Craggs Energy Limited - Limited company accounts 20.1

REGISTERED NUMBER: 07621614 (England and Wales)

GROUP STRATEGIC REPORT, REPORT OF THE DIRECTORS AND

CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020

FOR

CRAGGS ENERGY LIMITED

Page

Company Information

1

Group Strategic Report

2

Report of the Directors

4

Report of the Independent Auditors

6

Consolidated Income Statement

9

Consolidated Other Comprehensive Income

10

Consolidated Balance Sheet

11

Company Balance Sheet

12

Consolidated Statement of Changes in Equity

13

Company Statement of Changes in Equity

14

Consolidated Cash Flow Statement

15

Notes to the Consolidated Cash Flow Statement

16

Notes to the Consolidated Financial Statements

17

DIRECTORS:

C Bingham

Mrs J A Thornber

Mrs H L Bingham

B L Duckworth

J Cosway

R S Wallace

M Crockett

Ms D S Newman

JP Sharp

REGISTERED OFFICE:

The Craggs Country Business Park New Road

Cragg Vale

Hebden Bridge

West Yorkshire

HX7 5TT

REGISTERED NUMBER:

07621614 (England and Wales)

AUDITORS:

Cresswells Accountants (UK) Limited

Chartered Accountants

and Statutory Auditors

12 Market Street

Hebden Bridge

West Yorkshire

HX7 6AD

The directors present their strategic report of the company and the group for the year ended 31 December 2020.

Craggs Energy Limited is a large regional oil distribution business supplying homes, farms, businesses and public sector companies with heating oils, red diesel, diesel, industrial fuels, lubricants and fuel services. Its focus is on the level of personal service provided to its customers together with generating detailed administrative benefits which save time and improve efficiency.

REVIEW OF BUSINESS

Craggs Energy Limited exceeded expectations during the last year during an exceedingly challenging time for many of its loyal customers. The business reacted quickly to protect its staff and customers by implementing new ways of working including zero touch deliveries and home working where possible.

The continued focus on high levels of customer service and the business's ability to respond quickly to changes in demand and supply patterns ensured record volumes and margins.

The financial year included two full lockdown periods and the majority of the year included some level of business restrictions that saw a reduction in overall demand for fuel in the UK. This reduction, particularly evident in commercial customers, was somewhat balanced by the higher demand for domestic heating fuels, particularly in the first lockdown period.

The variability of fuel prices over the last period allowed the business to ensure its customers received lower priced fuel whilst also ensuring the business was able to improve its margins.

Towards the end of the year Craggs Energy Limited successfully completed a strategic acquisition of Moorland Fuels Limited based in Okehampton, Devon which is already operating at new record levels.

PRINCIPAL RISKS AND UNCERTAINTIES

The directors are aware of the various risks inherent in the business and meet regularly to consider them, ensuring that suitable management processes are in place to avoid, control or mitigate where possible. The key business risks are:

Price risk:

The business is impacted by the volatility in the world commodity price of oil. The risk is effectively mitigated by having low levels of stock and the daily active pricing systems ensuring margins targets are achieved.

Credit risk:

The group operates a strict policy of credit checking and reviewing all new and existing commercial customers. The group maintains credit insurance to help mitigate this risk.

Supply risk:

There is an inherent supply risk within the sector due to the nature of imports and seasonality of demand. The group mitigates this risk by creating strong trading relationships with several independent suppliers to ensure continuity of supply. The group also has excess storage capacity should it need to increase its stockholdings at short notice.

FINANCIAL KEY PERFORMANCE INDICATORS

The directors use a combination of financial and non-financial KPIs to determine how well the group is performing against its objectives and overall strategy. Whilst the business recognizes the credit risk associated with Turnover, due to the price volatility within the sector it does recognize Turnover as an indicator of annual performance. Some of the key performance measures are set out below.

Year ended 31 December 2020

Year ended 31 December 2019

Sales volumes

48.6 million litres

42.3 million litres

Turnover

£26,995,608

£28,944,252

Gross profit

£3,560,916

£2,321,833

Operating profit

£1,433,253

£399,952

The Statement of Financial Position shows that the group's net assets have increased by £1,023,474.

The group's financial key performance indicators are that of profit and revenue. Management consider revenue to be the key driver for the business and the most significant key performance indicator.

OTHER KEY PERFORMANCE INDICATORS

Key performance indicators

The group tightly manages its cash flow and working capital on a daily basis and uses a number of KPI's to further monitor its performance. These include:

Debtor days:

Monitored monthly showing the length of time taken to pay on average.

Gross margin per litre:

This is reviewed daily and reflecting the average profit made on each litre sold.

These performance indicators are considered to be commercially sensitive and have not been disclosed.

LOOKING FORWARD

With the acquisition of Moorland Fuels Limited completed at the end of 2020, the senior management team is now focused on fully integrating the business into the Craggs Energy business model. Early indications are that this integration is delivering ahead of initial expectation.

The business will continue to look for incremental growth within the areas it operates, whilst keeping a close eye on maintaining profitability in any new business development.

The Board anticipates further growth in online sales through the numerous online channels which support the business, providing a strong return on the investments made in technology over previous years.

ON BEHALF OF THE BOARD:

C Bingham - Director

4 May 2021

The directors present their report with the financial statements of the company and the group for the year ended 31 December 2020.

DIVIDENDS

During the year dividends were paid on the preference shares at 8%, totalling £47,313 (2019: £47,313).

DIRECTORS

The directors shown below have held office during the whole of the period from 1 January 2020 to the date of this report.

C Bingham

Mrs J A Thornber

Mrs H L Bingham

B L Duckworth

J Cosway

R S Wallace

Other changes in directors holding office are as follows:

R E Thornber - resigned 9 December 2020

D G Holmes - resigned 9 December 2020

R A Sturdy - resigned 9 December 2020

A Pritchard - resigned 29 June 2020

M Crockett - appointed 7 May 2020

Ms D S Newman - appointed 7 May 2020

JP Sharp - appointed 2 December 2020

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;

-	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 or she ought to have taken as a director in order to make himself or herself aware of any relevant audit information and to establish that the group's auditors are aware of that information.

AUDITORS

The auditors, Cresswells Accountants (UK) Limited, will be proposed for re-appointment at the forthcoming Annual General Meeting.

ON BEHALF OF THE BOARD:

C Bingham - Director

4 May 2021

Opinion

We have audited the financial statements of Craggs Energy Limited (the 'parent company') and its subsidiaries (the 'group') for the year ended 31 December 2020 which comprise the Consolidated Income Statement, Consolidated Other Comprehensive Income, Consolidated Balance Sheet, Company Balance Sheet, Consolidated Statement of Changes in Equity, Company Statement of Changes in Equity, Consolidated Cash Flow Statement and Notes to the Consolidated Cash Flow Statement, 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 group's and of the parent company affairs as at 31 December 2020 and of the group's 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 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

In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.

Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the group's and the parent company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.

Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.

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 this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

Opinions on other matters prescribed by the Companies Act 2006

In our opinion, based on the work undertaken in the course of 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 four, 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.

Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:

We obtained an understanding of the legal and regulatory frameworks that are applicable to Craggs Energy Limited and determined that the most significant are those that relate to the reporting framework (Companies Act 2006) and the relevant tax compliance regulations in the jurisdictions in which Craggs Energy Limited operates. In addition, we concluded that there are certain significant laws and regulations that may have an effect on the determination of the amounts and disclosures in the financial statements and those laws and regulations relating to health and safety, employee matters, environmental, and bribery and corruption practices.

We understood how Craggs Energy Limited is complying with those frameworks by making enquiries of management and those responsible for legal and compliance procedures. We corroborated our enquiries through our review of board minutes and papers provided to the audit team.

We assessed the susceptibility of Craggs Energy Limited's Financial Statements to material misstatement, including how fraud might occur, we utilised internal and external information to perform a fraud risk assessment. We considered the risk of fraud through management override and, in response, we incorporated a review of manual journal entries into our audit approach. We also considered the possibility of fraudulent or corrupt payments made through third parties.

Based on the results of our risk assessment we designed our audit procedures to identify non-compliance with such laws and regulations identified above.

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.

John Dakin BSc FCA (Senior Statutory Auditor)

for and on behalf of Cresswells Accountants (UK) Limited

Chartered Accountants

and Statutory Auditors

12 Market Street

Hebden Bridge

West Yorkshire

HX7 6AD

4 May 2021

TURNOVER

26,995,608

28,944,252

Cost of sales

23,434,692

26,622,420

GROSS PROFIT

3,560,916

2,321,832

Administrative expenses

2,336,175

2,332,356

1,224,741

(10,524

)

Other operating income

208,512

410,476

OPERATING PROFIT

4

1,433,253

399,952

Amounts written off investments

5

(100

)

-

1,433,353

399,952

Interest payable and similar expenses

6

66,383

46,310

PROFIT BEFORE TAXATION

1,366,970

353,642

Tax on profit

7

286,183

49,264

PROFIT FOR THE FINANCIAL YEAR

1,080,787

304,378

Profit attributable to:

Owners of the parent

1,080,787

304,378

PROFIT FOR THE YEAR

1,080,787

304,378

OTHER COMPREHENSIVE INCOME

-

-

TOTAL COMPREHENSIVE INCOME FOR THE YEAR

1,080,787

304,378

Total comprehensive income attributable to:

Owners of the parent

1,080,787

304,378

FIXED ASSETS

Intangible assets

10

1,474,086

5,568

Tangible assets

11

2,491,000

1,989,730

Investments

12

-

100

3,965,086

1,995,398

CURRENT ASSETS

Stocks

13

371,336

119,838

Debtors

14

4,894,212

4,242,241

Cash at bank and in hand

316,523

37,631

5,582,071

4,399,710

CREDITORS

Amounts falling due within one year

15

4,543,318

3,979,962

NET CURRENT ASSETS

1,038,753

419,748

TOTAL ASSETS LESS CURRENT LIABILITIES

5,003,839

2,415,146

CREDITORS

Amounts falling due after more than one year

16

(2,374,130

)

(991,836

)

PROVISIONS FOR LIABILITIES

19

(304,542

)

(121,617

)

NET ASSETS

2,325,167

1,301,693

CAPITAL AND RESERVES

Called up share capital

20

602,172

602,281

Share premium

21

208,147

218,038

Retained earnings

21

1,514,848

481,374

2,325,167

1,301,693

The financial statements were approved by the Board of Directors and authorised for issue on 4 May 2021 and were signed on its behalf by:

C Bingham - Director

FIXED ASSETS

Intangible assets

10

3,769

5,568

Tangible assets

11

2,060,471

1,989,730

Investments

12

2,153,540

100

4,217,780

1,995,398

CURRENT ASSETS

Stocks

13

254,842

119,838

Debtors

14

4,381,599

4,242,241

Cash at bank and in hand

898

37,631

4,637,339

4,399,710

CREDITORS

Amounts falling due within one year

15

3,626,023

3,979,962

NET CURRENT ASSETS

1,011,316

419,748

TOTAL ASSETS LESS CURRENT LIABILITIES

5,229,096

2,415,146

CREDITORS

Amounts falling due after more than one year

16

(2,657,286

)

(991,836

)

PROVISIONS FOR LIABILITIES

19

(304,542

)

(121,617

)

NET ASSETS

2,267,268

1,301,693

CAPITAL AND RESERVES

Called up share capital

20

602,172

602,281

Share premium

21

208,147

218,038

Retained earnings

21

1,456,949

481,374

2,267,268

1,301,693

Company's profit for the financial year

1,022,888

304,378

The financial statements were approved by the Board of Directors and authorised for issue on 4 May 2021 and were signed on its behalf by:

C Bingham - Director

Called up

share

Retained

Share

Total

capital

earnings

premium

equity

£

£

£

£

Balance at 1 January 2019

602,281

224,309

218,038

1,044,628

Changes in equity

Dividends

-

(47,313

)

-

(47,313

)

Total comprehensive income

-

304,378

-

304,378

Balance at 31 December 2019

602,281

481,374

218,038

1,301,693

Changes in equity

Issue of share capital

(109

)

-

(9,891

)

(10,000

)

Dividends

-

(47,313

)

-

(47,313

)

Total comprehensive income

-

1,080,787

-

1,080,787

Balance at 31 December 2020

602,172

1,514,848

208,147

2,325,167

Called up

share

Retained

Share

Total

capital

earnings

premium

equity

£

£

£

£

Balance at 1 January 2019

602,281

224,309

218,038

1,044,628

Changes in equity

Dividends

-

(47,313

)

-

(47,313

)

Total comprehensive income

-

304,378

-

304,378

Balance at 31 December 2019

602,281

481,374

218,038

1,301,693

Changes in equity

Issue of share capital

(109

)

-

(9,891

)

(10,000

)

Dividends

-

(47,313

)

-

(47,313

)

Total comprehensive income

-

1,022,888

-

1,022,888

Balance at 31 December 2020

602,172

1,456,949

208,147

2,267,268

Cash flows from operating activities

Cash generated from operations

1

978,002

843,371

Interest paid

(66,383

)

(46,310

)

Tax paid

57,298

(11,974

)

Net cash from operating activities

968,917

785,087

Cash flows from investing activities

Purchase of intangible fixed assets

(1,482,672

)

-

Purchase of tangible fixed assets

(794,630

)

(714,453

)

Sale of tangible fixed assets

-

169,045

Net cash from investing activities

(2,277,302

)

(545,408

)

Cash flows from financing activities

New loans in year

1,600,000

-

Capital repayments in year

44,590

(39,848

)

Share issue

(109

)

-

Share buyback

(9,891

)

-

Equity dividends paid

(47,313

)

(47,313

)

Net cash from financing activities

1,587,277

(87,161

)

Increase in cash and cash equivalents

278,892

152,518

Cash and cash equivalents at beginning of year

2

37,631

(114,887

)

Cash and cash equivalents at end of year

2

316,523

37,631

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

2020

2019

£

£

Profit before taxation

1,366,970

353,642

Depreciation charges

307,515

288,089

Loss on disposal of fixed assets

-

10,355

Finance costs

66,383

46,310

1,740,868

698,396

(Increase)/decrease in stocks

(251,498

)

104,159

(Increase)/decrease in trade and other debtors

(663,945

)

302,226

Increase/(decrease) in trade and other creditors

152,577

(261,410

)

Cash generated from operations

978,002

843,371

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 31 December 2020

31.12.20

1.1.20

£

£

Cash and cash equivalents

316,523

37,631

Year ended 31 December 2019

31.12.19

1.1.19

£

£

Cash and cash equivalents

37,631

4,093

Bank overdrafts

-

(118,980

)

37,631

(114,887

)

3.	ANALYSIS OF CHANGES IN NET DEBT

At 1.1.20

Cash flow

At 31.12.20

£

£

£

Net cash

Cash at bank and in hand

37,631

278,892

316,523

37,631

278,892

316,523

Debt

Finance leases

(426,198

)

(44,590

)

(470,788

)

Debts falling due after 1 year

-

(1,600,000

)

(1,600,000

)

(426,198

)

(1,644,590

)

(2,070,788

)

Total

(388,567

)

(1,365,698

)

(1,754,265

)