Company registration number 00491211 (England and Wales)
AGRICULTURAL MACHINERY (NANTWICH) LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
AGRICULTURAL MACHINERY (NANTWICH) LIMITED
COMPANY INFORMATION
Directors
Mr S A Cornthwaite
Mr R C Hughes
Mr B N Shield
(Appointed 1 June 2021)
Mrs S Moran
(Appointed 31 January 2022)
Company number
00491211
Registered office
Millstone Lane
Nantwich
CW5 5PJ
Auditor
MHA Moore and Smalley
Kendal House
Murley Moss Business Village
Oxenholme Road
Kendal
LA9 7RL
AGRICULTURAL MACHINERY (NANTWICH) LIMITED
CONTENTS
Page
Strategic report
1 - 3
Directors' report
4 - 5
Directors' responsibilities statement
6
Independent auditor's report
7 - 9
Profit and loss account
10
Statement of comprehensive income
11
Balance sheet
12
Statement of changes in equity
13
Notes to the financial statements
14 - 27
AGRICULTURAL MACHINERY (NANTWICH) LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2021
- 1 -
The directors present the strategic report for the year ended 31 December 2021.
Fair review of the business
The Company is a member of the Cornthwaite Holdings Group who hold the John Deere franchise for Cheshire, Lancashire, and Dumfries & Galloway. The franchise for Cheshire is predominantly covered by the company from its outlet in Nantwich. Fellow subsidiary Cornthwaite Agricultural Limited covers the remaining area from outlets in Bispham Green, Kendal, Carlisle and Dumfries.
Turnover for the company for year ended 31 December 2021 is slightly reduced at £23.7 million from £24.2 million for the previous year.
After a decrease to 4.8% in 2019, gross margin is stable at 5.6% for 2020 and 5.7% for 2021.
Profitability in the Group continues to be significantly impacted by the John Deere performance bonus (“P4P”) earned. In 2021, due to increased uncertainty and risk in forecasting this income based on market share percentage rather than unit sales, the Directors adopted the strategy to focus on operational margin retention and cost control whilst continuing to optimise the potential for market share realisation. The consequent short term reduction in P4P earned accounts entirely for the reduction in pre-tax profit from £670k in 2020 to £258k in 2021.
The key performance indicators of the business are turnover, gross profit and asset turn, all of which are monitored on a regular basis.
Whilst the Covid-19 pandemic continued to present challenges globally during 2021, the effect on the Agricultural sector continued to be less marked than in other sectors. The company ensure that the operations of the business are able to function effectively and have instigated measures to ensure the safety of staff and customers alike in their contact with the business.
AGRICULTURAL MACHINERY (NANTWICH) LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
- 2 -
Principal risks and uncertainties
In any entrepreneurial business there are risks and uncertainties that are faced; the assessment of that risk and the measures taken to mitigate it are integral to the strategic direction taken by the Directors.
The principal risks are considered to be:
Economic and market risks
Demand for the group’s products and services is affected by both wider economic cycles and conditions specific to the sectors in which the group operates. Although the group is active in a number of different market segments the majority of turnover is generated from the Agricultural sector.
As well as wider factors such as the outcome of the UK leaving the European Union and the alternative that will be proposed to the current subsidies available to the farming community, the market is also affected by factors such as commodity prices, themselves affected by factors such as global conflict and climate change.
To mitigate these risks, the intention is to operate in as many market sectors as possible whilst in the main sector of agriculture to deal with customers in diverse segments. To this end the expansion of the group’s territory means that a variety of operations and weather patterns are now encompassed in the group’s operational area.
Financial risk
The Group is exposed to risk as it entered a period of rapid expansion in 2017/18 and continues in the process of consolidating that expansion whilst managing the impact of the pandemic. Having robust reporting and communication frameworks with continued development of the Outlet and Group management teams alongside an enhanced Finance and Admin structure are all part of the Directors’ strategy to mitigate this risk.
The Company and Group have enjoyed a strong relationship with the Company’s Bankers, RBS Group, since the formation of the Group in 2007. The Bank has given strong support to all investment decisions since that time and has since the Balance Sheet date renewed the group’s facilities at the existing levels.
In order to minimise credit risk, the Group monitors and checks the credit ratings of customers and has in place an Aged Debt Committee, consisting of two Credit Controllers, two Directors and all Outlet Managers. Monthly meetings are held to review outstanding accounts and agree follow up actions to ensure a continued healthy ageing profile of Debtors.
During 2021 a revised cash management strategy was adopted whereby asset finance stocking loans provided by Lombard (via RBS relationship) and John Deere Financial have been more greatly utilised. This has resulted in a lower utilisation of the overdraft facilities and an improved ability to retail used machinery domestically. This in turn is resulting in strengthened margins and growth in aftersales opportunities. Additionally, the percentage of Group turnover derived from exports has fallen from 15% to 8% in the year because of this strategy. The minimal exposure to currency risk as virtually all sales are denominated in Sterling is therefore further reduced. The Group does not carry out any hedging activities.
Competitor risk
The Company and Group operate in a competitive marketplace and continue to invest in activities designed to lead in customer service and promote premium products and new technologies. The Directors monitor competitor financial performance, individual sales and market share in all of our leading franchises and employ marketing intelligence to monitor attraction and retention of our customer base.
Covid-19
Whilst the Covid-19 pandemic continued to present challenges globally during 2021, the effect on the Agricultural sector continued to be less marked than in other sectors. The company ensure that the operations of the business are able to function effectively and have instigated measures to ensure the safety of staff and customers alike in their contact with the business.
AGRICULTURAL MACHINERY (NANTWICH) LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
- 3 -
Key performance indicators
The company monitors its performance using a number of measures. These include:
Turnover - £23.68m (2020: £24.23m)
Gross profit margin - 5.7% (2020: 5.6%)
Net profit - £258k (2020: £670k)
Asset turn - 6.77 times (2020: 6.60 times)
Mr S A Cornthwaite
Director
18 August 2022
AGRICULTURAL MACHINERY (NANTWICH) LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 DECEMBER 2021
- 4 -
The directors present their annual report and financial statements for the year ended 31 December 2021.
Principal activities
The principal activity of the company continued to be that of the supply of new and used agricultural machinery, together with the ancillary services of repair, maintenance and supply of spare parts.
Results and dividends
The results for the year are set out on page 10.
The directors do not recommend the payment of any 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 S A Cornthwaite
Mr J E Ashe
(Resigned 7 May 2021)
Mr R C Hughes
Mr B N Shield
(Appointed 1 June 2021)
Mrs S Moran
(Appointed 31 January 2022)
Financial instruments
Financial risk management objectives and policies
Financial risk management objectives and policies.
The operations of the company expose it to a variety of financial risks that include the effects of changes in debt market prices, credit risk, liquidity risk and interest rate risk. The company has in place a risk management programme that seeks to limit the adverse effects on the financial performance of the company by monitoring levels of debt finance and the related finance costs. The company does not use derivative financial instruments to manage interest rate costs and as such, no hedge accounting is applied.
Given the size of the company, the directors have not delegated the responsibility of monitoring the financial risk management to a sub-committee of the board. The policies set by the board of directors are implemented by the company’s finance department.
The directors will revisit the appropriateness of the policy should the company’s operation change size or nature.
Future developments
The directors intend to explore any future opportunities to expand the company’s customer base or its activities.
Auditor
In accordance with the company's articles, a resolution proposing that MHA Moore and Smalley be reappointed as auditor of the company will be put at a General Meeting.
Energy and carbon report
As the company is the subsidiary in a large group, its emissions, energy consumption and energy efficiency activities are included within the report included in the accounts of the parent entity of the group, Cornthwaite Holdings Limited.
AGRICULTURAL MACHINERY (NANTWICH) LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
- 5 -
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 S A Cornthwaite
Director
18 August 2022
AGRICULTURAL MACHINERY (NANTWICH) LIMITED
DIRECTORS' RESPONSIBILITIES STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2021
- 6 -
The directors are responsible for preparing the Directors' 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 those financial statements, the directors are required to:
- select suitable accounting policies and then apply them consistently;
- make judgements and estimates that are reasonable and prudent; and
- 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.
In so far as the directors are, individually, aware:
- there is no relevant audit information of which the company's auditor is unaware; and
- the directors have taken all steps that they ought to have taken to make themselves aware of any relevant audit information and to establish that the auditor is aware of that information.
The directors are responsible for the maintenance and integrity of the corporate and financial information included on the company's website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.
AGRICULTURAL MACHINERY (NANTWICH) LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF AGRICULTURAL MACHINERY (NANTWICH) LIMITED
- 7 -
Opinion
We have audited the financial statements of Agricultural Machinery (Nantwich) Limited (the 'company') for the year ended 31 December 2021 which comprise the profit and loss account, 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 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 December 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 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.
AGRICULTURAL MACHINERY (NANTWICH) LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF AGRICULTURAL MACHINERY (NANTWICH) LIMITED
- 8 -
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' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
the strategic report and the directors' report have been prepared in accordance with applicable legal requirements.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identified material misstatements in the strategic report or the directors' report. 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' responsibilities statement, 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.
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:
AGRICULTURAL MACHINERY (NANTWICH) LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF AGRICULTURAL MACHINERY (NANTWICH) LIMITED
- 9 -
enquiring of management and those charged with governance of any actual and potential litigation and claims;
reviewing the financial statement disclosures and testing of supporting documentation to assess compliance with the relevant laws and regulations;
assessing whether the judgements made in making accounting estimates are indicative of any potential bias;
auditing the risk of management override of controls, including through testing journal entries and other adjustments for appropriateness, and evaluating the business rationale of significant transactions outside the normal course of business;
auditing the risk of fraud in revenue, including through the testing of the cut off of income at the year end and sales transaction testing to ensure revenue is complete in the financial statements and recognised in the correct accounting period; and
auditing the valuation of stock, including through the testing of a sample of stock items to confirm whether these are correctly valued at the lower of cost and net realisable value.
Because of the industry in which the company operates, we identified the following areas as those most likely to have a material impact on the financial statements: health and safety, compliance with quality management systems accreditations, employment law, and compliance with the Companies Act.
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 recognised the non-compliance.
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council’s website at: http://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 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.
Jenny McCabe (Senior Statutory Auditor)
For and on behalf of MHA Moore and Smalley
Chartered Accountants
Statutory Auditor
Kendal House
Murley Moss Business Village
Oxenholme Road
Kendal
LA9 7RL
19 August 2022
AGRICULTURAL MACHINERY (NANTWICH) LIMITED
PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 31 DECEMBER 2021
- 10 -
2021
2020
Notes
£
£
Turnover
3
23,684,839
24,234,553
Cost of sales
(22,338,270)
(22,877,433)
Gross profit
1,346,569
1,357,120
Distribution costs
(651,080)
(666,299)
Administrative expenses
(771,655)
(819,659)
Other operating income
371,803
840,313
Operating profit
4
295,637
711,475
Interest receivable and similar income
7
43
Interest payable and similar expenses
8
(37,566)
(41,624)
Profit before taxation
258,114
669,851
Tax on profit
9
(71,330)
(137,304)
Profit for the financial year
186,784
532,547
The profit and loss account has been prepared on the basis that all operations are continuing operations.
AGRICULTURAL MACHINERY (NANTWICH) LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2021
- 11 -
2021
2020
£
£
Profit for the year
186,784
532,547
Other comprehensive income
-
-
Total comprehensive income for the year
186,784
532,547
AGRICULTURAL MACHINERY (NANTWICH) LIMITED
BALANCE SHEET
AS AT
31 DECEMBER 2021
31 December 2021
- 12 -
2021
2020
Notes
£
£
£
£
Fixed assets
Tangible assets
10
744,427
900,424
Current assets
Stocks
11
4,755,676
5,171,711
Debtors
12
2,607,798
1,653,653
Cash at bank and in hand
364,763
1,332,437
7,728,237
8,157,801
Creditors: amounts falling due within one year
13
(4,645,064)
(5,342,435)
Net current assets
3,083,173
2,815,366
Total assets less current liabilities
3,827,600
3,715,790
Creditors: amounts falling due after more than one year
14
(286,015)
(356,821)
Provisions for liabilities
Deferred tax liability
17
41,597
45,765
(41,597)
(45,765)
Net assets
3,499,988
3,313,204
Capital and reserves
Called up share capital
19
5,125
5,125
Capital redemption reserve
5,125
5,125
Profit and loss reserves
3,489,738
3,302,954
Total equity
3,499,988
3,313,204
The financial statements were approved by the board of directors and authorised for issue on 18 August 2022 and are signed on its behalf by:
Mr S A Cornthwaite
Director
Company Registration No. 00491211
AGRICULTURAL MACHINERY (NANTWICH) LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2021
- 13 -
Share capital
Capital redemption reserve
Profit and loss reserves
Total
£
£
£
£
Balance at 1 January 2020
5,125
5,125
2,770,407
2,780,657
Year ended 31 December 2020:
Profit and total comprehensive income for the year
-
-
532,547
532,547
Balance at 31 December 2020
5,125
5,125
3,302,954
3,313,204
Year ended 31 December 2021:
Profit and total comprehensive income for the year
-
-
186,784
186,784
Balance at 31 December 2021
5,125
5,125
3,489,738
3,499,988
AGRICULTURAL MACHINERY (NANTWICH) LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
- 14 -
1
Accounting policies
Company information
Agricultural Machinery (Nantwich) Limited is a private company limited by shares incorporated in England and Wales. The registered office is Millstone Lane, Nantwich, CW5 5PJ.
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 amounts 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. The company has therefore taken advantage of exemptions from the following disclosure requirements:
Section 4 ‘Statement of Financial Position’: Reconciliation of the opening and closing number of shares;
Section 7 ‘Statement of Cash Flows’: Presentation of a statement of cash flow 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 26 ‘Share based Payment’: Share-based payment expense charged to profit or loss, reconciliation of opening and closing number and weighted average exercise price of share options, how the fair value of options granted was measured, measurement and carrying amount of liabilities for cash-settled share-based payments, explanation of modifications to arrangements;
Section 33 ‘Related Party Disclosures’: Compensation for key management personnel.
1.2
Going concern
The Directors have considered the Group's trading projections for a period of at least 12 months from the date of signing the accounts. Results for 2022 year to date show that the group is on track to achieve our objectives of strengthening margins through the continued development of the aftersales business and robust cash management. The agricultural industry remains positive with strong buying confidence and continued market leadership by our major franchise John Deere.true
The group has enjoyed successful trading for many years and has developed a strong balance sheet with healthy reserves. We continue to enjoy good relationships with our key suppliers and optimise the support they provide to assist in the smooth running of the group.
After considering all the above the Directors have a reasonable expectation that the Group has adequate resources to continue to be operational for the foreseeable future and are satisfied that it is appropriate to prepare the accounts on a going concern basis.
AGRICULTURAL MACHINERY (NANTWICH) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
1
Accounting policies
(Continued)
- 15 -
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
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:
Leasehold improvements
10 years/remainder of lease
Plant and machinery
3 to 5 years
Motor vehicles
5 years
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.
1.5
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.
AGRICULTURAL MACHINERY (NANTWICH) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
1
Accounting policies
(Continued)
- 16 -
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.
1.6
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 and those overheads that have been incurred in bringing the 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.
1.7
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.
1.8
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.
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.
AGRICULTURAL MACHINERY (NANTWICH) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
1
Accounting policies
(Continued)
- 17 -
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.
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 subsequently 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 through 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.
1.9
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.
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.
AGRICULTURAL MACHINERY (NANTWICH) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
1
Accounting policies
(Continued)
- 18 -
1.10
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.
1.11
Retirement benefits
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
1.12
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 leases asset are consumed.
1.13
Government grants
Government grants are recognised at the fair value of the asset received or receivable when there is reasonable assurance that the grant conditions will be met and the grants will be received.
A grant that specifies performance conditions is recognised in income when the performance conditions are met. Where a grant does not specify performance conditions it is recognised in income when the proceeds are received or receivable. A grant received before the recognition criteria are satisfied is recognised as a liability.
1.14
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.
1.15
John Deere P4P (Pay for Performance) is recognised as and when it is received from John Deere.
AGRICULTURAL MACHINERY (NANTWICH) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
- 19 -
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.
Critical judgements
The following judgements (apart from those involving estimates) have had the most significant effect on amounts recognised in the financial statements.
Stock provision
Provision has been made against the value of stock where necessary on a line by line and age basis bearing in mind the asset class and the current market conditions for that particular class of asset.
3
Turnover and other revenue
An analysis of the company's turnover is as follows:
2021
2020
£
£
Turnover analysed by class of business
Sale of goods and services
23,684,839
24,234,553
2021
2020
£
£
Turnover analysed by geographical market
UK
22,894,998
23,121,190
Rest of the World
789,841
1,113,363
23,684,839
24,234,553
2021
2020
£
£
Other revenue
Interest income
43
-
Grants received
25,000
AGRICULTURAL MACHINERY (NANTWICH) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
- 20 -
4
Operating profit
2021
2020
Operating profit for the year is stated after charging/(crediting):
£
£
Government grants
(25,000)
Fees payable to the company's auditor for the audit of the company's financial statements
4,685
4,125
Depreciation of owned tangible fixed assets
160,401
144,257
Depreciation of tangible fixed assets held under finance leases
6,247
21,791
Profit on disposal of tangible fixed assets
(2,250)
(3,650)
Operating lease charges
165,000
159,000
5
Employees
The average monthly number of persons (including directors) employed by the company during the year was:
2021
2020
Number
Number
Directors
3
3
Management and administration
3
3
Sales and after sales
29
30
Total
35
36
Their aggregate remuneration comprised:
2021
2020
£
£
Wages and salaries
1,123,341
1,214,008
Social security costs
121,136
135,124
Pension costs
37,511
41,303
1,281,988
1,390,435
6
Directors' remuneration
2021
2020
£
£
Remuneration for qualifying services
94,959
93,425
Company pension contributions to defined contribution schemes
13,275
15,110
108,234
108,535
AGRICULTURAL MACHINERY (NANTWICH) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
- 21 -
7
Interest receivable and similar income
2021
2020
£
£
Interest income
Interest on bank deposits
43
8
Interest payable and similar expenses
2021
2020
£
£
Interest on bank overdrafts and loans
15,358
19,719
Interest on finance leases and hire purchase contracts
491
1,684
Other interest
21,717
20,221
37,566
41,624
9
Taxation
2021
2020
£
£
Current tax
UK corporation tax on profits for the current period
76,006
153,934
Adjustments in respect of prior periods
(506)
(35,150)
Total current tax
75,500
118,784
Deferred tax
Origination and reversal of timing differences
(4,170)
18,520
Total tax charge
71,330
137,304
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
258,114
669,851
Expected tax charge based on the standard rate of corporation tax in the UK of 19.00% (2020: 19.00%)
49,042
127,272
Tax effect of expenses that are not deductible in determining taxable profit
231
430
Adjustments in respect of prior years
(506)
(35,150)
Permanent capital allowances in excess of depreciation
12,580
44,752
Effective change in rate of deferred tax provision
9,983
Taxation charge for the year
71,330
137,304
AGRICULTURAL MACHINERY (NANTWICH) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
- 22 -
10
Tangible fixed assets
Leasehold improvements
Plant and machinery
Motor vehicles
Total
£
£
£
£
Cost
At 1 January 2021
860,610
253,959
548,999
1,663,568
Additions
6,500
4,151
10,651
Disposals
(30,610)
(30,610)
At 31 December 2021
867,110
258,110
518,389
1,643,609
Depreciation and impairment
At 1 January 2021
112,523
208,906
441,715
763,144
Depreciation charged in the year
89,223
16,399
61,026
166,648
Eliminated in respect of disposals
(30,610)
(30,610)
At 31 December 2021
201,746
225,305
472,131
899,182
Carrying amount
At 31 December 2021
665,364
32,805
46,258
744,427
At 31 December 2020
748,087
45,053
107,284
900,424
The net carrying value of tangible fixed assets includes the following in respect of assets held under finance leases or hire purchase contracts.
2021
2020
£
£
Motor vehicles
13,535
55,682
11
Stocks
2021
2020
£
£
Raw materials and consumables
529,891
487,478
Work in progress
10,027
18,028
Finished goods and goods for resale
4,215,758
4,666,205
4,755,676
5,171,711
Included within this figure is an impairment loss of £471,456 (2020: £434,894) which was recognised against stock during the year due to slow-moving and obsolete stock.
AGRICULTURAL MACHINERY (NANTWICH) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
- 23 -
12
Debtors
2021
2020
Amounts falling due within one year:
£
£
Trade debtors
664,848
889,448
Amounts owed by group undertakings
1,902,129
750,396
Other debtors
17,402
550
Prepayments and accrued income
23,419
13,259
2,607,798
1,653,653
13
Creditors: amounts falling due within one year
2021
2020
Notes
£
£
Bank loans
15
69,313
66,632
Obligations under finance leases
16
1,489
14,450
Other borrowings
15
417,155
574,656
Trade creditors
3,718,994
3,120,804
Corporation tax
76,006
149,957
Other taxation and social security
30,451
862,344
Other creditors
5,564
13,162
Accruals and deferred income
326,092
540,430
4,645,064
5,342,435
14
Creditors: amounts falling due after more than one year
2021
2020
Notes
£
£
Bank loans and overdrafts
15
286,015
355,332
Obligations under finance leases
16
1,489
286,015
356,821
The bank facility is secured by a fixed and floating charge over all the assets of the company. In addition, unlimited cross guarantees exist between the company and its ultimate parent, Cornthwaite Holdings Limited and fellow subsidiary, Cornthwaite Agricultural Limited.
Other borrowings are stocking loans from John Deere S.A. and Lombard on used equipment traded in against new machines. These loans are secured on the equipment traded in.
The obligations under hire purchase contracts are secured on the assets subject to those contracts.
The aggregate amount of secured creditors is £773,972 (2020 - £1,012,599).
AGRICULTURAL MACHINERY (NANTWICH) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
- 24 -
15
Loans and overdrafts
2021
2020
£
£
Bank loans
355,328
421,964
Other loans
417,155
574,656
772,483
996,620
Payable within one year
486,468
641,288
Payable after one year
286,015
355,332
Included in the above bank loans balance of £355,328 is the amount of £Nil (2020 - £60,898) which is payable after 5 years.
16
Finance lease obligations
2021
2020
Future minimum lease payments due under finance leases:
£
£
Within one year
1,498
14,831
In two to five years
1,498
1,498
16,329
Less: future finance charges
(9)
(390)
1,489
15,939
Finance lease payments represent rentals payable by the company for certain items of plant and machinery. 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 1 year. All leases are on a fixed repayment basis and no arrangements have been entered into for contingent rental payments.
17
Deferred taxation
The following are the major deferred tax liabilities and assets recognised by the company and movements thereon:
Liabilities
Liabilities
2021
2020
Balances:
£
£
ACAs
41,597
45,765
AGRICULTURAL MACHINERY (NANTWICH) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
17
Deferred taxation
(Continued)
- 25 -
2021
Movements in the year:
£
Liability at 1 January 2021
45,765
Credit to profit or loss
(4,168)
Liability at 31 December 2021
41,597
18
Retirement benefit schemes
2021
2020
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
37,511
41,303
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.
19
Share capital
2021
2020
2021
2020
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Ordinary shares of £1 each
5,125
5,125
5,125
5,125
20
Financial commitments, guarantees and contingent liabilities
The company has given an unlimited guarantee in respect of the bank borrowings of it's fellow subsidiary company, Cornthwaite Agricultural Limited, and the ultimate parent, Cornthwaite Holdings Limited. This guarantee is supported by a debenture on all companies and by legal charges over land and buildings owned by Cornthwaite Agricultural Limited.
At the year end the potential liability amounted to £966,587 (2020 - £1,096,750)
The company, together with Cornthwaite Agricultural Limited and Cornthwaite Holdings Limited, has given a limited guarantee of £1,275,000 in respect of the bank borrowings of Cornthwaite Properties Limited, a company with certain common shareholders. This guarantee is supported by a debenture on Cornthwaite Properties Limited and by legal charges over land and buildings owned by Cornthwaite Properties Limited.
At the year end the potential liability amounted to £899,336 (2020 - £960,559).
AGRICULTURAL MACHINERY (NANTWICH) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
- 26 -
21
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
30,000
30,000
Between two and five years
62,500
92,500
92,500
122,500
22
Ultimate controlling party
The ultimate holding company is Cornthwaite Holdings Limited, a company registered in England and Wales.
The ultimate controlling party is S A Cornthwaite, the sole director and shareholder of that company.
Copies of the consolidated financial statements of Cornthwaite Holdings Limited, which is both the smallest and largest group for which consolidated financial statements are prepared, may be obtained from Cornthwaite Holdings Limited, Hall Lane, Bispham Green, Ormskirk, Lancs L40 3SB.
23
Related party transactions
Transactions with related parties
During the year the company entered into the following transactions with related parties:
Sales
Purchases
2021
2020
2021
2020
£
£
£
£
Other related parties
3,388,238
4,561,064
4,106,116
3,151,604
Rent
2021
2020
£
£
Other related parties
135,000
135,000
The following amounts were outstanding at the reporting end date:
2021
2020
Amounts due to related parties
£
£
Other related parties
13,114
22,500
AGRICULTURAL MACHINERY (NANTWICH) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
23
Related party transactions
(Continued)
- 27 -
The following amounts were outstanding at the reporting end date:
2021
2020
Amounts due from related parties
£
£
Other related parties
1,552,124
403,596
Other information
In accordance with section 33.1A of FRS102, as wholly owned subsidiary company, Agricultural Machinery (Nantwich) Limited is not required to disclose transactions with its parent, Cornthwaite Investments (AG) Limited.
2021-12-312021-01-01falseCCH SoftwareCCH Accounts Production 2022.200Mr S A CornthwaiteMr J E AsheMr R C HughesMr B N ShieldMrs S Moran004912112021-01-012021-12-3100491211bus:Director12021-01-012021-12-3100491211bus:Director32021-01-012021-12-3100491211bus:Director42021-01-012021-12-3100491211bus:Director52021-01-012021-12-3100491211bus:Director22021-01-012021-12-3100491211bus:RegisteredOffice2021-01-012021-12-31004912112021-12-31004912112020-01-012020-12-3100491211core:RetainedEarningsAccumulatedLosses2020-01-012020-12-3100491211core:RetainedEarningsAccumulatedLosses2021-01-012021-12-31004912112020-12-3100491211core:LeaseholdImprovements2021-12-3100491211core:PlantMachinery2021-12-3100491211core:MotorVehicles2021-12-3100491211core:LeaseholdImprovements2020-12-3100491211core:PlantMachinery2020-12-3100491211core:MotorVehicles2020-12-3100491211core:CurrentFinancialInstrumentscore:WithinOneYear2021-12-3100491211core:CurrentFinancialInstrumentscore:WithinOneYear2020-12-3100491211core:Non-currentFinancialInstrumentscore:AfterOneYear2021-12-3100491211core:Non-currentFinancialInstrumentscore:AfterOneYear2020-12-3100491211core:CurrentFinancialInstruments2021-12-3100491211core:CurrentFinancialInstruments2020-12-3100491211core:Non-currentFinancialInstruments2021-12-3100491211core:Non-currentFinancialInstruments2020-12-3100491211core:ShareCapital2021-12-3100491211core:ShareCapital2020-12-3100491211core:CapitalRedemptionReserve2021-12-3100491211core:CapitalRedemptionReserve2020-12-3100491211core:RetainedEarningsAccumulatedLosses2021-12-3100491211core:RetainedEarningsAccumulatedLosses2020-12-3100491211core:ShareCapital2019-12-3100491211core:CapitalRedemptionReservecore:RestatedAmount2019-12-3100491211core:RetainedEarningsAccumulatedLosses2019-12-31004912112019-12-3100491211core:LeaseholdImprovements2021-01-012021-12-3100491211core:PlantMachinery2021-01-012021-12-3100491211core:MotorVehicles2021-01-012021-12-3100491211core:OwnedAssets2021-01-012021-12-3100491211core:OwnedAssets2020-01-012020-12-3100491211core:LeasedAssets2021-01-012021-12-3100491211core:LeasedAssets2020-01-012020-12-310049121112021-01-012021-12-310049121112020-01-012020-12-3100491211core:UKTax2021-01-012021-12-3100491211core:UKTax2020-01-012020-12-3100491211core:LeaseholdImprovements2020-12-3100491211core:PlantMachinery2020-12-3100491211core:MotorVehicles2020-12-31004912112020-12-3100491211core:WithinOneYear2021-12-3100491211core:WithinOneYear2020-12-3100491211core:BetweenTwoFiveYears2021-12-3100491211core:BetweenTwoFiveYears2020-12-3100491211core:OtherRelatedPartiescore:SaleOrPurchaseGoods2021-01-012021-12-3100491211core:OtherRelatedPartiescore:SaleOrPurchaseGoods2020-01-012020-12-3100491211bus:PrivateLimitedCompanyLtd2021-01-012021-12-3100491211bus:FRS1022021-01-012021-12-3100491211bus:Audited2021-01-012021-12-3100491211bus:FullAccounts2021-01-012021-12-31xbrli:purexbrli:sharesiso4217:GBP