Company registration number SC392616 (Scotland)
DSHWOOD UK LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
A9 Accountancy Limited
Chartered Accountants
Elm House
Cradlehall Business Park
Inverness
United Kingdom
IV2 5GH
DSHWOOD UK LIMITED
COMPANY INFORMATION
Directors
Gavin Brown
Iwan Williams
Company number
SC392616
Registered office
Elm House
Cradlehall Business Park
Inverness
Scotland
IV2 5GH
Auditor
A9 Accountancy Limited
Elm House
Cradlehall Business Park
Inverness
United Kingdom
IV2 5GH
Business address
Eldo House
Monkton Road
Prestwick
Ayrshire
KA9 2PB
DSHWOOD UK LIMITED
CONTENTS
Page
Strategic report
1 - 2
Directors' report
3 - 4
Independent auditor's report
5 - 7
Profit and loss account
8
Statement of comprehensive income
9
Balance sheet
10
Statement of changes in equity
11
Statement of cash flows
12
Notes to the financial statements
13 - 25
DSHWOOD UK LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 30 JUNE 2023
- 1 -
The directors present the strategic report for the year ended 30 June 2023.
Review of the business
The results for the company show turnover of £25,588,414 and a pre-tax loss of £683,371 for the period.
The company’s turnover for the year increased by £2,056,186 from 2022. The growth achieved is a result of continued development of relationships within the industry and the teamwork and dedication of the company’s experienced staff.
The gross profit margin was 3.49% which has increased by 2.28% compared to the gross profit margin of 1.21% in 2022.
The company has net liabilities of £74,557 (2022 net liabilities £141,186) and cash reserves of £87,600 (2022 £97,744).
The accounts include a management charge amounting to £506,478 (2022 £309,724) by DSHwood A/S for the period.
There have been significant economic and inflationary impacts to the UK and Europe which has affected the company’s trading. These are discussed in further detail below.
Principal risks and uncertainties
The directors are responsible for risk management and continue to develop policies and procedures that reflect the nature and scale of the business. These are designed to identify, mitigate, and manage risk, but they cannot eliminate it. The directors have identified the following key areas of risk to the business.
Interest rates rose dramatically over the period resulting in bank interest payments significantly above those allowed for in the budget.
Market risks - the company is influenced by global economic development and in particular economic conditions of the market in which the company operates. The company’s results are therefore sensitive to global financial trends. The company is part of a group with a presence in various countries which mitigates the risk to some extent.
Fuel and transport costs during the past year caused a considerable unforeseen increase in haulage and freight movement costs.
Brexit – There hasn’t been a significant impact on the company over the period but longer term it could result in changes which will affect the movement of goods, exchange rates and price of imports.
Ukraine war – this has continued to create further significant economic disruption to the UK and Europe.
Credit risk –the risk that a counterparty will not meet its obligations in a customer contract leading to financial loss. The company is exposed to credit risk from its operating activities, primarily trade receivables. Customer credit is managed by the company’s policy and procedures. Credit risk is further mitigated by insurance.
The likely level of these impacts has been assessed and is considered to be manageable by the directors. The directors believe the key to managing and mitigating risk is the development and maintenance of long-term relationships with customers and suppliers.
Future developments
The company continues to be well placed to take advantage of suitable opportunities that the directors feel are appropriate to the business. The company is currently engaged with small, medium, and large-scale contracts. The directors are committed to growing the company in a sustainable and responsible manner ensuring that the correct opportunities are sought and secured by the company. The demand for product remains and the company considers itself well placed within the marketplace going forward.
DSHWOOD UK LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
- 2 -
Key performance indicators
The company uses several KPI’s to measure performance. The company's key performance indicators are turnover and gross profit margin.
Gavin Brown
Director
4 October 2023
DSHWOOD UK LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 30 JUNE 2023
- 3 -
The directors present their annual report and financial statements for the year ended 30 June 2023.
Principal activities
The principal activity of the company continued to be that of the purchase and sale of timber.
Results and dividends
The results for the year are set out on page 8.
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:
Gavin Brown
Iwan Williams
Auditor
The auditors A9 Accountancy Limited are 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.
DSHWOOD UK LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
- 4 -
On behalf of the board
Gavin Brown
Director
4 October 2023
DSHWOOD UK LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF DSHWOOD UK LIMITED
- 5 -
Opinion
We have audited the financial statements of DSHwood UK Limited (the 'company') for the year ended 30 June 2023 which comprise the profit and loss account, 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 loss 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.
DSHWOOD UK LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF DSHWOOD UK LIMITED
- 6 -
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 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 is detailed below.
We obtained an understanding of the legal and regulatory frameworks that are applicable to the company, focusing on provisions of those laws and regulations that had a direct effect on the determination of material amounts and disclosures in the financial statements. The most relevant frameworks we identified include:
We gained an understanding of how the company is complying with these laws and regulations by making enquiries of management. We corroborated these enquiries through our review of external inspections, relevant correspondence with regulatory bodies and board meeting minutes.
DSHWOOD UK LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF DSHWOOD UK LIMITED
- 7 -
We assessed the susceptibility of the company’s financial statements to material misstatement, including how fraud might occur, by meeting with management to understand where it was considered there was susceptibility to fraud. This evaluation also considered how management were remunerated and whether this provided an incentive for fraudulent activity. We considered the overall control environment and how management oversee the implementation and operation of controls. In areas of the financial statements where the risks were considered to be higher, we performed procedures to address each identified risk.
The following procedures were performed to provide reasonable assurance that the financial statements were free of material fraud or error:
Reviewing minutes of meetings of those charged with governance;
Reviewing the level of and reasoning behind the company’s procurement of legal and professional services;
Performing audit work procedures over the risk of management 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 judgements made by management in their calculation of accounting estimates for potential management bias.
Procedures to confirm the existence and completeness of revenue ensuring recognised in line with the company’s accounting policies.
Enquiries with management regarding the compliance with laws and regulations, including health and safety requirements.
Our audit procedures were designed to respond to the risk of material misstatements in the financial statements, recognising that the risk of not detecting a material risk due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve intentional concealment, forgery, collusion, omission or misrepresentation. There are inherent limitations in the audit procedures performed and the further removed noncompliance with laws and regulations is from the events and transactions reflected in the financial statements, the less likely we are to become aware of it.
A further description of our responsibilities is available on the Financial Reporting Council’s website at: https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.
This report is made solely to the company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's members as a body, for our audit work, for this report, or for the opinions we have formed.
Paul Capewell
Senior Statutory Auditor
For and on behalf of A9 Accountancy Limited
5 October 2023
Chartered Accountants
Statutory Auditor
Elm House
Cradlehall Business Park
Inverness
United Kingdom
IV2 5GH
DSHWOOD UK LIMITED
PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 30 JUNE 2023
- 8 -
2023
2022
Notes
£
£
Turnover
3
25,588,414
23,532,228
Cost of sales
(24,696,577)
(23,248,338)
Gross profit
891,837
283,890
Administrative expenses
(1,459,598)
(793,629)
Operating loss
4
(567,761)
(509,739)
Interest receivable and similar income
8
268
33
Interest payable and similar expenses
9
(115,878)
(48,909)
Loss before taxation
(683,371)
(558,615)
Tax on loss
10
(15,945)
Loss for the financial year
(683,371)
(574,560)
The profit and loss account has been prepared on the basis that all operations are continuing operations.
DSHWOOD UK LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2023
- 9 -
2023
2022
£
£
Loss for the year
(683,371)
(574,560)
Other comprehensive income
-
-
Total comprehensive income for the year
(683,371)
(574,560)
DSHWOOD UK LIMITED
BALANCE SHEET
AS AT 30 JUNE 2023
30 June 2023
- 10 -
2023
2022
Notes
£
£
£
£
Fixed assets
Tangible assets
11
67,303
64,289
Current assets
Stocks
12
-
483,732
Debtors
13
4,799,706
4,800,601
Cash at bank and in hand
87,600
97,744
4,887,306
5,382,077
Creditors: amounts falling due within one year
14
(4,825,351)
(5,563,030)
Net current assets/(liabilities)
61,955
(180,953)
Total assets less current liabilities
129,258
(116,664)
Creditors: amounts falling due after more than one year
15
(203,815)
(24,522)
Net liabilities
(74,557)
(141,186)
Capital and reserves
Called up share capital
19
800,000
50,000
Profit and loss reserves
(874,557)
(191,186)
Total equity
(74,557)
(141,186)
The financial statements were approved by the board of directors and authorised for issue on 4 October 2023 and are signed on its behalf by:
Gavin Brown
Director
Company Registration No. SC392616
DSHWOOD UK LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2023
- 11 -
Share capital
Profit and loss reserves
Total
Notes
£
£
£
Balance at 1 July 2021
50,000
383,374
433,374
Year ended 30 June 2022:
Loss and total comprehensive income for the year
-
(574,560)
(574,560)
Balance at 30 June 2022
50,000
(191,186)
(141,186)
Year ended 30 June 2023:
Loss and total comprehensive income for the year
-
(683,371)
(683,371)
Conversion of loan to shares
19
750,000
-
750,000
Balance at 30 June 2023
800,000
(874,557)
(74,557)
DSHWOOD UK LIMITED
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2023
- 12 -
2023
2022
Notes
£
£
£
£
Cash flows from operating activities
Cash (absorbed by)/generated from operations
23
(2,741,965)
175,987
Interest paid
(115,878)
(48,909)
Income taxes refunded
28,179
Net cash (outflow)/inflow from operating activities
(2,857,843)
155,257
Investing activities
Purchase of tangible fixed assets
(22,775)
(30,448)
Proceeds from disposal of tangible fixed assets
1,800
Interest received
268
33
Net cash used in investing activities
(20,707)
(30,415)
Financing activities
Proceeds from issue of shares
750,000
Payment of finance leases obligations
(26,664)
3,411
Net cash generated from financing activities
723,336
3,411
Net (decrease)/increase in cash and cash equivalents
(2,155,214)
128,253
Cash and cash equivalents at beginning of year
97,744
(30,509)
Cash and cash equivalents at end of year
(2,057,470)
97,744
Relating to:
Cash at bank and in hand
87,600
97,744
Bank overdrafts included in creditors payable within one year
(2,145,070)
DSHWOOD UK LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
- 13 -
1
Accounting policies
Company information
DSHwood UK Limited is a private company limited by shares incorporated in Scotland. The registered office is Elm House, Cradlehall Business Park, Inverness, Scotland, IV2 5GH. The principal place of business is Eldo House, Monkton Road, Prestwick, Ayrshire, KA9 2PB.
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 except that as disclosed in the accounting policies certain items are shown at fair value. The principal accounting policies adopted are set out below.
1.2
Going concern
The company has recorded a loss of £683,371 and has net liabilities of £74,557 (2022 £141,186) at the year end. The company's parent company DSHwood A/S will continue to support the company in order that the company will be able to meet its liabilities as they fall due and amounts due to them of £653,770 at 30 June 2023 will not be recalled within 12 months from the date of approval of these financial statements and all third party creditors have been met. true
For these reasons, the directors continue to adopt the going concern basis in preparing the financial statements and have considered a period of twelve months from the date of approval of these financial statements.
1.3
Turnover
Turnover is recognised at the fair value of the consideration received or receivable for goods and services provided in the normal course of business, and is shown net of VAT and other sales related taxes. 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:
Software
25% reducing balance
Motor vehicles
25% reducing balance
The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is credited or charged to profit or loss.
DSHWOOD UK LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
1
Accounting policies
(Continued)
- 14 -
1.5
Impairment of fixed assets
At each reporting period end date, the company reviews the carrying amounts of its tangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the company estimates the recoverable amount of the cash-generating unit to which the asset belongs.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.
Recognised impairment losses are reversed if, and only if, the reasons for the impairment loss have ceased to apply. Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.
1.6
Stocks
Stocks are stated at the lower of cost and estimated selling price less costs to complete and sell. Cost comprises direct materials and, where applicable, direct labour costs and those overheads that have been incurred in bringing the stocks to their present location and condition.
Stocks held for distribution at no or nominal consideration are measured at the lower of cost and replacement cost, adjusted where applicable for any loss of service potential.
At each reporting date, an assessment is made for impairment. Any excess of the carrying amount of stocks over its estimated selling price less costs to complete and sell is recognised as an impairment loss in profit or loss. Reversals of impairment losses are also recognised in profit or loss.
1.7
Cash and cash equivalents
Cash and cash equivalents are basic financial assets and include cash in hand, deposits held at call with banks, other short-term liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities.
1.8
Financial instruments
The company has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.
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.
DSHWOOD UK LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
1
Accounting policies
(Continued)
- 15 -
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.
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.
DSHWOOD UK LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
1
Accounting policies
(Continued)
- 16 -
Other financial liabilities
Derivatives, including interest rate swaps and forward foreign exchange contracts, are not basic financial instruments. Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured at their fair value. Changes in the fair value of derivatives are recognised in profit or loss in finance costs or finance income as appropriate, unless hedge accounting is applied and the hedge is a cash flow hedge.
Debt instruments that do not meet the conditions in FRS 102 paragraph 11.9 are subsequently measured at fair value through profit or loss. Debt instruments may be designated as being measured at fair value through profit or loss to eliminate or reduce an accounting mismatch or if the instruments are measured and their performance evaluated on a fair value basis in accordance with a documented risk management or investment strategy.
Derecognition of financial liabilities
Financial liabilities are derecognised when the company’s contractual obligations expire or are discharged or cancelled.
1.9
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.
1.10
Taxation
The tax expense represents the sum of the tax currently payable and deferred tax.
Current tax
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the profit and loss account because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The company’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.
Deferred tax
Deferred tax liabilities are generally recognised for all timing differences and deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Such assets and liabilities are not recognised if the timing difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.
The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the profit and loss account, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset when the company has a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.
DSHWOOD UK LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
1
Accounting policies
(Continued)
- 17 -
1.11
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.
1.12
Retirement benefits
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
1.13
Leases
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessees. All other leases are classified as operating leases.
Assets held under finance leases are recognised as assets at the lower of the assets fair value at the date of inception and the present value of the minimum lease payments. The related liability is included in the balance sheet as a finance lease obligation. Lease payments are treated as consisting of capital and interest elements. The interest is charged to profit or loss so as to produce a constant periodic rate of interest on the remaining balance of the liability.
Rentals payable under operating leases, including any lease incentives received, are charged to profit or loss on a straight line basis over the term of the relevant lease except where another more systematic basis is more representative of the time pattern in which economic benefits from the leases asset are consumed.
1.14
Foreign exchange
Transactions in foreign currencies are initially recorded at the functional currency rate prevailing at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated into the respective functional currency of the entity at the rates prevailing on the reporting period date. Non-monetary items carried at fair value that are denominated in foreign currencies are retranslated at the rate on the date when the fair value is re-measured.
Non-monetary items measured in terms of historical cost in a foreign currency are not retranslated.
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.
DSHWOOD UK LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
2
Judgements and key sources of estimation uncertainty
(Continued)
- 18 -
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.
Depreciation - useful lives of tangible assets
The useful life of any residual values of tangible fixed assets are considered and depreciation rates applied accordingly. Details of the depreciation policies can be found on page 12 of the financial statements. The depreciation charge for the year amounts to £18,306 (2022 £17,292) and the carrying value of the tangible fixed assets at the year end amounts to £67,303 (2022 £64,289).
3
Turnover and other revenue
2023
2022
£
£
Turnover analysed by class of business
Sale of timber
25,588,414
23,532,228
2023
2022
£
£
Other revenue
Interest income
268
33
4
Operating loss
2023
2022
Operating loss for the year is stated after charging/(crediting):
£
£
Exchange losses
122,497
920
Depreciation of owned tangible fixed assets
18,306
17,292
Profit on disposal of tangible fixed assets
(345)
-
Operating lease charges
23,264
8,358
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 company
26,400
15,195
Audit of the prior year financial statements
7,760
15,195
34,160
30,390
DSHWOOD UK LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
- 19 -
6
Employees
The average monthly number of persons (including directors) employed by the company during the year was:
2023
2022
Number
Number
Administration and support
2
1
Sales, marketing and distribution
5
4
Total
7
5
Their aggregate remuneration comprised:
2023
2022
£
£
Wages and salaries
349,068
244,102
Social security costs
36,312
30,746
Pension costs
25,590
19,111
410,970
293,959
7
Directors' remuneration
2023
2022
£
£
Remuneration for qualifying services
164,228
155,114
Company pension contributions to defined contribution schemes
9,161
8,958
173,389
164,072
The number of directors for whom retirement benefits are accruing under defined contribution schemes amounted to 2 (2022 2).
8
Interest receivable and similar income
2023
2022
£
£
Interest income
Interest on bank deposits
268
33
2023
2022
Investment income includes the following:
£
£
Interest on financial assets not measured at fair value through profit or loss
268
33
DSHWOOD UK LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
- 20 -
9
Interest payable and similar expenses
2023
2022
£
£
Interest on financial liabilities measured at amortised cost:
Interest on bank overdrafts and loans
24,487
-
Interest payable to group undertakings
76,852
37,897
Other interest on financial liabilities
11,877
7,474
113,216
45,371
Other finance costs:
Interest on finance leases and hire purchase contracts
2,662
3,538
115,878
48,909
10
Taxation
2023
2022
£
£
Deferred tax
Origination and reversal of timing differences
15,945
The actual charge for the year can be reconciled to the expected credit for the year based on the profit or loss and the standard rate of tax as follows:
2023
2022
£
£
Loss before taxation
(683,371)
(558,615)
Expected tax credit based on the standard rate of corporation tax in the UK of 19.00% (2022: 19.00%)
(129,840)
(106,137)
Tax effect of expenses that are not deductible in determining taxable profit
563
158
Unutilised tax losses carried forward
128,002
110,258
Permanent capital allowances in excess of depreciation
1,275
(4,279)
15,945
Taxation charge for the year
-
15,945
DSHWOOD UK LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
- 21 -
11
Tangible fixed assets
Software
Motor vehicles
Total
£
£
£
Cost
At 1 July 2022
7,603
98,813
106,416
Additions
8,390
14,385
22,775
Disposals
(17,583)
(17,583)
At 30 June 2023
15,993
95,615
111,608
Depreciation and impairment
At 1 July 2022
3,174
38,953
42,127
Depreciation charged in the year
2,506
15,800
18,306
Eliminated in respect of disposals
(16,128)
(16,128)
At 30 June 2023
5,680
38,625
44,305
Carrying amount
At 30 June 2023
10,313
56,990
67,303
At 30 June 2022
4,429
59,860
64,289
12
Stocks
2023
2022
£
£
Raw materials and consumables
-
483,732
13
Debtors
2023
2022
Amounts falling due within one year:
£
£
Trade debtors
3,722,495
4,519,950
Amounts owed by group undertakings
455
455
Other debtors
974,533
126,644
Prepayments and accrued income
102,223
153,552
4,799,706
4,800,601
DSHWOOD UK LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
- 22 -
14
Creditors: amounts falling due within one year
2023
2022
Notes
£
£
Bank loans and overdrafts
16
2,145,070
Obligations under finance leases
17
20,707
26,664
Trade creditors
2,137,310
3,002,012
Amounts owed to group undertakings
397,436
2,097,305
Taxation and social security
17,397
78,879
Other creditors
7,073
40,352
Accruals and deferred income
100,358
317,818
4,825,351
5,563,030
15
Creditors: amounts falling due after more than one year
2023
2022
Notes
£
£
Obligations under finance leases
17
3,815
24,522
Amounts owed to group undertakings
200,000
203,815
24,522
16
Loans and overdrafts
2023
2022
£
£
Bank overdrafts
2,145,070
Payable within one year
2,145,070
The company has a credit line facility with Nordea Bank Abp. This is secured by a floating charge over all of the property and undertaking of the company.
17
Finance lease obligations
2023
2022
Future minimum lease payments due under finance leases:
£
£
Within one year
20,707
26,664
In two to five years
3,815
24,522
24,522
51,186
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 3 years. All leases are on a fixed repayment basis and no arrangements have been entered into for contingent rental payments.
DSHWOOD UK LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
- 23 -
18
Retirement benefit schemes
2023
2022
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
25,590
19,111
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.
Contributions totaling £3,176 (2022 £2,283) were payable to the scheme at the end of the year and are included in creditors.
19
Share capital
2023
2022
2023
2022
Ordinary share capital
Number
Number
£
£
Issued and fully paid
of £1 each
800,000
50,000
800,000
50,000
Ordinary shares carry full voting rights and full rights to dividends and capital distributions (including upon winding up).
During the year, the company issued 750,000 ordinary shares at £1 per share. The consideration was the conversion of £750,000 of loan to equity.
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
11,332
19,690
Between two and five years
10,815
22,147
22,147
41,837
DSHWOOD UK LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
- 24 -
21
Related party transactions
Transactions with related parties
During the year the company entered into the following transactions with related parties:
Summary of transactions with parent
DSHwood A/S
(DSHwood UK Limited is a wholly owned subsidiary of DSHwood A/S, a company registered in Denmark. DSHwood A/S has been the parent company of DSHwood UK Limited throughout the period ended 30 June 2023. No individual has a controlling interest in the company.)
Copies of group accounts are available from DSHwood A/S, Glarmestervej 7, 7000 Frederica, Denmark.
During the year, DSHwood A/S received money from customers and made payments to suppliers on behalf of DSHwood UK Limited. At the year end the balance due from/(to) DSHwood A/S was (£597,436) (2022: (£2,097,305)).
During the year, DSHwood UK Limited was charged £506,478 (2022: £309,723) by DSHwood A/S in respect of management charges.
Summary of transactions with all associates
DSHwood France EURL
(A wholly owned subsidiary of DSHwood A/S, and is a company registered in France).
At the year end the balance due from DSHwood France EURL was £455 (£2022: £455).
22
Ultimate controlling party
The ultimate controlling part is The Danish Forest Association, which owns 100% of DSHwood A/S.
23
Cash (absorbed by)/generated from operations
2023
2022
£
£
Loss for the year after tax
(683,371)
(574,560)
Adjustments for:
Taxation charged
15,945
Finance costs
115,878
48,909
Investment income
(268)
(33)
Gain on disposal of tangible fixed assets
(345)
-
Depreciation and impairment of tangible fixed assets
18,306
17,292
Movements in working capital:
Decrease in stocks
483,732
42,175
Decrease/(increase) in debtors
895
(2,243,347)
(Decrease)/increase in creditors
(2,676,792)
2,869,606
Cash (absorbed by)/generated from operations
(2,741,965)
175,987
DSHWOOD UK LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
- 25 -
24
Analysis of changes in net funds/(debt)
1 July 2022
Cash flows
30 June 2023
£
£
£
Cash at bank and in hand
97,744
(10,144)
87,600
Bank overdrafts
(2,145,070)
(2,145,070)
97,744
(2,155,214)
(2,057,470)
Obligations under finance leases
(51,186)
26,664
(24,522)
46,558
(2,128,550)
(2,081,992)
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