Company Registration No. 07045259 (England and Wales)
ELLPRO TIMBER LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 NOVEMBER 2023
LB GROUP
The Octagon Suite E2
2nd Floor Middleborough
Colchester
Essex
CO1 1TG
ELLPRO TIMBER LIMITED
CONTENTS
Page
Strategic report
1
Directors' report
2
Directors' responsibilities statement
3
Independent auditor's report
4 - 7
Income statement
8
Statement of financial position
9
Statement of changes in equity
10
Statement of cash flows
11
Notes to the financial statements
12 - 22
ELLPRO TIMBER LIMITED
COMPANY INFORMATION
Directors
Mr L Proctor
Mr J Ellul
Secretary
Mrs C Wyatt
Company number
07045259
Registered office
Unit S
Camilla Court
Nacton
Ipswich
Suffolk
IP10 0EU
Auditor
LB Group Limited (Colchester)
The Octagon
Suite E2, 2nd Floor
Colchester
CO1 1TG
ELLPRO TIMBER LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 30 NOVEMBER 2023
- 1 -
The directors present the strategic report for the year ended 30 November 2023.
Review of the business
We aim to present a fair review of the development and performance of our business during the year and its position at the year end. Our review is consistent with the size and non-complex nature of our business, and is written in the context of the risks and uncertainties we face.
During continued uncertain times, Ellpro Timber continue to trade in a very strong position. Although turnover has continued to fall compared to 2022 year and historic highs from the covid period, the business model remains strong and very resistant to an ever-changing market. We believe turnover has stabilised now in line with current market conditions. Overhead costs remain consistent with our level of turnover and stock levels in line with our plans.
The balance sheet continues to present a very solid position.
Principal risks and uncertainties
The war in Ukraine continues with no supply coming from traditional supplying countries of Russia or Belarus. The company have built strong new supply partnerships with new mills in the EU and these continue to keep the company supplied along with our longstanding partners from Latvia. We have not seen any supply issues during the year.
UK domestic demand has fallen during the year with the cost-of-living crisis affecting the RM&I sector and increases in interest rates affecting new house building. In general demand for timber products for these sectors has been low, keeping prices and demand down. Our agricultural sector customers have also seen a significant reduction in demand due to the high rainfall seen in the UK from summer 2023.
Development and performance
We continue to work on our stock holdings ensuring we have the full range of products ready for immediate call off. During times of slower demand customers are looking to hold less in stock and in turn we are working on more just-in-time requirements from our customer base.
After the two consecutive yearly turnover downturns we are actively planning to stop the slide. Although we do not expect demand and timber prices to rise like they did in 2021 with the Covid boom where the UK market is slow. We realise that we have to halt the slide. Although at circa £20million turnover it still rewards the company with a robust return and healthy figures.
Key performance indicators
Given the straightforward nature of the business, the company's directors are of the opinion that a more detailed analysis, using key performance indicators, is not necessary to understand the development, performance, or position of the business.
Mr J Ellul
Director
22 July 2024
ELLPRO TIMBER LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 30 NOVEMBER 2023
- 2 -
The directors present their annual report and financial statements for the year ended 30 November 2023.
Principal activities
The principal activity of the company continued to be that of the supply and sale of timber.
Results and dividends
The results for the year are set out on page 8.
Ordinary dividends were paid amounting to £1,600,000. The directors do not recommend payment of a further dividend.
Directors
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
Mr L Proctor
Mr J Ellul
Auditor
LB Group Limited were appointed auditors to the company and in accordance with section 485 of the Companies Act 2006, a resolution proposing that they be re-appointed will be put at a general meeting.
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.
Medium-sized companies exemption
This report has been prepared in accordance with the provisions applicable to companies entitled to the medium-sized companies exemption.
On behalf of the board
Mr J Ellul
Director
22 July 2024
ELLPRO TIMBER LIMITED
DIRECTORS' RESPONSIBILITIES STATEMENT
FOR THE YEAR ENDED 30 NOVEMBER 2023
- 3 -
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.
ELLPRO TIMBER LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF ELLPRO TIMBER LIMITED
- 4 -
We have audited the financial statements of Ellpro Timber Limited (the 'company') for the year ended 30 November 2023 which comprise the income statement, the statement of financial position, 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, except for the effects of the matter described in Basis for Qualified Opinion paragraph, the financial statements:
give a true and fair view of the state of the company's affairs as at 30 November 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.
Basis for qualified opinion
As the company was unaudited in 2021, due to not requiring an audit, we were not appointed as auditor of the company until after 30 November 2021 and thus did not observe the counting of physical inventories at the end of the 2021 financial year. We were unable to satisfy ourselves by alternative means concerning the inventory quantities held at 30 November 2021, which are included in the balance sheet at £2,565,135, by using other audit procedures. Consequently, we were unable to determine whether any adjustment to this amount, and by extension, the opening profit and loss account position, was necessary.
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.
ELLPRO TIMBER LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF ELLPRO TIMBER LIMITED
- 5 -
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.
Matters on which we are required to report by exception
In respect solely of the limitation on our work relating to stock, described above:
we have not obtained all the information and explanations that we considered necessary for the purpose of our audit; and
we were unable to determine whether adequate accounting records had been maintained.
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.
ELLPRO TIMBER LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF ELLPRO TIMBER LIMITED
- 6 -
Our approach to identifying and assessing the risks of material misstatement in respect of irregularities, including, but not limited to, fraud and non-compliance with laws and regulations was as follows:
We focused on specific laws and regulations which we considered may have a direct material effect on the financial statements or the operations of the company, including the Companies Act 2006, taxation legislation, data protection, anti-bribery, employment, environmental and health and safety legislation;
To address the risk of fraud through management bias and override of controls, we:
ELLPRO TIMBER LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF ELLPRO TIMBER LIMITED
- 7 -
In response to the risk of irregularities and non-compliance with laws and regulations, we designed procedures which included, but were not limited to:
There are inherent limitations in our audit procedures described above. The more removed that laws and regulations are from financial transactions, the less likely it is that we would become aware of non-compliance. Auditing standards also limit the audit procedures required to identify non-compliance with laws and regulations to enquiry of directors and other management and the inspection of regulatory and legal correspondence, if any.
Material misstatements that arise due to fraud can be harder to detect than those that arise from error as they may involve deliberate concealment or collusion.
A further description of our responsibilities is available on the Financial Reporting Council’s website at: https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.
The financial statement of the Company for the year ended 30 November 2021 were not audited.
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.
Shaun Roberts
Senior Statutory Auditor
For and on behalf of LB Group Limited (Colchester)
22 July 2024
Chartered Accountants
Statutory Auditor
The Octagon
Suite E2, 2nd Floor
Colchester
CO1 1TG
ELLPRO TIMBER LIMITED
INCOME STATEMENT
FOR THE YEAR ENDED 30 NOVEMBER 2023
- 8 -
2023
2022
Notes
£
£
Turnover
3
19,038,731
21,369,127
Cost of sales
(16,187,132)
(17,718,547)
Gross profit
2,851,599
3,650,580
Administrative expenses
(632,293)
(569,591)
Operating profit
4
2,219,306
3,080,989
Interest receivable and similar income
34,695
2,604
Interest payable and similar expenses
8
-
(1,023)
Profit before taxation
2,254,001
3,082,570
Tax on profit
9
(520,206)
(587,291)
Profit for the financial year
1,733,795
2,495,279
The income statement has been prepared on the basis that all operations are continuing operations.
ELLPRO TIMBER LIMITED
STATEMENT OF FINANCIAL POSITION
AS AT 30 NOVEMBER 2023
30 November 2023
- 9 -
2023
2022
Notes
£
£
£
£
Fixed assets
Tangible assets
11
29,526
35,100
Current assets
Stocks
12
3,189,452
2,108,981
Debtors
13
2,773,137
2,440,245
Cash at bank and in hand
1,776,866
2,718,731
7,739,455
7,267,957
Creditors: amounts falling due within one year
14
(2,718,255)
(2,384,732)
Net current assets
5,021,200
4,883,225
Total assets less current liabilities
5,050,726
4,918,325
Provisions for liabilities
(7,381)
(8,775)
Net assets
5,043,345
4,909,550
Capital and reserves
Called up share capital
17
1,000
1,000
Share premium account
9,000
9,000
Profit and loss reserves
5,033,345
4,899,550
Total equity
5,043,345
4,909,550
The financial statements were approved by the board of directors and authorised for issue on 22 July 2024 and are signed on its behalf by:
Mr L Proctor
Mr J Ellul
Director
Director
Company Registration No. 07045259
ELLPRO TIMBER LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 NOVEMBER 2023
- 10 -
Share capital
Share premium account
Profit and loss reserves
Total
Notes
£
£
£
£
Balance at 1 December 2021
1,000
9,000
4,107,467
4,117,467
Year ended 30 November 2022:
Profit and total comprehensive income
-
-
2,495,279
2,495,279
Dividends
10
-
-
(1,703,196)
(1,703,196)
Balance at 30 November 2022
1,000
9,000
4,899,550
4,909,550
Year ended 30 November 2023:
Profit and total comprehensive income
-
-
1,733,795
1,733,795
Dividends
10
-
-
(1,600,000)
(1,600,000)
Balance at 30 November 2023
1,000
9,000
5,033,345
5,043,345
ELLPRO TIMBER LIMITED
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 NOVEMBER 2023
- 11 -
2023
2022
Notes
£
£
£
£
Cash flows from operating activities
Cash generated from operations
20
1,181,411
3,548,540
Interest paid
(1,023)
Income taxes paid
(556,164)
(649,297)
Net cash inflow from operating activities
625,247
2,898,220
Investing activities
Purchase of tangible fixed assets
(1,807)
(3,850)
Interest received
34,695
2,604
Net cash generated from/(used in) investing activities
32,888
(1,246)
Financing activities
Dividends paid
(1,600,000)
(1,703,196)
Net cash used in financing activities
(1,600,000)
(1,703,196)
Net (decrease)/increase in cash and cash equivalents
(941,865)
1,193,778
Cash and cash equivalents at beginning of year
2,718,731
1,524,953
Cash and cash equivalents at end of year
1,776,866
2,718,731
ELLPRO TIMBER LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 NOVEMBER 2023
- 12 -
1
Accounting policies
Company information
Ellpro Timber Limited is a private company limited by shares incorporated in England and Wales. The registered office is Unit S, Camilla Court, Nacton, Ipswich, Suffolk, IP10 0EU.
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.
1.2
Going concern
At the time of approving the financial statements, the directors have a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future. The financial statements report atruen increasing net asset position and an improved net current asset position.
The directors continue to forecast a strong 2024 which is supported by the actual year to date results and cash availability remains strong at the date of this report. The directors therefore continue 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 the wholesale of timber provided in the normal course of business, and is shown net of VAT and other sales related taxes.
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:
Fixtures, fittings & equipment
20% Reducing Balance
Computer equipment
20% 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.
ELLPRO TIMBER LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 NOVEMBER 2023
1
Accounting policies
(Continued)
- 13 -
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 replacement cost and cost, adjusted where applicable for any loss of service potential.
1.7
Cash at bank and in hand
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 statement of financial position 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.
ELLPRO TIMBER LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 NOVEMBER 2023
1
Accounting policies
(Continued)
- 14 -
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.
ELLPRO TIMBER LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 NOVEMBER 2023
1
Accounting policies
(Continued)
- 15 -
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.
Changes in the fair value of derivatives that are designated and qualify as fair value hedges are recognised in profit or loss immediately, together with any changes in the fair value of the hedged asset or liability that are attributable to the hedged risk.
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 income statement 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 income statement, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset when the company has a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.
1.11
Retirement benefits
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
ELLPRO TIMBER LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 NOVEMBER 2023
1
Accounting policies
(Continued)
- 16 -
1.12
Leases
Rentals payable under operating leases, including any lease incentives received, are charged to profit or loss on a straight line basis over the term of the relevant lease except where another more systematic basis is more representative of the time pattern in which economic benefits from the leases asset are consumed.
1.13
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
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.
Critical judgements
The following judgements (apart from those involving estimates) have had the most significant effect on amounts recognised in the financial statements.
Stock provision
Stock is initially measured at the costs incurred to acquire the inventory, this is then uplifted by any treatment, loading and transportation costs to get the stock to a condition where it is ready for sale. Estimations are made in the apportionment of the total freight costs, which are apportioned to each individual stock item per container on the basis of their volume. Included within the valuation of stock is a provision for an estimate for obsolete inventory, which is based on selected stock being sold undervalue as a result of the crash of building market post the Covid-19 pandemic. Calculation of these provisions requires judgements to be made, which includes reviewing the current inventory quantity and the time that the inventory remains unsold.
3
Turnover and other revenue
2023
2022
£
£
Turnover analysed by class of business
Supply and sale of timber
19,038,731
21,369,127
2023
2022
£
£
Other revenue
Interest income
34,695
2,604
ELLPRO TIMBER LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 NOVEMBER 2023
- 17 -
4
Operating profit
2023
2022
Operating profit for the year is stated after charging/(crediting):
£
£
Exchange losses/(gains)
2,944
(2,660)
Depreciation of owned tangible fixed assets
7,403
8,776
Operating lease charges
15,743
14,706
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
18,500
19,500
For non audit services
2,400
1,835
20,900
21,335
6
Employees
The average monthly number of persons (including directors) employed by the company during the year was:
2023
2022
Number
Number
Directors
2
2
Office Staff
8
9
Total
10
11
Their aggregate remuneration comprised:
2023
2022
£
£
Wages and salaries
327,337
355,230
Pension costs
72,762
70,938
400,099
426,168
ELLPRO TIMBER LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 NOVEMBER 2023
- 18 -
7
Directors' remuneration
2023
2022
£
£
Remuneration for qualifying services
17,256
17,256
Company pension contributions to defined contribution schemes
8,000
8,000
25,256
25,256
8
Interest payable and similar expenses
2023
2022
£
£
Other finance costs:
Other interest
1,023
9
Taxation
2023
2022
£
£
Current tax
UK corporation tax on profits for the current period
521,600
588,522
Deferred tax
Origination and reversal of timing differences
(1,394)
(1,231)
Total tax charge
520,206
587,291
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
2,254,001
3,082,570
Expected tax charge based on the standard rate of corporation tax in the UK of 23.00% (2022: 19.00%)
518,420
585,688
Tax effect of expenses that are not deductible in determining taxable profit
1,898
2,117
Depreciation on assets not qualifying for tax allowances
1,282
716
Deferred tax adjustments in respect of prior years
(1,394)
(1,230)
Taxation charge for the year
520,206
587,291
ELLPRO TIMBER LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 NOVEMBER 2023
- 19 -
10
Dividends
2023
2022
£
£
Final paid
1,600,000
1,703,196
11
Tangible fixed assets
Fixtures, fittings & equipment
Computer equipment
Total
£
£
£
Cost
At 1 December 2022
3,373
86,268
89,641
Additions
1,807
1,807
At 30 November 2023
3,373
88,075
91,448
Depreciation and impairment
At 1 December 2022
1,508
53,033
54,541
Depreciation charged in the year
373
7,008
7,381
At 30 November 2023
1,881
60,041
61,922
Carrying amount
At 30 November 2023
1,492
28,034
29,526
At 30 November 2022
1,865
33,235
35,100
12
Stocks
2023
2022
£
£
Raw materials and consumables
3,189,452
2,108,981
3,189,452
2,108,981
Amounts included in the above in respect of impairment £333,148. (2022: £105,690)
13
Debtors
2023
2022
Amounts falling due within one year:
£
£
Trade debtors
2,019,419
2,424,817
Other debtors
738,727
Prepayments and accrued income
14,991
15,428
2,773,137
2,440,245
ELLPRO TIMBER LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 NOVEMBER 2023
13
Debtors
(Continued)
- 20 -
Amounts included in the above in respect of impairment £21,078 (2022: £17,432)
14
Creditors: amounts falling due within one year
2023
2022
£
£
Trade creditors
2,256,008
1,768,785
Corporation tax
143,329
177,893
Other taxation and social security
260,437
346,044
Other creditors
3,061
15,217
Accruals and deferred income
55,420
76,793
2,718,255
2,384,732
15
Deferred taxation
The following are the major deferred tax liabilities and assets recognised by the company and movements thereon:
Liabilities
Liabilities
2023
2022
Balances:
£
£
Accelerated capital allowances
7,381
8,775
2023
Movements in the year:
£
Liability at 1 December 2022
8,775
Credit to profit or loss
(1,394)
Liability at 30 November 2023
7,381
16
Retirement benefit schemes
2023
2022
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
72,762
70,938
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.
ELLPRO TIMBER LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 NOVEMBER 2023
- 21 -
17
Share capital
2023
2022
2023
2022
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Ordinary A of £1 each
1,000
1,000
1,000
1,000
18
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
24,220
20,138
Between two and five years
20,720
24,220
40,858
19
Directors' transactions
This amount will be repaid in full within 9 months of the statement of financial position date.
Description
% Rate
Opening balance
Amounts advanced
Amounts repaid
Closing balance
£
£
£
£
Transactions with directors
-
(14,570)
2,353,297
(1,600,000)
738,727
(14,570)
2,353,297
(1,600,000)
738,727
ELLPRO TIMBER LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 NOVEMBER 2023
- 22 -
20
Cash generated from operations
2023
2022
£
£
Profit for the year after tax
1,733,795
2,495,279
Adjustments for:
Taxation charged
520,206
587,291
Finance costs
1,023
Investment income
(34,695)
(2,604)
Depreciation and impairment of tangible fixed assets
7,381
8,776
Movements in working capital:
(Increase)/decrease in stocks
(1,080,471)
456,154
Increase in debtors
(332,892)
654,094
Increase/(decrease) in creditors
368,087
(651,473)
Cash generated from operations
1,181,411
3,548,540
21
Analysis of changes in net funds
1 December 2022
Cash flows
30 November 2023
£
£
£
Cash at bank and in hand
2,718,731
(941,865)
1,776,866
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