Harlow Bros Holdings Ltd - Limited company accounts 20.1

REGISTERED NUMBER: 07582674 (England and Wales)

for

Page

Company Information  

1

Group Strategic Report  

2

Report of the Directors  

9

Report of the Independent Auditors  

12

Consolidated Income Statement  

15

Consolidated Other Comprehensive Income  

17

Consolidated Balance Sheet  

18

Company Balance Sheet  

19

Consolidated Statement of Changes in Equity  

20

Company Statement of Changes in Equity  

21

Consolidated Cash Flow Statement  

22

Notes to the Consolidated Cash Flow Statement  

23

Notes to the Consolidated Financial Statements  

24

DIRECTORS:

J R Harlow

P V J Harlow

R V D Harlow

D Poli

SECRETARY:

D Poli

REGISTERED OFFICE:

c/o Harlow Bros Limited

Hathern Road

Long Whatton

Loughborough

Leicestershire

LE12 5DE

REGISTERED NUMBER:

07582674 (England and Wales)

SENIOR STATUTORY AUDITOR:

Mr 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 of the company and the group for the year ended 30 June 2020.

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.

Principal activities and business model

The company's principal activity is that of a holding company. The Group operates in the timber industry. The principal activities of the Group for the year under review are that of a timber distributor and manufacturer of trusses and flooring along with the retailing of related building materials.

The core business activities are undertaken through the network of branches primarily located across the Midlands region. The business is family run and we pride ourselves on our ethos for providing excellent customer service through our network of branches and businesses, our knowledgeable staff and our wide ranging and competitively priced products.

The Group purchases its timber products from a variety of sustainable sources primarily throughout Europe. The majority of trade is derived from the building sector and merchants, however we also look to service the local builders working on smaller developments right down to customers undertaking repair projects. We look to add value to the timber we buy in addition to offering all our customers quality products at competitive pricing. We achieve this added value by treating and machining timber prior to resale to customer specifications before we distribute out through our reliable distribution service.

Two of the subsidiaries within the Group, Harlow Timber Systems Ltd and Harlow Timber Systems (Eastern) Ltd, manufacture and sell roof trusses and Engineered Timber products into the new house build market and trade with customers ranging from national house builders to more local property developers.

Results and performance

We are pleased to report a satisfactory year of trading results for the Group, as set out on pages 15 to 52, which show the effect of Covid 19 shutdowns throughout. Group turnover down 21.7% to £61.3m (2019: £78.3m). The largest contributor to this is the main trading company Harlow Bros Limited which accounts for approx. 55% of Group turnover through its network of 8 trading branches which predominantly services the building sector and local businesses.

The turnover decrease has resulted in a decrease in operating profit to £3.6m (2019: £4.9m).

The operating profit results have been impacted by the performance of Harlow Timber Systems (Eastern) Ltd in the year which has seen the company report an operating loss of £0.3m (2019 £0.9m loss). As a continued result in poor performance of the division the board undertook the decision in June 2019 to close down the Builders Merchant department as part of its strategic review of the company's operations. The focus was turned to scaling up production of the roof truss and Engineered timber divisions with the ongoing support of other Group businesses and personnel to meet growing demand. Within the financial statements, the impact of the discontinued operations has been reported. The shift in the focus of operations has already begun to show positive results, however, as with any exercise like this there is a time lag until results are realised within the year end financials.

REVIEW OF BUSINESS CONTINUED

The house building sector is continuing to show some resilience in the wake of the Pandemic and 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. We therefore hope to continue to perform strongly after the year end. The directors are optimistic that the Group's core businesses activities will continue to show improvements in line with our overall growth strategy plans.

The results reflect the Group's strong underlying trading activities, despite operating in a very competitive marketplace and the disruption of Covid 19. We strive to improve the efficiency and focus of our operations. The Group companies have made a considerable effort to control costs in recent years, and strong overhead control at both head office and subsidiary 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. Further investment is planned for the business across the Group which the board is confident will enable it to continue to grow and further strengthen its position for the future.

Stock levels held across the Group have decreased slightly. 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 again as a percentage of turnover.

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 entities, including the divisions within these, 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. Details of the number of employees and related costs can be found in Note 4 to the financial statements.

Overall we are satisfied with the current years trading results, in the circumstances, and we are 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 Group participates in a defined benefit pension scheme. As of 30 June 2020 there was a deficit for the scheme of £139,760 compared to a net surplus of £3,240 last year. In the main caused by discount rates represented by yields on corporate bonds falling to 1.6% for the year, along with decreases in inflation and pensionable pay. The increase in liabilities that this produces has also been supported by the increased investment asset performance in the scheme asset portfolio. In note 24 to the accounts we have outlined the impact on the financial statements in more detail based on the actuarial report, from which the directors review the risks in the pension scheme, which is principally under performance of equity investments, and the potential impact on the Group. The calculation of the pension deficit or surplus remains sensitive to changes in the underlying assumptions as reported by the actuaries in their report to us.

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 Group 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 Group 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 Group. 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 Group. 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 availability, although we have robust purchasing policies and practices in place that seek to mitigate such risks. We secure material from our long standing supply partners which ensures we can meet production requirements. We are not reliant on any one particular supplier or source allowing us to respond proactively to any sudden changes in market conditions.

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 Group'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.

The Group purchases goods from international markets and is therefore exposed to foreign currency movements on such purchases. The Group 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 Group expose it to a number of financial risks during the normal course of the Group's business. The Group aims to limit undue exposure to business and financial risks and ensure sufficient working capital exists to fund operations, take opportunities to make additional investments and to mitigate any potential negative effects on the Group's assets and profitability. The directors consider such risks and uncertainties to the business at this point in time are:

Currency risk

As the Group 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 Group holding foreign currency accounts from which such transactions will flow through.

Customer mix

There is a risk that the Group 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

Is the risk that a counterparty will default on its contractual obligations resulting in a financial loss to the Group.

The objective of the Group in managing its credit risk to ensure that this risk is managed in line with the Group's risk appetite. 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. The Group 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 Group's debtors are shown in the notes to the financial statements.

Pension funding risk

The Group 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 86% equities and 14% other assets. The Group 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 Group to the pension scheme.

The Group 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 Group'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.

Competitor risk

The Group operates in a highly competitive market balancing both customer requirements and market pressures. The directors review and monitor these factors to ensure the Group's competitiveness is upheld to enable the Group 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.

Liquidity and cash flow risks are the risks that the group cannot meet its obligations associated with financial liabilities as they fall due.

The Group is exposed to liquidity risk as sufficient funds are required to support trading and financing activities. The Group regularly monitors its liquidity position to ensure that sufficient funds are available to meet both current and future requirements.

The Group'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 Group'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.

SECTION 172(1) STATEMENT

All directors act in accordance with their duties, in good faith, to promote the success of the company as a whole, having regard to the effect of decisions on the group and other stakeholders, in particular taking into consideration:

- the likely consequences of any decision long term,

- the interests of the company's employees,

- the need to foster the company's business relationships with suppliers, customers and others,

- the impact of the company's operations on the community and the environment,

- the desirability of the company maintaining a reputation for high standards of business conduct, and

- the need to act fairly between members of the company.

The board of directors have considered the company's vision, purpose and values along with its strategic priorities implemented by the decision making processes in place when taking into account the views and interests of stakeholders. When considering the range of interests involved in arriving at the outcomes of decisions the directors acknowledge that such decisions may involve balancing different perspectives and as such it is not always possible to deliver everyone's desired outcome. The board is aware that the success of the group's businesses is dependent on the support of all of our stakeholders, by building good positive relationships and working together towards shared goals, and long-term success

ENGAGEMENT WITH EMPLOYEES

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

The Group'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 Group aims to keep employees up to date with financial and other information as the directors see fit, such as engaging through meetings and notice boards.

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. A program of introducing trainees and apprentices throughout the company is important to ensure that there is new talent coming through the business.

The Group'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.

The Group pays for free membership of a benefits package available to all employees, including purchase discount opportunities and health and wellbeing helplines. The Long Service Awards presentation event for Group employees having worked for more than 20 years, held on 17th January 2020, was appreciated by all concerned and regarded as a huge success.

ENGAGEMENT WITH SUPPLIERS, CUSTOMERS AND OTHERS

Suppliers

Through our Group procurement department, we have regular communications and strong relationships with our suppliers, whilst striving to achieve a balance between them and the needs of our customers. We recognise the importance of discussions on material availability, prices and quality, as well as more general supply and demand trends. 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. Being a member of the MNBS buying group further strengthens our supplier relationships in many product ranges.

Customers

We value our customers and recognise that they are the base for the success of our business, building relationships and understanding customer needs is important, in order to continue to provide a quality product and service. Dedicated sales teams are organised so that they focus on specific customers groups ranging from retail, local tradesmen, regional companies to national companies. ISO management systems and promotion of sustainable forest management practices are maintained to ensure that we meet customer expectations, we continually seek to improve service levels to our customers.

Community and Environment

The Group complies with environmental regulations and the board supports initiatives that reduce adverse impact on local communities and the environment, including investment in energy saving solutions. Various local charities are supported with donations, as well as often matching employee fund raising activities.

The directors recognise that the Group 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 Group.

We therefore make it a priority to ensure our timber is legally harvested and comes from well managed forests. The  Group 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 Group 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, www.harlowbros.co.uk, for customers and other stakeholders to view.

As part of our commitment to environmental awareness and best practice the entities in the Group hold an ISO14001 certificate and operates within this environmental management scheme framework in a compliant manner.

Shareholders

As a privately owned company, shareholders are actively involved within the business and execution of business strategy, receiving regular updates on performance against the strategy, and the financial position of the company.

FINANCIAL INSTRUMENTS

A summary of the Group 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.

KEY PERFORMANCE INDICATORS

We consider that our key financial performance indicators are those that communicate the financial performance and strength of the Group, these being turnover, gross margin, operating profit and earnings before interest tax depreciation and amortisation (EBITDA). The Group 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 credits 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 decreased approximately 21% as a direct result of Covid 19 shutdowns. We remain focused 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 Group, reflecting the quality of the goods and services offered. The gross margin for the year has increased slightly due to the change in sales mix resulting from the cessation of direct building material sales at HTS(E). Costs began to rise steadily in the last quarter of the year, but we have minimised as much as possible by our early identification of this trend & continued efficiency drive on stockholding and purchasing policies.

Overall, the Group's EBITDA has decreased to £4.9m (2019: £6.0m), with operating profit decreasing to £3.6m (2019: £4.9m), which this trend follows through to profit before tax decreasing to £3.5m (2019: £4.7m). Profit after taxation is £2.9m (2019: £4.0m) with the defined benefit pension adjustment as shown in note 24 giving a total of £2.2m retained by the Group to be added to retained earnings. Our strategy to recover and improve the financial performance of the business going forward has been commented on above in the review of business.

FUTURE DEVELOPMENTS

Harlow Bros Holdings aim to maintain the management policies which have resulted in the Group's growth in recent years but are closely monitoring performance against the strategic review plans for Harlow Timber Systems (Eastern) Ltd in the current year and providing additional support and resources if required in order to successfully implement the plans. We anticipate the business environment will remain competitive across the Group however, we believe that the Group is in a good financial position to meet these challenges, with new product lines continually being introduced throughout the year and the continuing review of operating and cost efficiencies.

We are mindful of the impact in the market place regarding the final outcome with Brexit and the Pandemic, and continue to monitor this situation as signs show that the new house build market in particular can expand and contract rapidly in demand and so we continue to diversify our offering and customer base so as to mitigate reliance on such key sectors should any dips in the market arise. In summary, despite the uncertainty surrounding the Pandemic and Brexit and the economy in general, we anticipate delivering a good set of results in the upcoming year, in line with our goals and objectives.

ON BEHALF OF THE BOARD:

R V D Harlow - Director

29 March 2021

The directors present their report with the financial statements of the company and the group for the year ended 30 June 2020.

DIVIDENDS

The total distribution of dividends for the year ended 30 June 2020 will be £217,800.

DIRECTORS

The directors shown below have held office during the whole of the period from 1 July 2019 to the date of this report.

J R Harlow

P V J Harlow

R V D Harlow

D Poli

STREAMLINED ENERGY AND CARBON REPORTING

Methodology

As part of our implementation of ISO 50001 we have identified the need to take a structured approach to monitoring and measuring our energy consumption. We aim to use this information to help drive greater efficiencies and reduce our energy consumption. We have used the 2019 UK Government Environmental reporting guidelines using the methodology from GHG Reporting Protocol and ISO 50001.  We have applied the 2020 UK Govt Conversion factors for our calculations, Gross Values.

As this is the first requirement to report under the Companies (Directors' Report) and Limited Liability Partnerships (Energy and Carbon Report) Regulations 2018, we have no figures available for the previous year.

Energy Consumption and GHG Emissions

Annual Energy Consumption

5,676,321

KWH

Scope 1

Total emissions though combustion of Gas

14.69

tCO2e

Total emissions though combustion of fuel for transport

1,030.50

tCO2e

Total emissions though combustion of fuel for heating

71.27

tCO2e

Scope 2

Total emissions from purchased electricity

210.63

tCO2e

Scope 3

Consumption of fuel in employee-owned vehicles

90.05

tCO2e

Total emissions for scope 1, 2 and 3

1,417.14

tCO2e

Intensity ratio 1 tCo2e per employee

4.837

Intensity ratio 2 tCO2e per M3 Timber sold

0.020

Energy Efficiency actions

The company is aware of its responsibilities to ensure the efficient use of energy. Through its commitments to ISO 14001 and ISO 50001 it has declared objectives which seek to drive continuous improvement. Throughout the year, the company has continued a program of replacing existing lighting with more energy efficient LED bulbs and fittings.

The use of home working and virtual meetings has meant a new way of working for some employees during the Covid 19 pandemic, and the company will continue to use these methods of communication and working as part of its regular working practices to help reduce fuel use.

The company's use of telematics and journey planning has been reviewed and the finding will form part of a renewed approach to transport management through the coming financial year. A rolling program of investment in new vehicles to replace less efficient older vehicles continued throughout the year for heavy goods vehicles and company cars. There are clear environmental and financial benefits for the introduction of electric and hybrid vehicles. With UK plans to bring forward a ban on fossil fuel vehicles to 2030, we have set a minimum NCAP rating of 3 for Grey Fleet vehicles and they must not be older than 6 years and our company car replacement cycle to include all electric leasing.

DISCLOSURE IN THE STRATEGIC REPORT

The group has chosen in accordance with Companies Act 2006, s. 414C(11) to set out in the group'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 Group 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 the group and of the profit or loss of the group for that period.  In preparing these financial statements, the directors are required to:

-

select suitable accounting policies and then apply them consistently;

-

make judgements and accounting estimates that are reasonable and prudent;

-

state whether applicable accounting standards have been followed, subject to any material departures disclosed and

explained in the financial statements;

-

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

The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company's and the group's transactions and disclose with reasonable accuracy at any time the financial position of the company and the group 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 the group 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 group'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 group'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

29 March 2021

Opinion

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 group 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 group'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 Group 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 Group 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 Group 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 group and the parent company and its environment obtained in the course of the audit, we have not identified material misstatements in the Group 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 by the parent company, or returns adequate for our audit have not been received from branches not visited by us; or

-

the parent company 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 eleven, 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 group's and the parent 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 group or the parent 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.

Mr 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

31 March 2021

TURNOVER

3

61,295,148

-

61,295,148

Cost of sales

(49,531,312

)

-

(49,531,312

)

GROSS PROFIT

11,763,836

-

11,763,836

Distribution costs

(308,372

)

-

(308,372

)

Administrative expenses

(9,592,413

)

-

(9,592,413

)

1,863,051

-

1,863,051

Other operating income

1,727,595

-

1,727,595

OPERATING PROFIT

5

3,590,646

-

3,590,646

Interest receivable and similar income

31,461

-

31,461

Amounts written off investments

-

-

-

Interest payable and similar expenses

7

(100,879

)

-

(100,879

)

PROFIT BEFORE TAXATION

3,521,228

-

3,521,228

Tax on profit

8

(596,371

)

-

(596,371

)

PROFIT FOR THE FINANCIAL YEAR

2,924,857

-

2,924,857

Profit attributable to:

Owners of the parent

2,255,494

Non-controlling interests

669,363

2,924,857

TURNOVER

3

72,937,739

5,386,256

78,323,995

Cost of sales

(58,593,474

)

(4,834,740

)

(63,428,214

)

GROSS PROFIT

14,344,265

551,516

14,895,781

Distribution costs

(229,642

)

(67,326

)

(296,968

)

Administrative expenses

(9,204,250

)

(809,612

)

(10,013,862

)

4,910,373

(325,422

)

4,584,951

Other operating income

111,576

-

111,576

Gain/loss on revaluation of assets

276,612

-

276,612

OPERATING PROFIT/(LOSS)

5

5,298,561

(325,422

)

4,973,139

Interest receivable and similar income

21,437

36

21,473

Amounts written off investments

-

-

-

Interest payable and similar expenses

7

(4,982

)

-

(4,982

)

Other finance costs

22

(1,000

)

-

(1,000

)

PROFIT/(LOSS) BEFORE TAXATION

5,314,016

(325,386

)

4,988,630

Tax on profit/(loss)

8

(993,549

)

61,824

(931,725

)

PROFIT/(LOSS) FOR THE FINANCIAL

YEAR

4,320,467

(263,562

)

4,056,905

Profit/(loss) attributable to:

Owners of the parent

3,561,439

Non-controlling interests

495,466

4,056,905