporation tax in the United Kingdom increased from 19% to 25% on 1st April 2023. Therefore, the effective rate of interest for the company, the year ended 31 July 2023 was 21.01%.

For the purposes of deferred tax, the rate changes from 19% to 25% had been substantively enacted before the balance sheet date. This will increase the company's future current tax charge and increase the company's deferred tax liability accordingly.