Company registration number 01604592 (England and Wales)
SAXON FURNITURE LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
SAXON FURNITURE LIMITED
COMPANY INFORMATION
Directors
R Jolly
T Jolly
M Deighton
Secretary
R Jolly
Company number
01604592
Registered office
Saxon House
Manchester Road
Bolton
Lancashire
United Kingdom
BL3 2NZ
Auditor
Azets Audit Services
Laurel House
173 Chorley New Road
Bolton
BL1 4QZ
SAXON FURNITURE 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 - 23
SAXON FURNITURE LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 30 JUNE 2023
The directors present the strategic report for the year ended 30 June 2023.
Business Review
The anticipated downturn in demand across the whole furnishing sector following the false increase during the pandemic proved to be only too accurate. Whilst the prediction was fairly obvious nobody could have foreseen that the downturn would coincide with the war in Ukraine and the resulting cost of living crisis. The whole housing and furnishings sectors have been affected and this flat level of demand is expected to continue throughout 2024.
Cost savings have been rigorously pursued and staff levels adjusted accordingly.
Future Developments
The subdued market conditions did not prevent optimistic investment with an eye to the future and a new range of chemical free sofas and chairs has been developed which will be marketed nation wide when the associated website is completed in the summer of 2024.
A new cutting machine has also been purchased which will provide a more cost efficient process and also guarantee against future skill shortages.
An association has been undertaken with an American partner which has resulted in the opening of showrooms in both New York and Dallas. It is expected that this partnership will provide a significant increase in our North American sales.
Market Risk
Internationally sourced raw material prices are always likely to be volatile in the current world turbulence, but costs have eased in general in the recent short term. The forthcoming general election could also effect customer confidence, but it is expected that the incoming government will be eager to court the electorate in the short term.
Price Risk
All raw material prices and supplier sourcing are under continuous review and exposure to single supply sources are never tolerated. Margins are maintained at all times by the transference of increases directly to the selling prices.
Liquid Risk
The company has no borrowings and has sufficient retained profits to enable confident trading and further investment in its own development.
R Jolly
Director
8 March 2024
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SAXON FURNITURE LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 30 JUNE 2023
The directors present their annual report and financial statements for the year ended 30 June 2023.
Principal activities
The principal activity of the company during the year was the manufacture and retailing of leather upholstered and fabric furniture.
Results and dividends
The results for the year are set out on page 7.
Ordinary dividends were paid amounting to £89,211. The directors do not recommend payment of a further dividend.
Directors
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
R Jolly
T Jolly
M Deighton
Auditor
The auditor, Azets Audit Services, is deemed to be reappointed under section 487(2) of the Companies Act 2006.
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;
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.
- 2 -
SAXON FURNITURE LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
On behalf of the board
R Jolly
Director
8 March 2024
- 3 -
SAXON FURNITURE LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF SAXON FURNITURE LIMITED
Opinion
- 4 -
We have audited the financial statements of Saxon Furniture Limited (the 'company') for the year ended 30 June 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 June 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.
SAXON FURNITURE LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF SAXON FURNITURE LIMITED
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.
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.
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SAXON FURNITURE LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF SAXON FURNITURE LIMITED
Extent to which the audit was considered capable of detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above and on the Financial Reporting Council’s website, to detect material misstatements in respect of irregularities, including fraud.
We obtain and update our understanding of the entity, its activities, its control environment, and likely future developments, including in relation to the legal and regulatory framework applicable and how the entity is complying with that framework. Based on this understanding, we identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. This includes consideration of the risk of acts by the entity that were contrary to applicable laws and regulations, including fraud.
In response to the risk of irregularities and non-compliance with laws and regulations, including fraud, we designed procedures which included:
Enquiry of management and those charged with governance around actual and potential litigation and claims as well as actual, suspected and alleged fraud;
Reviewing minutes of meetings of those charged with governance;
Assessing the extent of compliance with the laws and regulations considered to have a direct material effect on the financial statements or the operations of the company through enquiry and inspection;
Reviewing financial statement disclosures and testing to supporting documentation to assess compliance with applicable laws and regulations;
Performing audit work over the risk of management bias and override of controls, including testing of journal entries and other adjustments for appropriateness, evaluating the business rationale of significant transactions outside the normal course of business and reviewing accounting estimates for indicators of potential bias.
Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading to a material misstatement in the financial statements or non-compliance with regulation. This risk increases the more that compliance with a law or regulation is removed from the events and transactions reflected in the financial statements, as we will be less likely to become aware of instances of non-compliance. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
This report is made solely to the company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's members as a body, for our audit work, for this report, or for the opinions we have formed.
Helen Davies
Senior Statutory Auditor
For and on behalf of Azets Audit Services
Date: 11 March 2024
Chartered Accountants
Statutory Auditor
Laurel House
173 Chorley New Road
Bolton
United Kingdom
BL1 4QZ
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SAXON FURNITURE LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2023
2023
2022
Notes
£
£
Turnover
3
7,971,719
10,093,389
Cost of sales
(4,110,303)
(4,600,063)
Gross profit
3,861,416
5,493,326
Distribution costs
(680,705)
(740,633)
Administrative expenses
(2,836,243)
(2,748,954)
Other operating income
9,626
18,350
Operating profit
4
354,094
2,022,089
Interest receivable and similar income
31,950
884
Interest payable and similar expenses
7
(8,337)
(5,955)
Profit before taxation
377,707
2,017,018
Tax on profit
8
(76,340)
(393,249)
Profit for the financial year
301,367
1,623,769
Other comprehensive income
Revaluation of tangible fixed assets
2,006,089
Tax relating to other comprehensive income
(439,922)
Total comprehensive income for the year
301,367
3,189,936
The profit and loss account has been prepared on the basis that all operations are continuing operations.
- 7 -
SAXON FURNITURE LIMITED
BALANCE SHEET
2023
2022
Notes
£
£
£
£
Fixed assets
Tangible assets
10
4,210,001
4,147,772
Current assets
Stocks
11
835,076
1,044,450
Debtors
12
224,807
281,366
Cash at bank and in hand
2,281,001
2,869,672
3,340,884
4,195,488
Creditors: amounts falling due within one year
13
(1,117,056)
(2,159,610)
Net current assets
2,223,828
2,035,878
Total assets less current liabilities
6,433,829
6,183,650
Creditors: amounts falling due after more than one year
14
(82,356)
(59,811)
Provisions for liabilities
Deferred tax liability
16
585,939
570,461
(585,939)
(570,461)
Net assets
5,765,534
5,553,378
Capital and reserves
Called up share capital
18
2,000
2,000
Revaluation reserve
1,566,167
1,566,167
Profit and loss reserves
4,197,367
3,985,211
Total equity
5,765,534
5,553,378
The financial statements were approved by the board of directors and authorised for issue on 8 March 2024 and are signed on its behalf by:
R Jolly
Director
Company Registration No. 01604592
- 8 -
SAXON FURNITURE LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2023
Share capital
Revaluation reserve
Profit and loss reserves
Total
Notes
£
£
£
£
Balance at 1 July 2021
2,000
2,677,231
2,679,231
Year ended 30 June 2022:
Profit for the year
-
-
1,623,769
1,623,769
Other comprehensive income:
Revaluation of tangible fixed assets
-
2,006,089
-
2,006,089
Tax relating to other comprehensive income
-
(439,922)
(439,922)
Total comprehensive income for the year
-
1,566,167
1,623,769
3,189,936
Dividends
9
-
-
(315,789)
(315,789)
Balance at 30 June 2022
2,000
1,566,167
3,985,211
5,553,378
Year ended 30 June 2023:
Profit and total comprehensive income for the year
-
-
301,367
301,367
Dividends
9
-
-
(89,211)
(89,211)
Balance at 30 June 2023
2,000
1,566,167
4,197,367
5,765,534
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SAXON FURNITURE LIMITED
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2023
2023
2022
Notes
£
£
£
£
Cash flows from operating activities
Cash (absorbed by)/generated from operations
23
(99,136)
1,494,198
Interest paid
(8,337)
(5,955)
Income taxes paid
(271,817)
(464,907)
Net cash (outflow)/inflow from operating activities
(379,290)
1,023,336
Investing activities
Purchase of tangible fixed assets
(138,512)
(179,972)
Proceeds on disposal of tangible fixed assets
76,115
42,500
Interest received
31,950
884
Net cash used in investing activities
(30,447)
(136,588)
Financing activities
Payment of finance leases obligations
(89,723)
(71,845)
Dividends paid
(89,211)
(315,789)
Net cash used in financing activities
(178,934)
(387,634)
Net (decrease)/increase in cash and cash equivalents
(588,671)
499,114
Cash and cash equivalents at beginning of year
2,869,672
2,370,558
Cash and cash equivalents at end of year
2,281,001
2,869,672
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SAXON FURNITURE LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
1
Accounting policies
Company information
Saxon Furniture Limited is a private company limited by shares incorporated in England and Wales. The registered office is Saxon House, Manchester Road, Bolton, Lancashire, United Kingdom, BL3 2NZ.
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 the revaluation of freehold properties. The principal accounting policies adopted are set out below.
1.2
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.
1.3
Turnover
- 11 -
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.
Revenue from the sale of goods is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer (usually on dispatch of the goods), the amount of revenue can be measured reliably, it is probable that the economic benefits associated with the transaction will flow to the entity and the costs incurred or to be incurred in respect of the transaction can be measured reliably.
1.4
Tangible fixed assets
Tangible fixed assets are initially measured at cost and subsequently measured at cost or valuation, net of depreciation and any impairment losses.
Depreciation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:
Land and buildings
None
Leasehold improvements
1% straight line
Plant and machinery
20% straight line
Motor vehicles
25% straight line
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.
SAXON FURNITURE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
1
Accounting policies
(Continued)
Land and Buildings whose fair value can be measured reliably are held under the revaluation model and are carried at a revalued amount, being their fair value at the date of valuation less any subsequent accumulated depreciation and subsequent accumulated impairment losses. The fair value of the land and buildings is usually considered to be their market value.
Revaluation gains and losses are recognised in other comprehensive income and accumulated in equity, except to the extent that a revaluation gain reverses a revaluation loss previously recognised in profit or loss or a revaluation loss exceeds the accumulated revaluation gains recognised in equity; such gains and losses are recognised in profit or loss.
1.5
Stocks
- 12 -
Stocks are valued at the lower of cost and net realisable value after making due allowance for obsolete and slow-moving stocks where applicable.
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.
1.6
Cash and cash equivalents
Cash at bank and in hand are basic financial assets and include cash in hand and deposits held at call with banks.
1.7
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.
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.
SAXON FURNITURE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
1
Accounting policies
(Continued)
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.
Basic financial liabilities
Basic financial liabilities, including creditors, 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.
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 company’s contractual obligations expire or are discharged or cancelled.
1.8
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.
1.9
Taxation
The tax expense represents the sum of the tax currently payable and deferred tax.
Current tax
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the profit and loss account because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The company’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.
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SAXON FURNITURE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
1
Accounting policies
(Continued)
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.
1.10
Employee benefits
The costs of short-term employee benefits are recognised as a liability and an expense, unless those costs are required to be recognised as part of the cost of stock or fixed assets.
The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received.
1.11
Retirement benefits
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
1.12
Leases
Leases are classified as hire purchase contracts 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 hire purchase contracts 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 the profit and loss account so as to produce a constant periodic rate of interest on the remaining balance of the liability.
Rentals payable under operating leases, including any lease incentives received, are charged to profit or loss on a straight line basis over the term of the relevant lease except where another more systematic basis is more representative of the time pattern in which economic benefits from the leases asset are consumed.
1.13
Government grants
Government grants are recognised at the fair value of the asset received or receivable when there is reasonable assurance that the grant conditions will be met and the grants will be received.
Government grants relating to turnover are recognised as income over the periods when the related costs are incurred. Grants relating to an asset are recognised in income systematically over the asset's expected useful life. If part of such a grant is deferred it is recognised as deferred income rather than being deducted from the asset's carrying amount.
1.14
Foreign exchange
Transactions in currencies other than pounds sterling are recorded at the rates of exchange prevailing at the dates of the transactions. At each reporting end date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the reporting end date. Gains and losses arising on translation in the period are included in profit or loss.
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SAXON FURNITURE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
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.
Key sources of estimation uncertainty
The estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are as follows.
Stock provision
The directors have applied their knowledge of the operations of the business when reviewing the stock listing at the balance sheet date, and have made no provision for any items deemed to be slow moving or obsolete. Therefore, no charge to the profit and loss account is recognised in cost of sales.
3
Turnover and other revenue
2023
2022
£
£
Turnover analysed by geographical market
UK
5,851,430
7,643,770
Overseas
2,120,289
2,449,619
7,971,719
10,093,389
2023
2022
£
£
Other revenue
Grants received
-
17,063
4
Operating profit
2023
2022
Operating profit for the year is stated after charging/(crediting):
£
£
Exchange gains
(119,656)
(46,329)
Government grants
-
(17,063)
Fees payable to the company's auditor for the audit of the company's financial statements
17,000
17,000
Depreciation of owned tangible fixed assets
57,011
74,289
Depreciation of tangible fixed assets held under hire purchase contracts
59,083
42,499
Loss/(profit) on disposal of tangible fixed assets
2,827
(15,004)
Operating lease charges
157,527
150,000
- 15 -
SAXON FURNITURE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
5
Employees
The average monthly number of persons (including directors) employed by the company during the year was:
2023
2022
Number
Number
Directors
3
3
Production
57
63
Distribution
7
7
Admin and sales
26
28
Total
93
101
Their aggregate remuneration comprised:
2023
2022
£
£
Wages and salaries
2,766,013
2,983,752
Social security costs
273,435
284,798
Pension costs
199,921
192,264
3,239,369
3,460,814
6
Directors' remuneration
2023
2022
£
£
Remuneration for qualifying services
321,002
340,917
Company pension contributions to defined contribution schemes
65,312
51,964
386,314
392,881
The number of directors for whom retirement benefits are accruing under defined contribution schemes amounted to 3 (2022 - 3).
Remuneration disclosed above include the following amounts paid to the highest paid director:
2023
2022
£
£
Remuneration for qualifying services
155,635
164,721
- 16 -
SAXON FURNITURE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
7
Interest payable and similar expenses
2023
2022
£
£
Interest on financial liabilities measured at amortised cost:
Interest on bank overdrafts and loans
711
-
Other finance costs:
Interest on finance leases and hire purchase contracts
7,626
5,955
8,337
5,955
8
Taxation
2023
2022
£
£
Current tax
UK corporation tax on profits for the current period
60,862
345,002
Deferred tax
Origination and reversal of timing differences
15,478
48,247
Total tax charge
76,340
393,249
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
377,707
2,017,018
Expected tax charge based on the standard rate of corporation tax in the UK of 20.50% (2022: 19.00%)
77,430
383,233
Tax effect of expenses that are not deductible in determining taxable profit
500
Effect of change in corporation tax rate
(8,768)
7,832
Permanent capital allowances in excess of depreciation
(1,967)
Depreciation on assets not qualifying for tax allowances
(133)
4,030
Pensions
4,369
Other short term timing differences
3,442
(379)
Taxation charge for the year
76,340
393,249
- 17 -
SAXON FURNITURE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
8
Taxation
(Continued)
In addition to the amount charged to the profit and loss account, the following amounts relating to tax have been recognised directly in other comprehensive income:
2023
2022
£
£
Deferred tax arising on:
Revaluation of property
-
439,922
9
Dividends
2023
2022
£
£
Final paid
89,211
315,789
10
Tangible fixed assets
Land and buildings
Leasehold improvements
Plant and machinery
Motor vehicles
Total
£
£
£
£
£
Cost
At 1 July 2022
3,723,351
270,684
602,317
511,292
5,107,644
Additions
78,144
179,122
257,266
Disposals
(247,798)
(247,798)
Transfers
(6,950)
6,950
At 30 June 2023
3,716,401
277,634
680,461
442,616
5,117,112
Depreciation and impairment
At 1 July 2022
216,400
2,925
448,501
292,046
959,872
Depreciation charged in the year
2,936
41,540
71,618
116,094
Eliminated in respect of disposals
(168,855)
(168,855)
At 30 June 2023
216,400
5,861
490,041
194,809
907,111
Carrying amount
At 30 June 2023
3,500,001
271,773
190,420
247,807
4,210,001
At 30 June 2022
3,506,951
267,759
153,816
219,246
4,147,772
- 18 -
SAXON FURNITURE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
10
Tangible fixed assets
(Continued)
The net book value of assets held under hire purchase contracts, included above, is £194,259 (2022: £152,438). Depreciation for assets held under hire purchase contracts amounted to £59,083 (2022: £42,499).
The company has adopted a revaluation policy in the prior period to revalue their land and buildings to market value. A desktop valuation was conducted by Miller Metcalfe Estate Agents and the land and buildings were valued at £3,500,000 as at 30 June 2022. The land and buildings were valued using an average £ per square foot calculated by comparison to local commercial properties recently sold in the area. Prior to the adoption of the revaluation of the land and buildings, the historical cost was £1,740,312. There has been no significant change in market value of the revalued land and buildings based on management's best estimate.
As part of the revaluation, management deemed it was appropriate to reclassify a group of assets to leasehold improvements and hold these at cost less depreciation. This reflects that the assets are not directly related to the valuation of the land and buildings.
11
Stocks
2023
2022
£
£
Raw materials and consumables
365,774
478,352
Finished goods and goods for resale
469,302
566,098
835,076
1,044,450
12
Debtors
2023
2022
Amounts falling due within one year:
£
£
Trade debtors
27,308
91,162
Corporation tax recoverable
27,431
Other debtors
29,748
9,933
Prepayments and accrued income
140,320
180,271
224,807
281,366
- 19 -
SAXON FURNITURE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
13
Creditors: amounts falling due within one year
2023
2022
£
£
Net obligations under hire purchase contracts
15
52,421
45,936
Payments received on account
336,412
630,780
Trade creditors
289,933
424,900
Directors' current account
42,184
406,973
Corporation tax
183,524
Other taxation and social security
173,789
211,923
Other creditors
64,657
36,386
Accruals and deferred income
157,660
219,188
1,117,056
2,159,610
Net obligations under hire purchase contracts are secured on the assets to which they relate.
14
Creditors: amounts falling due after more than one year
2023
2022
£
£
Net obligations under hire purchase contracts
15
82,356
59,811
Net obligations under hire purchase contracts are secured on the assets to which they relate.
15
Finance lease obligations
2023
2022
Future minimum lease payments due under finance leases:
£
£
Within one year
52,421
45,936
In two to five years
82,356
59,811
134,777
105,747
Finance lease payments represent rentals payable by the company for certain items of plant and machinery. Leases include purchase options at the end of the lease period, and no restrictions are placed on the use of the assets. The average lease term is 29 months. All leases are on a fixed repayment basis and no arrangements have been entered into for contingent rental payments.
- 20 -
SAXON FURNITURE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
16
Deferred taxation
The following are the major deferred tax liabilities and assets recognised by the company and movements thereon:
Liabilities
Liabilities
2023
2022
Balances:
£
£
Accelerated capital allowances
152,487
133,519
Revaluation of land and buildings
439,922
439,922
Other
(6,470)
(2,980)
585,939
570,461
2023
Movements in the year:
£
Liability at 1 July 2022
570,461
Charge to profit or loss
15,478
Liability at 30 June 2023
585,939
The deferred tax liability set out above is expected to reverse within 12 months and relates to accelerated capital allowances that are expected to mature within the same period.
17
Retirement benefit schemes
2023
2022
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
199,921
192,264
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. Amounts owing to defined contribution pension scheme at the year end totalled £64,179 (2022: £33,997).
18
Share capital
2023
2022
2023
2022
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Ordinary shares of £1 each
2,000
2,000
2,000
2,000
The rights of shares are detailed in the company's articles of association.
- 21 -
SAXON FURNITURE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
19
Reserves
Profit & loss account
The profit and loss account represents accumulated trading profits less equity dividends paid.
Revaluation reserve
The revaluation reserve represents an uplift in Land and Buildings held at revalued market value, less deferred tax movements in respect of the change in valuation.
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
125,000
125,000
Between two and five years
62,500
187,500
Total commitment
187,500
312,500
21
Capital commitments
Amounts contracted for but not provided in the financial statements:
2023
2022
£
£
Acquisition of tangible fixed assets
29,516
45,057
At the year end a new operating system was being installed across the business. At the year end £76,484 has been included in plant and machinery as costs recognised to date. This asset has not been depreciated as the system was not ready for use at the year end. Further costs of £29,516 are to be incurred to bring this system into use and hence recognised as a capital commitment at the year end.
22
Ultimate controlling party
There is no ultimate controlling party in either the current or previous year.
- 22 -
SAXON FURNITURE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
23
Cash (absorbed by)/generated from operations
2023
2022
£
£
Profit for the year after tax
301,367
1,623,769
Adjustments for:
Taxation charged
76,340
393,249
Finance costs
8,337
5,955
Investment income
(31,950)
(884)
Loss/(gain) on disposal of tangible fixed assets
2,827
(15,004)
Depreciation and impairment of tangible fixed assets
116,094
116,788
Movements in working capital:
Decrease/(increase) in stocks
209,374
(273,104)
Decrease in debtors
83,990
8,424
Decrease in creditors
(865,515)
(364,995)
Cash (absorbed by)/generated from operations
(99,136)
1,494,198
24
Analysis of changes in net funds
1 July 2022
Cash flows
30 June 2023
£
£
£
Cash at bank and in hand
2,869,672
(588,671)
2,281,001
Obligations under finance leases
(105,747)
(29,030)
(134,777)
2,763,925
(617,701)
2,146,224
- 23 -
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