Hingley & Callow Oils Limited - Limited company accounts 16.3

REGISTERED NUMBER: 00955492 (England and Wales)

STRATEGIC REPORT, REPORT OF THE DIRECTORS AND

FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30TH JUNE 2016

FOR

HINGLEY & CALLOW OILS LIMITED

Page

Company Information

1

Strategic Report

2

Report of the Directors

4

Report of the Independent Auditors

5

Income Statement

6

Other Comprehensive Income

7

Balance Sheet

8

Statement of Changes in Equity

9

Cash Flow Statement

10

Notes to the Cash Flow Statement

11

Notes to the Financial Statements

12

Reconciliation of Equity

24

Reconciliation of Profit

26

DIRECTORS:

J D Callow

Mrs A M Callow

Mrs H L Needham

J Callow

SECRETARY:

J D Callow

REGISTERED OFFICE:

Severn House

Sandy Lane Industrial Estate

Stourport-on-Severn

Worcestershire

DY13 9QB

REGISTERED NUMBER:

00955492 (England and Wales)

AUDITORS:

French Ludlam & Co Limited

Statutory Auditors and Accountants

Mountfield House

661 High Street

Kingswinford

West Midlands

DY6 8AL

The directors present their strategic report for the year ended 30th June 2016.

PRINCIPAL ACTIVITIES AND REVIEW OF BUSINESS

The principal activity of the company is the distribution of domestic, agricultural and industrial fuels. However, we also sell petrol,

oils and associated products from petrol filling stations, and have a portfolio of investment properties.

Performance

The key financial performance indicators are as follows:

2016

2015 as restated under FRS102

£

£

Turnover

65,711,108

71,713,241

Gross profit

7,347,507

7,423,271

Operating profit

1,188,279

1,292,258

Gross profit %

11.2%

10.3%

Average number of employees

76

77

Turnover is down 8.3%, mainly as a consequence of falling sales prices within the Petrochemical industry. This has also affected

operating profit, which has decreased by 8.4%. Domestic fuel requirements have remained low due to another mild winter, but a

strong performance from the Callow Gas division, together with higher margins in the year have boosted the gross profit

percentage from 10.3% to 11.2%. The company continues to be competitive within the market sector and retains a very good

customer base.

The portfolio of land and buildings held by the company continues to provide a good return, with net rental income increasing by

19.3% to £102,772 although this was mainly due to exceptionally high maintenance costs during 2015.

Although it has been another challenging year , the directors are pleased with the profit levels achieved, especially by the Callow

Gas division. The balance sheet is strong, with good liquidity, and the company maintains an excellent relationship with its key

suppliers.

Going forward there are no plans to acquire or dispose of any operations. The directors long term strategy is to expand the

company's market share and improve efficiency, to maximise future profitability and ensure that the company is able to respond

quickly to increases (and decreases) in the demand for fuel.

PRINCIPAL RISKS AND UNCERTAINTIES

The company is exposed to interest rate risk on any borrowings. However, overdraft use is minimal and therefore this risk

continues to be low. The bank is currently satisfied with the company's financial performance and the directors do not think there is

any risk of facilities being withdrawn.

Fuel prices are monitored daily to minimise price risk and ensure the company remains competitive.

Credit risk is managed by strict credit control and thorough credit checks on new customers. Customers are encouraged to pay a

regular amounts by direct debit, to spread the cost of their fuel bills. This means that for most of the year many of the sales ledger

accounts are in credit.

All sales are to UK customers and all suppliers are UK based. There are therefore no risks relating to exchange rate movements.

ON BEHALF OF THE BOARD:

J D Callow - Secretary

16th January 2017

The directors present their report with the financial statements of the company for the year ended 30th June 2016.

DIVIDENDS

No dividends will be distributed for the year ended 30th June 2016.

DIRECTORS

The directors shown below have held office during the whole of the period from 1st July 2015 to the date of this report.

J D Callow

Mrs A M Callow

Mrs H L Needham

J Callow

DISCLOSURE IN THE STRATEGIC REPORT

The business review, financial key performance indicators and financial management risk objectives are included in the Strategic

Report.

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). Under company law the directors must not approve the financial statements

unless they are satisfied that they give a true and fair view of the state of affairs of the company and of the profit or loss of the

company for that period. In preparing these financial statements, the directors are required to:

-	select suitable accounting policies and then apply them consistently;

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

-	state whether applicable accounting standards have been followed, subject to any material departures disclosed and explained in the financial statements;

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

The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company's

transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that

the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the

company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

STATEMENT 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 or she ought to have taken as a director

in order to make himself or herself aware of any relevant audit information and to establish that the company's auditors are aware of

that information.

ON BEHALF OF THE BOARD:

J D Callow - Secretary

16th January 2017

We have audited the financial statements of Hingley & Callow Oils Limited for the year ended 30th June 2016 on pages six to

twenty six. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom

Accounting Standards (United Kingdom Generally Accepted Accounting Practice), including Financial Reporting Standard 102

'The Financial Reporting Standard applicable in the UK and Republic of Ireland'.

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.

Respective responsibilities of directors and auditors

As explained more fully in the Statement of Directors' Responsibilities set out on page four, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit and express an opinion on the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board's Ethical Standards for Auditors.

Scope of the audit of the financial statements

An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable

assurance that the financial statements are free from material misstatement, whether caused by fraud or error. This includes an

assessment of: whether the accounting policies are appropriate to the company's circumstances and have been consistently applied

and adequately disclosed; the reasonableness of significant accounting estimates made by the directors; and the overall presentation

of the financial statements. In addition, we read all the financial and non-financial information in the Strategic Report and the

Report of the Directors to identify material inconsistencies with the audited financial statements and to identify any information that

is apparently materially incorrect based on, or materially inconsistent with, the knowledge acquired by us in the course of

performing the audit. If we become aware of any apparent material misstatements or inconsistencies we consider the implications

for our report.

Opinion on financial statements

In our opinion the financial statements:

-	give a true and fair view of the state of the company's affairs as at 30th June 2016 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.

Opinion on other matter prescribed by the Companies Act 2006

In our opinion 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.

Matters on which we are required to report by exception

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.

Stephen B Ludlam (Senior Statutory Auditor)

for and on behalf of French Ludlam & Co Limited

23rd January 2017

TURNOVER

3

65,711,108

71,713,241

Cost of sales

58,363,601

64,289,970

GROSS PROFIT

7,347,507

7,423,271

Distribution costs

1,437,931

1,470,553

Administrative expenses

4,848,509

4,760,858

6,286,440

6,231,411

1,061,067

1,191,860

Other operating income

127,212

100,398

OPERATING PROFIT

5

1,188,279

1,292,258

Profit on sale of investments

1,907

7,975

1,190,186

1,300,233

Interest receivable and similar income

39,063

23,239

1,229,249

1,323,472

Value adjustments in respect

of investment properties

6

(324,364

)

387,092

1,553,613

936,380

Interest payable and similar charges

7

16,660

13,337

PROFIT ON ORDINARY ACTIVITIES BEFORE TAXATION

1,536,953

923,043

Tax on profit on ordinary activities

8

298,797

164,250

PROFIT FOR THE FINANCIAL YEAR

1,238,156

758,793

PROFIT FOR THE YEAR

1,238,156

758,793

OTHER COMPREHENSIVE INCOME

-

-

TOTAL COMPREHENSIVE INCOME FOR THE YEAR

1,238,156

758,793

FIXED ASSETS

Intangible assets

9

64,175

99,060

Tangible assets

10

4,375,355

4,306,781

Investment property

11

6,370,680

5,948,155

10,810,210

10,353,996

CURRENT ASSETS

Stocks

12

1,047,687

1,075,682

Debtors

13

4,143,226

4,202,816

Investments

14

307,397

285,616

Cash at bank and in hand

8,856,410

7,086,135

14,354,720

12,650,249

CREDITORS

Amounts falling due within one year

15

7,882,393

7,038,596

NET CURRENT ASSETS

6,472,327

5,611,653

TOTAL ASSETS LESS CURRENT LIABILITIES

17,282,537

15,965,649

PROVISIONS FOR LIABILITIES

18

365,388

286,656

NET ASSETS

16,917,149

15,678,993

CAPITAL AND RESERVES

Called up share capital

19

2,000

2,000

Non distributable reserves

20

2,540,776

2,246,848

Retained earnings

20

14,374,373

13,430,145

SHAREHOLDERS' FUNDS

16,917,149

15,678,993

The financial statements were approved by the Board of Directors on 16th January 2017 and were signed on its behalf by:

Mrs A M Callow - Director

Called up

Non

share

Retained

distributable

Total

capital

earnings

reserves

equity

£

£

£

£

Balance at 1st July 2014

2,000

12,389,648

2,528,552

14,920,200

Changes in equity

Total comprehensive income

-

1,040,497

(281,704

)

758,793

Balance at 30th June 2015

2,000

13,430,145

2,246,848

15,678,993

Changes in equity

Total comprehensive income

-

944,228

293,928

1,238,156

Balance at 30th June 2016

2,000

14,374,373

2,540,776

16,917,149

Cash flows from operating activities

Cash generated from operations

1

3,115,970

2,894,155

Interest paid

(13,272

)

(11,097

)

Tax paid

(272,084

)

(221,638

)

Net cash from operating activities

2,830,614

2,661,420

Cash flows from investing activities

Purchase of tangible fixed assets

(782,983

)

(386,801

)

Purchase of investment property

(98,160

)

(140,799

)

Sale of tangible fixed assets

71,171

9,800

Purchase of current asset investments

(55,476

)

(145,178

)

Sale of current asset investments

49,228

127,505

Interest received

32,138

17,677

Dividends received

6,925

5,562

Net cash from investing activities

(777,157

)

(512,234

)

Cash flows from financing activities

Amount introduced by directors

400,687

688,135

Amount withdrawn by directors

(1,247,358

)

(482,598

)

Net cash from financing activities

(846,671

)

205,537

Increase in cash and cash equivalents

1,206,786

2,354,723

Cash and cash equivalents at beginning of year

2

5,626,795

3,272,072

Cash and cash equivalents at end of year

2

6,833,581

5,626,795

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

2016

2015

£

£

Profit before taxation

1,536,953

923,043

Depreciation charges

727,136

890,443

Profit on disposal of fixed assets

(46,011

)

(4,189

)

Fair value adjustments

(13,629

)

(2,011

)

Profit on sale of investments

(1,907

)

(7,975

)

Fairvalue adjustment investment property

(324,364

)

387,092

Finance costs

16,660

13,337

Finance income

(39,063

)

(23,239

)

1,855,775

2,176,501

Decrease in stocks

27,995

656,067

Decrease in trade and other debtors

450,808

2,004,703

Increase/(decrease) in trade and other creditors

781,392

(1,943,116

)

Cash generated from operations

3,115,970

2,894,155

2.	CASH AND CASH EQUIVALENTS

The amounts disclosed on the Cash Flow Statement in respect of cash and cash equivalents are in respect of these Balance

Sheet amounts:

Year ended 30th June 2016

30.6.16

1.7.15

£

£

Cash and cash equivalents

8,856,410

7,086,135

Bank overdrafts

(2,022,829

)

(1,459,340

)

6,833,581

5,626,795

Year ended 30th June 2015

30.6.15

1.7.14

£

£

Cash and cash equivalents

7,086,135

4,575,508

Bank overdrafts

(1,459,340

)

(1,303,436

)

5,626,795

3,272,072

1.	COMPANY INFORMATION

Hingley & Callow Oils Limited is a limited liability company incorporated in England and Wales and it's registered office

is Severn House, Sandy Lane Industrial Estate, Stourport On Severn, Worcestershire, DY13 9QB.

The principal activity of the company is the distribution of domestic, agricultural and industrial fuels. However, we also

sell petrol, oils and associated products from petrol filling stations, and have a portfolio of investment properties.

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 as modified by the revaluation of certain assets.

This is the first year in which the financial statements have been prepared under FRS 102. Refer to note 24 for an

explanation of the transition.

The financial statements are presented in Sterling (£).

Significant judgements and estimates

Estimates and judgements are continually evaluated and are based on historical experience and other factors, including

expectations of future events, that are believed to be reasonable under the circumstances.

The company makes estimates and assumptions concerning the future. The resulting accounting estimates will, by

definition, seldom equal the related actual results. In the opinion of the directors there are no estimates or assumptions that

have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next

financial year.

Turnover

Turnover is measured at the fair value of the consideration received or receivable in respect of goods and services supplied,

exclusive of value added tax and trade discounts.

Tangible fixed assets

Depreciation is provided at the following annual rates in order to write off each asset over its estimated useful life.

Short leasehold

-

10% on cost

Plant and machinery

-

10% on cost and 10% on reducing balance

Motor vehicles

-

33% on reducing balance

No depreciation has been charged on freehold property as the estimated remaining useful economic life of the properties

exceeds 50 years and a continuous policy of renewal and maintenance is undertaken. A full review of impairment of

freehold property has been completed at the end of the accounting period with no adjustments being considered necessary

to the value at which these properties are shown in the financial statements.

Impairment of assets

At each reporting date assets are reviewed to determine whether there is any indication that those assets have suffered an

impairment loss. If there is an indication of possible impairment, the recoverable amount of any affected asset is estimated

and compared with its carrying amount. If the estimated recoverable amount is lower, the carrying amount is reduced to its

estimated recoverable amount, and an impairment loss is immediately recognise in profit or loss.

If an impairment loss subsequently reverses, the carry amount af the asset is increased to the revised estimate of its

recoverable amount, but not in excess of the amount that would have been determined had no impairment loss been

recognised for the asst in prior years. A reversal in an impairment loss is recognised immediately in profit or loss.

Investment property

Investment properties for which fair value can be measured reliably without undue cost or effort are measured at fair value

at each reporting date with changed in fair value being recognised in profit or loss.

Stocks

Stocks are valued at the lower of cost and net realisable value. Cost is based on the cost of purchase on a first in, first out

basis.

At each balance sheet date, stocks are assessed for impairment. If stock is impaired, the carrying amount is reduced to its

selling price less costs to sell. The impairment loss is recognised immediately in profit or loss.

Debtors

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.

Cash and cash equivalents

Cash is represented by cash in hand and deposits with financial institutions repayable without penalty on notice of not more

than 24 hours. Cash equivalents are highly liquid investments that mature in no more than 3 months from the date of

acquisition and that are readily convertible to known amounts of cash with insignificant risk of change in value.

Creditors

Short term creditors are measured at the transaction price. Other financial liabilities, including bank loans, are measured

initially at fair value, net of transaction costs, and are measured subsequently at amortised cost using the effective interest

method.

Current and deferred taxation

Current tax is recognised for the amount of income tax payable in respect of the taxable profit for the current or past

reporting periods using the tax rates and laws that have been enacted or subsequently enacted by the reporting date.

Deferred tax is recognised in respect of all timing differences at the reporting date, except as otherwise indicated.

Deferred tax assets are only 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.

If and when all conditions for retaining tax allowances for the cost of fixed assets have been met, the deferred tax is

reversed.

A deferred tax liability or asset is recognised for the additional tax that will be paid or avoided in respect of assets and

liabilities that are recognised in a business combination.

Deferred tax is calculated using tax rates and laws that have been enacted or subsequently enacted by the reporting date

that are expected to apply to the reversal of the timing difference.

The tax expense (income) is presented either in the profit or loss, other comprehensive income, or equity depending on the

transaction that resulted ion the tax expense (income).

Deferred tax liabilities are presented within provisions for liabilities and deferred tax assets within debtors.

Pension costs and other post-retirement benefits

The company operates two pension schemes, a self administered scheme (assets held in independently administered funds)

for the directors, and an automatic enrolment scheme for the employees. Contributions payable for the year are charged in

the profit and loss account.

Provisions for liabilities

Provisions are recognised where an event has taken place that gives the company a legal or constructive obligation that

probably requires settlement by transfer of economic benefit, and a reliable estimate can be made of the amount of the

obligation.

Provisions are charged as an expense to profit or loss in the year that the company becomes aware of the obligation, and

are measured at the best estimate at the Balance Sheet date of the expenditure required to settle the obligation, taking into

account relevant risks and uncertainties.

Investments

Investments comprise investments in quoted shares which are measured at fair value. Changes in fair value are recognised

in profit or loss.

Goodwill and single farm payment entitlements

Goodwill, being the amount paid in connection with the acquisition of two businesses, is being amortised evenly over its

estimated useful economic life, with impairment adjustment where appropriate. If a reliable estimate cannot be made, the

useful life of goodwill is presumed to be 5 years.

The remaining estimated useful economic lives of the two business acquired is less than 5 years and therefore the directors

consider that it is reasonable and appropriate to continue the policy to depreciate the goodwill over its remaining useful

life. Provision is made for any impairment.

Operating leases

Gross earnings from operating leases are recognised in the profit and loss account on a straight line basis over the period of

each lease. Any direct costs in arranging the leases are charged to the profit and loss account in the period in which they are

incurred.

Rentals paid under operating leases are charged to the profit and loss account on a straight line basis over the period of the

lease.

3.

TURNOVER

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

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

2016

2015

£

£

Fuel distribution division

59,823,483

64,205,592

Petrol filling stations

5,878,812

7,498,983

Farming

8,813

8,666

65,711,108

71,713,241

4.	STAFF COSTS

2016

2015

£

£

Wages and salaries

3,060,274

2,757,073

Social security costs

331,824

293,818

Other pension costs

184,600

104,682

3,576,698

3,155,573

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

2016

2015

Administration

18

21

Sales and distribution

54

52

Works

4

4

76

77

The company operates two pension schemes, a self administered scheme for the directors and an automatic enrolment

scheme for the benefit of the employees. The assets of the schemes are administered by independent pension providers.

Pension payments recognised as an expense during the year amount to £184,600 (2015: £104,682).

5.	OPERATING PROFIT

The operating profit is stated after charging/(crediting):

2016

2015

£

£

Operating lease income

(102,772

)

(86,111

)

Depreciation - owned assets

692,249

813,598

Profit on disposal of fixed assets

(46,011

)

(4,189

)

Goodwill amortisation

34,885

76,137

Single Farm Payment entitlements amortisation

-

708

Auditors' remuneration

33,500

31,800

Auditors remuneration - non

audit services

15,500

21,700

Operating lease rentals - land and buildings

14,532

68,265

Changes in fair value of investments

(13,629

)

(2,011

)

Directors' remuneration

1,269,782

935,708

Directors' pension contributions to money purchase schemes

160,000

80,000

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

Money purchase schemes

2

2

Information regarding the highest paid director is as follows:

2016

2015

£

£

Emoluments etc

533,275

416,518

Pension contributions to money purchase schemes

80,000

40,000