HPH_GROUP_LTD - Accounts

The director presents the strategic report for the year ended 30 June 2023.

HPH has served over 60 years of experience and expertise to the road haulage industry, covering the whole of the UK. Other areas of the business include, a VOSA testing facility, thus giving the advantage of serving our own equipment. HPH operate warehousing and storage facilities which have fluctuated this year in response to the external environment.

Despite the external and industry challenges of the year HPH have managed to sustain contractual and general work by increasing their rates to mitigate the rising costs. The driver shortage and supply chain disruption continues to the current date creating a supply and demand effect, driving up revenues and costs.

HPH foster a family approach and flexibility across the group to develop our staff and services, which allows us to provide a quality personal service for all our clients’ needs.

The continuation of the Dilapidation charges from the previous period still apply, although the claim has changed to a material loss claim the facts still remain in place and the unsubstantiated value of that potential loss. The value of that loss is still in dispute and the best estimate remains in place until further information becomes available from the disputed amount owing and agreed amount to settle the claimed loss. An amount is still being held from a deposit paid, in part payment of that outstanding amount once agreed.

Competition: Competition in the haulage industry remains fierce especially at this time with the supply chain disruption, driver availability, and inflation. The increase in inflation has far reaching effects to all costs within the business pushing the extra costs to the customers where possible but continually threatening profit margins.

Warehousing has continued to fluctuate over the past year and has reduced in current year due to customer demand and rising warehouse costs resulting in increase in charges and reduced stock piling as a result the HPH warehouse storage capacity has been reduced allowing HPH to remain competitive on price and cost. HPH continue to win profitable work and accommodate stock builds from our contractual customers in the current warehouse facility.

There is always a risk that technology will continue to dominate changes in business, and systems will become dated, and exposed to new forms of corruption or cyber-attack. Cyber security has fast become prevalent in our security management programme and continues to be monitored for any strange or unusual activity.

HPH continue to invest and explore in new systems and technology to improve our communications and operations, with the potential to create greater efficiencies, reporting and performance indications, which will enable better, more profitable decisions across all the departments.

Environmental: Government Legislation is to continually drive greener issues within companies. The business continues to follow government guidelines in respect of any new legislation, and has an internal environmental policy, focusing on reducing the company’s carbon footprint.

Driver availability: Driver availability is still a scarce resource and continues to be high risk to the haulage industry, HPH have enlisted the help from agencies over the year, which has been at a premium rate. Driver costs continue to increase but at a steady rate due to the continuation of a general driver shortage across the industry, the need for agency drivers will still be essential in the coming year.

Credit risk: Credit risk is monitored regularly by processes within the finance function, reviewing payment terms, credit limits and outstanding balances. Any new credit customer is rated and reviewed before any services commence.

The group continues to win new work therefore spreading commercial risk over a wider customer base.

Performance risk: Our performance risk is managed in part with the long-term framework agreements and regular senior management meetings looking at the potential risks and opportunities, and listening to customer feedback, creating action plans to mitigate, exploit or avoid risks where possible.

The policies set out by the directors are implemented by the Senior Management team.

During the year the group has seen an increase in turnover, HPH have continued to win profitable work and contracts into the new year. The group has continued to invest in fixed assets to support future growth and total capital expenditure for the year was £519,496 which includes £510,067 invested in the haulage fleet adding additional vehicles and replacing older units.

The group continues to tender for new contracts which will provide a healthy return into the future business.

Our vision is to provide a quality value service, with family values at the core of our business.

By the end of the year turnover had increased to £16,295,270 (2022: £15,065,298)

Gross profit for the year is £2,690,066 (2022: £3,398,260)

EBITDA for the year is £1,163,616 (2022: £1,535,763)

Key metrics measured throughout the year are:

• Profit, losses and turnover for each sector of the business.

• Cash headroom

• Average pence per mile

• Weekly driver wages as a percentage of general haulage sales

• Fuel costs as a percentage of general haulage sales

On behalf of the board

The director presents his annual report and financial statements for the year ended 30 June 2023.

The principal activity of the company continued to be that of a holding company. The group's principal activity is that of haulage and storage solutions.

The results for the year are set out on page 8.

Ordinary dividends were paid amounting to £135,082. The director does not recommend payment of a further dividend.

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

The auditor, MHA Moore and Smalley, is deemed to be reappointed under section 487(2) of the Companies Act 2006.

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 auditor of the company 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 auditor of the company is aware of that information.

The group has chosen in accordance with Companies Act 2006, s. 414C(11) to set out in the group's strategic report information required by Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008, Sch. 7 to be contained in the director's report. It has done so in respect of future developments and financial risks.

The director is responsible for preparing the Annual Report and the financial statements in accordance with applicable law and regulations.

Company law requires the director to prepare financial statements for each financial year. Under that law the director has 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 director must not approve the financial statements unless he is satisfied that they give a true and fair view of the state of affairs of the group and company, and of the profit or loss of the group for that period. In preparing these financial statements, the director is 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 ;

•     prepare the on the going concern basis unless it is inappropriate to presume that the group and company will continue in business.

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

We have audited the financial statements of HPH Group Ltd (the 'parent company') and its subsidiaries (the 'group') for the year ended 30 June 2023 which comprise the group statement of comprehensive income, the group balance sheet, the company balance sheet, the group statement of changes in equity, the company statement of changes in equity, the group statement of cash flows and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).

In our opinion the financial statements:

•     give a true and fair view of the state of the group's and the parent company's affairs as at 30 June 2023 and of the group's 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 Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the group and parent 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.

Material uncertainty relating to going concern

We draw attention to note 1.3 to the financial statements which explains that despite reporting net assets of £1,232,491 at the balance sheet date, the group is negotiating with a third party over a dilapidation claim. Trading results during the year under report and since the balance sheet date have put pressure on cash flow and available facilities although the group forecasts to remain within these agreed facility limits. Its banking partner have waived a covenant breach and intend to do so again, subject to standard satisfactory conduct of the facilities. Both matters indicate that a material uncertainty exists which may cast doubt over the group's ability to continue as a going concern.

Our opinion is not modified in respect of this matter.

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 director is 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 director's report for the financial year for which the financial statements are prepared is consistent with the financial statements; and

• the strategic report and the director's report have been prepared in accordance with applicable legal requirements.

In the light of the knowledge and understanding of the group and the parent company and their environment obtained in the course of the audit, we have not identified material misstatements in the strategic report or the director's 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.

As explained more fully in the director's responsibilities statement, the director is 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 director determines 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 director is responsible for assessing 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 director either intends to liquidate the parent company or to cease operations, or has no realistic alternative but to do so.

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:

• Auditing the risk of management override of controls, including through testing journal entries and other adjustments for appropriateness;

• Enquiries with management, about any known or suspected instances of non-compliance with laws and regulations and fraud;

• Reviewing how management identify and track compliance with key laws and regulations. Scrutinising legal and professional costs incurred for indications of non-compliance and consequential financial implications.

• Auditing the risk of fraud in revenue, including through the testing of income cut-off at the year end, through sales transaction testing and consideration of post year end sales credit notes to provide comfort that revenue stated in the financial statements has occurred and is recognised in the correcting accounting period;

• Challenging assumptions and judgements made by management in the accounting estimates.

Because of the field in which the client operates, we identified the following areas as those most likely to have a material impact on the financial statements: Health and Safety; environmental compliance, VOSA compliance, employment law and compliance with the UK Companies Act.

Owing to the inherent limitations of an audit, there is an unavoidable risk that some material misstatements in the financial statements may not be detected, even though the audit is properly planned and performed in accordance with the ISAs (UK). For instance, the further removed non-compliance is from the events and transactions reflected in the financial statements, the less likely the auditor is to become aware of it or to recognise the non-compliance.

A further description of our responsibilities is available on the Financial Reporting Council’s website at: https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.

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.

The Group Statement of Comprehensive Income has been prepared on the basis that all operations are continuing operations.

As permitted by s408 Companies Act 2006, the company has not presented its own profit and loss account and related notes. The company’s profit for the year was £129,069 (2022 - £126,533 profit).

These financial statements have been prepared in accordance with the provisions applicable to companies subject to the small companies regime.

HPH Group Ltd (“the company”) is a limited company domiciled and incorporated in England and Wales. The registered office is Mayfield House, Chorley Road, Walton-le-Dale, Preston, PR5 4JN. The company's place of business is Unit 1, Aston Way, Moss Side Industrial Estate, Leyland, PR26 7UX.

The group consists of HPH Group Ltd and its subsidiary company H. Parkinson Haulage Limited.

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.

The 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 for parent company information presented within the consolidated financial statements:

• Section 7 ‘Statement of Cash Flows’ – Presentation of a statement of cash flow and related notes and disclosures;

• Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instrument Issues’ – Carrying amounts, interest income/expense and net gains/losses for each category of financial instrument; basis of determining fair values; details of collateral, loan defaults or breaches, details of hedges, hedging fair value changes recognised in profit or loss and in other comprehensive income;

• Section 33 ‘Related Party Disclosures’ – Compensation for key management personnel.

The consolidated group financial statements consist of the financial statements of the parent company HPH Group Ltd together with all entities controlled by the parent company (its subsidiaries) and the group’s share of its interests in joint ventures and associates.

All financial statements are made up to 30 June 2023. Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with those used by other members of the group.

All intra-group transactions, balances and unrealised gains on transactions between group companies are eliminated on consolidation. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.

These financial statements are prepared on a going concern basis. The director has a reasonable expectation that the group will continue in operational existence for the foreseeable future.

However, the director is aware of a material uncertainty which may cause doubt over the group's ability to continue as a going concern. This relates to a claim for dilapidation remedial costs made by a third party after the balance sheet date, as disclosed in note 4 to the financial statements. The claim is in respect of a commercial property which the group vacated at the end of its leasehold tenure at the start of the financial year, although the claim was served in the prior financial year.

The group does not agree with material aspects of the third party's claim. The latest claim presented by the third party is more than 50% lower than the original claim made in the prior financial year. There are a number of legal and factual arguments which have not yet been considered by the group, which it has been advised are likely to significantly impact on both liability and quantum, assuming the third party continues to pursue this claim. These arguments have not been considered to date as the priority for the group, having due regard to risk and cost, remains to seek a commercial resolution with the third party.

The director took professional advice and duly included a provision at the prior balance sheet, representing a prudent best estimate of the group's likely liability within the financial statements, assuming the worst case scenario, on the basis of information available to them at that time. The director reviewed this position further at the current balance sheet date and, based on the information available to him believes the provision is fairly stated. At the time of approving the financial statements, the director is scrutinising this matter further, including taking relevant professional advice, with the aim of further reducing the group's exposure to this dilapidation claim.

Notwithstanding this, in order to carry out his going concern review, the director must assume the worst case scenario arises and whether the group could discharge this claim and remain a going concern. Accordingly he has factored in the payment of the balance provided for within the financial statements, £383,000, within financial projections covering the period to 31 March 2025. Key assumptions include the group's deposit, currently held by the third party, being offset against any agreed balance and the residual amount being paid in monthly instalments over an extended period of time as part of any settlement terms, commencing in Summer 2024. The group has received professional advice that the payment of such balances over an agreed period is a typical aspect of such arrangements and is not therefore an overly optimistic assumption.

The director acknowledges the continued material uncertainty relating to this event at the date of approving the financial statements, as the group's exposure to the claim has yet to be determined. The director is confident that any liability will not be greater than the £383,000 provided for, and in all likelihood will be significantly less, however there is a risk this balance could be higher than the balance provided for within the financial statements and included within his detailed going concern review, leading to a material uncertainty over going concern.

In addition to this specific matter, the group's underlying trade has been difficult during the financial year, a theme which continued after the balance sheet date. The director has worked to secure additional profitable work and at the time of approving the financial statements, management information indicates that the group is breaking even from a profitability perspective in recent months and generating a positive Earnings Before Interest, Tax, Depreciation and Amortisation which is sufficient to service its current facilities.

The group meets its day to day working capital requirements through a combination of financial facilities including asset and invoice finance and an overdraft facility provided by the bank, together with asset finance provided by other funders. The group's bank facilities are due for annual review in August 2024 but the director does not expect any difficulties with this process at the time of approving the financial statements. During the year, the group's banking partner confirmed that no action would be taken over a covenant breach due to the financial position stated in the 30 June 2022 financial statements. The bank has confirmed its intention to repeat this process in respect of the reported position in these financial statements, subject to the ongoing satisfactory conduct of the available facilities. The director appreciates this support and has a reasonable expectation that the group will continue into the foreseeable future with adequate resources to continue operations.

In conclusion, the director believes that whilst material uncertainties do exist, as noted above, the group is a going concern at the date of approving the financial statements. The financial statements do not include any adjustments that would result from the basis of preparation being inappropriate.

Turnover represents amounts receivable for services net of VAT and trade discounts.

Revenue from haulage contracts is recognised when the collection of goods has been completed. Income in respect of storage rental, warehouse handling, vehicle maintenance and other incidental income streams is recognised upon delivery of the service to the customer.

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:

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 recognised in the profit and loss account.

Equity investments are measured at fair value through profit or loss, except for those equity investments that are not publicly traded and whose fair value cannot otherwise be measured reliably, which are recognised at cost less impairment until a reliable measure of fair value becomes available.

In the parent company financial statements, investments in subsidiaries are initially measured at cost and subsequently measured at cost less any accumulated impairment losses.

A subsidiary is an entity controlled by the group. Control is the power to govern the financial and operating policies of the entity so as to obtain benefits from its activities.

Entities in which the group has a long term interest and shares control under a contractual arrangement are classified as jointly controlled entities.

At each reporting period end date, the group reviews the carrying amounts of its tangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the group 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.

Recognised impairment losses are reversed if, and only if, the reasons for the impairment loss have ceased to apply. Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss.

Stocks relate to fuel stocks and are stated at cost.

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

The group 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 group's balance sheet when the group becomes party to the contractual provisions of the instrument.

Financial assets and liabilities are offset and 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, 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, 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.

Financial assets 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.

Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the group 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.

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 group after deducting all of its 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 receipts 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.

The group has no other financial liabilities.

Financial liabilities are derecognised when the group's contractual obligations expire or are discharged or cancelled.

Equity instruments issued by the group 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 group.

The tax expense represents the sum of the tax currently payable and deferred 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 group’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.

Deferred tax liabilities are generally recognised for all timing differences and deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Such assets and liabilities are not recognised if the timing difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.

The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the profit and loss account, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset if, and only if, there is 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.

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.

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

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 the profit and loss account 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 leased asset are consumed.

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

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

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

The useful economic life of tangible fixed assets is judged at the point of purchase and reviewed at each financial reporting date. This judgement is based upon the director's in depth knowledge of the industry in which the group operates and of the individual assets.

As standard, a useful economic life of between 8 and 2 years is applied to fixtures and fittings, between 12.5 and 5 years is applied to motor vehicles, 50 years is applied to freehold properties and over the length of the relevant lease regarding leasehold property additions.

At each balance sheet date, the director undertakes an assessment of the carrying amounts of its tangible fixed assets based upon his knowledge of the assets to determine whether there is any indication that the assets have suffered an impairment loss. Where necessary, an impairment charge is recognised within the Group Statement of Comprehensive Income.

The estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are as follows.

At each balance sheet date, the director and his finance team undertake a review of outstanding debtor balances and estimate which, if any, should either be impaired or provided against.

This calculation is based on the financial position of the customers, the historical speed of payment and any ongoing discussions between relevant parties to the individual debtor.

Since this matter was brought to his attention, the director has taken professional advice from external legal and property experts, which is disclosed in note 4 to the financial statements. Based upon this advice and his own knowledge of this matter, the director made provision for such costs within the prior financial statements and reviewed this as at the balance sheet date. The director considers that by making use of external professional advice, he is reducing the level of estimation uncertainty in arriving at a suitable provision balance.

An analysis of the group's turnover is as follows:

The group was served notice of a claim for dilapidation remedial costs by a third party during the prior financial year. A provision for dilapidation costs was accordingly made within the financial statements in line with FRS102.

The group does not agree with material aspects of the third party's claim and active negotiations have taken place since the initial claim was served and continue at the time of approving these financial statements. There are a number of legal and factual arguments which have not yet been considered by the group, which could impact on the liability, assuming the third party continues to pursue this claim.

The provision represents the director's prudent, best estimate of the group's likely liability, assuming the worst case scenario arose, on the basis of information which is currently available to them. His opinion of this position remains unchanged from the prior balance sheet date. At the time of approving the financial statements, the director continues to scrutinise this matter further, including taking relevant professional advice, with the aim of further reducing the group's exposure to this dilapidation claim.

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

Their aggregate remuneration comprised:

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

The carrying value of land and buildings comprises:

The net carrying value of tangible fixed assets includes the following in respect of assets held under finance leases or hire purchase contracts.

Details of the company's subsidiaries at 30 June 2023 are as follows:

Finance lease and hire purchase obligations are secured over the assets to which they relate.

Finance lease and hire purchase obligations are secured over the assets to which they relate.

The long-term loans and bank facilities are secured over the land and buildings owned by the company and a debenture incorporating fixed and floating charges over all current and future assets within the group.

There is a cross-company guarantee in place across with group, with the parent company acting as a guarantor for its subsidiary company.

Finance lease payments represent rentals payable by the company or group for certain items of plant and machinery. Leases include purchase options at the end of the lease period, and no restrictions are placed on the use of the assets. The average lease term is 3-5 years. All leases are on a fixed repayment basis and no arrangements have been entered into for contingent rental payments.

Deferred tax assets and liabilities are offset where the group or company has a legally enforceable right to do so. The following is the analysis of the deferred tax balances (after offset) for financial reporting purposes:

The group has not finalised its capital expenditure programme for the next financial year and therefore an assessment as to the likely movement of timing differences cannot reasonably be made.            

A defined contribution pension scheme is operated for all qualifying employees. The assets of the scheme are held separately from those of the group in an independently administered fund.

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

At the balance sheet date the group owed £173,463 (2022: £185,442) to key management personnel.

During the year, the group made purchases of £450,360 (2022: £1,223,220) from other related parties and sales of £463,944 (2022: £416,477) to other related parties. At the balance sheet date, the group owed £328,948 (2022: £252,962) to other related parties and was owed £2,102 (2022: £1,887) from other related parties.

The company has taken advantage of the exemptions provided by FRS102 Section 33 from disclosing transactions and balances with its wholly owned subsidiary, H. Parkinson Haulage Limited, on the basis that they are eliminated on consolidation in these group financial statements.

Group key management personnel compensation is £101,781 (2022: £103,648).

The ultimate controlling party is Mr C Parkinson.