Company registration number 02751833 (England and Wales)
STONEGATE AGRICULTURE LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 SEPTEMBER 2023
STONEGATE AGRICULTURE LIMITED
COMPANY INFORMATION
Director
Mr A D Gott
Secretary
Mr S G Morse
Company number
02751833
Registered office
Lacock Green
Corsham Road
Lacock
Chippenham
SN15 2LZ
Auditor
MHA Moore and Smalley
Richard House
9 Winckley Square
Preston
PR1 3HP
STONEGATE AGRICULTURE LIMITED
CONTENTS
Page
Strategic report
1 - 2
Director's report
3
Director's responsibilities statement
4
Independent auditor's report
5 - 7
Statement of comprehensive income
8
Balance sheet
9
Statement of changes in equity
10
Notes to the financial statements
11 - 25
STONEGATE AGRICULTURE LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 30 SEPTEMBER 2023
- 1 -
The director presents the strategic report for the year ended 30 September 2023.
Review of the business
The principal activity of the company is poultry farming for the production of high-quality eggs and pullets.
The company has no caged hens and is fully focussed on free range and organic egg production.
All of our production goes to fellow Group companies who collect, grade and package free range and organic eggs. From these Group companies our eggs are delivered daily to many of the UK’s leading supermarkets and the most exclusive restaurants, as well as first class egg products to some of the biggest names in food manufacturing.
The company experienced level sales year over year with turnover of £16.4m (2020: £14.9m). The company’s Operating Profit was £0.5m (2021: £0.1m). The director considers the company to be in a good financial position with net assets of £1.1m as of 30 September 2023.
Principal risks and uncertainties
Sales from the company are primarily to other Group companies which predict, forecast, and manage the demands of customers by having the correct supply and type of egg.
Raw Material & Commodity Risk
The volatility of commodity prices, particularly wheat and soya, is a constant challenge for the company. This risk is mitigated by forward positions taken on key materials, feed tracking within its sales contracts and strong relationships with the customers and suppliers.
Health & Safety Risk
The company ensures that a thorough review of the workplace is carried out with any relevant actions taken to provide a safe working environment for all our employees.
Credit Risk
The company's principal financial assets are receivables and investments.
The company's credit risk is primarily attributable to its receivables. The majority of debtors are from other Group companies and as such the director does not believe there to be any significant risk of default.
Liquidity Risk
In order to maintain liquidity to ensure that sufficient funds are available for ongoing operations and future developments, the company manages its working capital to ensure an excess of current assets over current liabilities. The majority of short-term creditors of the company are other Group companies.
Market Risk
The company recognises the risk of competition in a highly active market. Through investment in our products, facilities, and people we aim to meet or exceed the demands of our customers and the consumer. Having removed ourselves from caged egg production the business is less at risk from consumer and retail pressure against egg production.
Key performance indicators
Given the straightforward nature of the company's operations, the director is of the opinion that analysis using KPIs other than the financial results, is not necessary for an understanding of the development, performance or position of the business.
STONEGATE AGRICULTURE LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 30 SEPTEMBER 2023
- 2 -
Mr A D Gott
Director
28 March 2024
STONEGATE AGRICULTURE LIMITED
DIRECTOR'S REPORT
FOR THE YEAR ENDED 30 SEPTEMBER 2023
- 3 -
The director presents his annual report and financial statements for the year ended 30 September 2023.
Principal activities
The principal activity of the company is poultry farming for the production of high-quality eggs and pullets. The company has no caged hens and is fully focussed on free range and organic egg production.
Results and dividends
The results for the year are set out on page 8.
No ordinary dividends were paid. The director does not recommend payment of a final dividend.
Director
The director who held office during the year and up to the date of signature of the financial statements was as follows:
Mr A D Gott
Auditor
The auditor, MHA Moore and Smalley, is deemed to be reappointed under section 487(2) of the Companies Act 2006.
Strategic report
The company has chosen in accordance with Companies Act 2006, s. 414C(11) to set out in the company's strategic report information required by Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008, Sch. 7 to be contained in the directors' report. It has done so in respect of financial risk management objectives and policies, and future developments.
Statement of disclosure to auditor
So far as each person who was a director at the date of approving this report is aware, there is no relevant audit information of which the company’s auditor is unaware. Additionally, the directors individually have taken all the necessary steps that they ought to have taken as directors in order to make themselves aware of all relevant audit information and to establish that the company’s auditor is aware of that information.
On behalf of the board
Mr A D Gott
Director
28 March 2024
STONEGATE AGRICULTURE LIMITED
DIRECTOR'S RESPONSIBILITIES STATEMENT
FOR THE YEAR ENDED 30 SEPTEMBER 2023
- 4 -
The director is responsible for preparing the annual report and the financial statements in accordance with applicable law and regulations.
Company law requires the director to prepare financial statements for each financial year. Under that law the director has elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the director must not approve the financial statements unless he is satisfied that they give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period. In preparing these financial statements, the director is required to:
select suitable accounting policies and then apply them consistently;
make judgements and accounting estimates that are reasonable and prudent;
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.
The director is responsible for keeping adequate accounting records that are sufficient to show and explain the company’s transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the Companies Act 2006. He is also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
STONEGATE AGRICULTURE LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF STONEGATE AGRICULTURE LIMITED
- 5 -
Opinion
We have audited the financial statements of Stonegate Agriculture Limited (the 'company') for the year ended 30 September 2023 which comprise the statement of comprehensive income, the balance sheet, the statement of changes in equity and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).
In our opinion the financial statements:
give a true and fair view of the state of the company's affairs as at 30 September 2023 and of its profit for the year then ended;
have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
have been prepared in accordance with the requirements of the Companies Act 2006.
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the director's use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the director with respect to going concern are described in the relevant sections of this report.
The other information comprises the information included in the annual report other than the financial statements and our auditor's report thereon. The director is 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.
STONEGATE AGRICULTURE LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF STONEGATE AGRICULTURE LIMITED
- 6 -
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of our audit:
the information given in the strategic report and the director's report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
the strategic report and the director's report have been prepared in accordance with applicable legal requirements.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identified material misstatements in the strategic report or the director's report.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:
adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or
the financial statements are not in agreement with the accounting records and returns; or
certain disclosures of remuneration specified by law are not made; or
we have not received all the information and explanations we require for our audit.
Responsibilities of director
As explained more fully in the director's responsibilities statement, the director is responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the director determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the director is responsible for assessing the company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the director either intends to liquidate the company or to cease operations, or has no realistic alternative but to do so.
Auditor's responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The specific procedures for this engagement and the extent to which these are capable of detecting irregularities, including fraud, are detailed below:
Enquiries with management about any known or suspected instances of non-compliance with laws and regulations;
Enquires with management about any known or suspected instances of fraud;
Review of minutes of meetings of management;
Examination of journal entries and other adjustments to test for appropriateness and identify any instances of management override of controls;
Review of legal and professional expenditure to identify any evidence of ongoing litigation or enquiries;
Auditing the risk of fraud in revenue, including through the testing of income cut off at the period end and through sales transaction testing to provide comfort that revenue is completely stated in the financial statements.
STONEGATE AGRICULTURE LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF STONEGATE AGRICULTURE LIMITED
- 7 -
We identified the following areas as those most likely to have a material impact on the financial statements: employment law, health and safety legislation, food hygiene and safety regulations, and compliance with the UK Companies Act.
Owing to the inherent limitations of an audit, there is an unavoidable risk that some material misstatements in the financial statements may not be detected, even though the audit is properly planned and performed in accordance with the ISAs (UK). For instance, the further removed non-compliance is from the events and transactions reflected in the financial statements, the less likely the auditor is to become aware of it or to recognize the non-compliance.
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.
Joe Sullivan
Senior Statutory Auditor
For and on behalf of MHA Moore and Smalley
Chartered Accountants
Statutory Auditor
Richard House
9 Winckley Square
Preston
PR1 3HP
28 March 2024
STONEGATE AGRICULTURE LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 SEPTEMBER 2023
- 8 -
52 weeks
53 weeks
ended 30
ended 1
September
October
2023
2022
as restated
Notes
£
£
Turnover
4
16,409,992
14,868,216
Cost of sales
(16,045,455)
(14,252,541)
Gross profit
364,537
615,675
Administrative expenses
(1,230,703)
(1,125,313)
Other operating income
1,408,934
580,486
Operating profit
5
542,768
70,848
Interest receivable and similar income
7
626
Interest payable and similar expenses
8
(29,164)
(22,532)
Profit before taxation
514,230
48,316
Tax on profit
9
(98,719)
(50,708)
Profit/(loss) for the financial year
415,511
(2,392)
The statement of comprehensive income has been prepared on the basis that all operations are continuing operations.
STONEGATE AGRICULTURE LIMITED
BALANCE SHEET
AS AT
30 SEPTEMBER 2023
30 September 2023
- 9 -
30 September 2023
1 October 2022
Notes
£
£
£
£
Fixed assets
Tangible assets
11
2,331,769
3,328,231
Investments
12
31
2,331,769
3,328,262
Current assets
Stocks
14
2,923,981
3,000,532
Debtors
15
3,615,250
3,788,048
Cash at bank and in hand
76,085
605
6,615,316
6,789,185
Creditors: amounts falling due within one year
16
(7,103,693)
(8,577,573)
Net current liabilities
(488,377)
(1,788,388)
Total assets less current liabilities
1,843,392
1,539,874
Creditors: amounts falling due after more than one year
17
(525,015)
(675,627)
Provisions for liabilities
Deferred tax liability
20
260,786
222,167
(260,786)
(222,167)
Net assets
1,057,591
642,080
Capital and reserves
Called up share capital
22
1,000
1,000
Profit and loss reserves
1,056,591
641,080
Total equity
1,057,591
642,080
The financial statements were approved and signed by the director and authorised for issue on 28 March 2024
Mr A D Gott
Director
Company Registration No. 02751833
STONEGATE AGRICULTURE LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 SEPTEMBER 2023
- 10 -
Share capital
Profit and loss reserves
Total
£
£
£
Balance at 3 October 2021
1,000
643,472
644,472
Year ended 1 October 2022:
Loss and total comprehensive income for the year
-
(2,392)
(2,392)
Balance at 1 October 2022
1,000
641,080
642,080
Year ended 30 September 2023:
Profit and total comprehensive income for the year
-
415,511
415,511
Balance at 30 September 2023
1,000
1,056,591
1,057,591
STONEGATE AGRICULTURE LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 SEPTEMBER 2023
- 11 -
1
Accounting policies
Company information
Stonegate Agriculture Limited is a private company limited by shares incorporated in England and Wales. The registered office is Lacock Green, Corsham Road, Lacock, Chippenham, SN15 2LZ.
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. The principal accounting policies adopted are set out below.
This company is a qualifying entity for the purposes of FRS 102, being a member of a group where the parent of that group prepares publicly available consolidated financial statements, including this company, which are intended to give a true and fair view of the assets, liabilities, financial position and profit or loss of the group. The company has therefore taken advantage of exemptions from the following disclosure requirements:
Section 7 ‘Statement of Cash Flows’ – Presentation of a statement of cash flow and related notes and disclosures;
Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instrument Issues’ – Carrying amounts, interest income/expense and net gains/losses for each category of financial instrument; basis of determining fair values; details of collateral, loan defaults or breaches, details of hedges, hedging fair value changes recognised in profit or loss and in other comprehensive income;
Section 33 ‘Related Party Disclosures’ – Compensation for key management personnel.
The results of the company are included in the consolidated financial statements of Stonegate Food Group Limited, registered office address Lacock Green, Corsham Road, Lacock, Chippenham, Wiltshire, SN15 2LZ.
The company has taken the section 402 exemption from the requirement to prepare group accounts as under section 405 all of its subsidiary undertakings could be excluded from consolidation in Companies Act group accounts. The financial statements present information about the company as an individual entity and not about its group.
STONEGATE AGRICULTURE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 SEPTEMBER 2023
1
Accounting policies
(Continued)
- 12 -
1.2
Going concern
Inflationary pressures from the impact of political instability and regional conflicts had a significant impact on many businesses in 2022-23 with food producers no less severely impacted than other sectors. The director believes that the company is well placed to minimise any impact.true
Management are continuously assessing the impact of inflationary pressures on customers and the supply chain with regular contact taking place throughout the supply chain to minimise any disruption. Where forward positions have been taken the company is protected from that cover in the short to medium term. Costs that are exposed to the current market volatility are being managed pro-actively through sympathetic engagement with our strategic suppliers and customers. The company remains confident of its ability to appropriately manage the short to medium term volatility being generated by these risks. Actions have also been taken in the past to enable the business to establish a strong financial platform, and this together with the current balance sheet strength positions the company well. Cash flow projections have been prepared for the company to cover at least twelve months following the approval of the financial statements, which indicate that the company will generate sufficient resources to meet their obligations as they fall due.
After considering the impact of the above, at the time of approving the financial statements, the director has a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future. Thus the director continues to adopt the going concern basis of accounting in preparing the financial statements.
1.3
Turnover
Turnover is recognised at the fair value of the consideration received or receivable for livestock and egg 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 livestock and egg is recognised when the significant risks and rewards of ownership of the livestock and egg have passed to the buyer (usually on dispatch of the livestock and egg), 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, net of depreciation and any impairment losses.
Depreciation is recognised so as to write off the cost of assets less their residual values over their useful lives on the following bases:
Freehold land and buildings
2% per annum
Plant and machinery
6% to 15% per annum
Fixtures, fittings & equipment
5% per annum
Motor vehicles
25% per annum
Assets in the course of construction are not depreciated.
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.
STONEGATE AGRICULTURE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 SEPTEMBER 2023
1
Accounting policies
(Continued)
- 13 -
1.5
Fixed asset investments
Interests in subsidiaries are initially measured at cost and subsequently measured at cost less any accumulated impairment losses. The investments are assessed for impairment at each reporting date and any impairment losses or reversals of impairment losses are recognised immediately in profit or loss.
A subsidiary is an entity controlled by the company. Control is the power to govern the financial and operating policies of the entity so as to obtain benefits from its activities.
1.6
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.
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.
1.7
Stocks
Stocks are stated at the lower of cost and estimated selling price less costs to complete and sell. Cost comprises the original purchase cost and, where applicable, direct labour costs that have been incurred in bringing the stocks to their present location and condition. Livestock comprises rearing birds where the cost represents any costs of rearing to the year end date, and laying birds where the total rearing cost is reduced on a straight line basis over the expected laying period.
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.
1.8
Cash and cash equivalents
Cash and cash equivalents are basic financial assets and include cash in hand, deposits held at call with banks, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities.
STONEGATE AGRICULTURE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 SEPTEMBER 2023
1
Accounting policies
(Continued)
- 14 -
1.9
Financial instruments
The company has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.
Financial instruments are recognised in the company's balance sheet when the company becomes party to the contractual provisions of the instrument.
Financial assets and liabilities are offset, with the net amounts presented in the financial statements, when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.
Basic financial assets
Basic financial assets, which include debtors and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised.
Other financial assets
All of the company's assets are basic financial assets.
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.
STONEGATE AGRICULTURE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 SEPTEMBER 2023
1
Accounting policies
(Continued)
- 15 -
Basic financial liabilities
Basic financial liabilities, including creditors, and loans from fellow group companies, are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future payments discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.
Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.
Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Amounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.
Other financial liabilities
All of the company's liabilities are basic financial liabilities.
Derecognition of financial liabilities
Financial liabilities are derecognised when the company’s contractual obligations expire or are discharged or cancelled.
1.10
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.
1.11
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.
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.
STONEGATE AGRICULTURE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 SEPTEMBER 2023
1
Accounting policies
(Continued)
- 16 -
1.12
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.
1.13
Retirement benefits
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
1.14
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.
1.15
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.
2
Change in accounting policy
The director has reviewed the categorisation of expenditure, and has decided to reclassify certain amounts to better reflect the activities of the company. The comparative figures have been restated to reflect this reclassification of costs, resulting in an increase in cost of sales of £116,070, and a reduction in administrative expenses of £116,070. There is no other effect on the figures previously reported.
STONEGATE AGRICULTURE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 SEPTEMBER 2023
- 17 -
3
Judgements and key sources of estimation uncertainty
In the application of the company’s accounting policies, the director is required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.
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.
Impairment of trade debtors
At each balance sheet date, management undertake an assessment of the recoverability of trade debtors based upon their knowledge of the customers, ageing of the balances outstanding and previous write off history. Where necessary, an impairment is recorded as a doubtful debt.
The actual level of debt collected may differ from the estimated level of recovery.
4
Turnover and other revenue
An analysis of the company's turnover is as follows:
2023
2022
£
£
Turnover analysed by class of business
Attributable to the principal activity
16,409,992
14,868,216
2023
2022
£
£
Turnover analysed by geographical market
United Kingdom
16,409,992
14,868,216
2023
2022
£
£
Other revenue
Interest income
626
-
STONEGATE AGRICULTURE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 SEPTEMBER 2023
- 18 -
5
Operating profit
2023
2022
Operating profit for the year is stated after charging:
£
£
Fees payable to the company's auditor for the audit of the company's financial statements
13,650
11,900
Depreciation of owned tangible fixed assets
305,043
393,017
Depreciation of tangible fixed assets held under finance leases
115,263
64,039
Impairment of owned tangible fixed assets
659,391
Loss on disposal of tangible fixed assets
2,125
-
Operating lease charges
1,009,816
1,089,445
6
Employees
The average monthly number of persons (including directors) employed by the company during the year was:
2023
2022
Number
Number
Production
63
54
Their aggregate remuneration comprised:
2023
2022
£
£
Wages and salaries
1,736,615
1,414,102
Social security costs
141,411
119,539
Pension costs
26,083
21,971
1,904,109
1,555,612
7
Interest receivable and similar income
2023
2022
£
£
Interest income
Other interest income
626
8
Interest payable and similar expenses
2023
2022
£
£
Interest on finance leases and hire purchase contracts
29,164
22,532
STONEGATE AGRICULTURE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 SEPTEMBER 2023
- 19 -
9
Taxation
2023
2022
£
£
Current tax
UK corporation tax on profits for the current period
110,478
Adjustments in respect of prior periods
(50,378)
Total current tax
60,100
Deferred tax
Origination and reversal of timing differences
35,178
24,506
Changes in tax rates
4,782
7,739
Adjustment in respect of prior periods
(1,341)
18,463
Total deferred tax
38,619
50,708
Total tax charge
98,719
50,708
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
514,230
48,316
Expected tax charge based on the standard rate of corporation tax in the UK of 22.00% (2022: 19.00%)
113,131
9,180
Tax effect of expenses that are not deductible in determining taxable profit
195,514
29,479
Adjustments in respect of prior years
(50,378)
Effect of change in corporation tax rate
4,782
7,739
Group relief
(162,989)
Other permanent differences
(14,153)
Deferred tax adjustments in respect of prior years
(1,341)
18,463
Taxation charge for the year
98,719
50,708
Factors affecting future tax and charges
In March 2021 the Chancellor confirmed, in the budget, an increase in the corporation tax rate from 19% to 25%. The Finance Bill 2021 had its third reading on 24 May 2021 and became substantively enacted. There were announcements to the contrary in the mini-budget of October 2022, but these announcements have since been reversed and so the new rate of 25% remains substantively enacted. Therefore, the timing differences expected to reverse on or after 1 April 2023 have been accounted for at 25% and therefore deferred tax has been provided for at 25% (2022: 25%).
STONEGATE AGRICULTURE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 SEPTEMBER 2023
- 20 -
10
Impairments
Impairment tests have been carried out where appropriate and the following impairment losses have been recognised in profit or loss:
2023
2022
Notes
£
£
In respect of:
Property, plant and equipment
11
659,391
Recognised in:
Cost of sales
659,391
-
11
Tangible fixed assets
Freehold land and buildings
Assets under construction
Plant and machinery
Fixtures, fittings & equipment
Motor vehicles
Total
£
£
£
£
£
£
Cost
At 2 October 2022
1,007,550
135,146
3,616,972
295,681
221,258
5,276,607
Additions
95,310
5,500
100,810
Disposals
(22,950)
(22,950)
Transfers
(135,146)
135,146
At 30 September 2023
1,007,550
3,824,478
295,681
226,758
5,354,467
Depreciation and impairment
At 2 October 2022
167,341
1,595,984
22,269
162,782
1,948,376
Depreciation charged in the year
20,150
363,422
14,784
21,950
420,306
Impairment losses
659,391
659,391
Eliminated in respect of disposals
(5,375)
(5,375)
At 30 September 2023
846,882
1,954,031
37,053
184,732
3,022,698
Carrying amount
At 30 September 2023
160,668
1,870,447
258,628
42,026
2,331,769
At 1 October 2022
840,209
135,146
2,020,988
273,412
58,476
3,328,231
The net carrying value of tangible fixed assets includes the following in respect of assets held under hire purchase contracts:
2023
2022
£
£
Plant and machinery
941,539
1,056,802
STONEGATE AGRICULTURE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 SEPTEMBER 2023
11
Tangible fixed assets
(Continued)
- 21 -
More information on impairment movements in the year is given in note 10.
12
Fixed asset investments
2023
2022
£
£
Unlisted investments
31
Movements in fixed asset investments
Investments other than loans
£
Cost
At 2 October 2022
31
Disposals
(31)
At 30 September 2023
-
Carrying amount
At 30 September 2023
-
At 1 October 2022
31
13
Subsidiaries
Details of the company's subsidiaries at 30 September 2023 are as follows:
Name of undertaking
Address
Nature of business
Class of
% Held
shares held
Direct
Thames Valley Eggs (Production) Limited
1
Dormant
Ordinary
100.00
Registered office addresses (all UK unless otherwise indicated):
1
Lacock Green, Corsham Road, Lacock, Chippenham, Wiltshire, SN15 2LZ
14
Stocks
2023
2022
£
£
Eggs, egg products and packaging
140,311
77,666
Livestock
2,156,927
2,034,548
Feed and raw materials
626,743
888,318
2,923,981
3,000,532
STONEGATE AGRICULTURE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 SEPTEMBER 2023
- 22 -
15
Debtors
2023
2022
Amounts falling due within one year:
£
£
Trade debtors
985,172
1,428,276
Amounts owed by group undertakings
2,183,534
2,185,680
Other debtors
131,777
35,892
Prepayments and accrued income
314,767
138,200
3,615,250
3,788,048
16
Creditors: amounts falling due within one year
2023
2022
Notes
£
£
Bank loans and overdrafts
18
22,397
Obligations under finance leases
19
150,612
145,028
Trade creditors
763,384
908,507
Amounts owed to group undertakings
5,185,004
6,152,254
Corporation tax
110,478
Other taxation and social security
45,283
41,635
Other creditors
29,876
23,889
Accruals and deferred income
819,056
1,283,863
7,103,693
8,577,573
17
Creditors: amounts falling due after more than one year
2023
2022
Notes
£
£
Obligations under finance leases
19
525,015
675,627
18
Loans and overdrafts
2023
2022
£
£
Bank overdrafts
22,397
Payable within one year
22,397
The bank overdraft is secured by a debenture over the assets of the company.
STONEGATE AGRICULTURE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 SEPTEMBER 2023
- 23 -
19
Finance lease obligations
2023
2022
Future minimum lease payments due under finance leases:
£
£
Within one year
150,612
145,028
In two to five years
525,015
630,328
In over five years
45,299
675,627
820,655
Finance lease payments represent rentals payable by the company for certain items within tangible fixed assets held under hire purchase. 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 6 years. All leases are on a fixed repayment basis and no arrangements have been entered into for contingent rental payments. The creditor is secured on the assets to which it relates.
20
Deferred taxation
Deferred tax assets and liabilities are offset where the company has a legally enforceable right to do so. The following is the analysis of the deferred tax balances (after offset) for financial reporting purposes:
Liabilities
Liabilities
2023
2022
Balances:
£
£
Accelerated capital allowances
262,901
232,250
Tax losses
-
(10,180)
Other timing differences
(2,115)
97
260,786
222,167
2023
Movements in the year:
£
Liability at 2 October 2022
222,167
Charge to profit or loss
38,619
Liability at 30 September 2023
260,786
As at the signing date of these financial statements, the company has not finalised its capital expenditure programme for the forthcoming year, and therefore an assessment as to the likely movement of the related timing differences cannot be made.
STONEGATE AGRICULTURE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 SEPTEMBER 2023
- 24 -
21
Retirement benefit schemes
2023
2022
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
26,083
21,971
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.
22
Share capital
2023
2022
2023
2022
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Ordinary shares of 70p each
1,428
1,428
1,000
1,000
23
Financial commitments, guarantees and contingent liabilities
The company is party to a cross guarantee in favour of HSBC UK Bank plc. As part of the cross composite guarantee between the companies under common control, a mortgage debenture exists which provides HSBC UK Bank plc with charges over all company assets, as security against its exposure to debt. The total liability under this guarantee across these companies from 12 October 2021 was limited to £1,400,000.
The company is party to a cross guarantee in favour of HSBC UK Bank plc. As part of the cross composite guarantee between the group companies, an unlimited multilateral guarantee exists which provides HSBC UK Bank plc with charges over all company assets, as security against its exposure to debt. The total liability under this guarantee across these companies is £6,241,320 (2022: £11,743,300).
The company is party to a cross guarantee in favour of HSBC Equipment Finance (UK) Limited in relation to the financing arrangements for various assets in group companies. The total liability under this guarantee across these companies is £5,083,029 (2022: £4,217,102).
24
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
975,678
1,047,955
Between two and five years
3,815,700
4,003,812
In over five years
5,024,706
6,217,997
9,816,084
11,269,764
STONEGATE AGRICULTURE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 SEPTEMBER 2023
- 25 -
25
Related party transactions
Transactions with related parties
During the year the company entered into the following transactions with related parties:
Purchases
Purchases
2023
2022
£
£
Other related parties
1,064,482
932,708
The following amounts were outstanding at the reporting end date:
2023
2022
Amounts due to related parties
£
£
Other related parties
-
3,600
Other information
In accordance with FRS102, Section 33 'Related Party Transactions', transactions with other group undertakings owned 100% within the group have not been disclosed in these financial statements.
26
Ultimate controlling party
The immediate parent company is Stonegate Farmers Limited.
The largest and smallest group in which the results of the company are consolidated is that headed by Stonegate Food Group Limited, registered office Lacock Green, Corsham Road, Lacock, Chippenham, Wiltshire, SN15 2LZ. The consolidated financial statements of this group are available to the public and may be obtained from Companies House, Cardiff.
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