James Gordon Limited - Limited company accounts 22.3

REGISTERED NUMBER: SC293893 (Scotland)

Strategic Report, Report of the Directors and

Financial Statements for the Year Ended 30th September 2022

for

James Gordon Limited

Page

Company Information

1

Strategic Report

2

Report of the Directors

3

Report of the Independent Auditors

4

to

5

Income Statement

6

Other Comprehensive Income

7

Balance Sheet

8

Statement of Changes in Equity

9

Cash Flow Statement

10

Notes to the Cash Flow Statement

11

Notes to the Financial Statements

12

to

20

DIRECTORS:

W F Montgomerie

N B Montgomerie

K Fraser

J Moss

SECRETARY:

W F Montgomerie

REGISTERED OFFICE:

Dalbeattie Road

Castle Douglas

Dumfries & Galloway

DG7 1HZ

REGISTERED NUMBER:

SC293893 (Scotland)

AUDITORS:

Farries, Kirk and McVean

Chartered Accountants

Statutory Auditors

Dumfries Enterprise Park

Heathhall

Dumfries

DUMFRIESSHIRE

DG1 3SJ

SOLICITORS:

Gillespie Gifford & Brown LLP

135 King Street

Castle Douglas

DG7 1NA

The directors present their strategic report for the year ended 30th September 2022.

James Gordon Limited is an agricultural engineering company. It sells and repairs agricultural machinery and associated parts. The business has been in existence for over 150 years.

The directors believe that the company is well placed to service the agricultural industry in the south and west of Scotland and that the long experience that both they and their management team have in the local industry is to the benefit of both the company and its customers, many of whom have been with the company for generations.

REVIEW OF BUSINESS

The directors are very pleased with the results. The company has had another very successful year of trade. Turnover has increased from £51.1m to £54.0m despite the sale in July 2021 of the filling station previously operated by the company and gross profits have increased from £7.2m to £7.4m. Gross profit percentage has dropped from 14.1% to 13.6%. The bottom line profits before tax have reduced from £1.2m to £853k, although last year included more than £200k of profits on disposal of assets. The directors are working to maintain profit levels next year and intend to maintain their close working relationship with Claas UK and Doosan.

Key Performance Indicators (KPI's)

Given the straightforward nature of the business, the directors are of the opinion that there are no additional KPI's other than the measures of turnover and gross profit reported above that are necessary for an understanding of the development, performance or position of the business.

PRINCIPAL RISKS AND UNCERTAINTIES

The management of the business and the execution of the company's strategy are subject to a number of risks. The key business risks and uncertainties affecting the company are considered to relate to competition from both national and independent machinery dealers, employee retention and product availability.

Financial risk management

The company's operations expose it to little in the way of financial risk. However, a variety of financial risks do exist to an extent including credit risk, liquidity risk and interest rate risk. The company has in place a risk management programme that seeks to limit the adverse effects on the financial performance of the company by monitoring levels of debt finance and the related finance costs.

Credit risk

The company has implemented policies that require appropriate credit checks on potential customers before sales are made. The amount of exposure to any individual is subject to a limit which can only be reassessed by a director.

Liquidity risk

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

Interest rate risk

The company has interest bearing liabilities including a bank overdraft and stocking loans. The amount of interest charged on these liabilities is not sufficient to significantly affect company operations.

ON BEHALF OF THE BOARD:

W F Montgomerie - Director

10th February 2023

The directors present their report with the financial statements of the company for the year ended 30th September 2022.

DIVIDENDS

Interim dividends per share were paid as follows:

24p

- 15th October 2021

64p

- 31st May 2022

88p

The directors recommend that no final dividend be paid.

The total distribution of dividends for the year ended 30th September 2022 will be £ 343,200 .

DIRECTORS

The directors shown below have held office during the whole of the period from 1st October 2021 to the date of this report.

W F Montgomerie

N B Montgomerie

K Fraser

Other changes in directors holding office are as follows:

J Moss - appointed 1st October 2021

STATEMENT OF DIRECTORS' RESPONSIBILITIES

The directors are responsible for preparing the Strategic Report, the Report of the Directors and the financial statements in accordance with applicable law and regulations.

Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period. In preparing these financial statements, the directors are required to:

-	select suitable accounting policies and then apply them consistently;

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

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

The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company's transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

STATEMENT AS TO DISCLOSURE OF INFORMATION TO AUDITORS

So far as the directors are aware, there is no relevant audit information (as defined by Section 418 of the Companies Act 2006) of which the company's auditors are unaware, and each director has taken all the steps that he ought to have taken as a director in order to make himself aware of any relevant audit information and to establish that the company's auditors are aware of that information.

AUDITORS

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

ON BEHALF OF THE BOARD:

W F Montgomerie - Director

10th February 2023

Opinion

We have audited the financial statements of James Gordon Limited (the 'company') for the year ended 30th September 2022 which comprise the Income Statement, Other Comprehensive Income, Balance Sheet, Statement of Changes in Equity, Cash Flow Statement and Notes to the Cash Flow Statement, Notes to the Financial Statements, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 'The Financial Reporting Standard applicable in the UK and Republic of Ireland' (United Kingdom Generally Accepted Accounting Practice).

In our opinion the financial statements:

-	give a true and fair view of the state of the company's affairs as at 30th September 2022 and of its profit for the year then ended;

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

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

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

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

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

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

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

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

Matters on which we are required to report by exception

In the light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identified material misstatements in the Strategic Report or the Report of the Directors.

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

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

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

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

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

Responsibilities of directors

As explained more fully in the Statement of Directors' Responsibilities set out on page three, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the directors are responsible for assessing the company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.

Auditors' responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue a Report of the Auditors that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:

- we have assessed the susceptibility of the company's financial statements to material misstatement as being low risk. The directors are very involved in the day to day management of the business and have a focus on controls to address potential fraud and error.

- the nature of the company's activities are not significantly regulated. We have discussed the legal and regulatory framework the company operates under with the directors. This has enabled us to gain an understanding of those laws and regulations that are applicable to the company and the procedures they operate to ensure compliance.

- we have obtained an understanding of the company's policies and procedures on fraud risk through two way communication with the management and have no knowledge of any actual, suspected or alleged fraud.

- the Senior Statutory Auditor is satisfied that the engagement audit staff were competent to and capable of recognising non-compliance with laws and regulation. No details of any non-compliance were communicated to us and no such potential instances were noted during the audit process.

We have reached these conclusions following enquiries made of those charged with governance and senior staff and following audit testing procedures and review of financial statements.

Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading to a material misstatement in the financial statements or non-compliance with regulation. This risk increases the more that compliance with a law or regulation is removed from the events and transactions reflected in the financial statements, as we will be less likely to become aware of instances of non-compliance. The risk is also greater regarding irregularities occurring due to fraud rather than error, as fraud involves intentional concealment, forgery, collusion, omission or

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.

Craig Paterson, BCom CA (Senior Statutory Auditor)

for and on behalf of Farries, Kirk and McVean

Chartered Accountants

Statutory Auditors

Dumfries Enterprise Park

Heathhall

Dumfries

DUMFRIESSHIRE

DG1 3SJ

10th February 2023

TURNOVER

3

54,011,983

51,144,709

Cost of sales

(46,651,454

)

(43,956,652

)

GROSS PROFIT

7,360,529

7,188,057

Administrative expenses

(6,294,705

)

(5,862,801

)

1,065,824

1,325,256

Other operating income

7,639

-

OPERATING PROFIT

6

1,073,463

1,325,256

Interest payable and similar expenses

7

(180,950

)

(83,103

)

PROFIT BEFORE TAXATION

892,513

1,242,153

Tax on profit

8

(189,735

)

(235,988

)

PROFIT FOR THE FINANCIAL YEAR

702,778

1,006,165

PROFIT FOR THE YEAR

702,778

1,006,165

OTHER COMPREHENSIVE INCOME

-

-

TOTAL COMPREHENSIVE INCOME FOR THE YEAR

702,778

1,006,165

FIXED ASSETS

Tangible assets

10

637,042

762,840

CURRENT ASSETS

Stocks

11

10,928,447

9,401,143

Debtors

12

7,692,753

7,338,937

Cash at bank and in hand

769,750

48,602

19,390,950

16,788,682

CREDITORS

Amounts falling due within one year

13

(12,931,759

)

(10,858,967

)

NET CURRENT ASSETS

6,459,191

5,929,715

TOTAL ASSETS LESS CURRENT LIABILITIES

7,096,233

6,692,555

CREDITORS

Amounts falling due after more than one year

14

(300,496

)

(268,411

)

PROVISIONS FOR LIABILITIES

18

(147,213

)

(135,198

)

NET ASSETS

6,648,524

6,288,946

CAPITAL AND RESERVES

Called up share capital

19

390,000

390,000

Capital redemption reserve

20

10,000

10,000

Retained earnings

20

6,248,524

5,888,946

SHAREHOLDERS' FUNDS

6,648,524

6,288,946

The financial statements were approved by the Board of Directors and authorised for issue on 10th February 2023 and were signed on its behalf by:

W F Montgomerie - Director

Called up

Capital

share

Retained

redemption

Total

capital

earnings

reserve

equity

£

£

£

£

Balance at 1st October 2020

390,000

4,949,081

10,000

5,349,081

Changes in equity

Dividends

-

(66,300

)

-

(66,300

)

Total comprehensive income

-

1,006,165

-

1,006,165

Balance at 30th September 2021

390,000

5,888,946

10,000

6,288,946

Changes in equity

Dividends

-

(343,200

)

-

(343,200

)

Total comprehensive income

-

702,778

-

702,778

Balance at 30th September 2022

390,000

6,248,524

10,000

6,648,524

Cash flows from operating activities

Cash generated from operations

1

(369,651

)

670,620

Interest paid

(162,461

)

(65,751

)

Interest element of hire purchase payments paid

(18,489

)

(17,352

)

Tax paid

(173,428

)

(89,983

)

Net cash from operating activities

(724,029

)

497,534

Cash flows from investing activities

Purchase of tangible fixed assets

52,714

(106,003

)

Sale of intangible fixed assets

-

65,563

Sale of tangible fixed assets

29,489

186,271

Net cash from investing activities

82,203

145,831

Cash flows from financing activities

Inter-company loan

(38,599

)

(657,068

)

Stocking loan

2,004,976

24,032

Capital repayments in year

(260,203

)

(235,478

)

Equity dividends paid

(343,200

)

(66,300

)

Net cash from financing activities

1,362,974

(934,814

)

Increase/(decrease) in cash and cash equivalents

721,148

(291,449

)

Cash and cash equivalents at beginning of year

2

48,602

340,051

Cash and cash equivalents at end of year

2

769,750

48,602

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

2022

2021

£

£

Profit before taxation

892,513

1,242,153

Depreciation charges

349,707

328,584

Profit on disposal of fixed assets

(20,532

)

(238,110

)

Finance costs

180,950

83,103

1,402,638

1,415,730

Increase in stocks

(1,527,304

)

(1,236,373

)

Increase in trade and other debtors

(315,217

)

(501,280

)

Increase in trade and other creditors

70,232

992,543

Cash generated from operations

(369,651

)

670,620

2.	CASH AND CASH EQUIVALENTS

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

Year ended 30th September 2022

30.9.22

1.10.21

£

£

Cash and cash equivalents

769,750

48,602

Year ended 30th September 2021

30.9.21

1.10.20

£

£

Cash and cash equivalents

48,602

340,051

3.	ANALYSIS OF CHANGES IN NET DEBT

Other

non-cash

At 1.10.21

Cash flow

changes

At 30.9.22

£

£

£

£

Net cash

Cash at bank

and in hand

48,602

721,148

769,750

48,602

721,148

769,750

Debt

Finance leases

(497,505

)

260,203

-

(522,881

)

Debts falling due

within 1 year

(1,015,685

)

(2,004,976

)

-

(3,020,661

)

(1,513,190

)

(1,744,773

)

-

(3,543,542

)

Total

(1,464,588

)

(1,023,625

)

-

(2,773,792

)

1.	STATUTORY INFORMATION

James Gordon Limited is a private company, limited by shares , registered in Scotland. The company's registered number and registered office address can be found on the Company Information page.

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

2.	ACCOUNTING POLICIES

Basis of preparing the financial statements

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

Significant judgements and estimates

In the opinion of the directors, the only significant judgement and estimate in the financial statements is:

Provision against both parts and machinery stock values. Machinery stock provisions are specifically calculated on individual machinery where necessary. The company provide in full against all parts stock greater than 18 months old.

Turnover

Turnover represents the net invoiced sales of goods and services, excluding value added tax. The company sells agricultural machinery and supplies as well as repairing such machinery.

The point of sale for machinery and goods is the point of supply to the customer except in some occasional cases where a special order might mean point of sale is at point of order. Repair work is invoiced on completion of the work involved to customer satisfaction. Any deposits taken are not recognised as sales but instead credited against a customer account until such times as the goods are supplied.

Tangible fixed assets

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

Plant and machinery

-

25% on cost and 20% on cost

Motor vehicles

-

25% on cost

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

Government grants

The company has been in receipt of a Digital South Lanarkshire Council Grant which was recognised in full when the company became entitled to receipt.

Stocks

Parts stocks, not individually identifiable, are valued on an average cost basis. Individual items of agricultural machinery are valued at the lower of actual cost and net realisable value. Obsolete items and slow moving items are not valued.

Taxation

Taxation for the year comprises current and deferred tax. Tax is recognised in the Income Statement, except to the extent that it relates to items recognised in other comprehensive income or directly in equity.

Current or deferred taxation assets and liabilities are not discounted.

Current tax is recognised at the amount of tax payable using the tax rates and laws that have been enacted or substantively enacted by the balance sheet date.

Deferred tax

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

Timing differences arise from the inclusion of income and expenses in tax assessments in periods different from those in which they are recognised in financial statements. Deferred tax is measured using tax rates and laws that have been enacted or substantively enacted by the year end and that are expected to apply to the reversal of the timing difference.

Unrelieved tax losses and other deferred tax assets are recognised only to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits.

Hire purchase and leasing commitments

Assets obtained under hire purchase contracts or finance leases are capitalised in the balance sheet. Those held under hire purchase contracts are depreciated over their estimated useful lives. Those held under finance leases are depreciated over their estimated useful lives or the lease term, whichever is the shorter.

The interest element of these obligations is charged to profit or loss over the relevant period. The capital element of the future payments is treated as a liability.

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

Pension costs and other post-retirement benefits

The company contributes to a defined contribution pension scheme. Contributions payable to the pension scheme are charged to profit or loss in the period to which they relate.

Financial instruments

Cash and cash equivalents

Cash and cash equivalents comprise cash on hand and call deposits, and other short term highly liquid investments that are readily convertible to a known amount of cash and are subject to an insignificant risk of change in value.

Trade debtors

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

Trade debtors are recognised initially at the transaction price and represent the full value of the goods and services charged to customers, including any amounts charged on for third parties.

Trade Creditors

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

Accounts payable are classified as current liabilities if the company does not have an unconditional right, at the end of the reporting period, to defer settlement of the creditor for at least twelve months after the reporting date. If there is an unconditional right to defer settlement for at least twelve months after the reporting date they are presented as non current liabilities.

Borrowings

Interest bearing borrowings are initially recorded at transaction price, net of transaction costs. Subsequently they are measured at amortised cost using the effective interest rate method, less impairment.

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

Borrowings are classified as current liabilities unless the company has an unconditional right to defer settlement of the liability for at least twelve months after the reporting date.

Share Capital

Ordinary shares are classified as equity. Equity instruments are measured at the fair value of the cash or other resources received or receivable, net of the direct costs of issuing the equity instruments. If payment is deferred and the time value of money is material, the initial measurement is on a present value basis.

3.

TURNOVER

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

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

2022

2021

£

£

Sale of goods

51,216,366

48,184,283

Rendering of services

2,795,617

2,960,426

54,011,983

51,144,709

4.	EMPLOYEES AND DIRECTORS

2022

2021

£

£

Wages and salaries

3,330,329

3,357,095

Social security costs

373,881

330,329

Other pension costs

255,421

196,298

3,959,631

3,883,722

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

2022

2021

Directors

4

3

Office and management

11

10

Direct employees

88

89

103

102

5.	DIRECTORS' EMOLUMENTS

2022

2021

£

£

Directors' remuneration

246,833

193,548

Directors' pension contributions to money purchase schemes

17,706

16,401

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

Money purchase schemes

4

3

Information regarding the highest paid director for the year ended 30th September 2022 is as follows:

2022

£

Emoluments etc

81,106

Pension contributions to money purchase schemes

2,430

6.	OPERATING PROFIT

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

2022

2021

£

£

Other operating leases

5,632

5,739

Depreciation - owned assets

166,724

174,849

Depreciation - assets on hire purchase contracts

182,982

153,736

Profit on disposal of fixed assets

(20,532

)

(238,110

)

Auditors' remuneration

17,400

16,300

Auditors' remuneration for non audit work

9,000

8,760

7.

INTEREST PAYABLE AND SIMILAR EXPENSES

2022

2021

£

£

Stocking loan interest

162,461

65,751

Hire purchase

18,489

17,352

180,950

83,103