Company registration number 02428299 (England and Wales)
TRS TYRES LTD
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
TRS TYRES LTD
COMPANY INFORMATION
Directors
Mr L Stonier
Mr N Stonier
Secretary
Mr N Stonier
Company number
02428299
Registered office
Whitegate
White Lund Industrial Estate
Morecambe
Lancashire
United Kingdom
LA3 3DB
Auditor
Azets Audit Services
Fleet House
New Road
Lancaster
United Kingdom
LA1 1EZ
TRS TYRES LTD
CONTENTS
Page
Strategic report
1
Directors' report
2 - 3
Independent auditor's report
4 - 6
Statement of comprehensive income
7
Balance sheet
8
Statement of changes in equity
9
Statement of cash flows
10
Notes to the financial statements
11 - 22
TRS TYRES LTD
STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2022
- 1 -
The directors present the strategic report for the year ended 31 December 2022.
Review of the business
TRS Tyres experienced growth throughout the year ended 31 December 2022. The company developed new projects in order to explore different elements of our industry with an emphasis on service and tyre logistics. Overall, there was an increase turnover and staffing compared to 2021. We view this as a strong performance in an industry that experienced many challenges throughout 2022. These include increases in raw materials, energy costs, shipping rates and uplift on wages. In turn these factors increased tyre prices during the year. In Q4 the tyre market saw a sudden downturn as UK haulage and logistics slowed significantly. This, in turn, reduced the market for retreaded tyres by over 20%, highlighting the need for TRS Tyres to focus on service and logistical elements of the tyre business.
Principal risks and uncertainties
TRS Tyres, and the European tyre industry as a whole, are expecting that the anti-dumping tariff will be reintroduced on budget Chinese imports. This would benefit tyre retreading and recycling in the UK and across Europe, as well as protecting European tyre manufacturing as a whole.
TRS Tyres has to continually work to improve business efficiencies, with a focus reducing energy consumption and lowering the unit cost of tyre movements. The purchase of energy efficient machinery has already produced benefits. The development of in-house I.T. systems, including tyre specific Apps, has helped increase handling and logistics while controlling costs.
Development and performance
During 2022 TRS Tyres expanded their new tyre wholesale activity and volumes, and augmented the service element of the business with the addition of 24hr call and data handling. As shipping rates returned to pre-pandemic levels, we were able to expand our tyre exports in the second half of the year. We added to the number of countries we export to and increased our customer base.
Key performance indicators
The KPI’s adopted by TRS to measure performance are turnover and operating profit.
Turnover increased from £13.2m in 2021 to £16.2m in 2022. Operating profit fell from £1.8m to £1.4m. This demonstrated a reduction in operating profit margin from 14% to 8.9%. This increase in turnover and reduction in percentage profit is due to the increase in service work and the sales of new tyres with a high cost and low margin.
Mr L Stonier
Director
21 September 2023
TRS TYRES LTD
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 DECEMBER 2022
- 2 -
The directors present their annual report and financial statements for the year ended 31 December 2022.
Principal activities
The principal activity of the company continued to be that of the sale of tyres, casings and re-treads.
Results and dividends
The results for the year are set out on page 7.
Ordinary dividends were paid amounting to £626,303. The directors do not recommend payment of a further dividend.
Directors
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
Mr L Stonier
Mr N Stonier
Research and development
R&D work involves the process of integrating software which enables real time collaboration with European partners, with the aim of increasing efficiencies and reducing the environmental impact of the company.
Auditor
Azets Audit Services were appointed as auditor to the company and in accordance with section 485 of the Companies Act 2006, a resolution proposing that they be re-appointed will be put at a General Meeting.
Statement of directors' responsibilities
The directors are responsible for preparing the annual report and the financial statements in accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period. In preparing these financial statements, the directors are required to:
select suitable accounting policies and then apply them consistently;
make judgements and accounting estimates that are reasonable and prudent;
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company’s transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
Statement 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.
TRS TYRES LTD
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
- 3 -
On behalf of the board
Mr L Stonier
Director
21 September 2023
TRS TYRES LTD
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF TRS TYRES LTD
- 4 -
Opinion
We have audited the financial statements of TRS Tyres Ltd (the 'company') for the year ended 31 December 2022 which comprise 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 significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).
In our opinion the financial statements:
give a true and fair view of the state of the company's affairs as at 31 December 2022 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.
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 company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
The other information comprises the information included in the annual report other than the financial statements and our auditor's report thereon. The directors are responsible for the other information 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 directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
the strategic report and the directors' report have been prepared in accordance with applicable legal requirements.
TRS TYRES LTD
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF TRS TYRES LTD
- 5 -
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identified material misstatements in the strategic report or the directors' report.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:
adequate accounting records have not been kept, 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 remuneration specified by law are not made; or
we have not received all the information and explanations we require for our audit.
Responsibilities of directors
As explained more fully in the directors' responsibilities statement, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the directors are responsible for assessing the company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.
Auditor's responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
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.
TRS TYRES LTD
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF TRS TYRES LTD
- 6 -
Extent to which the audit was considered capable of detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above and on the Financial Reporting Council’s website, to detect material misstatements in respect of irregularities, including fraud.
We obtain and update our understanding of the entity, its activities, its control environment, and likely future developments, including in relation to the legal and regulatory framework applicable and how the entity is complying with that framework. Based on this understanding, we identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. This includes consideration of the risk of acts by the entity that were contrary to applicable laws and regulations, including fraud.
In response to the risk of irregularities and non-compliance with laws and regulations, including fraud, we designed procedures which included:
Enquiry of management and those charged with governance around actual and potential litigation and claims as well as actual, suspected and alleged fraud;
Reviewing minutes of meetings of those charged with governance;
Assessing the extent of compliance with the laws and regulations considered to have a direct material effect on the financial statements or the operations of the company through enquiry and inspection;
Reviewing financial statement disclosures and testing to supporting documentation to assess compliance with applicable laws and regulations;
Performing audit work over the risk of management bias and override of controls, including testing of journal entries and other adjustments for appropriateness, evaluating the business rationale of significant transactions outside the normal course of business and reviewing accounting estimates for indicators of potential bias.
Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading to a material misstatement in the financial statements or non-compliance with regulation. This risk increases the more that compliance with a law or regulation is removed from the events and transactions reflected in the financial statements, as we will be less likely to become aware of instances of non-compliance. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
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.
Susanna Cassey
Senior Statutory Auditor
For and on behalf of Azets Audit Services
22 September 2023
Chartered Accountants
Statutory Auditor
Fleet House
New Road
Lancaster
United Kingdom
LA1 1EZ
TRS TYRES LTD
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2022
- 7 -
2022
2021
Notes
£
£
Turnover
2
16,178,357
13,156,194
Cost of sales
(13,286,803)
(10,383,701)
Gross profit
2,891,554
2,772,493
Administrative expenses
(1,493,511)
(1,524,506)
Other operating income
50
589,405
Operating profit
4
1,398,093
1,837,392
Interest payable and similar expenses
7
(68)
Profit before taxation
1,398,093
1,837,324
Tax on profit
8
(255,504)
(350,715)
Profit for the financial year
1,142,589
1,486,609
The profit and loss account has been prepared on the basis that all operations are continuing operations.
TRS TYRES LTD
BALANCE SHEET
AS AT
31 DECEMBER 2022
31 December 2022
- 8 -
2022
2021
Notes
£
£
£
£
Fixed assets
Tangible assets
10
996,046
991,581
Current assets
Stocks
11
677,109
463,094
Debtors
12
3,496,301
3,007,159
Investments
13
167,840
Cash at bank and in hand
3,249,250
4,355,657
7,590,500
7,825,910
Creditors: amounts falling due within one year
14
(1,425,560)
(2,174,203)
Net current assets
6,164,940
5,651,707
Total assets less current liabilities
7,160,986
6,643,288
Provisions for liabilities
Deferred tax liability
16
243,747
242,335
(243,747)
(242,335)
Net assets
6,917,239
6,400,953
Capital and reserves
Called up share capital
18
100
100
Profit and loss reserves
6,917,139
6,400,853
Total equity
6,917,239
6,400,953
The financial statements were approved by the board of directors and authorised for issue on 21 September 2023 and are signed on its behalf by:
Mr L Stonier
Director
Company Registration No. 02428299
TRS TYRES LTD
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2022
- 9 -
Share capital
Profit and loss reserves
Total
Notes
£
£
£
Balance at 1 January 2021
100
4,914,244
4,914,344
Year ended 31 December 2021:
Profit and total comprehensive income for the year
-
1,486,609
1,486,609
Balance at 31 December 2021
100
6,400,853
6,400,953
Year ended 31 December 2022:
Profit and total comprehensive income for the year
-
1,142,589
1,142,589
Dividends
9
-
(626,303)
(626,303)
Balance at 31 December 2022
100
6,917,139
6,917,239
TRS TYRES LTD
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2022
- 10 -
2022
2021
Notes
£
£
£
£
Cash flows from operating activities
Cash (absorbed by)/generated from operations
22
(176,303)
2,132,229
Interest paid
(68)
Income taxes paid
(230,593)
(265,349)
Net cash (outflow)/inflow from operating activities
(406,896)
1,866,812
Investing activities
Purchase of tangible fixed assets
(260,474)
(487,969)
Proceeds from disposal of tangible fixed assets
17,115
36,274
Purchase of investments
(167,840)
Repayment of loans
(313,151)
Net cash used in investing activities
(724,350)
(451,695)
Net (decrease)/increase in cash and cash equivalents
(1,131,246)
1,415,117
Cash and cash equivalents at beginning of year
4,355,657
2,940,540
Cash and cash equivalents at end of year
3,224,411
4,355,657
Relating to:
Cash at bank and in hand
3,249,250
4,355,657
Bank overdrafts included in creditors payable within one year
(24,839)
TRS TYRES LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
- 11 -
1
Accounting policies
Company information
TRS Tyres Ltd is a private company limited by shares incorporated in England and Wales. The registered office is Whitegate, White Lund Industrial Estate, Morecambe, Lancashire, United Kingdom, LA3 3DB.
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 amounts in these financial statements are rounded to the nearest £.
The financial statements have been prepared under the historical cost convention modified to include current asset investments at fair value. The principal accounting policies adopted are set out below.
1.2
Going concern
At the time of approving the financial statements, the directors have a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future. Thus the directors continue to adopt the going concern basis of accounting in preparing the financial statements.true
1.3
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.
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 recovered.
1.4
Tangible fixed assets
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 or valuation of assets less their residual values over their useful lives on the following bases:
Freehold land and buildings
5% straight line
Plant and equipment
15% reducing balance
Fixtures and fittings
20% reducing balance
Motor vehicles
25% reducing balance
TRS TYRES LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
1
Accounting policies
(Continued)
- 12 -
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.
1.5
Impairment of fixed assets
At each reporting period end date, the company 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 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.
1.6
Stocks
Stocks are stated at the lower of average 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.
1.7
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.
TRS TYRES LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
1
Accounting policies
(Continued)
- 13 -
1.8
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.
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.
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.
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 payments 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.
Derecognition of financial liabilities
Financial liabilities are derecognised when the company’s contractual obligations expire or are discharged or cancelled.
TRS TYRES LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
1
Accounting policies
(Continued)
- 14 -
1.9
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.
1.10
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.
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.
1.11
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.
1.12
Retirement benefits
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
1.13
Leases
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 leases asset are consumed.
1.14
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.
TRS TYRES LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
1
Accounting policies
(Continued)
- 15 -
1.15
Employer Financed Retirement Benefit Scheme
The company has established an employer financed retirement benefit scheme for the benefit of its officers, employees and their wider families, the TRS Tyres Limited Employer Financed Retirement Benefit Scheme ("The Scheme").
In accordance with Section 9 of FRS 102 the company does not include the assets and liabilities of The Scheme on its balance sheet to the extent that it considers that it will not retain any economic benefit from the assets of The Scheme and will not have control of the rights or other access to those present economic benefits.
2
Turnover
An analysis of the company's turnover is as follows:
2022
2021
£
£
Turnover analysed by class of business
Tyre sales and collections
15,584,325
12,595,952
Repairs
594,032
560,242
16,178,357
13,156,194
2022
2021
£
£
Turnover analysed by geographical market
UK
14,201,850
10,034,496
EU
1,721,119
2,726,704
Rest of the world
255,388
394,994
16,178,357
13,156,194
3
Exceptional item
2022
2021
£
£
Income
Social security
-
587,783
4
Operating profit
2022
2021
Operating profit for the year is stated after charging/(crediting):
£
£
Exchange (gains)/losses
(45,680)
144,298
Fees payable to the company's auditor for the audit of the company's financial statements
15,000
9,500
Depreciation of owned tangible fixed assets
247,511
196,077
Profit on disposal of tangible fixed assets
(8,617)
(22,680)
Operating lease charges
54,538
41,583
TRS TYRES LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
- 16 -
5
Employees
The average monthly number of persons (including directors) employed by the company during the year was:
2022
2021
Number
Number
Directors
2
2
Admin staff
9
9
Operations
50
41
Total
61
52
Their aggregate remuneration comprised:
2022
2021
£
£
Wages and salaries
2,001,181
1,714,378
Social security costs
218,081
170,722
Pension costs
116,035
112,302
2,335,297
1,997,402
6
Directors' remuneration
2022
2021
£
£
Remuneration for qualifying services
169,402
174,051
Company pension contributions to defined contribution schemes
81,197
81,287
250,599
255,338
7
Interest payable and similar expenses
2022
2021
£
£
Other finance costs:
Other interest
68
8
Taxation
2022
2021
£
£
Current tax
UK corporation tax on profits for the current period
262,984
239,484
Adjustments in respect of prior periods
(8,892)
Total current tax
254,092
239,484
TRS TYRES LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
8
Taxation
2022
2021
£
£
(Continued)
- 17 -
Deferred tax
Origination and reversal of timing differences
1,412
69,830
Changes in tax rates
41,401
Total deferred tax
1,412
111,231
Total tax charge
255,504
350,715
The actual charge for the year can be reconciled to the expected charge for the year based on the profit or loss and the standard rate of tax as follows:
2022
2021
£
£
Profit before taxation
1,398,093
1,837,324
Expected tax charge based on the standard rate of corporation tax in the UK of 19.00% (2021: 19.00%)
265,638
349,092
Tax effect of expenses that are not deductible in determining taxable profit
1,095
1,125
Tax effect of income not taxable in determining taxable profit
13
Adjustments in respect of prior years
(8,892)
Effect of change in corporation tax rate
339
58,159
Depreciation on assets not qualifying for tax allowances
225
195
Research and development tax credit
(48,870)
Effect of superdeduction
(2,901)
(8,999)
Taxation charge for the year
255,504
350,715
9
Dividends
2022
2021
£
£
Final paid
626,303
TRS TYRES LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
- 18 -
10
Tangible fixed assets
Freehold land and buildings
Plant and equipment
Fixtures and fittings
Motor vehicles
Total
£
£
£
£
£
Cost
At 1 January 2022
51,280
719,423
31,514
1,283,366
2,085,583
Additions
43,009
2,915
214,550
260,474
Disposals
(4,500)
(93,000)
(97,500)
At 31 December 2022
51,280
757,932
34,429
1,404,916
2,248,557
Depreciation and impairment
At 1 January 2022
26,061
284,804
20,588
762,549
1,094,002
Depreciation charged in the year
1,341
69,120
2,185
174,865
247,511
Eliminated in respect of disposals
(4,393)
(84,609)
(89,002)
At 31 December 2022
27,402
349,531
22,773
852,805
1,252,511
Carrying amount
At 31 December 2022
23,878
408,401
11,656
552,111
996,046
At 31 December 2021
25,219
434,619
10,926
520,817
991,581
11
Stocks
2022
2021
£
£
Finished goods and goods for resale
677,109
463,094
12
Debtors
2022
2021
Amounts falling due within one year:
£
£
Trade debtors
3,250,095
2,546,094
Other debtors
53,111
346,447
Prepayments and accrued income
193,095
114,618
3,496,301
3,007,159
13
Current asset investments
2022
2021
£
£
Unlisted investments
167,840
TRS TYRES LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
- 19 -
14
Creditors: amounts falling due within one year
2022
2021
Notes
£
£
Bank loans and overdrafts
15
24,839
Trade creditors
444,336
1,539,075
Corporation tax
262,984
239,485
Other taxation and social security
364,361
120,306
Other creditors
165,416
37,699
Accruals and deferred income
163,624
237,638
1,425,560
2,174,203
15
Loans and overdrafts
2022
2021
£
£
Bank overdrafts
24,839
Payable within one year
24,839
16
Deferred taxation
The following are the major deferred tax liabilities and assets recognised by the company and movements thereon:
Liabilities
Liabilities
2022
2021
Balances:
£
£
Accelerated capital allowances
243,747
242,335
2022
Movements in the year:
£
Liability at 1 January 2022
242,335
Charge to profit or loss
1,412
Liability at 31 December 2022
243,747
The deferred tax liability set out above is expected to reverse and relates to accelerated capital allowances that are expected to mature.
TRS TYRES LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
- 20 -
17
Retirement benefit schemes
2022
2021
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
116,035
112,302
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.
18
Share capital
2022
2021
2022
2021
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Ordinary A shares of £1 each
49
100
49
100
Ordinary B shares of £1 each
49
-
49
-
Ordinary C shares of £1 each
1
-
1
-
Ordinary D shares of £1 each
1
-
1
-
100
100
100
100
On 18 March 2022 there was a resignation of shares from 100 ordinary shares to 49 ordinary A shares, 49 ordinary B shares, 1 ordinary C share and 1 ordinary D share.
19
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:
2022
2021
£
£
Within one year
56,350
56,350
Between two and five years
70,929
100,279
127,279
156,629
20
Related party transactions
Transactions with related parties
During the year the company entered into the following transactions with related parties:
Rent paid
2022
2021
£
£
Other related parties
27,000
27,000
During the year the company remunerated other related parties totalling £77,102 (2021: £77,102).
TRS TYRES LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
20
Related party transactions
(Continued)
- 21 -
The following amounts were outstanding at the reporting end date:
2022
2021
Amounts due to related parties
£
£
Other related parties
54,000
81,000
At the year end the company owed other related parties £nil (2021: £70,000).
21
Directors' transactions
Description
% Rate
Opening balance
Amounts advanced
Amounts repaid
Closing balance
£
£
£
£
Directors loan account
-
338,101
318,710
(614,167)
42,644
Directors loan account
-
(28,315)
204,103
(335,563)
(159,775)
309,786
522,813
(949,730)
(117,131)
22
Cash (absorbed by)/generated from operations
2022
2021
£
£
Profit for the year after tax
1,142,589
1,486,609
Adjustments for:
Taxation charged
255,504
350,715
Finance costs
68
Gain on disposal of tangible fixed assets
(8,617)
(22,680)
Depreciation and impairment of tangible fixed assets
247,511
196,077
Movements in working capital:
Increase in stocks
(214,015)
(167,094)
Increase in debtors
(489,142)
(517,237)
(Decrease)/increase in creditors
(1,110,133)
805,771
Cash (absorbed by)/generated from operations
(176,303)
2,132,229
TRS TYRES LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
- 22 -
23
Analysis of changes in net funds
1 January 2022
Cash flows
31 December 2022
£
£
£
Cash at bank and in hand
4,355,657
(1,106,407)
3,249,250
Bank overdrafts
(24,839)
(24,839)
4,355,657
(1,131,246)
3,224,411
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