A & A Lamb Limited |
Strategic Report |
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The director presents his strategic report on the company for the year ended 31 March 2023. |
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Review of the business |
The company's principle activity is that of a fencing contractor. The director looks to identify opportunities for growth within the business with a view to increase its business with current customers and to add further quality customers to its customer base. The company will continue to prioritise service and quality of goods to its current customers. |
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Results and performance |
The results of the company, as set out on page 8, show a profit on ordinary activity before tax of £2,910,449 (2022: £2,059,729). The company is based in the midlands and is strategically placed to take on contracts nationwide. |
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Key Performance Indicators ("KPI's") |
Operating profit has increased to £2,947,157 (15.40%) (2022: £2,082,356 (11.77%)). Profit on ordinary activities before taxation has increased to £2,910,449 (15.20%) (2022: £2,059,729 (11.64%)). The increase is attributable to working closely with their current customers to gain additional contracts as well as gaining contracts with new customers. The profit for the year, after taxation, amounted to £2,328,387 (2022: £1,708,223). Ordinary dividends paid during the year amounted to £1,600,000 (2022: £1,000,000). Return on capital employed has increased to 209.33% (2022: 148.38%). Return on capital employed is calculated as profit before interest and tax, divided by capital employed, which is taken to be total assets less current liabilities, less investments, less cash, plus overdrafts and other short term borrowings. |
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Business environment |
The company operates in a competitive market against companies of various sizes. The market does change and continues to be highly competitive and therefore it is necessary to ensure the company continues to evolve and meet the requirements of the customers. |
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Principle risks and uncertainties |
The company has identified its principle risks and uncertainties as strong competition for sales combined with availability of workers and availability of products. The company maintains a robust position by ensuring stock levels are maintained to prevent shortfalls and purchasing in advance for large contracts to ensure pricing is maintained. The company works closely with its work force and many have worked for the company for a number of years. It is necessary to ensure the company continues to evolve and provide a quality service to the customer. The company has a strong balance sheet, a high quality customer base and has continued to trade strongly. It is anticipated that the company will continue as a going concern. |
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This report was approved by the board on 4 October 2023 and signed on its behalf. |
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M A Stacey |
Director |
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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 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's 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 director's report for the financial year for which the financial statements are prepared is consistent with the financial statements; and |
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the strategic report and the director's 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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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. 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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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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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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There are not considered to be any key judgements or 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. |
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3 |
Analysis of turnover |
2023 |
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2022 |
£ |
£ |
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Revenue from construction contracts |
19,138,748 |
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17,680,333 |
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By geographical market: |
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UK |
19,138,748 |
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17,680,333 |
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4 |
Operating profit |
2023 |
|
2022 |
£ |
£ |
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This is stated after charging: |
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Depreciation of owned fixed assets |
223,773 |
|
133,210 |
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Depreciation of assets held under finance leases and hire purchase contracts |
|
48,940 |
|
73,550 |
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Operating lease rentals - land and buildings |
62,000 |
|
62,000 |
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Auditors' remuneration for audit services |
10,100 |
|
14,000 |
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Auditors' remuneration for other services |
4,475 |
|
4,570 |
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Key management personnel compensation (including directors' emoluments) |
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45,075 |
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36,075 |
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Carrying amount of stock sold |
9,635,543 |
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9,290,437 |
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5 |
Other operating income |
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Other operating income relates to a vat surcharge received during the year due to a late repayment from HMRC. |
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6 |
Director's emoluments |
2023 |
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2022 |
£ |
£ |
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Emoluments |
21,000 |
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12,000 |
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7 |
Staff costs |
2023 |
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2022 |
£ |
£ |
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Wages and salaries |
5,135,272 |
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5,138,157 |
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Social security costs |
232,755 |
|
205,890 |
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Other pension costs |
40,964 |
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38,747 |
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5,408,991 |
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5,382,794 |
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Average number of employees during the year |
Number |
Number |
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Administration and office based |
15 |
|
15 |
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Director |
1 |
|
1 |
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On Site |
41 |
|
41 |
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|
57 |
|
57 |
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8 |
Interest payable |
2023 |
|
2022 |
£ |
£ |
|
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Bank loans and overdrafts |
- |
|
148 |
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Other loans |
59,927 |
|
30,125 |
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Finance charges payable under finance leases and hire purchase contracts |
|
7,313 |
|
8,394 |
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|
|
|
|
|
67,240 |
|
38,667 |
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|
|
|
|
|
|
|
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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 |
453,767 |
|
364,427 |
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Deferred tax: |
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Origination and reversal of timing differences |
128,295 |
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(12,921) |
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Tax on profit on ordinary activities |
582,062 |
|
351,506 |
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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 |
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2022 |
£ |
£ |
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Profit on ordinary activities before tax |
2,910,449 |
|
2,059,729 |
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Standard rate of corporation tax in the UK |
19% |
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19% |
|
£ |
£ |
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Profit on ordinary activities multiplied by the standard rate of corporation tax |
|
552,985 |
|
391,349 |
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Effects of: |
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Expenses not deductible for tax purposes |
437 |
|
37 |
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Super deduction in excess of asset cost |
(29,574) |
|
(9,800) |
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Deferred tax change in rate |
57,597 |
|
- |
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Leasehold depreciation |
617 |
|
617 |
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R & D claims |
- |
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(30,697) |
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Current tax charge for period |
582,062 |
|
351,506 |
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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 a maximum of 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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Leasehold improvements |
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Motor vehicles |
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Plant, equipment and fixtures |
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Total |
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At cost |
|
At cost |
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At cost |
£ |
£ |
£ |
£ |
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Cost or valuation |
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At 1 April 2022 |
39,439 |
|
801,945 |
|
537,742 |
|
1,379,126 |
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Additions |
- |
|
516,970 |
|
274,144 |
|
791,114 |
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Disposals |
- |
|
(320,119) |
|
(78,252) |
|
(398,371) |
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At 31 March 2023 |
39,439 |
|
998,796 |
|
733,634 |
|
1,771,869 |
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|
|
|
|
|
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Depreciation |
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At 1 April 2022 |
31,546 |
|
354,433 |
|
370,564 |
|
756,543 |
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Charge for the year |
3,943 |
|
187,046 |
|
81,724 |
|
272,713 |
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On disposals |
- |
|
(202,417) |
|
(44,706) |
|
(247,123) |
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At 31 March 2023 |
35,489 |
|
339,062 |
|
407,582 |
|
782,133 |
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|
|
|
|
|
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Carrying amount |
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At 31 March 2023 |
3,950 |
|
659,734 |
|
326,052 |
|
989,736 |
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At 31 March 2022 |
7,893 |
|
447,512 |
|
167,178 |
|
622,583 |
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|
|
|
|
|
|
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Amounts shown in leasehold improvements relate to short leasehold land and building improvements. |
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|
|
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|
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|
2023 |
|
2022 |
£ |
£ |
|
Carrying value of plant and machinery and motor vehicles included above held under finance leases and hire purchase contracts |
|
187,195 |
|
228,741 |
|
|
|
|
|
|
|
|
|
|
11 |
Stocks |
2023 |
|
2022 |
£ |
£ |
|
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Raw materials and consumables |
467,304 |
|
515,436 |
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|
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|
|
|
|
|
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|
12 |
Debtors |
2023 |
|
2022 |
£ |
£ |
|
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Trade debtors |
4,047,248 |
|
3,609,537 |
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Other debtors |
340,371 |
|
284,691 |
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Prepayments and accrued income |
25,588 |
|
4,965 |
|
|
|
|
|
|
4,413,207 |
|
3,899,193 |
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|
|
|
|
|
|
|
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|
13 |
Creditors: amounts falling due within one year |
2023 |
|
2022 |
£ |
£ |
|
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Obligations under finance lease and hire purchase contracts |
73,122 |
|
97,082 |
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Trade creditors |
1,571,900 |
|
1,495,424 |
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Corporation tax |
453,767 |
|
364,427 |
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Other taxes and social security costs |
66,207 |
|
56,057 |
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Other creditors |
1,878,330 |
|
1,271,496 |
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Accruals and deferred income |
436,540 |
|
364,561 |
|
|
|
|
|
|
4,479,866 |
|
3,649,047 |
|
|
|
|
|
|
|
|
|
|
14 |
Creditors: amounts falling due after one year |
2023 |
|
2022 |
£ |
£ |
|
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Obligations under finance lease and hire purchase contracts |
73,705 |
|
45,718 |
|
|
|
|
|
|
|
|
|
|
15 |
Obligations under finance leases and hire purchase |
2023 |
|
2022 |
|
contracts |
£ |
£ |
|
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Amounts payable: |
|
Within one year |
73,122 |
|
97,082 |
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Within two to five years |
73,705 |
|
45,718 |
|
|
|
|
|
|
146,827 |
|
142,800 |
|
|
|
|
|
|
|
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The obligations under finance lease and hire purchase contracts totalling £146,827 (2022 - £142,800) are secured on the assets concerned. |
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|
16 |
Deferred taxation |
2023 |
|
2022 |
£ |
£ |
|
|
Accelerated capital allowances |
239,989 |
|
111,694 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2023 |
|
2022 |
£ |
£ |
|
|
At 1 April |
111,694 |
|
124,615 |
|
Charged/(credited) to the profit and loss account |
128,295 |
|
(12,921) |
|
|
At 31 March |
239,989 |
|
111,694 |
|
|
|
|
|
|
|
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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: |
|
A Ordinary shares |
£1 each |
|
500 |
|
500 |
|
500 |
|
B Ordinary shares |
£1 each |
|
500 |
|
500 |
|
500 |
|
|
|
|
|
|
1,000 |
|
1,000 |
|
|
|
|
|
|
|
|
|
|
18 |
Profit and loss account |
2023 |
|
2022 |
£ |
£ |
|
|
At 1 April |
2,102,249 |
|
1,394,026 |
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Profit for the financial year |
2,328,387 |
|
1,708,223 |
|
Dividends |
(1,600,000) |
|
(1,000,000) |
|
|
At 31 March |
2,830,636 |
|
2,102,249 |
|
|
|
|
|
|
|
|
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Includes all current and prior year retained profit and losses. All amounts are distributable. |
|
19 |
Dividends |
2023 |
|
2022 |
£ |
£ |
|
|
Dividends on ordinary shares (note 18) |
1,600,000 |
|
1,000,000 |
|
|
|
|
|
|
|
|
|
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|
20 |
Capital commitments |
2023 |
|
2022 |
£ |
£ |
|
|
Amounts contracted for but not provided in the accounts |
209,052 |
|
- |
|
|
|
|
|
|
|
|
|
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21 |
Defined contribution pension plans |
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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 £40,964 (2022: £38,747). |
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22 |
Other financial commitments |
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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 one year |
62,000 |
|
62,000 |
|
468 |
|
468 |
|
within two to five years |
248,000 |
|
248,000 |
|
499 |
|
967 |
|
in over five years |
191,167 |
|
253,167 |
|
- |
|
- |
|
|
501,167 |
|
563,167 |
|
967 |
|
1,435 |
|
|
|
|
|
|
|
|
|
|
23 |
Related party transactions |
2023 |
|
2022 |
£ |
£ |
|
Key management personnel of the company |
|
Interest is paid on the in hand loan account balances at 4.00% (2022: 3.00%) and amounted to £59,927 (2022: £30,086). The outstanding balances are unsecured and repayable on demand. |
|
|
Amount due from (to) the related party |
(1,839,547) |
|
(1,244,250) |
|
|
|
|
|
|
|
|
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Other related parties |
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Rent was paid of £62,000 (2022: £62,000). Purchases were made of £44,498 (2022: £51,710). Sales were made of £32,589 (2022: £10,980). The outstanding balances are unsecured and repayable on demand. |
|
|
Amount due from (to) the related party |
(10,268) |
|
3,565 |
|
|
|
|
|
|
|
|
|
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24 |
Controlling party |
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Throughout the year the company was controlled by M A Stacey a major shareholder and director of the company. |
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|
25 |
Presentation currency |
|
|
The financial statements are presented in Sterling. |
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|
26 |
Legal form of entity and country of incorporation |
|
|
A & A Lamb Limited is a private company limited by shares and incorporated in England. |
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|
27 |
Principal place of business |
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|
The address of the company's principal place of business and registered office is: |
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Walton New Road |
|
Upper Bruntingthorpe |
|
Lutterworth |
|
Leicestershire |
|
LE17 5RD |