Grangewood Fencing Supplies Limited - Limited company accounts 23.2

GRANGEWOOD FENCING SUPPLIES LIMITED

STRATEGIC REPORT, REPORT OF THE DIRECTORS AND

FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2023

Page

Company Information

1

Strategic Report

2

Report of the Directors

3

Report of the Independent Auditors

5

Statement of Income and Retained Earnings

9

Balance Sheet

10

Cash Flow Statement

11

Notes to the Cash Flow Statement

12

Notes to the Financial Statements

13

DIRECTORS:

D S Baskerville

Mrs N A Baskerville

D J Perry

REGISTERED OFFICE:

Oakhurst House

57 Ashbourne Road

Derby

Derbyshire

DE22 3FS

REGISTERED NUMBER:

04609510 (England and Wales)

AUDITORS:

Sibbalds Limited

Chartered Accountants and Statutory Auditor

Oakhurst House

57 Ashbourne Road

Derby

Derbyshire

DE22 3FS

The directors present their strategic report for the year ended 30 June 2023.

REVIEW OF BUSINESS

The directors regard turnover and net profit margin as the key performance indicators of the business.

Turnover has seen a decrease of 21% from £11.3m in 2021/22 to £8.9m in 2022/23, and this can mainly be attributed to the exceptional demand in the previous period due to COVID-19 and lockdown.

The decrease in revenue has filtered down to profit before tax (down by 54% from £669k to £308k), especially as many overheads are fairly fixed and reduced turnover still requires the same amount of resources.

The directors see the current performance of the business as satisfactory given the general economic condition of the UK. Although overall sales have been down, our net margin has remained fairly consistent with previous years.

We have noticed a slight improvement in public confidence for Q3 and Q4 of 2023/2024 which we hope will reflect in improving margins.

Despite negative cashflow in the year, the company still has a strong level of cash reserves and net current assets.

PRINCIPAL RISKS AND UNCERTAINTIES

The company remains under no particular financial pressure with a low level of gearing and strong cash reserves. As a result of the company's low debt ratio, the directors believe that the company is now in a strong position to weather economic storms caused by current world events. Risks are reviewed by the directors on an ongoing basis and mitigated where possible. The company's subsidiaries continue to grow and perform beyond expectation.

FUTURE DEVELOPMENTS

The depot at Burton was completed in September 2023 and was being fully traded from as of this date so this should help with an upturn in revenue.

We expect to show improvements through to 2024/2025 as the economy strengthens and our investment in marketing continues to show returns.

ON BEHALF OF THE BOARD:

D S Baskerville - Director

27 March 2024

The directors present their report with the financial statements of the company for the year ended 30 June 2023.

PRINCIPAL ACTIVITY

The principal activity of the company in the year under review was that of the supply of fencing products.

DIVIDENDS

Interim dividends per share were paid during the year as follows:

Ordinary A £1

-

£1350

Ordinary B £1

-

£2096.2955

Ordinary C £1

-

£650

Ordinary D £1

-

£3500

Ordinary E £1

- £3500

The total distribution of dividends for the year ended 30 June 2023 will be £ 194,650 .

DIRECTORS

The directors shown below have held office during the whole of the period from 1 July 2022 to the date of this report.

D S Baskerville

Mrs N A Baskerville

D J Perry

FINANCIAL INSTRUMENTS

The company's financial assets of trade debtors, cash balances and stock far exceed it's liabilities of creditors, bank loans and overdrafts. The directors manage the company's exposure to financial risk by researching the credit worthiness of customers. Currency risk is restricted to the short term settlement of trading balances with customers and suppliers. The company does not trade speculatively in derivatives or similar instruments.

STATEMENT OF DIRECTORS' RESPONSIBILITIES

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

Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law), including Financial Reporting Standard 102 'The Financial Reporting Standard applicable in the UK and Republic of Ireland'. 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 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 company's auditors are aware of that information.

AUDITORS

The auditors, Sibbalds Limited, will be proposed for re-appointment at the forthcoming Annual General Meeting.

ON BEHALF OF THE BOARD:

D S Baskerville - Director

27 March 2024

Opinion

We have audited the financial statements of Grangewood Fencing Supplies Limited (the 'company') for the year ended 30 June 2023 which comprise the Statement of Income and Retained Earnings, Balance Sheet, 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 30 June 2023 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 qualified 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:

Based on our knowledge of the company and industry, we identified that the principal risks of non-compliance with laws and regulations related to breaches of health and safety laws and we considered the extent to which non-compliance might have a material effect on the financial statements. We also considered those laws and regulations that have a direct impact on the preparation of the financial statements such as the Companies Act 2006. We evaluated management's incentives and opportunities for fraudulent manipulation of the financial statements (including the risk of override of controls), and determined that the principal risks were related to posting inappropriate journal entries to manipulate results and management bias in significant accounting estimates and judgements. Audit procedures performed by the engagement team in relation to these risks included:

-

Discussions with the Managing Director, including consideration of known or suspected instances of

non-compliance with laws and regulations or fraud;

-

Evaluation of management's internal controls designed to prevent and detect irregularities;

-

Reviewing sensitive expense accounts for evidence of non-compliance with laws and regulations or fraud.

-

Identifying and testing journal entries, in particular any journal entries posted with unusual account combinations or of exceptional size.

-

Challenging assumptions and judgements made by management in their significant accounting estimates and judgements, in particular in relation to investment property valuation.

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 misrepresentation.

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.

Hari Vasdev MEng FCA (Senior Statutory Auditor)

for and on behalf of Sibbalds Limited

Chartered Accountants and Statutory Auditor

Oakhurst House

57 Ashbourne Road

Derby

Derbyshire

DE22 3FS

27 March 2024

TURNOVER

8,910,640

11,296,179

Cost of sales

6,773,529

8,649,204

GROSS PROFIT

2,137,111

2,646,975

Distribution costs

1,165,201

1,332,315

Administrative expenses

649,710

689,458

1,814,911

2,021,773

322,200

625,202

Other operating income

60,256

87,246

OPERATING PROFIT

4

382,456

712,448

Interest receivable and similar income

5

2,610

479

385,066

712,927

Interest payable and similar expenses

6

77,535

43,753

PROFIT BEFORE TAXATION

307,531

669,174

Tax on profit

7

57,509

126,179

PROFIT FOR THE FINANCIAL YEAR

250,022

542,995

Retained earnings at beginning of year

4,034,591

3,681,296

Dividends

8

(194,650

)

(189,700

)

RETAINED EARNINGS AT END OF YEAR

4,089,963

4,034,591

FIXED ASSETS

Intangible assets

9

-

-

Tangible assets

10

1,944,632

1,806,033

Investments

11

1,259,619

1,259,619

Investment property

12

300,000

300,000

3,504,251

3,365,652

CURRENT ASSETS

Stocks

13

703,095

848,163

Debtors

14

2,632,160

2,543,112

Cash at bank and in hand

761,082

1,327,933

4,096,337

4,719,208

CREDITORS

Amounts falling due within one year

15

2,164,855

2,635,540

NET CURRENT ASSETS

1,931,482

2,083,668

TOTAL ASSETS LESS CURRENT LIABILITIES

5,435,733

5,449,320

CREDITORS

Amounts falling due after more than one year

16

(1,228,670

)

(1,277,629

)

PROVISIONS FOR LIABILITIES

20

(117,000

)

(137,000

)

NET ASSETS

4,090,063

4,034,691

CAPITAL AND RESERVES

Called up share capital

21

100

100

Retained earnings

4,089,963

4,034,591

SHAREHOLDERS' FUNDS

4,090,063

4,034,691

The financial statements were approved by the Board of Directors and authorised for issue on 27 March 2024 and were signed on its behalf by:

D S Baskerville - Director

Cash flows from operating activities

Cash generated from operations

1

143,985

1,020,509

Interest paid

(77,535

)

(43,750

)

Interest element of hire purchase or finance lease rental payments paid

-

(3

)

Tax paid

(177,179

)

(250,569

)

Net cash from operating activities

(110,729

)

726,187

Cash flows from investing activities

Purchase of tangible fixed assets

(224,307

)

(75,464

)

Sale of tangible fixed assets

28,250

(1

)

Interest received

2,610

479

Net cash from investing activities

(193,447

)

(74,986

)

Cash flows from financing activities

Loan repayments in year

(119,560

)

(123,493

)

Capital repayments in year

-

(1,039

)

Amount introduced by directors

59,680

10,890

Amount withdrawn by directors

(95,547

)

(156,339

)

Equity dividends paid

(107,248

)

(91,700

)

Net cash from financing activities

(262,675

)

(361,681

)

(Decrease)/increase in cash and cash equivalents

(566,851

)

289,520

Cash and cash equivalents at beginning of year

2

1,327,933

1,038,413

Cash and cash equivalents at end of year

2

761,082

1,327,933

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

2023

2022

£

£

Profit before taxation

307,531

669,174

Depreciation charges

54,034

77,574

Loss on disposal of fixed assets

3,426

780

Finance costs

77,535

43,753

Finance income

(2,610

)

(479

)

439,916

790,802

Decrease in stocks

145,068

270,286

(Increase)/decrease in trade and other debtors

(89,456

)

10,375

Decrease in trade and other creditors

(351,543

)

(50,954

)

Cash generated from operations

143,985

1,020,509

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 30 June 2023

30.6.23

1.7.22

£

£

Cash and cash equivalents

761,082

1,327,933

Year ended 30 June 2022

30.6.22

1.7.21

£

£

Cash and cash equivalents

1,327,933

1,038,413

3.	ANALYSIS OF CHANGES IN NET DEBT

At 1.7.22

Cash flow

At 30.6.23

£

£

£

Net cash

Cash at bank and in hand

1,327,933

(566,851

)

761,082

1,327,933

(566,851

)

761,082

Debt

Debts falling due within 1 year

(74,991

)

19,063

(55,928

)

Debts falling due after 1 year

(1,277,629

)

48,959

(1,228,670

)

(1,352,620

)

68,022

(1,284,598

)

Total

(24,687

)

(498,829

)

(523,516

)

1.	STATUTORY INFORMATION

Grangewood Fencing Supplies Limited is a private company, limited by shares , registered in England and Wales. The company's registered number and registered office address can be found on the Company Information page.

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

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.

Preparation of consolidated financial statements

The financial statements contain information about Grangewood Fencing Supplies Limited as an individual company and do not contain consolidated financial information as the parent of a group. The company is exempt under Section 399(2A) of the Companies Act 2006 from the requirements to prepare consolidated financial statements.

Related party exemption

The company has taken advantage of exemption, under the terms of Financial Reporting Standard 102 'The Financial Reporting Standard applicable in the UK and Republic of Ireland', not to disclose related party transactions with wholly owned subsidiaries within the group.

Critical accounting judgements and key sources of estimation uncertainty

In the application of the company's accounting policies, the directors are required to make judgements, estimates and assumptions regarding the carrying amounts of the company's assets and liabilities. These are based on historical experience and other factors that are considered relevant. They are reviewed on a regular basis and changes recognised in the period in which the estimate is revised. Actual results may differ from these estimates.

The following are the critical accounting judgements and key sources of estimation uncertainty:

Investment property is measured at fair value at the reporting date. Further details on the method of valuation is given in the investment property note.

Turnover

Turnover is measured at the fair value of the consideration received or receivable, excluding discounts, rebates, value added tax and other sales taxes.

Turnover represents the amounts derived from the provision of goods and services to customers during the year. Revenue is recognised in the income statement when a right to the consideration has been obtained through performance.

Goodwill

Acquired goodwill is written off, in equal instalments, over its estimated useful life of 10 years.

Intangible assets

Intangible assets are initially measured at cost. After initial recognition, intangible assets are measured at cost less any accumulated amortisation and any accumulated impairment losses.

Tangible fixed assets

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

Freehold property

-

2% on cost

Plant and machinery

-

15% on reducing balance

Motor vehicles

-

15% on reducing balance

Computer equipment

-

33% on cost

Freehold land is not depreciated.

Investments in subsidiaries

Investments in subsidiary undertakings are recognised at cost less impairment.

Investment property

Investment property is shown at most recent valuation. Any aggregate surplus or deficit arising from changes in fair value is recognised in profit or loss.

Stocks

Stocks are valued at the lower of cost and net realisable value, after making due allowance for obsolete and slow moving items.

Cost includes all costs incurred in bringing each product to its present location and condition on a FIFO (first in, first out) basis.

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

Financial liabilities

Short term creditors are measured at transaction price. Other financial liabilities, including loans from group companies are measured initially at fair value, net of transaction cost and are measured subsequently at amortised cost using the effective interest method, less any impairment.

Financial assets

Short term debtors are measured at transaction price, less any impairment. Other financial assets, including loans to group companies are measured initially at fair value, net of transactions cost and are subsequently measured at amortised cost using the effective interest method, less any impairment.

Going concern

After reviewing the company's forecasts and projections plus the latest financial information, the directors have a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future. The company therefore continues to adopt the going concern policy in preparing its financial statements.

3.	EMPLOYEES AND DIRECTORS

2023

2022

£

£

Wages and salaries

764,102

894,544

Social security costs

72,336

81,741

Other pension costs

20,992

20,923

857,430

997,208

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

2023

2022

Directors

2

2

Admin

2

2

Direct

20

26

24

30

2023

2022

£

£

Directors' remuneration

60,874

55,919

Directors' pension contributions to money purchase schemes

1,168

1,303

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

Money purchase schemes

2

2

4.	OPERATING PROFIT

The operating profit is stated after charging:

2023

2022

£

£

Other operating leases

147,424

175,982

Depreciation - owned assets

54,032

77,307

Depreciation - assets on hire purchase contracts or finance leases

-

268

Loss on disposal of fixed assets

3,426

780

Auditors' remuneration

12,950

13,250

5.

INTEREST RECEIVABLE AND SIMILAR INCOME

2023

2022

£

£

Deposit account interest

2,216

186

Other interest receivable

394

293

2,610

479

6.

INTEREST PAYABLE AND SIMILAR EXPENSES

2023

2022

£

£

Bank interest

73,507

42,074

Interest on taxation

4,028

1,566

Loan interest

-

110

Hire purchase interest

-

3

77,535

43,753

7.

TAXATION

Analysis of the tax charge

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

2023

2022

£

£

Current tax:

UK corporation tax

77,509

132,179

Deferred tax

(20,000

)

(6,000

)

Tax on profit

57,509

126,179

Reconciliation of total tax charge included in profit and loss

The tax assessed for the year is lower than the standard rate of corporation tax in the UK. The difference is explained below:

2023

2022

£

£

Profit before tax

307,531

669,174

Profit multiplied by the standard rate of corporation tax in the UK of 20.500% (2022 - 19%)

63,044

127,143

Effects of:

Expenses not deductible for tax purposes

(1,183

)

-

Other permanent differences

(4,352

)

(964

)

Total tax charge

57,509

126,179

8.

DIVIDENDS

2023

2022

£

£

Ordinary A shares of £1 each

Interim

64,800

74,650

Ordinary B shares of £1 each

Interim

56,600

62,050

Ordinary C shares of £1 each

Interim

3,250

13,000

Ordinary D shares of £1 each

Interim

35,000

20,000

Ordinary E shares of £1 each

Interim

35,000

20,000

194,650

189,700