Glenmere Timber Company Limited |
Strategic Report |
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The directors present their strategic report on the company for the year ended 31 March 2023. |
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Review of the business |
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The company's principle activity is that of timber importing, sawmilling and merchants of hardwood timber to trade customers. The directors look to identify opportunities for growth within the business with a view to increase its customer base. The company will continue to prioritise service and quality of goods to its current customers. The directors are considering the development of some of the property that was owned in this company. However in order to not expose the trade in anyway to the inherent risks of such an activity any property development will be in a separate entity. For this reason, during the prior year the company restructured, to create a new property development business into which the properties owned by this company were transferred at market value of £6,190,000. This resulted in a exceptional profit in the prior year of £4,663,917. The resulting inter group debt was written off in the prior year. |
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Results and performance |
The results of the company, as set out on page 8, show a profit on ordinary activities before tax of £129,729 (2022: Loss of £743,476). The prior years loss is shown after the inter group loan write off of £6,190,000 and the profit on the sale of the properties of £4,663,917. Based in the Midlands the company is strategically well placed to make nationwide deliveries using its own fleet of vehicles. |
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Key performance indicators ("KPIs") |
Operating profit has decreased to £168,596 (2022: £797,615). The decrease in profit is mainly attributable to a decrease in turnover and gross profit margin reducing. The profit for the year, after taxation was £98,290 (2022: Loss £892,305). Ordinary dividends paid during the year amounted to £Nil (2022: £300,000). A preference dividend of £25,106 (2022: £9,066), was paid in the year. |
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Business environment |
The company operates in a very competitive market against companies of varying sizes. It is a forever changing market and it is necessary to ensure the company continues to evolve and meet the requirements of the consumer. |
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Principle risks and uncertainties |
The company has identified its principal risks and uncertainties as strong competition for sales combined with often limited availability for sourcing of stock and delays in shipment arrivals. The company maintains a robust position by continuously monitoring stock levels and holding large range of stocks to prevent shortfalls. It is necessary to ensure the company continues to evolve and provide a quality service to the consumer. The global events have impacted on all companies and especially those in the timber trade where they have seen prices increase globally and issues in supply. The company has a strong balance sheet and we anticipate that the company will continue as a going concern. |
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Invoice Finance |
The company has an invoice finance arrangement that enables it to receive advances against its sales invoices. The company discloses both the debtors and creditors relating to this agreement separately within its Statement of Financial Position. |
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Forward Rate Currency Agreements |
The company engaged in forward rate currency agreements during the year, Forward Rate Currency Agreements are used to cover confirmed future orders. |
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This report was approved by the board on 4 September 2023 and signed by its order. |
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Mr K N J Robinson |
Secretary |
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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 Auditor’s 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. |
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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. |
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Other information |
The other information comprises the information included in the annual report other than the financial statements and our auditor’s report thereon. The directors are responsible for the other information contained within the annual report. 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. 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 course of 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. |
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Opinions on other matters prescribed by the Companies Act 2006 |
In our opinion, based on the work undertaken in the course of the audit: |
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the information given in the strategic report and the directors’ report for the financial year for which the financial statements are prepared is consistent with the financial statements; and |
● |
the strategic report and the directors’ report have been prepared in accordance with applicable legal requirements. |
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Matters on which we are required to report by exception |
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Investment property |
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Investment property is initially recognised at cost and then subsequently measured at fair value. Changes in value are recognised in profit or loss. |
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Stocks |
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Stocks are measured at the lower of cost and estimated selling price less costs to complete and sell. Cost is determined using the first in first out method. A set policy for writing down stock based on age is followed. The carrying amount of stock sold is recognised as an expense in the period in which the related revenue is recognised. |
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Debtors |
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Short term debtors are measured at transaction price (which is usually the invoice price), less any impairment losses for bad and doubtful debts. Loans and other financial assets are initially recognised at transaction price including any transaction costs and subsequently measured at amortised cost determined using the effective interest method, less any impairment losses for bad and doubtful debts. |
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Creditors |
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Short term creditors are measured at transaction price (which is usually the invoice price). Loans and other financial liabilities are initially recognised at transaction price net of any transaction costs and subsequently measured at amortised cost determined using the effective interest method. |
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Taxation |
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A current tax liability is recognised for the tax payable on the taxable profit of the current and past periods. A current tax asset is recognised in respect of a tax loss that can be carried back to recover tax paid in a previous period. Deferred tax is recognised in respect of all timing differences between the recognition of income and expenses in the financial statements and their inclusion in tax assessments. 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. Deferred tax is measured using the tax rates and laws that have been enacted or substantively enacted by the reporting date and that are expected to apply to the reversal of the timing difference, except for revalued land and investment property where the tax rate that applies to the sale of the asset is used. Current and deferred tax assets and liabilities are not discounted. |
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Provisions |
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Provisions (ie liabilities of uncertain timing or amount) are recognised when there is an obligation at the reporting date as a result of a past event, it is probable that economic benefit will be transferred to settle the obligation and the amount of the obligation can be estimated reliably. |
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Foreign currency translation |
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Transactions in foreign currencies are initially recognised at the rate of exchange ruling at the date of the transaction. At the end of each reporting period foreign currency monetary items are translated at the closing rate of exchange. Non-monetary items that are measured at historical cost are translated at the rate ruling at the date of the transaction. All differences are charged to profit or loss. |
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Leased assets |
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A lease is classified as a finance lease if it transfers substantially all the risks and rewards incidental to ownership. All other leases are classified as operating leases. The rights of use and obligations under finance leases are initially recognised as assets and liabilities at amounts equal to the fair value of the leased assets or, if lower, the present value of the minimum lease payments. Minimum lease payments are apportioned between the finance charge and the reduction in the outstanding liability using the effective interest rate method. The finance charge is allocated to each period during the lease so as to produce a constant periodic rate of interest on the remaining balance of the liability. Leased assets are depreciated in accordance with the company's policy for tangible fixed assets. If there is no reasonable certainty that ownership will be obtained at the end of the lease term, the asset is depreciated over the lower of the lease term and its useful life. Operating lease payments are recognised as an expense on a straight line basis over the lease term. |
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Operating leases - Lessor |
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Rentals received under operating leases are recognised in the profit and loss on a straight line basis over the period of the lease. |
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Pensions |
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Contributions to defined contribution plans are expensed in the period to which they relate. |
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2 |
Critical accounting estimates and judgements |
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The following key judgements and assumptions concerning the future and other key sources of estimation uncertainty at the reporting date that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year include: (a) Fair value of investment property The fair value of investment property is subject to change in the current market. Fair value adjustments have no effect on tax charges, directors remuneration and dividends proposed and are purely an accounting adjustment to ensure compliance with FRS102. In the opinion of the directors, fair value can be measured reliably by the directors and seeking an external professional valuation would incur significant undue costs. (b) Stock valuations The stock is monitored against age profile and market demand. The company has a set policy in place in respect of age write downs. Stock and the related provisions are reviewed at the year end by the directors. |
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3 |
Exceptional items |
2023 |
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2022 |
£ |
£ |
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Profit on sale of investment and freehold properties on restructure |
- |
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4,663,914 |
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Intragroup debt write off on restructure |
- |
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(6,190,000) |
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- |
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(1,526,086) |
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4 |
Analysis of turnover |
2023 |
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2022 |
£ |
£ |
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Sale of goods |
11,603,654 |
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13,784,153 |
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By geographical market: |
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UK |
11,365,531 |
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13,396,816 |
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Europe |
- |
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25,644 |
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Rest of world |
238,123 |
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361,693 |
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11,603,654 |
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13,784,153 |
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5 |
Operating profit |
2023 |
|
2022 |
£ |
£ |
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This is stated after charging: |
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Depreciation of owned fixed assets |
80,225 |
|
27,992 |
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Auditors' remuneration for audit services |
5,000 |
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5,000 |
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Key management personnel compensation (including directors' emoluments) |
|
142,600 |
|
96,600 |
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Carrying amount of stock sold |
9,153,932 |
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10,630,944 |
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|
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6 |
Directors' emoluments |
2023 |
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2022 |
£ |
£ |
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Emoluments |
66,071 |
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41,973 |
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Number of directors to whom retirement benefits accrued: |
2023 |
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2022 |
Number |
Number |
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Defined contribution plans |
1 |
|
1 |
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7 |
Staff costs |
2023 |
|
2022 |
£ |
£ |
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Wages and salaries |
849,773 |
|
785,174 |
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Social security costs |
92,017 |
|
79,427 |
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Other pension costs |
65,142 |
|
63,146 |
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|
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|
1,006,932 |
|
927,747 |
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Average number of employees during the year |
Number |
Number |
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Administration |
9 |
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9 |
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Development |
1 |
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2 |
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Manufacturing |
17 |
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18 |
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Sales |
1 |
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1 |
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|
28 |
|
30 |
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|
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|
|
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8 |
Interest payable |
2023 |
|
2022 |
£ |
£ |
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Bank loans and overdrafts |
892 |
|
490 |
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Other loans |
8,430 |
|
8,040 |
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Dividends on preference shares |
25,106 |
|
9,066 |
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Factoring interest |
1,433 |
|
1,823 |
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|
|
|
|
|
35,861 |
|
19,419 |
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|
|
|
|
|
|
|
|
|
9 |
Taxation |
2023 |
|
2022 |
£ |
£ |
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Analysis of charge in period |
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Current tax: |
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UK corporation tax on profits of the period |
(13,594) |
|
161,679 |
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|
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Deferred tax: |
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Origination and reversal of timing differences |
45,033 |
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(12,850) |
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|
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|
|
|
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|
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Tax on profit on ordinary activities |
31,439 |
|
148,829 |
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Factors affecting tax charge for period |
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The differences between the tax assessed for the period and the standard rate of corporation tax are explained as follows: |
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|
2023 |
|
2022 |
£ |
£ |
|
Profit/(loss) on ordinary activities before tax |
129,729 |
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(743,476) |
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|
|
|
|
|
|
|
|
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Standard rate of corporation tax in the UK |
19% |
|
19% |
|
£ |
£ |
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Profit on ordinary activities multiplied by the standard rate of corporation tax |
|
24,649 |
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(141,260) |
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Effects of: |
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Expenses not deductible for tax purposes |
6,975 |
|
1,184,126 |
|
Super deduction in excess of asset cost |
(14,250) |
|
- |
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Deferred tax change in rate |
14,065 |
|
- |
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Transfer of freehold and investment property on reorganisation |
- |
|
(894,037) |
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Current tax charge for period |
31,439 |
|
148,829 |
|
|
|
|
|
|
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Factors that may affect future tax charges |
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From 1 April 2023 the main corporation tax rate increases to 25% and it is expected that this will affect the clients future tax liability. Other than this there are no further significant changes expected that will affect future tax charges. |
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10 |
Tangible fixed assets |
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|
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Fixtures, fittings, tools and equipment |
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|
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At cost |
£ |
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Cost or valuation |
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At 1 April 2022 |
1,072,633 |
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Additions |
250,003 |
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Disposals |
(66,850) |
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At 31 March 2023 |
1,255,786 |
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|
|
|
|
|
|
|
|
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Depreciation |
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At 1 April 2022 |
992,608 |
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Charge for the year |
80,225 |
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On disposals |
(51,452) |
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At 31 March 2023 |
1,021,381 |
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|
|
|
|
|
|
|
|
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Carrying amount |
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At 31 March 2023 |
234,405 |
|
At 31 March 2022 |
80,025 |
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|
|
|
|
|
|
|
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11 |
Investment property |
2023 |
£ |
|
Valuation |
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At 1 April 2022 |
238,134 |
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At 31 March 2023 |
238,134 |
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Investment property has been valued by the company directors at fair value. The valuation was completed by the directors using their knowledge of the properties in the area. |
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If investment property had been accounted for under the historical cost accounting rules the properties would have been accounted for as follows: |
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|
|
|
|
|
2023 |
|
2022 |
£ |
£ |
|
Historical cost |
|
|
|
|
238,134 |
|
238,134 |
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|
|
|
|
|
|
|
|
|
12 |
Stocks |
2023 |
|
2022 |
£ |
£ |
|
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Finished goods and goods for resale |
3,182,543 |
|
3,134,893 |
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|
|
|
|
|
|
|
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|
13 |
Debtors |
2023 |
|
2022 |
£ |
£ |
|
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Trade debtors |
2,036,253 |
|
3,103,169 |
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Other debtors |
42,740 |
|
13,681 |
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Prepayments and accrued income |
36,742 |
|
64,500 |
|
|
|
|
|
|
2,115,735 |
|
3,181,350 |
|
|
|
|
|
|
|
|
|
|
14 |
Creditors: amounts falling due within one year |
2023 |
|
2022 |
£ |
£ |
|
|
Bank overdrafts |
- |
|
417,367 |
|
Trade creditors |
799,689 |
|
761,557 |
|
Corporation tax |
- |
|
161,679 |
|
Other taxes and social security costs |
318,998 |
|
370,570 |
|
Other creditors |
417,905 |
|
634,252 |
|
Accruals and deferred income |
88,906 |
|
102,735 |
|
|
|
|
|
|
1,625,498 |
|
2,448,160 |
|
|
|
|
|
|
|
|
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The bank overdraft of £Nil (2022: £56,107) is secured on part of the freehold land and buildings. Other creditors of £Nil (2022: £360,759) are secured on the factored debts. |
|
15 |
Creditors: amounts falling due after one year |
2023 |
|
2022 |
£ |
£ |
|
|
Preference shares |
760,000 |
|
760,000 |
|
|
|
|
|
|
|
|
|
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Preference shares can be redeemed by the company or at the option of the shareholder. Interest is paid on preference shares at 1% over the bank base rate. |
|
16 |
Deferred taxation |
2023 |
|
2022 |
£ |
£ |
|
|
Accelerated capital allowances |
58,602 |
|
13,569 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2023 |
|
2022 |
£ |
£ |
|
|
At 1 April |
13,569 |
|
26,419 |
|
Charged/(credited) to the profit and loss account |
45,033 |
|
(12,850) |
|
|
At 31 March |
58,602 |
|
13,569 |
|
|
|
|
|
|
|
|
|
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The deferred tax liability on accelerated capital allowances is expected to decrease as the depreciation rates are in excess of writing down allowances but this may be partly offset by an increase in future corporation tax rates. |
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17 |
Share capital |
Nominal |
|
2023 |
|
2023 |
|
2022 |
value |
Number |
£ |
£ |
|
Allotted, called up and fully paid: |
|
Ordinary shares |
£1 each |
|
50,000 |
|
50,000 |
|
50,000 |
|
Preference shares |
£1 each |
|
760,000 |
|
760,000 |
|
760,000 |
|
|
|
|
|
|
810,000 |
|
810,000 |
|
|
|
|
|
|
|
|
|
|
18 |
Other reserves |
2023 |
|
2022 |
|
Revaluation reserve |
£ |
£ |
|
|
At 1 April |
- |
|
792,432 |
|
Loss on revaluation of land and buildings |
- |
|
(792,432) |
|
|
At 31 March |
- |
|
- |
|
|
|
|
|
|
|
|
|
|
Includes all current and prior year revaluation gains and losses in respect of revaluation to fair value. Revaluations are recognised in the profit and loss in the year they occur and are then transferred from the profit and loss account to the revaluation reserve. Any amounts debited or credited to the revaluation reserve are not allowable or income for tax purposes. All amounts are non-distributable. |
|
19 |
Profit and loss account |
2023 |
|
2022 |
£ |
£ |
|
|
At 1 April |
3,363,590 |
|
3,763,463 |
|
Profit/(loss) for the financial year |
98,290 |
|
(892,305) |
|
Dividends |
- |
|
(300,000) |
|
Transfer (to) / from revaluation reserve |
- |
|
792,432 |
|
|
At 31 March |
3,461,880 |
|
3,363,590 |
|
|
|
|
|
|
|
|
|
|
Includes all current and prior year retained profit and losses. All amounts are distributable. |
|
20 |
Dividends |
2023 |
|
2022 |
£ |
£ |
|
|
Dividends on preference shares (note 8) |
25,106 |
|
9,066 |
|
Dividends on ordinary shares (note 19) |
- |
|
300,000 |
|
|
|
|
|
|
25,106 |
|
309,066 |
|
|
|
|
|
|
|
|
|
|
|
21 |
Defined contribution pension plans |
|
|
The company operates a defined contribution pension scheme. The assets of the scheme are held separately from those of the company in an independently administered fund. The pension cost charge represents contributions payable by the company to the fund. Contributions payable by the company for the year amounted to £65,142 (2022: £63,146). |
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22 |
Other financial commitments |
|
|
Total future minimum lease payments under non-cancellable operating leases: |
|
|
|
Land and buildings |
|
Land and buildings |
Other |
Other |
|
|
2023 |
|
2022 |
|
2023 |
|
2022 |
£ |
£ |
£ |
£ |
|
Falling due: |
|
within two to five years |
627,000 |
|
807,000 |
|
- |
|
- |
|
|
|
|
|
|
|
|
|
|
23 |
Contingent liabilities |
|
|
The company has given a counter indemnity to Barclays Bank of £Nil (2022: £30,000) in respect of a guarantee provided by the bank to HMRC. |
|
|
24 |
Related party transactions |
2023 |
|
2022 |
£ |
£ |
|
|
Key management personnel of the company |
|
Interest is paid on the in hand loan account balances at 2.00% (2022: 2.00%) and amounted to £8,403 (2022: £8,415). Interest is paid on overdrawn loan account balances at 2.00% (2022: 2.00%) and amounted to £766 (2022: £Nil). The outstanding balances are unsecured and repayable on demand. |
|
Amount due from (to) the related party |
(217,368) |
|
(522,041) |
|
|
|
|
|
|
|
|
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Entities with control, joint control or significant influence over the entity |
|
On the 21 April 2021 all freehold and investment land and buildings were transferred to a property holding company as part of a restructure. The land and buildings were transferred at market value which amounted to £6,190,000. |
|
Amounts written off re related party |
- |
|
6,190,000 |
|
|
|
|
|
|
|
|
|
|
Amount due from (to) the related party |
(158,891) |
|
(86,696) |
|
|
|
|
|
|
|
|
|
|
|
Other related parties |
|
Rent was paid of £193,400 (2022: £193,400). The outstanding balances are unsecured and repayable on demand. |
|
Amount due from (to) the related party |
(142,167) |
|
(147,890) |
|
|
|
|
|
|
|
|
|
|
25 |
Controlling party |
|
|
On the 21 April 2021 all shares in the company were acquired by Glenmere Timber Holding Co Limited a company incorporated in England. Its registered office is Hoptons Sawmills, Gores Lane, Market Harborough, Leicestershire. LE16 8AJ. |
|
The only group in which the results of the company are consolidated is that headed by Glenmere Timber Holding Co Limited and the accounts are available to the public. |
|
|
26 |
Presentation currency |
|
|
The financial statements are presented in Sterling. |
|
|
27 |
Legal form of entity and country of incorporation |
|
|
Glenmere Timber Company Limited is a private company limited by shares and incorporated in England. |
|
|
28 |
Principal place of business |
|
|
The address of the company's principal place of business and registered office is: |
|
|
Hoptons Sawmills |
|
Gores Lane |
|
Market Harborough |
|
Leicestershire |
|
LE16 8AJ |