James Gordon Limited - Limited company accounts 18.2

REGISTERED NUMBER: SC293893 (Scotland)

Strategic Report, Report of the Directors and

Financial Statements for the Year Ended 30th September 2018

for

James Gordon Limited

Page

Company Information

1

Strategic Report

2

Report of the Directors

3

Report of the Independent Auditors

4

to

5

Income Statement

6

Other Comprehensive Income

7

Balance Sheet

8

Statement of Changes in Equity

9

Cash Flow Statement

10

Notes to the Cash Flow Statement

11

Notes to the Financial Statements

12

to

21

DIRECTORS:

W F Montgomerie

N B Montgomerie

A Parker

SECRETARY:

W F Montgomerie

REGISTERED OFFICE:

Dalbeattie Road

Castle Douglas

Dumfries & Galloway

DG7 1HZ

REGISTERED NUMBER:

SC293893 (Scotland)

AUDITORS:

Farries, Kirk and McVean

Chartered Accountants

Statutory Auditors

Dumfries Enterprise Park

Heathhall

Dumfries

DUMFRIESSHIRE

DG1 3SJ

SOLICITORS:

Gillespie Gifford & Brown LLP

135 King Street

Castle Douglas

DG7 1NA

The directors present their strategic report for the year ended 30th September 2018.

James Gordon Limited is an agricultural engineering company. It sells and repairs agricultural machinery and associated parts. It also runs

a petrol station in Castle Kennedy. The business has been in existence for over 150 years.

The directors believe that the company is well placed to service the agricultural industry in the south and west of Scotland and that the

long experience that both they and their management team have in the local industry is to the benefit of both the company and its

customers, many of whom have been with the company for generations.

REVIEW OF BUSINESS

The directors are delighted with the results. The company has had a very successful year ot trade. Turnover has increased from £30.7m to

£39.4m and gross profits have increased from £4.8m to almost £6m. Gross profit percentage has decreased though from 15.7% to 15.1%

due to most of the increased sales being in lower margin areas but bottom line profits before tax have increased to £1.07m from £760k.

The improved results can be attributed particularly to an increase this year in machinery sales, particularly in terms of trading for a full

year in Doosan Construction Equipment. The directors are working to maintain profit levels next year. The Directors intend to maintain

their close working relationship with Claas UK and Doosan.

Key Performance Indicators (KPI's)

Given the straightforward nature of the business, the directors are of the opinion that there are no additional KPI's other than the measures

of turnover and gross profit reported above that are necessary for an understanding of the development, performance or position of the

business.

PRINCIPAL RISKS AND UNCERTAINTIES

The management of the business and the execution of the company's strategy are subject to a number of risks. The key business risks and

uncertainties affecting the company are considered to relate to competition from both national and independent machinery dealers,

employee retention and product availability.

Financial risk management

The company's operations expose it to little in the way of financial risk. However, a variety of financial risks do exist to an extent

including credit risk, liquidity risk and interest rate risk. The company has in place a risk management programme that seeks to limit the

adverse effects on the financial performance of the company by monitoring levels of debt finance and the related finance costs.

Credit risk

The company has implemented policies that require appropriate credit checks on potential customers before sales are made. The amount

of exposure to any individual is subject to a limit which can only be reassessed by a director.

Liquidity risk

The company requires only limited short term debt finance to ensure there are sufficient available funds for operations.

Interest rate risk

The company has interest bearing liabilities including a bank overdraft and stocking loans. The amount of interest charged on these

liabilities is not sufficient to significantly affect company operations.

FUTURE OUTLOOK

The company expects to continue trading profitably over the forthcoming twelve months and would hope to be able to maintain these

much improved results. There are no plans for significant expansion within the next twelve months..

ON BEHALF OF THE BOARD:

W F Montgomerie - Director

14th June 2019

The directors present their report with the financial statements of the company for the year ended 30th September 2018.

DIVIDENDS

An interim dividend of 25p per share was paid on 18th July 2018. The directors recommend that no final dividend be paid.

The total distribution of dividends for the year ended 30th September 2018 will be £ 97,500 .

DIRECTORS

The directors shown below have held office during the whole of the period from 1st October 2017 to the date of this report.

W F Montgomerie

N B Montgomerie

A Parker

Other changes in directors holding office are as follows:

T Tyrrell - resigned 30th April 2018

STATEMENT OF DIRECTORS' RESPONSIBILITIES

The directors are responsible for preparing the Strategic Report, the Report of the Directors and the financial statements in accordance

with applicable law and regulations.

Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to

prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom

Accounting Standards and applicable law). Under company law the directors must not approve the financial statements unless they are

satisfied that they give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period.

In preparing these financial statements, the directors are required to:

-	select suitable accounting policies and then apply them consistently;

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

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

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

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

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

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

STATEMENT AS TO DISCLOSURE OF INFORMATION TO AUDITORS

So far as the directors are aware, there is no relevant audit information (as defined by Section 418 of the Companies Act 2006) of which

the company's auditors are unaware, and each director has taken all the steps that he ought to have taken as a director in order to make

himself aware of any relevant audit information and to establish that the company's auditors are aware of that information.

AUDITORS

The auditors, Farries, Kirk and McVean, will be proposed for re-appointment at the forthcoming Annual General Meeting.

ON BEHALF OF THE BOARD:

W F Montgomerie - Director

14th June 2019

Opinion

We have audited the financial statements of James Gordon Limited (the 'company') for the year ended 30th September 2018 which

comprise the Income Statement, Other Comprehensive Income, Balance Sheet, Statement of Changes in Equity, Cash Flow Statement and

Notes to the Cash Flow Statement, 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 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 30th September 2018 and of its profit for the year then ended;

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

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

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our

responsibilities under those standards are further described in the Auditors' responsibilities for the audit of the financial statements section

of our report. We are independent of the company in accordance with the ethical requirements that are relevant to our audit of the

financial statements in the UK, including the FRC's Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance

with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our

opinion.

Conclusions relating to going concern

We have nothing to report in respect of the following matters in relation to which the ISAs (UK) require us to report to you where:

-	the directors' use of the going concern basis of accounting in the preparation of the financial statements is not appropriate; or

-

the directors have not disclosed in the financial statements any identified material uncertainties that may cast significant doubt about the company's ability to continue to adopt the going concern basis of accounting for a period of at least twelve months from the date when the financial statements are authorised for issue.

Other information

The directors are responsible for the other information. The other information comprises the information in the Strategic Report and the

Report of the Directors, but does not include the financial statements and our Report of the Auditors thereon.

Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our

report, we do not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider

whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise

appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to

determine whether there is a material misstatement in the financial statements or a material misstatement of the other information. If,

based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to

report that fact. We have nothing to report in this regard.

Opinions on other matters prescribed by the Companies Act 2006

In our opinion, based on the work undertaken in the course of the audit:

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

-	the Strategic Report and the Report of the Directors have been prepared in accordance with applicable legal requirements.

Matters on which we are required to report by exception

In the light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we have not

identified material misstatements in the Strategic Report or the Report of the Directors.

We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our

opinion:

-	adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or

-	the financial statements are not in agreement with the accounting records and returns; or

-	certain disclosures of directors' remuneration specified by law are not made; or

-	we have not received all the information and explanations we require for our audit.

Responsibilities of directors

As explained more fully in the Statement of Directors' Responsibilities set out on page three, the directors are responsible for the

preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the

directors determine necessary to enable the preparation of financial statements that are free from material misstatement, whether due to

fraud or error.

In preparing the financial statements, the directors are responsible for assessing the company's ability to continue as a going concern,

disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either

intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.

Auditors' responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement,

whether due to fraud or error, and to issue a Report of the Auditors that includes our opinion. Reasonable assurance is a high level of

assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it

exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably

be expected to influence the economic decisions of users taken on the basis of these financial statements.

A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council's

website at www.frc.org.uk/auditorsresponsibilities. This description forms part of our Report of the Auditors.

Use of our report

This report is made solely to the company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our

audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in a

Report of the Auditors and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to

anyone other than the company and the company's members as a body, for our audit work, for this report, or for the opinions we have

formed.

Robert Mitchell, BA CA (Senior Statutory Auditor)

for and on behalf of Farries, Kirk and McVean

Chartered Accountants

Statutory Auditors

Dumfries Enterprise Park

Heathhall

Dumfries

DUMFRIESSHIRE

DG1 3SJ

14th June 2019

TURNOVER

3

39,383,121

30,663,174

Cost of sales

(33,440,180

)

(25,843,503

)

GROSS PROFIT

5,942,941

4,819,671

Administrative expenses

(4,823,671

)

(4,015,467

)

1,119,270

804,204

Other operating income

5,053

7,211

OPERATING PROFIT

6

1,124,323

811,415

Interest payable and similar expenses

7

(56,454

)

(51,905

)

PROFIT BEFORE TAXATION

1,067,869

759,510

Tax on profit

8

(202,917

)

(147,096

)

PROFIT FOR THE FINANCIAL YEAR

864,952

612,414

PROFIT FOR THE YEAR

864,952

612,414

OTHER COMPREHENSIVE INCOME

-

-

TOTAL COMPREHENSIVE INCOME FOR THE YEAR

864,952

612,414

FIXED ASSETS

Tangible assets

10

556,217

404,556

CURRENT ASSETS

Stocks

11

7,528,671

4,410,793

Debtors

12

4,722,315

3,854,368

Cash at bank and in hand

2,576

174,460

12,253,562

8,439,621

CREDITORS

Amounts falling due within one year

13

(8,014,487

)

(4,920,969

)

NET CURRENT ASSETS

4,239,075

3,518,652

TOTAL ASSETS LESS CURRENT LIABILITIES

4,795,292

3,923,208

CREDITORS

Amounts falling due after more than one year

14

(195,376

)

(102,151

)

PROVISIONS FOR LIABILITIES

19

(37,868

)

(26,461

)

NET ASSETS

4,562,048

3,794,596

CAPITAL AND RESERVES

Called up share capital

20

390,000

390,000

Capital redemption reserve

21

10,000

10,000

Retained earnings

21

4,162,048

3,394,596

SHAREHOLDERS' FUNDS

4,562,048

3,794,596

The financial statements were approved and authorised for issue by the Board of Directors on 14th June 2019 and were signed on its behalf by:

W F Montgomerie - Director

Called up

Capital

share

Retained

redemption

Total

capital

earnings

reserve

equity

£

£

£

£

Balance at 1st October 2016

390,000

2,782,182

10,000

3,182,182

Changes in equity

Total comprehensive income

-

612,414

-

612,414

Balance at 30th September 2017

390,000

3,394,596

10,000

3,794,596

Changes in equity

Dividends

-

(97,500

)

-

(97,500

)

Total comprehensive income

-

864,952

-

864,952

Balance at 30th September 2018

390,000

4,162,048

10,000

4,562,048

Cash flows from operating activities

Cash generated from operations

1

313,185

1,442,207

Interest paid

(42,610

)

(41,494

)

Interest element of hire purchase payments paid

(13,844

)

(10,411

)

Tax paid

(133,108

)

(40,572

)

Net cash from operating activities

123,623

1,349,730

Cash flows from investing activities

Purchase of tangible fixed assets

(54,302

)

(75,621

)

Sale of tangible fixed assets

24,086

49,520

Net cash from investing activities

(30,216

)

(26,101

)

Cash flows from financing activities

Inter-company loan

(226,568

)

(40,416

)

Stocking loan

13,158

80,567

Capital repayments in year

(195,965

)

(142,181

)

Equity dividends paid

(97,500

)

-

Net cash from financing activities

(506,875

)

(102,030

)

(Decrease)/increase in cash and cash equivalents

(413,468

)

1,221,599

Cash and cash equivalents at beginning of year

2

174,460

(1,047,139

)

Cash and cash equivalents at end of year

2

(239,008

)

174,460

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

2018

2017

£

£

Profit before taxation

1,067,869

759,510

Depreciation charges

233,004

190,017

Profit on disposal of fixed assets

(24,086

)

(30,020

)

Finance costs

56,454

51,905

1,333,241

971,412

Increase in stocks

(3,117,878

)

(208,781

)

Increase in trade and other debtors

(641,378

)

(1,066,029

)

Increase in trade and other creditors

2,739,200

1,745,605

Cash generated from operations

313,185

1,442,207

2.	CASH AND CASH EQUIVALENTS

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

amounts:

Year ended 30th September 2018

30.9.18

1.10.17

£

£

Cash and cash equivalents

2,576

174,460

Bank overdrafts

(241,584

)

-

(239,008

)

174,460

Year ended 30th September 2017

30.9.17

1.10.16

£

£

Cash and cash equivalents

174,460

1,957

Bank overdrafts

-

(1,049,096

)

174,460

(1,047,139

)

1.	STATUTORY INFORMATION

James Gordon Limited is a private company, limited by shares , registered in Scotland. The company's registered number and

registered office address can be found on the Company Information page.

The presentation currency of the financial statements is the Pound Sterling (£).

2.	ACCOUNTING POLICIES

Basis of preparing the financial statements

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

Significant judgements and estimates

The following represent the significant judgements and estimates in the financial statements:

Depreciation as detailed separately in the Tangible Fixed Assets policy.

Provision for bad debt which is calculated on a specific case by case basis.

Provision against warranty debt which is also calculated specifically.

Provision against both parts and machinery stock values. Machinery stock provisions are specifically calculated on individual

machinery where necessary. The company provide in full against all parts stock greater than 18 months old.

Turnover

Turnover represents the net invoiced sales of goods and services, excluding value added tax. The company sells agricultural

machinery and supplies as well as repairing such machinery. It also sells road fuels and ancillary goods from a petrol station in

Castle Kennedy.

The point of sale for machinery and goods is the point of supply to the customer except in some occasional cases where a special

order might mean point of sale is at point of order. Repair work is invoiced on completion of the work involved to customer

satisfaction. Any deposits taken are not recognised as sales but instead credited against a customer account until such times as the

goods are supplied.

Tangible fixed assets

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

Plant and machinery

-

25% on cost and 20% on cost

Motor vehicles

-

25% on cost

Amounts written off each asset over the estimated useful life represent cost less residual value.

Stocks

Parts stocks, not individually identifiable, are valued on an average cost basis. Fuel stocks are valued at most recent cost price.

Individual items of agricultural machinery are valued at the lower of actual cost and net realisable value. Obsolete items and slow

moving items are not valued.

Taxation

Taxation for the year comprises current and deferred tax. Tax is recognised in the Income Statement, except to the extent that it

relates to items recognised in other comprehensive income or directly in equity.

Current or deferred taxation assets and liabilities are not discounted.

Current tax is recognised at the amount of tax payable using the tax rates and laws that have been enacted or substantively

enacted by the balance sheet date.

Deferred tax

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

Timing differences arise from the inclusion of income and expenses in tax assessments in periods different from those in which

they are recognised in financial statements. Deferred tax is measured using tax rates and laws that have been enacted or

substantively enacted by the year end and that are expected to apply to the reversal of the timing difference.

Unrelieved tax losses and other deferred tax assets are recognised only to the extent that it is probable that they will be recovered

against the reversal of deferred tax liabilities or other future taxable profits.

Hire purchase and leasing commitments

Assets obtained under hire purchase contracts or finance leases are capitalised in the balance sheet. Those held under hire

purchase contracts are depreciated over their estimated useful lives. Those held under finance leases are depreciated over their

estimated useful lives or the lease term, whichever is the shorter.

The interest element of these obligations is charged to profit or loss over the relevant period. The capital element of the future

payments is treated as a liability.

Rentals paid under operating leases are charged to profit or loss on a straight line basis over the period of the lease.

Pension costs and other post-retirement benefits

The company contributes to a defined contribution pension scheme. Contributions payable to the pension scheme are charged to

profit or loss in the period to which they relate.

Financial instruments

Cash and cash equivalents

Cash and cash equivalents comprise cash on hand and call deposits, and other short term highly liquid investments that are

readily convertible to a known amount of cash and are subject to an insignificant risk of change in value.

Trade debtors

Trade debtors are amounts due from customers for the sale of goods and services performed in the ordinary course of business.

Trade debtors are recognised initially at the transaction price and represent the full value of the goods and services charged to

customers, including any amounts charged on for third parties.

Trade Creditors

Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from

suppliers.

Accounts payable are classified as current liabilities if the company does not have an unconditional right, at the end of the

reporting period, to defer settlement of the creditor for at least twelve months after the reporting date. If there is an unconditional

right to defer settlement for at least twelve months after the reporting date they are presented as non current liabilities.

Borrowings

Interest bearing borrowings are initially recorded at transaction price, net of transaction costs. Subsequently they are measured at

amortised cost using the effective interest rate method, less impairment.

Interest expense is recognised on the basis of the effective interest rate method and is included in interest payable and similar

charges.

Borrowings are classified as current liabilities unless the company has an unconditional right to defer settlement of the liability

for at least twelve months after the reporting date.

Share Capital

Ordinary shares are classified as equity. Equity instruments are measured at the fair value of the cash or other resources received

or receivable, net of the direct costs of issuing the equity instruments. If payment is deferred and the time value of money is

material, the initial measurement is on a present value basis.

3.

TURNOVER

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

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

2018

2017

£

£

Sale of goods

37,490,039

29,030,377

Rendering of services

1,893,082

1,632,797

39,383,121

30,663,174

4.	EMPLOYEES AND DIRECTORS

2018

2017

£

£

Wages and salaries

2,600,330

2,229,979

Social security costs

248,830

217,681

Other pension costs

159,962

152,483

3,009,122

2,600,143

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

2018

2017

Directors

3

3

Office and management

7

7

Direct employees

76

67

86

77

5.	DIRECTORS' EMOLUMENTS

2018

2017

£

£

Directors' remuneration

226,804

223,353

Directors' pension contributions to money purchase schemes

26,369

27,239

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

Money purchase schemes

3

3

Information regarding the highest paid director is as follows:

2018

2017

£

£

Emoluments etc

100,201

99,787

Pension contributions to money purchase schemes

12,870

13,267

The total remuneration in respect of key management personnel is the same as that of directors' remuneration.

6.	OPERATING PROFIT

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

2018

2017

£

£

Other operating leases

4,460

-

Depreciation - owned assets

107,390

62,400

Depreciation - assets on hire purchase contracts

125,614

127,618

Profit on disposal of fixed assets

(24,086

)

(30,020

)

Auditors' remuneration

16,500

15,000

Auditors' remuneration for non audit work

7,500

7,250

7.

INTEREST PAYABLE AND SIMILAR EXPENSES

2018

2017

£

£

Bank interest

-

1

Montgomerie Holdings interest

-

15,000

Stocking loan interest

42,610

26,493

Hire purchase

13,844

10,411

56,454

51,905

8.

TAXATION

Analysis of the tax charge

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

2018

2017

£

£

Current tax:

UK corporation tax

191,511

133,108

Corporation tax interest

-

9

Total current tax

191,511

133,117

Deferred tax

11,406

13,979

Tax on profit

202,917

147,096

UK corporation tax has been charged at 19% (2017 - 19.50%).