Company Registration No. 03556697 (England and Wales)
L & I EATON ARC LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2020
L & I EATON ARC LIMITED
COMPANY INFORMATION
Director
Mr L J Bootle
Company number
03556697
Registered office
Unit Gf1, The Quad
Atherleigh Business Park, Gibfield Park Avenue
Atherton
Manchester
M46 0SY
Auditor
Lopian Gross Barnett & Co
1st Floor, Cloister House
Riverside
New Bailey Street
Manchester
M3 5FS
Business address
Unit Gf1, The Quad
Atherleigh Business Park, Gibfield Park Avenue
Atherton
Manchester
M46 0SY
L & I EATON ARC LIMITED
CONTENTS
Page
Strategic report
1 - 2
Director's report
3
Director's responsibilities statement
4
Independent auditor's report
5 - 6
Profit and loss account
7
Statement of comprehensive income
8
Balance sheet
9
Statement of changes in equity
10
Statement of cash flows
11
Notes to the financial statements
12 - 26
L & I EATON ARC LIMITED
STRATEGIC REPORT
FOR THE PERIOD ENDED 31 DECEMBER 2020
- 1 -
The director presents the strategic report for the period ended 31 December 2020.
Fair review of the business
A dominant company in the accident repair industry which works with core partners including insurance
companies, work providers, vehicle manufacturers, retail and public sector.
The company presently has 9 sites in prime locations throughout England and Scotland. It has a total of 31
vehicle manufacturer approvals, making it a significant player in the UK market, these include BMW, Jaguar, Land Rover, Mercedes, VW Group and Tesla.
The financial results reported below cover a 14-month period and therefore not directly comparable with the October 2019 figures.
Turnover during the period increased from £21.2m to £26.1m.
The gross profit margin was 40.7%, compared with 39.1% in the previous period. This is in line with the director’s expectations and reflects the medium-term strategic decision to broaden its customer base and therefore reduce its reliance on any particular customer or site. This is being achieved through several methods and the director believes the current strategy is prudent and will strengthen the company’s position in the long term.
Operating profit during the period increased from £1.3m to £1.
7
m.
The director is
pleased
with the results which have exceeded the 2019 figures despite the Covid-19 pandemic.
During 2021 the company has invested resources into the finance department and recruited several members of staff. This was deemed to be necessary following the 2019 statutory audit whereby certain deficiencies in the department were identified. The director and senior management are working hard to build a stronger and more robust system of financial controls, including remedying deficiencies highlighted by the external auditors during the course of their audit.
Principal risks and uncertainties
The primary risk to the level of activity relates to loss of approval from one or more major insurance customers. It is difficult to guard against such a loss but there are strong relationships built on excellent customer service and repair quality. The director is continuing to develop relationships with other insurance companies and work providers to reduce the commercial risk of any particular customer having a dominant position.
The secondary risks are the declining number of accident repairs due to the increasing level of vehicle safety features resulting in fewer accidents and not keeping abreast of technology.
The director wishes to maintain and further broaden the portfolio of insurance companies and work providers who provide quality revenue streams.
Despite the Covid-19 pandemic which impacted the number of vehicles on the road, the company was able to expand with two new sites opening together with a strong financial performance as noted in the previous section.
L & I EATON ARC LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE PERIOD ENDED 31 DECEMBER 2020
- 2 -
Development and performance
The industry is rapidly changing due to the technological evolution of vehicles towards electric, hybrid and autonomous driving. The company is committed to continuous investment in its processes, staff training and technological implementation to ensure it remains at the forefront of the industry and continues to develop strong relationships with current and future partners.
During the period the company opened two additional sites located in the key regional areas of Glasgow and Birmingham.
These acquisitions, together with in excess of £1m capital expenditure have been funded using the company's existing cash reserves. The director is pleased that after significant investment, the company’s cash reserves increased to £2.5m compared with £1.9m in the previous accounting period.
Key performance indicators
The company operates in a competitive market place and the director and senior management are committed to maintain and enhance customer service and satisfaction levels. This will ensure that efficiencies are maintained and the insurers Key Performance Indicators (KPI) are met.
The key performance indicators (KPI's) that the company regards as important are:
a. gross profit margin;
b. the ratio of administrative expenses to turnover;
c. the ratio of operating profit to turnover; and
d. earnings before interest, tax, depreciation, impairment charge and amortisation (EBITDA).
For the year under review, those Key Performance Indicators were:
2020
2019
Gross margin
40.
7
%
39.1%
Administrative expenses to turnover
3
8
%
32.9%
Operating profit to turnover
6.
5
%
6.2%
Earnings before interest, tax, depreciation and amortisation
£
2,915,196
£
1,988,890
An analysis of the company's competitors illustrates that the gross profit margin, cash position, net assets and other key performance indicators continues to be above the industry average.
Mr L J Bootle
Director
1 October 2021
L & I EATON ARC LIMITED
DIRECTOR'S REPORT
FOR THE PERIOD ENDED 31 DECEMBER 2020
- 3 -
The director presents his annual report and financial statements for the period ended 31 December 2020.
Principal activities
The principal activity of the company continued to be that of motor vehicle body repairs.
Results and dividends
The results for the period are set out on page 7.
Ordinary dividends were paid amounting to £4,000,000. The director does not recommend payment of a final dividend.
Director
The director who held office during the period and up to the date of signature of the financial statements was as follows:
Mr L J Bootle
Auditor
Lopian Gross Barnett & Co were appointed as auditor to the company and in accordance with section 485 of the Companies Act 2006.
Energy and carbon report
As the company has not consumed more than 40,000 kWh of energy in this reporting period, it qualifies as a low energy user under these regulations and is not required to report on its emissions, energy consumption or energy efficiency activities.
Statement of disclosure to auditor
So far as each person who was a director at the date of approving this report is aware, there is no relevant audit information of which the company’s auditor is unaware. Additionally, the directors individually have taken all the necessary steps that they ought to have taken as directors in order to make themselves aware of all relevant audit information and to establish that the company’s auditor is aware of that information.
On behalf of the board
Mr L J Bootle
Director
1 October 2021
L & I EATON ARC LIMITED
DIRECTOR'S RESPONSIBILITIES STATEMENT
FOR THE PERIOD ENDED 31 DECEMBER 2020
- 4 -
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 company and of the profit or loss of the company 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 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 director is 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. He is 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.
L & I EATON ARC LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF L & I EATON ARC LIMITED
- 5 -
Disclaimer of opinion on financial statements
We were engaged to audit the financial statements of L & I Eaton Arc Limited (the 'company') for the period ended 31 December 2020 which comprise the profit and loss account, the statement of comprehensive income, the balance sheet, the statement of changes in equity, the statement of cash flows and 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 FRS 102
The Financial Reporting Standard applicable in the UK and Republic of Ireland
(United Kingdom Generally Accepted Accounting Practice).
We do not express an opinion on the accompanying financial statements. Because of the significance of the matter described in the "Basis for Disclaimer of Opinion" section of our report, we have not been able to obtain sufficient and appropriate audit evidence to provide a basis for an audit opinion on these financial statements.
Basis for disclaimer of opinion
W
e have been unable to obtain sufficient audit evidence on which to base an opinion. In particular, that not all transactions of the company have been recorded in its books and records.
The company is in the process of identifying the missing transactions and their nature as well as collecting and collating evidence to support their accounting treatment.
Once this process is complete, adjustments to correctly reflect them in the financial statements will be necessary. The potential impact of the adjustments could be material and affect a number of balances in the primary statements.
Opinions on other matters prescribed by the Companies Act 2006
Because of the significance of the matter described in the basis for disclaimer of opinion section of our report, we
have been unable to form an opinion that:
-
the information given in the strategic report and directors’ report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
-
the strategic report and directors’ report have been prepared in accordance with applicable legal requirements.
Matters on which we are required to report by exception
Notwithstanding our disclaimer of an opinion on the financial statements, in the light of the knowledge and understanding of the company and its environment obtained in the course of the audit performed and subject to the pervasive limitation described above, we have not identified material misstatements in the strategic report or the directors’ report.
Arising from the limitation of our work referred to above:
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:
-
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.
L & I EATON ARC LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF L & I EATON ARC LIMITED
- 6 -
Responsibilities of director
As explained more fully in the director's
r
esponsibilities
s
tatement, 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 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 company or to cease operations, or has no realistic alternative but to do so.
Auditor's responsibilities for the audit of the financial statements
Our responsibility is to conduct an audit of the company’s financial statements in accordance with International Standards on Auditing (UK) and to issue an auditor’s report.
However, because of the matter described in the basis for disclaimer of opinion section of our report, we were not able to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion on these financial statements.
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, and we have fulfilled our other ethical responsibilities in accordance with these requirements.
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 him 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.
Jason Selig BA ACA CTA DChA (Senior Statutory Auditor)
for and on behalf of Lopian Gross Barnett & Co
8 October 2021
Chartered Accountants
Statutory Auditor
1st Floor, Cloister House
Riverside
New Bailey Street
Manchester
M3 5FS
L & I EATON ARC LIMITED
PROFIT AND LOSS ACCOUNT
FOR THE PERIOD ENDED 31 DECEMBER 2020
- 7 -
Period
Year
ended
ended
31 December
31 October
2020
2019
as restated
Notes
£
£
Turnover
3
26,135,038
21,201,061
Cost of sales
(15,507,802)
(12,902,493)
Gross profit
10,627,236
8,298,568
Administrative expenses
(9,926,236)
(6,982,628)
Other operating income
1,002,888
Operating profit
4
1,703,888
1,315,940
Interest receivable and similar income
7
115,474
Interest payable and similar expenses
8
(111,915)
(250)
Profit before taxation
1,707,447
1,315,690
Tax on profit
9
(423,397)
(260,995)
Profit for the financial period
1,284,050
1,054,695
The profit and loss account has been prepared on the basis that all operations are continuing operations.
L & I EATON ARC LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE PERIOD ENDED 31 DECEMBER 2020
- 8 -
Period
Year
ended
ended
31 December
31 October
2020
2019
as restated
£
£
Profit for the period
1,284,050
1,054,695
Other comprehensive income
-
-
Total comprehensive income for the period
1,284,050
1,054,695
L & I EATON ARC LIMITED
BALANCE SHEET
AS AT
31 DECEMBER 2020
31 December 2020
- 9 -
2020
2019
as restated
Notes
£
£
£
£
Fixed assets
Tangible assets
12
2,137,786
2,136,204
Investments
13
1,164,354
1,164,354
3,302,140
3,300,558
Current assets
Stocks
15
1,868,628
264,460
Debtors
16
3,316,530
8,624,278
Cash at bank and in hand
2,467,919
1,915,699
7,653,077
10,804,437
Creditors: amounts falling due within one year
17
(6,147,266)
(7,293,484)
Net current assets
1,505,811
3,510,953
Total assets less current liabilities
4,807,951
6,811,511
Creditors: amounts falling due after more than one year
18
(651,557)
Provisions for liabilities
Deferred tax liability
21
165,032
104,199
(165,032)
(104,199)
Net assets
3,991,362
6,707,312
Capital and reserves
Called up share capital
23
100
100
Profit and loss reserves
3,991,262
6,707,212
Total equity
3,991,362
6,707,312
The financial statements were approved and signed by the director and authorised for issue on 1 October 2021
Mr L J Bootle
Director
Company Registration No. 03556697
L & I EATON ARC LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE PERIOD ENDED 31 DECEMBER 2020
- 10 -
Share capital
Profit and loss reserves
Total
Notes
£
£
£
As restated for the period ended 31 October 2019:
Balance at 1 November 2017 (as restated)
100
5,652,517
5,652,617
Year ended 31 October 2019:
Profit and total comprehensive income for the year
-
1,054,695
1,054,695
Balance at 31 October 2018 (as restated)
100
6,707,212
6,707,312
Period ended 31 December 2020:
Profit and total comprehensive income for the period
-
1,284,050
1,284,050
Dividends
10
-
(4,000,000)
(4,000,000)
Balance at 31 December 2020
100
3,991,262
3,991,362
L & I EATON ARC LIMITED
STATEMENT OF CASH FLOWS
FOR THE PERIOD ENDED 31 DECEMBER 2020
- 11 -
2020
2019
as restated
Notes
£
£
£
£
Cash flows from operating activities
Cash generated from operations
29
2,212,973
1,918,298
Interest paid
(250)
Income taxes paid
(141,256)
(544,208)
Net cash inflow from operating activities
2,071,717
1,373,840
Investing activities
Purchase of tangible fixed assets
(1,097,415)
(592,674)
Proceeds on disposal of tangible fixed assets
1,500
Purchase of subsidiaries
(100)
Receipts arising from loans made
(437,950)
(1,064,495)
Interest received
(38)
Net cash used in investing activities
(1,535,403)
(1,655,769)
Financing activities
Repayment of bank loans
(70,155)
(101,894)
Payment of finance leases obligations
86,061
123,345
Net cash generated from financing activities
15,906
21,451
Net increase/(decrease) in cash and cash equivalents
552,220
(260,478)
Cash and cash equivalents at beginning of period
1,915,699
2,176,177
Cash and cash equivalents at end of period
2,467,919
1,915,699
L & I EATON ARC LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2020
- 12 -
1
Accounting policies
Company information
L & I Eaton Arc Limited is a
private
company
limited by shares
incorporated in England and Wales.
The registered office is
Unit Gf1, The Quad, Atherleigh Business Park, Gibfield Park Avenue, Atherton, Manchester, M46 0SY.
1.1
Accounting convention
These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006.
The financial statements are prepared in
sterling
, which is the functional currency of the company.
Monetary a
mounts
in these financial statements are
rounded to the nearest £.
The financial statements have been prepared under the historical cost convention, modified to include the revaluation of freehold properties and to include investment properties and certain financial instruments at fair value. The principal accounting policies adopted are set out below.
The company has taken advantage of the exemption under section 400 of the
Companies Act 2006 not to prepare consolidated accounts. The financial statements present information about the company as an individual entity and not about its group
.
L & I Eaton Arc Limited is a wholly owned subsidiary of The James Group Limited and the results of L & I Eaton Arc Limited are included in the consolidated financial statements of The James Group Limited which are available from its registered office.
1.2
Going concern
A
true
t the time of approving the financial statements
,
t
he director has a reasonable expectation that the
company
has adequate resources to continue in operational existence for the foreseeable future. Thus
t
he director continues to adopt the going concern basis of accounting in preparing the financial statements.
The Director has closely monitored the Government guidance in response to the Covid-19 Pandemic and have implemented measures in line with Governmental guidelines. The Director has assessed the impact of Covid-19 on the company and conclude that there are no items resulting from the Covid-19 Pandemic which require disclosure at the balance sheet date.
1.3
Reporting period
The directors of L&I Eaton ARC Limited present their complete set of financial statements including comparative information for the period ended 31 December 2020. This represents a period longer than one year, being 14 months which commenced on 1 November 2019. The reason the period extension occurred was to meet the commercial needs of the company. The comparative amounts presented in financial statements (including the related notes) are not entirely comparable.
1.4
Turnover
Turnover is recognised at the fair value of the consideration received or receivable for goods and services provided in the normal course of business
, and
is shown net of VAT and other sales related taxes
.
The fair value of consideration takes into account trade discounts, settlement discounts and volume rebates.
When cash inflows are deferred and represent a financing arrangement, the fair value of the consideration is the present value of the future receipts. The difference between the fair value of the consideration and the nominal amount received is recognised as interest income.
L & I EATON ARC LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 31 DECEMBER 2020
1
Accounting policies
(Continued)
- 13 -
Revenue from the sale of goods is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer
(usually on dispatch of the goods)
, the amount of revenue can be measured reliably, it is probable that the economic benefits associated with the transaction will flow to the entity and the costs incurred or to be incurred in respect of the transaction can be measured reliably.
Revenue from contracts for the provision of professional services is recognised by reference to the stage of completion when the stage of completion, costs incurred and costs to complete can be estimated reliably. The stage of completion is calculated by comparing costs incurred, mainly in relation to contractual hourly staff rates and materials, as a proportion of total costs. Where the outcome cannot be estimated reliably, revenue is recognised only to the extent of the expenses recognised that
it is probable will be
recover
ed
.
1.5
Intangible fixed assets - goodwill
Goodwill represents the excess of the cost of acquisition of unincorporated businesses over the fair value of net assets acquired. It is initially recognised as an asset at cost and is subsequently measured at cost less accumulated
amortisation and accumulated impairment losses. Goodwill is considered to have a finite useful life and is amortised on a systematic basis over its expected life, which is 5 years.
For the purposes of impairment testing, goodwill is allocated to the cash-generating units expected to benefit from the acquisition. Cash-generating units to which goodwill has been allocated are tested for impairment at least annually, or more frequently when there is an indication that the unit may be impaired. If the recoverable amount of the cash-generating unit is less than the carrying amount of the unit, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro-rata on the basis of the carrying amount of each asset in the unit.
1.6
Tangible fixed assets
Tangible fixed assets
are initially measured at cost and subsequently measured at cost or valuation, net of depreciation and any impairment losses.
Depreciation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:
Leasehold improvements
Over the lease term
Plant and equipment
Straight line over 5 years
Fixtures and fittings
Straight line over 3 years
Motor vehicles
25% per annum reducing balance
The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and
is credited or charged to profit or loss
.
1.7
Fixed asset investments
Interests in subsidiaries, associates and jointly controlled entities are initially measured at cost and subsequently measured at cost less any accumulated impairment losses.
The investments are assessed for impairment at each reporting date
and
any
impairment
losses or reversals of impairment losses are recognised immediately in profit or loss.
A subsidiary is an entity controlled by the company
. Control is
the power to govern the financial and operating policies of
the
entity so as to obtain benefits from its activities.
L & I EATON ARC LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 31 DECEMBER 2020
1
Accounting policies
(Continued)
- 14 -
1.8
Impairment of fixed assets
At each reporting
period
end date, the
company
reviews the carrying amounts of its tangible
and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the company
estimates the recoverable amount of the cash-generating unit to which the asset belongs.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.
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, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.
1.9
Stocks
Stocks are stated at the lower of cost and estimated selling price less costs to complete and sell. Cost comprises direct materials and, where applicable, direct labour costs and those overheads that have been incurred in bringing the stocks to their present location and condition.
Stocks held for distribution at no or nominal consideration are measured at the lower of cost and replacement cost, adjusted where applicable for any loss of service potential.
At each reporting date, an assessment is made for impairment. Any excess of the carrying amount of stocks over its estimated selling price less costs to complete and sell is recognised as an impairment loss in profit or loss. Reversals of impairment losses are also recognised in profit or loss.
1.10
Cash and cash equivalents
Cash and cash equivalents
are basic financial assets
and
include cash in hand, deposits held at call with banks, other short-term liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities.
1.11
Financial instruments
The company has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.
Financial instruments are recognised in the company's balance sheet when the company becomes party to the contractual provisions of the instrument.
Financial assets and liabilities are offset
, with
the net amounts presented in the financial statements
,
when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.
L & I EATON ARC LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 31 DECEMBER 2020
1
Accounting policies
(Continued)
- 15 -
Basic financial assets
Basic financial assets, which include debtors and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest
method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest.
Financial assets classified as receivable within one year are not amortised.
Other financial assets
Other financial assets, including investments in equity instruments which are not subsidiaries, associates or joint ventures, are initially measured at fair value, which is normally the transaction price. Such assets are subsequently carried at fair value and the changes in fair value are recognised in profit or loss, except that investments in equity instruments that are not publicly traded and whose fair values cannot be measured reliably are measured at cost less impairment.
Impairment of financial assets
Financial assets, other than those
held
at
fair value through profit and loss
, are assessed for indicators of impairment at each reporting end date.
Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected.
If an asset is impaired, the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset’s original effective interest rate. The impairment loss is recognised in profit or loss.
If there is a decrease in the impairment loss arising from an event occurring after the impairment was recognised, the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been, had the impairment not previously been recognised. The impairment reversal is recognised in profit or loss.
Derecognition of financial assets
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when
the company
transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.
Classification of financial liabilities
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the company after deducting all of its liabilities.
L & I EATON ARC LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 31 DECEMBER 2020
1
Accounting policies
(Continued)
- 16 -
Basic financial liabilities
Basic financial liabilities, including creditors, bank loans, loans from
fellow group companies and preference shares that are classified as debt, 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
paymen
ts 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. A
m
ounts payable are classified as
current liabilities if payment is due within one year or less. If not, they are presented
as non-current liabilities. Trade creditors are recognised initially at transaction price
and subsequently measured at amortised cost using the effective interest method.
Other financial liabilities
Derivatives, including interest rate swaps and forward foreign exchange contracts,
are not basic financial instruments. Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are
s
ubsequently re-measured at their fair value. Changes in the fair value of derivatives are recognised in profit or loss in finance costs or finance income as appropriate, unless hedge accounting is applied and the hedge is a cash flow hedge.
Debt instruments that do not meet the conditions in FRS 102 paragraph 11.9 are subsequently measured at fair value through profit or loss. Debt instruments may be designated as
being measured at
fair value th
r
ough profit or loss to eliminate or reduce an accounting mismatch or if the instruments are measured and their performance evaluated on a fair value basis in accordance with a documented risk management or investment strategy.
Derecognition of financial liabilities
Financial liabilities are derecognised when the company’s contractual obligations
expire or are discharged or cancelled.
1.12
Equity instruments
Equity instruments issued by the company are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the company.
1.13
Taxation
The tax expense represents the sum of the tax currently payable and deferred tax.
Current tax
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the profit and loss account because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The
company’s
liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.
L & I EATON ARC LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 31 DECEMBER 2020
1
Accounting policies
(Continued)
- 17 -
Deferred tax
Deferred tax liabilities are generally recognised for all timing differences and deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Such assets and liabilities are not recognised if the timing difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.
The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the profit and loss account, 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 when the
company
has a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.
1.14
Employee benefits
The costs of short-term employee benefits are recognised as a liability and an expense, unless those costs are required to be recognised as part of the cost of stock or fixed assets.
The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received.
Termination benefits are recognised immediately as an expense when the company is demonstrably committed to terminate the employment of an employee or to provide termination benefits.
1.15
Retirement benefits
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
1.16
Leases
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessees. All other leases are classified as operating leases.
Assets held under finance leases are recognised as assets at the lower of the assets fair
value at the date of inception and the present value of the minimum lease payments. The related liability is included in the balance sheet as a finance lease obligation. Lease payments are treated as consisting of capital and interest elements. The interest is charged to profit or loss so as to produce a constant periodic rate of interest on the remaining balance of the liability.
Rentals payable under operating leases,
including
any lease incentives received, are charged to
profit or loss
on a straight line basis over the term of the relevant lease except where another more systematic basis is more representative of the time pattern in which economic benefits from the lease
s
asset are consumed.
1.17
Government grants
Government grants are recognised at the fair value of the asset receive
d
or receivable when there is reasonable assurance that the grant conditions will be met and the grants will be received.
A grant that specifies performance conditions is recognised in income when the performance conditions are met
. Where a
grant does not specify performance conditions
it
is recognised in income when the proceeds are received or receivable
. A grant received before the recognition criteria are satisfied is recognised as a liability.
L & I EATON ARC LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 31 DECEMBER 2020
1
Accounting policies
(Continued)
- 18 -
1.18
Foreign exchange
Transactions in currencies other than pounds sterling are recorded at the rates of exchange prevailing at the dates of the transactions. At each reporting end date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the reporting end date. Gains and losses arising on translation
in the period
are included in profit or loss.
2
Judgements and key sources of estimation uncertainty
In the application of the company’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.
3
Turnover and other revenue
2019
2020
as restated
£
£
Turnover analysed by class of business
Parts, paint and labour
26,135,038
21,201,061
2020
2019
£
£
Other significant revenue
Interest income
115,474
-
Grants received
1,002,888
2019
2020
as restated
£
£
Turnover analysed by geographical market
United Kingdom
26,135,038
21,201,061
4
Operating profit
2020
2019
Operating profit for the period is stated after charging/(crediting):
£
£
Government grants
(1,002,888)
Fees payable to the company's auditor for the audit of the company's financial statements
60,000
30,000
Depreciation of owned tangible fixed assets
1,095,834
672,950
Operating lease charges
649,612
458,315
L & I EATON ARC LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 31 DECEMBER 2020
- 19 -
5
Employees
The average monthly number of persons (including directors) employed by the company during the period was:
2020
2019
Number
Number
Administrative
37
37
Indirect
124
105
Direct
81
77
Total
242
219
Their aggregate remuneration comprised:
2020
2019
£
£
Wages and salaries
8,620,518
6,304,886
Pension costs
155,191
96,056
8,775,709
6,400,942
6
Director's remuneration
2020
2019
£
£
Remuneration for qualifying services
78,045
66,816
7
Interest receivable and similar income
2020
2019
£
£
Interest income
Other interest income
115,474
8
Interest payable and similar expenses
2020
2019
£
£
Interest on financial liabilities measured at amortised cost:
Interest on bank overdrafts and loans
367
Other finance costs:
Interest on finance leases and hire purchase contracts
2,674
250
Other interest
108,874
111,915
250
L & I EATON ARC LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 31 DECEMBER 2020
- 20 -
9
Taxation
2019
2020
as restated
£
£
Current tax
UK corporation tax on profits for the current period
362,564
220,242
Deferred tax
Origination and reversal of timing differences
60,833
40,753
Total tax charge
423,397
260,995
The actual charge for the period can be reconciled to the expected charge for the period based on the profit or loss and the standard rate of tax as follows:
2019
2020
as restated
£
£
Profit before taxation
1,707,447
1,315,690
Expected tax charge based on the standard rate of corporation tax in the UK of 19.00% (2019: 19.00%)
324,415
249,981
Tax effect of expenses that are not deductible in determining taxable profit
25,566
10,747
Group relief
(40,361)
Deferred tax
60,833
40,753
Capital allowances
(195,626)
(127,986)
Depreciation
208,209
127,861
Taxation charge for the period
423,397
260,995
10
Dividends
2020
2019
£
£
Interim paid
4,000,000
L & I EATON ARC LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 31 DECEMBER 2020
- 21 -
11
Intangible fixed assets
Goodwill
£
Cost
At 1 November 2019 and 31 December 2020
286,965
Amortisation and impairment
At 1 November 2019 and 31 December 2020
286,965
Carrying amount
At 31 December 2020
At 31 October 2019
12
Tangible fixed assets
Leasehold improvements
Plant and equipment
Fixtures and fittings
Motor vehicles
Total
£
£
£
£
£
Cost
At 1 November 2019
1,008,663
3,485,516
373,955
1,022,561
5,890,695
Additions
102,073
643,330
91,742
260,271
1,097,416
At 31 December 2020
1,110,736
4,128,846
465,697
1,282,832
6,988,111
Depreciation and impairment
At 1 November 2019
399,349
2,636,819
301,512
416,811
3,754,491
Depreciation charged in the period
237,433
534,614
71,198
252,589
1,095,834
At 31 December 2020
636,782
3,171,433
372,710
669,400
4,850,325
Carrying amount
At 31 December 2020
473,954
957,413
92,987
613,432
2,137,786
At 31 October 2019
609,314
848,697
72,443
605,750
2,136,204
13
Fixed asset investments
2020
2019
Notes
£
£
Investments in subsidiaries
14
1,164,354
1,164,354
14
Subsidiaries
Details of the company's subsidiaries at 31 December 2020 are as follows:
L & I EATON ARC LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 31 DECEMBER 2020
14
Subsidiaries
(Continued)
- 22 -
Name of undertaking
Registered office
Class of
% Held
shares held
Direct
Indirect
Brookland (Lincoln) Limited
England and Wales
Ordinary
0
100.00
Brooklands Auto Body Centre Limited
England and Wales
Ordinary
100.00
-
Wheel Aid Limited
England and Wales
Ordinary
100.00
-
15
Stocks
2020
2019
£
£
Finished goods and goods for resale
1,868,628
264,460
16
Debtors
2019
2020
as restated
Amounts falling due within one year:
£
£
Trade debtors
1,304,016
2,083,479
Corporation tax recoverable
1,018,287
Amounts owed by group undertakings
1,391,398
1,321,268
Other debtors
531,149
3,972,687
Prepayments and accrued income
89,967
228,557
3,316,530
8,624,278
17
Creditors: amounts falling due within one year
2019
2020
as restated
Notes
£
£
Bank loans
19
70,155
Obligations under finance leases
20
68,849
123,345
Trade creditors
2,133,385
2,357,124
Amounts owed to group undertakings
191,802
285,997
Corporation tax
896,409
1,693,388
Other taxation and social security
2,159,089
1,871,423
Other creditors
460,708
393,056
Accruals and deferred income
237,024
498,996
6,147,266
7,293,484
The bank loan is secured by a fixed and floating charge over the assets of the company.
L & I EATON ARC LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 31 DECEMBER 2020
- 23 -
18
Creditors: amounts falling due after more than one year
2020
2019
Notes
£
£
Obligations under finance leases
20
140,557
Other creditors
511,000
651,557
19
Loans and overdrafts
2020
2019
£
£
Bank loans
70,155
Payable within one year
70,155
The bank loan is secured by a fixed and floating charge.
20
Finance lease obligations
2020
2019
Future minimum lease payments due under finance leases:
£
£
Within one year
68,848
41,115
In two to five years
140,558
82,230
209,406
123,345
Finance lease payments represent rentals payable by the company 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 years. All leases are on a fixed repayment basis and no arrangements have been entered into for contingent rental payments.
21
Deferred taxation
The following are the major deferred tax liabilities and assets recognised by the company and movements thereon:
Liabilities
Liabilities
2020
2019
Balances:
£
£
Accelerated capital allowances
165,032
104,199
L & I EATON ARC LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 31 DECEMBER 2020
21
Deferred taxation
(Continued)
- 24 -
2020
Movements in the period:
£
Liability at 1 November 2019
104,199
Charge to profit or loss
60,833
Liability at 31 December 2020
165,032
22
Retirement benefit schemes
2020
2019
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
155,191
96,056
The company operates a defined contribution pension scheme for all qualifying employees.
The assets of the scheme are held separately from those of the company in an independently administered fund.
23
Share capital
2020
2019
2020
2019
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Ordinary of £1 each
100
100
100
100
24
Operating lease commitments
Lessee
At the reporting end date the company had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:
2020
2019
£
£
Within one year
598,410
486,600
Between two and five years
1,902,372
1,606,625
In over five years
1,771,018
1,588,000
4,271,800
3,681,225
25
Related party transactions
The company has given cross guarantees in respect of group company bank loans and overdrafts. As at both 31 December 2020 and 31 October 2019 no contingent liabilities existed.
The company has taken advantage of the exemption available in FRS102 'Related party disclosures' whereby it has not disclosed transactions with the ultimate parent company or any wholly owned subsidiary undertaking of the group.
L & I EATON ARC LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 31 DECEMBER 2020
- 25 -
26
Directors' transactions
Description
% Rate
Opening balance
Amounts advanced
Amounts repaid
Closing balance
£
£
£
£
2.50
3,972,687
553,462
(4,000,000)
526,149
3,972,687
553,462
(4,000,000)
526,149
27
Ultimate controlling party
The company is a wholly owned subsidiary of The James Group Limited, registered office Unit Gf1, The Quad, Atherleigh Business Park Gibfield Park Avenue, Atherton, Manchester, United Kingdom, M46 0SY.
The ultimate controlling party is L J Bootle.
28
Other operating income
During the year the company received other income of £1,002,888 (2019: £0) in relation to the Coronavirus Job Retention Scheme.
29
Cash generated from operations
2020
2019
£
£
Profit for the period after tax
1,284,049
1,054,695
Adjustments for:
Taxation charged
423,397
260,995
Finance costs
111,915
250
Investment income
(115,474)
Depreciation and impairment of tangible fixed assets
1,095,834
672,950
Movements in working capital:
(Increase)/decrease in stocks
(1,604,168)
8,368
Decrease/(increase) in debtors
842,923
(452,452)
Increase in creditors
174,497
373,492
Cash generated from operations
2,212,973
1,918,298
L & I EATON ARC LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 31 DECEMBER 2020
- 26 -
30
Analysis of changes in net funds
1 November 2019
Cash flows
31 December 2020
£
£
£
Cash at bank and in hand
1,915,699
552,220
2,467,919
Borrowings excluding overdrafts
(70,155)
70,155
-
Obligations under finance leases
(123,345)
(86,061)
(209,406)
1,722,199
536,314
2,258,513
31
Prior period adjustment
Basis for prior period adjustment
In error multiple expenditure transactions were recorded twice in the prior year. This has now been corrected and the financial impact is stated above.
Financial impact
The financial impact is as follows:
Trade Receivables has reduced by £578,917;
Corporation Tax liability and charge has reduced £91,075;
VAT Liability has reduced by £96,486;
Net assets has reduced by £391,356; and
Cost of Sales have increased by £482,431.
32
Potential contingent liabilities
The is an ongoing legal dispute with a potential uncertain liability. It is not expected to result in an economic outflow from the business and the amount is impractical to estimate.
2020-12-31
2019-11-01
false
CCH Software
CCH Accounts Production 2021.200
Mr L J Bootle
03556697
2019-11-01
2020-12-31
03556697
bus:Director1
2019-11-01
2020-12-31
03556697
bus:RegisteredOffice
2019-11-01
2020-12-31
03556697
2020-12-31
03556697
2018-11-01
2019-10-31
03556697
core:RetainedEarningsAccumulatedLosses
2018-11-01
2019-10-31
03556697
core:RetainedEarningsAccumulatedLosses
2019-11-01
2020-12-31
03556697
2019-10-31
03556697
core:LandBuildings
core:LeasedAssetsHeldAsLessee
2020-12-31
03556697
core:PlantMachinery
2020-12-31
03556697
core:FurnitureFittings
2020-12-31
03556697
core:MotorVehicles
2020-12-31
03556697
core:LandBuildings
core:LeasedAssetsHeldAsLessee
2019-10-31
03556697
core:PlantMachinery
2019-10-31
03556697
core:FurnitureFittings
2019-10-31
03556697
core:MotorVehicles
2019-10-31
03556697
core:CurrentFinancialInstruments
core:WithinOneYear
2020-12-31
03556697
core:CurrentFinancialInstruments
core:WithinOneYear
2019-10-31
03556697
core:Non-currentFinancialInstruments
core:AfterOneYear
2020-12-31
03556697
core:Non-currentFinancialInstruments
core:AfterOneYear
2019-10-31
03556697
core:Non-currentFinancialInstruments
2020-12-31
03556697
core:Non-currentFinancialInstruments
2019-10-31
03556697
core:ShareCapital
2020-12-31
03556697
core:ShareCapital
2019-10-31
03556697
core:RetainedEarningsAccumulatedLosses
2020-12-31
03556697
core:RetainedEarningsAccumulatedLosses
2019-10-31
03556697
core:ShareCapital
2018-10-31
03556697
core:RetainedEarningsAccumulatedLosses
2018-10-31
03556697
2018-10-31
03556697
1
2019-11-01
2020-12-31
03556697
1
2018-11-01
2019-10-31
03556697
2019-10-31
03556697
core:Goodwill
2019-11-01
2020-12-31
03556697
core:LandBuildings
core:LongLeaseholdAssets
2019-11-01
2020-12-31
03556697
core:PlantMachinery
2019-11-01
2020-12-31
03556697
core:FurnitureFittings
2019-11-01
2020-12-31
03556697
core:MotorVehicles
2019-11-01
2020-12-31
03556697
core:UKTax
2019-11-01
2020-12-31
03556697
core:UKTax
2018-11-01
2019-10-31
03556697
2
2019-11-01
2020-12-31
03556697
2
2018-11-01
2019-10-31
03556697
3
2019-11-01
2020-12-31
03556697
3
2018-11-01
2019-10-31
03556697
core:Goodwill
2019-10-31
03556697
core:Goodwill
2020-12-31
03556697
core:Goodwill
2019-10-31
03556697
core:LandBuildings
core:LeasedAssetsHeldAsLessee
2019-10-31
03556697
core:PlantMachinery
2019-10-31
03556697
core:FurnitureFittings
2019-10-31
03556697
core:MotorVehicles
2019-10-31
03556697
core:LandBuildings
core:LeasedAssetsHeldAsLessee
2019-11-01
2020-12-31
03556697
core:Subsidiary1
2019-11-01
2020-12-31
03556697
core:Subsidiary2
2019-11-01
2020-12-31
03556697
core:Subsidiary3
2019-11-01
2020-12-31
03556697
core:Subsidiary1
1
2019-11-01
2020-12-31
03556697
core:Subsidiary2
2
2019-11-01
2020-12-31
03556697
core:Subsidiary3
3
2019-11-01
2020-12-31
03556697
core:CurrentFinancialInstruments
2020-12-31
03556697
core:CurrentFinancialInstruments
2019-10-31
03556697
core:Non-currentFinancialInstruments
1
2020-12-31
03556697
core:Non-currentFinancialInstruments
1
2019-10-31
03556697
core:WithinOneYear
2020-12-31
03556697
core:WithinOneYear
2019-10-31
03556697
core:BetweenTwoFiveYears
2020-12-31
03556697
core:BetweenTwoFiveYears
2019-10-31
03556697
core:MoreThanFiveYears
2020-12-31
03556697
core:MoreThanFiveYears
2019-10-31
03556697
bus:PrivateLimitedCompanyLtd
2019-11-01
2020-12-31
03556697
bus:FRS102
2019-11-01
2020-12-31
03556697
bus:Audited
2019-11-01
2020-12-31
03556697
bus:FullAccounts
2019-11-01
2020-12-31
xbrli:pure
xbrli:shares
iso4217:GBP