Company registration number SC025270 (Scotland)
DAVIDSON BROTHERS (SHOTTS) LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 JULY 2022
DAVIDSON BROTHERS (SHOTTS) LIMITED
COMPANY INFORMATION
Directors
Mr W M Davidson
Mr W G Davidson
Secretary
Mr G Dow
Company number
SC025270
Registered office
3 Gray Street
Shotts
Lanarkshire
United Kingdom
ML7 5EZ
Auditor
Azets Audit Services
Titanium 1
King's Inch Place
Renfrew
Renfrewshire
United Kingdom
PA4 8WF
DAVIDSON BROTHERS (SHOTTS) LIMITED
CONTENTS
Page
Strategic report
1 - 2
Directors' report
3
Directors' responsibilities statement
4
Independent auditor's report
5 - 7
Profit and loss account
8
Statement of comprehensive income
9
Balance sheet
10
Statement of changes in equity
11
Statement of cash flows
12
Notes to the financial statements
13 - 26
DAVIDSON BROTHERS (SHOTTS) LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 31 JULY 2022
- 1 -
The directors present the strategic report for the year ended 31 July 2022.
Fair review of the business
Despite continued economic uncertainty in the market throughout the year under review, the directors are pleased to report that the company has continued to improve its profitability year on year on increased turnover levels. The business has traded well throughout this period despite the challenges faced, showing improvement in its operating profit and EBITDA levels. Highlight results are shown as below.
Our industry continues to experience volatility caused by fluctuations in raw material prices and currency markets. The company has traded successfully closely managing its working capital throughout this period. The significant increase in turnover in the year demonstrates the company's continued increase in market share under competitive market conditions.
The company continues to invest in its people and facilities and remains free of any external borrowings. The directors are satisfied with the company's performance and remain confident about its future prospects.
Principal risks and uncertainties
The management of the business and execution of the company's strategy is subject to a number of risks. The key business risks and uncertainties affecting the company are considered to relate to the farming/agricultural industry in general.
The directors have in place a risk management system which aims to manage and reduce the above risks to which the company is exposed
.
Key performance indicators
Given the nature of the business, the directors are of the opinion that analysis using KPIs other than those above is not necessary for an understanding of the development, performance or position of the business.
Financial Instruments
Objectives
Our financial risk management objectives are to ensure there is sufficient working capital and cash flow to meet the operating needs of the company and to ensure there is sufficient support for its growth strategy. This is achieved through careful management of our cash resources and by obtaining finance leases or other loans where necessary. No treasury transactions or derivatives are entered into.
Risks
The company trades with companies based in the UK and is thus subject to no forex risk. The company also maintains a low gearing position and is thus exposed to minimal interest rate risk. All customers who wish to trade on credit terms are subject to credit verification procedures. Trade debtors are monitored on an ongoing basis and provision is made for doubtful debts where necessary.
Future Outlook
The Directors and staff are constantly looking to continuous improvements to our animal feed with enhancements to our mill through technology, raw materials, efficiencies and formulations.
We are eagerly working towards a Net Zero position with new green technologies to be installed and operated on site through close collaborations and developing innovations.
The outlook for Agriculture is always difficult to predict. Our focus and outlook is to ensure we have resources in place to meet our increasing customer demand.
DAVIDSON BROTHERS (SHOTTS) LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 JULY 2022
- 2 -
Mr G Dow
Secretary
16 December 2022
DAVIDSON BROTHERS (SHOTTS) LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 JULY 2022
- 3 -
The directors present their annual report and financial statements for the year ended 31 July 2022.
Principal activities
The principal activity of the company continued to be that of the manufacture and sale of animal feedstuffs.
Results and dividends
The results for the year are set out on page 8.
Ordinary dividends were paid amounting to £833,583. The directors do not recommend payment of a final dividend.
Directors
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
Mr W M Davidson
Mr W G Davidson
Auditor
The auditor, Azets Audit Services, is deemed to be reappointed under section 487(2) of the Companies Act 2006.
Strategic report
The 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 instruments and risks.
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.
By order of the board
Mr G Dow
Secretary
16 December 2022
DAVIDSON BROTHERS (SHOTTS) LIMITED
DIRECTORS' RESPONSIBILITIES STATEMENT
FOR THE YEAR ENDED 31 JULY 2022
- 4 -
The directors are responsible for preparing the annual report and the financial statements in accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period. In preparing these financial statements, the directors are required to:
-
select suitable accounting policies and then apply them consistently;
-
make judgements and accounting estimates that are reasonable and prudent;
-
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company’s transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
DAVIDSON BROTHERS (SHOTTS) LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF DAVIDSON BROTHERS (SHOTTS) LIMITED
- 5 -
Opinion
We have audited the financial statements of Davidson Brothers (Shotts) Limited (the 'company') for the year ended 31 July 2022 which comprise the profit and loss account, the statement of comprehensive income, the balance sheet, the statement of changes in equity, the statement of cash flows 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 Financial Reporting Standard 102
The Financial Reporting Standard applicable in the UK and Republic of Ireland
(United Kingdom Generally Accepted Accounting Practice).
In our opinion the financial statements:
-
give a true and fair view of the state of the company's affairs as at 31 July 2022 and of its profit for the year then ended;
-
have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
-
have been prepared in accordance with the requirements of the Companies Act 2006.
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 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.
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.
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 directors'
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 directors' report have been prepared in accordance with applicable legal requirements.
DAVIDSON BROTHERS (SHOTTS) LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF DAVIDSON BROTHERS (SHOTTS) LIMITED
- 6 -
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 or the directors'
r
eport
. We have nothing to report in respect of the following matters in relation to which 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 directors
As explained more fully in the directors'
r
esponsibilities
s
tatement, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine 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
directors are
responsible for assessing the company
'
s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the company or to cease operations, or have
no realistic alternative but to do so.
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
.
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.
DAVIDSON BROTHERS (SHOTTS) LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF DAVIDSON BROTHERS (SHOTTS) LIMITED
- 7 -
Extent to which the audit was considered capable of detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above and on the Financial Reporting Council’s website, to detect material misstatements in respect of irregularities, including fraud.
We obtain and update our understanding of the entity, its activities, its control environment, and likely future developments, including in relation to the legal and regulatory framework applicable and how the entity is complying with that framework. Based on this understanding, we identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. This includes consideration of the risk of acts by the entity that were contrary to applicable laws and regulations, including fraud.
In response to the risk of irregularities and non-compliance with laws and regulations, including fraud, we designed procedures which included:
-
Enquiry of management and those charged with governance around actual and potential litigation and claims as well as actual, suspected and alleged fraud;
-
Assessing the extent of compliance with the laws and regulations considered to have a direct material effect on the financial statements or the operations of the company through enquiry and inspection;
-
Reviewing financial statement disclosures and testing to supporting documentation to assess compliance with applicable laws and regulations;
-
Performing audit work over the risk of management bias and override of controls, including testing of journal entries and other adjustments for appropriateness, evaluating the business rationale of significant transactions outside the normal course of business and reviewing accounting estimates for indicators of potential bias.
Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading to a material misstatement in the financial statements or non-compliance with regulation. This risk increases the more that compliance with a law or regulation is removed from the events and transactions reflected in the financial statements, as we will be less likely to become aware of instances of non-compliance. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
This report is made solely to the company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in 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.
Alan Brown (Senior Statutory Auditor)
For and on behalf of Azets Audit Services
19 December 2022
Chartered Accountants
Statutory Auditor
Titanium 1
King's Inch Place
Renfrew
Renfrewshire
United Kingdom
PA4 8WF
DAVIDSON BROTHERS (SHOTTS) LIMITED
PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 31 JULY 2022
- 8 -
2022
2021
Notes
£000
£000
Turnover
3
44,411
39,457
Cost of sales
(32,002)
(29,773)
Gross profit
12,409
9,684
Distribution costs
(860)
(720)
Administrative expenses
(10,147)
(8,791)
Other operating income
183
477
Operating profit
4
1,585
650
Interest receivable and similar income
7
7
Interest payable and similar expenses
8
(18)
(25)
Profit before taxation
1,574
625
Tax on profit
9
143
250
Profit for the financial year
1,717
875
The profit and loss account has been prepared on the basis that all operations are continuing operations.
DAVIDSON BROTHERS (SHOTTS) LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 JULY 2022
- 9 -
2022
2021
£000
£000
Profit for the year
1,717
875
Other comprehensive income
-
-
Total comprehensive income for the year
1,717
875
DAVIDSON BROTHERS (SHOTTS) LIMITED
BALANCE SHEET
AS AT
31 JULY 2022
31 July 2022
- 10 -
2022
2021
Notes
£000
£000
£000
£000
Fixed assets
Tangible assets
11
5,073
5,580
Current assets
Stocks
12
2,203
968
Debtors
13
2,300
2,616
Cash at bank and in hand
2,771
3,175
7,274
6,759
Creditors: amounts falling due within one year
14
(2,756)
(3,554)
Net current assets
4,518
3,205
Total assets less current liabilities
9,591
8,785
Creditors: amounts falling due after more than one year
15
(191)
Provisions for liabilities
Deferred tax liability
18
114
(114)
-
Net assets
9,477
8,594
Capital and reserves
Called up share capital
21
140
140
Capital redemption reserve
13
13
Profit and loss reserves
9,324
8,441
Total equity
9,477
8,594
The financial statements were approved by the board of directors and authorised for issue on 16 December 2022 and are signed on its behalf by:
Mr W G Davidson
Director
Company Registration No. SC025270
DAVIDSON BROTHERS (SHOTTS) LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 JULY 2022
- 11 -
Share capital
Capital redemption reserve
Profit and loss reserves
Total
Notes
£000
£000
£000
£000
Balance at 1 August 2020
140
13
7,566
7,719
Year ended 31 July 2021:
Profit and total comprehensive income for the year
-
-
875
875
Balance at 31 July 2021
140
13
8,441
8,594
Year ended 31 July 2022:
Profit and total comprehensive income for the year
-
-
1,717
1,717
Dividends
10
-
-
(834)
(834)
Balance at 31 July 2022
140
13
9,324
9,477
DAVIDSON BROTHERS (SHOTTS) LIMITED
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 JULY 2022
- 12 -
2022
2021
Notes
£000
£000
£000
£000
Cash flows from operating activities
Cash generated from operations
26
1,868
805
Interest paid
(18)
(25)
Income taxes refunded
257
250
Net cash inflow from operating activities
2,107
1,030
Investing activities
Purchase of tangible fixed assets
(367)
(197)
Proceeds on disposal of tangible fixed assets
46
78
Interest received
7
Net cash used in investing activities
(314)
(119)
Financing activities
Repayment of borrowings
(21)
(18)
Payment of finance leases obligations
(1,342)
(737)
Dividends paid
(834)
Net cash used in financing activities
(2,197)
(755)
Net (decrease)/increase in cash and cash equivalents
(404)
156
Cash and cash equivalents at beginning of year
3,175
3,019
Cash and cash equivalents at end of year
2,771
3,175
DAVIDSON BROTHERS (SHOTTS) LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 JULY 2022
- 13 -
1
Accounting policies
Company information
Davidson Brothers (Shotts) Limited is a
private
company
limited by shares
incorporated in
Scotland
.
The registered office is
3 Gray Street, Shotts, Lanarkshire, United Kingdom, ML7 5EZ.
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 £000.
The financial statements have been prepared under the historical cost convention. The principal accounting policies adopted are set out below.
1.2
Going concern
A
true
t the time of approving the financial statements
,
t
he directors have a reasonable expectation that the
company
has adequate resources to continue in operational existence for the foreseeable future. Thus
t
he directors continue 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 and services 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.
When cash inflows are deferred and represent a financing arrangement, the fair value of the consideration is the present value of the future receipts. The difference between the fair value of the consideration and the nominal amount received is recognised as interest income.
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
Research and development expenditure
Research
and development
expenditure is written off against profits in the year in which it is incurred
.
1.5
Tangible fixed assets
Tangible fixed assets
are initially measured at cost and subsequently measured at cost or valuation, net of depreciation and any impairment losses.
Depreciation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:
Freehold land and buildings
2% on cost
Plant and equipment
10% on cost
Computer and office equipment
20% on cost
Motor vehicles
14%, 20% and 33% on cost
DAVIDSON BROTHERS (SHOTTS) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JULY 2022
1
Accounting policies
(Continued)
- 14 -
Freehold land and assets in the course of construction are not depreciated.
Assets under construction are transferred to the appropriate asset category when they come into use. Assets under construction are reviewed annually for impairment. Where there are signs of impairment, the assets are impaired down to their fair value through an impairment charge to the income statement.
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
.
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
and work in progress
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 and those overheads that have been incurred in bringing the stocks to their present location and condition.
Stocks held for distribution at no or nominal consideration are measured at the lower of replacement cost and cost, adjusted where applicable for any loss of service potential.
Cost is calculated using the first-in, first-out method and includes all purchase, transport, and handling costs in bringing stocks to their present location and condition.
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.
DAVIDSON BROTHERS (SHOTTS) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JULY 2022
1
Accounting policies
(Continued)
- 15 -
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
Other financial assets, including investments in equity instruments which are not subsidiaries, associates or joint ventures, are initially measured at fair value, which is normally the transaction price. Such assets are subsequently carried at fair value and the changes in fair value are recognised in
profit
or
loss
, except that investments in equity instruments that are not publicly traded and whose fair values cannot be measured reliably are measured at cost less impairment.
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.
DAVIDSON BROTHERS (SHOTTS) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JULY 2022
1
Accounting policies
(Continued)
- 16 -
Basic financial liabilities
Basic financial liabilities, including
creditors
, bank loans, loans from
fellow group companies and preference shares that are classified as debt, 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
Derivatives, including interest rate swaps and forward foreign exchange contracts,
are not basic financial instruments. Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are
s
ubsequently re-measured at their fair value. Changes in the fair value of derivatives are recognised in
profit
or
loss
in finance costs or finance income as appropriate, unless hedge accounting is applied and the hedge is a cash flow hedge.
Debt instruments that do not meet the conditions in FRS 102 paragraph 11.9 are subsequently measured at fair value through profit or loss. Debt instruments may be designated as
being measured at
fair value th
r
ough profit or loss to eliminate or reduce an accounting mismatch or if the instruments are measured and their performance evaluated on a fair value basis in accordance with a documented risk management or investment strategy.
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.
DAVIDSON BROTHERS (SHOTTS) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JULY 2022
1
Accounting policies
(Continued)
- 17 -
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.
The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. 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.
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.
1.15
Government grants
Government grants are recognised at the fair value of the asset receive
d
or receivable when there is reasonable assurance that the grant conditions will be met and the grants will be received.
Government grants relating to turnover are recognised as income over the periods when the related costs are incurred
. Grants relating to an asset are recognised in income systematically over the asset's expected useful life. If part of such a grant is deferred it is recognised as deferred income rather than being deducted from the asset's carrying amount.
1.16
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.
DAVIDSON BROTHERS (SHOTTS) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JULY 2022
- 18 -
2
Judgements and key sources of estimation uncertainty
In the application of the company’s accounting policies, the directors are required to make judgements, estimates and assumptions 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.
Stock
The company's stock consists of raw material grains, compounds and processed animal feed. The storage of stock takes place in Silos and in the company's warehouse. Due to the nature of the stock held, the assessment of the quantities of inventory held is subject to a degree of judgement.
The directors are of the opinion there are no further matters of significant judgement and estimation which are material to the financial statements.
3
Turnover and other revenue
An analysis of the company's turnover is as follows:
2022
2021
£000
£000
Turnover analysed by class of business
Manufactured product
43,027
38,335
Raw materials and bought-in
1,384
1,122
44,411
39,457
2022
2021
£000
£000
Other revenue
Interest income
7
-
Grants received
36
260
All turnover was generated within the UK.
4
Operating profit
2022
2021
Operating profit for the year is stated after charging/(crediting):
£000
£000
Research and development costs
987
616
Government grants
(36)
(260)
Fees payable to the company's auditor for the audit of the company's financial statements
24
21
Depreciation of owned tangible fixed assets
875
969
Depreciation of tangible fixed assets held under finance leases
366
319
Profit on disposal of tangible fixed assets
(45)
(55)
DAVIDSON BROTHERS (SHOTTS) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JULY 2022
- 19 -
5
Employees
The average monthly number of persons (including directors) employed by the company during the year was:
2022
2021
Number
Number
Production
14
12
Selling and distribution
47
45
Administration
6
6
Total
67
63
Their aggregate remuneration comprised:
2022
2021
£000
£000
Wages and salaries
2,676
2,309
Social security costs
287
237
Pension costs
171
214
3,134
2,760
6
Directors' remuneration
2022
2021
£000
£000
Remuneration for qualifying services
56
55
Company pension contributions to defined contribution schemes
38
61
94
116
The number of directors for whom retirement benefits are accruing under defined contribution schemes amounted to 2 (2021 - 2).
7
Interest receivable and similar income
2022
2021
£000
£000
Interest income
Interest on bank deposits
7
Investment income includes the following:
Interest on financial assets not measured at fair value through profit or loss
7
DAVIDSON BROTHERS (SHOTTS) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JULY 2022
- 20 -
8
Interest payable and similar expenses
2022
2021
£000
£000
Other finance costs:
Interest on finance leases and hire purchase contracts
18
25
9
Taxation
2022
2021
£000
£000
Current tax
Adjustments in respect of prior periods
(257)
(250)
Deferred tax
Origination and reversal of timing differences
114
Total tax credit
(143)
(250)
The actual credit 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:
2022
2021
£000
£000
Profit before taxation
1,574
625
Expected tax charge based on the standard rate of corporation tax in the UK of 19.00% (2021: 19.00%)
299
119
Change in unrecognised deferred tax assets
(193)
(131)
Depreciation on assets not qualifying for tax allowances
8
12
Research and development tax credit
(257)
(250)
Taxation credit for the year
(143)
(250)
At the year end the company has an net unrecognised deferred tax asset amounting to £nil (20
2
1 - £27
2
,000) predominately in respect of carried forward tax losses.
10
Dividends
2022
2021
£000
£000
Interim paid
834
DAVIDSON BROTHERS (SHOTTS) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JULY 2022
- 21 -
11
Tangible fixed assets
Freehold land and buildings
Plant and equipment
Computer and office equipment
Motor vehicles
Total
£000
£000
£000
£000
£000
Cost
At 1 August 2021
2,819
3,192
53
4,985
11,049
Additions
109
626
735
Disposals
(165)
(634)
(46)
(336)
(1,181)
At 31 July 2022
2,654
2,667
7
5,275
10,603
Depreciation and impairment
At 1 August 2021
998
1,822
44
2,605
5,469
Depreciation charged in the year
227
316
4
694
1,241
Eliminated in respect of disposals
(165)
(634)
(46)
(335)
(1,180)
At 31 July 2022
1,060
1,504
2
2,964
5,530
Carrying amount
At 31 July 2022
1,594
1,163
5
2,311
5,073
At 31 July 2021
1,821
1,370
9
2,380
5,580
The net carrying value of tangible fixed assets includes the following in respect of assets held under finance leases or hire purchase contracts.
2022
2021
£000
£000
Plant and equipment
51
Motor vehicles
1,717
-
1,768
12
Stocks
2022
2021
£000
£000
Raw materials and consumables
2,047
806
Finished goods and goods for resale
156
162
2,203
968
DAVIDSON BROTHERS (SHOTTS) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JULY 2022
- 22 -
13
Debtors
2022
2021
Amounts falling due within one year:
£000
£000
Trade debtors
1,980
2,480
Other debtors
228
83
Prepayments and accrued income
92
53
2,300
2,616
14
Creditors: amounts falling due within one year
2022
2021
Notes
£000
£000
Obligations under finance leases
17
792
Other borrowings
16
17
Trade creditors
1,428
1,836
Taxation and social security
96
75
Government grants
19
5
Other creditors
376
240
Accruals and deferred income
856
589
2,756
3,554
15
Creditors: amounts falling due after more than one year
2022
2021
Notes
£000
£000
Obligations under finance leases
17
182
Other borrowings
16
4
Government grants
19
5
191
16
Loans and overdrafts
2022
2021
£000
£000
Other loans
21
Payable within one year
17
Payable after one year
4
During the year all other loans were settled in full.
DAVIDSON BROTHERS (SHOTTS) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JULY 2022
- 23 -
17
Finance lease obligations
2022
2021
Future minimum lease payments due under finance leases:
£000
£000
Within one year
792
In two to five years
182
974
Finance lease obligations are secured over the assets they were used to acquire.
Finance lease payments represent rentals payable by the company for certain items of plant and machinery and motor vehicles. During the year all finance leases were settled in full.
18
Deferred taxation
The following are the major deferred tax liabilities and assets recognised by the company and movements thereon:
Liabilities
Liabilities
2022
2021
Balances:
£000
£000
Accelerated capital allowances
490
-
Tax losses
(365)
-
Short term timing differences
(11)
-
114
-
2022
Movements in the year:
£000
Liability at 1 August 2021
-
Charge to profit or loss
114
Liability at 31 July 2022
114
19
Government grants
2022
2021
£000
£000
Arising from government grants
-
10
DAVIDSON BROTHERS (SHOTTS) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JULY 2022
19
Government grants
(Continued)
- 24 -
Deferred income is included in the financial statements as follows:
Current liabilities
5
Non-current liabilities
5
10
20
Retirement benefit schemes
2022
2021
Defined contribution schemes
£000
£000
Charge to profit or loss in respect of defined contribution schemes
171
214
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. The pension cost charge represents contributions payable by the company to the fund.
21
Share capital
2022
2021
2022
2021
Ordinary share capital
Number
Number
£000
£000
Issued and fully paid
Ordinary "A" shares of £1 each
96,215
96,215
96
96
Ordinary "B" shares of £1 each
31,186
31,186
31
31
Ordinary "C" shares of £1 each
12,537
12,537
13
13
Ordinary "D" shares of £1 each
1
1
-
-
Ordinary "E" shares of £1 each
1
1
-
-
Ordinary "F" shares of £1 each
1
1
-
-
139,941
139,941
140
140
Ordinary shares carry one vote per share. There are no restrictions on the distribution of dividends and the repayment of capital.
22
Capital commitments
Amounts contracted for but not provided in the financial statements:
2022
2021
£000
£000
Acquisition of tangible fixed assets
1,322
728
Capital commitments relate to assets ordered during the year but received by the company subsequent to the year end.
DAVIDSON BROTHERS (SHOTTS) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JULY 2022
- 25 -
23
Related party transactions
Remuneration of key management personnel
The remuneration of key management personnel is as follows.
2022
2021
£000
£000
Aggregate compensation
152
167
Transactions with related parties
During the year the company entered into the following transactions with related parties:
Purchases
Purchases
2022
2021
£000
£000
Other related parties
508
310
Recharges
2022
2021
£000
£000
Other related parties
73
71
The following amounts were outstanding at the reporting end date:
2022
2021
Amounts due from related parties
£000
£000
Other related parties
105
-
24
Directors' transactions
Dividends totalling £92,000 (2021:£Nil) were paid in the year in respect of shares held by the company's directors.
At the year end the company owed £349,000 (20
2
1 - £2
40,0
00) to the directors of the company. Loans to directors are provided interest free. There are no repayment terms attached to these loans, and they are disclosed within other creditors due within one year.
25
Ultimate controlling party
W M Davidson, a director, is the controlling party of the company by virtue of his controlling interest in the company's equity capital.
DAVIDSON BROTHERS (SHOTTS) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JULY 2022
- 26 -
26
Cash generated from operations
2022
2021
£000
£000
Profit for the year after tax
1,717
875
Adjustments for:
Taxation credited
(143)
(250)
Finance costs
18
25
Investment income
(7)
Gain on disposal of tangible fixed assets
(45)
(55)
Depreciation and impairment of tangible fixed assets
1,241
1,289
Movements in working capital:
(Increase)/decrease in stocks
(1,235)
307
Decrease/(increase) in debtors
316
(771)
Increase/(decrease) in creditors
16
(465)
Decrease in deferred income
(10)
(150)
Cash generated from operations
1,868
805
27
Analysis of changes in net funds
1 August 2021
Cash flows
New finance leases
31 July 2022
£000
£000
£000
£000
Cash at bank and in hand
3,175
(404)
-
2,771
Borrowings excluding overdrafts
(21)
21
-
-
Obligations under finance leases
(974)
1,342
(368)
-
2,180
959
(368)
2,771
2022-07-31
2021-08-01
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