Harlow Bros. Limited - Limited company accounts 18.2

REGISTERED NUMBER: 00907445 (England and Wales)

Strategic Report, Report of the Directors and

Financial Statements for the Year Ended 30 June 2019

for

Harlow Bros. Limited

Page

Company Information

1

Strategic Report

2

Report of the Directors

8

Report of the Independent Auditors

10

Income Statement

12

Other Comprehensive Income

13

Balance Sheet

14

Statement of Changes in Equity

15

Notes to the Financial Statements

16

DIRECTORS:

J R Harlow

R V D Harlow

P V J Harlow

J Sharkey

N Sabey

L Christie

SECRETARY:

D Poli

REGISTERED OFFICE:

Hathern Road

Long Whatton

Loughborough

Leicestershire

LE12 5DE

REGISTERED NUMBER:

00907445 (England and Wales)

SENIOR STATUTORY AUDITOR:

Christopher David Hutton FCCA

AUDITORS:

Charnwood Accountants & Business Advisors LLP

Statutory Auditor

The Point

Granite Way

Mountsorrel

Loughborough

Leicestershire

LE12 7TZ

The directors present their strategic report for the year ended 30 June 2019.

REVIEW OF BUSINESS

We aim to present a balanced and comprehensive review of the development and performance of our business during the

year and its position at the year end.

Our review is consistent with the size and non-complex nature of our business and is written in the context of the risks and

uncertainties we face.

The company is a wholly-owned subsidiary of Harlow Bros Holdings Ltd and operates in the timber industry. The principal

activities of the company for the year under review are that of a timber distributor and manufacturer. We provide products to

a wide range of customers within the construction sector and look to create value at the various stages of the selling process.

The business activities are undertaken through the network of branches located across the Midlands region. The business is

family run and we pride ourselves on having this ethos for excellent customer service run through our network of branches to

enhance our customers experience in doing business with us, through having knowledgeable staff and offering a wide

product range at competitive prices.

Results and performance

We are pleased to report a satisfactory year of trading results for the company, as set out on pages 12 to 30, which show an

increase in turnover as the company continues to see a general improvement in trade particularly from the housing building

sector, which is continuing to show resilience in the wake of Brexit despite the continued uncertainty as to the future trading

impacts and the wider economy. Our customers appear to be trading well and remain positive for the immediate future with a

strong order book and results meaning we are set to continue to perform strongly after the year end.

The results reflect the company's strong underlying trading activities whilst we drive to improve the efficiency and focus of

our operations. The company has made a considerable effort to control its costs in recent years and strong overhead control

at both head office and branch level continues to be a key focus of management. We have continued to invest in all areas of

the business, such as the vehicle fleet, and improving the customer experience to ensure that we remain competitive whilst

offering quality products and customer service. Stock levels held across the branches have increased partly due to the

increase in unit cost of timber as well as volume held at the year end as we continue to work with our supply chain to source

the most competitively priced products without compromising on quality. Trade debtors have continued to show good debtor

days figures in line with our targets, which due to the processes and credit control team in place, means we are reporting

another low bad debt charge for the year of 0.2% of turnover.

The gross margin has decreased slightly on previous years partly due to the continued increased timber costs and the impact

on prices caused by the weakness in sterling, resulting in some lower margins being achieved on some of the product range.

The directors are aware of this and are continually looking to source the best available product at the most competitive prices

by utilising their industry expertise and buying power.

Our supplier procurement strategy follows the Timber Trade Federation (TTF) Responsible Purchasing Policy (RPP). We

continue to develop our range of certified Forest Stewardship Council (FSC) and Programme for the Endorsement of Forest

Certification (PEFC) products. To ensure we supply traceable and sustainable quality products we assess all suppliers

continually.

All trading branches have targets and goals set over the short and medium term to ensure that they monitor opportunities for

growth and to mitigate threats throughout the year, whilst reviewing their working practices to continually improve service

levels to our customers. We will continue to invest in our branch premises and staff to enable us to expand and enhance our

product offering across the full range of our products.

Staff numbers have remained stable overall for this year; we recognise that our staff are a major asset for the company. We

are always looking to continually improve the knowledge of all our staff through training and personal development. This

includes investment in trainees, which are important to ensure that we have new talent coming through the business, and

continued investment in internal systems to manage the growing workforce needs.

REVIEW OF BUSINESS CONTINUED

Overall we are satisfied with the current years trading results and we are also pleased to report a growth in the value of

shareholders' funds of the company for the year whilst maintaining a strong balance sheet which enables us to implement our

growth and investments plans for the future. We are confident that this will continue steadily for the foreseeable future, as we

continually aim to develop and grow the business further across our core trading areas.

Pension scheme

The company participates in a defined benefit pension scheme. As of 30 June 2019 the net surplus of the scheme was £3,240

compared to a deficit of £193,590 last year. Discount rates represented by yields on corporate bonds was at 2.3% for the

year along with decreases in inflation and pensionable pay. The decrease in liabilities that this produces has also been

supported by the increased investment asset performance in the scheme asset portfolio. In note 17 to the accounts we have

outlined the impact on the financial statements in more detail based on the actuarial report. The company had agreed a

deficit recovery plan with the trustees with the aim to eliminate the deficit at the time by additional contributions

commencing from April 2016. The company regularly assesses the risks in the pension and the potential impact on the

company. The scheme ceased to future accruals on the 31st March 2019. Furthermore, the company is in the process of

closing down the defined benefit scheme with the scheme administrator and actuary and they are currently obtaining final

valuations on all scheme assets to be able to reach agreement with the scheme members for their transfer values

The calculation of the pension deficit or surplus remains very sensitive to changes in the underlying assumptions.

PRINCIPAL RISKS AND UNCERTAINTIES

The process of risk management is applied through a combination of policies, procedures and internal controls. All policies

are subject to Board approval and ongoing review by management. Compliance with regulation, legal and ethical standards

is a high priority for the company to ensure they are compliant and able to continue trading successfully.

The finance team is responsible for ensuring that effective internal controls exist to manage the financial risks and that these

controls operate effectively for the benefit of the business.

We the directors endeavour to identify the risks that the company faces on a day to day basis. This is to ensure we have the

financial strength and operational capacity to support the growth of the business. The current risk factors below are those

that are considered by the board to be material to the company. However, we also recognise that we operate in a fast paced

commercial environment which is constantly evolving, where new risks may appear or immaterial risks may become more

important, and the directors will develop appropriate strategies as these risks appear.

Competitive market pressure is an ongoing risk for the company. To mitigate this risk the company strives to understand its

customers' requirements, markets and competitors, to ensure we continue to provide quality products and seek expansion by

organic growth. Given the potential economic volatility seen in our core business markets, we are continuously monitoring

trends and looking for ways in which to be more efficient and improve our working capital requirements. The production of

regular financial information helps the board to identify and assess current trends.

Parts of our business, such as timber raw material purchasing, are affected by fluctuations in price and supply of key

materials, although purchasing policies and practices in place seek to mitigate, where practicable, such risks. We secure

material from our long standing supply partners which ensures we can meet our production requirements.

Other than the general uncertainty that surrounds the decision to leave the European Union, Brexit has not yet had a

significant impact on the business or operations so far. The company's relationship with its supply partners in Europe is of

great importance to us and we have the flexibility to procure timber from a wide range of reliable supply sources to help

mitigate changes in market conditions.

PRINCIPAL RISKS AND UNCERTAINTIES CONTINUED

The company purchases goods from international markets and is therefore exposed to foreign currency movements on such

purchases. The company manages this risk by purchasing and retaining cash funds in these currencies.

We have continuously worked to build a robust and flexible business by attracting and retaining the right quality staff to help

us achieve this. By doing so we have a good financial position to deal with any situations which have arisen during the year

and which we expect to face in the future.

FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES

The activities of the company expose it to a number of financial risks during the normal course of the company's business.

The company aims to limit undue exposure to business and financial risks and ensure sufficient working capital exists to

fund operations and to mitigate any potential negative effects on the company's assets and profitability. The directors

consider such risks and uncertainties to the business at this point in time are:

Currency risk

As the company trades in the UK, but purchases from various overseas markets, margins can fluctuate in line with changes in

currency spot rates against the value of sterling for our purchases. This is mitigated in part by the company holding foreign

currency accounts from which such transactions will flow through.

Customer mix

There is a risk that the company becomes too dependent on a particular customer and product range and efforts are made to

ensure that our exposure in this respect is minimised by continually striving to expand the range of products and services on

offer to enhance the customer experience and build relationships with key customers.

Credit risk

There is a risk that one party to a financial instrument will cause a financial loss for the other party by failing to discharge an

obligation. Company policies are aimed at minimising such losses, and require that deferred terms are only granted to

customers who demonstrate an appropriate payment history and satisfy credit worthiness procedures. Details of the

company's debtors are shown in the notes to the financial statements.

Pension funding risk

The company operates a defined benefit plan, although this was ceased to future accruals on 31st March 2019, as noted in

the notes to the financial statements. The funding of the pension liabilities at the year end was 88% equities and 12% other

assets. The company is subject to funding risks, which could derive from poorly managed performance of the equity

investments. Such risks could lead to increased contributions due from the company to the pension scheme.

The company is required by law to maintain a minimum funding level in relation to its obligations to provide pensions to

members of the pension scheme. This level of funding is dependent on a series of external factors, such as investment

performance, life expectancy and gilt yields. Significant changes in these areas and actuarial assumptions underlying the

calculation of plan liabilities for these could materially impact the company's trading results and can also have a significant

effect on the funding levels.

This risk is mitigated by the fact that the scheme has been closed to new entrants for many years. The board regularly

reviews the investment strategy and performance of the pension scheme investments to ensure that plan assets are performing

and growing in line with the plan requirements to cover expected liabilities.

FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES CONTINUED

Competitor risk

The company operates in a highly competitive market balancing both customer requirements and market pressures. The

directors review and monitor these factors to ensure the company's competitiveness is upheld to enable the company to

maintain its long term relationships with key customers and reputation for quality. We aim to improve, strengthen and

maintain the brand to ensure we maintain the right levels of investment and innovation in our customer offerings.

Liquidity risk and going concern

The company is exposed to liquidity risk as sufficient funds are required to support trading and financing activities. The

company regularly monitors its liquidity position to ensure that sufficient funds are available to meet both current and future

requirements.

The company's cash position removes some elements of the financial risks any business faces. With the above business risks

and uncertainties in mind, we are aware that any plans for the future development of the business may be subject to

unforeseen future events outside of our control.

Health and Safety

We are conscious of our corporate responsibilities to all our stakeholders and to society as a whole. Health and safety,

environmental matters, staff training and equal opportunities are key areas relevant to the company's business activities.

We are keen to remain proactive in assessing and minimising the risks in all areas of the business and educating the

workforce to provide as safe a working environment as possible for our staff.

We employ a full-time Health and Safety Officer who reports to the board regularly on working practices and improvements

that can be made to increase safety for the staff. Employees are encouraged to take personal responsibility for making sure

their actions and behaviour maintain safety for all staff members during the working day.

Environmental

The directors recognise that the company has a responsibility to the environment, customers, suppliers and staff to operate its

commercial activities using well-managed forests and to reduce any negative environmental or social impact of its trading as

far as is reasonably practical for the company.

We therefore make it a priority to ensure our timber is legally harvested and comes from well managed forests. The company

recognises that the independent certification of forests and of the supply chain is the best means of providing assurances of

this. Where possible we purchase material certified by the Programme for the Endorsement of Forest Certification schemes

(PEFC) or the Forest Stewardship Council (FSC).

The company has third party audits of their chain of custody for timber supplied as certified by PEFC, FSC and other

schemes. This is to ensure that claims made about certification can be proven and our certifications for these can be located

on our website for customers and other stakeholders to view.

As part of our commitment to environmental awareness and best practice the company holds an ISO14001 certificate and

operates within this environmental management scheme framework in a compliant manner.

KEY PERFORMANCE INDICATORS

We consider that our key financial performance indicators are those that communicate the financial performance and

strength of the company, these being turnover, gross margin, operating profit and earnings before interest tax depreciation

and amortisation (EBITDA). The company also closely monitors other internal KPI's for example;

- Vehicle statistics on usage & efficiency

- Individual employee performance in line with our HR objectives

- The reason and level of sales credit notes raised

- Daily sales performance and margin threshold reviews

We continually aim to develop and grow our business in order to increase our market share, whilst striving to maintain the

gross margin on our products. As the prime measure of our economic output, revenue growth is key to measuring

shareholder return and the success of our expansion strategies. Turnover for the year increased approximately 22% despite

the increased competition in the market place and as a result of our focus on offering the best possible products and service

to our customer base.

Gross margin provides an indication of the quality of turnover growth and is also a measure of value added by the company,

reflecting the quality of the goods and services offered. The gross margin for the year has increased due to the fall in direct

purchase costs. These however, began to rise steadily into the new year and we addressed this trend as soon as possible

through our early identification and change to our purchasing policies.

Overall, the company's EBITDA has improved to £2.6m (2018: £1,1m), with operating profit increasing to £1.9m (2018:

£0.5m), which this trend follows through to profit before tax increasing to £1.9m (2018: £0.5m). Profit after taxation is

£1.5m (2018: £0.3m) with the defined benefit pension adjustment as shown in note 17 giving total comprehensive income of

£1.6m for the year. This has enabled the company to declare a dividend for the year as noted in the directors report leaving

£0.6m retained by the company to be added to the company reserves.

FINANCIAL INSTRUMENTS

A summary of the company financial instruments and related disclosures affecting the financial statements are set out in the

notes to the accounts. The financial risk management objectives and policies of the entity and its exposure to related risks are

covered above.

FUTURE DEVELOPMENTS

The directors aim to maintain the management policies which have resulted in the company's growth in recent years. The

directors anticipate the business environment will remain competitive and challenging, but they believe that the company is

in a good financial position to meet these challenges, with new product lines being introduced throughout the year and the

continuing review of operating and cost efficiencies. The company is always looking for ways to increase its market share

through delivering new products, ways to market and added value services to its customer base and, despite the uncertainty

surrounding Brexit and the economy in general, we are hopeful of delivering another good set of results for the upcoming

year.

EMPLOYEES

Details of the number of employees and related costs can be found in Note 4 to the financial statements.

The company's ability to achieve its commercial objectives and to serve the needs of its customers in a profitable and

friendly manner depends on the contribution of its employees. Employees are encouraged to develop their contribution to the

business whatever department in the business they work in. The company aims to keep employees up to date with financial

and other information as the directors and management board see fit such as engaging through meetings and notice boards.

The company's employment policies do not discriminate between employees, or potential employees, on the grounds of age,

gender, disability, sexual orientation, ethnic origin or religious belief. Every effort would be made to ensure that employment

would continue for any employees that become disabled including arranging appropriate training. It is our policy that career

development, training and opportunities for promotion of disabled persons should, as far as possible, be identical with that of

other employees in the business.

The criteria used for selection or promotion is the suitability of any applicant for the job.

It is our policy to train and develop employees to ensure that they are best equipped to undertake their daily tasks for which

they are employed, and to provide the opportunity for career development without discrimination. Training and development

is provided and is available to all levels and categories of staff.

ON BEHALF OF THE BOARD:

R V D Harlow - Director

23 March 2020

The directors present their report with the financial statements of the company for the year ended 30 June 2019.

DIVIDENDS

The total distribution of dividends for the year ended 30 June 2019 will be £ 1,000,000 .

DIRECTORS

The directors shown below have held office during the whole of the period from 1 July 2018 to the date of this report.

J R Harlow

R V D Harlow

P V J Harlow

J Sharkey

Other changes in directors holding office are as follows:

N Sabey - appointed 1 November 2018

L Christie - appointed 1 November 2018

DISCLOSURE IN THE STRATEGIC REPORT

The company has chosen in accordance with Companies Act 2006, s. 414C(11) to set out in the company's strategic report

information required by Schedule 7 of the Large and Medium-sized Companies and Groups (Accounts and Reports)

Regulations 2008 to be contained in the directors' report. It has done so in respect of future developments and financial

instruments.

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, Charnwood Accountants & Business Advisors LLP, have expressed their willingness to continue in office as

auditors and will be proposed for re-appointment at the forthcoming Annual General Meeting in accordance with Section

485 & 487 of the Companies Act 2006.

ON BEHALF OF THE BOARD:

R V D Harlow - Director

23 March 2020

Opinion

We have audited the financial statements of Harlow Bros. Limited (the 'company') for the year ended 30 June 2019 which

comprise the Income Statement, Other Comprehensive Income, Balance Sheet, Statement of Changes in Equity 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 30 June 2019 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 eight, 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.

Christopher David Hutton FCCA (Senior Statutory Auditor)

for and on behalf of Charnwood Accountants & Business Advisors LLP

Statutory Auditor

The Point

Granite Way

Mountsorrel

Loughborough

Leicestershire

LE12 7TZ

24 March 2020

TURNOVER

3

42,046,713

34,442,967

Cost of sales

34,969,523

29,175,713

GROSS PROFIT

7,077,190

5,267,254

Distribution costs

336,974

172,203

Administrative expenses

4,831,752

4,622,348

5,168,726

4,794,551

1,908,464

472,703

Other operating income

9,628

15,638

OPERATING PROFIT

5

1,918,092

488,341

Interest receivable and similar income

7,737

4,018

1,925,829

492,359

Interest payable and similar expenses

6

8

-

Other finance costs

17

1,000

8,000

1,008

8,000

PROFIT BEFORE TAXATION

1,924,821

484,359

Tax on profit

7

419,181

180,759

PROFIT FOR THE FINANCIAL YEAR

1,505,640

303,600

PROFIT FOR THE YEAR

1,505,640

303,600

OTHER COMPREHENSIVE INCOME

Net actuarial gain / (loss)

53,000

80,000

Income tax relating to other comprehensive income

-

-

OTHER COMPREHENSIVE INCOME FOR THE YEAR, NET OF INCOME TAX

53,000

80,000

TOTAL COMPREHENSIVE INCOME FOR THE YEAR

1,558,640

383,600

FIXED ASSETS

Intangible assets

9

-

-

Tangible assets

10

2,322,883

2,332,476

2,322,883

2,332,476

CURRENT ASSETS

Stocks

11

7,172,705

7,268,522

Debtors

12

7,931,472

7,156,823

Cash at bank

2,440,695

1,902,107

17,544,872

16,327,452

CREDITORS

Amounts falling due within one year

13

6,318,991

5,472,655

NET CURRENT ASSETS

11,225,881

10,854,797

TOTAL ASSETS LESS CURRENT LIABILITIES

13,548,764

13,187,273

PROVISIONS FOR LIABILITIES

15

(48,926

)

(49,245

)

PENSION ASSET/(LIABILITY)

17

3,240

(193,590

)

NET ASSETS

13,503,078

12,944,438

CAPITAL AND RESERVES

Called up share capital

16

105,005

105,005

Capital redemption reserve

46,995

46,995

Retained earnings

13,351,078

12,792,438

SHAREHOLDERS' FUNDS

13,503,078

12,944,438

The financial statements were approved by the Board of Directors on 23 March 2020 and were signed on its behalf by:

R V D Harlow - Director

Called up

Capital

share

Retained

redemption

Total

capital

earnings

reserve

equity

£

£

£

£

Balance at 1 July 2017

105,005

12,408,838

46,995

12,560,838

Changes in equity

Total comprehensive income

-

383,600

-

383,600

Balance at 30 June 2018

105,005

12,792,438

46,995

12,944,438

Changes in equity

Dividends

-

(1,000,000

)

-

(1,000,000

)

Total comprehensive income

-

1,558,640

-

1,558,640

Balance at 30 June 2019

105,005

13,351,078

46,995

13,503,078

1.	STATUTORY INFORMATION

Harlow Bros. Limited is a private company, limited by shares , registered in England and Wales. 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 (£).

The nature of the company’s operations and its principal activities are set out in the Strategic Report.

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 and under the

provision of The Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008. The

financial statements have been prepared under the historical cost convention.

The preparation of financial statements requires the use of certain critical accounting estimates. It also requires

management to exercise its judgement in the process of applying the company accounting policies. The areas

involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to

the financial statements, are disclosed in note 2 below.

These policies have been consistently applied to all the years presented, unless otherwise stated.

Financial Reporting Standard 102 - reduced disclosure exemptions

The company has taken advantage of the following disclosure exemptions in preparing these financial statements, as

permitted by FRS 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland":

•

the requirements of Section 7 Statement of Cash Flows;

•

the requirement of Section 33 Related Party Disclosures paragraph 33.7.

The company has taken advantage of the exemption, under paragraph 1.12(b) of FRS 102, from preparing a

statement of cash flows, on the basis that it is a qualifying entity and its ultimate parent company, Harlow Bros

Holdings Limited, includes the company’s cash flows in its consolidated financial statements.

Significant judgements and estimates

In the application of the company's accounting policies, which are described in the accounting policies below,

management is required to make judgements, estimates and assumptions about the carrying values of assets and

liabilities that are not readily apparent from other sources. The estimates and underlying 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 if the revision affects only that period, or in the period of the

revision and future periods if the revision affects both current and future periods.

Judgements

In preparing these financial statements, the directors have made the following key judgements that have a significant

effect on the amounts recognised in the financial statements as described below.

- Determine whether there are indicators of impairment of the company's tangible and intangible assets along with

residual values and asset lives. The residual value is the net realisable value of an asset at the end of its useful

economic life. The company has made an assessment of the residual values that are appropriate for the business and

reviews this assessment annually. Note 9 provides details of the value of fixed assets capitalised.

Estimates and assumptions

The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, that

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

next financial year, are described below. The Company based its assumptions and estimates on parameters available

when the financial statements were prepared. Existing circumstances and assumptions about future developments,

however, may change due to market changes or circumstances arising that are beyond the control of the Company.

Such changes are reflected in the assumptions when they occur.

a) Establishing useful economic lives for depreciation purposes of property, plant and equipment

Long-lived assets, consisting primarily of property, plant and equipment, comprise a significant portion of the

total assets. The annual depreciation charge depends primarily on the estimated useful economic lives of each type of

asset and estimates of residual values. The directors regularly review these asset useful economic lives and change

them as necessary to reflect current thinking on remaining lives in light of prospective economic utilisation and

physical condition of the assets concerned. Changes in asset useful lives can have a significant impact on

depreciation and amortisation charges for the period. Detail of the useful economic lives is included in the tangible

fixed asset accounting policy.

b) Providing for bad and doubtful debts

The company makes an estimate of the recoverable value of trade and other debtors. The company uses estimates

based on historical experience in determining the level of debts, which the company believes, will not be collected.

These estimates include such factors as the current credit rating of the debtor, the ageing profile of debtors and

historical experience. Any significant reduction in the level of customers that default on payments or other significant

improvements that resulted in a reduction in the level of bad debt provision would have a positive impact on the

operating results. The level of provision required is reviewed on an on-going basis.

c) Defined benefit pension scheme

The company has an obligation to pay pension benefits to certain employees. The cost of these benefits and the

present value of the obligation depend on a number of factors which are sensitive to the actuarial assumptions

included within the report by the actuary, including; life expectancy, salary increases, asset valuations and the

discount rate on corporate bonds. The actuary estimates these factors in determining the net pension obligation in the

balance sheet as arrived at in their report to management. The assumptions reflect historical experience and current

trends. The size of the plan assets is also sensitive to asset return levels and the level of contributions paid by the

company. See note 16 for the disclosures relating to the defined benefit pension scheme.

d) Stock provisioning

At each reporting date judgement is used by management to establish the net realisable value of stock. Provisions are

established for net realisable value where appropriate and are made are based on facts available at the time. The level

of provision required is reviewed on an on-going basis.

In arriving at an estimate for the net realisable value of stock, judgement is required in assessing their likely

value on realisation taking into account market and technological changes associated with the demand for the

product line.

Revenue recognition

Turnover represents the amounts (excluding value added tax) derived from the provision of goods and services to

customers during the year and includes net leasing income (relating to profit) receivable from finance leases.

Revenue is recognised when the significant risks and rewards of the goods or services provided have transferred to

the buyer, the amount of revenue can be measured reliably and it is probable that the economic benefits associated

with the transaction will flow to the company.

Revenue is measured at the fair value of the consideration receivable from the sale of goods and services to third

parties after deducting discounts. Revenue includes duties which the company pays as principal, but excludes

amounts collected on behalf of other parties, such as value added tax or other sales taxes.

Revenue of the company comprises the following key streams:

Sale of goods

Revenue on the sale of goods delivered is recognised when goods have been dispatched to the customer. No revenue

is recognised on work in progress.

Intangible assets

Intangible assets are initially measured at cost. After initial recognition, intangible assets are measured at cost less

any accumulated amortisation and any accumulated impairment losses.

Tangible fixed assets

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

Improvements to property

-

at varying rates on cost

Plant, machinery, fixtures and computers

-

at varying rates on cost

Motor vehicles

-

25% on cost

Tangible assets are stated at cost less accumulated depreciation and accumulated impairment losses. Cost includes

the original purchase price, costs directly attributable to bringing the asset to its working condition for its intended

use.

Stocks

Stocks are stated at the lower of cost and net realisable value, being the estimated selling price less costs to

complete and sell, and after making due allowance for obsolete and slow moving items.

The cost of stock is calculated on the weighted average cost principle on a first in first out basis and includes

expenditure incurred in acquiring stock, production or conversion costs, and other costs incurred in bringing them to

their existing location and condition. Stocks are recognised as an expense in the period in which the related revenue

is recognised.

Cost for raw materials and consumables are at the purchase cost to the company. Cost for Work in progress and

finished goods includes all direct expenditure.The cost of work in progress and finished goods includes

production overheads and the attributable proportion of indirect overheads based on the normal level of activity.

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

selling price, in the ordinary course of business, less costs to complete and sell. The impairment provision is

determined primarily by future demand forecasts. The write down is measured as the difference between the

calculated cost of the stock and market based upon assumptions about future demand and charged to the provision

for stock, which is a component of cost of sales.

Financial instruments

The company only enters into basic financial instruments transactions that result in the recognition of financial assets

and liabilities like trade and other accounts receivable and payable and loans to/from related parties.

Debt instruments, like loans and other accounts receivable and payable, are initially measured at present value of the

future payments and subsequently at amortised cost using the effective interest method. Debt instruments that are

payable or receivable within one year, typically trade payables or receivables, are measured, initially and

subsequently, at the undiscounted amount of the cash or other consideration, expected to be paid or received.

However, if the arrangements of a short-term instrument constitute a financing transaction, like the payment of a

trade debt deferred beyond normal business terms or financed at a rate of interest that is not a market rate or in case

of an outright short-term loan not at market rate, the financial asset or liability is measured, initially and

subsequently, at the present value of the future payment discounted at a market rate of interest for a similar debt

instrument.

Trade and other debtors

Trade and other debtors are initially recognised at the transaction price and thereafter stated at amortised cost using

the effective interest method, less impairment losses for bad and doubtful debts except where the effect of

discounting would be immaterial. In such cases, the debtors are stated at cost less impairment losses for bad and

doubtful debts.

A provision for impairment of trade debtors is established when there is objective evidence that the company will not

be able to collect all amounts due according to the original terms of debtors. The amount of the provision is

determined as the difference between the asset's carrying amount and the present value of estimated future cash

flows, and is recognised in the profit & loss in operating expenses.

Trade and other creditors

Trade and other creditors are initially recognised at fair value and thereafter stated at amortised cost using the

effective interest method unless the effect of discounting would be immaterial, in which case they are stated at cost.