Company Registration No. SC029399 (Scotland)
John Gunn & Sons Limited
Annual report and financial statements
for the year ended 31 August 2023
John Gunn & Sons Limited
Company information
Director
Ian Gunn
Company number
SC029399
Registered office
Swiney
Lybster
Caithness
KW3 6BT
Independent auditor
Saffery LLP
Torridon House
Beechwood Park
Inverness
IV2 3BW
Bankers
The Royal Bank of Scotland plc
29 Harbour Road
Inverness
IV1 1NU
Solicitors
Twin Deer Law
Torlundy
Fort William
Inverness-shire
PH33 6SQ
John Gunn & Sons Limited
Contents
Page
Strategic report
1
Director's report
2
Director's responsibilities statement
3
Independent auditor's report
4 - 6
Statement of comprehensive income
7
Balance sheet
8
Statement of changes in equity
9
Notes to the financial statements
10 - 21
John Gunn & Sons Limited
Strategic report
For the year ended 31 August 2023
1
The director presents his strategic report and financial statements for the year ended 31 August 2023.
Review of the business
The results for the year and the financial position at the year end were considered satisfactory by the director.
Principal risks and uncertainties
The key business risks and uncertainties affecting the company are considered to relate to the costs of supplies and the impact of any additional civil engineering and building competition entering the local market. The director believes the company is well placed to monitor and control the impact that these may have on the company.
Key performance indicators
The gross profit percentage of the company was 61% at the year end (2022: 55%). This key performance indicator is calculated by gross profit/turnover x 100. The directors are satisfied with the gross profit percentage of the company, which can fluctuate according to business mix.
..............................
Ian Gunn
Director
Date: .............................................
John Gunn & Sons Limited
Director's report
For the year ended 31 August 2023
2
The director presents his annual report and financial statements for the year ended 31 August 2023.
Principal activities
The principal activity of the company continued to be that of public works contractors, civil engineers and building contractors.
Results and dividends
The results for the year are set out on page 7.
The directors do not recommend payment of a dividend.
Director
The director who held office during the year and up to the date of signature of the financial statements was as follows:
Ian Gunn
Future developments
The company has continued trading satisfactorily and continues to review opportunities for organic growth.
Auditor
The auditor, Saffery LLP, is deemed to be reappointed under section 487(2) of the Companies Act 2006.
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
Ian Gunn
Director
28 March 2024
John Gunn & Sons Limited
Director's responsibilities statement
For the year ended 31 August 2023
3
The director is responsible for preparing the annual report and the financial statements in accordance with applicable law and regulations.
Company law requires the director to prepare financial statements for each financial year. Under that law the director has elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law).
Under company law the director must not approve the financial statements unless he is satisfied that they give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period. In preparing these financial statements, the director is required to:
select suitable accounting policies and then apply them consistently;
make judgements and accounting estimates that are reasonable and prudent;
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.
The director is responsible for keeping adequate accounting records that are sufficient to show and explain the company’s transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the Companies Act 2006. He is also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
John Gunn & Sons Limited
Independent auditor's report
To the members of John Gunn & Sons Limited
4
Opinion
We have audited the financial statements of John Gunn & Sons Limited (the 'company') for the year ended 31 August 2023 which comprise the statement of comprehensive income, the balance sheet, the statement of changes in equity and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including 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 August 2023 and of its profit for the year then ended;
have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
have been prepared in accordance with the requirements of the Companies Act 2006.
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the director's use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the director with respect to going concern are described in the relevant sections of this report.
The director is responsible for the other information. The other information comprises the information included in the annual report, other than the financial statements and our auditor’s report thereon. 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.
John Gunn & Sons Limited
Independent auditor's report (continued)
To the members of John Gunn & Sons Limited
5
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of our audit:
the information given in the strategic report and the director's report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
the strategic report and the director's report have been prepared in accordance with applicable legal requirements.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identified material misstatements in the strategic report and the director's 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 director
As explained more fully in the director's responsibilities statement, as set out on page 3, the director is responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the director determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the director is responsible for assessing the company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the director either intends to liquidate the company or to cease operations, or has no realistic alternative but to do so.
Auditor's responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The specific procedures for this engagement and the extent to which these are capable of detecting irregularities, including fraud are detailed below.
Identifying and assessing risks related to irregularities:
We assessed the susceptibility of the company’s financial statements to material misstatement and how fraud might occur, including through discussions with the director, discussions within our audit team planning meeting, updating our record of internal controls and ensuring these controls operated as intended. We evaluated possible incentives and opportunities for fraudulent manipulation of the financial statements. We identified laws and regulations that are of significance in the context of the company by discussions with director and by updating our understanding of the sector in which the company operates.
John Gunn & Sons Limited
Independent auditor's report (continued)
To the members of John Gunn & Sons Limited
6
Laws and regulations of direct significance in the context of the company include The Companies Act 2006 and UK Tax legislation.
Audit response to risks identified
We considered the extent of compliance with these laws and regulations as part of our audit procedures on the related financial statement items including a review of financial statement disclosures. We reviewed the company's records of breaches of laws and regulations, minutes of meetings and correspondence with relevant authorities to identify potential material misstatements arising. We discussed the company's policies and procedures for compliance with laws and regulations with members of management responsible for compliance.
During the planning meeting with the audit team, the engagement partner drew attention to the key areas which might involve non-compliance with laws and regulations or fraud. We enquired of management whether they were aware of any instances of non-compliance with laws and regulations or knowledge of any actual, suspected or alleged fraud. We addressed the risk of fraud through management override of controls by testing the appropriateness of journal entries and identifying any significant transactions that were unusual or outside the normal course of business. We assessed whether judgements made in making accounting estimates gave rise to a possible indication of management bias. At the completion stage of the audit, the engagement partner’s review included ensuring that the team had approached their work with appropriate professional scepticism and thus the capacity to identify non-compliance with laws and regulations and fraud.
There are inherent limitations in the audit procedures described above and the further removed non-compliance with laws and regulations is from the events and transactions reflected in the financial statements, the less likely we would become aware of it. Also, the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery or intentional misrepresentations, or through collusion.
A further description of our responsibilities is available on the Financial Reporting Council’s website at: https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.
This report is made solely to the company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to 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.
Eunice McAdam
Senior Statutory Auditor
For and on behalf of Saffery LLP
28 March 2024
Chartered Accountants
Statutory Auditors
Torridon House
Beechwood Park
Inverness
IV2 3BW
John Gunn & Sons Limited
Statement of comprehensive income
For the year ended 31 August 2023
7
2023
2022
Notes
£
£
Turnover
3
10,526,118
11,499,896
Cost of sales
(4,037,659)
(5,133,603)
Gross profit
6,488,459
6,366,293
Administrative expenses
(2,660,609)
(2,952,948)
Other operating income
237,729
236,245
Operating profit
4
4,065,579
3,649,590
Interest receivable and similar income
106,752
4,290
Interest payable and similar expenses
(1,794)
(1,015)
Profit before taxation
4,170,537
3,652,865
Tax on profit
7
(809,569)
(715,523)
Profit for the financial year
3,360,968
2,937,342
The Statement of comprehensive income has been prepared on the basis that all operations are continuing operations.
John Gunn & Sons Limited
Balance sheet
As at 31 August 2023
8
2023
2022
Notes
£
£
£
£
Fixed assets
Tangible assets
10
3,077,825
3,109,405
Investment property
11
2,325,000
2,325,000
Investments
12
9,999
9,999
5,412,824
5,444,404
Current assets
Stocks
576,808
399,908
Debtors
14
15,330,919
12,542,181
Cash at bank and in hand
7,799
11,517
15,915,526
12,953,606
Creditors: amounts falling due within one year
15
(1,707,923)
(1,288,752)
Net current assets
14,207,603
11,664,854
Total assets less current liabilities
19,620,427
17,109,258
Provisions for liabilities
Deferred tax liability
16
538,893
538,692
(538,893)
(538,692)
Net assets
19,081,534
16,570,566
Capital and reserves
Called up share capital
3,500
3,500
Profit and loss reserves
19,078,034
16,567,066
Total equity
19,081,534
16,570,566
The financial statements were approved and signed by the director and authorised for issue on 28 March 2024.
Ian Gunn
Director
Company Registration No. SC029399
John Gunn & Sons Limited
Statement of changes in equity
For the year ended 31 August 2023
9
Share capital
Profit and loss reserves
Total
Notes
£
£
£
Balance at 1 September 2021
3,500
13,629,724
13,633,224
Year ended 31 August 2022:
Profit and total comprehensive income for the year
-
2,937,342
2,937,342
Balance at 31 August 2022
3,500
16,567,066
16,570,566
Year ended 31 August 2023:
Profit and total comprehensive income for the year
-
3,360,968
3,360,968
Dividends
8
-
(850,000)
(850,000)
Balance at 31 August 2023
3,500
19,078,034
19,081,534
John Gunn & Sons Limited
Notes to the financial statements
For the year ended 31 August 2023
10
1
Accounting policies
Company information
John Gunn & Sons Limited is a private company limited by shares incorporated in Scotland. The registered office is Swiney, Lybster, Caithness, KW3 6BT.
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, modified to include investment properties and certain financial instruments at fair value. The principal accounting policies adopted are set out below.
John Gunn & Sons Limited is a wholly owned subsidiary of John Gunn and Sons (Holdings) Limited and the results of John Gunn & Sons Limited are included in the consolidated financial statements of John Gunn and Sons (Holdings) Limited which are available from Swiney, Lybster, Caithness, KW3 6BT.
1.2
Going concern
Atruet the time of approving the financial statements, the director has a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future. Thus the director continues to adopt the going concern basis of accounting in preparing the financial statements.
1.3
Turnover
Turnover is recognised at the fair value of the consideration received or receivable for goods and services provided in the normal course of business, and is shown net of VAT and other sales related taxes.
Turnover in respect of long-term contracts is recognised by reference to stage of completion of the contract.
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:
Land and buildings
Nil
Plant and machinery
20% reducing balance
Fixtures, fittings & equipment
33.33% straight line
Motor vehicles
20% reducing balance
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.
Heritable land is only depreciated when when minerals and other deposits are extracted if the extraction will result in loss of value.
John Gunn & Sons Limited
Notes to the financial statements (continued)
For the year ended 31 August 2023
1
Accounting policies (continued)
11
1.5
Investment properties
Investment property, which is property held to earn rentals and for capital appreciation, is initially recognised at cost, which includes the purchase cost and any directly attributable expenditure. Subsequently it is measured at fair value at the reporting end date. Changes in fair value are recognised in profit or loss.
1.6
Fixed asset investments
Interests in subsidiaries are initially measured at cost and subsequently measured at cost less any accumulated impairment losses. The investments are assessed for impairment at each reporting date and any impairment losses or reversals of impairment losses are recognised immediately in profit or loss.
A subsidiary is an entity controlled by the company. Control is the power to govern the financial and operating policies of the entity so as to obtain benefits from its activities.
1.7
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.
1.8
Stocks
Stocks are stated at the lower of cost and estimated selling price less costs to sell, which is equivalent to net realisable value.
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.
1.9
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.
John Gunn & Sons Limited
Notes to the financial statements (continued)
For the year ended 31 August 2023
1
Accounting policies (continued)
12
1.10
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, 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.
John Gunn & Sons Limited
Notes to the financial statements (continued)
For the year ended 31 August 2023
1
Accounting policies (continued)
13
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 payments 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. Amounts 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 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.
1.11
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.
Changes in the fair value of derivatives that are designated and qualify as fair value hedges are recognised in profit or loss immediately, together with any changes in the fair value of the hedged asset or liability that are attributable to the hedged risk.
1.12
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.
John Gunn & Sons Limited
Notes to the financial statements (continued)
For the year ended 31 August 2023
1
Accounting policies (continued)
14
Deferred tax
Deferred taxation is provided in full on timing differences which result in an obligation at the balance sheet date to pay more tax, or right to pay less tax, at a future date, at rates expected to apply when they crystallise based on current tax rates and law. Timing differences arise from inclusion of items of income and expenditure in taxation computations in periods different from those in which they are included in the financial statements. Deferred tax assets are recognised to the extent that it is regarded as more likely than not they will be recovered. Deferred tax assets and liabilities are not discounted.
1.13
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.
1.14
Retirement benefits
The company makes contributions into the personal pension fund for various employees. Contributions payable are charged to the profit and loss account in the year they are payable.
1.15
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.
Rental income from operating leases is recognised on a straight line basis over the term of the relevant lease. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised on a straight line basis over the lease term.
1.16
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.
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.
John Gunn & Sons Limited
Notes to the financial statements (continued)
For the year ended 31 August 2023
15
2
Critical accounting judgements and key sources of estimation uncertainty
In the application of the company’s accounting policies, the director is required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.
Investment properties
Investment properties are carried at fair value. Fair value is defined as the estimated amount for which a property should exchange on the date of the valuation between a willing buyer and seller in an arm's length transaction, through the use of comparable values of similar properties observable in the market.
The main assumptions in the valuation are typically market related, such as market rents and yields and are based on the director's judgement and market observations. Each property has been valued in isolation based on the unique nature, characteristics and perceived risk of that property.
3
Turnover and other revenue
An analysis of the company's turnover is as follows:
2023
2022
£
£
Turnover analysed by class of business
Rendering of services
7,602,658
8,783,745
Sale of goods
2,923,460
2,716,151
10,526,118
11,499,896
2023
2022
£
£
Other revenue
Interest income
106,752
4,290
Grants received
21,495
13,302
2023
2022
£
£
Turnover analysed by geographical market
United Kingdom
10,526,118
11,499,896
John Gunn & Sons Limited
Notes to the financial statements (continued)
For the year ended 31 August 2023
16
4
Operating profit
2023
2022
Operating profit for the year is stated after charging/(crediting):
£
£
Government grants
(21,495)
(13,302)
Fees payable to the company's auditor for the audit of the company's financial statements
25,400
11,600
Depreciation of owned tangible fixed assets
418,628
393,394
Impairment of owned tangible fixed assets
186,669
Profit on disposal of tangible fixed assets
(121,115)
(9,645)
5
Employees
The average monthly number of persons (including directors) employed by the company during the year was:
2023
2022
Number
Number
Direct employees
37
35
Administration
4
4
Directors
1
1
Total
42
40
Their aggregate remuneration comprised:
2023
2022
£
£
Wages and salaries
1,812,227
1,889,875
Social security costs
199,187
204,057
Pension costs
32,788
33,533
2,044,202
2,127,465
6
Director's remuneration
2023
2022
£
£
Remuneration (including benefits) for qualifying services
72,447
67,583
John Gunn & Sons Limited
Notes to the financial statements (continued)
For the year ended 31 August 2023
17
7
Taxation
2023
2022
£
£
Current tax
UK corporation tax on profits for the current period
850,085
647,757
Adjustments in respect of prior periods
(40,717)
Total current tax
809,368
647,757
Deferred tax
Origination and reversal of timing differences
201
67,766
Total tax charge
809,569
715,523
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:
2023
2022
£
£
Profit before taxation
4,170,537
3,652,865
Expected tax charge based on the standard rate of corporation tax in the UK of 21.52% (2022: 19.00%)
897,500
694,044
Tax effect of expenses that are not deductible in determining taxable profit
97
516
Gains not taxable
(40,162)
Unutilised tax losses carried forward
234
Change in unrecognised deferred tax assets
28
Effect of change in corporation tax rate
16,264
Under/(over) provided in prior years
(40,717)
Other difference
(7,411)
4,699
Taxation charge for the year
809,569
715,523
8
Dividends
2023
2022
£
£
Final paid
850,000
John Gunn & Sons Limited
Notes to the financial statements (continued)
For the year ended 31 August 2023
18
9
Impairments
Impairment tests have been carried out where appropriate and the following impairment losses have been recognised in profit or loss:
2023
2022
Notes
£
£
In respect of:
Land
10
186,669
Recognised in:
Administrative expenses
-
186,669
10
Tangible fixed assets
Land and buildings
Plant and machinery
Fixtures, fittings & equipment
Motor vehicles
Total
£
£
£
£
£
Cost
At 1 September 2022
1,372,275
5,180,668
23,429
1,533,397
8,109,769
Additions
396,929
51,529
448,458
Disposals
(392,691)
(21,875)
(414,566)
At 31 August 2023
1,372,275
5,184,906
23,429
1,563,051
8,143,661
Depreciation and impairment
At 1 September 2022
186,669
3,691,653
18,471
1,103,571
5,000,364
Depreciation charged in the year
320,085
2,860
95,683
418,628
Eliminated in respect of disposals
(334,217)
(18,939)
(353,156)
At 31 August 2023
186,669
3,677,521
21,331
1,180,315
5,065,836
Carrying amount
At 31 August 2023
1,185,606
1,507,385
2,098
382,736
3,077,825
At 31 August 2022
1,185,606
1,489,015
4,958
429,826
3,109,405
11
Investment property
2023
£
Fair value
At 1 September 2022 and 31 August 2023
2,325,000
John Gunn & Sons Limited
Notes to the financial statements (continued)
For the year ended 31 August 2023
11
Investment property (continued)
19
Investment property comprises land and buildings. The fair value of the investment property has been arrived at on the basis of valuation carried out at 31 August 2023 by the directors of the company. The valuation was made on an open market basis by reference to market evidence of transaction prices for similar properties.
12
Fixed asset investments
2023
2022
Notes
£
£
Investments in subsidiaries
13
9,999
9,999
13
Subsidiaries
These financial statements are the separate company financial statements for John Gunn & Sons Limited.
Details of the company's subsidiary at 31 August 2023 are:
Name of undertaking
Registered office
Nature of business
Class of
% Held
shares held
Direct
Indirect
Gunns (Lybster) Limited
Scotland
Dormant
Ordinary
100
-
The aggregate capital and reserves and the result for the year of the subsidiaries noted above was as follows:
Name of undertaking
Capital and Reserves
Profit/(Loss)
£
£
Gunns (Lybster) Limited
14
Debtors
2023
2022
Amounts falling due within one year:
£
£
Trade debtors
1,227,053
1,140,111
Amounts owed by group undertakings
13,550,294
11,087,707
Other debtors
12,000
12,000
Prepayments and accrued income
275,126
19,627
15,064,473
12,259,445
John Gunn & Sons Limited
Notes to the financial statements (continued)
For the year ended 31 August 2023
14
Debtors (continued)
20
2023
2022
Amounts falling due after more than one year:
£
£
Gross amounts owed by contract customers
114,446
114,446
Other debtors
152,000
168,290
266,446
282,736
Total debtors
15,330,919
12,542,181
15
Creditors: amounts falling due within one year
2023
2022
£
£
Trade creditors
945,750
777,449
Amounts owed to group undertakings
1,830
1,830
Corporation tax
345,954
285,304
Other taxation and social security
277,802
103,265
Other creditors
27,884
20,932
Accruals and deferred income
108,703
99,972
1,707,923
1,288,752
16
Deferred taxation
Deferred tax assets and liabilities are offset where the company has a legally enforceable right to do so. The following is the analysis of the deferred tax balances (after offset) for financial reporting purposes:
2023
2022
Balances:
£
£
ACAs
386,494
337,761
Investment property
153,811
200,479
Timing difference
(1,412)
452
538,893
538,692
17
Provisions for liabilities
2023
2022
Notes
£
£
Deferred tax liabilities
16
538,893
538,692
John Gunn & Sons Limited
Notes to the financial statements (continued)
For the year ended 31 August 2023
21
18
Financial commitments, guarantees and contingent liabilities
The company participates in an inter-company guarantee with the group's principal bankers. The group guarantee comprises John Gunn & Sons Limited and the parent undertaking John Gunn and Sons (Holdings) Limited.
19
Related party transactions
The company has taken advantage of the exemption available in accordance with FRS 102 33.1A 'Related party disclosures' not to disclose transactions entered into between two or more members of a group, as the company is a wholly owned subsidiary undertaking of the group to which it is party to transactions.
20
Ultimate controlling party
The ultimate parent company is John Gunn and Sons (Holdings) Limited, a company registered in Scotland. At 31 August 2023, Ian Gunn considers that he is the ultimate controlling party.
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