The directors present the strategic report for the year ended 31 December 2023.
The Directors are pleased with the performance of the group for 2023. The group statement of comprehensive income is set out on Page 9.
Turnover for the year is £12,757,068 compared to £13,396,909 for the previous year. This represents a decrease in turnover of 4.78%. There is an increasing trend to reduce the carbon footprint of food creating a continued need for locally produced produce. Strong farming commodity prices within the agricultural industry were counteracted by exorbitantly higher input costs throughtout the 2023 year. Farming continues to be classed as an essential industry but demand for farm machinery slowed in the latter part of the year due to a combination of bad weather and reduced nett farming income. The group maintained manufacturing levels gradually increasing stock to shorten lead times creating shorter delivery times to satisfy a slower demand for machinery throughout the latter half of 2023 year.
Gross margin percentage has risen slightly from 22.47% in 2022 to 22.96% in 2023. The group implemented product price increases throughout the year to try and keep abreast of any increases in raw material prices and fuel and energy costs. The increase in interest rates started to curtail the sales of more expensive equipment which in turn reduced the stocking levels of companies which had a knock-on effect in the latter half of 2023.
Our customers are primarily dealers in agricultural machinery and to a much lesser degree individual farmers. Therefore the performance of the Group is dependent on general conditions within the agricultural industry and the availability of finance for farmers to purchase new machinery. Sales can be affected by factors such as the weather conditions, availability of government subsidies, commodity prices and livestock health.
The group is affected by currency fluctuations to the extent that a proportion of our manufacturer partners either source parts or manufacture products overseas. The Board is aware of the uncertainties this causes and factors exchange rate fluctuations into the decision making process.
The group is dependent upon a number of business critical systems which, if interrupted for any length of time, could have a material effect on the running of the group's business. The Board has implemented a series of contingency plans which would enable the group to resume operations within a short space of time, thus mitigating the likelihood of material loss.
The war in Ukraine continued global demand for raw materials causing an increase in costs throughout the first half of 2023. The Covid 19 effect on major raw material suppliers and consumers like Europe, India and China began to ease the availability of components and raw material to mainland Europe and the UK in the latter half of 2023 but the unprecedented price increases that occurred during the COVID years did not fall to the same extent as they went up which kept pressure on the gross profit margin.
The new welding, spraying and finishing facilities which opened in 2020 are now well established and making a good contribution to the production. There are still some difficulties attracting staff to satisfy production needs, but our own internal training/welding academy combined with the continued relationship with the North West Regional College allows us to increase the trainee and apprenticeship intake to try and ease staffing issues.
The investment in new plant and machinery in recent years has proven a great help improving the potential and cost effectiveness of the workforce and facilities. In particular the new Plasma cutter has helped increase the versatility of the production facilities and reduce the dependence on outside contractors. The new generator has taken the pressure off our power requirement and allows the new facility to run independently from the grid when necessary. A new Tube Lazer was installed at the end of 2023 but was not fully operational. It is anticipated that this machine when fully operational will have a big impact on production efficiency and gross margin.
The demand for Fleming products eased in the latter half of 2023 allowing the group to bring some products into production which had not been allowed to be fully commercialised due to the earlier years intense work-load. Some new products which have already been designed and tested are now starting to hit the production floor and come on to the market, The R & D on new product development and production efficiency is now getting going again. Analysis of sales in recent years has highlighted how new products have significantly contributed to turnover. New product development has increased market share in new and existing markets.
The key performance indicators used by the directors are turnover, gross margin percentage and operating profit. These are set out below
As discussed above turnover has decreased by 4.78% while gross margin percentage has risen by 0.49%. There has been a decrease in operating profit of £141k.
On behalf of the board
The directors present their annual report and financial statements for the year ended 31 December 2023.
The results for the year are set out on page 9.
No ordinary dividends were paid. The directors do not recommend payment of a further dividend.
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
Cash flow forecasting is performed by the group to mitigate any liquidity risks and to ensure it has sufficient cash to meet operational needs while maintaining sufficient headroom for unforeseen expenditure.
The group is affected by currency fluctuations to the extent that a proportion of our manufacturer partners either source parts or manufacture products overseas. The Board is aware of the uncertainties this causes and factors exchange rate fluctuations into the decision making process.
Credit risk arises from cash and deposits with banks and financial institutions, as well as credit exposures to wholesale and retail customers, including outstanding receivables and committed transactions. Risk control assesses the credit quality of the customer, taking into account its financial position, past experience and other factors. Individual risk limits are set based on internal ratings in accordance with limits set by the Board. The utilisation of credit limits is regularly monitored.
The group has continued to carry out research and development activities in respect of product development
As referred to in the Strategic Report, the group plans to continue to further drive efficiency levels in the production facilities. The new high-definition plasma cutting machine has increased efficiencies in the cutting and preparation department and reduced the dependency on outside suppliers. This machine has been fully integrated into the design and production process creating more diverse thinking and creative design of products for better production efficiency. The group has invested in a new Tube Lazer at the end of 2023 to compliment the Plasma. This machine will be fully operational in 2024. It is proposed to continue to upgrade more welding machines to Low Energy welders for 2024 and we will complete the upgrade to the factory fume extraction system in 2024. With the increased costs of fuel, electric and gas the group continues to investigate into renewable energy systems to be less reliant on the National Grid by 2025. A feasibility study was carried out for a wind turbine but this was not an option. Investigations are ongoing for increasing our solar power system and possible battery storage. It is proposed to install a smaller 2m press brake to augment the existing 4m machine. When the investment in machinery is complete and fully integrated into the design and production process this will create greater efficiencies and improved quality. These new machines will also create too great a demand for power from our already strained power supply, so the company has installed a new 210 KW generator to augment our existing supply. To maximise the efficiency of the Tube Lazer and plasma cutter, a new steel store will be built beside the machines to reduce material travel time. The group’s administration offices are now 24 years old and are no longer suitable for the level of business. It is intended to build an extension to the existing building and renovate the sales area to a more open plan facility.
A new area sales manager will be appointed for the UK in 2024 and we will continue to put emphasis on developing our existing markets as well as enabling the group to develop a stronger presence in existing export markets.
The auditor, Moore (NI) LLP, is deemed to be reappointed under section 487(2) of the Companies Act 2006.
This report has been prepared in accordance with the provisions applicable to companies entitled to the medium-sized companies exemption.
We have audited the financial statements of Fleming Agri Limited (the 'parent company') and its subsidiaries (the 'group') for the year ended 31 December 2023 which comprise the group statement of comprehensive income, the group balance sheet, the company balance sheet, the group statement of changes in equity, the company statement of changes in equity, the group statement of cash flows, the company 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).
Basis for opinion
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 group and parent 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 group's and parent 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.
Other information
The other information comprises the information included in the annual report other than the financial statements and our auditor's report thereon. The directors are responsible for the other information contained within the annual report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of our audit:
the information given in the strategic report and the directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
the strategic report and the directors' report have been prepared in accordance with applicable legal requirements.
In the light of the knowledge and understanding of the group and the parent company and their 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 by the parent company, or returns adequate for our audit have not been received from branches not visited by us; or
the parent company financial statements are not in agreement with the accounting records and returns; or
certain disclosures of directors' remuneration specified by law are not made; or
we have not received all the information and explanations we require for our audit.
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 parent 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 parent company or to cease operations, or have no realistic alternative but to do so.
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.
The objectives of our audit in respect of fraud, are; to identify and assess the risks of material misstatement of the financial statements due to fraud; to obtain sufficient appropriate audit evidence regarding the assessed risks of material misstatement due to fraud, through designing and implementing appropriate responses to those assessed risks; and to respond appropriately to instances of fraud or suspected fraud identified during the audit. However, the primary responsibility for the prevention and detection of fraud rests with both management and those charged with governance of the group and the company.
Based on our understanding of the group and the company and their operating environment, we determined that the most significant frameworks which have a direct impact on the preparation of the financial statements are those related to the reporting framework (FRS 102 and the Companies Act 2006) and the relevant tax compliance regulations. Compliance with these laws and regulations was assessed as part of our procedures.
Other laws and regulations of which non-compliance may have a material effect on the financial statements, eg through fines or litigation, were identified as employment law, health and safety and environmental regulations. Our required procedures in this area are limited to inquiry of Directors and other management and inspection of any regulatory or legal correspondence. These limited procedures did not identify any actual or suspected non-compliance.
We assessed the susceptibility of the group and the company's financial statements to material misstatement, including how fraud might occur, including evaluating management's incentives and opportunities to manage earnings or influence the reported results. From the results of our assessment, we determined that the principal risk of fraud related to posting inappropriate journal entries. In common with all audits under ISAs (UK), we are required to perform specific procedures to respond to the risk of management override.
As part of an audit in accordance with ISAs (UK) we exercise professional judgement and maintain professional scepticism throughout the audit. Audit procedures performed by the engagement team included:
We obtained an understanding of the group and the company's internal control systems in order to design audit procedures that are appropriate in the circumstances, but not for the purposes of expressing an opinion on the effectiveness of the group and the company's internal control.
We obtained an understanding of how the group and the company comply with relevant laws and regulations by making enquiries of management and those charged with governance.
Enquiry of management, those charged with governance and the entity’s solicitors around actual and potential litigation and claims.
Enquiry of entity staff to identify any instances of non-compliance with laws and regulations.
Performing analytical procedures to identify any unusual or unexpected relationships that may indicate risks of material misstatement due to fraud
Reviewing minutes of management and directors meetings
Reviewing financial statement disclosures and testing to supporting documentation to assess compliance with applicable laws and regulations.
We test the completeness of sales to address the risk of fraud in revenue recognition.
Auditing the risk of management override of controls, including through testing journal entries and other adjustments for appropriateness, and evaluating the business rationale of significant transactions that are unusual or outside the normal course of business.
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 purpose of our audit work and to whom we owe our responsibilities
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.
As permitted by s408 Companies Act 2006, the company has not presented its own profit and loss account and related notes. The company’s loss for the year was £106,183 (2022 - £157,027 loss).
Fleming Agri Limited (“the company”) is a private limited company domiciled and incorporated in Northern Ireland. The registered office is Ballyorr, New Buildings, Co Londonderry, BT47 2SX.
The group consists of Fleming Agri Limited and all of its subsidiaries.
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.
The consolidated group financial statements consist of the financial statements of the parent company Fleming Agri Limited together with all entities controlled by the parent company (its subsidiaries) and the group’s share of its interests in joint ventures and associates.
All financial statements are made up to 31 December 2023. Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with those used by other members of the group.
All intra-group transactions, balances and unrealised gains on transactions between group companies are eliminated on consolidation. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.
Subsidiaries are consolidated in the group’s financial statements from the date that control commences until the date that control ceases.
At the time of approving the financial statements, the directors have a reasonable expectation that the group has adequate resources to continue in operational existence for the foreseeable future. Thus the directors continue to adopt the going concern basis of accounting in preparing the financial statements.
Turnover is recognised at the fair value of the consideration received or receivable for goods and services provided in the normal course of business, and is shown net of VAT and other sales related taxes. The fair value of consideration takes into account trade discounts, settlement discounts and volume rebates.
Revenue from the sale of goods is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer (usually on dispatch of the goods), the amount of revenue can be measured reliably, it is probable that the economic benefits associated with the transaction will flow to the entity and the costs incurred or to be incurred in respect of the transaction can be measured reliably.
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 recognised in the profit and loss account.
Equity investments are measured at fair value through profit or loss, except for those equity investments that are not publicly traded and whose fair value cannot otherwise be measured reliably, which are recognised at cost less impairment until a reliable measure of fair value becomes available.
In the parent company financial statements, investments in subsidiaries, associates and jointly controlled entities are initially measured at cost and subsequently measured at cost less any accumulated impairment losses.
A subsidiary is an entity controlled by the group. Control is the power to govern the financial and operating policies of the entity so as to obtain benefits from its activities.
At each reporting period end date, the group reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the company estimates the recoverable amount of the cash-generating unit to which the asset belongs.
The carrying amount of the investments accounted for using the equity method is tested for impairment as a single asset. Any goodwill included in the carrying amount of the investment is not tested separately for impairment.
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.
The group 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 group's balance sheet when the group becomes party to the contractual provisions of the instrument.
Financial assets and liabilities are offset and 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, 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, 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.
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.
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the group 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.
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 group after deducting all of its 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.
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.
Financial liabilities are derecognised when the group's contractual obligations expire or are discharged or cancelled.
Equity instruments issued by the group 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 group.
The tax expense represents the sum of the tax currently payable and deferred 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 group’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.
Deferred tax liabilities are generally recognised for all timing differences and deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Such assets and liabilities are not recognised if the timing difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.
The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the profit and loss account, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset if, and only if, there is 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.
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.
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
Government grants are recognised at the fair value of the asset received or receivable when there is reasonable assurance that the grant conditions will be met and the grants will be received.
Government grants relating to turnover are recognised as income over the periods when the related costs are incurred. Grants relating to an asset are recognised in income systematically over the asset's expected useful life. If part of such a grant is deferred it is recognised as deferred income rather than being deducted from the asset's carrying amount.
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.
Research and development
Expenditure on research and development costs is written off in the year in which it is incurred.
In the application of the group’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.
The average monthly number of persons (including directors) employed by the group and company during the year was:
Their aggregate remuneration comprised:
The number of directors for whom benefits are accruing under defined contribution schemes amounted to 5 (2022: 5)
An increase to the UK Corporation Tax rate to 25% (where taxable profits are in excess of £250k) from 1 April 2023 was substantively enacted as part of the Finance Bill 2021. The deferred tax liability reflects this increased rate for timing differences which are expected to unwind on or after 1 April 2023.
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:
The goodwill all arises on the acquisition of Fleming Agri Products Limited on 2 June 2021.
Details of the company's subsidiaries at 31 December 2023 are as follows:
There are no material differences between the replacement cost of stock and the balance sheet amounts.
At 01.01.23 the company had 2,700,000 redeemable preference shares with a par value of £1 per share. These shares are redeemable at the option of the holders of the shares to a maximum of £500k per financial year until such times as all shares have been redeemed. 500,000 shares (2022: NIL) were redeemed in the year leaving 2,200,000 redeemable preference shares at the year end. The shares carry a mandatory dividend, the rate of which is based on the profitability of the group. The rate of dividend payable to the holders for the financial period ended 31 December 2023 is 1% (2022: 1.5%) and is expected to be 0.5% for 2024 and succeeding years until the shares have been repaid.
The dividends are recognised in the Profit and Loss account as interest expense on an amortised cost basis using the effective interest method based on the borrowing rates which the directors expect would be available to the Group at the balance sheet date. The amount recognised in respect of the period is £103,838 (2022: £155,684) of which £24,500 (2022: £40,500) is the actual dividend payable to the shareholders at the period end. The discount on initial recognition of the shares of £443,478 was recognised as a capital reserve on the balance sheet. There has been an increase in this figure of £32,659 in the current year due to a change in estimate in relation to the dividend rate payable.
The amount of preference shares due for repayment after 5 years is NIL (2022: £NIL) based on the maximum redemption taking place in each year
The following are the major deferred tax liabilities and assets recognised by the group and company, and movements thereon:
The expected reversal of the deferred tax liability above relating to accelerated capital allowances in 2024 is £41,000. This is expected to arise because depreciation is anticipated to be higher than the available capital allowances. The expected reversal of the deferred tax liability relating to the fair value adjustment on acquisition in 2024 is £3,039 arising due to further depreciation of the related fixed assets,
A defined contribution pension scheme is operated for all qualifying employees. The assets of the scheme are held separately from those of the group in an independently administered fund.
The Ordinary A shares and Ordinary B shares carry full rights in relation to voting, dividends and distributions and rank pari passu.
Details on the Redeemable Preference Shares are shown in Note 13 to the financial statements.
The Ordinary A shares and Ordinary B shares carry full rights in relation to voting, dividends and distributions and rank pari passu.
Details on the Redeemable Preference Shares are shown in Note 20 to the financial statements.
The capital redemption reserve represents the discount on the recognition of the redeemable preference shares which are accounted for as detailed in Note 19 to the financial statements.
The merger relief reserve represents the premium arising on a share for share exchange on acquisition of the subsidiary company. The criteria for merger relief in Section 612 of Companies Act 2006 were met and therefore no premium is recorded on the issue of the shares and a merger relief reserve is created.
Profit and loss reserves represent the recognised income and expenditure of the Company and its subsidiaries from the date of acquisition.
Amounts contracted for but not provided in the financial statements:
The remuneration of key management personnel is as follows.
The subsidiary company is owed £252,000 (2022: £252,000) by way of unsecured interest free loan to a company controlled by close family members of a director.