Company Registration No. 02751833 (England and Wales)
STONEGATE AGRICULTURE LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 2 OCTOBER 2021
STONEGATE AGRICULTURE LIMITED
COMPANY INFORMATION
Director
Mr A D Gott
Company number
02751833
Registered office
Lacock Green
Corsham Road
Lacock
Chippenham
SN15 2LZ
Auditor
MHA Moore and Smalley
Richard House
9 Winckley Square
Preston
PR1 3HP
STONEGATE AGRICULTURE LIMITED
CONTENTS
Page
Strategic report
1 - 2
Director's report
3
Director's responsibilities statement
4
Independent auditor's report
5 - 7
Statement of comprehensive income
8
Balance sheet
9
Statement of changes in equity
10
Notes to the financial statements
11 - 25
STONEGATE AGRICULTURE LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 2 OCTOBER 2021
- 1 -
The director presents the strategic report for the year ended 2 October 2021.
Fair review of the business
The principal activity of the company is poultry farming for the production of high-quality eggs and pullets.
The company has no caged hens and is fully focussed on free range and organic egg production.
All of our production goes to fellow Group companies who collect, grade and package free range and organic eggs. From these Group companies our eggs are delivered daily to many of the UK’s leading supermarkets and the most exclusive restaurants, as well as first class egg products to some of the biggest names in food manufacturing.
The company experienced positive sales growth in the year with turnover of £14.7m (2020: £13.8m). The company’s Operating Profit was £511,775 (2020: £125,302). The
d
irector considers the company to be in a good financial position with net assets of £0.
6
m as at 2 October 2021.
The results for the year reflect a strong year of performance particularly in the production of free range and organic egg.
Principal risks and uncertainties
Sales from the company are primarily to other Group companies which predict, forecast and manage the demands of customers by having the correct supply and type of egg.
Raw Material Risk
The volatility of commodity prices, particularly wheat, is a constant challenge for the company, mitigated by strong relationships with the customers and suppliers.
Health & Safety Risk
The company ensures that a thorough review of the workplace is carried out with any relevant actions taken so as to provide a safe working environment for all our employees.
Credit risk
The company's principal financial assets are receivables and investments.
The company's credit risk is primarily attributable to its receivables. The majority of debtors are from other Group companies and as such the
d
irector does not believe there to be any significant risk of default.
Liquidity risk
In order to maintain liquidity to ensure that sufficient funds are available for ongoing operations and future developments, the company manages its working capital to ensure an excess of current assets over current liabilities. The majority of short-term creditors of the company are other Group companies.
STONEGATE AGRICULTURE LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 2 OCTOBER 2021
- 2 -
Market Risk
The company recognises the risk of competition in a highly active market. Through investment in our products, facilities and people we aim to meet or exceed the demands of our customers and the consumer. Having removed ourselves from caged egg production the business is less at risk from consumer and retail pressure against egg production.
Covid-19
The outbreak of the Covid-19 virus continued to have a significant impact on a large number of businesses
in
2021. However, food producers have been less severely impacted than many businesses and the
d
irector believes that the company is well placed to minimise any impact.
Management are continuously assessing the impact of the coronavirus on clients, suppliers and employees. Regular contact is taking place throughout the supply chain to minimise any disruption. Strategies and procedures have been in place for employees safety including working remotely where feasibly, and for additional site labour to quickly be sourced if and when required, all of which provides the business the flexibility it requires to both prepare for and react to the ever-changing unprecedented circumstances.
Russia-Ukraine war
The invasion of Ukraine by Russia in February 2022 has created significant uncertainty in many commodity markets, most notably feed, fuel and energy costs. Where forward positions have been taken the company is protected from that cover in the short to medium term. Costs that are exposed to the current market volatility are being managed pro-actively through sympathetic engagement with our strategic suppliers and customers. The company remains confident of its ability to appropriately manage the short to medium term volatility being generated by the conflict in Ukraine.
Key performance indicators
Given the straightforward nature of the company's operations, the
d
irector is of the opinion that analysis using KPIs other than the financial results, is not necessary for an understanding of the development, performance or position of the business.
Mr A D Gott
Director
6 May 2022
STONEGATE AGRICULTURE LIMITED
DIRECTOR'S REPORT
FOR THE YEAR ENDED 2 OCTOBER 2021
- 3 -
The director presents his annual report and financial statements for the year ended 2 October 2021.
Principal activities
The principal activity of the company is poultry farming for the production of high-quality eggs and pullets. The company has no caged hens and is fully focussed on free range and organic egg production.
Results and dividends
The results for the year are set out on page 8.
No ordinary dividends were paid. The director does not recommend payment of a final dividend.
Director
The director who held office during the year and up to the date of signature of the financial statements was as follows:
Mr A D Gott
Auditor
The auditor, MHA Moore and Smalley, is deemed to be reappointed under section 487(2) of the Companies Act 2006.
Strategic report
T
he company has chosen in accordance with Companies Act 2006, s. 414C(11) to set out in the company's strategic report information required by Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008, Sch. 7 to be contained in the directors' report. It has done so in respect of
financial risk management objectives and policies, and future developments.
Statement of disclosure to auditor
So far as each person who was a director at the date of approving this report is aware, there is no relevant audit information of which the company’s
auditor
is unaware. Additionally, the directors individually have taken all the necessary steps that they ought to have taken as directors in order to make themselves aware of all relevant audit information and to establish that the company’s
auditor
is aware of that information.
On behalf of the board
Mr A D Gott
Director
6 May 2022
STONEGATE AGRICULTURE LIMITED
DIRECTOR'S RESPONSIBILITIES STATEMENT
FOR THE YEAR ENDED 2 OCTOBER 2021
- 4 -
The director is responsible for preparing the annual report and the financial statements in accordance with applicable law and regulations.
Company law requires the director to prepare financial statements for each financial year. Under that law the director has 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 director must not approve the financial statements unless he is 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 director is 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 director is 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. He is 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.
STONEGATE AGRICULTURE LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF STONEGATE AGRICULTURE LIMITED
- 5 -
Opinion
We have audited the financial statements of Stonegate Agriculture Limited (the 'company') for the year ended 2 October 2021 which comprise the statement of comprehensive income, the balance sheet, the statement of changes in equity and notes to the financial statements, including significant accounting policies.
The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including FRS 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 2 October 2021 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.
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.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the director's 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 director with respect to going concern are described in the relevant sections of this report.
The other information comprises the information included in the annual report other than the financial statements and our auditor's report thereon. The director is 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.
STONEGATE AGRICULTURE LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF STONEGATE AGRICULTURE LIMITED
- 6 -
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of our audit
:
-
the information given in the strategic report and the director's
r
eport for the financial year for which the financial statements are prepared is consistent with the financial statements
; and
-
the strategic report and the director's report 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 identifie
d
material misstatements in the strategic report and the director's
r
eport
.
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
remuneration specified by law are not made; or
-
we have not received all the information and explanations we require for our audit.
Responsibilities of director
As explained more fully in the director's
r
esponsibilities
s
tatement, the director is 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 director determines is 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
director is
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
director
either
intends
to liquidate the company or to cease operations, or has no realistic alternative but to do so.
Auditor's 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 an
auditor's
report 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 specific procedures for this engagement and the extent to which these are capable of detecting irregularities, including fraud
,
are
detailed below:
-
Enquiries with management about any known or suspected instances of non-compliance with laws and regulations;
-
Enquires with management about any known or suspected instances of fraud;
-
Review of minutes of
meetings of management;
-
Examination of journal entries and other adjustments to test for appropriateness and identify any instances of management override of controls;
-
Review of legal and professional expenditure to identify any evidence of ongoing litigation or enquiries.
We identified the following areas as those most likely to have a material impact on the financial statements:
employment law, health and safety legislation
, food hygiene and safety regulations,
and compliance with the UK Companies Act
.
STONEGATE AGRICULTURE LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF STONEGATE AGRICULTURE LIMITED
- 7 -
Owing to the inherent limitations of an audit, there is an unavoidable risk that some material misstatements in the financial statements may not be detected, even though the audit is properly planned and performed in accordance with the ISAs (UK). For instance, the further removed non-compliance is from the events and transactions reflected in the financial statements, the less likely the auditor is to become aware of it or to recognize the non-compliance.
A further description of our responsibilities is available on the Financial Reporting Council’s website at: https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's 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 him in an auditor's report 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.
Jonathan Pinder (Senior Statutory Auditor)
For and on behalf of MHA Moore and Smalley
Chartered Accountants
Statutory Auditor
Richard House
9 Winckley Square
Preston
PR1 3HP
10 May 2022
STONEGATE AGRICULTURE LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 2 OCTOBER 2021
- 8 -
53 weeks
52 weeks
ended 2
ended 26
October
September
2021
2020
Notes
£
£
Turnover
3
14,741,833
13,782,000
Cost of sales
(13,175,495)
(13,008,610)
Gross profit
1,566,338
773,390
Administrative expenses
(1,231,538)
(1,375,713)
Other operating income
176,975
727,625
Operating profit
4
511,775
125,302
Interest receivable and similar income
6
303,571
Interest payable and similar expenses
7
(1,322)
Amounts written off investments
8
(30,000)
Profit before taxation
510,453
398,873
Tax on profit
9
(163,941)
(90,095)
Profit for the financial year
346,512
308,778
The profit and loss account has been prepared on the basis that all operations are continuing operations.
STONEGATE AGRICULTURE LIMITED
BALANCE SHEET
AS AT
2 OCTOBER 2021
02 October 2021
- 9 -
2021
2020
Notes
£
£
£
£
Fixed assets
Tangible assets
12
3,413,929
2,412,078
Investments
13
31
31
3,413,960
2,412,109
Current assets
Stocks
16
2,387,195
1,913,189
Debtors
15
3,569,631
3,365,496
Cash at bank and in hand
61,585
28,272
6,018,411
5,306,957
Creditors: amounts falling due within one year
17
(8,181,752)
(7,413,588)
Net current liabilities
(2,163,341)
(2,106,631)
Total assets less current liabilities
1,250,619
305,478
Creditors: amounts falling due after more than one year
18
(434,688)
Provisions for liabilities
Deferred tax liability
20
171,459
7,518
(171,459)
(7,518)
Net assets
644,472
297,960
Capital and reserves
Called up share capital
22
1,000
1,000
Profit and loss reserves
643,472
296,960
Total equity
644,472
297,960
The financial statements were approved and signed by the director and authorised for issue on 6 May 2022
Mr A D Gott
Director
Company Registration No. 02751833
STONEGATE AGRICULTURE LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 2 OCTOBER 2021
- 10 -
Share capital
Profit and loss reserves
Total
Notes
£
£
£
Balance at 29 September 2019
1,000
291,753
292,753
Year ended 26 September 2020:
Profit and total comprehensive income for the year
-
308,778
308,778
Dividends
10
-
(303,571)
(303,571)
Balance at 26 September 2020
1,000
296,960
297,960
Year ended 2 October 2021:
Profit and total comprehensive income for the year
-
346,512
346,512
Balance at 2 October 2021
1,000
643,472
644,472
STONEGATE AGRICULTURE LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 2 OCTOBER 2021
- 11 -
1
Accounting policies
Company information
Stonegate Agriculture Limited is a
private
company
limited by shares
incorporated in
England and Wales
.
The registered office is
Lacock Green, Corsham Road, Lacock, Chippenham, SN15 2LZ.
1.1
Accounting convention
These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006.
The financial statements are prepared in
sterling
, which is the functional currency of the company.
Monetary a
mounts
in these financial statements are
rounded to the nearest £.
The financial statements have been prepared under the historical cost convention. The principal accounting policies adopted are set out below.
This company is a qualifying entity for the purposes of FRS 102, being a member of a group where the parent of that group prepares
publicly available consolidated financial statements
, including this company,
which are
intended to give a true and fair view of the assets, liabilities,
financial position and profit or loss
of the group
.
T
he company has
therefore
taken advantage of
e
xemptions from the following disclosure requirements:
-
Section 7 ‘Statement of Cash Flows’ – Presentation of a statement of cash
f
low and related notes and disclosures
;
-
Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instrument Issues’ – Carrying amounts, interest income/expense and net gains/losses for each category of financial instrument; basis of determining fair values; details of collateral, loan defaults or breaches, details of hedges, hedging fair value changes recognised in profit or loss and in other comprehensive income
;
-
Section 33 ‘Related Party Disclosures’ – Compensation for key management personnel
.
The company has taken advantage of the exemption under section 400 of the
Companies Act 2006 not to prepare consolidated accounts
, as it is included in the consolidated accounts of a larger group.
The
financial statements
present information about the company as an individual entity and not about its group
.
The results of the company are included in the consolidated financial statements of Stonegate Food Group Limited, registered office address
Lacock Green, Corsham Road, Lacock, Chippenham, Wiltshire, SN15 2LZ
.
STONEGATE AGRICULTURE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 2 OCTOBER 2021
1
Accounting policies
(Continued)
- 12 -
1.2
Going concern
The outbreak of the Covid-19 virus
true
continued to have
significant impact on a large number of business
es in 2021
.
However, food producers have been less severely impacted than many businesses and the
d
irector believes that the company is well placed to minimise any impact.
Management are continuously assessing the impact of the coronavirus on clients, suppliers and employees. Regular contact is taking place throughout the supply chain to minimise any disruption. Strategies and procedures have been in place for employees safety including working remotely where feasibly, and for additional site labour to quickly be sourced if and when required, all of which provides the business the flexibility it requires to both prepare for and react to the ever-changing unprecedented circumstances.
The measures taken by the government to slow down the spread of the virus have resulted in an increased demand for the company’s products. Actions have been taken in the past to enable the business to establish a strong financial platform, and this together with the current balance sheet strength positions the company well.
After considering the impact of the above, at the time of approving the financial statements, the
d
irector has a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future. Thus the
d
irector continues to adopt the going concern basis of accounting in preparing the financial statements.
1.3
Turnover
Turnover is recognised at the fair value of the consideration received or receivable for goods provided in the normal course of business
, and
is shown net of VAT and other sales related taxes
.
The fair value of consideration takes into account trade discounts, settlement discounts and volume rebates.
Revenue from the sale of goods is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer
(usually on dispatch of the goods)
, the amount of revenue can be measured reliably, it is probable that the economic benefits associated with the transaction will flow to the entity and the costs incurred or to be incurred in respect of the transaction can be measured reliably.
1.4
Tangible fixed assets
Tangible fixed assets
are initially measured at cost and subsequently measured at cost, net of depreciation and any impairment losses.
Depreciation is recognised so as to write off the cost of assets less their residual values over their useful lives on the following bases:
Freehold land and buildings
Land not depreciated, buildings 2% per annum
Plant and machinery
6% to 15% per annum
Fixtures, fittings & equipment
5% per annum
Motor vehicles
25% per annum
Assets in the course of construction are not depreciated.
The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and
is credited or charged to profit or loss
.
STONEGATE AGRICULTURE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 2 OCTOBER 2021
1
Accounting policies
(Continued)
- 13 -
1.5
Fixed asset investments
Interests in subsidiaries
are initially measured at cost and subsequently measured at cost less any accumulated impairment losses.
The investments are assessed for impairment at each reporting date
and
any
impairment
losses or reversals of impairment losses are recognised immediately in
profit
or
loss
.
A subsidiary is an entity controlled by the company
. Control is
the power to govern the financial and operating policies of
the
entity so as to obtain benefits from its activities.
1.6
Impairment of fixed assets
At each reporting
period
end date, the
company
reviews the carrying amounts of its tangible
assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the
company
estimates the recoverable amount of the cash-generating unit to which the asset belongs.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in
profit
or
loss
, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.
Recognised impairment losses are reversed if, and only if, the reasons for the impairment loss have ceased to apply. Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit)
in
prior years. A reversal of an impairment loss is recognised immediately in
profit
or
loss
, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.
1.7
Stocks
Stocks are stated at the lower of cost and estimated selling price less costs to complete and sell. Cost comprises direct materials and, where applicable, direct labour costs that have been incurred in bringing the stocks to their present location and condition.
The cost of livestock includes any costs of rearing to the valuation date.
At each reporting date, an assessment is made for impairment. Any excess of the carrying amount of stocks over its estimated selling price less costs to complete and sell is recognised as an impairment loss in profit or loss. Reversals of impairment losses are also recognised in profit or loss.
1.8
Cash and cash equivalents
Cash and cash equivalents
are basic financial assets
and
include cash in hand, deposits held at call with banks, other short-term liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities.
STONEGATE AGRICULTURE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 2 OCTOBER 2021
1
Accounting policies
(Continued)
- 14 -
1.9
Financial instruments
The company has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.
Financial instruments are recognised in the company's balance sheet when the company becomes party to the contractual provisions of the instrument.
Financial assets and liabilities are offset
, with
the net amounts presented in the financial statements
,
when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.
Basic financial assets
Basic financial assets, which include
debtors
and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest
method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest.
Financial assets classified as receivable within one year are not amortised.
Other financial assets
All of the company's assets are basic financial assets.
Impairment of financial assets
Financial assets, other than those
held
at
fair value through profit and loss
, are assessed for indicators of impairment at each reporting end date.
Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected.
If an asset is impaired, the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset’s original effective interest rate. The impairment loss is recognised in profit or loss.
If there is a decrease in the impairment loss arising from an event occurring after the impairment was recognised, the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been, had the impairment not previously been recognised. The impairment reversal is recognised in profit or loss.
Derecognition of financial assets
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when
the company
transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.
Classification of financial liabilities
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the company after deducting all of its liabilities.
STONEGATE AGRICULTURE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 2 OCTOBER 2021
1
Accounting policies
(Continued)
- 15 -
Basic financial liabilities
Basic financial liabilities, including
creditors
,
and
loans from
fellow group companies, are
initially recognised at transaction price unless the arrangement constitutes a
financing transaction, where the debt instrument is measured at the present value of
the future
paymen
ts discounted at a market rate of interest.
Financial liabilities classified as payable within one year are not amortised.
Debt instruments are subsequently carried at amortised cost, using the effective
interest rate method.
Trade creditors
are obligations to pay for goods or services that have been acquired
in the ordinary course of business from suppliers. A
m
ounts payable are classified as
current liabilities if payment is due within one year or less. If not, they are presented
as non-current liabilities.
Trade creditors
are recognised initially at transaction price
and subsequently measured at amortised cost using the effective interest method.
Other financial liabilities
All of the company's liabilities
are basic financial
liabilities.
Derecognition of financial liabilities
Financial liabilities are derecognised when the company’s contractual obligations
expire or are discharged or cancelled.
1.10
Equity instruments
Equity instruments issued by the company are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the company.
1.11
Taxation
The tax expense represents the sum of the tax currently payable and deferred tax.
Current tax
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the
profit and loss account
because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The
company’s
liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.
Deferred tax
Deferred tax liabilities are generally recognised for all timing differences and deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Such assets and liabilities are not recognised if the timing difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.
Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the
profit and loss account
, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset when the
company
has a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.
STONEGATE AGRICULTURE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 2 OCTOBER 2021
1
Accounting policies
(Continued)
- 16 -
1.12
Employee benefits
The costs of short-term employee benefits are recognised as a liability and an expense, unless those costs are required to be recognised as part of the cost of stock or
fixed assets
.
The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received.
Termination benefits are recognised immediately as an expense when the company is demonstrably committed to terminate the employment of an employee or to provide termination benefits.
1.13
Retirement benefits
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
1.14
Leases
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessees. All other leases are classified as operating leases.
Assets held under finance leases are recognised as assets at the lower of the assets fair
value at the date of inception and the present value of the minimum lease payments. The related liability is included in the balance sheet as a finance lease obligation. Lease payments are treated as consisting of capital and interest elements. The interest is charged to profit or loss so as to produce a constant periodic rate of interest on the remaining balance of the liability.
Rentals payable under operating leases,
including
any lease incentives received, are charged to
profit or loss
on a straight line basis over the term of the relevant lease except where another more systematic basis is more representative of the time pattern in which economic benefits from the lease
s
asset are consumed.
1.15
Foreign exchange
Transactions in currencies other than pounds sterling are recorded at the rates of exchange prevailing at the dates of the transactions. At each reporting end date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the reporting end date. Gains and losses arising on translation
in the period
are included in profit or loss.
2
Judgements and key sources of estimation uncertainty
In the application of the company’s accounting policies, the director is required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.
STONEGATE AGRICULTURE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 2 OCTOBER 2021
2
Judgements and key sources of estimation uncertainty
(Continued)
- 17 -
Key sources of estimation uncertainty
The estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are
as follows.
Impairment of trade debtors
At each balance sheet date, management undertake an assessment of the recoverability of trade debtors based upon their knowledge of the customers, ageing of the balances outstanding and previous write off history. Where necessary, an impairment is recorded as a doubtful debt.
The actual level of debt collected may differ from the estimated level of recovery.
3
Turnover and other revenue
An analysis of the company's turnover is as follows:
2021
2020
£
£
Turnover analysed by class of business
Attributable to the principal activity
14,741,833
13,782,000
2021
2020
£
£
Other significant revenue
Dividends received
-
303,571
2021
2020
£
£
Turnover analysed by geographical market
United Kingdom
14,741,833
13,782,000
4
Operating profit
2021
2020
Operating profit for the year is stated after charging/(crediting):
£
£
Fees payable to the company's auditor for the audit of the company's financial statements
11,175
10,900
Depreciation of owned tangible fixed assets
389,404
383,907
Depreciation of tangible fixed assets held under finance leases
30,542
(Profit)/loss on disposal of tangible fixed assets
(8,646)
75,424
Operating lease charges
931,607
935,577
STONEGATE AGRICULTURE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 2 OCTOBER 2021
- 18 -
5
Employees
The average monthly number of persons (including directors) employed by the company during the year was:
2021
2020
Number
Number
Production
61
74
Their aggregate remuneration comprised:
2021
2020
£
£
Wages and salaries
1,437,145
1,843,146
Social security costs
117,065
139,157
Pension costs
25,005
30,281
1,579,215
2,012,584
6
Interest receivable and similar income
2021
2020
£
£
Income from fixed asset investments
Income from shares in group undertakings
303,571
7
Interest payable and similar expenses
2021
2020
£
£
Interest on finance leases and hire purchase contracts
1,322
8
Amounts written off investments
2021
2020
£
£
Impairment charge
-
(30,000)
9
Taxation
2021
2020
£
£
Current tax
UK corporation tax on profits for the current period
50,501
STONEGATE AGRICULTURE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 2 OCTOBER 2021
9
Taxation
2021
2020
£
£
(Continued)
- 19 -
Deferred tax
Origination and reversal of timing differences
122,791
43,368
Changes in tax rates
41,150
(3,774)
Total deferred tax
163,941
39,594
Total tax charge
163,941
90,095
The actual charge for the year can be reconciled to the expected charge for the year based on the profit or loss and the standard rate of tax as follows:
2021
2020
£
£
Profit before taxation
510,453
398,873
Expected tax charge based on the standard rate of corporation tax in the UK of 19.00% (2020: 19.00%)
96,986
75,786
Tax effect of expenses that are not deductible in determining taxable profit
30,029
39,841
Tax effect of income not taxable in determining taxable profit
(57,678)
Effect of change in corporation tax rate
41,150
(3,774)
Group relief
28,123
Other permanent differences
(32,347)
Transfers
35,920
Taxation charge for the year
163,941
90,095
Factors affecting future tax and charges
In March 2021 the Chancellor confirmed, in the budget, an increase in the corporation tax rate from 19% to 25%. The Finance Bill 2021 had its third reading on 24 May 2021 and is now considered substantively enacted. The timing differences expected to reverse on or after 1 April 2023 have been accounted for at 25% and and therefore deferred tax has been provided for at 25% (2020: 19%).
10
Dividends
2021
2020
£
£
Final paid
303,571
STONEGATE AGRICULTURE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 2 OCTOBER 2021
- 20 -
11
Impairments
Impairment tests have been carried out where appropriate and the following impairment losses have been recognised in profit or loss:
2021
2020
Notes
£
£
In respect of:
Fixed asset investments
13
-
30,000
Recognised in:
Amounts written off investments
-
30,000
The impairment losses in respect of financial assets are recognised in other gains and losses in the profit and loss account.
12
Tangible fixed assets
Freehold land and buildings
Assets under construction
Plant and machinery
Fixtures, fittings & equipment
Motor vehicles
Total
£
£
£
£
£
£
Cost
At 27 September 2020
1,007,550
30,370
2,297,592
166,258
3,501,770
Additions
449,332
670,380
269,057
36,090
1,424,859
Disposals
(9,915)
(9,915)
Transfers
(30,370)
3,746
26,624
At 2 October 2021
1,007,550
449,332
2,971,718
295,681
192,433
4,916,714
Depreciation and impairment
At 27 September 2020
126,654
815,576
147,462
1,089,692
Depreciation charged in the year
20,537
379,201
7,485
12,723
419,946
Eliminated in respect of disposals
(6,853)
(6,853)
At 2 October 2021
147,191
1,194,777
7,485
153,332
1,502,785
Carrying amount
At 2 October 2021
860,359
449,332
1,776,941
288,196
39,101
3,413,929
At 26 September 2020
880,896
30,370
1,482,016
18,796
2,412,078
STONEGATE AGRICULTURE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 2 OCTOBER 2021
12
Tangible fixed assets
(Continued)
- 21 -
The net carrying value of tangible fixed assets includes the following in respect of assets held under hire purchase contracts
:
2021
2020
£
£
Plant and machinery
565,918
13
Fixed asset investments
2021
2020
£
£
Unlisted investments
31
31
Movements in fixed asset investments
Investments other than loans
£
Cost
At 27 September 2020 & 2 October 2021
31
Carrying amount
At 2 October 2021
31
At 26 September 2020
31
14
Subsidiaries
Details of the company's subsidiaries at 2 October 2021 are as follows:
Name of undertaking
Address
Nature of business
Class of
% Held
shares held
Direct
Thames Valley Eggs (Production) Limited
1
Dormant
Ordinary
100.00
Registered office addresses (all UK unless otherwise indicated):
1
Lacock Green, Corsham Road, Lacock, Chippenham, Wiltshire, SN15 2LZ
STONEGATE AGRICULTURE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 2 OCTOBER 2021
- 22 -
15
Debtors
2021
2020
Amounts falling due within one year:
£
£
Trade debtors
1,213,442
962,985
Amounts owed by group undertakings
1,730,073
1,921,187
Other debtors
138,573
77,057
Prepayments and accrued income
487,543
404,267
3,569,631
3,365,496
16
Stocks
2021
2020
£
£
Eggs, egg products and packaging
73,032
52,600
Livestock
1,775,452
1,464,350
Feed and raw materials
538,711
396,239
2,387,195
1,913,189
17
Creditors: amounts falling due within one year
2021
2020
Notes
£
£
Obligations under finance leases
19
80,745
Trade creditors
959,395
734,353
Amounts owed to group undertakings
6,127,501
5,973,374
Corporation tax
50,501
Other taxation and social security
30,961
30,596
Other creditors
14,653
50,484
Accruals and deferred income
968,497
574,280
8,181,752
7,413,588
18
Creditors: amounts falling due after more than one year
2021
2020
Notes
£
£
Obligations under finance leases
19
434,688
STONEGATE AGRICULTURE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 2 OCTOBER 2021
- 23 -
19
Finance lease obligations
2021
2020
Future minimum lease payments due under finance leases:
£
£
Within one year
80,745
In two to five years
348,649
In over five years
86,039
515,433
Finance lease payments represent rentals payable by the company for certain items
within tangible fixed assets
held under hire purchase. Leases include purchase options at the end of the lease period, and no restrictions are placed on the use of the assets. The average lease term is
6
years. All leases are on a fixed repayment basis and no arrangements have been entered into for contingent rental payments. The creditor is secured on the assets to which it relates.
20
Deferred taxation
Deferred tax assets and liabilities are offset where the company has a legally enforceable right to do so. The following is the analysis of the deferred tax balances (after offset) for financial reporting purposes:
Liabilities
Liabilities
2021
2020
Balances:
£
£
Accelerated capital allowances
171,459
7,518
2021
Movements in the year:
£
Liability at 27 September 2020
7,518
Charge to profit or loss
163,941
Liability at 2 October 2021
171,459
As at the signing date of these financial statements, the company has not finalised its capital expenditure programme for the forthcoming year, and therefore an assessment as to the likely movement of the related timing differences cannot be made.
21
Retirement benefit schemes
2021
2020
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
25,005
30,281
The company operates a defined contribution pension scheme for all qualifying employees.
The assets of the scheme are held separately from those of the company in an independently administered fund.
STONEGATE AGRICULTURE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 2 OCTOBER 2021
- 24 -
22
Share capital
2021
2020
2021
2020
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Ordinary shares of 70p each
1,428
1,428
1,000
1,000
23
Financial commitments, guarantees and contingent liabilities
The company is party to a cross guarantee in favour of HSBC UK Bank plc. As part of the cross composite guarantee between the companies under common control, a mortgage debenture exists which provides HSBC UK Bank plc with charges over all company assets, as security against its exposure to debt. The total liability under this guarantee across these companies is £8,151,926
(20
20
: £
8,898,590
).
On 12 October 2021 the total liability under this guarantee across these companies was limited to £1,400,000.
The company is party to a cross guarantee in favour of HSBC UK Bank plc. As part of the cross composite guarantee between the group companies, an unlimited multilateral guarantee exists which provides HSBC UK Bank plc with charges over all company assets, as security against its exposure to debt. The total liability under this guarantee across these companies is £5,027,776 (20
20
: £3,698,970).
The company is party to a cross guarantee in favour of HSBC Equipment Finance (UK) Limited in relation to the financing arrangements for various assets in group companies. The total liability under this guarantee across these companies is £
5,067,576
(2020: £nil).
24
Operating lease commitments
Lessee
At the reporting end date the company had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:
2021
2020
£
£
Within one year
874,583
854,613
Between two and five years
3,173,342
3,211,983
In over five years
5,759,251
6,530,814
9,807,176
10,597,410
25
Capital commitments
Amounts contracted for but not provided in the financial statements:
2021
2020
£
£
Acquisition of tangible fixed assets
230,914
150,872
STONEGATE AGRICULTURE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 2 OCTOBER 2021
- 25 -
26
Related party transactions
Transactions with related parties
During the year the company entered into the following transactions with related parties:
Purchases
2021
2020
£
£
Other related parties
887,335
762,465
The following amounts were outstanding at the reporting end date:
2021
2020
Amounts due to related parties
£
£
Other related parties
-
189,141
Other information
In accordance with FRS102, Section 33 'Related Party Transactions', transactions with other group undertakings owned 100% within the group have not been disclosed in these financial statements.
27
Ultimate controlling party
The immediate parent company is Stonegate Farmers Limited.
T
he largest and smallest group in which the results of the company are consolidated is that headed by
Stonegate Food Group Limited
, registered office Lacock Green, Corsham Road, Lacock, Chippenham, Wiltshire, SN15 2LZ. The consolidated financial statements of this group are available to the public and may be obtained from Companies House, Cardiff.
2021-10-02
2020-09-27
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