Company registration number 03777195 (England and Wales)
AVONCROSS LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 SEPTEMBER 2023
AVONCROSS LIMITED
COMPANY INFORMATION
Directors
L Christensen
K Hague
P Handley
A J Macdonald
(Appointed 1 June 2023)
Company number
03777195
Registered office
Hawton Lane
Balderton
Newark
Nottinghamshire
NG24 3BU
Auditor
Newton & Garner Limited
Building 2
30 Friern Park
North Finchley
London
N12 9DA
AVONCROSS LIMITED
CONTENTS
Page
Strategic report
1
Directors' report
2 - 3
Independent auditor's report
4 - 6
Statement of comprehensive income
7
Balance sheet
8
Statement of changes in equity
9
Statement of cash flows
10
Notes to the financial statements
11 - 22
AVONCROSS LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 30 SEPTEMBER 2023
- 1 -
The directors present the strategic report for the year ended 30 September 2023.
The company trades under the name Cannon Piling.
Review of the business
During 2023 the Cannon Piling continued to further strengthen, streamline and improve all functions while increasing revenues through organic growth and working closely with key clients. During the year we have moved the offices to a more suitable location and invested heavily in the Plant Yard to bring it up to the Aarsleff Group standards.
Synergies between Aarsleff and Cannon are constantly being reviewed with best practice improvements being introduced while also sharing knowledgeable insights to improve the customer journey. Investments have been increased in the company with new rigs and equipment to improve processes and efficiency.
Principal risks and uncertainties
The Directors continually monitor the risks the company faces. The approach to conduct business in a manner which balances costs and risks while taking account of all of its stakeholders and protecting the company’s performance and reputation by prudently managing the risks inherent in the business.
Development and performance
The plan for 2024 is to continue to consolidate the company towards the Aarsleff methods of working and systems. The UK will continue to recruit and retain the best talent in the industry which will allow further organic growth while also reviewing opportunities for strategic acquisitions. Investment in Machinery and Equipment will be maintained to enable better performance on site.
Key performance indicators
The key financial highlights are as follows:-
Turnover £16.5m (Period ended 30th September 2022 - £17.9m)
Profit after tax £0.3m (Period ended 30th September 2022 - £0.1m)
Shareholders' funds £3.7m (Period ended 30th September 2022 - £3.4m)
K Hague
Director
8 December 2023
AVONCROSS LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 30 SEPTEMBER 2023
- 2 -
The directors present their annual report and financial statements for the year ended 30 September 2023.
Principal activities
The principal activity of the company continued to be that of Piling and Foundation Engineering.
Results and dividends
The results for the year are set out on page 7.
No ordinary dividends were paid. The directors do not recommend payment of a final dividend.
Directors
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
L Christensen
K Hague
P Handley
A J Macdonald
(Appointed 1 June 2023)
Statement of directors' responsibilities
The directors are responsible for preparing the annual report and the financial statements in accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period. In preparing these financial statements, the directors are required to:
select suitable accounting policies and then apply them consistently;
make judgements and accounting estimates that are reasonable and prudent;
state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements;
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.
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.
AVONCROSS LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 30 SEPTEMBER 2023
- 3 -
On behalf of the board
K Hague
Director
8 December 2023
AVONCROSS LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBER OF AVONCROSS LIMITED
- 4 -
Opinion
We have audited the financial statements of AVONCROSS LIMITED (the 'company') for the year ended 30 September 2023 which comprise the statement of comprehensive income, the balance sheet, the statement of changes in equity, the statement of cash flows and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).
In our opinion the financial statements:
give a true and fair view of the state of the company's affairs as at 30 September 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 directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
The other information comprises the information included in the annual report other than the financial statements and our auditor's report thereon. The directors are responsible for the other information contained within the annual report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of our audit:
the information given in the strategic report and the directors' 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.
AVONCROSS LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBER OF AVONCROSS LIMITED
- 5 -
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.
The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We identified and assessed the risks of material misstatement of the financial statements from irregularities, whether due to fraud or error, and discussed these between our audit team members. We then designed and performed audit procedures responsive to those risks, including audit evidence sufficient and appropriate to provide a basis for our opinion.
We obtained an understanding of the legal and regulatory frameworks within which the company operates, focusing on those laws and regulations that have a direct effect on the determination of material amounts and disclosures in the financial statements. The main law and regulation we considered in this context was The Financial Reporting Standards applicable in the UK and Republic of Ireland (FRS 102). We assessed the required compliance with these as part of our audit procedures on the related financial statement items.
We also considered the opportunities and incentives that may exist within the company for fraud. Auditing standards limit the required audit procedures to identify non-compliance.
We identified the greatest risk of impact on the financial statements from irregularities, including fraud, to be within the recording of income, particularly year end debtors, and the override of controls by management. Our audit procedures to respond to these risks included additional work reviewing year end debtors and enquiries of management and analytical review procedures.
Owing to the inherent limitations of an audit, there is an unavoidable risk that we may not have detected some material misstatements in the financial statements, even though we have properly planned and performed our audit in accordance with auditing standards. We are not responsible for preventing non-compliance and cannot be expected to detect non-compliance with all laws and regulations.
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.
AVONCROSS LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBER OF AVONCROSS LIMITED
- 6 -
This report is made solely to the company's member 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 member those matters we are required to state to the member 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 member, for our audit work, for this report, or for the opinions we have formed.
David Watts FCA
Senior Statutory Auditor
For and on behalf of Newton & Garner Limited
8 December 2023
Chartered Accountants
Statutory Auditor
Building 2
30 Friern Park
North Finchley
London
N12 9DA
AVONCROSS LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 SEPTEMBER 2023
- 7 -
Year
18 month Period
ended
ended
30 September
30 September
2023
2022
Notes
£
£
Turnover
3
16,511,375
17,901,412
Cost of sales
(13,554,008)
(15,737,139)
Gross profit
2,957,367
2,164,273
Administrative expenses
(2,373,574)
(1,852,965)
Operating profit
4
583,793
311,308
Interest receivable and similar income
7
15,853
100
Interest payable and similar expenses
8
(41,005)
(74,441)
Profit before taxation
558,641
236,967
Tax on profit
9
(267,037)
(93,264)
Profit for the financial year
291,604
143,703
The profit and loss account has been prepared on the basis that all operations are continuing operations.
AVONCROSS LIMITED
BALANCE SHEET
AS AT
30 SEPTEMBER 2023
30 September 2023
- 8 -
2023
2022
Notes
£
£
£
£
Fixed assets
Tangible assets
11
3,038,075
3,394,574
Current assets
Stocks
12
138,604
20,000
Debtors
13
4,175,804
3,034,795
Cash at bank and in hand
404,389
4,314,408
3,459,184
Creditors: amounts falling due within one year
14
(2,536,022)
(2,063,749)
Net current assets
1,778,386
1,395,435
Total assets less current liabilities
4,816,461
4,790,009
Creditors: amounts falling due after more than one year
15
(479,981)
(846,206)
Provisions for liabilities
Deferred tax liability
17
613,674
512,601
(613,674)
(512,601)
Net assets
3,722,806
3,431,202
Capital and reserves
Called up share capital
19
100
100
Profit and loss reserves
3,722,706
3,431,102
Total equity
3,722,806
3,431,202
The financial statements were approved by the board of directors and authorised for issue on 8 December 2023 and are signed on its behalf by:
K Hague
Director
Company registration number 03777195 (England and Wales)
AVONCROSS LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 SEPTEMBER 2023
- 9 -
Share capital
Profit and loss reserves
Total
£
£
£
Balance at 1 June 2021
100
3,287,399
3,287,499
Period ended 30 September 2022:
Profit and total comprehensive income
-
143,703
143,703
Balance at 30 September 2022
100
3,431,102
3,431,202
Year ended 30 September 2023:
Profit and total comprehensive income
-
291,604
291,604
Balance at 30 September 2023
100
3,722,706
3,722,806
AVONCROSS LIMITED
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 SEPTEMBER 2023
- 10 -
2023
2022
Notes
£
£
£
£
Cash flows from operating activities
Cash generated from operations
21
735,769
1,155,443
Interest paid
(41,005)
(74,441)
Income taxes refunded
156
Net cash inflow from operating activities
694,764
1,081,158
Investing activities
Purchase of tangible fixed assets
(720,931)
(1,164,424)
Proceeds from disposal of tangible fixed assets
44,837
283,683
Interest received
15,853
100
Net cash used in investing activities
(660,241)
(880,641)
Financing activities
Payment of finance leases obligations
(438,912)
(273,605)
Net cash used in financing activities
(438,912)
(273,605)
Net decrease in cash and cash equivalents
(404,389)
(73,088)
Cash and cash equivalents at beginning of year
404,389
477,477
Cash and cash equivalents at end of year
404,389
AVONCROSS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 SEPTEMBER 2023
- 11 -
1
Accounting policies
Company information
AVONCROSS LIMITED is a private company limited by shares incorporated in England and Wales. The registered office is Hawton Lane, Balderton, Newark, Nottinghamshire, NG24 3BU.
1.1
Reporting period
The company is showing a period of 16 months this year to align it with it's parent company, having been purchased during the year, therefore the comparative amounts presented in the financial statements (including the related notes) are not entirely comparable.
1.2
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 the revaluation of freehold properties and to include investment properties and certain financial instruments at fair value]. The principal accounting policies adopted are set out below.
1.3
Going concern
Atruet the time of approving the financial statements, the directors have a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future. Thus the directors continue 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. 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.
Revenue from contracts for the provision of professional services is recognised by reference to the stage of completion when the stage of completion, costs incurred and costs to complete can be estimated reliably. The stage of completion is calculated by comparing costs incurred, mainly in relation to contractual hourly staff rates and materials, as a proportion of total costs. Where the outcome cannot be estimated reliably, revenue is recognised only to the extent of the expenses recognised that it is probable will be recovered.
1.5
Intangible fixed assets - goodwill
Goodwill represents the excess of the cost of acquisition of unincorporated businesses over the fair value of net assets acquired. It is initially recognised as an asset at cost and is subsequently measured at cost less accumulated amortisation and accumulated impairment losses. Goodwill is considered to have a finite useful life and is amortised on a systematic basis over its expected life.
AVONCROSS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 SEPTEMBER 2023
1
Accounting policies
(Continued)
- 12 -
1.6
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:
Plant and equipment
between 2 and 8 years straight line basis
Fixtures and fittings
15% straight line basis
Motor vehicles
25% straight line basis
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.
1.7
Impairment of fixed assets
At each reporting period end date, the company 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.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.
Recognised impairment losses are reversed if, and only if, the reasons for the impairment loss have ceased to apply. Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.
1.8
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.
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.
AVONCROSS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 SEPTEMBER 2023
1
Accounting policies
(Continued)
- 13 -
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 and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised.
Other financial assets
Other financial assets, including investments in equity instruments which are not subsidiaries, associates or joint ventures, are initially measured at fair value, which is normally the transaction price. Such assets are subsequently carried at fair value and the changes in fair value are recognised in profit or loss, except that investments in equity instruments that are not publicly traded and whose fair values cannot be measured reliably are measured at cost less impairment.
Impairment of financial assets
Financial assets, other than those held at fair value through profit and loss, are assessed for indicators of impairment at each reporting end date.
Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected. If an asset is impaired, the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset’s original effective interest rate. The impairment loss is recognised in profit or loss.
If there is a decrease in the impairment loss arising from an event occurring after the impairment was recognised, the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been, had the impairment not previously been recognised. The impairment reversal is recognised in profit or loss.
Derecognition of financial assets
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the company transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.
Classification of financial liabilities
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the company after deducting all of its liabilities.
AVONCROSS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 SEPTEMBER 2023
1
Accounting policies
(Continued)
- 14 -
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.
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.
AVONCROSS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 SEPTEMBER 2023
1
Accounting policies
(Continued)
- 15 -
Deferred tax
Deferred tax liabilities are generally recognised for all timing differences and deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Such assets and liabilities are not recognised if the timing difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.
The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the profit and loss account, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset when the company has a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.
1.13
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
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
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.
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.
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.
AVONCROSS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 SEPTEMBER 2023
- 16 -
3
Turnover and other revenue
2023
2022
£
£
Turnover analysed by class of business
Turnover
16,511,375
17,901,412
2023
2022
£
£
Other revenue
Interest income
15,853
100
4
Operating profit
2023
2022
Operating profit for the year is stated after charging/(crediting):
£
£
Exchange losses
2,460
Fees payable to the company's auditor for the audit of the company's financial statements
3,213
19,997
Depreciation of owned tangible fixed assets
1,058,950
1,003,071
Profit on disposal of tangible fixed assets
(26,357)
(107,572)
Operating lease charges
69,816
26,730
5
Employees
The average monthly number of persons (including directors) employed by the company during the year was:
2023
2022
Number
Number
Management
2
3
Production
16
16
Administration
6
9
Total
24
28
Their aggregate remuneration comprised:
2023
2022
£
£
Wages and salaries
3,349,737
3,817,187
Social security costs
175,817
157,122
Pension costs
25,787
29,435
3,551,341
4,003,744
AVONCROSS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 SEPTEMBER 2023
- 17 -
6
Directors' remuneration
2023
2022
£
£
Remuneration for qualifying services
60,080
7
Interest receivable and similar income
2023
2022
£
£
Interest income
Interest on bank deposits
15,853
100
2023
2022
Investment income includes the following:
£
£
Interest on financial assets not measured at fair value through profit or loss
15,853
100
8
Interest payable and similar expenses
2023
2022
£
£
Other finance costs:
Interest on finance leases and hire purchase contracts
41,005
74,441
9
Taxation
2023
2022
£
£
Current tax
UK corporation tax on profits for the current period
139,313
(156)
Deferred tax
Origination and reversal of timing differences
127,724
93,420
Total tax charge
267,037
93,264
AVONCROSS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 SEPTEMBER 2023
9
Taxation
(Continued)
- 18 -
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
558,641
236,967
Expected tax charge based on the standard rate of corporation tax in the UK of 22.01% (2022: 19.00%)
122,946
45,024
Tax effect of expenses that are not deductible in determining taxable profit
10,395
5,727
Tax effect of utilisation of tax losses not previously recognised
(41,052)
Unutilised tax losses carried forward
22,888
Adjustments in respect of prior years
(156)
Group relief
48,167
Permanent capital allowances in excess of depreciation
47,024
(121,806)
Deferred tax movement
127,724
93,420
Taxation charge for the year
267,037
93,264
10
Intangible fixed assets
Goodwill
£
Cost
At 1 October 2022 and 30 September 2023
2
Amortisation and impairment
At 1 October 2022 and 30 September 2023
2
Carrying amount
At 30 September 2023
At 30 September 2022
AVONCROSS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 SEPTEMBER 2023
- 19 -
11
Tangible fixed assets
Plant and equipment
Fixtures and fittings
Motor vehicles
Total
£
£
£
£
Cost
At 1 October 2022
6,081,562
32,427
351,070
6,465,059
Additions
255,673
465,258
720,931
Disposals
(20,000)
(49,874)
(69,874)
At 30 September 2023
6,317,235
32,427
766,454
7,116,116
Depreciation and impairment
At 1 October 2022
2,851,213
27,834
191,438
3,070,485
Depreciation charged in the year
945,082
1,562
112,306
1,058,950
Eliminated in respect of disposals
(9,375)
(42,019)
(51,394)
At 30 September 2023
3,786,920
29,396
261,725
4,078,041
Carrying amount
At 30 September 2023
2,530,315
3,031
504,729
3,038,075
At 30 September 2022
3,230,349
4,593
159,632
3,394,574
12
Stocks
2023
2022
£
£
Raw materials and consumables
138,604
20,000
13
Debtors
2023
2022
Amounts falling due within one year:
£
£
Trade debtors
1,445,211
1,936,286
Gross amounts owed by contract customers
1,233,816
952,597
Corporation tax recoverable
46,800
46,800
Amounts owed by group undertakings
1,019,160
Other debtors
430,817
72,461
4,175,804
3,008,144
Deferred tax asset (note 17)
26,651
4,175,804
3,034,795
AVONCROSS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 SEPTEMBER 2023
- 20 -
14
Creditors: amounts falling due within one year
2023
2022
Notes
£
£
Obligations under finance leases
16
371,025
443,712
Trade creditors
1,003,177
1,526,492
Amounts owed to group undertakings
613,818
Corporation tax
139,313
Other taxation and social security
(167,020)
(115,687)
Other creditors
575,709
209,232
2,536,022
2,063,749
15
Creditors: amounts falling due after more than one year
2023
2022
Notes
£
£
Obligations under finance leases
16
479,981
846,206
16
Finance lease obligations
2023
2022
Future minimum lease payments due under finance leases:
£
£
Within one year
371,025
443,712
In two to five years
479,981
846,206
851,006
1,289,918
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.
17
Deferred taxation
The following are the major deferred tax liabilities and assets recognised by the company and movements thereon:
Liabilities
Liabilities
Assets
Assets
2023
2022
2023
2022
Balances:
£
£
£
£
Accelerated capital allowances
613,674
512,601
-
-
Tax losses
-
-
-
26,651
613,674
512,601
-
26,651
AVONCROSS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 SEPTEMBER 2023
17
Deferred taxation
(Continued)
- 21 -
2023
Movements in the year:
£
Liability at 1 October 2022
485,950
Charge to profit or loss
127,724
Liability at 30 September 2023
613,674
The deferred tax liability set out above is expected to reverse within the next few years and relates to accelerated capital allowances that are expected to mature within the same period.
18
Retirement benefit schemes
2023
2022
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
25,787
29,435
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
2023
2022
2023
2022
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Ordinary shares of £1 each
100
100
100
100
20
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:
2023
2022
£
£
Within one year
5,490
5,490
Between two and five years
5,490
10,981
10,980
16,471
AVONCROSS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 SEPTEMBER 2023
- 22 -
21
Cash generated from operations
2023
2022
£
£
Profit for the year after tax
291,604
143,703
Adjustments for:
Taxation charged
267,037
93,264
Finance costs
41,005
74,441
Investment income
(15,853)
(100)
Gain on disposal of tangible fixed assets
(26,357)
(107,572)
Depreciation and impairment of tangible fixed assets
1,058,950
1,003,071
Movements in working capital:
Increase in stocks
(118,604)
Increase in debtors
(1,167,660)
(845,559)
Increase in creditors
405,647
794,195
Cash generated from operations
735,769
1,155,443
22
Analysis of changes in net debt
1 October 2022
Cash flows
30 September 2023
£
£
£
Cash at bank and in hand
404,389
(404,389)
-
Obligations under finance leases
(1,289,918)
438,912
(851,006)
(885,529)
34,523
(851,006)
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