Company Registration No. SC221924 (Scotland)
John Gunn and Sons (Holdings) Limited
Annual report and
group financial statements
for the year ended 31 August 2023
John Gunn and Sons (Holdings) Limited
Company information
Director
Ian Gunn
Company number
SC221924
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 and Sons (Holdings) Limited
Contents
Page
Strategic report
1
Director's report
2
Director's responsibilities statement
3
Independent auditor's report
4 - 6
Group statement of comprehensive income
7
Group balance sheet
8
Company balance sheet
9
Group statement of changes in equity
10
Company statement of changes in equity
11
Group statement of cash flows
12
Notes to the financial statements
13 - 27
John Gunn and Sons (Holdings) 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 directors, particularly given the challenging economic climate.
Principal risks and uncertainties

The key business risks and uncertainties affecting the group are considered to relate to the cost of supplies and the impact of any additional civil engineering and building competition entering the local market. The directors believes the company is well placed to monitor and control the impact that these may have on the group.

Key performance indicators

The gross profit percentage of the group was 63% at the year end (2022: 56%). This key performance indicator is calculated by gross profit/turnover x 100. The directors are satisfied with the gross profit percentage of the group, which can fluctuate according to business mix.

Future developments

The director will continue to review opportunities for organic growth going forward.

On behalf of the board

Ian Gunn
Director
28 March 2024
John Gunn and Sons (Holdings) 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 and its subsidiaries 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.

Ordinary dividends were paid amounting to £850,000. The director does not recommend payment of a further 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
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 auditor of the company 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 auditor of the company is aware of that information.

On behalf of the board
Ian Gunn
Director
28 March 2024
John Gunn and Sons (Holdings) Limited
Director's responsibilities statement
For the year ended 31 August 2023
3

The director is responsible for preparing the Director's 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 group and company, and of the profit or loss of the group for that period. In preparing these financial statements, the director is required to:

 

 

The director is responsible for keeping adequate accounting records that are sufficient to show and explain the group’s and company’s transactions and disclose with reasonable accuracy at any time the financial position of the group and 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 group and company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

John Gunn and Sons (Holdings) Limited
Independent auditor's report
To the members of John Gunn and Sons (Holdings) Limited
4
Opinion

We have audited the financial statements of John Gunn and Sons (Holdings) Limited (the 'parent company') and its subsidiaries (the 'group') for the year ended 31 August 2023 which comprise the group statement of comprehensive income, the group balance sheet, the company balance sheet, the group statement of changes in equity, the company statement of changes in equity, the group statement of cash flows and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).

In our opinion the financial statements:

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the group and parent 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 group's and parent 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.

Other information

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 and Sons (Holdings) Limited
Independent auditor's report (continued)
To the members of John Gunn and Sons (Holdings) Limited
5

Opinions on other matters prescribed by the Companies Act 2006

In our opinion, based on the work undertaken in the course of the audit:

Matters on which we are required to report by exception

In the light of the knowledge and understanding of the group and the parent company and their environment obtained in the course of the audit, we have not identified material misstatements in the strategic report or 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:

 

Responsibilities of director

As explained more fully in the director's responsibilities statement, 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 parent 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 parent 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 group and parent 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 group and parent company by discussions with director and by updating our understanding of the sector in which the group and parent company operates.

John Gunn and Sons (Holdings) Limited
Independent auditor's report (continued)
To the members of John Gunn and Sons (Holdings) Limited
6

Laws and regulations of direct significance in the context of the group and parent 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 group and parent company financial statement disclosures. We reviewed the parent 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 parent 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.

Use of our report

This report is made solely to the parent 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 parent company's members those matters we are required to state to them in an auditors 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 parent company and the parent 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 and Sons (Holdings) Limited
Group 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
(4,016,759)
(5,114,199)
Gross profit
6,509,359
6,385,697
Administrative expenses
(2,677,289)
(2,968,393)
Other operating income
237,729
236,245
Operating profit
4
4,069,799
3,653,549
Interest receivable and similar income
8
208,992
4,290
Interest payable and similar expenses
9
(1,794)
(1,015)
Profit before taxation
4,276,997
3,656,824
Tax on profit
10
(832,360)
(715,523)
Profit for the financial year
3,444,637
2,941,301
Profit and total comprehensive income for the year is all attributable to the owners of the parent company.

The profit and loss account has been prepared on the basis that all operations are continuing operations.

John Gunn and Sons (Holdings) Limited
Group balance sheet
As at 31 August 2023
8
2023
2022
Notes
£
£
£
£
Fixed assets
Tangible assets
13
3,077,825
3,109,405
Investment property
14
2,325,000
2,325,000
5,402,825
5,434,405
Current assets
Stocks
17
576,808
399,908
Debtors
18
1,883,965
1,456,674
Cash at bank and in hand
15,774,753
13,513,109
18,235,526
15,369,691
Creditors: amounts falling due within one year
19
(3,551,827)
(3,312,410)
Net current assets
14,683,699
12,057,281
Total assets less current liabilities
20,086,524
17,491,686
Provisions for liabilities
Deferred tax liability
20
538,893
538,692
(538,893)
(538,692)
Net assets
19,547,631
16,952,994
Capital and reserves
Called up share capital
22
2,625
2,625
Profit and loss reserves
19,545,006
16,950,369
Total equity
19,547,631
16,952,994
The financial statements were approved and signed by the director and authorised for issue on 28 March 2024.
Ian Gunn
Director
Company Registration No. SC221924 (Scotland)
John Gunn and Sons (Holdings) Limited
Company balance sheet
As at 31 August 2023
31 August 2023
9
2023
2022
Notes
£
£
£
£
Fixed assets
Investments
15
9,477
9,477
Current assets
Debtors
18
103,340
2,200
Cash at bank and in hand
15,766,954
13,501,592
15,870,294
13,503,792
Creditors: amounts falling due within one year
19
(15,397,596)
(13,114,763)
Net current assets
472,698
389,029
Net assets
482,175
398,506
Capital and reserves
Called up share capital
22
2,625
2,625
Profit and loss reserves
479,550
395,881
Total equity
482,175
398,506

As permitted by s408 Companies Act 2006, the company has not presented its own profit and loss account and related notes. The company’s profit for the year was £933,669 (2022 loss: £6,555)

The financial statements were approved and signed by the director and authorised for issue on 28 March 2024..
Ian Gunn
Director
Company Registration No. SC221924 (Scotland)
John Gunn and Sons (Holdings) Limited
Group statement of changes in equity
For the year ended 31 August 2023
10
Share capital
Profit and loss reserves
Total
Notes
£
£
£
Balance at 1 September 2021
2,625
14,409,068
14,411,693
Year ended 31 August 2022:
Profit and total comprehensive income for the year
-
2,941,301
2,941,301
Dividends
11
-
(400,000)
(400,000)
Balance at 31 August 2022
2,625
16,950,369
16,952,994
Year ended 31 August 2023:
Profit and total comprehensive income for the year
-
3,444,637
3,444,637
Dividends
11
-
(850,000)
(850,000)
Balance at 31 August 2023
2,625
19,545,006
19,547,631
John Gunn and Sons (Holdings) Limited
Company statement of changes in equity
For the year ended 31 August 2023
11
Share capital
Profit and loss reserves
Total
Notes
£
£
£
Balance at 1 September 2021
2,625
789,326
791,951
Year ended 31 August 2022:
Profit and total comprehensive income for the year
-
6,555
6,555
Dividends
11
-
(400,000)
(400,000)
Balance at 31 August 2022
2,625
395,881
398,506
Year ended 31 August 2023:
Profit and total comprehensive income for the year
-
933,669
933,669
Dividends
11
-
(850,000)
(850,000)
Balance at 31 August 2023
2,625
479,550
482,175
John Gunn and Sons (Holdings) Limited
Consolidated statement of cash flows
For the year ended 31 August 2023
12
2023
2022
Notes
£
£
£
£
Cash flows from operating activities
Cash generated from operations
23
3,920,342
5,197,909
Interest paid
(1,794)
(1,015)
Taxes paid
(749,963)
(944,312)
Net cash inflow from operating activities
3,168,585
4,252,582
Investing activities
Purchase of tangible fixed assets
(448,458)
(559,984)
Proceeds on disposal of tangible fixed assets
182,525
39,449
Interest received
208,992
4,290
Net cash used in investing activities
(56,941)
(516,245)
Financing activities
Dividends paid to equity shareholders
(850,000)
(400,000)
Net cash used in financing activities
(850,000)
(400,000)
Net increase in cash and cash equivalents
2,261,644
3,336,337
Cash and cash equivalents at beginning of year
13,513,109
10,176,772
Cash and cash equivalents at end of year
15,774,753
13,513,109
John Gunn and Sons (Holdings) Limited
Notes to the financial statements
For the year ended 31 August 2023
13
1
Accounting policies
Company information

John Gunn and Sons (Holdings) Limited (“the company”) is a private company limited by shares incorporated in Scotland. The registered office is Swiney, Lybster, Caithness, KW3 6BT.

 

The group consists of John Gunn and Sons (Holdings) Limited and all of its subsidiaries.

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.

As permitted by s408 Companies Act 2006, the company has not presented its own profit and loss account and related notes. The company’s profit for the year was £933,669 (2022 loss: £6,555)

The 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 for parent company information presented within the consolidated financial statements:

 

1.2
Basis of consolidation

In the parent company financial statements, the cost of a business combination is the fair value at the acquisition date of the assets given, equity instruments issued and liabilities incurred or assumed, plus costs directly attributable to the business combination. The excess of the cost of a business combination over the fair value of the identifiable assets, liabilities and contingent liabilities acquired is recognised as goodwill. The cost of the combination includes the estimated amount of contingent consideration that is probable and can be measured reliably, and is adjusted for changes in contingent consideration after the acquisition date. Provisional fair values recognised for business combinations in previous periods are adjusted retrospectively for final fair values determined in the 12 months following the acquisition date. Investments in subsidiaries, joint ventures and associates are accounted for at cost less impairment.

 

Deferred tax is recognised on differences between the value of assets (other than goodwill) and liabilities recognised in a business combination accounted for using the purchase method and the amounts that can be deducted or assessed for tax, considering the manner in which the carrying amount of the asset or liability is expected to be recovered or settled. The deferred tax recognised is adjusted against goodwill or negative goodwill.

John Gunn and Sons (Holdings) Limited
Notes to the financial statements (continued)
For the year ended 31 August 2023
1
Accounting policies (continued)
14

The consolidated financial statements incorporate those of John Gunn and Sons (Holdings) Limited and all of its subsidiaries (i.e. entities that the group controls through its power to govern the financial and operating policies so as to obtain economic benefits). Subsidiaries acquired during the year are consolidated using the purchase method. Their results are incorporated from the date that control passes.

 

All financial statements are made up to 31 August 2023. Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with those used by other members of the group.

 

All intra-group transactions, balances and unrealised gains on transactions between group companies are eliminated on consolidation. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.

1.3
Going concern

At the time of approving the financial statements , the director has a reasonable expectation that the group 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.

 

1.4
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.

 

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.

Turnover in respect of long-term contracts is recognised by reference to stage of completion of the contract.

1.5
Tangible fixed assets

Tangible fixed assets are initially measured at cost and subsequently measured at cost or valuation, net of depreciation and any impairment losses.

Tangible fixed assets are stated at cost less depreciation. Depreciation is provided at rates calculated to write off the cost less estimated residual value of each asset over its expected useful life, as follows:
Land and buildings
Nil
Plant and machinery
20% reducing balance
Fixtures, fittings & equipment
33.33% straight line
Motor vehicles
20% reducing balance
Heritable land is only depreciated when minerals and other deposits are extracted if the extraction will result in loss of value.

 

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 recognised in the profit and loss account.

1.6
Investment properties

Investment property, which is property held to earn rentals and/or 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.

John Gunn and Sons (Holdings) Limited
Notes to the financial statements (continued)
For the year ended 31 August 2023
1
Accounting policies (continued)
15
1.7
Fixed asset investments

Equity investments are measured at fair value through profit or loss, except for those equity investments that are not publicly traded and whose fair value cannot otherwise be measured reliably, which are recognised at cost less impairment until a reliable measure of fair value becomes available.

 

In the parent company financial statements, investments in subsidiaries, associates and jointly controlled entities are initially measured at cost and subsequently measured at cost less any accumulated impairment losses.

A subsidiary is an entity controlled by the group. Control is the power to govern the financial and operating policies of the entity so as to obtain benefits from its activities.

1.8
Impairment of fixed assets

At each reporting period end date, the group reviews the carrying amounts of its tangible and intangible 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.

 

The carrying amount of the investments accounted for using the equity method is tested for impairment as a single asset. Any goodwill included in the carrying amount of the investment is not tested separately for impairment.

1.9
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.

1.10
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.

1.11
Financial instruments

The group 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 group's balance sheet when the group becomes party to the contractual provisions of the instrument.

 

Financial assets and liabilities are offset and 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.

John Gunn and Sons (Holdings) Limited
Notes to the financial statements (continued)
For the year ended 31 August 2023
1
Accounting policies (continued)
16
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.

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 group 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 group after deducting all of its liabilities.

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.

Derecognition of financial liabilities

Financial liabilities are derecognised when the group's contractual obligations expire or are discharged or cancelled.

John Gunn and Sons (Holdings) Limited
Notes to the financial statements (continued)
For the year ended 31 August 2023
1
Accounting policies (continued)
17
1.12
Equity instruments

Equity instruments issued by the group 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 group.

1.13
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 group’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 taxation is provided in full in respect 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 terms 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.
1.14
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.

1.15
Retirement benefits
The group makes contributions into the personal pension funds for various employees.  Contributions payable are charged to the profit and loss account in the year they are payable.
1.16
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.

John Gunn and Sons (Holdings) Limited
Notes to the financial statements (continued)
For the year ended 31 August 2023
1
Accounting policies (continued)
18
1.17
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.

2
Critical accounting judgements and key sources of estimation uncertainty

In the application of the group’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 group'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
£
£
Turnover analysed by geographical market
United Kingdom
10,526,118
11,499,896
John Gunn and Sons (Holdings) Limited
Notes to the financial statements (continued)
For the year ended 31 August 2023
3
Turnover and other revenue (continued)
19
2023
2022
£
£
Other revenue
Interest income
208,992
4,290
Grants received
21,495
13,302
Rental income arising from investment properties
216,234
222,943
4
Operating profit
2023
2022
£
£
Operating profit for the year is stated after charging/(crediting):
Government grants
(21,495)
(13,302)
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
Auditor's remuneration
2023
2022
Fees payable to the company's auditor and associates:
£
£
For audit services
Audit of the financial statements of the group and company
15,900
14,665
Audit of the financial statements of the company's subsidiaries
25,400
11,600
41,300
26,265
6
Employees

The average monthly number of persons (including directors) employed by the group and company during the year was:

Group
Company
2023
2022
2023
2022
Number
Number
Number
Number
Direct employees
37
35
-
-
Administration
4
4
-
-
Directors
1
1
-
-
Total
42
40
-
0
-
0
John Gunn and Sons (Holdings) Limited
Notes to the financial statements (continued)
For the year ended 31 August 2023
6
Employees (continued)
20

Their aggregate remuneration comprised:

Group
Company
2023
2022
2023
2022
£
£
£
£
Wages and salaries
1,812,227
1,889,875
-
0
-
0
Social security costs
199,187
204,057
-
-
Pension costs
32,788
33,533
-
0
-
0
2,044,202
2,127,465
-
0
-
0
7
Director's remuneration
2023
2022
£
£
Remuneration for qualifying services
72,447
67,583
8
Interest receivable and similar income
2023
2022
£
£
Interest income
Interest on bank deposits
205,790
-
0
Other interest income
3,202
4,290
Total income
208,992
4,290
9
Interest payable and similar expenses
2023
2022
£
£
Interest on financial liabilities measured at amortised cost:
Interest on bank overdrafts and loans
1,794
1,015
10
Taxation
2023
2022
£
£
Current tax
UK corporation tax on profits for the current period
872,876
647,757
Adjustments in respect of prior periods
(40,717)
-
0
Total current tax
832,159
647,757
John Gunn and Sons (Holdings) Limited
Notes to the financial statements (continued)
For the year ended 31 August 2023
10
Taxation
2023
2022
£
£ (continued)
21
Deferred tax
Origination and reversal of timing differences
201
67,766
Total tax charge
832,360
715,523

The charge for the year can be reconciled to the profit per the profit and loss account as follows:

2023
2022
£
£
Profit before taxation
4,276,997
3,656,824
Expected tax charge based on the standard rate of corporation tax in the UK of 21.52% (2022: 19.00%)
920,410
694,797
Tax effect of expenses that are not deductible in determining taxable profit
97
516
Gains not taxable
(40,162)
-
0
Unutilised tax losses carried forward
234
-
0
Change in unrecognised deferred tax assets
28
-
0
Effect of change in corporation tax rate
-
15,511
Under/(over) provided in prior years
(40,717)
-
0
Other difference
(7,530)
4,699
Taxation charge
832,360
715,523
11
Dividends
2023
2022
Recognised as distributions to equity holders:
£
£
Final paid
500,000
-
Interim paid
350,000
400,000
850,000
400,000
John Gunn and Sons (Holdings) Limited
Notes to the financial statements (continued)
For the year ended 31 August 2023
22
12
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
13
-
186,669
Recognised in:
Administrative expenses
-
186,669
13
Tangible fixed assets
Group
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
-
0
396,929
-
0
51,529
448,458
Disposals
-
0
(392,691)
-
0
(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
-
0
320,085
2,860
95,683
418,628
Eliminated in respect of disposals
-
0
(334,217)
-
0
(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
The company had no tangible fixed assets at 31 August 2023 or 31 August 2022.
14
Investment property
Group
Company
2023
2023
£
£
Fair value
At 1 September 2022 and 31 August 2023
2,325,000
-
John Gunn and Sons (Holdings) Limited
Notes to the financial statements (continued)
For the year ended 31 August 2023
14
Investment property (continued)
23

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.

John Gunn and Sons (Holdings) Limited
Notes to the financial statements (continued)
For the year ended 31 August 2023
24
15
Fixed asset investments
Group
Company
2023
2022
2023
2022
Notes
£
£
£
£
Investments in subsidiaries
16
-
0
-
0
9,477
9,477
Movements in fixed asset investments
Company
Shares in group undertakings
£
Cost or valuation
At 1 September 2022 and 31 August 2023
9,477
Carrying amount
At 31 August 2023
9,477
At 31 August 2022
9,477
16
Subsidiaries

Details of the company's subsidiaries at 31 August 2023 are as follows:

Name of undertaking
Registered office
Nature of business
Class of
% Held
shares held
Direct
Indirect
Gunns (Lybster) Limited
Scotland
Dormant
Ordinary
-
100.00
John Gunn & Sons Limited
Scotland
Civil Engineers
Ordinary
100.00
-
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
-
0
-
0
John Gunn & Sons Limited
20,741,103
4,170,537
17
Stocks
Group
Company
2023
2022
2023
2022
£
£
£
£
Raw materials and consumables
109,914
107,986
-
-
Work in progress
466,894
291,922
-
-
576,808
399,908
-
-
John Gunn and Sons (Holdings) Limited
Notes to the financial statements (continued)
For the year ended 31 August 2023
25
18
Debtors
Group
Company
2023
2022
2023
2022
Amounts falling due within one year:
£
£
£
£
Trade debtors
1,227,053
1,140,111
-
0
-
0
Other debtors
13,100
14,200
1,100
2,200
Prepayments and accrued income
377,366
19,627
102,240
-
0
1,617,519
1,173,938
103,340
2,200
Amounts falling due after more than one year:
Gross amounts owed by contract customers
114,446
114,446
-
0
-
0
Other debtors
152,000
168,290
-
0
-
0
266,446
282,736
-
-
Total debtors
1,883,965
1,456,674
103,340
2,200
19
Creditors: amounts falling due within one year
Group
Company
2023
2022
2023
2022
£
£
£
£
Trade creditors
945,750
777,449
-
0
-
0
Amounts owed to group undertakings
-
0
-
0
13,550,294
11,087,707
Corporation tax payable
367,500
285,304
21,546
-
0
Other taxation and social security
277,802
103,265
-
-
Other creditors
1,833,112
2,027,460
1,805,228
2,006,528
Accruals and deferred income
127,663
118,932
20,528
20,528
3,551,827
3,312,410
15,397,596
13,114,763
John Gunn and Sons (Holdings) Limited
Notes to the financial statements (continued)
For the year ended 31 August 2023
26
20
Deferred taxation

Deferred tax assets and liabilities are offset where the group or company has a legally enforceable right to do so. The following is the analysis of the deferred tax balances (after offset) for financial reporting purposes:

Liabilities
Liabilities
2023
2022
Group
£
£
ACAs
386,494
337,761
Investment property
153,811
200,479
Timing differences
(1,412)
452
538,893
538,692
The company has no deferred tax assets or liabilities.
Group
Company
2023
2023
Movements in the year:
£
£
Liability at 1 September 2022
538,692
-
Charge to profit or loss
201
-
Liability at 31 August 2023
538,893
-
21
Retirement benefit schemes
2023
2022
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
32,788
33,533

A defined contribution pension scheme is operated for all qualifying employees. The assets of the scheme are held separately from those of the group in an independently administered fund.

22
Share capital
Group and company
2023
2022
2023
2022
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Ordinary shares of £1 each
2,625
2,625
2,625
2,625
John Gunn and Sons (Holdings) Limited
Notes to the financial statements (continued)
For the year ended 31 August 2023
27
23
Cash generated from group operations
2023
2022
£
£
Profit for the year after tax
3,444,637
2,941,301
Adjustments for:
Taxation charged
832,360
715,523
Finance costs
1,794
1,015
Investment income
(208,992)
(4,290)
Gain on disposal of tangible fixed assets
(121,115)
(9,645)
Depreciation and impairment of tangible fixed assets
418,628
580,063
Movements in working capital:
(Increase)/decrease in stocks
(176,900)
91,872
(Increase)/decrease in debtors
(427,291)
797,557
Increase in creditors
157,221
84,513
Cash generated from operations
3,920,342
5,197,909
24
Analysis of changes in net funds - group
1 September 2022
Cash flows
31 August 2023
£
£
£
Cash at bank and in hand
13,513,109
2,261,644
15,774,753
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