The Directors present their strategic review for the year ended 30 April 2024.
The business model of the company continues to be a high quality printer to the food packaging and greeting card markets. The company has long term business relationships with large and blue chip customers supported by a key account management programme to meet their needs.
The Sherwood Press is a focussed low cost printing business operating in the carton board food packaging industry and the greeting card market. In a world of increased business risk, Sherwood is well positioned to manage risk through continual improvement and investment in its low cost model. The company has invested £700,000 in finishing automation, robotics and window patching during the year. This follows £2m investment in the previous two years.
The key strategy is to build sustainable growth in sales and profits. This is achieved by having long term relationships with customers combined with investment to increase productivity and profitability. The Directors consider food packaging has long term growth potential and has recently invested in additional sales and marketing resources. Since the year end the sales team are on boarding £1.5m new business alongside 10% growth in key accounts. In the year to April 2025, we expect our sales to reach £15m.
The cost of living crisis and continued disruption to supply chains has reduced demand for food packaging by 20% according to industry studies.
The decline in turnover of £900,000 is the result of trading out of two accounts. In the food packaging market, we traded out of an account where we lost credit cover and experienced payment problems. The account has now been settled in full. In the card market, we had to say goodbye to a long standing customer who would not pay an economic price for the service provided. The Sherwood Press mitigates risk of default in payment by only trading within its own internal credit limits and insuring all debts and finished goods stock.
The key risk affecting the business during the last two years has been the disruption to supply chains in the global supply of board, energy and other raw materials. These risks have now reduced with the normalisation of the supply of board. Energy costs have been mitigated through the installation of power correction technology, LED lighting and long term energy contracts going forward. The business has recently ordered solar panels costing £205,000 to provide a further 14% reduction in our electricity requirements and meet an important environmental pledge to a key account.
The continued investment in new technology to increase productivity and profitability will continue in the year to April 2025 with additional die cutting and blanking machinery with full logistics at a cost £500,000. This investment will complete our plan to increase capacity by 30% and we will have a low cost finishing department considered best in class, funded with no external debt.
The year to the 30 April 2024 (FY2024) was a tough year for the industry with the cost of living crisis, continuation of rising raw material and manufacturing costs that could not be fully passed on to customers. Oversupply in the industry continued to depress the sales prices that could be negotiated with customers.
The carton board food packaging market has declined in value by 20% according to industry statistics. Stockpiling of raw materials had normalised by the year-end with raw material lead-times reverting to 4-6 weeks. We have reduced our stock by £480,102 mainly in finished goods by introducing a doorstep delivery service to a key account.
The card market continues to grow in value, if not in volume, as it is less impacted by the economic cycle. People continue to celebrate life events, even in a cost of living crisis. We have recently re-organised our greeting card finishing department to improve productivity and capitalise on growth opportunities.
Turnover decreased by 6.8% to £12,374,354 from £13,276,217, however gross margin increased by 2.5% from 16.43% to 18.88% due to productivity improvements through investment. Post year end the gross margin has improved by a further 1%. The Directors are confident that the benefits of this strategy will positively impact the net profit as sales and margin rise.
The Directors are disappointed to report a loss before tax of £156,400. The loss arose mainly through labour re-organisation in the greeting card department and write off of redundant raw material stock. These amounts will not reoccur going forward.
The Directors consider sales, gross margin and net profit as our key performance financial indicators, along with operational performance indicators such as ‘On Time in Full’ and ‘Cost of Quality’. Our OTIF measured 99.2% and our Cost of Quality was 0.26% of sales during the year.
As Managing Director I have continued to build an executive team to grow the company with key appointments in Sales, Marketing and Commercial areas of the business. We are pleased to report that we are experiencing wins in competitive tendering processes, with recent wins on new business, as well as existing customer retention. This is testament to the strategy and culture of the business - that we are big enough to compete, but small enough to care. We are currently onboarding growth opportunities totalling £2.5m.
The Directors are confident that the year to the 30th April 2025 will return us to normal levels of profitability and provide a platform for further growth in sales and profitability.
We have recently published our 16th Corporate and Social Responsibility report which now includes our scope 1, 2 and 3 emissions. We were recently awarded a bronze ESG status by a key customer and are committed to achieve their silver standard in the next 12 months. In June we received the Gold Award in the Online Retail category in the Environmental Packaging Awards with our flower hydration pot for Bunches.
The company has no particular pressure on its cashflows. The business has no external third party debt as at the signing date – with any funding for capital expenditure being provided by the Directors’ pension scheme. The company has cash reserves of £264,209 at the year end and the balance sheet stands at £3,990,157.
During the year (in February 2024) we retained our British Retail Consortium Accreditation – with a “AA+” standard hygiene rating, following a semi-unannounced audit. The site continues to be run in a safe and responsible manner.
On behalf of the board
The directors present their annual report and financial statements for the year ended 30 April 2024.
The results for the year are set out on page 10.
No interim 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:
In accordance with the company's articles, a resolution proposing that UHY Hacker Young be reappointed as auditor of the group will be put at a General Meeting.
We have audited the financial statements of Sherwood Press (Holdings) Limited (the 'parent company') and its subsidiaries (the 'group') for the year ended 30 April 2024 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 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 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.
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 extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below.
Based on our understanding of the group and the industry in which it operates, we identified that the principal risks of non-compliance related to the acts of the Group, including fraud, and we considered the extent to which non-compliance might have a material effect on the financial statements. We also considered those laws and regulations that have a direct impact on the preparation of the financial statements such as the Companies Act 2006. We evaluated management’s incentives and opportunities for fraudulent manipulation of the financial statements (including the risk of override of controls), and determined that the principal risks were related to inflated revenue and reducing losses.
Audit procedures performed included, but were not limited to:
making enquiries of management on whether they had knowledge of any actual, suspected or alleged fraud;
assessment of fraud prevention and detection procedures within the group;
reviewing minutes of meetings of those charged with governance;
evaluating whether journals posted gave indications of bias by the Directors, that represented a risk of material misstatement due to fraud;
performed cut off testing either side of the year end, to confirm that revenue recognition is appropriate;
making enquiry of management regarding actual and potential litigation and claims, or any potential breaches of laws and regulations; and
gaining an understanding of the internal controls in place through performing walkthrough procedures.
There are inherent limitations in the audit procedures described above. In addition the further removed non-compliance is from the events and transactions reflected in the financial statements, the less likely we would become aware of it. Also, the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery or intentional misrepresentations, or through 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.
Use of our 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.
The Statement of Comprehensive Income has been prepared on the basis that all operations are continuing operations.
As permitted by s408 Companies Act 2006, the company has not presented its own profit and loss account and related notes. The company’s profit for the year was £0 (2023 - £0 profit).
Sherwood Press (Holdings) Limited (“the company”) is a private limited company domiciled and incorporated in England and Wales. The registered office is Hadden Court, Glaisdale Parkway, Glaisdale Drive West, Nottingham, NG8 4GP.
The group consists of Sherwood Press (Holdings) 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 modified to include the revaluation of certain tangible fixed assets at fair value. The principal accounting policies adopted are set out below.
The consolidated group financial statements consist of the financial statements of the parent company Sherwood Press (Holdings) 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 30 April 2024. 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.
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.
Interest income is accrued on a time basis, by reference to the principal outstanding and the effective interest rate applicable.
Rental income is accrued on a time basis, by reference to the agreements entered.
Commissions receivable are accrued on a time basis, when it is probable that economic benefits will flow to the entity and the value of the transaction can be measured reliably.
Research expenditure is written off against profits in the year in which it is incurred. Identifiable development expenditure is capitalised to the extent that the technical, commercial and financial feasibility can be demonstrated.
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.
Interests in subsidiaries are initially measured at transaction price excluding transaction costs, and are subsequently measured at fair value at each reporting date. Transaction costs are expensed to profit or loss as incurred. Changes in fair value are recognised in other comprehensive income except to the extent that a gain reverses a loss previously recognised in profit or loss, or a loss exceeds the accumulated gains recognised in equity; such gains and loss are recognised in profit or loss.
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).
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. Financial assets classified as receivable within one year are not amortised.
Basic financial liabilities, including creditors and loans from fellow group companies, are initially recognised at transaction price.
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.
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 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.
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
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 leased asset are consumed.
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.
A grant that specifies performance conditions is recognised in income when the performance conditions are met. Where a grant does not specify performance conditions it is recognised in income when the proceeds are received or receivable. A grant received before the recognition criteria are satisfied is recognised as a liability.
Company results for the financial period
The company exists as a holding company only and, as such, did not trade during the financial year to 30 April 2024.
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 following judgements (apart from those involving estimates) have had the most significant effect on amounts recognised in the financial statements.
In determining the stock valuation of work in progress and finished goods, management have made judgements regarding the absorption of costs. Management consider that the majority of administration costs relate to production and this should be absorbed in to the valuation of work in progress and finished goods.
Management consider that the majority of plant and equipment has a relatively long economic useful life and which results in a depreciation charge of £322,779 (2023: £309,664). The original cost of plant and equipment at April 2024 was £6,119,028 and net book value of plant and equipment at 30 April 2024 was £2,662,410. Accordingly a 10% decrease to the assessment of the economic useful life would lead to an increase in the depreciation charge of approximately £34,992 in the year 30 April 2024.
The Directors consider that the group will make sufficient profits in the foreseeable future to utilise the £1,485,459 tax losses carried forward as at April 2024. This judgement supports the corresponding Deferred Tax Asset of £371,364.
The whole of turnover is attributable to the company's principal activity.
The average monthly number of persons (including directors) employed by the group and company during the year was:
Their aggregate remuneration comprised:
The actual (credit)/charge for the year can be reconciled to the expected (credit)/charge for the year based on the profit or loss and the standard rate of tax as follows:
In addition to the amount charged to the profit and loss account, the following amounts relating to tax have been recognised directly in other comprehensive income:
The group had tax trading losses of £1,485,459 to carry forward (2023: £1,109,090).
The directors deem the valuation of the assets to be reasonable as at 30 April 2024.
Details of the company's subsidiaries at 30 April 2024 are as follows:
Obligations under finance leases are secured against the assets to which they relate.
The loans are secured by fixed charges over the assets.
The loans are taken out from the Sherwood Press Pension Fund and are repayable on demand at four weeks notice. All loans taken out are interest bearing at a commercial rate.
Finance lease payments represent rentals payable by the company or group for certain items of plant and machinery. Leases include options to sell at the end of the lease period, and no restrictions are placed on the use of the assets. The average lease term was 5 years. All leases are on a fixed repayment basis and no arrangements have been entered into for contingent rental payments.
Obligations under finance leases are secured against the assets to which they relate.
Deferred tax assets and liabilities are offset where the group or 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:
The deferred tax relating to accelerated capital allowances as set out above are expected to substantially reverse within six years and relates to accelerated capital allowances that are expected to mature within the same period. The group has trading losses of £1,485,459 to carry forward.
A defined contribution 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.
This undistributable reserve is used to record increases in the fair value of fixed assets and decreases to the extent that such decrease relates to an increase on the same asset.
This reserve records the nominal value of shares repurchased by the company.
This is an undistributable merger reserve used to record the increase in fair value of merger accounting and decreases to the extent that such decrease relates to an increase on the same investment.
This compromises of opening retained earnings, the profit or loss for the year and dividends paid as set out in the Statement of Changes in Equity.
At the reporting end date the group had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:
In May 2022 the group entered into a new lease agreement with an annual rent charge of £170,000.
Amounts contracted for but not provided in the financial statements:
The remuneration of key management personnel is as follows.
During the year the group entered into the following transactions with related parties:
Sales with entities over which the company has joint control or significant influence of £87,786 (2023: £231,750).
Purchases with entities over which the company has joint control or significant influence of £80,222 (2023: £85,119).
Rental expenses with other related parties of £170,000 (2023: £170,000).
At the balance sheet date the company owed £194,961 (2023: £198,752) to entities over which the company has joint control or significant influence.
The company also owed £506,495 (2023: £562,771) to other related parties.
At the balance sheet date the company was due £287,850 (2023: £371,344) from entities over which the company has joint control or significant influence.
There are no unusual terms and conditions or guarantees relating to any of the amounts owed by the company or due to the company.