The directors present the strategic report for the year ended 31 January 2024.
The overall results for the year and the financial position at the year end were considered satisfactory by the directors.
In summary, the overall turnover has increased by 5% on the previous year at just over £11 million and gross profits remained at the £5 million level, (fractionally down by 3%).
All centres saw significant restaurant income growth, with the greatest growth at Tenterden, over 50%, reflecting the impact of the restaurant developments.
As mentioned in the Chairman's Statement, the performance at the Canterbury site was impacted by significant public works in its vicinity.
The Group continues to manage its cash flow effectively and the cash generated by the operating activities has allowed for the continued development of the Garden Centres within the Group.
Whilst during the year, bank loans have been partly repaid in accordance with the agreed terms and payment schedules, further bank facilities have also been negotiated and arranged to fund future planned developments.
Strategy
The Group’s strategy is, over the next few years, to:
Invest in a managed manner in the centres to ensure they look smart and attractive to our customers, and so they are functional and easy to operate.
Complete the primary investment projects. Going forward these are at Hamstreet (first) and Folkestone (second) and include gaining planning permission for building of the houses on the spare land at Hamstreet and Folkestone and selling the plots to provide funds for the investments at these sites.
By investing in the centres and completing the projects to maximise the potential of the four centres, and with this to see the turnover and profits grow over the medium term.
Create strong management team who can run the business without supervision to ensure the business is resilient.
Maintain our Planet Mark accreditation and in doing so improve the sustainability of our operations.
The Group's main trading activity is dependent on the UK economy as 100% sales is generated in the UK. Historically, the Group’s business operates in an industry that is relatively robust to economic downturns so long as the businesses are allowed to open. There are some significant issues that are impacting and posing risk to the company and its operations in the current year (2024-25). These include:
High interest rates: Interest rates impact on the interest charges on our loans. Over the year we paid off some more of the historic loans and have used cash generated by the business to pay for the developments at the garden centres. However, we are not expecting to be able to cover all the Hamstreet development costs over this and next year from cash generated by the business and we have organised a loan facility. We are seeking to keep the need for any loan to a minimum and to draw on the loan as late as possible (as the point when we have to start repayments is set by the first drawdown date. Also, interest rates are forecast to fall over this and next year, and the interest we have to pay is linked to the Bank of England base rate.
Cost pressures: increasing costs due to higher wages driven by above inflation increases in the minimum wage. On the positive side we are not seeing increase in the prices of the goods we purchase for sale. Although this year shipping costs for furniture are rising again. The current primary area creating cost pressures are wages. This year we have sought to keep prices as competitive as possible. We are continuing to see a change in the customer spending profile, with a drop in garden centre sales and an increase in restaurant spending. We are therefore carefully controlling garden centre cost and prices, and have raised restaurant prices to reflect increased food costs.
Major project cost escalation: While we budgeted projects carefully, with a contingency to cover unexpected costs, this year we are seeing multiple pressures including; increased building material costs vs the budget coming through from previous years inflation, changes (with higher costs) being made to meet the local authority and regulatory requirements, and a drop in the property market in the Hamstreet area, meaning the sale of the house building plots is unlikely to deliver the income originally forecast. Added to this, gaining the planning approval required one less house than we had originally included in the plans.
Geopolitical; impacting supply chain and energy: The war in Ukraine continues and a war in the middle East has started. These continue to have an impact on the world’s economy. Energy prices are down from their peak, but there is still a risk they could increase again. We have some protection to increased energy costs through our solar panels. Energy needs to continue to be managed carefully. The supply chain is threatened with attacks on shipping passing the Arabian peninsula. The company gets much of its furniture from China. This poses a risk of delays or non supply of furniture, with potential increased costs. Currently furniture stocks are at a reasonable level, meaning we should be able to offer and supply to customers’ needs.
Trade Creditor liquidity. This risk is managed by ensuring that there are sufficient funds to meet amounts due. The Group's main trading activity is dependent on the prevailing economic conditions in the UK market and especially in the South-East region where all the Group’s Garden centres are located. Almost all the Group’s customers are consumers and therefore the Group is also susceptible to the normal risks associated with the retail sector, albeit a very specialised part of that sector.
In summary trading continues to be tough with an expectation that turnover will be flat (garden sales down and café sales up) and that the profit level should stay steady with good management.
The main KPI's used by the Group are oriented around gross profit and turnover. These are summarised as follows:
| 2024 | 2023 |
Turnover | £11.2m | £10.7m |
Gross Profit % | 44.54% | 48.26% |
Operating Profit | £0.13m | £0.60m |
Sustainability (ESG; Environmental Social and Governance)
The Group produced its first internal standalone sustainability report this year. It outlines the areas of sustainability we are currently addressing as a priority and sets an ambition to address more. As reported in last year’s Chairman’s report, we gained accreditation from Planet Mark for our operating sustainability performance in terms of tonnes of carbon dioxide equivalent released, earlier in the year under review and have retained the Mark for 2024, and won NFU Community Champion Award for our continued support of local charities, wider community, and businesses, a recognition of our social impact.
We continue to challenge ourselves on what we can do better for the benefit of society and the environment. We are looking create a Grovewell Sustainability Green Team comprising individuals who volunteer and are passionate about sustainability. The Sustainability Green Team will help the organisation deliver sustainability benefits including reduced energy usage and carbon emissions, by engaging with all staff so we behave sustainably.
All aspects of the business are continually monitored with a view to maintaining profitability and controlling the cost of control in a efficient way.
On behalf of the board
The directors present their annual report and financial statements for the year ended 31 January 2024.
The results for the year are set out on page 9.
Ordinary dividends were paid amounting to £129,500. 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 Richard Anthony be reappointed as auditor of the group will be put at a General Meeting.
We have audited the financial statements of Grovewell Garden Centres Limited (the 'parent company') and its subsidiaries (the 'group') for the year ended 31 January 2024 which comprise the group profit and loss account, 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.
Risk identified:
The following risks were identified during the course of audit:
Valuation and existence of year end closing stocks.
Accuracy, valuation and completeness of Trade creditors.
Audit response:
Audit tests were conducted on a sample basis to ensure that stocks were valued at lower of cost and their net realisable value. Quantity of stocks held at year end were also tested on a sample basis to agree with the quantity counted at stocktake .
Trade creditor balances of major suppliers were reconciled to the suppliers' statements and cut-off tests were performed.
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 profit and loss account 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 £129,200 (2023 - £129,228)
These financial statements have been prepared in accordance with the provisions relating to medium-sized companies.
Grovewell Garden Centres Limited (“the company”) is a private limited company domiciled and incorporated in England and Wales. The registered office is .
The group consists of Grovewell Garden Centres 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 freehold properties and to include investment properties and certain financial instruments 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 Grovewell Garden Centres 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 January 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.
Acquired goodwill is written off in equal annual instalments over five years.
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.
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.
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.
Rental income from operating leases is recognised on a straight line basis over the term of the relevant lease. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised on a straight line basis over the lease term.
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.
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.
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.
An analysis of the group's turnover is as follows:
The average monthly number of persons (including directors) employed by the group and company during the year was:
Their aggregate remuneration comprised:
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 net carrying value of tangible fixed assets includes the following in respect of assets held under finance leases or hire purchase contracts.
Details of the company's subsidiaries at 31 January 2024 are as follows:
The bank holds the following charges:
There is a legal mortgage charge dated 25 November 2010 over the freehold property at Tenterden Garden Centre, Reading Street, Tenterden, Kent, TN30 7HT.
There is a legal mortgage charge dated 4 August 2008 over the freehold property at Busheyfields Nursery, Busheyfields Road, Herne Bay, CT6 7LJ.
There is a legal mortgage charge dated 19 December 2018 over the freehold property at Wyevale Garden Centre and Farthings, Marsh Road, Hamstreet, Ashford, TN26 2JZ .
There is a legal mortgage charge dated 14 March 2016 over the freehold property at Folkestone Garden Centre, Canterbury Road, Swingfield, Dover, CT15 7HX.
There is also a debenture charge which comprises all money and liabilities of the parent and its subsidiaries whatever, whenever and howsoever incurred by the company whether now or in the future.
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:
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.